project_id
stringlengths 7
7
| document_text
stringlengths 0
892k
| document_type
stringclasses 2
values |
|---|---|---|
P095978 | Page 1
40113
PROJECT INFORMATION DOCUMENT (PID)
Project Name
Nepal Village Micro Hydro Carbon Offset Project
Region
South Asia
Sector
SASSD
Project ID
P095978
Borrower(s)
Implementing Agency
Alternative Energy Promotion Center
Environment Category
[] A [X ] B [ ] C [ ] FI [ ] TBD
Safeguard Classification
[]S
1
[X ] S
2
[
]
S
3
[
]
S
F
[
]
TBD
Date PID Revised
May 7, 2007
Date of Appraisal
Authorization
April 27, 2007
Estimated Date of ERPA
Signature
June 17, 2007
1\.
Country and Sector Background
Nepal has vast hydro resources, which represent a source of potential wealth\. Commercially
exploitable hydropower generating potential is estimated to be about 43,000 MW\. However,
despite this large potential, only about 600 MW has been developed so far\. Based on the 2001
census, 40 percent of Nepal's households have access to electricity, but disparity in access is
stark\. While over 90 percent of the urban population is connected to the grid, it is estimated that
only 27 percent of rural households have access to electricity\.
1
Nepals 10th National Plan aims to increase the electrification rate to 55 percent through both
grid extension and non-grid options including micro-hydro and solar\. This emphasis on power
development followed the adoption of the Hydropower Development Policy in the early 1990s
which, combined with changes in electricity legislation and the opening up of the power sector to
local and foreign private investments, was intended to make institutions operating in the power
sector efficient and creditworthy, as well as increase the participation of the private sector in the
provision of electricity services of the people\. Under this policy and regulatory framework,
Government of Nepal (GoN) has been able to attract some private (foreign) investments in power
generation, yet there is an increased recognition that more needed to be done to attract private
capital in the sector and to improve the efficiency and creditworthiness of Nepal Electricity
Authority (NEA), the central Government owned grid operator, generator and distributor\.
1
Nepal Country Strategy on Integration of Energy and Rural Development Policies and Programme -Water and
Energy Commission Secretariat of the Government of Nepal, December 2005\.
Page 2
The revised Hydropower Development Policy of 2001 was intended to address many of the
outstanding issues preventing achievement of the sector objectives\. It envisaged an increased
involvement of private investors in the production, distribution, and management of electricity
while recognizing the need for continued institutional and structural changes in the power
industry\. The revised Policy called for the creation of a more competitive environment for
private sector participation, including introduction of more transparent and investment friendly
procedures\. The development of small hydro projects and district level projects under
decentralized schemes in hilly and remote areas were also highlighted as areas to be developed
with support of a subsidy scheme implemented by the Alternative Energy Promotion Center
(AEPC)\. Finally, the Policy directed that increased attention be paid to the social and
environmental aspects of hydroelectric development to ensure that adverse effects on the
environment and communities are minimized\.
While progress has been made on several fronts during the initial years of policy
implementation, there was a growing realization that increasing access to remote areas though
decentralized schemes required additional specialized efforts\. Furthermore, implementation of
some elements of the hydropower policy, such as private sector participation, were hampered by
country economic and security risk, and the lack of adequate domestic capital market, issues
which were beyond the control of the power sector itself\.
To assist the GoN in meeting its sector objectives, the World Bank approved a Power
Development Project consisting of a $75\.6 million IDA credit in 2003\.
Discussions were initiated with the World Bank in late 2004 to prepare a complementary Carbon
Offset project whose revenues would provide additional financial support to AEPCs village
micro-hydro program, further increasing rural access to modern energy sources in Nepal\.
2\. Objectives
The proposed development objectives of the Carbon Offset Project are:
Reduce global emissions of carbon dioxide\.
Increase access to modern energy from renewable energy sources\.
The Carbon Offset project complements the ongoing World Bank Power Development Project
by providing additional support for the achievement of its development objectives, in particular
the objective of improving access of rural areas to electricity services\. The overall development
objectives of the Power Development Project are: (a) develop Nepal's hydropower potential in an
environmentally and socially sustainable manner so as to help meet electricity demand, (b)
improve access of rural areas to electricity services, and (c) promote private participation in the
power sector as a way to improve sector efficiency and to mobilize financing for the sector's
investment requirements\.
The objectives of this World Bank Carbon Offset Project are therefore consistent with the
developmental and poverty reduction objectives of GoN\.
3\.
Rationale for Bank Involvement
Page 3
This Carbon Offset project will facilitate greenhouse emission reductions and support the
development of the international market mechanism for trading Emission Reductions (ERs),
developed under the framework of the Kyoto Protocol\. The Nepal Village Micro Hydro project
consists of sale of ERs to the Community Development Carbon Fund (CDCF) which provides
carbon finance to small-scale CDM projects in the least developed countries and poorer areas of
all developing countries\. The CDCF actively seeks to reach countries and communities that are
neither presently benefiting from development through carbon finance nor are likely to benefit
greatly from it in the future\. The CDCF also seeks to support projects which include, as a
measurable output, the provision of goods and services that will lead to improvement in the
social welfare of the communities involved in the projects\.
The sale of emission reduction credits to the CDCF will allow for full implementation of the
micro-hydro program by generating additional resources to allow for expanded coverage of the
program beyond the original target of 25 districts, and will improve program sustainability by
reducing reliance on donor assistance for implementation of future phases of the program\.
Higher level objectives to which the project contributes
The project is consistent with the CAS for Nepal and supports the PRSP, particularly through
providing support for the development of the rural economy and by increasing access to modern
energy sources\.
4\. Description
The Project will support the development of micro-hydropower mini-grids to meet the electricity
and motive power needs of the rural people of Nepal through provision of subsidy assistance and
program technical support\. The project will build on the successes achieved under the UNDP
Rural Energy Development Program (REDP) by extending electrification activities to 40
districts, including 15 that were not covered under the first phase of that program\. It will also
bring together the rural electrification activities supported through the micro-hydro component of
the World Bank Power Development Project and the donor-financed Energy Sector Assistance
Program (ESAP II) to expand the total target level of new micro-hydro installations by 15 MW
by utilizing the CDM revenues to help meet un-financed program implementation and subsidy
costs\.
The project seeks to develop a viable off-grid micro-hydropower market for villages which will
not be served by the national grid for at least 5 years\. It would offer support on both the demand
and supply sides by providing information and social mobilization support, technical training,
and investment subsidy (representing 40 to 70 percent of the initial investment) to communities,
and market information and business development support services to micro-hydro construction
and supply companies\. The micro-hydro plants will be installed by pre-qualified private sector
companies who will receive subsidy payments, technical assistance and credit support\. The
plants will be managed by the communities themselves or by the private sector providers\.
Meters will be installed on each unit, and operating costs will be recovered through tariffs based
upon installed demand for residential users and energy use for larger rural enterprises\.
Page 4
The program will scale-up the promotion of off-grid micro-hydropower plants less than 100 kW
utilizing Peltic systems (up to 3 kW) to supply power for domestic and institutional lighting and
larger micro-hydro systems which can power agro-processing mills, saw mills and other electric
machinery for small cottage industries\. It is anticipated that 15,000 kW from 750 micro-
hydropower plants will be installed between 2003 and 2010, providing access to electricity to an
estimated 142,000 households\. Thirty four schemes generating 589 kW have already been
commissioned under this program, although these schemes are not eligible for early start
crediting and will thus not claim early start emissions reductions under the carbon offset project\.
This project falls under the small-scale CDM project activity with total electricity generation
within the limit of 15 MW\. The project will lead to reduced GHG emissions by:
Replacement of kerosene for lighting;
Replacement of diesel fuel used for agro-processing and other productive use
applications\.
Average household electricity consumption post installation of the micro-hydro units is estimated
to be 27 kWh/month, of which 18 kWh will be used for lighting and 9 kWh will be used for
productive uses\.
The cost of the above investment projects
Project Cost
US$ Million
Project Component
Program Cost
28\.4
Program Development cost including project
appraisal costs, AEPC subsidy, technical
assistance, and program management\.
Installed costs
26\.9
Sponsors plant investment (loan, labor, other
contributions)
Other costs
3\.8
HRD, Goods, Incremental operating costs
TOTAL
59\.1
5\. Financing
Source: ($million)
GoN 2\.26
Domestic borrowings/Equity investment
26\.9
INTERNATIONAL BANK FOR RECONSTRUCTION AND
DEVELOPMENT IDA GRANT
9\.4
UNDP 3\.57
DANIDA/NORAD 14\.3
Carbon Finance
1\.9
Financing gap
\.65
TOTAL 59\.08
Implementation
Page 5
The project will be implemented by the Alternative Energy Promotion Center (AEPC) with
technical assistance provided by UNDP REDP program\. Funding will be provided by the World
Bank, DANIDA/NORAD through the ESAP Phase II program, GoN, equity contributions and
in-kind contributions from the communities, and carbon finance revenues\.
AEPC will assume overall management of this project\. The REDP project support units will
provide project implementation support and technical assistance to the participating communities
and the private sector providers\. Actual implementation of the micro-hydro installations will be
managed by local governments, i\.e\., District Development Committees (DDC) and the Village
Development Committees (VDC), and will involve formation of a micro-hydro functional group
(MHFG) at each participating community to guide implementation and operation\.
AEPC will extend grants and other project support funds to a District Energy Fund (DEF)
managed by District Development Committees for financing approved micro-hydro project
proposals\. Funds are released from the DEF only after the acquisition of land for the power
house, securitization of the right of way for the canal and distribution lines, and the collection of
collateral for any required local loans\. Investment grants or subsidies are then released based on
output verification, while other costs such as for social mobilization, training, etc\. are paid on an
actual cost basis\. Expenditure statements submitted through the DDCs to AEPC, who confirms
eligibility of expenditures\.
Partnership arrangements
The Alternative Energy Promotion Center (AEPC), under the Ministry of Environment, Science
and Technology is devoted to the development and promotion of renewable and alternative
energy technologies in Nepal\. Established in 1996 by a Government Cabinet Order, the
objective of AEPC is to popularize and promote the use of renewable energy technology to raise
living standards of the rural people of Nepal, to protect the environment and to develop
commercially viable alternative energy industries in the country\. Acting as an intermediary
institution between the operational level NGOs/ private promoters of renewable energy and the
policy deciding levels in relevant ministries, AEPCs activities include renewable energy policy
formulation and planning and facilitating the implementation of the policies/ plans\. The REDP
shall provide continuing technical assistance support to AEPC in the implementation of the
village micro-hydro project\.
The Grant Agreement covering the Second Phase of the Energy Sector Assistance Program
(ESAP II) was signed in March 2007\. Joint funding for this program will be provided by the
Danish International Development Agency (DANIDA) and Norway (NORAD)\.
5\. Monitoring and evaluation of outcomes/results
Monitoring and evaluation will be undertaken through two mechanisms, the World Bank
supervision of the ongoing Power Development project and through the specific monitoring plan
for Verification of Emissions Reductions that will be developed in the CDM Project Design
Document\. The monitoring parameters of the CDM program shall include the number of kWh
produced by each micro-hydro unit as measured by the individual meters, and the number of
households connected to the micro-hydro plant\. AEPC will be accountable for overall reporting
on implementation progress, preparation of financial monitoring reports, and preparation of
Page 6
audited project accounts\. REDP district stall shall conduct regular monitoring of the installed
plants\. AEPC shall also conduct enhanced verification and quality assurance activities\. A
monitoring and verification plan for the community benefits of the program will be developed as
required by the CDCF\. It will be built upon the existing M&E activities undertaken by AEPC
under the World Bank Power Development Project and the annual impact assessment reports\.
6\. Sustainability
Sustainability of the micro-hydro village electrification systems is primarily linked to the
sustainability of the MHFGs, the community mobilization process and the transparency of
operation throughout the life of each sub-project\. Previous experience with the first phase of the
REDP shows that the community mobilization program has been effective, and that system
failures have been few in number\.
However, there are a number of areas where processes (and therefore sustainability) would be
further enhanced, e\.g, (i) further strengthening of the community mobilization process, (ii)
improve the formalization of micro-hydro functional groups; (iii) improve procurement
practices; and (iv) improve the benefit monitoring and evaluation process\. Moreover, an
enhanced benefit monitoring and evaluation program is being implemented as part of the World
Bank Grant program, with the secondary aim of providing early feedback of system failure and
malfunction\.
Extensive training for the operation and maintenance (O&M) staff (two operators and one
manager selected from the local community) assigned to each system is being provided through
the World Bank project, in both technical aspects of system operation and in bill collection,
disconnection for non-payment, record keeping, accounting, etc\. O&M staff are engaged prior to
commencement of construction, are required to sign pledges that prevent them from leaving for
other opportunities once training is completed, and are required to assist with system
construction, plant installation and commissioning\.
7\. Lessons Learned from Past Operations in the Country/Sector
The Carbon Finance Project will incorporate lessons learned from the initial implementation
results of the Power Development Project and the previous phases of the UNDP REDP project\.
Recent experience in Nepal has demonstrated that delivery of infrastructure services to rural
communities is more effective and sustainable when beneficiaries are able to actively participate
in project planning and design\. Accordingly, the village electrification component adopts a
community-driven approach, which involves the community through every stage of the
development process including,
inter alia,
organization development, woman's empowerment,
skills enhancement, capital formation, technology promotion and environmental management\.
8\.
Environmental Issues and Safeguard Policies
The environmental impacts of micro hydro projects are generally small, with the main impacts
being (i)
the partial de-watering of a section of riverbed from the intake until water is returned to
the river downstream of the powerhouse, and the consequent effect on aquatic life in the
Page 7
dewatered section; (ii) potential ground / soil erosion caused by flushing flows discharged from
sedimentation basins and by overflows at the forebay, (iii) potential ground instability caused by
canal/pipe construction and leakage from canals; (iv) cutting of forest cover to make way for
construction works, and (v) cutting of trees for use as power poles\. Considering the small size of
these sub-projects, it is not anticipated that there will be any road construction\. In the unlikely
event there are unanticipated impacts, the environmental mitigation plans developed for each
sub-project will address the problems with suitable mitigation measures\.
Safeguard Policies Triggered by the Project
Yes
No
Environmental Assessment
(
OP
/
BP
/
GP
4\.01)
[ X ]
[ ]
Natural Habitats (
OP
/
BP
4\.04)
[
X
]
[
]
Pest Management (
OP 4\.09
)
[
]
[
X
]
Cultural Property (
OPN 11\.03
,
being revised as OP 4\.11)
[
]
[
X
]
Involuntary Resettlement (
OP
/
BP
4\.12)
[
]
[
X
]
Indigenous Peoples (
OD 4\.20
,
being revised as OP 4\.10)
[
]
[
X
]
Forests (
OP
/
BP
4\.36)
[
X
]
[
]
Safety of Dams (
OP
/
BP
4\.37)
[
]
[
X
]
Projects in Disputed Areas (
OP
/
BP
/
GP
7\.60)
[
]
[
X
]
Projects on International Waterways (
OP
/
BP
/
GP
7\.50)
[
]
[
X]
9
List of Factual Technical Documents
World Bank Nepal Power Development Project, Project Appraisal Document, 2003
Rural Energy Development Programme, Project NEP/02/001, Annual Progress Reports 2003/5
Energy Sector Assistance Program (ESAP I) Progress Reports, Ref\. No\. 104\.Nepal\.802, 2003/5
Nepal Micro-Hydro Carbon Finance Document, December 2005
Nepal Micro-Hydro Promotion by Alternative Energy Promotion Centre (AEPC), CDM-SSC-
PDD (Version 02), April 2007
10 Contact
point
Mudassar Imran
Jeremy Levin
11 For more information contact:
The Info Shop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Web: http://www\.worldbank\.org/infoshop | APPROVAL |
P009057 |  Second Small & Medium Scale Industry
Report No: ; Type: Report/Evaluation Memorandum ; Country: Turkey; Region: Europe And Central Asia; Sector: Small Scale Enterprise; Major Sector:
Industry; ProjectID: P009057
The Turkey Second Small and Medium Industry Project, supported by Loan 3067-TU for
US$204\.5 million equivalent, was approved in FY89\. The loan was closed in FY97, following a one year
extension, and US$2\.2 million was cancelled\. The Implementation Completion Report (ICR) was
prepared by the Europe and Central Asia Regional Office\. The Borrowerâs contribution is included as
Part III\.
The project objectives were to assist further in the expansion of small and medium scale
industries (SMIs), improve their competitiveness, increase their export capacity, and strengthen the
financial intermediaries providing credit to the sector\. The loan resources were to finance lines of credit
to finance SMI investment, and a diversified technical assistance (TA) program\. The TA was to
strengthen the project appraisal and supervision capabilities of financial intermediaries\. Other TA
components that directly addressed the SMIs dealt with: (i) improvement of the quality of SMI products
for exports; (ii) promotion of industrial standards; and (iii) further development of the statistical
database on the SMI sector in Turkey\.
After a good start, loan disbursement decreased considerably in 1993 as a result of weak market
demand, high interest rates and competing Government subsidized credits\. In 1994, the loan was
restructured to allow financing of permanent working capital, preshipment export finance and leasing\. In
addition, loan proceeds could be onlent on a single currency basis in US dollars as well as DMs with an
adequate premium over their LIBOR rates\. Following the restructuring, loan utilization increased
substantially and the objectives of the credit component were reached\. The technical assistance program
was on balance successful, but the quality improvement and the statistics components will require further
financial and technical support to be sustainable\.
The ICR, which is of satisfactory quality, rates the project outcome as satisfactory, achievement of
institutional objectives as substantial, sustainability as likely, and Bank and Borrower performance as
satisfactory\. OED concurs with this evaluation\.
The lessons derived from this operation focus on project lending in an uncertain macroeconomic
environment\. Free standing permanent working capital loans with long term maturities can be vital for
enterprises in economies where banks are reluctant to provide term lending in an inflationary
environment\. A credit line can be satisfactory in an inflationary environment for export-oriented
enterprises if loans are made in foreign exchange\.
No audit is planned\. | APPROVAL |
P113117 | Page 1
INTEGRATED SAFEGUARDS DATASHEET
APPRAISAL STAGE
I\. Basic Information
Date prepared/updated: 10/14/2008
Report No\.: AC3899
1\. Basic Project Data
Country: West Bank and Gaza
Project ID: P113117
Project Name: FOOD PRICE CRISIS RESPONSE PROGRAM - Additional Financing
to Social Safety Net Reform Project
Task Team Leader: Samira Ahmed Hillis
Estimated Appraisal Date: September 2,
2008
Estimated Board Date: November 14, 2008
Managing Unit: MNSHD
Lending Instrument: Emergency Recovery
Loan
Sector: Other social services (100%)
Theme: Global food crisis response (P)
IBRD Amount (US$m\.):
0\.00
IDA Amount (US$m\.):
0\.00
GEF Amount (US$m\.):
0\.00
PCF Amount (US$m\.):
0\.00
Other financing amounts by source:
Borrower
0\.00
Special
Financing
5\.00
5\.00
Environmental Category: C - Not Required
Simplified Processing
Simple [X]
Repeater []
Is this project processed under OP 8\.50 (Emergency Recovery)
or OP 8\.00 (Rapid Response to Crises and Emergencies)
Yes [X]
No [ ]
2\. Project Objectives
To mitigate the impact of the continued socio-economic crisis on a subset of the poorest
and most vulnerable households\. An additional objective would be to strengthen
MOSAs institutional capacity to manage cash transfer programs\.
3\. Project Description
The proposed Additional Financing grant (out of the Food Price Crisis Response Trust
Fund - FPCR-AF) gives the Palestinian Authority (PA) the opportunity to scale up its
existing safety net instruments to demonstrate its commitment to the poorest and most
vulnerable population groups in the West Bank and Gaza\. The Grant would finance one
payment of $200 to about 25,000 of the poorest households that have been adversely
affected by the recent increase in food prices\. These households will be selected using
the SSNRP poverty targeting database using a proxy means test (PMT) to determine
household eligibility\.
The proceeds of the additional financing grant will finance only cash benefits to poor
households under component 1 of the SSNRP\.
Page 2
4\. Project Location and salient physical characteristics relevant to the safeguard
analysis
West Bank and Gaza\.
5\. Environmental and Social Safeguards Specialists
6\. Safeguard Policies Triggered
Yes No
Environmental Assessment (OP/BP 4\.01)
X
Natural Habitats (OP/BP 4\.04)
X
Forests (OP/BP 4\.36)
X
Pest Management (OP 4\.09)
X
Physical Cultural Resources (OP/BP 4\.11)
X
Indigenous Peoples (OP/BP 4\.10)
X
Involuntary Resettlement (OP/BP 4\.12)
X
Safety of Dams (OP/BP 4\.37)
X
Projects on International Waterways (OP/BP
7\.50)
X
Projects in Disputed Areas (OP/BP 7\.60)
X
II\. Key Safeguard Policy Issues and Their Management
A\. Summary of Key Safeguard Issues
1\. Describe any safeguard issues and impacts associated with the proposed project\.
Identify and describe any potential large scale, significant and/or irreversible impacts:
N\.A\.
2\. Describe any potential indirect and/or long term impacts due to anticipated future
activities in the project area:
N\.A\.
3\. Describe any project alternatives (if relevant) considered to help avoid or minimize
adverse impacts\.
N\.A\.
4\. Describe measures taken by the borrower to address safeguard policy issues\. Provide
an assessment of borrower capacity to plan and implement the measures described\.
N\.A\.
5\. Identify the key stakeholders and describe the mechanisms for consultation and
disclosure on safeguard policies, with an emphasis on potentially affected people\.
N\.A\.
B\. Disclosure Requirements Date
Page 3
Environmental Assessment/Audit/Management Plan/Other:
Was the document disclosed
prior to appraisal?
Date of receipt by the Bank
Date of "in-country" disclosure
Date of submission to InfoShop
For category A projects, date of distributing the Executive
Summary of the EA to the Executive Directors
Resettlement Action Plan/Framework/Policy Process:
Was the document disclosed
prior to appraisal?
Date of receipt by the Bank
Date of "in-country" disclosure
Date of submission to InfoShop
Indigenous Peoples Plan/Planning Framework:
Was the document disclosed
prior to appraisal?
Date of receipt by the Bank
Date of "in-country" disclosure
Date of submission to InfoShop
Pest Management Plan:
Was the document disclosed
prior to appraisal?
Date of receipt by the Bank
Date of "in-country" disclosure
Date of submission to InfoShop
*
If the project triggers the Pest Management and/or Physical Cultural Resources,
the respective issues are to be addressed and disclosed as part of the Environmental
Assessment/Audit/or EMP\.
If in-country disclosure of any of the above documents is not expected, please
explain why:
N\.A\.
C\. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the
ISDS is finalized by the project decision meeting)
The World Bank Policy on Disclosure of Information
Have relevant safeguard policies documents been sent to the World Bank's
Infoshop?
N/A
Have relevant documents been disclosed in-country in a public place in a
form and language that are understandable and accessible to project-affected
groups and local NGOs?
N/A
All Safeguard Policies
Have satisfactory calendar, budget and clear institutional responsibilities
been prepared for the implementation of measures related to safeguard
policies?
N/A
Have costs related to safeguard policy measures been included in the project
cost?
N/A
Does the Monitoring and Evaluation system of the project include the
N/A
Page 4
monitoring of safeguard impacts and measures related to safeguard policies?
Have satisfactory implementation arrangements been agreed with the
borrower and the same been adequately reflected in the project legal
documents?
N/A
D\. Approvals
Signed and submitted by:
Name
Date
Task Team Leader:
Ms Samira Ahmed Hillis
10/14/2008
Environmental Specialist:
Ms Banumathi Setlur
10/14/2008
Social Development Specialist
Ms Fatou Fall
10/14/2008
Additional Environmental and/or
Social Development Specialist(s):
Approved by:
Regional Safeguards Coordinator:
Mr Hocine Chalal
10/14/2008
Comments: The project has been transferred to the TTL on September 23, 2008\.
Sector Manager:
Ms Roberta V\. Gatti
10/14/2008
Comments: | APPROVAL |
P131202 | 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
Ù
41
42
43
39
40
Ù
41
42
43
44
45
44
46
47
48
49
50
51
52
53
54
55
ï
ï
ï
56
57
58
59
60
61
62
ï
ï
63
â«âªïâ¬â¬
â«Ù
سؤÙÙÙØ© اÙÙ
شترÙات⬠â«Ø§Ùعتبةâ¬
â«Ø§ÙÙ
شترÙات اÙÙ
عاÙجة Ù
٠اÙÙزÙر⬠â«Ø¯Ù٠⪠05555â¬Ø¯ÙاÙر Ø£Ù
ÙرÙÙâ¬
â«Ù
راجعة Ù
سبÙØ© Ù
٠دÙÙا٠اÙÙ
Øاسبة⬠â«Ø¯Ù٠⪠00555â¬Ø¯ÙاÙر Ø£Ù
ÙرÙÙâ¬
â«Ø¥Ø¯Ø§Ø±Ø© اÙÙ
ÙاÙصات⪠Øâ¬Ù
ا ÙÙ
ÙتÙ
تÙÙÙر استثÙاء خاص Ù
Ù Ù
Ùتب رئاسة اÙÙزراء⪠Øâ¬ÙÙÙ Ùذ٠اÙØاÙة⪠Øâ¬ØªØصÙ⬠â«Ø£Ùثر Ù
٠⪠00555â¬Ø¯ÙاÙر Ø£Ù
ÙرÙÙâ¬
â«Ùزارة ااÙتصااÙت عÙ٠صاÙØÙØ© Ù
عاÙجة اÙÙشاØâª\.â¬â¬
â«âªïâ¬â¬
â«âªïâ¬â¬
â«âªïâ¬â¬
â«âªoâ¬â¬
â«âªoâ¬â¬
â«âªoâ¬â¬
â«âª64â¬â¬
ï
ï
65
ï
ï
ï
ï
ï
ï
66
67
\.1
\.2
68
\.3
69
\.4
70
ï
ï
ï
ï
71
â«âªïâ¬â¬
â«âªïâ¬â¬
â«Ø§ÙتÙدÙرات ØÙ٠اÙÙ
Ùارد⬠â«Ø§ÙÙ
Ùارات اÙضرÙرÙة⬠â«Ø§ÙترÙÙز⬠â«Ø§ÙتÙÙÙتâ¬
â«Ù
Ùس٠اÙÙ
شترÙات ÙاإÙدارة⬠â«Ø§Ø³ØªØداثâª/â¬ØªØ¹Ø²Ùز Ù
ØÙر⬠â«Ø£Ù٠⪠12â¬Ø´ÙراÙâ¬
â«Ø§ÙÙ
اÙÙØ© ÙاÙÙ
ØÙر⬠â«ÙÙرÙ٠اإÙدارة اÙÙ
اÙÙØ© âªMiHubâ¬â¬
â«ÙاÙÙ
شترÙاتâ¬
â«Ø§ÙÙر٠اÙÙÙÙØ© اÙخبÙرة⬠â«Ùضع اأÙÙØ´ØØ© اÙÙ
ختÙÙØ©â¬
â«(اÙÙ
ختبر⪠Øâ¬Ø§ÙÙ
ØÙر⪠Øâ¬Ø§ÙÙ
ÙاÙساتâ¬
â«ØÙ٠اÙتØبÙÙات عÙ٠اÙØ®ÙÙÙÙâ¬
â«Ø§ÙÙ
اÙØظات⬠â«Ø¹Ø¯Ø¯ اÙرØاÙت⬠â«Ø¹Ø¯Ø¯ أسابÙع عÙ
٠اÙÙادر⬠â«Ø§ÙÙ
Ùارات اÙضرÙرÙØ©â¬
â«ÙاشÙØÙ⬠â«Ø±ØاÙت Ù
ÙداÙÙØ© عÙد ااÙÙتضاء⬠â«Ùâ¬
â«âª 11â¬Ø£Ø³Ø§Ø¨Ùع عÙ
٠سÙÙÙا⬠â«Ø±Ø¦Ùس ÙرÙ٠اÙÙ
ÙاÙ
â¬
â«Ø§ÙÙ
Ùتب اÙÙØرÙ⬠â«Ø±ØاÙت Ù
ÙداÙÙØ© عÙد ااÙÙتضاء⬠â«âª 5â¬Ø£Ø³Ø§Ø¨Ùع عÙ
٠سÙÙÙاâ¬
â«Ù⬠â«Ø§ÙÙ
شترÙاتâ¬
â«ÙاشÙØÙ⬠â«Ø±ØاÙت Ù
ÙداÙÙØ© عÙد ااÙÙتضاء⬠â«âª 8â¬Ø£Ø³Ø§Ø¨Ùع عÙ
٠سÙÙÙاâ¬
â«Ù⬠â«Ø£Ø®ØµØ§Ø¦Ù اإÙÙترÙت عبر اÙØ®ÙÙÙÙâ¬
â«Ø§ÙÙ
Ùتب اÙÙØرÙ⬠â«Ø±ØاÙت Ù
ÙداÙÙØ© عÙد ااÙÙتضاء⬠â«Ùâ¬
â«Ø£Ø³Ø¨Ùعا عÙ
٠سÙÙÙا⬠â«Ø£Ø®ØµØ§Ø¦Ù اÙتعÙÙÙ
ÙاÙتدرÙبâ¬
â«Ø§ÙÙ
Ùتب اÙÙØرÙ⬠â«Ø±ØاÙت Ù
ÙداÙÙØ© عÙد ااÙÙتضاء⬠â«âª 5â¬Ø£Ø³Ø§Ø¨Ùع عÙ
٠سÙÙÙاâ¬
â«Ù⬠â«Ø£Ø®ØµØ§Ø¦Ù اإÙدارة اÙÙ
اÙÙØ©â¬
â«ÙاشÙØÙ⬠â«Ø±ØاÙت Ù
ÙداÙÙØ© عÙد ااÙÙتضاء⬠â«Ø£Ø³Ø¨Ùع عÙ
Ù ÙاØد⬠â«Ø§ÙدعÙ
اÙÙاÙÙÙÙâ¬
â«âª72â¬â¬
73
74
75
76
77
78
79
80
81
82
83
84
85 | APPROVAL |
P119295 | 51759
PROJECT INFORMATION DOCUMENT (PID)
APPRAISAL STAGE
Project Name Karnataka Wind Power Carbon Finance Project, India
Region South Asia
Sector SASDE
Project ID P119295
Borrower(s) NA
Implementing Agency Acciona Wind Energy Pvt\. Ltd\. (AWEPL), a 100% subsidiary of
the Spanish Acciona group of companies, i\.e\. Acciona Energia
Internacional, S\.A\. and Acciona, S\.A\.
Environment Category [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared 19 November 2009
Date of Appraisal 26 October 2009
Authorization
Estimated Date of ERPA 21 December 2009
Signing
I\. Country and Sector Background
The total installed power generation capacity in India at the end of the 10th Plan was
132329\.21MW which included 7760\.60MW from renewable sources of energy\. Keeping in view
the existing energy deficit of 11%, peak deficit of 12% and the envisaged growth of 9% in the
Eleventh Plan, the target of capacity addition in the Eleventh Plan period is an ambitious
78577MW, almost three and a half times the actual capacity addition during the Tenth Plan\.
India is also committed to achieving the desired growth in power sector in a clean, green and
sustainable manner\. Given this and the need to maximally develop domestic supply options as
well as the need to diversify energy sources, renewable energy sources remain important to
India's power sector\. The Eleventh Plan target for renewable power is addition of 14000MW
capacity which includes 10500MW wind based power\.
II\. Objective
The proposed development objectives of the Carbon Offset Project are:
Contribute to sustainable development by providing renewable power to the Karnataka
State electricity grid and reduce greenhouse gas emissions caused by reliance on fossil
fuels
Reduce global emissions of carbon dioxide\.
The objectives of this World Bank Carbon Offset Project are consistent with the developmental
and poverty reduction objectives of the Government of India\.
III\. Rationale for Bank involvement
This Carbon Offset project will facilitate greenhouse gas emission reductions and support the
development of the international market mechanism for trading Emission Reductions (ERs)
developed under the framework of the Kyoto Protocol\.
The final commissioned project cost is US$45\.11 million (1US$=Rs\.47\.86) which is financed
from a debt to equity ratio of 61:39\. The O&M costs are around 1% per annum\. As per Project
Design Document (prepared for CDM registration), the project IRR without considering CDM
revenues is 11\.93% and with CER revenue @9 per CER, is 13\.65%1\. This is stated to barely
meet the return criteria factoring the risk premium\. Acciona has executed a 10 year Power
Purchase Agreement with Bangalore Electricity Supply Company Limited (BESCOM) for sale
of electricity at a fixed rate (no escalation) of Rs\.3\.40 per unit (kWh)\. At present, this is the only
revenue stream available\. The sale of emission reduction credits to the World Bank-executed
Spanish Carbon Fund will make the implementation of the project more financially viable, by
providing an additional revenue stream\. This will provide increased financial comfort to the
project and lead to development of renewable energy based power in the region\.
This project is consistent with the India Country Assistance Strategy in that it augments the
generation of power while ensuring environmental sustainability and leads to reduction of
poverty by providing employment and economic opportunities to the local population\.
IV\. Description
The project consists of two 29\.7MW wind power plants located in Arasinagundi (13\.20MW) and
Anabaru (16\.50MW), in Davangere district of the Indian state of Karnataka, owned by Acciona
Wind Energy Private Limited (AWEPL), a 100% subsidiary of the Spanish Acciona group of
companies, i\.e\. Acciona Energia Internacional, S\.A\. and Acciona, S\.A\. The delivery of the power
plants was done by Vestas Wind Technology India Pvt\. Ltd, who are also the Operations and
Maintenance (O&M) contractors\. The plants are commissioned and under operation -
Arasinagundi since June'08 and Anabaru since Sept'08\. The electricity generated from the
project is supplied to the Karnataka Power Corporation Limited (KPTCL) sub-station at
Hiremallaholle, and from there to the state grid\. The project was registered as a Clean
Development Mechanism (CDM) project with the CDM Executive Board on 20 November
20082\. The first verification of Certified Emission Reductions (CERs) is under process3\. A Letter
of Intent (LoI) has been executed between the International Bank for Reconstruction and
Development (IBRD) acting as the trustee of the Spanish Carbon Fund and AWEPL for the
transaction of 178,917 Certified Emission Reductions (CERs) generated from the Project from 1
January 2010 until 31 December 2012\.
1
As per the Project Design Document prepared for CDM registration
2
Project Reference no\. 1949
3
The final Monitoring Report was submitted to CDM Executive Board by BvQI with Request for Issuance on 9
October 2009 for the First Verification Report for CERs\. The completeness check is pending by UNFCCC after
which the documents will be hosted for the mandatory disclosure period of 15 days for review prior to CER
issuance\.
AWEPL has executed a 10 year Power Purchase Agreement (PPA) with Bangalore Electricity
Supply Company Limited (BESCOM) for sale of electricity at a fixed rate (no escalation) of
Rs\.3\.40 per unit (kWh)\. The tariff from 11th year onwards will be decided by Karnataka
Electricity Regulatory Commission (KERC), and BESCOM can exercise its option to procure
electricity at the KERC determined tariff, else AWEPL can enter into agreement with a third
party\.
Carbon revenues are necessary for improving financial viability of the project as they will
provide additional financial comfort to the project sponsor\. This in turn would provide
encouragement to other investors in the area and would be in line with the larger Government of
India objective of scaling up the share of renewable energy in Indian power sector\.
Monitoring and evaluation will be undertaken through the specific plan for Verification of
Emissions Reductions included in the Clean Development Mechanism (CDM) Project Design
Document\. AWEPL will be responsible for periodic verification, certification, preparation and
submission of verification reports\.
V\. Financing
(US$ million4)
Source:
Equity 17\.59
Local Financial Institutions 27\.52
Total 45\.11
VI\. Implementation
AWEPL is responsible for overall implementation of the project including periodic verification
and certification of emission reductions, preparation and submission of verification reports\. The
Operation and Maintenance is presently contracted out to Vestas India Pvt\. Ltd\. who also
delivered the two projects\. The present O&M contracts are valid for 2 years and cover day to day
operations, scheduled/unscheduled plant/33kV transmission line maintenance\. AWEPL is
considering the continuation of the arrangement beyond this period\.
VII\. Sustainability
The project activity will achieve the objectives of sustainable development by
Substituting electricity generated using conventional fossil fuel with wind energy based
power
Mitigating the emission of GHG (CO2) as wind is a renewable source of energy
Conserving coal and other non-renewable natural resource
The project is in line with the policies of Ministry of New and Renewable Energy, India,
as it contributes its share towards achievement of the 11th Plan target of 10,500 MW of
renewable wind energy by 2012
4
1US$= Rs\.47\.86
Increasing the share of renewable energy in the regional grid
Reducing pollutants like SOX, NOX etc associated with other power plants
Contributing towards reducing power shortage in the state of Karnataka
Generate local employment and other economic activity in areas near the project
Help to bridge India's energy deficit
Contributing to the growth of Wind Energy sector in India
VIII\. Lessons Learned from past experiences in the country/sector
This project draws from previous World Bank operational experiences and analytic and advisory
work in renewable energy, especially wind energy\.
The project applies an approved small-scale CDM Methodology utilized by several CDM
projects registered with the UNFCCC\.
IX\. Safeguard Policies (including public consultation)
The project triggers the World Bank's Environmental Assessment Policy (OP/BP 4\.01) and was
designated a Category B as the potential negative environmental impacts of the project are site
specific and manageable with the proposed mitigation measures\. The table below lists the
applicable World Bank Safeguard Policies\.
Safeguard Policies Triggered by the Project Yes No TBD
Environmental Assessment (OP/BP 4\.01) [X] []
Natural Habitats (OP/BP 4\.04) [] [X]
Pest Management (OP 4\.09) [] [X]
Physical Cultural Resources (OP/BP 4\.11) [X] []
Involuntary Resettlement (OP/BP 4\.12) [] []
Indigenous Peoples ( OP/BP 4\.10) [X] []
Forests (OP/BP 4\.36) [X] []
Safety of Dams (OP/BP 4\.37) [] [X]
Projects in Disputed Areas (OP/BP 7\.60)5 [] [X]
Projects on International Waterways (OP/BP 7\.50) [] [X]
Piloting the Use of Borrower Systems to Address Environmental
[] [X]
and Social Issues in Bank-Supported Projects (OP/BP 4\.00)
Overall, the project will have positive impact on the global environment due to reduction in the
Green House Gas emissions\. There may be some localized adverse impacts in the project area
which are being mitigated through the implementation of several mitigation and enhancement
measures by the project sponsors\. Key measures include: plantation in about 30ha of land in lieu
of plantation in the project site, provision of gully checks and on-site plantation, underground
cabling within site to minimize potential visual impacts and hazard to birds, and implementation
of a systematic waste management plan\. Consultations were held with the various stakeholders
during project preparation and PDD formulation\.
5
By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the
disputed areas
The project activities are not expected to adversely impact the local communities\. However,
Acciona has proactively been adopting a strategy to help the local people, particularly the tribal
and other vulnerable communities, in accessing the project benefits including wage employment\.
An environmental and social assessment (ESA) report documenting the environmental and social
measures undertaken during project construction and addendum updating the current conditions
have been prepared\. The executive summary of the ESA has been translated into the local
language Kannada and is being locally disclosed in the Gram Panchayat offices of the two
villages where the two subprojects are located\. The project sponsor is also considering the
possibility of hosting the ESA report along with its executive summary on their website\.
X\. List of Factual Technical Documents
Project Design Document (PDD)
Integrated Safeguards Data Sheet (ISDS)
Environmental and Social Assessment (ESA) Report and Addendum to ESA for both sites
Letter of Intent between International Bank for Reconstruction and Development and
Acciona Wind Energy Private Limited, India\.
XI\. Contact Point
Kavita Saraswat
ksaraswat@worldbank\.org
Fax: +91 11 41177849
70 Lodi Estate
New Delhi 110021
India\.
XII\. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-5454
Fax: (202) 522-1500
Web: http://www\.worldbank\.org/infoshop | APPROVAL |
P000354 | Document de
La Banque Mondiale
A N'UTILISER QU'A DES FINS OFFICIELLES
Rapport No\. 3448-CM
RAPPORT D'EVALUATION
CAMEROUN
PROJET FORESTIER
22 decembre 1981
"
J
Region Afrique de l'Ouest
Agriculture 2
TRADUCTION NON-OFFICIELLE A TITRE D'INFORMATION
Le present document fait I'objet d'une diffusion restreinte, et ne peut etre utilise par ses
destinataires que dans I'exercice de leurs fonetions officielles\. Sa teneur ne peut etre
autrement dhulguee sans I'autorisation de la Banque Mondiale\.
CAMEROUN
PROJET FORESTIER
RAPPORT D'EVALUATION
Table des matieres
Pages
1\. INTRODUCTION \. 1
A\. Generali tes \. 1
B\. Le secteur forestier et l'economie 1
a) Contribution a l'economie \. 1
b) Ressources et industries forestieres \. 2
c) F inancement du secteur 4
d) Institutions et formation \. 5
e) Objectifs, strategies et politiques 7
f) Role de la Banque et des autres agences d'aide
exterieure 8
I I\. ZONE DU PRO JET 9
III\. LE PROJET \. 11
A\. Obj ecti fs \. 11
B\. Caracteristiques detaillees \. 12
a) Plantation d'Edea \. 12
b) Plantation de la SEMRY \. 14
c) Plantation de Ngaoundere \. 15
d) Services de production de graines \. 15
e) Renforcement du FNFP \. 16
f) Renforcement de la DEFC \. 16
g) Etudes et preparation d'un eventuel projet de suivi\. 17
IV\. ORGANISATION ET GESTION \. 18
A\. Generalites\. 18
B\. Dispositions en matiere de plantation 18
Le present document fait l'objet d'une diffusion restreinte\. 11 ne peut etre
utilise par ses destinataires que dans l'exercice de leurs fonctions officielles
et sa teneur ne peut etre divulguee sans l'autorisation de la Banque mondiale\.
Table des matieres (suite)
Pages
C\. Renforcement du FNFP \. 20
D\. Renforcement de la DEFC \. 20
E\. Formation \. \. 21
F\. Suivi et evaluation retrospective \. 22
G\. Production de graines et liaison avec les services de
recherche \. 22
V\. COUTS ET DISPOSITIONS FINANCIERES \. \. 24
A\. Estimations des coOts du projet 24
B\. Financement envisage \. \. 24
C\. Condi tions de retrocession \. 26
D\. Passation des marches \. 28
E\. Decaissement \. \. 28
VI\. PRODUCTION, DEBOUCHES ET RESULTATS FINANCIERS \. 31
A\. Production \. \. 31
B\. Debouches et commercialisation \. 31
C\. Resultats financiers \. 33
VII\. AVANTAGES, JUSTIFICATION ECONOMIQUE ET RISQUES \. 36
A\. Avantages \. 36
B\. Justification economique \. 36
C\. Risques \. 40
VIII\.ASSURANCES ET RECOMMANDATIONS \. 41
ANNEXES
Tableaux
Tableau 1 Estimations des coOts du projet
Tableau 2 Plan de financement envisage
INTRODUCTION
A\. Generalites
1\.01 Le Gouvernement camerounais a demande a la Banque de l'aider a
financer un projet forestier quinquennal dans les provinces du Centre-Sud
et du Nord, d'un cout estimatif de 35,5 millions de dollars\. Le projet
portera sur l'amenagement de trois plantations et d'une unite de produc
tion de semences ameliorees, et fournira une assistance technique au Fonds
national forestier et piscicole (FNfP), qui est responsable des programmes de
reboisement de l'Etat, ainsi qu'une aide logistique et technique a la Direction
des eaux et forets et des chasses (DEPC) qui est charg~e de la cote et de la
perception des impOts forestie~s\. Le projet sera Ie premier projet benefi
ciant d'une aide de la Banque a porter exclusivement sur Ie secteur forestier
au Cameroun\.
1\.02 Le projet a ete identifie en fevrier-mars 1979 par une mission sec
torielle du Programme de cooperation fAO/Banque mondiale et en novembre 1979
par une seconde mission d'identification; il a ete prepare par une mission du
Programme de cooperation qui s'est rendue au Cameroun en mai-juin 1980\. Le
present rapport a ete etabli a la suite du sejour effectue au Cameroun, en
janvier-fevrier 1981 par une mission d'evaluation de la Banque composee de
MM\. John Russell, Robert Fishwick, Robert Crown et Christopher Ward\. MM\. Sean
Magee et frank Dorward (CDC) ant participe a l'evaluation de la composante
plantation d'Edea\.
B\. Le secteur forestier et l'economie
a) Contribution a l'economie
1\.03 La Republique Unie du Cameroun s'etend sur 1 200 km, du golfe de
Guinee au sud-ouest au lac Tchad au nord; elle a une superficie de 475 000 km2\.
On y trouve un vaste eventail de conditions climatiques allant de la zone sahe
lienne a l'extreme nord a la foret tropicale humide au sud, qui rend pos
sible une agriculture diversifiee et lui permet presque, a l'heure actuelle, de
subvenir a ses besoins alimentaires\. Les forets couvrent environ 33 millions
d'hectares\. le pays doit exploiter de plus en plus ses reserves de petrole et
de bauxite mais son developpement industriel est encore dans une grande mesure
fonde sur l'agriculture et la foresterie, et repose sur Ie traitement des pro
duits de base, tels que Ie cacao et les palmistes, et de la transformation des
grumes en bois d'oeuvre, en bois deroule, en contreplaque, et en pate de bois\.
les industries alimentaires representent 45 % du chiffre d'affaires total du
secteur industriel\. D'un autre cOte, bien que les ressources forestisres
soient considerables et que des permis d'abattage aient ete accordes pour
7,7 millions d'hectares en 1977/78, on estimait que la valeur ajoutee dans ce
secteur n'etait que de 8 % de la production agricole nette et 4 % du PIB\.
- 2
1\.04 Les investissements d'infrastructure ant porte sur l'amelioration du
reseau routier, et en particulier des pistes rurales indispensables au mouve
ment des produits agricoles, sur la modernisation du reseau ferroviaire trans
camerounais, sur l'expansion des installations portuaires de Douala, et l'etude
des possibilites d'amenagement d'un nouveau port a Rocher du Loup entre Kribi
et Campo\. Ces investissements faciliteront Ie transport en vrac des produits
de base de gros volume, tels les produits forestiers qui a l'heure actuelle
sont surtout ex partes a l'etat brut\. D'un autre cOte, Ie developpement des
installations de transport dans Ie sud-est, au se trouvent un grand nombre des
for@ts les plus riches du pays, a pris du retard\.
1\.05 La population, estimee a 8,3 millions d'habitants en 1979, augmente
d'environ 2,3 % par an, et plus de 40 % des Camerounais sont ~ges de mains
de 15 ansa Sur une population adulte de 5 millions de personnes, 74 %, soit
3,7 millions, travaillent dans Ie secteur rural et environ 25 % ant des emplois
urbains\. La densite varie enormement entre les regions : dans la province de
l'Ouest et certaines parties de la province du Nord, elle atteint 200 habitants
au plus au km2 , alors quIa l'autre extreme dans la province de l'Est, elle
nlest que de 3 habitants au km2 Selon les projections, en llan 2000 la popu
lation atteindra 16 millions d'habitants, dont pres de la moitie vivront dans
des villes\. Cette croissance va creer une tres forte demande de materiaux de
construction et de bois de feu, surtout dans les regions de grande concentra
tion rurale au l'acces dlautres sources d'energie est limite et coOteux\.
1\.06 Le PNB etant estime aujourdlhui a 4,4 milliards de dollars, Ie revenu
par habitant est de 518 dollars\. Le PNB a progresse au rythme d'environ 4,5 %
par an entre 1970 et 1975 et 7,1 % par an entre 1975 et 1980\. Les revenus par
habitant ant augmente d' environ la moitie de ces taux\. Mais entre 1980 et 1981,
la croissance du PNB n'a ete que de 3,5 %\. Cette chute est due a la baisse du
cours des produits de base exportes, cafe et cacao notamment, et au ralentisse
ment des investissements\. Le taux d'inflation, qui etait en moyenne de 6,2 %
entre 1969 et 1973, est passe a 11,8 % entre 1974 et 1978 et est aujourd'hui
d'environ 12 %\. Le Gouvernement slest fixe pour objectif de retablir un taux
de croissance de 6 % dans Ie cadre du Quatrieme Plan national (1976/77-1980/81)
et, pendant la merne periode, a porte son budget d'investissements initiale
ment prevu pour 685 milliards de francs CFA (2,5 milliards de dollars) a
930 milliards de francs CFA (3,4 milliards de dollars)\. Au cours des quatre
premiers Plans, 14 % uniquement des investissements realises par l'Etat et le
secteur prive avaient ete consacres a l'agriculture et au developpement rural\.
Cette proportion est recemment passee a environ 16 % et lIon s'attend que
les credits budgetaires affectes a l'agriculture augmentent encore dans Ie
cadre du Cinquieme Plan, aujourd'hui en preparation\.
b) Ressources et industries forestieres
1\.07 On estime que la for@t couvre 33 millions d'hectares, soit les deux
tiers de la superficie du pays: 18 millions d'hectares de for@t dense, et
15 millions d'hectares de savane et ripisylves\. Cependant, on conna1t mal la
qualite et le volume du bois exploitable dans ces forets puisque 700 000 ha
seulement ont ete inventories\. La FAD a fait un inventaire de 176 000 ha dans
- 3
la for@t du Deng-Deng, ~ui montre que les volumes commercialement exploitables
peuvent atteindre 160 m a l'hectare; des etudes de la futaie tropicale humide
autour d'Edea et les resultats obtenus au moment du de mar rage de la scierie de
la Cellucam ont montre que le volume utilisable pour le projet de pate a bois
3
est d'environ 190 m a l'hectare\. Toutefois, a cause de la diversite des
essences, les petits echantillonnages sont des indicateurs peu fiables, et ac
tuellement la production moyenne des exploitations forestieres n'est que d'en
3
viron 10 m a l'hectare\.
1\.08 En 1978/79, des permis d'exploitation portant sur 7,7 millions d'hec
tares ont ete attribues a une centaine de concessionnaires travaillant dans
quelque 200 concessions concentrees dans les trois provinces du Centre-Sud
(3,3 millions d'hectares), de l'Est (2,8 millions d'hectares) et du Littoral
(1 million d'hectares); les 600 000 ha de concessions restants se trouvent dans
les provinces de l'Ouest et du Sud-Ouest\. Environ la moitie des concessions
ont moins de 50 000 ha, superficie inferieure a la moyenne de l'Afrique de
l'Ouest, et 10 % sont de grandes concessions entre 200 000 et 250 000 ha\.
Environ 10 % des societes forestieres sont des entreprises mixtes ou publiques\.
Malgre les encouragements de l'Etat aux entreprises locales, des compagnies
etrangeres detiennent des concessions sur 70 % de la superficie exploitee\. En
3
1978/79, la production de grumes a ete de 1,6 million de m , soit une augmen
tation importante par rapport au 1,3 million de m 3 de l'anneee precedente\.
3
La production annuelle pourrait passer a 2 millions de m pratiquement sans
nouvel investissement\.
1\.09 L'integration verticale tres poussee (abattage, traitement et commer
cialisation des grumes) est encouragee par des textes officiels qui exigent
que les concessionnaires exploitant plus de 10 000 ha fassent subir un premier
traitement aux grumes\. En 1977/78, quelque 75 scieries ont produit environ
3 3
250 000 m de bois scie, dont 75 000 m ont ete exportes\. 11 existe ac
tuellement deux usines produisant du bois de deroulage et deux autres sont en
construction\. En 1977/78, la production de bois deroule a ete de 40 000 m , 3
dont 90 % pour l'exQortation\. Le marche interieur a absorbe la plus grande
3
partie des 30 000 m de panneaux de particules et de contreplaque\.
1\.10 Dans le cadre de la politique officielle visant a accroitre la
valeur ajoutee interieure du secteur et, a long terme, a approvisionner en
papier 1e marche interieur, une usine de pate a papier a ete creee a Edea
(carte BIRD 15692) par la Societe cellulose du Cameroun SA (Cellucam) en 1980\.
La Cellucam est une entreprise d'investissement d'economie mixte dont l'Etat,
par l'intermediaire de la Societe nationale d'investissement (SNI) et de quatre
aut res organismes plus petits, est le principal actionnaire (67 % du capital
social)\. Les autres actionnaires sont la Banque islamique de developpement
(12 %), Voest-Alpine (6 %), la Societe luxembourgeoise de financement pour
l'Afrique (5 %), 1a Societe europeenne d'investissement industrie1 en Afrique
(3 ra) et deux particuliers (7 %)\. Voest-Alpine (Autriche) a installe l'usine
et fournit l'assistance technique necessaire a son exploitation\. Svenska
Cellulosa AB, le plus grand fabricant suedois de pate a papier et de papier,
fournit les debouches\. L'usine peut produire 122 000 tonnes de pate au
- 4
sulfate blanchie par an, et sa production provient a l'heure actuelle d'une
for~t naturelle de 160 000 ha de feuillus au nord d'Edea contenant environ
100\.000 ha de for~t exploitable\. Du point de vue technique, l'abattage des
arbres et la preparation de la pate sont d'excellente qualite et l'usine a
commence a produire de la pate blanchie en janvier 1981\. La pate produite
est d'une qualite acceptable sur les marches mondiaux pour les pates a fibre
courte, et il est probable que la Cellucam degagera des benefices d'exploita
tion en 1983 lorsqu'elle travaillera a 100 ~ de sa capacite reelle\. Cependant,
malgre ses atouts techniques et la qualite de sa production, la Cellucam fait
face a des difficultes financieres\. La hausse des coats a fait passer les
investissements d'environ 165 millions de dollars a 350 000 millions de
dollars a la fin de 1980; cette augmentation a ete financee par des credits
fournisseurs et des credits de banques commerciales a court terme\. Le rembour
sement de ces credits devant se faire au cours des cinq prochaines annees, la
Cellucam vient de negocier des accords de refinancement avec ses actionnaires
et les banques commerciales\. La participation de la Cellucam au projet envi
sage sera regie par un contrat d'execution, qui a ete discute au cours des
negociations (par\. 4\.02)\.
1\.11 Lorsque les plantations du projet seront arr1vees a maturite, la
Cellucam achetera Ie bois produit\. Elle en retirera certains avantages : au
lieu de preparer la pate a bois a partir de feuillus tropicaux d'essences
diverses, comme elle Ie fait aujourd'hui, elle sera approvisionnee en bois de
taille et de densite uniformes, situe a des distances raisonnables de l'usine,
et plante en rangs reguliers\. Le coat de l'abattage et du transport du bois
jusqu'a l'usine pourrait ~tre reduit d'environ 33 ~ par rapport au coat d'ex
ploitation des forets naturelles, et Ie coat de la transformation par tonne
de pate baisserait d'environ 20 ~ par suite de la reduction du temps de prepa
ration et du traitement chimique\. De plus, les plantations envisagees contien
dront des pins qui ne poussent pas naturellement dans la foret tropicale; or
Ie pin donne une pate a longue fibre, indispensable a la production de papier,
qui se vend sur les marches mondiaux a 8 % de plus que la pate a fibre courte,
du type actuellement produit par la Cellucam\. Ainsi, la politique de la
Cellucam d'utiliser du bois cultive en plantation au lieu de for~t naturelle
accroltra la valeur ajoutee interieure et ira dans Ie sens de la strategie
sectorielle de l'Etat (par\. 1\.19)\.
c) Financement du secteur
1\.12 D'une maniere generale, Ie secteur prive a pu facilement obtenir des
financements pour les entreprises forestieres et, jusqu'a present, l'exploita
tion a ete dominee par des compagnies etrangeres\. Cependant, outre les inves
tissements dans la Cellucam, la SNI a pris des participations au capital social
d'un certain nombre d'entreprises de transformation du bois\. Au cours du Plan
quinquennal 1976/77-1980/81, les investissements prevus pour Ie secteur fores
tier etaient de 21,7 milliards de francs CFA (80 millions de dollars), fournis
a 80 ~ par Ie secteur prive\. La contribution de l'Etat a en grande partie ete
affectee a des actions de reboisement et a des plantations d'enrichissement
executees par Ie FNFP\.
- 5
1\.13 L'Etat tire des recettes du secteur forestier par l'intermediaire :
i) de deux impots annuels payes par les concessionnaires (la redevance com
munale et la redevance de reforestation); ii) de charges codifiees pour l'oc
troi ou Ie renouvellement des concessions; et iii) des redevances per~ues sur
Ie cubage du bOis exporte ou traite dans Ie pays\. La loi specifie que la tota
lite de la redevance de reforestation et des charges codifiees et 55 % des
redevances per~ues sur Ie bois coupe sont affectees au programme de reboisement
de l'Etat\. Cependant, bien que Ie nombre des concessionnaires et la superficie
des concessions soient restees relativement stables depuis 1977, et que Ie vo
lume de grumes transformees et exportees ait augmente, les redevances per~ues ont
baisse : en effet, les redevances sur Ie bois coupe ont ete mal calculees
pres de la moitie de la recolte n'a pas ete comptee dans l'assiette de l'im
pot - et les reglements portant sur les redevances et les charges annuelles
et quinquennales ont ete mal appliques\. En consequence, au 30 juin 1980, envi
ron 1,5 milliard de francs CFA (5,6 millions de dollars) des charges et des
redevances mises en recouvrement n'avaient pas ete acquittes\. Cette somme est
presque egale aux recettes per~ues en 1979/80, et represente environ Ie double
des arrieres au 30 juin 1978\. De plus, plus de 64 % des impayes etaient dus
par Ie tiers des concessionnaires exploitant des superficies superieures a
100 000 ha\. Cela s'est produit parce que les sanctions legales dont dispose
Ie Gouvernement pour percevoir les arrieres n'ont pas ete rigoureusement appli
quees\. De plus, Ie manque de ressourCes materielles et financieres pour Ie
calcul et la perception des redevances et des charges, et la lourdeur de l'ap
pareil administratif ont reduit l'efficacite des organismes responsables\. Mais
depuis avril 1981, l'Etat fait un vigoureux effort pour encaisser ses arrieres
et, au moment des negociations, il avait recouvre environ 500 millions de
francs CFA (1,9 million de dollars)\. En outre, pour eviter qu'une telle situa
tion ne se reproduise, il a commence a mettre en place de nouvelles procedures
administratives et de nouvelles structures hieerarchiques\. Au cours des nego~
ciations, Ie Gouvernement a convenu de prendre toutes les mesures necessaires
pour percevoir d'ici au 31 decembre 1982 les redevances et charges qui etaient
exigibles au 31 juillet 1980\. II s'est engage a prendre a l'avenir les mesures
voulues pour que les redevances et charges forestieres soient correctement
calculees et per~ues dans les 12 mois suivant la date de calcul\. l 'Etat affec
tera des fonds pour renforcer la Direction des eaux et for@ts et des chasses
(DEFC), tant du point de vue logistique que materiel (par\. 3\.13)\. En cas de
besoin, il emploiera des consultants pour l'aider a appliquer strictement les
nouveaux reglements; il continuera a employer des cadres superieurs de la DEFC
exclusivement charges de calculer et de percevoir les charges et redevances
dans les cinq grandes provinces forestieres\.
d) Institutions et formation
1\.14 le Ministere de l'agriculture (MINAGRI) est charge d'elaborer la
politique forestiere et d'assurer la surveillance du secteur\. II exerce ses
responsabilites par l'intermediaire de deux organismes : Ie premier est la
DEFC, responsable de la planification du secteur, y compris de la direction
des programmes de replantation, de la gestion des for@ts domaniales, et de
- 6
la supervlslon de toutes les exploitations forestieres\. Bien que la DEFC soit
chargee de calculer et de percevoir les redevances et charges sectorielles,
ses depenses de fonctionnement sont financees par des credits budgetaires, et
son budget d'investissement par Ie FNFP\. Cela la laisse chroniquement a court
de fonds d'exploitation, et sans pratiquement aucune latitude pour renforcer
son soutien logistique\. Elle emploie 880 personnes\. Trois bureaux se trouvent
a son siege a Yaounde: Etudes et programmes (planification et statistiques),
Production et industries forestieres (supervision quotidienne et calcul et per
ception des charges et redevances) et Faune et environnement\. Compte tenu de
ses responsabilites, les locaux et Ie materiel dont dispose la DEFC sont insuf
fisants, ce qui explique en partie les carences de son contr61e financier\.
La DEFC va disposer de l'autorite necessaire pour imposer les penalites voulues
en cas de retard dans les paiements des redevances et charges\. La DEFC est
representee dans chaque province\. A l'echelon Ie plus bas de la hierarchie on
\.trouve Ie Poste forestier, tenu par un agent technique justifiant d'une annee
de formation : il est charge de mesurer et de marquer les grumes a la sortie
des concessions\. Il y a normalement un poste par arrondissement, ce qui n'est
pas suffisant pour couvrir convenablement les regions ou plusieurs concessions
sont exploitees\. Les postes sont groupes en sections dirigees par des tech
niciens justifiant de deux ans de formation; ces sections coincident en gros
avec les departements, qui comptent en moyenne huit concessions\. Le chef de
section est charge de recueillir et de presenter sous forme statistique les
renseignements des concessions sur Ie volume de bois recolte\. Mais les chefs
de section n'ont pas les moyens de transport necessaires pour aller verifier
sur Ie terrain les volumes de bois declares par Ie poste/le concessionnaire,
ce qui rend leur contr61e peu efficace\. Au niveau de la province, Ie bureau
de la DEFC - dirige par Ie Conservateur provincial - est charge de verifier Ie
travail des chefs de section, de calculer les redevances et charges dues sur
Ie bois recolte, et de verifier leur versement\. Cependant, les sieges provin
ciaux n'ont ni les moyens de transport ni les installations voulus pour tra
vailler d' une fa~on efficace\. Des mesures seront prises dans Ie cadre du pro
jet pour remedier a cette situation (par\. 3\.13)\.
1\.15 Le FNFP est un organisme public autonome responsable de l'execution
du programme de replantation\. Environ 90 % de ses fonds viennent directement
des redevances et charges versees par les concessionnaires a la DEFC\. Le FNFP
est dirige par un conseil d'administration ou siege Ie Directeur de la DEFC,
mais il dispose d'une autonomie considerable\. Les operations du FNFP, dirigees
par un petit bureau a Yaounde, sont tres decentralisees : Ie pays est divise \.
en chantiers qui correspondent, dans une grande mesure, aux provinces\. Dans
chaque chantier, un chef de chantier supervise un certain nombre de chefs de
base en fait charges de l'execution des programmes de plantation\. Jusqu'a
present, Ie programme de plantation du FNFP a ete modeste; environ 2 500 ha par
an, dont 60 % en plantations d'enrichissement dans les futaies tropicales, et
Ie reste en plantations dans la zone de la savane\. Du point de vue technique,
les resultats ont ete mediocres : les taux de perte enregistres dans les nou
velles plantations sont eleves, l'entretien y est faible et Ie travail generale
ment lent et coOteux\. La baisse des recettes provenant des redevances et
charges, qui sont tombees d'un maximum de 1,1 milliard de francs CFA
- 7
(4,1 millions de dollars) en 1978 a 700 millions de francs CFA (2,6 millions
de dollars) en 1980, a egalement cause de graves problemes budgetaires au FNFP\.
Cependant, gr~ce au renforcement envisage de ses capacites techniques, finan
cieres et administratives (par\. 3\.12), Ie FNFP devrait devenir un instrument
efficace d'execution de la politique officielle de regeneration des plantations\.
1\.16 La grave penurie de cadres et de techniciens justifiant d'une bonne
experience sur Ie terrain, dont souffrent la DEFC et Ie FNFP, nuit a la bonne
administration et au developpement du secteur\. L'Ecole nationale superieure
agronomique de Nkolbisson pourvoit aux besoins de formation des cadres\. Cette
ecole peut diplOmer 16 etudiants par an, ce qui est suffisant pour les besoins
futurs du Cameroun\. Le college de Mbalmayo forme actuellement 10 techniciens
par an, ce qui est egalement suffisant pour satisfaire les besoins previsibles\.
Cependant, ces diplomes - et Ie personnel deja en poste - ont, avant tout, be
soin de suivre des stages pratiques dans des exploitations techniquement bien
gerees Ie projet leur en donnera la possibilite\.
1\.17 Les stations de recherche et les plantations produisent aujourd'hui
a petite echelle des semences hybrides de pin et d'eucalyptus, mais aucun orga
nisme n'est charge d'importer, de certifier, de selectionner et de reproduire
des semences de bonne qualite\. II en resulte que les hybrides disponibles
actuellement commencent a perdre leur vigueur, parce que l'on ne s'efforce pas
de trouver ni de diffuser des semences de la meilleure origine possible pour
les essences exotiques\. Dans Ie cadre du projet cette tache serait confiee
au FNFP\.
1\.18 Les inter~ts des industries forestieres sont representes aupres du
Gouvernement par Ie Syndicat des exploitants forestiers, qui participe regulie
rement a des reunions d'information avec la DEFC et Ie MINAGRI\.
e) Objectifs, strategies et politigues
1\.19 les objectifs du Gouvernement dans Ie secteur forestier tela qu'ils
ont ete definis par des lois passees en 1973 et 1974 sont les suivants
etendre les superficies des for~ts domaniales classees;
assurer l'exploitation rationnel1e et planifiee des for~ts;
regenerer les for~ts par des plantations d'enrichissement dans la
for~t dense et par Ie reboisement dans les savanes; et
accroltre Ia valeur ajoutee interne gr~ce au traitement des
grumes\.
Etant donne l'etat actuel du secteur, ces buts sont juges raisonnables\. Cepen
dant, Ies resultat ont ete inegaux\. Le classement de nouveaux perimetres
avance lentement, la regeneration n'atteint m~me pas la moitie du rythme
prevu, et les taux de survie sont faibles\. Le pourcentage de la valeur ajoutee
interieure est de 20 % inferieur au niveau souhaite\. Ces resultats sont
- 8
d'autant plus decevants que les objectifs etaient modestes et des sommes consi
derables ont ete allouees a leur realisation\. Cette situation se perpetue sur
tout parce que les cadres du FNFP qui devraient organiser et suivre l'execution
des programmes n'ont pas les competences techniques requises sur Ie terrain\.
f) ROle de la Bangue et des autres agences d'aide exterieure
1\.20Ce sera la premiere fois que la Banque participera a un projet exclu
sivement consacre au secteur forestier au Cameroun\. Toutefois deux projets de
developpement rural - Ie Projet de developpement rural des plateaux de l'Ouest
(Cr\. 784-CM) et Ie Projet de developpement de la province du Nord (Cr\. l075-CM,
Prat 1919-CM) - comportent des volets forestiers visant a encourager Ie reboise
ment a petite echelle et la lutte contre l'erosion\. Las programmes des pla
teaux de l'Ouest avancent bien et Ie volet reboisement dans la province du Nord
vient de demarrer\. Le projet s'inscrit dans la logique du Document de politique
generale du secteur forestier, publie par la Banque, qui dit que les planta
tions forestieres industrielles, du genre de celles qui sont proposees ici, ont
une place dans la strategie forestiere globale du pays au meme titre que les
petits projets forestiers et qu'il est indispensable de renforcer les institu
tions travaillant dans ce secteur\.
1\.21 Le secteur forestier du Cameroun a egalement beneficie d'une assis
tance bilaterale pour la formation des techniciens forestiers a Nkolbisson,
et pour la recherche forestiere\. Le programme pilote de boisement actuellement
en cours dans la zone de la SEMRY (carte BIRD 15692) permet d'identifier des
essences et fournit des renseignements precieux qui seront utilises dans Ie
projet\. Dans Ie cadre d'un autre accord bilateral, Ie Cameroun re90it une
assistance technique dans les domaines de la politique sectorielle et de la
photographie aerienne pour l'etude, la classification et l'inventaire de la
Foret; tous ces elements completeront Ie projet\.
- 9
II\. ZONE DU PROJET
2\.01 Localisation: Le projet portera sur la plantation d'arbres dans
troia regions separees et differentes du point de vue ecologique, et renforcera
la production de semences ameliorees dans quatre perimetres\. Les plantations
couvriront 11 000 ha, dont 8 800 a Edea, dans Ie sud-ouest qui approvisionne
ront l'usine de pate a papier de la Cellucam en bois de pate cultive indus
triellement\. Mille hectares seront plantes pres de Ngaoundere sur Ie plateau
d'Adamaoua pour la production en bois d'oeuvre et en poteaux electriques qui
s'ajoutera a celIe d'une plantation de 600 ha existante; 1 200 ha plantes pres
de Maga, dans Ie nord, viendront s'ajouter a la plantation de 600 ha de bois
de feu que la SEMRY est en train d'etablir (par\. 1\.21)\. II existe dans ces
deux dernieres zones des terres disponibles pour Ie boisement, et etant donne
la rarete du bois dans la region, cette utilisation des sols est economiquement
souhaitable\. Tous les sites envisages, indiques sur la carte BIRD 15692, sont
desservis par de bonnes routes, par des liaisons aeriennes regulieres vers les
regions de Ngaoundere et Maga (Maroua) et par des communications regulieres\.
2\.02 Topographie et sols: La topographie et les sols de ces trois regions
sont differents\. A Edea, 75 % des terres peuvent etre plantees, Ie reste
consistant en collines rocailleuses, en marecages, ou en rives escarpees de
cours d'eau\. Les sols de la foret ont un bon ecoulement, ils sont profonds,
souvent tres lessives et acides\. A Ngaoundere, Ie haut plateau (1 500 m
d'altitude) a un relief legerement ondule coupe de vallees rocheuses; les sols
y sont generalement profonds, et lion y trouve des affleurements de granite
qui constitue la roche mere\. A Maga, Ie terrain est plat et avant que la
SEMRY ne construise une digue de retenue, la region etait souvent inondee pen
dant la saison des pluies, a l'exception de quelques lIes sur lesquelles les
villages sont construits\. Les sols sont des limons fortement tasses recouvrant
du sable ou du sable recouvrant des limons tasses\.
2\.03 Vegetation: Au sud de la region d'Edea se trouvent des forets tro
picales a feuillage persistant, qui ont ete exploitees d'une maniere selective\.
La vegetation de Ngaoundere est la savane boisee au sol couvert de canche gazon
nante perenne\. A Maga, on ne trouve que des graminees annuelles sur les
plaines alluviales et, sur les lIes, une savane arboree tres clairsemee\.
2\.04 Climat : A Edea, la pluviosite annuelle est en moyenne superieure a
2 500 mm, les taux d'humidite y sont tres eleves, et la saison seche ne dure
que deux mois\. Ngaoundere re~oit environ 1 600 mm de pluie par an et a une
saison seche de six mois\. Maga re~oit environ 750 mm de pluie par an, et la
saison seche dure six mois\. Les temperatures ne freinent pas la croissance
vegetale\. La temperature maximale moyenne annuelle oscille entre 40 0 C a
Maga et 24 0 a Ngaoundere\. Le taux Ie plus faible d'humidite relative (10 %
en pleine saison seche) a ete enregistre a Maga\.
- 10
2\.05 Infrastructure: Les trois plantations sont situees pres de peri
metres en exploitation\. A Edea, on utilisera les routes forestieres, les ate
liers, les bureaux, les services sociaux et autres de la Cellucam (par\. 4\.02)\.
A Ngaoundere, Ie projet permettra d'ameliorer la pepiniere, Ie magasin et les
bureaux du FNP\. A Maga, les ateliers et les services de la SEMRY sont de bonne
qualite, et la pepiniere qui y existe sera maintenue (par\. 4\.05)\.
2\.06 Population : Edea a une population d'environ 55 000 habitants, et a
la peripherie des 160 000 ha de la concession de la Cellucam, se trouvent de
nombreux villages\. La ville de Ngaoundere compte environ 45 000 habitants\.
Lorsque Ie Deuxieme projet SEMRY sera termine, on prevoit qu'environ
60 000 personnes vivront dans les nouveaux villages de la region\. A ce jour,
la Cellucam a ~te en mesure de recruter la main-d'oeuvre dont elle a besoin
dans la region d'Edea, en appliquant Ie SMIG\. On pourra trouver les 525 hommes
annees de main-d'oeuvre locale supplementaire necessaires aux plantations du
projet, ce qui representera environ 33 % de la main-d'oeuvre totale de la
'Cellucam pendant les periodes de pointe; les ouvriers seront egalement payes
au SMIG\. A Ngaoundere et a Maga, la main-d'oeuvre necessaire aux programmes
de plantation sera egalement disponible\.
- 11
III\. LE PROJET
A\. Objectifs
3\.01 Le projet aura pour principaux objectifs :
a) d'accrottre la contribution du secteur forestier a l'economie natio
nale grace a l'amenagement de 11 000 ha environ de plantations de
pins et d'eucalyptus, essences qui ne font pas partie de la flore du
pays; et
b) d'accroftre l'aptitude des organismes publics competents a pour
suivre la regeneration reguliere des for~ts en renfor~ant leurs
services techniques charges du reboisement et a accrottre leurs
recettes grace a l'application diligente de la reglementation en
vigueur en matiere de redevances et d'impOts forestiers\.
3\.02 II y aura deux types de plantations: d'une part, des plantations de
reboisement des zones de futaie naturelle exploitees par la Cellucam pour la
fabrication de pate, ce qui permettra a cette entreprise de tirer avantage,
en definitive, du bois de plantations (par\. 1\.11); d'autre part, de nouvelles
plantations (plantations en blocs et for~ts communales pilotes) dans les
regions de savane ou l'on manque de bois\.
3\.03 Le developpement des institutions sera etroitement lie a l'amenage
ment des plantations envisagees\. Les services techniques publics pourront \.
etre ameliores, d'une part, en faisant participer Ie personnel d'exploitation
du FNFP (par\. 1\.15) aux programmes de reboisement, ce qui leur procurera de
l'experience en cours d'emploi, et d'autre part en creant des vergers a varie
tes de graines ameliorees\. II sera egalement prevu de renforcer directement
les services d'exploitation, de planification et de suivi du siege du FNFP\.
L'Etat sera mieux a m~me de recouvrer les redevances et impOts forestiers
grace au renforcement direct des services operationnels de la DEFC (par\. 1\.13),
laquelle est chargee notamment de cette fonction\. II s'agira d'ameliorer imme
diatement l'aptitude de la DEFC a calculer et a percevoir les impOts et les
redevances\.
3\.04 En cinq ans, Ie Projet financera :
a) l'amenagement d'une plantation de 5 200 ha environ de pins et de
quelque 3 600 ha d'eucalyptus dans la zone du projet d'Edea\. Les
travaux seront effectues par la Cellucam sous la supervision du FNFP
et permettront de fournir a l'usine de cellulose du bois de qualite
superieure et uniforme;
b) l'amenagement d'une plantation de 1 000 ha environ d'eucalyptus en
blocs d'une superficie allant de 50 a 200\. ha et de 200 ha de bois de
forets communales pilotes pres de Maga (SEMRY)\. Cette operation
sera effectuee par la SEMRY et visera a produire du bois de feu pour
les menages et du perchis pour la construction;
- 12
c) l'amenagement par Ie FNFP d'une plantation de 750 ha de pins et de
250 ha d'eucalyptus a Ngaoundere qui produira des grumes pour Ie
sciage, et la construction de poteaux electriques;
d) la creation, au sein du FNFP, d'un service charge de l'amenagement de
vergers a graines ameliorees de 11 ha dans quatre sites;
e) la fourniture de services specialises (16 hommes-annees) qui ne sont
pas actuellement disponibles au Cameroun, pour la gestion des planta
tions et Ie contrOle financier du FNFP et de la SEMRY;
f) la fourniture du soutien logistique, materiel et operationnel neces
saire a la DEFC pour qu'elle soit mieux a meme de calculer et de
percevoir les impOts et les redevances; et
g) l'octroi de fonds pour la realisation d'etudes specialisees compre
nant la preparation d'un eventuel projet de suivi et pour contribuer
a financer la formation appropriee, a l'etranger, d'un personnel
selectionne\.
B\. Caracteristiques detail lees
a) Plantation d'Edea
3\.05 Le programme de plantation de 8 800 ha a Edea permettra de planter
des pins et des eucalyptus dans des zones de forets tropicales que la
Cellucam a deboisees pour fabriquer de la cellulose\. Par consequent, la
Cellucam finira Ie defrichement et construira des pistes qui seront par la
suite utilisees pour les travaux de plantation\. Le projet financera les
frais relatifs aux operations d'andainage et de brulage des residus qui ne
peuvent pas servir a la fabrication de cellulose\. Ces operations seront
effectuees avec les moyens mecaniques appropries et laisseront un site de
plantation couvrant 85 % environ de la superficie initialement exploitee\.
La preparation et Ie reboisement suivront des que possible afin de minimiser
les frais de desherbage\. Le programme quinquennal d'exploitation forestiere,
de defrichement et preparation de la terre et de plantation se deroulera
comme suit :
- 13 -
Annee 1 Annee 2 Annee 3 Annee 4 Annee 5 Total
------------------------(en ha)-----------------------
Exploitation forestiere
(non financee par le
projet) 2 200 3 000 3 000 3 000 3 000 14 200
Defrichement et
preparation 1 350 1 500 2 200 2 500 1 250 8 800
Plantation 000 1 100 1 900 2 500 2 500 8 800
Entretien (avec les
400 ha plantes
prealablement;
entretien cumule) 1 200 2 300 4 200 6 700 9 200 9 200
11 faudra pour effectuer un desherbage approprie etablir un programme d'entre
tien (les superficies cumulees figurent dans Ie tableau ci-dessus)\. Une pepi
niere sera creee pour fournir de jeunes plants\.
3\.06 Les pins choisis pour etre plantes sont l'essence Pinus caribaea,
variete hondurensis, qui dans le milieu d'Edea devrait enregistrer une crois
3
sance moyenne annuelle de 18 m sur ecorce par ha et atteindre en 14 ans la
taille appropriee pour etre abattue\. Les eucalyptus seront des Eucalyptus
urophylla qui se regenerent a partir de leurs propres racines apres l'abat
tage (rejets de taillis) et ont presente au cours de tests effectues a Edea
3
une croissance moyenne annuelle de 25 m sur ecorce par ha\. Pour cette
variete, l'abattage pourra avoir lieu a la dixieme annee\. Des variations de
croissance moyenne annuelle allant de 15 a 29 m3 par ha ont ete enregistrees
a Edea pour P\. Caribaea et la croissance moyenne annuelle a atteint jusqu'a 40
3
m par ha pour E\. urophylla selon la provenance\. On poursuivra les tests de
provenance dans le cadre du programme normal de plantation\.
3\.07 Le projet financera l'achat de gros materiel pour les travaux sup
plementaires de defrichement et de preparation de la terre, de materiel d'en
tretien de plantation et de vehicules; les travaux de construction de bureaux
supplementaires et l'achat de materiel pour les pepinieres; l'entretien des
routes d'exploitation forestiere et le coat de la main-d'oeuvre recrutee\.
Pour 8viter d'installer des infrastructures de soutien (garages, ateliers de
reparation et magasins pour les pieces detachees) faisant double emploi,
celles-ci seront louees a la Cellucam sur la base de leur coat reel\.
Les chefs de section de plantation et les contremaitres du FNFP seront
detaches a Edea OU ils travailleront sous la direction de la Cellucam\. lls
recevront une formation en cours d'emploi pour la direction d'une equipe de
travail et la gestion des sites des plantations dans le cadre d'un programme
organise par la Cellucam et elabore d'apres un programme deja utilise pour la
formation des directeurs de sites d'exploitation forestiere et des contre
maitres (par\. 4\.09)\. La Cellucam sera payee pour ce service et pour les
services de gestion comprenant notamment la gestion globale du programme de
- 14
plantations et du personnel, la coordination des operations de plantation
et des activites d'exploitation forestiere et la passation des marches\. Le
Gouvernement et Ie FNFP concluront un contrat juge acceptable par la Banque,
et dont la Cellucam aura fixe les modalites\. Les points qui seront inclus
dans ce contrat ant ete examines avec les services officiels et la Cellucam
au cours de l'evaluation et un projet de contrat sera discute au cours des
negociations\. La signature de ce contrat sera une condition d'entree en
vigueur du pr~t (par\. 4\.02 et 4\.03)\.
b) Plantation de la SEMRY
3\.08 Dans Ie cadre du programme quinquennal de plantation du projet,
1 000 ha d'eucalyptus (E\. camaldulensis) seront amenages ainsi que des blocs
d'autres essences sur des terres non irriguees de la zone du projet Semry II,
ce qui sera la suite logique du programme pilote commence avec une assistance
bilaterale (par\. 1\.21) et qui a ete couronne de succes\. Dans Ie cadre du pro
jet, des fonds seront accordes en quantite suffisante pour financer Ie materiel
et les depenses supplementaires d'exploitation necessaires pour la construction
de pistes, la preparation des terres (labour du sous-sol) et l'amenagement de
pepinieres pour executer Ie programme\. Le personnel comprendra un fares tier
recrute au niveau international, ayant l'experience voulue de l'amenagement de
plantations en zone aride pour diriger les plantations en blocs et l'execution
d'un programme de bois de village pilotes (par\. 3\.09)\. Du personnel supplemen
taire de direction sera detache du FNFP\. Bien que la zone du projet SEMRY dis
pose de terres suffisantes pour les for@ts, les cultures vivrieres irriguees
et en sec, on financera une etude pedologique detail lee au 1:20 000 qui per
mettra a la SEMRY d'etablir un plan d'utilisation des terres et, a cette occa
sion, de determiner l'emplacement a reserver aux cultures forestieres
appropriees\.
3\.09 Un programme pilote visant a amenager des bois de village sur 200 ha
pour produire du bois de feu destine a l'usage domestique et a la vente, du
bois de service et du fourrage sera egalement entrepris dans Ie cadre du pro
jet\. Le programme interessera des groupes d'exploitants organises en previ
sion de la creation de cooperatives dans les zones de peuplement nouvellement
creees par la SEMRY\. Ces groupes recevront gratuitement des jeunes plants
(notamment des plants d'arbres fuitiers et fourragers) et 20 ha environ de
terres preparees qu'il subdiviseront en parcelles individuelles de 0,5 a 1 ha\.
Chaque famille d'exploitants plantera et entretiendra sa parcelle\. Les femmes
seront un groupe cible particulierement approprie pour cette activite\. Le
travail aux champs sera organise et supervise par Ie personnel du FNFP detache
a cette fin aupres de la SEMRY\. Un accord adapte au cas de chaque groupe sera
negocie entre la SEMRY/le FNFP et les exploitants; il definira les droits fan
ciers, les obligations des exploitants pour ce qui est de la plantation, de
l'entretien et de la lutte contre les incendies et les animaux et fixera la date
avant laquelle tout abattage sera interdit\. L'accord precisera egalement Ie
prix du bois sur pied qui sera per~u par Ie FNFP au moment de la coupe pour
couvrir les frais initiaux de preparation de la terre\. Le Cameroun ne dispose
pour ainsi dire d'aucun personnel experimente pour guider l'evolution d'un tel
programme bien que certains travaux soient actuellement effectues dans Ie cadre
- 15
du Projet de developpement agricole des hauts plateaux de l'Ouest (Cr\. 784-CM)
finance en partie par l'IDA\. Par consequent, Ie personnel du projet effectuera
des visites periodiques dans les hauts plateaux de l'Ouest dans Ie cadre de sa
formation en cours d'emploi\. En ce qui concerne Ie manque d'experience pour ce
type de projet, les autorites ont donne l'assurance au cours des negociations
que l'on n'effectuerait pas de travaux sur les forets communales avant qu'un
plan d'action relatif a leur execution comprenant des dispositions contrac
tuelles avec les exploitants n'ait ete approuve par la Banque (par\. 8\.01(a))\.
c) Plantation de Ngaoundere
3\.10 Le programme de plantation qui sera finance dans Ie cadre du projet
comprendra la plantation d'un bloc de 200 ha par an, pendant cinq ans, qui
viendra s'ajouter au programme normal de plantation du FNFP de 50 ha environ
dans cette region que Ie FNFP poursuivra apres Ie demarrage du projet\. Comme
les plantations actuellement en cours, les plantations du projet seront etab
lies sur des terres classees "terres forestieres" conformement aux procedures
administratives habituelles et appartiendront a l'Etat\. Les operations de
plantation qui seront effectuees dans Ie cadre du projet permettront d'ajouter
au patrimoine forestier 750 ha de pins (P\. kesiya et P\. caribaea) et 250 ha
d'eucalyptus (E\. grandis et E\. cloeziana)\. Le defrichement se fera mecanique
ment afin d'extraire completement les souches et de bien preparer Ie sol et Ie
FNFP vendra Ie bois de recuperation de la savane (environ 4 000 m3 par an) a
des acheteurs prives, en tant que bois de feu\. On agrandira les pepinieres
existantes pour produire les jeunes plants necessaires\. La plantation se fera
selon des plans de travail annuels approuves par Ie FNFP et la Banque
(par\. 8\.01 (c))\. Les fonds prevus dans Ie projet financeront l'achat du mate
riel supplementaire, des vehicules de service et les pepinieres necessaires\.
Comme les nouveaux sites seront de plus en plus eloignes de Ngaoundere, des
campements modestes seront construits sur les plantations pour Ie personnel
participant a l'entretien et a la protection des plantations\.
d) Services de production de graines
3\.11 Un service de production de graines sera cree au sein du FNFP; il
sera charge :
d'importer des graines d'arbres forestiers et d'en etablir l'inven
taire;
d'organiser et d'executer en collaboration etroite avec les services
de recherche forestiere une serie de tests de provenance portant sur
toutes'les essences de plantation importantes;
de mettre en place des stations de production de semences d'eucalyp
tus et de pins dans chaque region ecologique importante du pays\.
Onze hectares environ de P\. caribaea, P\. oocarpa, P\. kesiya,
- 16
E\. grandis, E\. urophylla, E\. deglupta et E\. cloeziana seront plantes
dans quatre stations;
d'effectuer un examen systematique de toutes les plantations amena
gees afin de selectionner des individus superieurs desquels des bou
tures seront prelevees pour creer des vergers a graines clonals\.
Comme exercice de formation pour les pepinieristes, des boutures
seront faites a partir de l'essence camerounaise Triplochiton et
cinq hectares supplementaires seront plantes avec cette essence
pour la production de clones destines aux futures plantations; et
d'utiliser toutes les techniques appropriees existantes en matiere de
genetique forestiere et de reproduction arboricole\.
La realisation de ce programme demandera du temps et a la fin des cinq ans
d'execution du projet, Ie service de production de graines commencera a
peine a fonctionner\. la formation du personnel local sera une fonction
importante de ce service; des consultants experts dans ce domaine aideront a
mettre en place ce service et a etablir son programme de travail\. les tech
niques habituelles de creation de plantations et de pepinieres seront utili
sees pour la production de plants a partir de graines\. les techniques connues
pour faire monter des boutures seront egalement employees\.
e) Renforcement du FNFP
3\.12 Dans le cadre du projet, le FNFP disposera de 12 hommes-annees envi
ron d'assistance technique ainsi que du materiel necessaire, ce qui lui permet
tra de renforcer ses activites dans les domaines suivants : planification
annuelle du travail et suivi des resultats, gestion financiere et gestion des
diverses plantations\. Des efforts dans ces trois domaines sont indispensables
a la reussite du projet mais l'amelioration de la gestion financiere du FNFP
est d'une importance vitale pour administrer les interets financiers de l'Etat
dans la plantation d'Edea\.
f) Renforcement de la DEFC
3\.13 On ameliorera l'efficacite de la DEFC en finan~ant : tout d'abord,
l'achat de vehicules et de materiel pour donner au personnel la mobilite
necessaire et lui permettre d'effectuer des inspections sur Ie terrain et de
verifier les operations d'exploitation forestiere et d'enregistrement du bois
abattu; en deuxieme lieu, l'achat de materiel de bureau et de calculateurs
pour etablir et contrOler de maniere plus efficace les avis d'imposition et
la perception des impOts et des redevances; et enfin, la remise en etat des
bureaux et des cases de passage sur Ie terrain pour Ie personnel charge de
la cote et du contrOle des impOts\. De plus, des fonds seront prevus pour fi
nancer 45 hommes-mois de services de consultants a recruter en fonction des be
soins (par\. 4\.08) et pour l'exploitation adequate des vehicules et des bureaux\.
- 17
g) Etudes et preparation d'un eventuel projet de suivi
3\.14 Dans Ie cadre du projet, il est prevu de recruter, en fonction des
besoins et apres accord entre Ie Gouvernement, la 8anque et la CDC, des con
sultants a concurrence de 43 hommes-mois; il s'agira d'experts en matiere de
croissance, protection et utilisation de la for~t\. Au dossier du projet
figurent des mandats qui pourraient servir de directives en la matiere\. De
plus, apres un examen a mi-course de l'etat d'avancement du projet, on pour
rait commencer la preparation d'un eventuel projet de su~v~ pour lequel Ie
financement des services de consultants a concurrence de 12 hommes-mois sera
prevu\.
- 18
IV\. ORGANISATION ET GESTION
A\. Generalites
4\.01 Les institutions du secteur de la foresterie, a savoir Ie FNFP et
la DEFC (par\. 1\.14 et 1\.15), seront chargees de l'organisation et de la ges
tion du projet\. Ces organismes recevront Ie soutien necessaire pour atre a
marne d'assumer les responsabilites supplementaires resultant de l'execution
du projet (par\. 3\.12 et 3\.13)\. Le FNFP conclura avec la Cellucam et la SEMRY
des accords speciaux pour la mise en place des plantations d'Edea et de la
SEMRY et s'occupera seul de la creation de la plantation de Ngaoundere et du
service de production de graines ameliorees\. Les specifications techniques
des facteurs de creation et d'entretien figurent dans Ie dossier du projet\.
B\. Dispositions en matiere de plantation
4\.02 L'element correspondant a la plantation d'Edea sera execute par la
Cellucam, qui assumera Ie r61e d'entrepreneur pour la plantation des arbres
pour Ie compte du FNFP\. Le FNFP retrocedera les fonds du projet et fournira
Ie personnel de terrain qui fera temporairement partie de celui de la Cellucam\.
La Cellucam organisera et executera les operations de plantation, et assurera
la coordination avec ses activites d'abattage de grumes a pate\. L'Etat sera
donc proprietaire des arbres plantes au cours du programme quinquennal et que
la Cellucam achetera a un prix de bois sur pied approprie (par\. 6\.03) lorsque
les arbres auront atteint liege optimal des grumes a pate\. Ces dispositions
formeront la base d'un contrat qui sera conclu entre Ie Gouvernement et Ie FNFP
d'une part et la Cellucam d'autre part\. Un projet de contrat a ete examine au
cours des negociations; la signature d'un contrat juge satisfaisant sera une
condition d'entree en vigueur du pret (par\. 8\.02(b))\.
4\.03 L'accord entre Ie Gouvernement, Ie FNFP et la Cellucam comprendra
egalement les dispositions detaillees relatives a l'execution du projet\. Les
plans de travail annuels et les budgets, Ie recrutement des consultants et la
nomination aux postes cles du service de reboisement de la Cellucam seront exa
mines et soumis a l'approbation d'un comite directeur compose de representants
de la Cellucam, du FNFP et du Gouvernement, qui etudiera toutes questions ou
problemes se posant au cours de l'execution de cet element et fera des recom
mandations a ce sujet\. La Cellucam preparera des plans de travail et des bud
gets detailles, recrutera Ie personnel de terrain, prendra les dispositions
voulues en matiere de passation des marches, detiendra et gerera les avoirs du
projet au nom du FNFP et etablira une comptabilite trimestrielle (non verifiee)
et annuelle (verifiee) et des rapports sur l'etat d'avancement du projet\. Le
FNFP detachera aupres de la Cellucam du personnel de direction sur Ie terrain
- 19
qui sera organise selon l'organigramme presente ci-apres et contrOlera la
comptabilite et l'avancement du projet avec Ie personnel sur Ie terrain\. Le
FNFP remboursera la Cellucam de ses frais effectifs enregistres pour les tra
vaux de reboisement qu'elle execute dans Ie cadre du projet\. De plus, Ie
FNFP verser a a la Cellucam pour les services de soutien des paiements perio
diques dont Ie montant sera determine conformement aux dispositions de l'ac
cord et proportionnel aux travaux de plantation realises\. Cette depense
couvrira Ie pourcentage des frais gene raux de la Cellucam et des frais de ges
tion de la Direction de la foresterie imputable au programme de plantation\.
Ce pourcentage sera determine d'apres une formule qui tiendra compte des aug
mentations des frais d'exploitation de la Cellucam et des effectifs par rap
port a ce qu'ils etaient avant Ie projet, a l'exclusion du travail de l'usine\.
Une estimation du montant des versements a effectuer a la Cellucam pour les
services de soutien sera incluse dans Ie budget annuel qui sera soumis a l'ap
probation des copr~teurs au plus tard Ie 31 mars precedant Ie debut de
l'exercice du projet (par\. a\.Ol(c»\. Le FNFP nommera un comptable pour Ie
contrOle des fonds du projet utilises par la Cellucam\.
4\.04 La Division de la forest erie de la SEMRY executera l'element de
reboisement SEMRY\. Un forestier recrute au niveau international, ayant des
qualifications jugees acceptables par la Banque, dirigera les travaux\. II
sera aide de deux adjoints detaches du FNFP dont l'un sera charge de l'element
de plantation en blocs et l'autre du programme pilote de bois de village\.
La Division de la foresterie sera administree conformement aux reglements de
la SEMRY selon lesquels des rapports sur l'etat d'avancement seront presentes
regulierement et des comptes seront etablis a l'intention du FNFP pour etre
inclus aux etats financiers consolides du projet\. Elle choisira les sites
devant etre reboises d'apres Ie plan d'utilisation des terres (par\. 3\.0a)\.
Elle etablira et suivra les plans de travail annuels et les budgets qui seront
approuves par Ie FNFP et la Banque (par\. a\.Ol(c» et fera en sorte que la SEMRY
entretienne les pistes et recrute de la main-d'oeuvre, maintienne et comptabi
lise les avoirs du projet\. Le FNFP detachera des contremattres de site et
des contrema1tres d'equipes aupres de la SEMRY pour effectuer des travaux
sur Ie terrain et mettra a la disposition du projet les conseils techniques du
Directeur de plantation charge de la supervision (par\. 4\.06)\. Un accord juge
acceptable par la aanque, precisant notamment Ie programme de plantation, ses
specifications techniques ainsi que les responsabilites administratives du
FNFP et de la SEMRY, sera conclu entre Ie FNFP et la SEMRY\. Sa signature sera
une condition prealable au decaissement des fonds afferents a cet element
(par\. 8\.03)\. Les avoirs residuels provenant du projet pilote en cours,
finance par l'aide bilaterale, pourront etre utilises pour Ie projet\.
4\.05 L'execution de l'element concernant Ie bois communal pilote de la
SEMRY sera souple et fera une large place aux principes de base qui ant ete
couronnes de succes dans d'autres projets de foresterie villageoise finances
par la Banque (par\. 3\.09)\. On assurera les services d'un consultant specia
liste en sociologie economique, recrute pour une courte periode pour analyser
la mise en oeuvre du programme et veiller a son expansion et a sa
reproduction\.
- 20
C\. Renforcement du FNFP
4\.06 L'aptitude du FNFP a executer les programmes de regeneration des
for~ts du Gouvernement sera accrue, tout d'abord gr~ce a la formation en
cours d'emploi des ingenieurs et des techniciens du FNFP qui seront detaches
pour travailler a l'amenagement de plantations financees dans Ie cadre du pro
jet (par\. 4\.09), ensuite gr~ce au renforcement de la direction financiere
et technique du siege du FNFP\. Un directeur/ingenieur forestier recrute au
niveau international sera charge, en tant que directeur du programme, d'eta
blir des programmes de reboisement annuels detailles au sein du FNFP, dans Ie
cadre : i) des directives etablies pour Ie FNFP; ii) des limites imposees par
les ressources disponibles; et iii) des besoins renouvelables d'entretien et
de replantation\. D'autre part, il mettra sur pied un systeme de visites perio
diques, site par site, avec enregistrement des donnees pour verifier l'etat
d'avancement, identifier les goulets d'etranglement et etablir la base des
prochains programmes annuels de plantation\. Un comptable du projet recrute au
niveau international sera charge de mettre en place un contrale financier,
d'en superviser l'application, de rediger des rapports pour chaque element du
projet et d'ameliorer, gr~ce aux conseils qu'il pourra donner et a sa colla
boration avec la direction et les comptables du FNFP, Ie contrale financier et
l'etablissement des etats financiers du FNFP\. Enfin, un Directeur de planta
tion charge de la supervision, recrute au niveau international et residant a
Garoua, introduira site par site avec les directeurs des plantations exis
tantes du FNFP des techniques ameliorees et choisira les essences et les res
sources appropriees aux conditions microecologiques particulieres a la pro
vince du nord\. II supervisera l'application des nouvelles methodes\. II
assurera aussi la liaison avec Ie personnel de recherche forestiere de l'IRA
afin de donner des conseils sur les besoins en matiere de recheche et de
faire adopter les techniques ayant donne des resultats prometteurs\. Tout Ie
personnel recrute au niveau international, y compris Ie Directeur de la fores
terie de la SEMRY (par\. 4\.04), aura des qualifications et une experience
jugees acceptables par la Banque et fournira ses services pendant quatre ans,
dans Ie cadre d'un mandat detaille figurant dans Ie dossier du projet
(par\. 8\.01(b»\.
D\. Renforcement de la DEFC
4\.07 Le Directeur de la DEFC ameliorera, par l'intermediaire du Service de
l'exploitation et des industries forestieres, l'aptitude de la DEFC a calculer
les impats et les redevances du secteur forestier et a en assurer Ie recouvre
ment\. Dans chacun des sieges des cinq provinces ou des concessions forestieres
sont actuellement en exploitation (ouest, sud-ouest, littoral, centre-sud et
est), des cadres ont ete nommes pour calculer les impOts et redevances et
s'occuper de toutes les questions fiscales, dans la province, et les autorites
ont donne l'assurance que ces responsables seraient en poste pendant toute la
periode d'investissement du projet (par\. B\.Ol(d»\. Le responsable de chaque
bureau provincial de la DEFC (Ie Conservateur) sera charge d'organiser, au sein
- 21
de la province, des visites regulieres des chefs de section 8 leurs postes
respectifs et aux concessions faisant partie de leur section; des visites regu
lieres effectuees par des agents du siege permettront 8 leur tour d'exercer
un contrdle sur ces deplacements\. Des rapports trimestriels de ces activites
sur Ie terrain seront prepares et soumis au siege de la DEFC ou Ie Chef du
Service de l'exploitation et des industries forestieres sera charge du suivi
et du contrOle\.
4\.08 Les autorites ont considerablement ameliore Ie recouvrement des impOts
et mettent en oeuvre de nouvelles mesures pour renforcer cette tendance\. De
plus, elles ont donne l'assurance qu'un specialiste du calcul de l'assiette
des impOts forestiers et de leur mise en application, recrute au niveau in
ternational, serait employe pendant une periode de 24 hommes-mois environ pour
aider Ie Directeur de la DEFC 8 mettre en oeuvre les mesures\. Des services de
consultants en administration publique pour une duree de six mois environ seront
egalement finances\. Enfin, comme l'application de sanctions peut soulever des
problemes juridiques en ce qui concerne les concessionnaires, des fonds seront
disponibles pour assurer les services d'un conseiller juridique (8 concurrence'
de 15 mois) au cours de la periode d'investissement de cinq ans, en vue d'aider
selon les besoins la DEFC 8 traiter avec l'industrie forestiere\. Tous les con
sultants auront des qualifications et une experience jugees acceptables par la
Banque\.
E\. Formation
4\.09 Le personnel local sera essentiellement forme en cours d'emploi au
cours des operations de plantation en cours\. Un programme de detachement par
rotation de superviseurs de site et de contremaitres du FNFP aupres de la
Cellucam et de la SEMRY sera organise et suivi par Ie Directeur du FNFP avec
l'assistance du Directeur du programme d~nt les services seront finances dans
Ie cadre du projet (par\. 4\.06)\. Les detachements, qui porteront sur des perio
des de deux 8 trois ans selon les besoins des organismes beneficiaires et du
FNFP, auront pour objectif de donner aux 50 ingenieurs et techniciens supe
rieurs du FNFP la possibilite de travailler soit 8 la Cellucam, soit 8 la
SEMRY, pendant les cinq ans de la periode d'investissement du projet\. Au
FNFP, Ie comptable du projet sera charge d'ameliorer les services de comptabi
lite du FNFP et les techniques employees par Ie personnel du FNFP et de les
porter 8 des normes jugees acceptables pour l'execution du projet\. Ces normes
sont decrites dans Ie dossier du projet\. On prevoit egalement de financer la
participation (pour une duree de 12 hommes-mois environ) du personnel selec
tionne du FNFP et de la DEFC 8 des seminaires specialises 81'etranger\.
- 22
F\. Suivi et evaluation retrospective
4\.10 Au FNFP, Ie Directeur du programme (par\. 4\.06) etablira une proce
dur~ de suivi des operations de plantation qui servira de base a l'etablis
sement des plans de travail et des budgets annuels\. Pour ce faire, les contre
ma1tres devront presenter des rapports hebdomadaires d'activites et d'utilisa
tion des ressources aux directeurs de site, les directeurs de site des rapports
mensuels a l'intention des directeurs de zones et ces derniers des rapports
trimestriels consolides a l'intention du siege\. Chaque superviseur devra
periodiquement effectuer une visite de contrOle aux services relevant de sa
supervision\. Le Directeur de plantation charge de la supervision (par\. 4\.06)
examinera les rapports mensuels etablis sur les sites\. Le contrOle des flux
financiers sera place sous la responsabilite du service de comptabilite du
FNFP qui comprendra un comptable residant a Edea, charge de la comptabilite de
la plantation d'Edea\.
4\.11 La DEFC restera responsable du suivi des questions fiscales concer
nant Ie secteur de la foresterie\. Le Directeur, par l'intermediaire de chaque
Conservateur provincial, veillera desormais a ce que les techniciens en fores
terie, les chefs de section et les responsables designes du siege provincial,
par ordre hierarchique, effectuent des visites de contrOle periodiques des
exploitations forestieres\.
4\.12 Le personnel renforce du FNFP et de la DEFC aura notamment pour
tache d'evaluer periodiquement l'etat d'avancement du projet\. Pendant la
deuxieme partie de l'annee 3 du projet, une evaluation du projet ami-course
sera effectuee par des consultants dont les qualifications, l'experience et Ie
mandat auront ete juges acceptables par la Banque\. Les recommandations emises
dans cette etude seront examinees par les services officiels, Ie FNFP, la DEFC
et la Banque et serviront notamment de base a la preparation, a 1'annee 4,
d'un eventuel projet de suivi\.
G\. Production de graines et liaison avec les services de recherche
4\.13 Le service de production de graines qui sera cree au sein du FNFP
(par\. 3\.11) poursuivra les travaux d'apres les resultats des tests d'elimina
tion qui ont ete menes avec succes pendant de nombreuses annees par 1'IRA/CTFT
a Mangombe et ailleurs et qui ont permis d'identifier des essences pouvant
convenir au Cameroun\. Le service de production de graines continuera a coope
rer et a echanger des informations avec ces chercheurs\. Au debut du projet,
des consultants recrutes pour trois mois aideront a etablir Ie programme de
travail; celui-ci sera mis a jour chaque annee grace a un mois de services
de consultants\. Des terres et des services de plantation et d'entretien se
ront mis a la disposition du projet dans Ie cadre des programmes de plantation
prevus par Ie FNFP a proximite des quatre sites du projet\.
- 23
4\.14 Dans chaque plantation, des essais de rendement des arbres de dif
ferentes provenances seront egalement effectues dans le cadre des elements de
production\. Le Directeur de plantation charge de la supervision du FNFP et le
Directeur du programme prepareront ces essais en liaison avec les responsables
de l'IRA\. Le siege du FNFP entretiendra des contacts etroits avec les servi
ces de recherche de l'IRA, en particulier a propos de la province du nord ou
de nombreux sites du FNFP tres differents sur le plan ecologique sont plantes
simultanement\. Le FNFP consultera egalement l'IRA en ce qui concerne les
besoins en matiere de recherche appliquee\.
- 24
v\. COUTS ET DISPOSITIONS FINANCIERES
A\. Estimations des coOts du projet
5\.01 Le coOt total du projet pendant la periode d'investissement de
cinq ans est estime a 9 602 millions de francs CFA (35,5 millions de dollars),
dont 4 374 millions de francs CFA (16,2 millions de dollars) en devises\. Ce
devis comprend un mont ant estimatif de 632 millions de francs CFA (2,3 mil
lions de dollars) d'impOts identifiables\. Les droits d'importation identi
fiables des fournitures importees destinees a l'execution du projet ont ete
exclus, en prevision de la decision du Gouvernement d'exonerer de ces droits
lesdites fournitures\. Le coOt du projet netd'impots s'eleve donc a
8 970 millions de francs CFA (33,2 millions de dollars), dont 49 % en devises\.
5\.02 Les estimations de couts sont fondees sur les prix de janvier 1981
et comprennent : i) des provisions pour imprevus de 10 % sur les b~timents et
de 5 % sur tous les autres couts, a l'exception des frais de personnel, des
honoraires des consultants et des services de gestion a propos desquels aucune
provision pour imprevus n'a ete calculee; et ii) des provisions pour hausse
des prix calculees en fonction des previsions d'augmentation des prix
suivantes :
1981 1982 1983 1984 1985 1986
CoOts en monnaie 12 12 12 12
nationale
Couts en devises 9 8,5 8,5 7,5 7,0 6,0
Les provisions sont egales a 44 % des couts de base ou a 31 % du cout total\.
Les couts estimatifs du projet sont recapitules dans Ie Tableau 1 ci-dessous
et figurent de maniere detaillee dans Ie dossier du projet\.
B\. Financement envisage
5\.03 Le projet sera finance par la Banque (pret de 17 millions de dol
lars), la Commonwealth Development Corporation du Royaume-Uni (CDC) (pret de
7,4 millions de dollars) et par l'Etat (11,1 millions de dollars)\. La reparti
tion de ce financement figure au Tableau 2\. Le pret de la Banque financera
Ie cout en devises du projet (11,6 millions de dollars)\. II financera egale
ment 1,3 million de dollars de coOts marginaux relatifs au renforcement de
la DEFC et du FNFP que lion considere justifies compte tenu de l'importance du
bon fonctionnement de ces deux organismes\. Le financement total de la Banque
couvrira 51 % des coOts du projet nets d'impots\.
- 25 - Tabl\.
!\.timatlona daa eoGts du Projet
e" \. lIIIo"\. de lelA en lrJ1 ilion\. de dollan
1Ion"\.Le lIo"nd\. Dev1&
Nationale Devises Totd NaUo\.le Of:Yb Totd %
!U\.nu du I"IIFP
PlaotatioQ4 c'£4e\.
Vlhieule mat~rl\.1 et b;tl~"ea 68 864 932 0\.3 3\.2 3 \.5 91
III't\.ti\.e"t\. relauta \.u" pla"taUolIA \.ill! 1080 1!!l \.2\.:\.! ~ ~ 1!1\.
260\.5 1944 4549 9\.7 7\.2 16\.9 43
nneationa SEMI'!: II (Maaa)
Vfbie,,1\. mater lei at bit1ment\. 33 108 141 0\.1 0\.4 0 \.5 80
11:IY\.ti\."U relaut\. pla"t\.tio\.,\. \.ill -Y\. \.ill\. ~ 0\.3 1& 11
216 189 40\.5 0\.8 0\.7 1\.5 47
nant\.tions d\. tls_ndh/!
Vfbieulaa, materlel at batiment\.
lJrre\.U\."ts rel\.tib a \. plant\.tio"\. ill
7 S4
2i
61
ill hl
-* 0\.2
\.!!\.:\.!
0\.2
~
67
12\.
144 108 252 0\.5 0\.4 0\.9 44
S\.rvlc\. de !roductlon d\. sral~e\. amelioree\.
Vfbleul\., materlel et bidmenu 21 27 48 0\.1 0\.1 0\.2 SO
11:IYaaciaa\.anta r\.l\.Ub au" plantatio"\. 2! -1! -!l \.2\.:l\. hl hl 11
79
" 133 0\.3 0\.2 O\.S 40
AI"l"t\."\.e technlgu\.
Yihieul\.
Per\.annel\. cccs"ltallta et 1 9 10 -\.
-\. -\. -\. 90
exploit\.tloo de\. vehi¢ula\. -1
6
\.ill\.
630
ill
636 - \. 1:\.L
2\.3
Ll
I\.3
2!
q'l
total partie1 de \.nt\.nta J"IIFP 3050 2975 S966 11\.3 10\.1 22\.1 49
Soothn tochn19"e at "atlrld 1 1\. Due
Ytbieule", materlal at bitlmanta 98 210 368 0\.3 1\.0 1\.3 77
CoUu d' expl"tt\.Uon \.uppl\.ntal\. 139 \.ill\. \.ill\. !!\.:\.L 2\.J!\. b1\. !\.L
ec eOl\\.8ulCanta 237 486 723 0\.8 1\.8 2\.6 69
\.,\.
CoGt 4e loa\. tctal 3287 3402 6689 12\.1 12\.6 24\.7 Sl
Prov1don\.
Prov idon\. 1>0ur impdvua 49 108 157 0\.2
Provlda,," pour hau8\.e de prix 0 0\.6 61
1892 864 2756 1\.& 1\.:1\. 10\.2 11
1941 972 2UJ 7\.2 3\.6 10\.8 33
ceNt t!)tal du Proj\.c S228 4314 9602 19\.3 16\.2 3S\.5 46
1101\.- da 50,000 dollar
- 26
5\.04 Le pr~t de la Banque sera octroye au Gouvernement pour une duree
de 20 ans avec un differe d'amortissement de cinq ans, au taux d'interet en
vigueur au moment de la presentation du projet au Conseil des Administrateurs\.
Le pret de la Banque sera retrocede au FNFP et a la DEFC sous forme de dons\.
Le pret de la CDC devrait ~tre octroye aux m~es conditions que Ie pret
de la Banque et financera 30 % des coOts estimatifs de l'element representant
la plantation d'Edea\. Pour que Ie pret de la Banque prenne effet
(par\. 8\.02(a)), il faudra que les conditions auxquelles est subordonnee
l'entree en vigueur du pret de la CDC soient remplies\.
C\. Conditions de retrocession
5\.05 Comme il a ete convenu au cours des negociations, Ie Gouvernement
mettra a la disposition du FNFP et de la DEFC, sous forme de don, taus les
fonds necessaires (montants des prets de la Banque et de la CDC et la quote
part de l'Etat) pour executer Ie projet (par\. 8\.01(e))\. Bien que Ie FNFP soit
sur Ie plan juridique un organisme autonome, ses activitees se bornent a l'exe
cution des programmes de plantations du Gouvernement et il n'est donc pas
motive sur Ie plan commercial\. II s'ensuit que l'octroi de prets subsi
diaires au FNFP ne serait pas justifie\. En ce qui concerne la DEFC, les prets
subsidiaires sont inutiles puisqu'il s'agit d'un organisme public\. Pour que
Ie pret de la Banque entre en vigueur, Ie Gouvernement devra ouvrir pour
chacun des elements du projet des comptes separes qui serviront a financer
les frais de fonctionnement en monnaie nationale; d'autre part, l'execution
du projet ne pourra commencer qu'apres qu'il aura depose aces comptes un
montant d'au moins 400 millions de francs CFA pour la plantation d'Edea,
35 millions de francs CFA pour la plantation de la SEMRY, 25 millions de
francs CFA pour la plantation de Ngaoundere; 12 millions de francs CFA pour Ie
siege du FNfP et 33 millions de francs CFA pour la DEFC (par\. 8\.02(c))\. Le
compte de Ie plantation de Ngaoundere sera ouvert au siege du FNFP et les
fonds de la DEFC seront deposes a un compte subsidiaire du FNFP pour la DEFC\.
Ces comptes seront reapprovisionnes au cours de l'annee par les fonds prove
nant des prets de la Banque et de la CDC et au debut de l'exercice par la
contribution de l'Etat conformement a l'approbation des budgets pour les ele
ments du projet\. Le FNFP supervisera Ie flux des fonds du projet pour les
cinq elements\. En plus de la contribution supplementaire de l'Etat envisagee
pour l'element de Ngaoundere, Ie FNFP maintiendra les fonds de fonctionnement
destines au programme de plantation en cours de Ngaoundere a leur niveau de
1981 (40 millions de francs CFA; 148 000 dollars)\. Pour minimiser les frais
supplementaires de defrichement apres l'abattage, Ie programme de reboisement
envisage dans les plantations d'Edea commencera vers Ie milieu de 1981\. Un
financement retroactif pour ces activites sera accorde a concurrence de
1 million de dollars sur Ie pret de la Banque; des contributions de l'ordre
de 700 000 dollars pour la CDC et de 700 000 dollars pour l'Etat seront prevues
pour couvrir les depenses enregistrees apres Ie ler juillet 1981\.
-2'7 Tableau 2
Plan dL, financement envisage
(eu millions de dollars)
Bank CDC Etat Total
Plantations d'Edea
Vibicules, materiel et batiments 2\.9 2\.2 5\.1
lavestissements relatifs aux plantatioUJ 7\.1 S\.2 6\.9 19\.2
10\.0 7\.4 6\.9 24\.3
Plantations de Semry II (Maga)
Vebicules\. materiel et batiments 0\.4 0\.1 0\.5
Amenagement des plantations et couts 0\.7 0\.8 1\.5
d lexploitation
1\.1 0\.9 2\.0
Plantation de Ngaoundere
Vihlcules, materiel et batiments \ 0\.2 0\.1 0\.3
luveatfasements relatifs aux plantatlona 0\.4 0\.7 1\.1
0\.6 0\.8 1\.4
Service de production de semences amelior~es
Vebicules\. materiel et batiments 0\.1 0\.1 0\.2
lDvestissements relatifs aux plantations
0\.2 0\.3 0\.5
0\.3 0\.4 0\.7
Assistaneetechnique au FNFP
_ 1t
Vihlcules 0\.1 0\.1
Personnel, consultant et 2\.7 0\.5 3\.2
exploitation des vehicules
2\.8 0\.5 3\.3
SoutienTechnique et materiel a la DEFC
Vibicules, materiel et bitiments 1\.3' 0\.4 1\.7
Couts d'exploitation supplementaires 0\.9 1\.2 2\.1
et consultants
2\.2 1\.6 3\.8
Total 17\.0 7\.4 11\.1 35\.5
Pourcentage du total 48 21 31 100
Total du finsncement il\. I' exclusion des tax~s_\.::\.17::\.:\.;:\.o_ _ _ _-\.:\.7:\.,;\.4;:\._ _ _\.;8:::,\.:\.,:8::\.-_ _ _-\.:3:\.:3:\.:\.:,\.=2:\.-_
Pourcentage du total il\. l'exclusion des tax~ __~5_1________2_2 ____________7___________
_ 2 l_0_0___
\." Moina de 50\.000 dollars
- 28
D\. Passation des marches
5\.06 Les marches d'un montant egal a au moins 100 000 dollars, portant
principalement sur l'achat de gros materiel, seront passes dans Ie cadre d'un
appel a la concurrence internationale conformement aux directives de la Banque\.
Les fournitures achetees selon ces procedures devraient atteindre un montant
total de 5,2 millions de dollars environ (financement de la Banque : 3,3 mil
lions de dollars)\. Les achats seront groupes dans la mesure du possible pour
tirer Ie maximum d'avantages d'achats en grandes quantites\. Les marches d'un
montant inferieur a 100 000 dollars mais superieurs a 50 000 dollars seront
attribues sur appel d'offres dont la publicite est faite localement tandis que
les marches d'un montant egal ou inferieur a 50 000 dollars seront passes sur
la base d'offres de prix emanant de trois fournisseurs au moins ayant bonne
reputation\. Ces marches devraient atteindre un montant total de 1,1 million
de dollars (financement de la Banque : 700 000 dollars)\. Les travaux de prepa
ration de la terre et de construction de pistes forestieres qui doivent etre
etroitement coordonnes avec les operations de plantation ne se pretent pas a
une passation de marche par appel a la concurrence et seront donc effectues en
regie par les organismes de plantation respectifs du projet (2,9 millions
de dollars; financement de la Banque : 800 000 dollars)\. Les petits bati
ments 9values a 200 000 dollars (financement de la Banque : 100 000 dollars)
des plantations d'Edea, de la SEMRY et de Ngaoundere seront egalement cons
truits en regie\. Cependant, pour la construction des elements de la DEFC et
du service de production de graines, les marches d'une valeur de 700 000 dol
lars (financement de la 8anque : 500 000 dollars) seront attribues dans Ie
cadre d'adjudications avec publicite locale, conformement a des procedures
jugees acceptables par la Banque\. Les marches relatifs a l'assistance tech
nique (294 hommes-mois) dont Ie coat total se monte a 3,2 millions de dollars
environ (financement de la 8anque : 3,1 millions de dollars) seront attribues
conformement a des procedures portant sur Ie recrutement au niveau interna
tional\. Tous les mandats, qualifications et contrats des specialistes devant
etre recrutes conformement aux directives du Groupe de la 8anque, seront
juges satisfaisants par la 8anque\. Quelque 18,2 millions de dollars de de
penses pour Ie projet (principalement coats de fonctionnement et salaires du
personnel local) (financement de la 8anque : 7 millions de dollars) ne se pre
tent pas aux procedures d'appel d'offres et seront engages conformement a des
pratiques prudentes et bien etablies qui sont satisfaisantes\. Les versements
effectues par l'Etat a la Cellucam pour les services de gestion seront determi
nes selon les principes de finis dans Ie contrat de gestion envisage avec la
Cellucam (par\. 4\.02 et 4\.03) et se monteront a 4 millions de dollars environ
(financement de la 8anque : 1,5 million de dollars)\.
E\. Decaissement
5\.07 Le pret de la Banque sera decaisse sur une periode de sept ans
(voir Annexe Tableau 1)\. Ce calendrier de versement est fonde sur l'expe
rience de la Banque en matiere de decaissement de prets au Cameroun\. Le pret
de la Banque financera les depenses du projet comme suit :
- 29
Millions de dollars Decaissement (%)
1\. Plantations d'Edea
Vehicules, materiel et b§timents 2,3 60
Coats d'investissement des plan
tations, y compris Ie coat du
personnel local et les depenses
de la Cellucam 7,4 35
2\. Plantation de la SEMRY (Maga)
Vehicules, materiel et b§timents 0,4 75
coats d'investissement de la plan
tation, y compris Ie coat du
personnel local 0,6 50
3\. Elements du FNFP
a) Plantation de Ngaoundere
Vehicules, materiel, b§timents 0,2 75
Coats d'investissement de la plan
tation, y compris Ie coat du
personnel local 0,1 35
b) Production de graines
Vehicules, materiel, b§timents 0,2 75
Coats d'exploitation supplementaires 0,1 35
c) Assistance technique et services de
consultants
Vehicules et coats d'exploitation 0,1 60
Personnel expatrie 2,4 100
4\. Soutien technique et materiel a la DEFC
Vehicules, materiel et b§timents 1,2 75
Coats d'exploitation supplementaires 0,4 35
Services de consultants expatries 0,4 100
5\. Non affecte
TOTAL
- 30 -
Les decaissements relatifs aux travaux de genie civil, a l'achat de vehicules
et de materiel, aux versements effectues a la Cellucam pour les services de
soutien et aux services de consultants se feront sur presentation de pieces
justificatives\. Les decaissements relatifs aux coats de plantation pour Ie
projet, y compris les salaires du personnel local, seront effectues sur pre
sentation de releves de depenses certifies\. Les pieces justificatives qui ne
seront pas presentees avec les demandes de retrait seront mises en suspens et
tenues a la disposition des missions de supervision de la Banque pour examen\.
II faudrait prendre des dispositions appropriees pour verifier les depenses
financees sur presentation de factures\.
5\.08 Le comptable du projet, qui sera recrute pour Ie siege du FNFP
(par\. 4\.06), sera charge de la comptabilite et du contrOle financier des ele
ments du FNFP et coordonnera la preparation des demandes de retrait de fonds
emanant du pr~t de la Banque pour tous les elements du projet\.
5\.09 Comptabilite, audit et etablissement de rapports\. Le FNFP tiendra,
conformement a des pratiques comptables appropriees, les ecritures se rappor
tant aux elements du FNFP et necessaires pour enregistrer la situation finan
ciere de chaque element et leurs coats detailles d'exploitation\. La compta
bilite des elements des plantations d'Edea et de la SEMRY sera confiee aux ser
vices comptables de la Cellucam et de la SEMRY; cependant, des comptes separes
seront tenus pour ces elements et seront contrOles par Ie FNFP\. Les systemes
comptables actuellement utilises par la Cellucam et la SEMRY suivent les proce
dures de comptabilite analytique appropriees a l'etablissement de releves de
depenses et de balances d'inventaire mensuelles exigees par Ie FNFP, comme il
sera precise dans les accords d'execution qui seront signes pour ces elements
(par\. 4\.02 et 4\.05)\. Le comptable du projet au FNFP conseillera egalement la
DEFC sur les ameliorations a apporter a la comptabilite et a l'etablissement
de rapports\. Le FNFP tiendra pour l'ensemble du projet une comptabilite con
solidee qui recapitulera les balances d'inventaires mensuelles\.
5\.10 les comptes du projet tenus par Ie FNFP feront l'objet d'une veri
fication comptable effectuee chaque annee par un expert-comptable independant
dont les qualifications et Ie mandat seront juges acceptables par la Banque\.
le rapport de l'expert-comptable sera presente a la Banque dans les quatre
mois suivant la clOture de l'exercice du FNFP\. De plus, les experts
comptables de la Cellucam fourniront chaque annee un releve indiquant les couts
reels des services rendus par la Cellucam a la plantation d'Edea au cours de
l'exercice precedent\.
5\.11 Le FNFP et la DEFC soumettront chaque trimestre au Gouvernement et
a la Banque des rapports sur l'etat d'avancement presentant les depenses
reelles et celles prevues au budget et indiquant les travaux realises et les
objectifs pour Ie trimestre a venir pour chaque element du projet\.
- 31
VI\. PRODUCTION, DEBOUCHES ET RESULTATS FINANCIERS
A\. Production
6\.01 Apres la periode d'investissement du projet, les plantations commen
ceront a produire comme suit :
Abattage (nombre Production (en
d'hectares milliers de m3
Categorie Annee du pro,jet par an) par an)
Bois a papier
15-26 (pins) 520 136
Plantation d'Edea 15 et 23 1 800 588
(eucalyptus)
16 et 24 1 800 401
Bois de chauffage et
bois de construction
6 14 (pins et 19
400
Plantations de la SEMRY)
et de Ngaoundere ) 15 23 eucalyptus) 22
)
25 29 (pins) 150 47
B\. Debouches et commercialisation
6\.02 La Cellucam utilisera comme matiere premiere (par\. 1\.11) du bois de
plantation au lieu du bois en provenance de la foret naturelle; Ie debouche
pour Ie bois de la plantation d'Edea est donc assure\. L'abattage du bois a
papier sera contrOle de sorte que de l'annee 15 a l'annee 26 du projet (1995
a 2006), la Cellucam pourra compter sur Ie bois de plantation pour satisfaire
100 % de ses besoins annuels en bois a longues fibres (pin) et pres de 100 %
de ses besoins en bois a fibres courtes (eucalyptus)\. Pour passer completement
de l'utilisation de la futaie tropicale au bois de plantation, et pour atteindre
un objectif de production de 80 % de pate blanchie a courtes fibres et 20 % de
pate blanchie a longues fibres, Ie Gouvernement et la Cellucam continueront
de l'annee 6 a l'annee 11 du projet a planter un nombre suffisant d'eucalyptus
(2 500 ha environ par an)\.
6\.03 La Cellucam paiera Ie bois sur pied un prix negocie pour les arbres
de plantation venus a maturite, qui sera determine suivant les principes pre
cises dans Ie contrat d'execution passe entre la Cellucam et Ie Gouvernementl
FNFP (par\. 4\.02)\. Ces principes, examines au cours des negociations, permettront
- 32
a l'Etat, d'une part, de recouvrer la totalite du cout de plantation et
d'entretien et, d'autre part, d'obtenir un taux de rentabilite positif apres
ajustement pour inflation\. De plus, il a ete convenu que la Cellucam devrait
acheter Ie bois de plantation dans un certain lapse de temps suivant la venue
a maturite des arbres\. D'autre part, il a ete convenu que si Ie prix du bois
sur pied excedait la valeur du bois determinee sur la base du prix paritaire
a l'importation, la Cellucam pourrait ajourner ses achats d'un an\. Pour illus
trer Ie principe de recouvrement des coats si lion prend comme base les
coats estimatifs du projet aux prix de 1981 et si lion fixe arbitrairement a
2,5 % Ie taux de rentabilite reel des investissements, Ie prix du bois sur pied
3 3
devrait depasser 2 820 francs CFA la m (10,44 dollars Ie m ) d'ou un cout
du bois livre a la Cellucam de 6 120 francs CFA Ie m 3
3 (22,67 dollars Ie m )\.
Ce prix du bois livre se situe dans la fourchette des prix que paieRt actuelle
ment les producteurs de pate a papier dans de nombreux pays developpes (de
3
15 dollars a 30 dollars Ie m )\.
6\.04 La production de bois des plantations en blocs de la SEMRY sera ab
sorbee par Ie marche de Maga qui comprend la zone de la SEMRY, ou la demande
devrait s'accroitre de 5 % par an, et ou il y a penurie de bois par suite de
L'augmentation naturelle de la population et de la reinstallation recente de
25 000 personnes environ (quelque 4 000 familIes) dans la zone de la SEMRY\. La
production des plantations aidera a satisfaire la demande croissante de cette
region qui devrait augmenter de 30 000 m3 d'ici a l'annee 5 du projet\. Compte
tenu des possibilites d'ecoulement, la moitie environ du bois sera vendue sous
forme de bois de feu et l'autre moitie sous forme de bois de service\. La
SEMRY et Ie FNFP annonceront la vente de droits d'abattage sur des exploi
tations de tailles differentes et Ie bois sera vendu sur pied a des bacherons,
sous contrat\. Les prix planchers du marche acceptables seront superieurs a un
prix plancher du bois sur pied qui sera au moins suffisant pour couvrir les
frais de creation et d'entretien de la plantation estimes a 1 800 francs CFA
3 3
Ie m (6,67 dollars Ie m ) aux prix de 1981, ce qui represente actuellement
15 % environ de la valeur moyenne actuelle sur Ie marche des eucalyptus sur
pied dans la region\. A partir de l'annee 6 du projet, les villageois paieront
egalement pour Ie bois sur pied des bois communaux un prix payable au moment
de la coupe, ceci pour permettre au FNFP et a la SEMRY de recouvrer Ie coat
de preparation du sol (par\. 3\.09)\. D'apres les coats estimatifs du projet,
3 3
ce prix atteindra au moins 760 francs CFA Ie m (2,80 dollars Ie m ) au prix
de 1981 et Ie montant a verser correspondra a la recette provenant de la vente
d'une petite quantite de bois sur les marches locaux\.
6\.05 D'apres les possibilites de marche de la region de Ngaoundere, 5 %
de la production d'eucalyptus pourrait etre consacree a la construction
de poteaux electriques, 25 % au bois de construction et 70 % au bois de feu\.
Pour les pins, la moitie de la production provenant des eclaircies effec
tuees de l'annee 7 a l'annee 19 du projet pourrait servir de bois de feu
et l'autre moitie de bois de service\. Au moment de la coupe rase, la moitie
des pins pourrait fournir des grumes de sciage\. La consommation annuelle
3
de combustibles dans la region de Ngaoundere est estimee a 55 000 m et
la demande devrait augmenter de 4,5 % par an jusqu'en 1990\. Par consequent,
- 33
3
les 4 000 m supplementaires de bois de la savane arbustive qui seront
disponibles grace au defrichement effectue dans Ie cadre du projet et la
3
production annuelle supplementaire de 8 400 m disponible apras l'annee 6
du projet seront rapidement absorbes\. L'envergure du marche des poteaux de
ligne, lequel absorbe actuellement environ 700 m3 par an dont la majeure
partie est deja fournie par les plantations du FNFP a Ngaoundere, devrait
augmenter d'environ 15 ~ par an au fur et a mesure que d'autres lignes seront
installees dans la province du nord\. La production supplementaire de poteaux
prevue, qui est de 225 m par an, est inferieure a la demande supplementaire
3
de 850 m 3 par an qui sera enregistree chaque annee apras l'annee 6 du projet
et sera donc immediatement absorbee\. La production supplementaire de bois de
3
service, 1 125 m par an, sera egalement inferieure a la demande supplemen
3
taire prevue de 6 500 m par an apras l'annee 6 du projet\. Bien qu'il n'existe
pas actuellement de scierie a Ngaoundere, il ne devrait pas ~tre difficile de
3
commercialiser les 48 000 m de grumes de pins pour la construction disponibles
a l'annee 25 du projet si lIon considare que la demande actuelle de bois de
3
sciage dans la province du nord depasse 50 000 m par an\. Le FNFP commercia
lisera Ie bois de plantation par l'intermediaire des bOcherons locaux, sous
contrat, comme il Ie fait actuellement au nom du Gouvernement\. Les prix du
bois sur pied devraient continuer a ~tre superieurs aux niveaux moyens neces
saires pour permettre de recouvrer la totalite des coOts et inter~ts,estimes
3 3
a 1 700 francs CFA Ie m (6,30 dollars Ie m ) pour Ie pin et a 1 200 francs CFA
Ie m 3
3 (4,44 dollars Ie m ) pour l'eucalyptus (par\. 7\.06)\.
C\. Resultats financiers
6\.06 Les flux financiers de llEtat relatifs aux plantations et au projet
ont ete estimes de la maniare suivante :
\. i) les coOts des elements du projet ont ete estimes chaque annee
avec les provisions et les impots, comme dans Ie dossier du pro
jet, avec en plus les couts renouvelables afferents a la periode
suivant l'execution du projet;
ii) les recettes comprennent les impOts indirects, les revenus des
plantations de Ngaoundere et de la SEMRY estimes aux prix courants
du marche (par\. 7\.06), et les revenus de la plantation d'Edea
estimes aux prix minimums du bois sur pied permettant de recouvrer
la totalite des coOts et d'atteindre un taux de rentabilite nomi
nal (par\. 6\.03); tous ces montants sont ex primes en prix courants;
iii) l'estimation du montant du service de la dette est fondee sur Ilhy_
pothase selon laquelle Ie pret de la CDC serait accorde aux m~mes
conditions que celui de la Banque (par\. 5\.04); et
iv) les recettes supplementaires enregistrees par suite de l'amelioration
du calcul et de la perception des redevances et impots forestiers
due au renforcement de la DEFC ont ete exclues des calculs\.
»
- 34
D'apres ces hypotheses, les resultats financiers sont les suivants :
Projet, plus ser
vice de la dette
PlantationsL1 Projet/ 2 moins impOts
Annee ou les recettes
annuelles sont posi
tives pour la pre
miere fois annee 7 annee 7 annee 14
Periode d'amortissement
(annees jusqu'au pre
mier flux de tresore
rie cumule positif) 15 15 16
Investissement cumule
(en milliolls) $ 28,4 $ 34,0 $ 30,0
/1 Les trois elements de plantation\.
/2 Plantations plus la DEFC et le FNFP\.
Les resultats financiers sont presentes en detail dans Ie dossier du projet\.
l 'Etat devrait amortir son investissement en 16 ans au plus s'il reussit a
ameliorer Ie recouvrement des impOts et des redevances per~us aupres du
secteur forestier\. Avec l'amelioration des procedures administratives et de
la perception des impOts et des redevances leves sur la recoite connue de
bois, les recettes pourraient augmenter de 1 000 millions de francs CFA par an
(3,7 millions de dollars), ce qui permettra de disposer chaque annee de revenus
supplementaires (SOD millions de francs CFA environ, soit 1,9 million de dol
lars) suffisants pour financer Ie coat du reboisement pendant 7 des 13 annees
au cours desquelles le flux de tresorie cumule de l'Etat sera negatif\.
6\.07 les taux de rentabilite financiere du projet seront determines en
grande partie par le prix du bois sur pied qui sera negocie entre Ie Gouver
nement et la Cellucam pour Ie bois de la plantation d 'Edea\. Le tableau ci
apres presente les taux de rentabilite pour differents prix du bois sur pied
3
a Edea, allant de 12 dollars Ie m (prix approximatif qui permettrait a
3
l'Etat de recouvrer les coOts) a 57 dollars Ie m (prix paritaire a l'im
portation) (par\. 7\.05)\. Si lIon considere que Ie coat de la recolte et du
3
transport du bois de plantation a l'usine est de 13 dollars Ie m environ
(par\. 6\.03), Ie Gouvernement pourrait appliquer un prix allant jusqu'a 18 dol
3
lars Ie m de bois sur pied et enregistrer une rentabilite financiere allant
jusqu'a 9,8 % sur l'investissement total sans pour cela que Ie coOt du bois
de la Cellucam soit superieur au coat plafond habituellement enregistre
ailleurs par des entreprises de pate a papier efficaces\. Un accord sur les
prix, satisfaisant pour les deux parties, pourra probablement etre conclu
entre la Cellucam et Ie Gouvernement\.
- 35
TAUX DE RENTABILITE FINANCIERE/l
--------Taux de rentabilite financiere---------------------
Projet plus
service de
Prix du bois sur Elements de la dette
pied a Edea Edea SEMRY Nqaoundere plantation moins impots
(en dollars par m ) _____________________________ %
3 _____________________-------
12 5,2 18,0 18,1 8,1 7,1
18 7,9 II II
10,0 9,8
24 9,9 " " 11 ,3 11 ,8
30 11,5 " " 12,5 D,2
48 14,9 " " 15,3 17,2
57 16,1 " " 16,6 18,4
11 L\.es flux d'avantages nets ont ete calcules sur la meme base que le flux
de tresorerie de l'Etat (par\. 6\.06) mais aux prix de 1981\.
- 36
VII\. AVANTAGES, JUSTIFICATION ECONOMIQUE ET RISQUES
A\. Avantages
7\.01 Dans Ie cadre du projet, Ie programme de plantation de 11 000 ha don
nera des resultats immediatement quantifiables, a savoir : i) une production
3
supplementaire annuelle egale en moxenne a 19 000 m de bois de l'annee 6 a
l'annee 14 du projet, et a 26 000 m' de l'annee 15 a l'annee 29, essentielle
ment dans la grovince du nord qui conna1t une penurie de bois; et
ii) 330 000 m par an de bois abattu de l'annee 15 a l'annee 29 a Edea
3
(par\. 6\.01)\. Cela permettra a la Cellucam de n'utiliser en fin de compte que
du bois de plantation de qualite uniforme, d'ou une diminution d'environ 33 %
environ des coats de la recolte et de 20 % environ du coat de la fabrication
de pate et une augmentation de la valeur de la pate a fibres longues et
courtes par rapport a la valeur actuelle (par\. 1\.11)\. II s'ensuivra une ame
lioration des resultats financiers de la Cellucam d~nt l'Etat, principal
actionnaire, sera Ie beneficiaire\. ,De surcro1t, des graines ameliorees
d'eucalyptus provenant des vergers I graines finances par Ie projet seront
disponibles apres l'annee 6 et des graines ameliorees de pin apres l'annee 10\.
Cet element du projet fournira environ la moitie des graines necessaires pour
executer les futurs programmes de plantation du FNFP, ce qui est d'autant plus
avantageux que Ie desequilibre entre l'offre et la demande mondiales pourrait
limiter les futurs programmes de plantation\.
7\.02 Le principal avantage indirect du projet envisage sera Ie renforce
ment des deux principaux organismes du secteur forestier, Ie FNFP et la DEFC\.
Le projet mettra en place la base necessaire pour assurer un suivi et un
contrdle ameliore a terme de l'exploitation forestiere et pour l'etablisse
ment de programmes de regeneration bien fondes sur les plans economique et
technique\. Le renforcement de ces organismes sera avantageux dans l'immediat
sur Ie plan financier: d'une part, la perception des impdts et des redevan
ces s'ameliorera et, d'autre part, des economies seront realisees grace a la
mise en oeuvre de programmes de reboisement plus rentables, executes par Ie
personnel du FNFP forme dans Ie cadre du projet\. Enfin, Ie projet permettra
d'acquerir davantage d'experience dans Ie domaine de la foresterie villageoise
qui est l'un des elements cles grace auxquels il sera possible de freiner la
degradation des ressources forestieres en zone seche (par\. 3\.09)\.
B\. Justification economigue
a) Analyse et taux de rentabilite economigue
7\.03 L'analyse economique du projet est limitee a trois elements de plan
tations productives representant 81 % du coat total du projet, a savoir les
plantations d'Edea, de la SEMRY et Ngaoundere et a l'assistance technique
accordee au FNFP et representant 7 % des coats du projet \. L'Etat beneficiera
d'avantages importants decoulant du service de production de graines ameliorees,
- 37
mais qui sont de par leur nature similaires aux efforts de recherche a long
terme dont les avantages et les coats ne sont pas quantifies aux fins d'ana
lyse economique\. De plus, les avantages dont beneficiera l'Etat grace a
l'amelioration de la DEFC sont des avant ages financiers; il s'agit en effet
de paiements de transferts dont la valeur economique nlest pas calculee\. Deux
analyses ont ete faites sur la plantation d'Edea; la premiere porte sur la
plantation de 8 800 ha prevue dans Ie projet et la deuxieme, sur Ie programme
de reboisement de 24 000 ha qui permettra a la Cellucam d'utiliser du bois de
plantation\. La variation du taux de rentabilite economique de la plantation
dlEdea dans Ie cas ou lion exclurait la Cellucam comme debouche est analysee
dans Ie paragraphe consacre aux risques du projet (par\. 7\.11)\.
7\.04 Les coats et les vantages ont ete estimes aux prix constants de
1981\. Tousles coats sont ex primes nets d'impOts et tous les coats autres
queles coats de main-d'oeuvre comprennent des provisions pour imprevus ap
propriees (par\. 5\.02)\. La part des coats d'investissement et des coats de
fonctionnement autres que ceux dela main-d'oeuvre qui represente des services
et des biens non commercialises a ete multipliee par un facteur de conversion
standard de 0,77 pour obtenir des prix frnco frontiere et pouvoir ainsi Ie com
parer a des biens et services commercialises\. On a egalement ramene les trai
tements et salaires de la main-d' oeuvre qualifiee travaillant dans les planta
tions d'Eaea, qui sera payee selon Ie SMIC aux niveaux des prix franco frontiere,
en les multipliant par Ie facteur de conversion standard 0,77\. La main-d'oeuvre
saisonniere non qualifiee travaillant dans les plantations d 'Edea sera payee aux
niveaux de sal aires les plus bas permis par Ie SMIC\. Cependant, pour l'analyse
economique, Ie coat de la main-d'oeuvre est evalue selon des salaires compa
rabIes aux salaires payes pour un travail similaire, realise dans des condi
tions comparables dans Ie cadre de projets de plantations agricoles de la re
gion\. Le coat de la main-d'oeuvre saisonniere qualifiee et non qualifiee
travaillant dans les plantations de la SEMRY et de Ngaoundere est evalue au
taux salarial dumarche, net d'impOt, qui traduit actuellement la valeur de
rarete de la main-d'oeuvre en periode de pointe\.
7\.05 On a estime la valeur des pins sur pied a la plantation d'Edea d'apres
Ie prix des copeaux de bois de pin importes livres a l'usine de pate a papier
tout en tenant compte des couts d'abattage et de dechiquetage du bois de plan
3
tation au m Le resultat est une valeur economique du pin sur pied de 57 dol
3
lars Ie m aux prix de 1981\. En fonction des projections recentes de la si
tuation commerciale mondiale future, ce prix est majore de 0,5 % par an en
termes reeels\. La valeur economique des eucalyptus a ete calculee directement
comme etant egale au coat de la recolte d'eucalyptus, lequel est inferieur a
celui de la recolte de bois de feuillus de la for§t naturelle, auquel sont
venus s'ajouter les economies realiseees sur les coats de fabrication de la
pate par suite de l'utilisation de bois de plantation de qualite uniforme
(par\. 7\.02)\. Le resultat est une valeur economique estimative des eucalyptus
3
sur pied de 12 dollars Ie m
- 38
7\.06 La valeur des eucalyptus sur pied a la 5EMRY est estimee a 53,40 dol
3
lars Ie m C'est la valeur moyenne ponderee du bois de service (50 %) et
du bois de feu (50 %) calculee en soustrayant des prix du marche les coats
estimatifs de l'abattage et du transport\. 5i lIon considere que Ie bois de la
5EMRY est ecoule localement sur des marches qui ne sont pas, pour la plupart,
reglementes, les valeurs monetaires sur Ie marche local sont en fait les
valeurs economiques du bois\. Le bois abattu par les proprietaires de par
celles dans les bois communaux a egalement ete evalue a ce prix\. D'apres
les estimations, la valeur des eucalyptus sur pied a la plantation de
3
Ngaoundere est de 44 dollars Ie m , ce qui correspond a la valeur ponde
ree du bois de feu, de service, et des grumes pour poteaux de ligne sur
pied, calculee a partir des prix du marche dont on a deduit les couts
d'abattage et de transport\. La valeur des pins sur pied est estimee a
3
10 dollars Ie m de llannee 7 a l'annee 10 du projet, et a 15 dollars Ie
3
m de l'annee 11 a l'annee 20 du projet, ce qui represente les prix moyens
ponderes des bois de service, de feu et du petit bois de sciage\. Au moment
de la coupe rase des pins qui serviront de bois de sciage, entre l'annee 25 et
3
l'annee 29, leur valeur sera de 24,50 dollars Ie m Les marches locaux
de bois de feu, de service et de sciage ne sont soumis a aucune reglementa
tion de sorte que les valeurs monetaires sur Ie marche local correspondent
aux valeurs economiques du bois\. Les poteaux de ligne seront vend us a la
50NEL, societe nationale d'electricite, a 77 dollars environ la piece (aux
prix de 1981) pour ~tre utilises dans la province du nord\. Ce prix est une
approximation de la valeur paritaire a llimportation de poteaux de bois traite
qui ant ete vendus recemment au niveau international a des prix allant de 174
a 264 dollars la piece, deduction faite, d'une part, des frais de transport
qui se montent a environ 30 % de la valeur (pour Ie calcul du prix CFA Douala)
et, d'autre part, des frais de transport se montant a 50 % de la valeur (pour
fixer un prix local a Ngaoundere)\. Le calcul des prix economiques est
presente dans Ie dossier du projet\.
7\.07 D'apres les hypotheses susmentionnees, les taux de rentabilite eco
nomique des elements du pro jet sont les suivants
- 39 -
Taux de
rentabilite
economique Valeur de substitution a 12 %
% du coOt estimatif en l20urcentage en l20urcentage
du I2rojet en % des coOts des avantages
Elements
Plantation d'Edea (projet) 70 13,9 20,9 -17,3
Plantation d'Edea (programme) 13,7 15,7 -13,6
Plantation de la SEMRY 7 19,1 67,7 -40,4
Plantation de Ngaoundere 4 19,0 88,1 -46,8
Projet (3 plantations plus
Ie siege du FNFP) 88 13,9 19,0 -16,0
Les flux de couts et avantages detailles utilises figurent dans Ie dossier du
projet\.
b) Sensibilite
7\.08 Le taux de rentabilite du projet n'est dans l'ensemble que peu sen
sible aux modifications des coOts et avantages reels\. Comme il est indique au
paragraphe 7\.07, il faudrait une augmentation generale des coOts reels de 19 %
ou une baisse des avantages reels allant jusqu'a 16 % pour que Ie taux de renta
bilite economique tombe a 12 %, c'est-a-dire au niveau representant Ie coOt
estimatif d'opportunite du capital\. De surcroit, les deux plantations situees
dans la zone aride, celIe dela SEMRY et celIe de Ngaoundere, ne sont que tres
peu sensibles aux modifications des coOts et des avantages\. Les facteurs ci
apres, qui pourraient avoir une influence sur Ie taux de rentabilite econo
mique de la plantation d'Edea, sont particulierement importants :
a) l' augmentation du I2rix reel du l2in : \.si la valeur economique du pin
n'augmentait pas de 0,5 % par an comme prevu (par\. 7\.05), Ie taux de
rentabilite economique du projet tomberait de 13,4 % a 13,2 %;
b) un retard dans Ie I2rogramme des 121antations : des retards dans Ie
programme d'abattage de la futaie tropicale de la Cellucam ralenti
raient Ie rythme de plantation, d'ou un recul de la date a partir
de laquelle Ie projet commencera a produire des avantages\. Dans un
- 40
tel cas, de nombreux couts pourraient etre evites, mais un ajour
nement d'un an dans la realisation des avantages par rapport aux
couts du projet est une eventualite qui n'est pas a ecarter, et
un tel retard ferait tomber Ie taux de rentabilite economique de
13,4 % a 13 %; et
c) la variation des rendements : les estimations des rendements qui sont
a la base du projet envisage sont conformes aux rendements obtenus
au cours des tests de provenance effectues dans la region d'Edea\.
Neanmoins, si les conditions microecologiques changent, les rende
ments peuvent varier\. Si Ie rendement diminue de 10 %, Ie taux de
rentabilite economique tombera a 13 % et une diminution des rende
ments de 20 % pourrait se traduire par un taux de rentabilite econo
mique de 12,2 %\.
C\. Risgues
7\.09 La reussite du projet envisage n'est menacee par aucun risque _tech
nique majeur au inhabituel\. Les risque normaux d'incendie dans des planta
tions de zone aride et de maladies ant ete pris en compte, comme i l se doit
lars de la conception du projet et des fonds ont ete prevus pour assurer une
protection adequate\. Les techniques de plantation envisagees ant e~e utili
sees dans plusieurs pays d'Afrique de l'Ouest avec succes, dans des conditions
climatiques d'aridite et d'humidite similaires\. Des techniques mains eprou
vees visant a creer des bois individuels (par\. 3\.09) seront utilisees dans Ie
cadre d'un projet pilote et les risques qui peuvent exister sont d'ordre socio
economique plut6t que technique\.
7\.10 La Cellucam sera Ie principal debouche pour Ie bois des plantations
financees dans Ie cadre du projet et un participant important a l'execution du
projet, bien que l'Etat soit proprietaire du bois qui sera plante et soit
charge d'etablir les modalites appropriees pour Ie calcul des prix du bois sur
pied dans Ie contrat avec la Cellucam (par\. 8\.02(b»\. De plus, une analyse du
cash-flow projete de la Cellucam indique que la Cellucam sera a meme de payer
un prix du bois sur pied raisonnable lorsque Ie bois sera pret a etre abattu\.
Cependant, dans Ie cas au la Cellucam ne constituerait pas un debouche pour Ie
bois de plantation du projet, ce qui est peu probable, la production des plan
tations de pins et d'eucalyptus pourrait etre exportee sous forme de parti
cules de bois, de grumes de sciage pour la construction et de poteau x de ligne\.
Si 20 % du bois de pin etaient vendus sous forme de bois de construction et
80 % sous forme de particules de bois pour l'exportation, et si 5 % du bois
d'eucalyptus etaient vendus comme bois de service et poteaux de ligne et 95 %
sous forme de particules de bois, l'Etat pourrait vendre les arbres plantes
3
dans Ie cadre du projet a 12 dollars environ Ie m aux prix de 1981\. Ce prix
serait suffisant pour permettre a l'Etat de recouvrer la totalite des couts et
obtenir un taux de rentabilite de 2,5 % sur son investissement (par\. 6\.03)\.
- 41
VIII\. ASSURANCES ET RECOMMANDATIONS
8\.01\. Au cours des negociations, Ie Gouvernement a assure:
a) qu'aucune activite ne serait effectuee dans les bois communaux avant
qu'un plan d'action pour executer un tel programme n'ait ete soumis
a la Banque et approuve par cette derniere (par\. 3\.09);
b) que des responsables ayant des qualifications et un mandat juges accep
tables par la 8anque seraient recrutes suivant les procedures decrites
dans les "Directives pour l'emploi de consultants par des emprunteurs
de la 8anque mondiale et par la 8anque mondiale en tant qu'Agence d'exe
cution" pour les postes de directeur de programmes, de comptable du pro
jet, et de directeur de plantations charge de la supervision pour Ie
FNFP et de directeur de la foresterie pour la SEMRY (par\. 4\.06);
c) que les plantations d'Edea, de la SEMRY et de Ngaoundere seraient ef
fectuees conformement aux plans de travail et aux budgets annuels
presentes a la 8anque pour approbation Ie 31 mars de chaque annee
precedant la mise en oeuvre du programme (par\. 3\.10, 4\.03, 4\.04);
d) que des responsables nommes pour calculer les impots et redevances
et s'occuper du controle de leur perception dans chacune des cinq
provinces seraient en poste pendant toute la periode d'investissement
du projet (par\. 4\.07);
e) qu'il mettrait a la disposition de la DEFC et du FNFP suffisamment de
fonds pour executer Ie projet, les fonds etant octroyes sous forme de
dons a la DEFC et au FNFP qui tiendra des comptes separes pour chaque
element du projet et qui reapprovisionnera ces comptes au cours de
l'annee en utilisant pour cela des fonds provenant des pr~ts de la
Banque et de la CDC, et au debut de l'exercice a l'aide de sa
contribution, conformement au budget approuve pour les divers ele
ments (par\. 5\.05); et
f) qu'il prendrait toutes les mesures necessaires pour percevoir d'ici au
31 decembre 1982 tous les impots et redevances forestieres dus et en
souffrance depuis Ie 31 juillet 1980 et pour assurer que tous les
impots forestiers et redevances seront par la suite correctement
calcules et seront per~us dans les douze mois suivant leurs calculs
respectifs (par\. 1\.13)\.
8\.02 l'entree en vigueur du pr~t sera soumise aux conditions preala
bles suivantes :
- 42
a) toutes les conditions prealables a l'entree en vigueur du pret de
la CDC auront ete remplies (par\. 5\.04);
b) Ie contrat entre la Cellucam et l'Etat/FNFP, juge acceptable par la
Banque et precisant les modalites de mise en place de la plantation
d'Edea, aura ete signe (par\. 4\.02);
c) Ie Gouvernement aura etabli des comptes du projet separes pour
chacun des elements de plantation et depose aces comptes 400 mil
lions de francs CFA (1,5 million de dollars) pour la plantation
d'Edea; 35 millions de francs CFA (130 000 dollars) pour la SEMRY;
25 millions de francs CFA (90 000 dollars) pour la plantation
de Ngaoundere; 12 millions de francs CFA (40 000 dollars) pour Ie
siege du FNFP; et 33 millions de francs CFA (120 000 dollars) pour
la DEFC, montants qui representent les frais d'exploitation affe
rents a ces elements pendant une periode de six mois (par\. 5\.05)\.
8\.03 La signature d'un accord juge satisfaisant par la Banque, conclu
entre Ie FNFP et la SEMRY et precisant les dispositions a prendre pour mettre
en place Ie programme, sera la condition prealable au decaissement des montants
correspondant a des couts concernant l'element de la SEMRY et qui peuvent ~tre
finances dans Ie cadre du pret (par\. 4\.04)\.
8\.04 Sous reserve des conditions susmentionnees, Ie projet justifie
l'octroi par la Banque d'un pret de 17 millions de dollars\.
- 43
ANNEXE
Tableau 1
CAMEROUN - PROJET FORESTIER
Etat Estimatif des Decaissements
(en millions de dollars EU)
Annees Fisca1es Decaissements Pourcentage de
et Trimestres (BIRD) Decaissements cumu1es Decaissement
AF 83
Septemb re 1982 0\.2 0\.2 1
Decembre 1982 0\.4 0\.6 4
Mars 1983 0\.4 1\.0 6
Juin 1983 0\.5 1\.5 9
AF 84
Septembre 1983 0\.7 2\.2 13
Decembre 1983 0\.7 2\.9 17
Mars 1984 0\.8 3\.7 22
Juin 1984 0\.9 4\.6 27
AF\. 85
Septembre 1984 0\.9 5\.5 32
Decembre 1984 0\.9 6\.4 38
Mars 1985 0\.9 7\.3 43
Juin 1985 0\.9 8\.2 48
AF 86
Septemb re 1985 0\.9 9\.1 54
Deceml:J'e 1985 0\.8 9\.9 58
Mars 1986 0\.8 10\.7 63
Juin 1986 0\.8 11\.5 68
AF 87
Septemb re 1986 0\.7 12\.2 72
Decemb re 1986 0\.6 12\.8 75
Mars 1987 0\.6 13\.4 79
Juin 1987 0\.5 13\.9 82
AF 88
Septembre 1987 0\.5 14\.4 85
Decembre 1987 0\.5 14\.9 88
Mars 1988 0\.5 15\.4 91
JUin 1988 0\.5 15\.9 94
AF 89
Septembre 1988 0\.3 16\.2 95
Decembre 1988 0\.3 16\.5 97
Mars 1989 0\.3 16\.8 99
Juin 1989 0\.2 17\.0 100
~Y11 - PHQJID' FOflESTIm Annexe
Tableau 2
Cash Flov de 1 'Etatll
(en million de FCrA)
InTeat1!;sen:ellts
Recettes r6aultant du proJet SurElus ProJet \. l"!nance1llent du ProJet Cash Flow let de l'Etat
Colnposante Autres COlli- ColTlllosante SOIW- Taxes indi- Sous\. Service de
Plantation '$I ColllPosante ( financement
/IIlnEes f?slIIltea FNFP\. Dt~C \. \. total
PllllltationaY rectes !I Total reguia) ~!!I la dette ;V Net Annue! Ct:\.nru1 s ti t
1982 1398 223 400 2021 130 130 (1891) 243 76 168 (1,723) (1,732)
1983 1050 156 126 1332 90 90 (1242) 891 69 822 (420) (2,152)
1984 1605 168 81 1860 122 122 (1738) 1350 162 1,188 (550) (2,702)
1985 1922 240 239 2401 160 160 (2241) 1350 30'1 1,041 U,200) (3,902)
1986 1844 44 100 1988 130 130 (1858) 1134 457 1,591 (267) (4,169)
1981 252 252 21 21 (231 ) 810 1,169 (359) (590) 4,759)
1988 28 11 39 39 1i2T (492) (453)
1989 1,113 (5,212)
389 389 389 189 1;060 (811) (482) (5,694)
1990 452 452 452 (1,009) (557) (6,251)
1991 1,009
532 532 532 957 (957) (425) (6,676)
1992 539 539 539
1993 906 (906) (367) (7,043)
145 145 11\.5
855 (855) (710) (7,753)
1994 358 358 358 803 (803) ~445) (8,198)
1995 815 815 815
1996 752 (752) 63 (8,135)
6968 6968 6968 100 (700) 6,268 (1,867)
1991 5389 5389 5389
1998 649 (649) 4,740 2,873
1810 1810 18]0 598 (598) 1,212 4,085
1999 1356 1356 1356
2000 546 (546) 810 4,895
1591 1591 1591 495 (495) 1,096 5,991
2001 2011 2011 2011
2002 443 (443) 1,568 1,559
1924 1924 1924 1,924 9,483 +:
2003 1930 1930 1930 +:
2004 1,930 11,413
6629 6629 6629 6,629 18,043
2005 4601 4601 4601
2006 4,601 22,643
2435 2435 2435 2,435 25,076
2001 1000 1000 1000
2008 1,000 26,078
862 662 862 862 26,940
2009 861 867 867
2010 861 21,807
873 873 673 813 28,680
11 CoUts tiennent compte inflation elements rapport d'evaluation pendant periode develop~ment proJet\. Ensuite, 6% pour
devises et toutes recettes et 12% pour coOts locaux pendant periode d'investisaement {Juaqu'en 1995; ensuite composanteB
plantations refletent surplus cumule}; a partir de 1996, en terDles constants 1995\.
E! Fiche proJet indique composition de ces flux, qui sont retletea ici en termes neta\.
3/ TaxeE indirectea identitisbles aur depenses du proJet, a
l'exclusion dea recettea d'impOta eventuela du secteur torestier
- resu1tant de 1\. composante DEFC\.
!I Tableau 1 - Et\.t eatimatif des decaissementa (pret Bnnque)\. II est \.ssu\.e que pret CDC ser\. decaiaae parallelement A
prat Bnnque\.
'iI Service de Is detto de 1& fiche du proJet\.
21 avril 1$161\.
N G E R
HAD
UN ITED REPUSLI C OF CAMEROON
FORESTRY PROJECT
\. PROI'OSEO PROJEC'T PI\.Af<I'TA'TIONS
I'A()IIItOSEO f'ROJECr SiEO PAOOUCTION AREAS
8
OlRECT1OH DES E\.-\.oX £T "OREn; HEADQUAIIHRS
FNFf' HEAOOU""l1I'1:S
~ PHFP SU&\.$"l'A'TIQNS
!\.!l FNFP Pt\.AHTAT10HS
fA
18RO ASSISTED ACTIYITIl:S WITH fOftESTRY
FORESTI'I:V JlE$AA~ liRA' STATIONS
'A\fED ROADS
GRAVEL ROAOS
IiART~ FOAOS
ftAILROAOS
"-800'- ISOH'iI:TS IN-\.
NIGERIA
ECOLOGICAL ZONES
§llilllill! SAHEL
SOUO"N
\ SOUDANIANi HIGHLANDS
\"\.SOUDA\.N!AN-GU!NEAN
~AN-GUINEAN TRANSITION
G",N~_~,
FOREST
\
/
~~j~~C:Al
IIN>lUI GUlNU{
J r
IS' ()
CONGO | APPROVAL |
P123783 | PROJECT INFORMATION DOCUMENT (PID)
APPRAISAL STAGE
Report No\.: AB6209
VN-VAHIP additional financing
Project Name
Region EAST ASIA AND PACIFIC
Sector Health (50%);General agriculture, fishing and forestry sector
(20%);Solid waste management (10%);General public
administration sector (10%);Other social services (10%)
Project ID P123783
Borrower(s) THE SOCIALIST REPUBLIC OF VIETNAM
Implementing Agency
Ministry of Health
138A Giang Vo Street
Vietnam
Tel: (84-4) 6273-2273 Fax: (84-4) 3846-4051
Environment Category [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared January 9, 2011
Date of Appraisal January 20, 2011
Authorization
Date of Board Approval June 30, 2011
1\. Country and Sector Background
The Vietnam Avian and Human Influenza Control and Preparedness Project is co-financed by an
IDA Credit (SDR 13\.5 million, US$20 million equivalent), an Avian and Human Influenza
Facility Grant (US$10 million), a Japan PHRD Grant (US$5 million), and the Vietnam
Government (US$3 million)\. The Credit and Grant were approved on March 13, 2007 and
became effective on August 23, 2007\. The Project was restructured once in June 2010 to re-
allocate funds among the Disbursement Categories\. The original Projectâs Closing Date was
December 31, 2010\. A second extension of six months from June 30, 2011 to December 31,
2011 was approved by the Bank management recently\.
The Project Development Objective (PDO) is to increase the effectiveness of Government
services in reducing the health risk to poultry and humans from avian influenza in eleven high
priority provinces and thus contribute to addressing highly pathogenic avian influenza (HPAI) at
the national level by (i) controlling the disease at source in domestic poultry; (ii) early detection
and response to poultry and human cases; and (iii) preparing for the medical consequences of a
human pandemic\. This is in line with and supports the implementation of Vietnamâs plans for the
medium to long-term control of avian and human influenza as outlined in the Integrated National
Operational Program for the Avian and Human Influenza 2006 â 2010 (The Green Book), and is
fully consistent with the approach envisaged under the Global Program for Avian Influenza and
Human Pandemic Preparedness and Response (GPAI)\.
The Project is being implemented jointly by the Ministry of Agriculture and Rural Development
(MARD) and the Ministry of Health (MOH), with MARD as the lead ministry for the overall
management of the Project, MARD for Component A activities and MOH for Component B
activities\. Out of a total cost of US$38 million, US$21 million is under the management of
MARD and US$17 million is under the management of MOH\. It consists of three components:
(a) HPAI Control and Eradication in the Agricultural Sector; (b) Influenza Prevention and
Pandemic Preparedness in the Health Sector; and (c) Integration and Operational Program Plan
(OPI) Coordination, Results Monitoring and Evaluation, and Project Management\. Component
A, which is for animal health and managed by MARD, covers 11 selected Provinces\. Component
B, which is for human health and managed by MOH, covers 8 out of the same 11 Provinces\.
Component C is jointly managed by MARD and MOH\.
The Project is being implemented jointly by MARD and MOH, with MARD as the lead ministry
for the overall management of the Project and for Component A activities and MOH managing
Component B activities\. It consists of three components: (a) HPAI Control and Eradication in
the Agricultural Sector; (b) Influenza Prevention and Pandemic Preparedness in the Health
Sector; and (c) Integration and Operational Program Plan (OPI) Coordination, Results
Monitoring and Evaluation (M&E), and Project Management\. Component A is managed by
MARD and covers 11 selected Provinces\. Component B is managed by MOH and covers 8 out
of the same 11 Provinces\. Component C is jointly managed by MARD and MOH\.
2\. Objectives
The Project Development Objective is to assist the Recipient to increase the effectiveness of
public services in reducing the health risk to poultry and to humans from avian influenza in
selected provinces, through measures to control the disease at source in domestic poultry, to
detect early and respond to human cases of infections, and to prepare for the medical
consequences of a potential human pandemic\.
3\. Rationale for Bank Involvement
The VAHIP is due to close on December 31, 2011\. However, the threat from emerging infectious
diseases (EIDs), including influenza A (H5N1), has not been adequately reduced\. The on-going
threat justifies additional investment into measures to reduce the risk posed by poultry and to
improve the capacity of health services and pandemic preparedness\. A majority of high impact
infectious diseases that have recently affected humans have arisen at the animal-human-
environment interface and significantly impact animal and human health, livelihoods and
development\. More specifically, as predicted at the time VAHIP was prepared, HPAI viruses of
the H5N1 subtype are still entrenched in Vietnam, despite the improvements made\. Although
the frequency and scale of H5N1 outbreaks has been reduced, they could flare up if close
attention to control and prevention is not maintained\. The recent human influenza A (H1N1)
pandemic demonstrated the need for pandemic preparedness\. By June 30, 2011, the original
VAHIP would have invested in strengthening of animal health systems in 135 Districts in 11
Provinces, and strengthening human health systems in 28 overlapping Districts in 8 of the 11
Provinces\. The proposed AF is consistent with the draft National Strategic Plan for Avian and
Human Influenza for 2011- 2015\. An extension of VAHIP will support the updated National
Strategic Plan by strengthening the human health system (Component B) in a larger number of
Districts while keeping the same "one-health" approach that underpinned the original VAHIP\.
The AF also recognizes the importance of some key activities under Component A (HPAI
Control and Eradication in the Agricultural Sector) which will receive continued support in order
to consolidate and scale up the project impact on the ground\. On the basis of the foregoing, the
Government has requested AF from the Bank to narrow the financing gap in order to achieve
these goals\.
Description
The AF will keep the original components\. Component A â HPAI Control and Eradication in the
Agricultural Sector ($2 million) will be managed by MARD Department of Animal Health to
supplement government support to the program\. Component B Influenza Prevention and
Pandemic Preparedness in the Health Sector and Component C Project Management (total $18
million) will be managed by the CPMU of MOH\.
Component A â HPAI Control and Eradication in the Agricultural Sector
Sub-component A1: Strengthening of Veterinary Services: Under the existing VAHIP, good
progress has been made in: (a) improving the quality management of the nine national and
regional veterinary laboratories to ensure that they have the necessary capacity and capability to
perform all necessary testing for avian influenza to international quality standards and in
improving their biosafety facilities, and (b) improving the commune-based early warning and
disease reporting in 90 districts in 11 project provinces through the provision of training for
commune animal health workers (CAHW) and supporting monthly meetings between district
veterinary stations and CAHW\. To consolidate the impact on the ground, the AF will support the
operation of seven regional labs and two central labs, and costs associated with commune-based
early warning and disease reporting e\.g\. training, meetings between DVO and CAHWs\.
Sub-component A2: Enhanced Disease control\. Under the existing VAHIP, good progress has
been made in (a) upgrading Ha Vi live bird market in Hanoi and some selected live bird markets
and slaughterhouses in project provinces, (b) constructing a poultry destruction and disposal site
in Lang Son for smuggled poultry; and (c) developing bio security standards for smallholder- and
commercial farms\. The achievements under VAHIP have provided a foundation for future
control and prevention of avian influenza along the production and market chains\. The AF will
include continued support to strengthening operations of Ha Vi live bird market in Hanoi and
culling and disposal site in Lang Son for smuggled poultry for another 2 years (a testing period)
to ensure smooth operations of the facilities as they have just been completed\.
Sub-component A3: Disease surveillance and epidemiological investigations: Under the
existing VAHIP, good progress has been made in (a) introducing a market-based and risk-based
surveillance approach; and (b) improving the quality of surveillance activities, including
sampling, laboratory analysis, data analysis, and reporting\. As HPAI viruses are continuing to
circulate in the natural environment and poultry flocks, the AF will support risk-based disease
surveillance and epidemiological investigations at local levels\.
Sub-component A5: Emergency Outbreak Containment Plan: The current VAHIP has
provided disinfectants, supplies, and basic equipment for effective outbreak containment in- and
outside the 11 project provinces\. Provincial and district rapid response teams have been
established in all project provinces\. Joint simulation exercises prove to be very useful for
improving coordination between animal health sector and human health sector in responding to
epidemics\. These also helped improve responding capacity of commune, district, and provincial
levels to respond and control other emerging diseases such as H1N1, malaria, dengue fever, etc\.
To consolidate experience and lessons, and deepen the impacts, the AF will finance stockpiles of
emergency supplies and simulation exercises\.
Component B - Influenza Prevention and Pandemic Preparedness in the Health Sector
Sub-component B1: Improving Surveillance and Response System: Evidence in Vietnam
suggests that the weakest part of the response systems tend to be at the grass-root level, and
cross-sectoral collaboration at the district and commune levels is one of the critical factors to
strengthen the response systems\. Under the existing VAHIP, good progress has been made in (a)
developing and piloting an improved surveillance system in Project Provinces; (b) establishing
and operating rapid response mechanisms; and (c) improving surveillance capacity\. The AF will
focus on filling the gaps in human health sector in these areas while supporting the collaboration
of animal health and human health in surveillance and joint simulation\. The AF will support
improvement of the quality of disease surveillance and expand the coverage of the internet-based
(infectious) disease reporting system in 54 additional project districts in the eleven Project
provinces\. It will also support multi disciplinary Rapid Response Teams (RRTs) pilots in a few
selected districts to improve the linkage between the surveillance systems in animal and human
health sectors\.
Sub-component B2: Improving Technical Quality and Efficiency of Curative Care
Preparedness: Under the existing VAHIP, good progress has been made in (a) reviewing and
updating technical guidelines and training materials on influenza clinical management (diagnosis
and treatment), infection control, management of patients with respiratory failure, and operation
of mechanical ventilation systems; and (b) improving capacities to control infection in hospitals
at central, Provincial and District levels\. This component will scale up the pilot activities under
(a) and (b) in 54 additional project districts\. It will also support development and implementation
of health sector pandemic preparedness plans at District level, piloting establishment of human
influenza (HI) surveillance in two to three Provinces, and upgrading isolation wards in three
Provinces\. The new activities are aimed at improving hospital infection control and health sector
pandemic preparedness at District level\.
Sub-component B3: Strengthening BCC and Risk Communication for Emerging Infectious
Diseases: Under the existing VAHIP, good progress has been made in (a) training for Provincial,
District, commune and village health workers in BBC skills and provision of equipment for
Provincial and District communications units; and (b) conducting community awareness,
information, education and communication campaigns\. The AF will scale up training on BCC
and other campaigns at the community level in 54 additional districts\. In addition, it will finance
the development and piloting of risk communications models through: (i) developing national
Risk Communication Plan (RCP); (ii) developing a toolkit for risk communication on EIDs; (iii)
training of spokespersons within health sector; and (iv) impact evaluation skills for preventive
medicine staff\.
Sub-component B4: Strengthening the Preventive Health System at the Local Level:
Strengthening the capacity of District health systems would improve the countryâs overall
capacity in early detection and early response to HAPI or similar infectious diseases\.
Identification of a significant number of avian influenza outbreaks in Vietnam was promoted by
identification and reporting of human infection of HPAI (H5N1)\. Such a strategy is particularly
important when the country is running vaccination campaigns that may prevent large scale of
deaths among domestic poultry\. Investments under VAHIP in the 28 pilot Districts have
improved the District preventive medicine system in selected Provinces and demonstrated good
impact on helping control H5N1, H1N1 and other emerging epidemic diseases\. In the AF, the
pilot model developed under VAHIP will be replicated in 54 additional Districts in the eleven
Project Provinces to improve the emergency response capacity at District preventive medicine
centers, including provision of equipment and training of staff\.
Component 3 - Coordination, Monitoring and Evaluation, and Project Management: This
component will support Project management, monitoring and evaluation, and coordination
between agriculture sector, human health sector and other concerned agencies implementing the
Integrated and Operational Program Plan (OPI)\. At the central level, MOH will be the lead
Ministry for the overall management and implementation of AF project\. The Central Project
Management Unit (CPMU) in MARD will be replaced by the Department of Animal Health
(DAH) as implementer of AF funded activities under Component A\. A Designated Account
(DA) will be opened at DAH\. A Project Team including a Director, a Sr\. Technical Expert, and
an Accountant will be appointed to manage and implement project activities\. This team will also
provide technical guidance to project provinces through provincial animal health specialists
seconded to PPMUs to implement animal health related activities and coordinate with human
health sector\. Results Monitoring and Evaluation, and incremental operating costs of DAH for
the AF implementation will be covered by the AF\. The CPMU in MOH will be responsible for
the implementation of human health related activities and coordination with DAH in MARD\. It
will manage the Project Designated Account in the CPMU, procurement of goods and consulting
services, Project monitoring and evaluation, Project reporting, and Project audit\. At the
provincial level, the PPMUs under the on-going project will continue to implement the AF
project activities\. The directors of the PPMUs will be directors of the Department of Health in
respective provinces\. It will consist of project coordinator, procurement officer, accountant, and
project assistants\. One staff from the agricultural sector will be seconded to the PPMU\. This
arrangement is believed to be appropriate for better inter-sectoral cooperation\. The AF will
finance the costs associated with project implementation and management including coordination
and M&E\.
Financing
Source: ($m\.)
BORROWER/RECIPIENT 2
International Development Association (IDA) 10
AHI Facility (Grant) 13
Total 25
Implementation
The project management structure at central and provincial levels will also remain unchanged\.
The central Project Coordination Units (PCUs) of the Ministry of Agriculture and Rural
Development (MARD) and the Ministry of Health (MOH) will be responsible for the
implementation of the activities in animal health sector and human health sector under the AF
project respectively\. The Ministry of Health will be the lead agency for implementation of the
AF project, instead of the Ministry of Agriculture and Rural Development\. At the provincial
level, the joint Provincial Project Management Units (PPMUs) in 11 project provinces will be
responsible for implementation of the AF project\. Provincial Department of Health will be the
lead agency for implementation of the AF project in respective provinces\.
Safeguard Policies
Experiences from the Project show that the AF, with a continuation of existing activities, is not
expected to have any large-scale, significant and/or irreversible environmental and social impacts
as it is focused largely on capacity building and strengthening readiness for dealing with
outbreaks of avian influenza and preventing or reducing possible human infections by
strengthening emergency preparedness and response\. In addition, the AF Project continues to
incorporate in its design other beneficial measures such as upgrading the regional/central
laboratories, improving bio-security in farms and hygiene in live bird markets and strengthening
the culling and disposal sites\. With respect to the health sector, similar activities in additional
districts will continue to be supported, as well as equipment, and training to improve the
capacity, preparedness and readiness to respond, along with strengthening the curative care
systems in the Provinces and Districts\. These will have positive impacts on human health and
the environment\. Since the activities remain largely unchanged, the AF is still assigned an
Environmental Category of B\.
Among the Bankâs safeguards policies, only OP 4\.01 (Environmental Assessment) and OP 4\.10
(Indigenous People) are triggered\. The Bankâs policy on Pest Management is not triggered since
the Project: (a) will not procure any pesticides; and (b) will not promote an increase in the use of
pesticides increase\. However, the chemicals to be used for the disinfection of farm
facilities/personal protection equipment will be evaluated on a case-by-case basis for conformity
with OP 4\.09 for Pest Management\. Similar to the parent Project, the AF will not trigger the
policies of OP 4\.04, OP 4\. 36, OP 4\.11 on Natural Habitat, Forest and Physical Cultural
Resources respectively given that no activities affecting the natural habitat, forest and cultural
resources are proposed\.
Contact point
Contact: Lingzhi Xu
Title: Senior Operations Officer
Tel: (202) 473-2803
Fax:
Email: Lzxu@worldbank\.org
For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Email: pic@worldbank\.org
Web: http://www\.worldbank\.org/infoshop | APPROVAL |
P162165 |  â«Ø§ÙبÙ٠اÙدÙÙÙâ¬
â«Ù
شرÙع إصاÙØ ÙØاع اÙÙ
Ùا٠Ù?٠تÙÙس )âª(P162165â¬â¬
â«ÙØ«ÙÙØ© Ù
عÙÙÙ
ات اÙبرÙاÙ
جâ¬
â«Ù
رØÙØ© تØدÙد اÙÙ
Ù?اÙÙÙ
| تارÙØ® اإÙعداد âª/â¬Ø§ÙتØدÙث⪠21 :â¬Ø£Ùت ⪠| 2018â¬Ø§ÙتÙرÙر عددâªPIDC168310 :â¬â¬
â«âª 21â¬Ø£Ùت âª2018â¬â¬ â«Ø§ÙصÙ?ØØ© ⪠1â¬Ù
Ù âª14â¬â¬
â«Ø§ÙبÙ٠اÙدÙÙÙâ¬
â«Ù
شرÙع إصاÙØ ÙØاع اÙÙ
Ùا٠Ù?٠تÙÙس )âª(P162165â¬â¬
â«Ø§ÙÙ
عÙÙÙ
ات اأÙساسÙØ©â¬
â«Ø£âª \.â¬Ø§ÙÙ
عÙÙÙ
ات اأÙساسÙØ© ØÙ٠اÙبرÙاÙ
ج âªOPS TABLEâ¬â¬
â«Ø§Ø³Ù
اÙÙ
شرÙع⬠â«Ø¹Ø±Ù? اÙÙ
شرÙع اأÙصÙÙ (Ø¥Ù Ùجد)⬠â«Ù
Ùâ¬â«Ù?⬠â«Ù
Ùâ¬
â«Ø¹Ø±Ù? اÙÙ
شرÙع⬠â«Ù?⬠â«Ø§ÙبÙدâ¬
â«Ù
شرÙع إصاÙØ ÙØاع اÙÙ
ÙاÙ⬠â«âªP162165â¬â¬ â«Ø§ÙجÙ
ÙÙرÙØ© اÙتÙÙسÙØ©â¬
â«Ù?٠تÙÙسâ¬
â«Ø§ÙتارÙØ® اÙتÙدÙر٠اÙجتÙ
اع اÙÙ
جÙس⬠â«ØªØ§Ø±ÙØ® اÙتÙÙÙÙ
اÙتÙدÙرÙ⬠â«Ø§ÙÙ
ÙØÙØ©â¬
â«ÙÙ ÙÙجد عÙصر تÙ
ÙÙÙ⬠â«âª-20â¬Ø¯ÙسÙ
بر âª2018-â¬â¬ â«âª-27â¬ÙÙÙ?Ù
بر âª2018-â¬â¬ â«Ø§Ùشر٠اأÙÙØ³Ø ÙØ´Ù
ا٠أÙ?رÙÙÙاâ¬
â«Ù
شرÙع ااÙستثÙ
ار Ù?Ù ÙØ°Ùâ¬
â«Ø§ÙعÙ
ÙÙØ©â¬
â«Ù
جا٠اÙتدخÙ⬠â«Ø§ÙÙÙاÙØ© اÙÙ
ÙÙ?ذةâ¬
â«Ø§ÙÙ
Ùترض (اÙÙ
ÙترضÙÙ)⬠â«Ø£Ø¯Ø§Ø© اÙتÙ
ÙÙÙâ¬
â«ÙØاع اÙÙ
ÙاÙâ¬
â«Ø§ÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع⬠â«Ùزارة اÙتÙÙ
ÙØ© ÙااÙستثÙ
ار ÙاÙتعاÙÙ⬠â«ØªÙ
ÙÙ٠اÙبرÙاÙ
ج ÙÙ?Ùا ÙÙÙتائجâ¬
â«Ø§ÙÙ
Ùا٠âªSONEDEâ¬â¬ â«Ø§ÙدÙÙÙ âªMDICIâ¬â¬
â«Ø§ÙÙدÙ? اÙÙ
ÙØªØ±Ø ÙتØÙÙر اÙبرÙاÙ
ج (اأÙÙداÙ?)â¬
â«ØªØسÙ٠اأÙداء اÙÙ
اÙÙ ÙاÙتشغÙÙÙ ÙÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠ÙجÙدة اÙخدÙ
Ø© اÙÙ
ÙدÙ
Ø© ÙÙعÙ
اÙØ¡ باإÙضاÙ?Ø© Ø¥Ù٠تأÙ
Ù٠إÙ
دادات اÙÙ
Ùا٠Ù?٠تÙÙسâ¬
â«Ø§ÙÙبر٠ÙاÙØد Ù
٠اÙخسائر Ù?Ù ÙاÙÙات اÙÙØ³Ø ÙاÙجÙÙب اÙÙ
ختارةâª\.â¬â¬
â«Ø§ÙتÙÙÙ?Ø© ÙاÙتÙ
ÙÙÙâ¬
â«âªFIN_SRC_TABLE1â¬â¬
â«Ù
Ùخص (Ù
ÙÙÙ٠دÙاÙر Ø£Ù
رÙÙÙ)â¬
â«âª300\.00â¬â¬ â«ØªÙÙÙ?Ø© اÙبرÙاÙ
ج اÙØÙÙÙ
Ùâ¬
â«âª150\.00â¬â¬ â«Ù
جÙ
Ùع تÙÙÙ?Ø© اÙتشغÙÙâ¬
â«âª150\.00â¬â¬ â«Ù
جÙ
Ùع تÙÙÙ?Ø© اÙبرÙاÙ
جâ¬
â«âª0\.00â¬â¬ â«Ù
ÙÙ٠تÙ
ÙÙÙ Ù
شرÙع ااÙستثÙ
ارâ¬
â«âª0\.00â¬â¬ â«ØªÙاÙÙÙ? أخرÙâ¬
â«âª150\.00â¬â¬ â«Ù
جÙ
Ùع اÙتÙ
ÙÙÙâ¬
â«âª0\.00â¬â¬ â«Ù?جÙØ© اÙتÙ
ÙÙÙâ¬
â«Ø§ÙتÙ
ÙÙÙ (Ù
ÙÙÙ٠دÙاÙر Ø£Ù
رÙÙÙ)â¬
â«âª150\.00â¬â¬ â«ØªÙ
ÙÙÙ Ù
جÙ
Ùعة اÙبÙ٠اÙدÙÙÙâ¬
â«âª150\.00â¬â¬ â«Ø¥Ùراض اÙبÙ٠اÙدÙÙÙâ¬
â«âª 21â¬Ø£Ùت âª2018â¬â¬ â«Ø§ÙصÙ?ØØ© ⪠1â¬Ù
Ù âª14â¬â¬
â«Ø§ÙبÙ٠اÙدÙÙÙâ¬
â«Ù
شرÙع إصاÙØ ÙØاع اÙÙ
Ùا٠Ù?٠تÙÙس )âª(P162165â¬â¬
â«âª150\.00â¬â¬ â«Ù
جÙ
Ùع اÙتÙ
ÙÙÙ Ù
Ù ØرÙ? غÙر Ù
جÙ
Ùعة اÙبÙ٠اÙدÙÙÙ ÙاÙتÙ
ÙÙÙ Ù
٠عÙ
اÙØ¡ غÙر اÙØÙÙÙ
اتâ¬
â«âª150\.00â¬â¬ â«Ø±Ø£Ø³ اÙÙ
ا٠اÙخاص ÙاÙتÙ
ÙÙ٠اÙتجارÙâ¬
â«âª150\.00â¬â¬ â«Ù
Ù٠رأس اÙÙ
ا٠اÙخاصâ¬
â«Ø¨âª \.â¬Ø§ÙÙ
ÙدÙ
Ø© ÙاÙسÙاÙâ¬
â«Ø³Ùا٠اÙبÙدâ¬
â«âª \.1â¬ØªÙÙس Ù٠بÙد Ù
تÙØ³Ø Ø§Ùدخ٠بÙغ عدد سÙاÙ٠⪠11\.4â¬Ù
ÙÙÙÙ ÙسÙ
Ø© ÙÙ
تÙØ³Ø Ø§ÙÙاتج اÙÙ
ØÙ٠اإÙجÙ
اÙÙ ÙÙÙ?رد ⪠3700â¬Ø¯Ùâ¬
â«Ø§Ùر Ø£Ù
رÙÙÙ Ù?٠عاÙ
â¬
â«Ø¹ اÙبÙدا٠ÙÙ
Ùا٠Ù?Ù Ù
ÙØÙØ© اÙشر٠اأÙÙØ³Ø ÙØ´Ù
اÙâ¬
â«âª \.2016â¬Ø®Ø§Ù٠اÙعÙد اأÙØ®Ùر⪠Øâ¬Ø¨Ùغ Ù
تÙØ³Ø Ø§ÙÙÙ
٠ااÙÙتصاد٠⪠ØÙª5â¬Ù
Ù
ا جع٠تÙÙس Ù
٠بÙ٠أسرâ¬
â«Ø¥Ù?رÙÙÙا⪠\.â¬ÙÙد Ø£Øرز اÙبÙد Ø£Ùضا ت٠دÙ
ا Ùب٠اâ¬
â«Ø± Ù?Ù Ù
ÙاÙ?ØØ© اÙÙ?Ùر⪠Øâ¬ØÙØ« اÙØ®Ù?ض Ù
عد٠اÙتشار اÙÙ?Ùر Ø¥Ù٠اÙÙصÙ? بÙ٠عاÙ
٠⪠2000â¬Ù⪠Ø2015â¬Ù
Ùâ¬
â«Ø£Ùثر Ù
٠⪠32â¬Ù?٠اÙÙ
ائة Ø¥Ù٠⪠15â¬Ù?٠اÙÙ
ائة⪠Øâ¬ÙÙ
ا اÙØ®Ù?ض Ù
ستÙ٠اÙÙ?Ùر اÙÙ
دÙع بØÙاÙ٠اÙÙصÙ? خاÙÙ ÙÙ?س اÙÙ?ترâ¬
â«Ø©âª \.â¬ÙتÙ
ث٠اÙتÙ?اÙتات اÙجÙÙÙØ© Ù?Ùâ¬
â«ÙدÙÙ
ا⪠Øâ¬ØÙØ« ÙاÙت اÙÙ
عداÙت اÙÙ
سجÙØ© Ù?٠اÙØ´Ù
ا٠اÙغرب٠ÙاÙÙØ³Ø Ø§Ùغرب٠تÙارب ضعÙ? اÙÙ
عد٠اÙÙØÙÙ⪠\.â¬ÙÙد ترâ¬
â«Ø§Ø¬Ø¹Øª Ùسبة⬠â«Ùذا اÙÙ
جا٠Ùâ¬
â«ØªØدÙا Ùâ¬
â«Ùا ÙÙ
ؤشر جÙÙÙ⪠Øâ¬Ø¥Ù٠⪠ØÙª31â¬Ù
٠⪠٪36â¬Ù?٠عاÙ
⪠\.2005â¬Ø¯Ø®Ùت تÙÙس اآÙÙ ØÙبة سÙاسÙØ© جدÙدة Ù?٠ظÙ⬠â«Ø¹Ø¯Ù
اÙÙ
ساÙاة⪠Øâ¬Ø§Ùت٠ÙتÙ
ÙÙاسÙا ÙÙ?Ùâ¬
â«Ø© âª\.2019-2015â¬â¬ â«Ø§ÙجÙ
ÙÙرÙØ© اÙثاÙÙØ© بعد اعتÙ
اد دستÙر جدÙد ÙتÙ
تÙظÙÙ
Ø£Ù٠اÙتخابات دÙÙ
Ùرâ¬
â«Ø§ØÙØ© اÙÙتخاب رئÙس جدÙد ÙÙ
جÙس ÙÙاب جدÙد ÙÙÙ?ترâ¬
â«Ø©âª Øâ¬Ø£Ø¯Ù ااÙضØرâ¬
â«Ø§Ø¨ ااÙجتÙ
اع٠ÙاÙسÙاسÙ⬠â«Ø§Øªâª Øâ¬ØªØ¸Ù اÙتØدÙات ااÙجتÙ
اعÙØ© ÙااÙÙتصادÙØ© ÙبÙرâ¬
â«Ø©âª \.â¬Ù?٠اÙسÙÙات اأÙØ®Ùر⬠â«ØºÙ
Ù
Ù Ùذ٠اإÙÙجازâ¬â«âª \. 2â¬Ø¹Ù٠اÙرâ¬
â«Ø¥Ù٠تباØؤ اÙÙس٠ااÙÙتصادÙ⪠Øâ¬ØÙØ« اÙØ®Ù?ض ÙÙ
٠اÙÙاتج اÙÙ
ØÙ٠اإÙجÙ
اÙÙ Ù
Ù Ù
تÙØ³Ø âª Ùª3\.2â¬Ø¨Ù٠عاÙ
٠⪠2006â¬Ù⪠Ø2016â¬Ø¥Ù٠⪠٪2â¬Ù?٠عاÙ
â¬
â«âª \.2016â¬ÙÙ
٠اÙÙ
تÙÙع Ø£Ù ÙرتÙ?ع بشÙÙ Ù
تÙاضع Ø¥Ù٠⪠٪2\.7â¬Ù?٠عاÙ
⪠\.2018â¬ÙصÙت Ùسبة اÙبØاÙØ© اÙعاÙÙØ© Ø¥Ù٠⪠٪ 15\.5â¬Ù?٠عاÙ
⪠2017â¬Ø¹ÙÙâ¬
â«Ø£Ø© (⪠\.)Ùª 28â¬ØªÙ
اØتÙاء اÙعجز اÙÙ
اÙÙ ÙÙ
ستÙÙâ¬
â«ØºÙ
Ù
٠اÙØ®Ù?اض Ù
شارÙØ© اÙÙد اÙعاÙ
ÙØ© ÙØÙاÙ٠⪠ØÙª 50â¬ÙÙرجع Ø°Ù٠أساسا Ø¥Ù٠ضعÙ? Ù
شارÙØ© اÙÙ
رâ¬â«Ø§Ùرâ¬
â«Ø£ÙÙ Ù
٠⪠٪ 5â¬Ù
٠اÙÙاتج اÙÙ
ØÙ٠اإÙجÙ
اÙÙ Ù?٠عاÙ
⪠Ø2015â¬ÙØ°Ù٠بÙ?ض٠ااÙÙØ®Ù?اض اÙØاد Ù?٠أسعار اÙÙÙ?Ø Ø§ÙعاÙÙ
ÙØ© ÙباÙتاÙ٠اÙØ®Ù?اض إعاÙاتâ¬
â«Ø¯Ø¹Ù
اÙØاÙة⪠\.â¬ÙبÙ٠اإÙÙÙ?ا٠اÙÙ
تÙرر Ù
سÙØ Ø§â¬
â«Ø± عÙ٠اإÙÙÙ?ا٠اÙعاÙ
⪠Øâ¬Ø¨Ù
ا Ù?Ù Ø°Ù٠اأÙجÙر اÙت٠ارتÙ?عت Ø¥Ù٠⪠٪ 13\.4â¬Ù
٠اÙÙاتج اÙÙ
ØÙ٠اإÙجÙ
اÙÙ (Ù
Ùâ¬
â«âª Ùª 12\.8â¬Ù?٠عاÙ
⪠)2014â¬Ùتص٠إÙÙ Ù
ا ÙÙرب Ù
٠⪠٪ 50â¬Ù
٠إجÙ
اÙ٠اإÙÙÙ?اÙ⪠\.â¬ÙÙ
ا تÙاص٠اÙØ¶ØºØ Ø¹Ù٠اÙÙÙ?Ùات اÙرâ¬
â«Ø£Ø³Ù
اÙÙØ© ÙÙÙ Ù
ا اÙعÙس Ù?Ùâ¬
â«Ø¨ØØ¡ تÙÙ?ÙØ° ااÙستثÙ
ارâª\.â¬â¬
â«âª 21â¬Ø£Ùت âª2018â¬â¬ â«Ø§ÙصÙ?ØØ© ⪠1â¬Ù
Ù âª14â¬â¬
â«Ø§ÙبÙ٠اÙدÙÙÙâ¬
â«Ù
شرÙع إصاÙØ ÙØاع اÙÙ
Ùا٠Ù?٠تÙÙس )âª(P162165â¬â¬
â«âª\.3â¬ØªØ³ÙØر اÙØÙÙÙ
Ø© اÙتÙÙسÙØ© عÙ٠اÙشرÙات اÙÙ
Ù
ÙÙÙØ© ÙÙدÙÙØ© Ù?٠اÙÙØاعات اإÙÙتاجÙØ© ÙاÙخدÙ
Ùة⪠Øâ¬ØÙØ« تÙظÙ? ⪠٪4\.5â¬Ù
٠اÙسÙا٠اÙÙØ´ØÙÙ⪠Øâ¬Ù
عâ¬
â«Ø²Ùادة بÙسبة تزÙد ع٠⪠٪50â¬Ù
ÙØ° عاÙ
⪠2011â¬Ùاستجابة ÙÙØ³Ø®Ø Ø§Ø§ÙجتÙ
اع٠اÙÙ
تÙاصÙ⪠\.â¬ÙÙد أد٠اÙعجز اÙÙ
تزâ¬
â«Ø§Ùد⪠Øâ¬Ø§ÙØ°Ù ÙÙ
ث٠⪠٪4\.4â¬Ù
٠اÙÙاتجâ¬
â«Ø§ÙÙ
ØÙ٠اإÙجÙ
اÙÙ (اÙÙ
ؤسسات غÙر اÙÙ
اÙÙØ© اÙت٠تÙ
ÙÙÙا اÙدÙÙØ©) Ù?٠⪠Ø2013â¬Ø¥Ù٠زÙادة ÙبÙرâ¬
â«Ø© Ù?٠اÙتØÙÙاÙت Ø¥ÙÙ Ùذ٠اÙÙ
ؤسسات Ù
Ù ØÙاÙÙ âªÙª2â¬â¬
â«Ø¬ÙØ© ÙÙÙ
ؤسسات اÙت٠تÙ
ÙÙÙا اÙدÙÙØ©â¬â«Ù
٠اÙÙاتج اÙÙ
ØÙ٠اإÙجÙ
اÙÙ Ù?٠عاÙ
⪠2010â¬Ø¥Ù٠⪠٪7â¬Ù?٠عاÙ
⪠\.2013â¬ÙÙ?٠عاÙ
⪠Ø2015â¬ÙصÙت اÙدÙÙ٠اÙخارâ¬
â«Ø§Ùت٠تضÙ
ÙÙا اÙØÙÙÙ
Ø© Ø¥Ù٠⪠٪12â¬Ù
٠اÙÙاتج اÙÙ
ØÙ٠اإÙجÙ
اÙÙâª\.â¬â¬
â«ØºØ© بÙ٠اÙØÙÙÙ
Ø© ÙاÙعدÙد Ù
٠اÙشرÙاتâ¬â«âª \.4â¬Ø¹ÙÙ Ùذ٠اÙØ®ÙÙ?Ùة⪠Øâ¬ÙÙا٠Øاجة Ù
ÙØØ© ÙتØسÙÙ ØÙÙÙ
Ø© Ùأداء اÙشرÙات اÙت٠تÙ
ÙÙÙا اÙدÙÙة⪠\.â¬ØªÙجد ØÙÙØ© Ù
Ù?رâ¬
â«Ù Ù
ØدÙد ÙÙغاÙة⪠Øâ¬Ù
Ù
ا ÙØد Ù
Ù ÙدرتÙا عÙ٠زÙادة اإÙÙرâ¬
â«Ø§Ø¯Ø§Øª Ø£Ù⬠â«Ø§Ùت٠تÙ
ÙÙÙا اÙدÙÙة⪠Øâ¬ØÙØ« تتÙ
تع اÙشرÙات اÙÙ
Ù
ÙÙÙØ© ÙÙدÙÙØ© باستÙاÙÙ Ù
اÙÙ Ùادارâ¬
â«Ø¬âª \.â¬ÙÙتعاÙ
Ù Ù
ع Ø°ÙÙ⪠Øâ¬ØªØ¶Øر اÙØÙÙÙ
Ø© ÙزÙادة Ø¢ÙÙات اÙرÙابة اÙÙ
سبÙة⪠Øâ¬ÙÙÙ Ù
ا Ùؤد٠إÙÙâ¬â«Ø§ÙتØÙÙ
Ù?٠اÙتÙاÙÙÙ?⪠Øâ¬ÙÙÙ Ù
ا ÙضعÙا Ù?Ù Ùضع Ù
اÙÙ Øرâ¬
â«ØªÙ?اÙÙ
اÙعداÙ
اÙÙ
ساءÙة⪠Øâ¬Ù
Ù
ا Ùؤد٠إÙ٠اÙØاجة Ø¥Ù٠زÙادة اإÙعاÙات Ùاعادة رسÙ
ÙØ© اÙشرÙات اÙت٠تÙ
ÙÙÙا اÙدÙÙØ©âªÙ? \.â¬â¬
â«ÙÙعتبر اإÙØار اÙÙاÙÙÙ٠اÙÙدÙÙ
اÙØ°Ùâ¬
â«Ø§Ø± اÙداخÙÙ⪠\.â¬ÙÙد ÙاÙ?Ù Ù
جÙس⬠â«Ø§Ù ع٠اÙÙØ«Ùر Ù
Ù Ùذا اÙØ®ÙÙ⪠Øâ¬ØÙØ« Ø£ÙÙ ÙÙÙد ÙÙبØئ عÙ
ÙÙØ© صÙع اÙÙر⬠â«ØªØ¹Ù
Ù Ù?Ù٠اÙشرÙات اÙت٠تÙ
ÙÙÙا اÙدÙÙØ© Ù
سؤÙâ¬
â«Ø§Ø¡ Ù?Ù ÙÙÙ?Ù
بر ⪠2015â¬Ø¹ÙÙ "استرâ¬
â«Ø§ØªÙجÙØ© إصاÙØ Ø§ÙÙ
ؤسسات اÙت٠تÙ
ÙÙÙا اÙدÙÙØ©" ÙزÙادة اÙÙ
ساءÙØ© بÙ٠اÙØÙÙÙ
Ø© ÙاÙÙ
ؤسسات اÙت٠تÙ
ÙÙÙا اÙدÙÙة⬠â«Ø§ÙÙزرâ¬
â«ÙاÙت٠ÙÙ
ÙتÙ
تÙÙ?ÙØ°Ùا باÙÙاÙ
٠بعدâª\.â¬â¬
â«Ø§ÙØ© بÙ٠اÙÙØاعÙ٠اÙعاÙ
ÙاÙخاص ÙتعتزÙ
استخداÙ
Ùذ٠اÙØرÙÙØ© اâ¬
â«ÙØ«Ùر ÙتØÙÙر⬠â«Ø± بتعزÙز Ø¥Øارâ¬
â«Ùا اÙÙاÙÙÙÙ ÙاÙÙ
ؤسس٠ÙÙشر⬠â«âª - 5â¬ÙاÙ
ت تÙÙس Ù
ؤخ اâ¬
â«Ø¨ÙÙتÙا اÙتØتÙة⪠\.â¬Ø¥Ù اÙسج٠اÙتارÙخ٠ÙÙشرâ¬
â«Ø§Ùات بÙ٠اÙÙØاعÙ٠اÙعاÙ
ÙاÙخاص Ù
تÙاضع بشÙ٠عاÙ
ÙÙعÙس اÙتÙ?ضÙ٠اÙتارÙخ٠ÙتÙÙ?Ùر خدÙ
ات اÙبÙÙØ©â¬
â«Ø©âª \.â¬Ù?Ù ÙØاع Ù
Ùا٠اÙشرب⪠Øâ¬ÙÙ
ÙتÙ
اÙتÙÙÙع Øتﯽ اآÙ٠عÙﯽ⬠â«Ø§Ø¶ بشرÙØ Ù
Ùسر⬠â«Ù
دÙ?Ùعا بإÙ
ÙاÙÙØ© اÙÙصÙ٠اÙÙÙ٠إÙ٠اإÙÙرâ¬
â«Ù⬠â«Ø§ÙتØتÙØ© عبر اÙÙØاع اÙعاÙ
â¬
â«Ø§ÙØ© بÙ٠اÙÙØاعÙ٠اÙعاÙ
ÙاÙخاص⪠Øâ¬ÙÙï®?٠اÙØï®?ÙÙ
Ø© ÙاÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠تعتزÙ
Ø¥Ùشاء Ù
ØØØ© اÙتØÙÙØ© اÙÙ
ï®Ù
ة⬠â«Ø§ØªÙ?اÙÙات اÙشرâ¬
â«Ø§ÙتاÙÙØ© (Ù?٠اÙÙ
ï®Ø¯ÙØ©) Ù
٠خاÙÙ Ø®ØØ© ÙظاÙ
اÙبÙاء ÙاÙتشغÙÙ ÙتØÙÙ٠اÙÙ
ÙÙÙة⪠\.â¬ØªÙ
إصدار ÙاÙÙ٠جدÙد ÙÙشرâ¬
â«Ø§ÙØ© بÙ٠اÙÙØاعÙ٠اÙعاÙ
ÙاÙخاص Ù?Ùâ¬
â«Ø§ÙØ© بÙ٠اÙÙØاع اÙعاÙ
ÙاÙÙØاع اÙخاص عÙÙ Ù
ستÙ٠رئاسة اÙØÙÙÙ
ة⪠\.â¬ÙبÙÙÙ
ا تÙعب Ùذ٠اÙÙÙئة Ùاâ¬
â«Ø¯Ùر⬠â«Ø¹Ø§Ù
⪠Ø2015â¬ÙتÙ
Ø¥Ùشاء اÙÙÙئة اÙعاÙ
Ø© ÙÙشرâ¬
â«Ø§ÙØ© بÙ٠اÙÙØاعÙ٠اÙعاÙ
ÙاÙخاص Ø£ÙصØاب اÙÙ
صÙØة⬠â«Ù
ÙÙ
ا⪠Øâ¬Ø¥Ø§Ù Ø£ÙÙا تÙاج٠اÙÙØ«Ùر Ù
٠اÙصعÙبات Ù?٠تÙÙ?Ùر اÙخبرâ¬
â«Ø© اÙاÙزÙ
Ø© Ù?Ù Ù
عاÙ
اÙت اÙشر⬠â«Ùâ¬
â«Ù?٠اÙÙØاع اÙعاÙ
اÙØ°Ù٠تÙÙصÙÙ
اÙخبرâ¬
â«Ø© Ù?Ù Ùذا اÙÙ
جاÙâª\.â¬â¬
â«Ø§ÙسÙا٠اÙÙØاع٠(Ø£Ù Ù
تعدد اÙÙØاعات) ÙاÙÙ
ؤسس٠ÙÙبرÙاÙ
جâ¬
â«âª -6â¬ØªØ¨Ùغ Ù
Ùارد اÙÙ
Ùا٠اÙÙ
تجددة Ù?٠تÙÙس ⪠405â¬Ù
تر Ù
Ùعب ⪠/â¬Ø³Ø§ÙÙ âª Ø /â¬ÙÙÙ Ù
ستÙ٠أÙÙ Ù
٠عتبة Ùدرâ¬
â«Ø© اÙÙ
Ùا٠اÙÙ
ØÙÙة⪠\.â¬ÙÙ
٠اÙÙ
تÙÙع Ø£Ù ÙؤدÙâ¬
â«Ø±Ø±â¬
â«Ø©âª Øâ¬ÙتÙÙÙÙ ÙØÙ٠اأÙÙ
Øار⪠Øâ¬ÙزÙادة تÙÙبات سÙÙØ Ø§Ø£ÙÙ
Øار⪠Øâ¬Ù
Ù
ا Ùؤد٠إÙ٠زÙادة استÙاÙ٠اÙÙ
Ùا٠ÙاÙØ®Ù?اض⬠â«ØªØºÙر اÙÙ
Ùاخ Ø¥Ù٠زÙادة درجات اÙØ Ø§â¬
â«Ù Ù
سؤÙÙÙØ© اإÙشرâ¬
â«Ø§Ù? عÙÙ ÙØاع اÙÙ
Ùا٠Ùتعبئة اÙÙ
Ùارد اÙÙ
ائÙØ© ÙØÙ?ظÙا ÙادارتÙا⪠\.â¬ÙÙد⬠â«Ø© اÙÙ?اÙØØ© ÙاÙÙ
Ùارد اÙÙ
ائÙØ© ÙاÙصÙد اÙبØرâ¬
â«Ø²Ø±â¬â«Ø§ÙÙ
خزÙÙ⪠\.â¬ÙتتÙÙ٠٠اâ¬
â«Ù
ÙÙت ااÙستثÙ
ارâ¬
â«Ø§Øª اÙرئÙسÙØ© Ù?٠اÙبÙÙØ© اÙتØتÙØ© ÙتÙÙس باستغاÙÙ Ù
عظÙ
Ù
ÙاردÙا اÙÙ
ائÙØ© اÙØ´ØÙØة⪠Øâ¬ÙاستغاÙÙ Ù
ا ÙÙرب Ù
٠⪠٪100â¬Ù
٠اÙÙ
Ùاردâ¬
â«Ù اÙÙ
ØاÙ?ظة عÙÙâ¬â«Ø§ÙÙ
تجددة⪠\.â¬ÙÙ
ع Ø°ÙÙ⪠Øâ¬Ù?ستØتاج تÙÙس Ù?٠اÙÙ
ستÙب٠إÙÙ Ù
Ùارد Ù
Ùا٠إضاÙ?ÙØ© ÙضÙ
ا٠زÙادة اÙÙ
خزÙÙ⪠Øâ¬ÙÙ
ا سÙÙÙÙ Ù
٠اÙضرÙرâ¬
â«Ø§ÙتدابÙر اÙÙ
تعÙÙØ© باÙØÙب ÙÙ
ÙاصÙØ© اÙتØÙÙ
Ù?٠استخداÙ
اÙÙ
ÙاÙ⪠\.â¬Ø¬Ù
Ùع سÙا٠اÙÙ
ÙاØ٠اÙØضرÙØ© ÙدÙÙÙ
Ø¥Ù
ÙاÙÙØ© اÙÙصÙ٠إÙÙ Ù
Ùا٠اÙشرب اأÙساسÙØ©â¬
â«âª 21â¬Ø£Ùت âª2018â¬â¬ â«Ø§ÙصÙ?ØØ© ⪠1â¬Ù
Ù âª14â¬â¬
â«Ø§ÙبÙ٠اÙدÙÙÙâ¬
â«Ù
شرÙع إصاÙØ ÙØاع اÙÙ
Ùا٠Ù?٠تÙÙس )âª(P162165â¬â¬
â«Ø¹Ù٠اأÙÙÙ⪠Øâ¬Ù?Ù ØÙ٠أ٠Ùذا اÙرÙÙ
ÙÙØ®Ù?ض Ø¥Ù٠⪠٪83â¬Ø¨Ø§ÙÙسبة ÙسÙا٠اÙرÙÙ?⪠\.â¬ÙÙ?ÙÙ
ا ÙتعÙ٠باÙصرÙ? اÙصØÙ⪠Øâ¬ØªØ³ØªØ®Ø¯Ù
Ùسبة âªÙª 89â¬Ù
٠اأÙسرâ¬
â«Ø§Ù?٠صرÙ? صØÙ Ù
ØسÙة⪠Øâ¬ÙÙÙ Ùذا اÙرÙÙ
ÙÙØ®Ù?ض باÙÙسبة ÙÙÙ
ÙاØ٠اÙرÙÙ?Ùة⪠Øâ¬ØÙØ« ÙستخدÙ
Ø£Ùثر Ù
Ù ÙصÙ? اأÙسر اÙÙ
رâ¬
â«Ø§ØÙض⬠â«Ø§ÙØضرÙØ© Ù
رâ¬
â«(⪠Ø)Ùª56â¬Ù?Ù ØÙÙ ÙستخدÙ
⪠٪ 20â¬Ø§ÙبÙارâ¬
â«Ø§Øªâª\.â¬â¬
â«âª \.7â¬Ø§ÙشرÙØ© اÙÙØÙÙØ© ÙاÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠Ù٠اÙÙ
ؤسسة اÙÙØÙÙØ© اÙعÙ
ÙÙ
ÙØ© ÙÙÙ
Ùا٠اÙت٠تÙÙ?ر Ù
Ùا٠اÙشرب Ø¥Ù٠⪠٪100â¬Ù
٠سÙا٠اÙÙ
ÙاØÙâ¬
â«Ø§ÙØضرÙØ© Ù?٠تÙÙس ÙÙØ٠⪠٪50â¬Ù
٠سÙا٠اÙرÙÙ?⪠\.â¬ØªÙ
Ø¥ÙشاؤÙا Ù?٠عاÙ
⪠Ø1968â¬ÙÙدÙÙا Ø£Ùثر Ù
٠⪠2\.7â¬Ù
ÙÙÙ٠عÙ
Ù٠اÙÙÙÙ
⪠Øâ¬ÙÙ٠تÙزâ¬
â«Ø¹ Ø£Ùثر Ù
Ùâ¬
â«âª 650â¬Ù
ÙÙÙÙ Ù
تر Ù
Ùعب Ù?٠اÙسÙة⪠Øâ¬ÙتبÙغ ÙÙÙ
Ø© Ù
بÙعاتÙا اÙسÙÙÙØ© ÙØ٠⪠170â¬Ù
ÙÙÙ٠دÙâ¬
â«Ø§Ùر⪠Øâ¬ÙÙدÙÙا ⪠6600â¬Ù
ÙظÙ?⪠\.â¬ÙاÙ
ت اÙشرÙØ© اÙÙØÙÙØ© ÙاÙستغاÙÙâ¬
â«ÙتÙزÙع اÙÙ
Ùا٠بتØÙÙر اÙبÙÙØ© اÙتØتÙØ© اÙÙاÙ
Ø© ÙØ¥ÙÙتاج ÙاإÙÙصا٠ÙاÙتÙزÙع اÙت٠سÙ
Øت ÙتÙÙس باÙÙصÙ٠إÙÙ Ù
ستÙÙات عاÙÙØ© Ù
٠اÙÙصÙ٠عÙÙâ¬
â«Ø© دÙ٠اÙÙØاع Ù?٠اÙخدÙ
ة⪠Øâ¬ÙتÙÙ?Ùر Ù
Ùا٠ذات جÙدة عاÙÙØ© تتÙ
اش٠Ù
ع اÙÙ
عاÙÙر اÙدÙÙÙة⪠\.â¬Ø§ÙدÙÙا٠اÙÙØÙÙ ÙÙتØÙÙر Ù٠اÙÙ
سؤÙ٠عÙâ¬
â«Ù
ستÙ٠اأÙسرâ¬
â«Ù
رâ¬
â«Ø§Ù?٠اÙصرÙ? اÙصØÙØ© اÙÙØÙÙØ©âª\.â¬â¬
â«âª -8â¬ØªØ¹Ø±Ø¶Øª اÙÙتائج اÙتÙÙÙØ© اÙÙ
Ù
تازâ¬
â«Ø© اÙت٠ØÙÙتÙا اÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠Ù
ÙØ° Ø¥ÙشائÙا ÙÙØ®Øر خاÙ٠اÙعÙد اÙÙ
اض٠بسبب ااÙختاÙÙâ¬
â«Ø§ÙÙبÙر Ù?٠تÙازÙÙا اÙÙ
اÙÙ⪠\.â¬Ù?٠عاÙ
⪠Ø2016â¬ÙÙ
تØص٠اÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠عÙ٠إعاÙات تشغÙÙÙة⪠Øâ¬ÙÙÙ٠اÙدÙÙØ© ÙاÙت تغØÙâ¬
â«Ø£Ø³ اÙÙ
ا٠âª0\.35â¬â¬ â«Ø§ØªÙا⪠\.â¬ÙبÙغت دÙÙÙÙا ⪠441â¬Ù
ÙÙÙ٠دÙÙار تÙÙس٠ÙاÙعائد عÙ٠اأÙسÙÙ
âª( 0\.01â¬Ø¯âª\.â¬Øª) ÙبÙغت Ùسبة اÙدÙÙ٠إÙ٠ر⬠â«Ø¬Ø²Ùâ¬
â«Ø¡Ø§ Ù
٠استثÙ
ارâ¬
â«Ø¯ÙÙار⪠\.â¬ÙÙد أثر Ùذا اÙÙضع اÙÙ
اÙ٠اÙÙØ´ عÙ٠صÙاÙØ© بÙÙاتÙا اÙتØتÙØ© ÙÙÙض ااÙستثÙ
ارâ¬
â«Ø§Øª اÙجدÙدة اÙضرÙرÙة⪠\.â¬Ø¹Ù٠سبÙ٠اÙÙ
ثاÙ⪠Øâ¬Ø§Ø±ØªÙ?ع إجÙ
اÙÙâ¬
â«Ø§ÙÙ
Ùا٠اÙÙ
ÙدÙرâ¬
â«Ø© ÙÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠Ù
٠⪠٪22â¬Ù?٠عاÙ
⪠2003â¬Ø¥Ù٠⪠٪33â¬Ù?٠عاÙ
⪠Ø2016â¬Ù
ع Ù
ستÙÙات أعÙÙ Ù
٠⪠٪45â¬Ù?Ùâ¬
â«Ø§Ø¡ Ùذا اÙØ®ÙÙ Ù٠زÙادة اÙÙ?ص٠بÙ٠اÙتسعÙرâ¬
â«Ø© ÙÙ
تÙØ³Ø ØªÙÙÙ?Ø© اÙÙ
ÙاÙ⪠\.â¬Ù
ÙØ° عاÙ
⬠â«Ù
ÙاØÙ Ù
عÙÙØ© Ù
Ù ÙØ³Ø ÙجÙÙب اÙباÙد⪠\.â¬ÙÙا٠اÙسبب اÙرئÙس٠Ùرâ¬
â«âª Ø2006â¬ÙاÙت ÙÙا٠زÙادات Ù?٠اÙتسعÙرâ¬
â«Ø© Ù?ÙØ Ù?٠أعÙاÙ
⪠2010â¬Ù⪠2011â¬Ù⪠2013â¬Ù⪠Ø2016â¬ÙÙاÙت Ùذ٠اÙزÙادة غÙر ÙاÙ?ÙØ© Ùسد اÙÙ?جÙØ© اÙÙ
اÙÙØ©âª\.â¬â¬
â«Ùد Ùؤد٠اÙتدÙÙر اÙÙ
ستÙ
ر ÙØ£Ùداء اÙÙ
اÙÙ ÙاÙتشغÙÙ٠إÙ٠اÙتأثÙر Ù?٠جÙدة اÙخدÙ
ات اÙÙ
ÙدÙ
Ø© ÙÙدرâ¬
â«Ø© اÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠عÙÙâ¬
â«Ø¥Ø¯Ø§Ø±â¬
â«Ø© أصÙÙÙا عÙ٠اÙÙØ٠اأÙÙ
Ø«Ùâª\.â¬â¬
â«Ø§Øª ÙبÙرâ¬
â«Ø©âª Øâ¬Ø§Ù سÙÙ
ا Ù?ÙÙ
ا ÙتعÙ٠بتعزÙز ÙتÙسÙع اÙبÙÙØ© اأÙساسÙØ© ÙØ¥ÙÙتاج⪠Øâ¬Ù
Ø«Ù Ù
ØØات⬠â«âª -9â¬ØªØªØÙب زÙادة عدد اÙسÙا٠ÙاÙØÙب عÙ٠اÙÙ
Ùا٠استثÙ
ارâ¬
â«Ù⪠Øâ¬Ø¹Ù٠سبÙ٠اÙÙ
ثاÙ⪠Øâ¬Ù
٠اÙÙ
تÙÙع ØدÙØ« ÙÙص Ù?٠عاÙ
⪠2022â¬Ø¥Ø°Ø§â¬â«ØªØÙÙØ© اÙÙ
Ùا٠ÙشبÙات تÙزÙع اÙÙ
Ùا٠Ù?٠اÙÙ
ÙاØ٠اÙرÙÙ?Ùة⪠\.â¬Ø¨Ø§ÙÙسبة ÙتÙÙس اÙÙبرâ¬
â«Ø©â¬ â«Ù Ù
ع Ø°ÙÙ⪠Øâ¬ØªØتاج اÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠إÙ٠زÙادة جÙÙدÙا ÙتØسÙ٠إÙرâ¬
â«Ø§Ø¯Ø§ØªÙا اÙتشغÙÙÙØ© Ùادار⬠â«ÙÙ
تزدد ØاÙØ© اÙعرض⪠\.â¬ÙباÙتÙازâ¬
â«Ø£ØµÙÙÙا⪠Øâ¬Ù?ضاÙ٠ع٠تØدÙØ« إجرâ¬
â«Ø§Ø¡Ø§ØªÙا اÙتشغÙÙÙة⪠\.â¬ÙÙا٠Øاجة Ù
ÙØØ© Ø¥Ù٠إعادة تÙظÙÙ
اÙشرÙØ© باÙÙظر Ø¥Ù٠اÙÙد اÙعاÙ
ÙØ© اÙÙ
تÙادÙ
Ø© اÙت٠تستخدÙ
Ùاâ¬
â«Ù اÙت٠ÙتعÙÙ Ù
عاÙجتÙا Ù
ÙاØ٠اÙضعÙ? اÙتشغÙÙÙة⬠â«ÙÙ
غادرâ¬
â«Ø© عدد ÙبÙر Ù
٠اÙÙ
ÙظÙ?ÙÙ ÙÙتÙاعد Ù?٠اÙسÙÙات اÙÙÙÙÙØ© اÙÙ
ÙبÙة⪠\.â¬ÙتشÙ
٠اÙÙ
سائ٠اأÙخرâ¬
â«Ø²Ø±â¬
â«Ø© اÙÙ?اÙØØ© باإÙضاÙ?ة⬠â«Ù
ث٠تدÙÙر أداء اÙشبÙØ© ÙزÙادة اÙخسائر اÙتجارÙØ© بسبب عدادات اÙÙ
Ùا٠اÙÙدÙÙ
Ø©Ø ÙعدÙ
ااÙستÙاÙÙÙØ© ع٠اÙسÙØØ© اÙÙ
شرÙ?Ø© Ù٠اâ¬
â«Ø¥Ù٠اÙÙ
رÙزÙØ© اÙÙ
Ù?رØØ© ÙاÙترÙÙز اÙضعÙÙ? عÙ٠خدÙ
Ø© اÙعÙ
اÙØ¡âª\.â¬â¬
â«âª \.10â¬Ø£Ø¹Ø¯Øª اÙØÙÙÙ
Ø© ÙاÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠برÙاÙ
ج Ø£Ù
٠إÙ
دادات اÙÙ
Ùا٠ÙتØÙÙ٠اأÙÙداÙ? اÙثاÙثة اÙتاÙÙØ©âª:â¬â¬
â«âª 21â¬Ø£Ùت âª2018â¬â¬ â«Ø§ÙصÙ?ØØ© ⪠1â¬Ù
Ù âª14â¬â¬
â«Ø§ÙبÙ٠اÙدÙÙÙâ¬
â«Ù
شرÙع إصاÙØ ÙØاع اÙÙ
Ùا٠Ù?٠تÙÙس )âª(P162165â¬â¬
â«(Ø£) ضÙ
ا٠اÙساÙÙ
Ø© اÙÙ
اÙÙØ© ØÙÙÙØ© اأÙج٠ÙÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠ÙتØسÙ٠أدائÙا اÙتشغÙÙÙâ¬
â«(ب) تØسÙ٠جÙدة اÙخدÙ
ات اÙÙ
ÙدÙ
Ø© ÙتعزÙز اÙعاÙÙات Ù
ع اÙعÙ
اÙØ¡â¬
â«(ج) تأÙ
ÙÙ ÙتعزÙز اÙÙصÙ٠إÙÙ Ù
Ùا٠اÙشرب عÙ٠اÙÙ
ستÙ٠اÙÙØÙÙâ¬
â«Ø§Øª دÙÙار تÙÙس٠(⪠1\.5â¬Ù
ÙÙار دÙâ¬
â«Ø§Ùر بسعر اÙصرÙ? اÙØاÙÙ) ÙÙستÙد اÙبرÙاÙ
ج Ø¥ÙÙ⬠â«âª \.11â¬ØªÙدر تÙÙÙ?Ø© برÙاÙ
ج Ø£Ù
٠إÙ
دادات اÙÙ
Ùا٠بÙØ٠⪠4â¬Ù
ÙÙارâ¬
â«Ù ÙتأÙ
ÙÙ ÙتعزÙز اÙبÙÙØ© اÙتØتÙØ© ÙÙ
Ùا٠اÙشربâª\.â¬â¬ â«Ø§ÙرÙÙزتÙ٠اÙتاÙÙتÙÙ⪠)1( :â¬Ø§Ø³ØªØ±â¬
â«Ø§ØªÙجÙØ© اإÙصاÙØ Ù?٠برÙاÙ
ج Ø£Ù
٠إÙ
دادات اÙÙ
Ùا٠٠(⪠)2â¬Ø¨Ø±ÙاÙ
ج استثÙ
ارâ¬
â«ÙتÙ
اش٠برÙاÙ
ج Ø£Ù
٠إÙ
دادات اÙÙ
Ùا٠Ù
ع "استرâ¬
â«Ø§ØªÙجÙØ© اإÙصاÙØ Ø§Ùخاصة باÙÙ
شارÙع اÙت٠تÙ
ÙÙÙا اÙدÙÙØ©" اÙت٠اعتÙ
دتÙا اÙØÙÙÙ
Ø© Ù?٠عاÙ
âª\.2015â¬â¬
â«ÙتشÙ
٠أÙداÙ? برÙاÙ
ج دعÙ
ÙØاع اÙÙ
Ùا٠ÙتØدÙØ« اÙÙ
رâ¬
â«Ø§Ù?Ù⪠Øâ¬ÙتعزÙز جÙدة اÙخدÙ
ات اÙÙ
ÙدÙ
Ø© ÙÙعÙ
اÙء⪠Øâ¬ÙضÙ
ا٠اÙساÙÙ
Ø© اÙÙ
اÙÙØ© ÙاÙØÙ?اظ عÙÙâ¬
â«Ø© اÙتجارÙØ© ÙاإÙدارâ¬
â«Ø© اÙÙ
اÙÙØ© ÙخدÙ
ات⬠â«Ø§Ø£ÙصÙÙ⪠\.â¬ÙÙتÙ
Ø°Ù٠ع٠ØرÙ٠تÙÙ?ÙØ° Ø®ØØ© عÙ
٠تستÙد Ø¥Ù٠اÙتØسÙÙات Ù?٠اÙعÙ
ÙÙات Ùادارâ¬
â«Ø© اأÙصÙÙ ÙاإÙدارâ¬
â«Ø© اÙÙ
Ùارد اÙبشرÙة⪠\.â¬ÙÙØ´Ù
٠برÙاÙ
ج ااÙستثÙ
ار استثÙ
ارâ¬
â«Ø§Øª Ù?٠تعبئة اÙÙ
Ùا٠غÙر اÙÙ
اÙØØ© ÙاÙÙ
Ùا٠اÙÙ
اÙØØ© غÙر اÙتÙÙÙدÙØ© عÙ⬠â«ØªÙÙÙÙÙجÙا اÙÙ
عÙÙÙ
ات Ùادارâ¬
â«ØرÙ٠اÙتØÙÙØ©Ø ÙتعزÙز شبÙØ© Ø¥Ù
دادات اÙÙ
ÙاÙØ ÙدÙ
ج جزâ¬
â«Ø¡ Ù
٠اÙÙ
ÙاØ٠اÙرÙÙ?ÙØ© Ù?٠شبÙØ© اÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
ÙاÙØ ÙتØسÙ٠أداءâ¬
â«Ø´Ø¨Ùات اÙÙÙÙ ÙاÙتÙزÙØ¹Ø ÙتعزÙز Ø£ÙظÙ
Ø© اإÙÙتاجâª\.â¬â¬
â«Ø§ÙØ© Ù
ع اÙبÙد ⪠/â¬Ø§Ø³ØªØ±â¬
â«Ø§ØªÙجÙØ© Ù
ساعدة اÙبÙد⬠â«Ø§ÙعاÙÙØ© Ù
ع Ø¥Øار اÙشرâ¬
â«Ø§ÙØ© Ù
ع اÙبÙد ÙÙÙ?ترâ¬
â«Ø© ⪠Ø2020-2016â¬Ø§ÙØ°Ù ÙستÙد Ø¥Ù٠اأÙرÙا٠اÙثاÙثة اÙتاÙÙة⪠)1( :â¬Ø§Ø³ØªØ¹Ø§Ø¯Ø© بÙئة Ù
ÙاتÙة⬠â«Ø Ù
ع Ø¥Øار اÙشرâ¬â«âª - 12â¬ÙتÙاءÙ
اÙبرÙاÙ
ج اÙÙ
Ùترâ¬
â«ÙÙÙÙ
٠ااÙÙتصاد٠اÙÙ
ستداÙ
ÙØ®ÙÙ Ù?رص عÙ
Ù ÙÙÙدÙا اÙÙØاع اÙخاص Ø (⪠)2â¬ØªÙÙÙ٠اÙÙ?Ùار٠اÙجÙÙÙØ© Ù(⪠)3â¬ØªØ¹Ø²Ùز Ø£Ùبر ÙاÙÙدÙ
اج ااÙجتÙ
اعÙ⪠\.â¬ÙÙدâ¬
â«Ø عÙ٠أÙ٠أØد Ø£ÙداÙ? اÙسÙØ© اÙÙ
اÙÙØ© ⪠2018â¬Ù?٠إØار اÙرÙ٠اÙثاÙÙ⪠Øâ¬ÙÙÙ ÙÙضÙ٠بصÙ?Ø© خاصة تØت تØسÙÙâ¬â«Ø بÙضÙâ¬â«Ø¹ اÙÙ
Ùتر⬠â«ØªÙ
إدرâ¬
â«Ø§Ø¬ اÙÙ
شرÙâ¬
â«Ø§ÙÙصÙ٠إÙ٠اÙخدÙ
ات ÙجÙدة اÙخدÙ
ات Ù?٠اÙÙ
ÙاØ٠اÙÙ
تأخرâ¬
â«Ø© تÙÙ
ÙÙاâª\.â¬â¬
â«Ø Ù?٠اÙرÙائز اÙثاÙثة Ø¥ÙØار اÙشرâ¬
â«Ø§ÙØ© Ù
ع اÙبÙد Ù
٠خاÙÙ⪠)1( :â¬ØªØسÙ٠اÙبÙئة اÙÙ
ÙاتÙØ© ÙÙ
شارÙØ© اÙÙØاع اÙخاص Ù
Ù⬠â«Ø¹ اÙÙ
Ùترâ¬â«âª - 13â¬ÙساÙÙ
اÙÙ
شرÙâ¬
â«Ø®Ø§Ù٠تØسÙ٠اÙجدارâ¬
â«Ø© ااÙئتÙ
اÙÙØ© ÙÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠(⪠)1â¬Ø (⪠)2â¬ØªØسÙ٠اÙØصÙ٠عÙ٠خدÙ
ات اÙÙ
Ùا٠ÙÙÙعÙتÙا Ù?٠اÙÙ
ÙاØÙâ¬
â«Ø© تÙÙ
ÙÙا (اÙرÙ٠⪠2â¬Ù
٠إØار اÙشرâ¬
â«Ø§ÙØ© Ù
ع اÙبÙد) Ø Ù (⪠)iiiâ¬Ø²Ùادة اÙÙ
ساءÙØ© بÙÙ ÙÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠ÙاÙØÙÙÙ
Ø© ÙÙ
ÙاØÙÙÙا⬠â«Ø§ÙÙ
تأخرâ¬
â«Ø² Ù
٠اÙØÙÙÙ
ة⪠Øâ¬ÙÙ٠اÙÙ
سأÙØ© اأÙساسÙØ© Ù?٠إØار اÙشرâ¬
â«Ø§Ùة⬠â«Ø¹ جزâ¬
â«Ø¡ ا٠Ùتج أ⬠â«Ø§ÙØ© Ù
ع اÙبÙد)⪠\.â¬Ø¨Ø§Ø¥ÙضاÙ?Ø© Ø¥ÙÙ Ø°ÙÙâªÙ? Øâ¬â¬
â«Ùعتبر اÙÙ
شرÙ⬠â«(اÙرÙ٠⪠3â¬Ù
٠إØار اÙشرâ¬
â«Ù
ع اÙبÙدâª\.â¬â¬
â«Ø§ØªÙجÙØ© Ù
جÙ
Ùعة اÙبÙ٠اÙدÙÙÙ ÙÙشر٠اأÙÙØ³Ø ÙØ´Ù
ا٠أÙ?رÙÙÙا "اإÙدÙ
اج ااÙÙتصاد٠ÙااÙجتÙ
اع٠Ù
٠أج٠اÙساÙÙ
â¬
â«âª \.14â¬ÙتÙ
اش٠اÙبرÙاÙ
ج Ù
ع استرâ¬
â«Ø¹ Ø¥Ù٠ضÙ
ا٠خدÙ
ات Ù
ستداÙ
Ø© ÙÙ
Ùا٠اÙشرب ÙسÙاÙ⬠â«ÙااÙستÙرâ¬
â«Ø§Ø±" Ù
٠خاÙ٠دعÙ
دعائÙ
Ùا اأÙÙÙÙ ØÙ٠تجدÙد اÙعÙد ااÙجتÙ
اعÙ⪠\.â¬ÙÙÙدÙ? اÙÙ
شرÙâ¬
â«ØªÙÙس⪠Øâ¬Ù
Ù
ا Ùعزز Ø«ÙØ© اÙÙ
ÙاØÙÙÙ Ù?Ù Ùدرâ¬
â«Ø§Øª اÙÙØاع اÙعاÙ
⪠\.â¬ÙÙ
ا ÙÙدÙ? Ø¥Ù٠تØسÙÙ Ù
ØÙرÙÙ ÙÙÙ
ساءÙة⪠)1( :â¬Ø¨Ù٠اÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙعâ¬
â«Ø§ÙÙ
Ùا٠ÙعÙ
اÙئÙا Ù
٠خاÙÙ Ù
ÙØ Ø§ÙشرÙØ© استÙاÙا٠تشغÙÙÙا Ø£Ùبر⪠\.â¬Ù(⪠)2â¬Ø¨Ù٠اÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠ÙاÙØÙÙÙ
Ø© Ù
٠خاÙ٠ااÙتÙ?اÙâ¬
â«âª 21â¬Ø£Ùت âª2018â¬â¬ â«Ø§ÙصÙ?ØØ© ⪠1â¬Ù
Ù âª14â¬â¬
â«Ø§ÙبÙ٠اÙدÙÙÙâ¬
â«Ù
شرÙع إصاÙØ ÙØاع اÙÙ
Ùا٠Ù?٠تÙÙس )âª(P162165â¬â¬
â«Ø¹Ù٠أÙداÙ? Ù
Øددة ÙتØسÙ٠اأÙداءâª\.â¬â¬
â«âª - 15â¬ÙتÙاءÙ
اÙبرÙاÙ
ج Ø£Ùضا Ù
ع ÙÙج زÙادة اÙتÙ
ÙÙÙ Ù
٠أج٠اÙتÙÙ
Ùة⪠Øâ¬Ø§ÙØ°Ù ÙرÙ
٠إÙ٠تعزÙز ااÙستخداÙ
اÙرشÙد ÙÙÙ
Ùارد اÙعÙ
ÙÙ
ÙØ© اÙØ´ØÙØØ©â¬
â«Ù ÙتÙÙÙص عبء اÙدÙ٠اÙعاÙ
عÙ٠اÙعÙ
اÙء⪠Øâ¬Ù
ع تÙÙ?Ùر خدÙ
ات أساسÙØ© Ù
ستداÙ
Ø© Ùبأسعار⬠â«Ø© Ù
٠أج٠استÙØاب Ø£Ùبر Ùرâ¬
â«Ø£Ø³ اÙÙ
ا٠اÙتجار⬠â«ÙاÙÙ
Ùسرâ¬
â«Ø§Ø¡ إصاÙØات ÙØاعÙØ© تشÙ
٠اآÙÙÙات اÙتÙظÙÙ
ÙØ© ÙاÙتسعÙرÙØ© ÙاÙÙ
ؤسسÙØ© اÙت٠Ù
٠شأÙÙا أ٠تØس٠اÙجدارâ¬
â«Ø©â¬ â«Ø¹ Ø¥Ù٠إجرâ¬â«Ù
عÙÙÙة⪠\.â¬ÙÙÙدÙ? Ùذا اÙÙ
شرÙâ¬
â«Ù Ù?٠اÙÙ
ستÙبÙâª\.â¬â¬â«Ø§Ø§ÙئتÙ
اÙÙØ© ÙÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
ÙاÙ⪠Øâ¬Ù
Ù
ا ÙسÙÙ ÙصÙÙÙا Ø¥Ù٠اÙتÙ
ÙÙ٠اÙتجارâ¬
â«Ø§Ø£Ùساس اÙÙ
ÙØÙÙ ÙÙ
شارÙØ© اÙبÙÙ ÙاختÙار ÙسÙÙØ© اÙتÙ
ÙÙÙâ¬
â«âª \.16â¬ÙÙبÙ٠شرâ¬
â«Ø§ÙØ© ØÙÙÙØ© اأÙÙ
د Ù
ع ÙÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠Ù
بÙÙØ© عÙ٠تÙ
ÙÙ٠اÙبÙÙØ© اÙتØتÙØ© اأÙساسÙة⪠\.â¬ØªÙ
ت اÙÙ
ÙاÙ?ÙØ© Ù?٠عاÙ
â¬
â«Ø¹ Ø¥Ù
دادات اÙÙ
Ùا٠Ù?٠اÙÙ
ÙاØ٠اÙØضرÙØ©" اÙذ٠تأÙÙ? Ù
Ù Ùرض Ø¥ÙÙ ÙÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠ÙتÙ
ت اÙÙ
ÙاÙ?ÙØ©â¬â«âª 2005â¬Ø¹ÙÙ "Ù
شرÙâ¬
â«Ù إعداد تÙرÙر اإÙÙجاز⪠\.â¬ÙÙد أد٠ذÙ٠إÙ٠تØÙÙÙâ¬â«Ø¹ Ù?٠⪠30â¬Ø¬Ùا٠⪠2018â¬ÙÙجرâ¬â«Ø¹Ù٠تÙ
ÙÙ٠إضاÙ?Ù Ù?٠عاÙ
⪠\.2014â¬ØªÙ
ااÙÙتÙاء Ù
٠اÙÙ
شرÙâ¬
â«Ø¥Ùجازâ¬
â«Ø§Øª Ù
ÙÙ
Ø© Ù?ÙÙ
ا ÙتعÙ٠بإعادة تأÙÙ٠شبÙات تÙزÙع اÙÙ
Ùا٠Ù?٠عدد Ù
٠اÙÙ
د٠Ù
تÙسØØ© اÙØجÙ
ÙÙØ°Ù٠اÙØÙ?اظ عÙ٠إÙ
دادات اÙÙ
Ùا٠عÙÙ Ù
دارâ¬
â«Ù Ù?Ù⬠â«ØºÙ
Ù
٠اÙØÙب اÙÙ
تزâ¬
â«Ø§Ùد اÙÙاÙ
⪠\.â¬ÙÙ
ع Ø°ÙÙ⪠Øâ¬ÙÙ
ÙÙØ¬Ø ØªÙ
ÙÙ٠اÙبÙ٠اÙدÙÙÙ ÙاÙجÙات اÙÙ
اÙØØ© اأÙخر⬠â«Ù⪠Øâ¬Ø¨Ø§Ùرâ¬â«Ø¹ ÙتÙÙس اÙÙبرâ¬â«Ø§Ùساعة ØÙا٠اأÙسبÙâ¬
â«Ø© أعاÙÙ Ù?٠اÙسÙÙات اأÙØ®Ùرâ¬
â«Ø©âª Øâ¬ÙØاÙتÙا اÙÙ
اÙÙØ© Øساسة Ù?Ù⬠â«Ù
ساعدة ÙÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠عÙ٠اÙتعاÙ?Ù Ù
٠اÙتØدÙات اÙÙ
Ø°ÙÙرâ¬
â«Ø§ÙÙÙت اÙØاÙÙâª\.â¬â¬
â«Ø§Ø¶ ÙÙ
ساعدة ÙÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠Ù?٠تØسÙ٠أدائÙا⪠\.â¬Ø£Ùâ¬
â«Ø§ÙÙ⪠Øâ¬ÙظÙ
⬠â«Ø± عددا٠Ù
٠اإÙجرâ¬
â«Ø§Ø¡Ø§Øª اÙت٠تتجاÙز اإÙÙر⬠â«âª \.17â¬Ø§ØªØ®Ø° اÙبÙÙ Ù
ؤخ اÙâ¬
â«Ø§â¬
â«Ù
ؤتÙ
ر ÙÙÙ
اÙØÙÙ Ù?Ù Ù
رسÙÙÙا تÙ
Ù?Ù٠تÙدÙÙ
اØتÙاجات ااÙستثÙ
ار ÙبرÙاÙ
ج⬠â«Ø§ÙبÙÙ Ù?٠عاÙ
⪠2014â¬Ø¨Ø§Ùشرâ¬
â«Ø§ÙØ© Ù
ع اÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
ÙاÙâ¬
â«Ø£Ù
٠إÙ
دادات اÙÙ
Ùا٠بÙÙÙ
Ø© ⪠1\.5â¬Ù
ÙÙار دÙâ¬
â«Ø§Ùر Ø£Ù
رÙÙ٠إÙ٠عدد Ù
٠اÙÙ
اÙØÙ٠اÙØ°ÙÙ ÙدÙ
Ùا Ù
Ù ØÙØ« اÙÙ
بدأ اتÙ?اÙÙات ÙتÙ
ÙÙÙ Ù
شارÙع Ù
Øددة⪠\.â¬Ø«Ø§ÙÙاÙâªØâ¬â¬
â«Ø© ⪠Ø2016-2015â¬ÙاÙ
اÙبÙ٠بتÙ
ÙÙ٠درâ¬
â«Ø§Ø³Ø© تÙ?صÙÙÙØ© ÙتÙÙ?Ùر Ù
سار ÙÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠اÙستعادة تÙازÙÙا اÙÙ
اÙÙ⪠Øâ¬Ù
Ù⬠â«Ù?٠اÙÙ?ترâ¬
â«Ø®Ø§Ù٠اÙجÙ
ع بÙ٠اÙعدÙد Ù
٠اÙتدابÙر Ù
٠جاÙب ÙÙ Ù
٠اÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠ÙاÙØÙÙÙ
ة⪠Øâ¬ÙاÙØ°Ù Ùا٠أØد اÙÙ
دخاÙت اÙرئÙسÙØ©â¬
â«Ù?٠اإÙصاÙØات اÙÙ
درجة Ù?٠برÙاÙ
ج Ø£Ù
٠إÙ
دادات اÙÙ
ÙاÙâª\.â¬â¬
â«Ø¹ Ù٠أداة تÙ
ÙÙÙâ¬â«ØØ© ÙتÙ
ÙÙÙ Ùذا اÙÙ
شرÙ⬠â«âª -18â¬Ø§Ø³ØªÙادا٠إÙ٠تÙÙÙÙ
Ù
Ù?ص٠ÙبرÙاÙ
ج دعÙ
ÙØاع اÙÙ
Ùا٠ÙÙ
ÙاÙشات Ù
ع اÙÙظرâ¬
â«Ø§Ø¡âª Øâ¬Ù?إ٠اأÙداة اÙÙ
اÙÙØ© اÙÙ
Ùترâ¬
â«Ø§Ùبرâ¬
â«Ø§Ù
ج ÙÙ?Ùا ÙÙÙتائج ÙØ°ÙÙ ÙØ£Ùسباب اÙتاÙÙØ©âª:â¬â¬
â«â¢Ø¨Ø±ÙاÙ
ج اÙØÙÙÙ
ة⪠\.â¬Ø´Ø§Ø±Ùت اÙØÙÙÙ
Ø© اÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠Ù?٠تÙدÙÙ
ØÙب ÙÙبÙÙ ÙدعÙ
برÙاÙ
ج ØÙÙÙ
Ù ÙاضØ⪠Øâ¬Ø¨Ø±ÙاÙ
ج Ø£Ù
Ùâ¬
â«Ø¥Ù
دادات اÙÙ
ÙاÙ⪠Øâ¬Ù
ع Ø£ÙداÙ? ÙÙسائ٠ÙاضØØ© (Ù
ادÙØ© Ùâ¬
â«Ø§Ù Ù
ادÙØ© عÙÙ Øد سÙاء) ÙتØÙÙ٠تÙ٠اأÙÙداÙ?⪠\.â¬ØªÙ
ت اÙÙ
ÙاÙ?ÙØ© عÙ٠برÙاÙ
ج Ø£Ù
٠إÙ
داداتâ¬
â«Ø© اÙÙ?اÙØة⪠\.â¬ÙÙ
Ùâ¬
â«Ø²Ø±â¬ â«Ù ⪠)2018â¬ÙÙ
Ù Ùب٠ÙظÙرâ¬
â«Ù اÙÙ
باشر Ù?٠اÙØÙÙÙ
ة⪠Øâ¬Ù ا⬠â«Ø§ÙÙ
Ùا٠Ù
Ù Ùب٠Ù
جÙس اÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠(Ù?Ù Ù?ÙÙ?رâ¬
â«Ø§ÙÙ
Ùرر عÙد اجتÙ
اع ØÙÙÙ
Ù (Ù
جÙس اÙÙزرâ¬
â«Ø§Ø¡ اÙÙ
ضÙÙ) ÙÙ
ÙاÙشة ÙØاع Ù
Ùا٠اÙشرب⪠Øâ¬ØÙØ« سÙتÙ
اعتÙ
اد Ùذا اÙبرÙاÙ
ج اÙÙ
تÙÙع ÙخرÙÙ? ⪠\.2018â¬Ùعدâ¬
â«ØªÙ
ÙÙ٠اÙبرâ¬
â«Ø§Ù
ج ÙÙ?Ùا ÙÙÙتائج اأÙداة اÙÙ
Ùاسبة Ù?Ù Ùذا اÙسÙا٠أÙÙÙ Ù
Ø±ØªØ¨Ø Ø¨Ø¨Ø±ÙاÙ
ج ØÙÙÙ
٠عاÙ
ÙÙÙس بÙ
عاÙ
اÙت Ù
Øددةâª\.â¬â¬
â«â¢ تÙÙ?ÙØ° اإÙصاÙØات⪠\.â¬ØªØ¯Ø¹Ù
أداة تÙ
ÙÙ٠اÙبرâ¬
â«Ø§Ù
ج ÙÙ?Ùا ÙÙÙتائج تÙÙ?ÙØ° اإÙصاÙØات اÙÙ
ؤسسÙة⪠\.â¬Ø³ÙÙ? تؤد٠Ùذ٠اإÙصاÙØات Ø¥Ù٠تØدÙØ« اÙشرÙØ© اÙÙØÙÙØ©â¬
â«âª 21â¬Ø£Ùت âª2018â¬â¬ â«Ø§ÙصÙ?ØØ© ⪠1â¬Ù
Ù âª14â¬â¬
â«Ø§ÙبÙ٠اÙدÙÙÙâ¬
â«Ù
شرÙع إصاÙØ ÙØاع اÙÙ
Ùا٠Ù?٠تÙÙس )âª(P162165â¬â¬
â«Ø§ÙستغاÙÙ ÙتÙزÙع اÙÙ
ÙاÙ⪠Øâ¬ÙتØسÙ٠أÙظÙ
Ø© اÙÙ
عÙÙÙ
ات⪠Øâ¬ÙتعزÙز جÙدة اÙخدÙ
ات اÙÙ
ÙدÙ
Ø© ÙÙعÙ
اÙء⪠Øâ¬ÙدعÙ
اÙÙضع اÙÙ
اÙÙ⪠Øâ¬ÙاإÙدارâ¬
â«Ø© اÙÙ
Ø«ÙÙ ÙØ£ÙصÙÙâª\.â¬â¬
â«ÙبدÙÙ Ùذ٠اإÙصاÙØات⪠Øâ¬Ø³ÙÙ? تتعرض ااÙستداÙ
Ø© اÙÙ
اÙÙØ© ÙÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠ÙÙØ®Øر ÙستÙØ®Ù?ض جÙدة اÙخدÙ
ات اÙÙ
ÙدÙ
Ø©â¬
â«ÙÙعÙ
اÙØ¡ بدرجة ÙبÙرâ¬
â«Ø© Ù?٠اÙسÙÙات اÙÙÙÙÙØ© اÙÙادÙ
Ø©âª\.â¬â¬
â«Ø§Ù
ج ÙÙ?Ùا ÙÙÙتائج Ø£ÙظÙ
Ø© اÙØÙÙÙ
Ø© (اإÙدارâ¬
â«Ø© اÙÙ
اÙÙØ© ÙاÙÙ
شترÙات ÙاÙضÙ
اÙات ااÙجتÙ
اعÙØ© ÙاÙبÙئÙØ©)⪠\.â¬ÙÙد⬠â«â¢ اأÙÙظÙ
Ø© اÙØÙÙÙ
Ùة⪠\.â¬ÙستخدÙ
تÙ
ÙÙ٠اÙبرâ¬
â«Ø¡Ø§ Ù
٠إØار اإÙÙÙ?ا٠سÙÙÙ
Ø© Ù
٠اÙÙاØÙØ©â¬â«Ø§Øª اÙت٠تشÙ٠جزÙâ¬â«Ø£Ø¸Ùرت اÙتÙÙÙÙ
ات اأÙÙÙÙØ© اÙتÙÙÙØ© ÙااÙئتÙ
اÙÙØ© ÙتÙÙÙÙ
ات اÙضÙ
اÙات Ù
ا ÙÙÙ⪠)1( :â¬Ø§Ø§ÙستثÙ
ارâ¬
â«Ø§Øª اÙÙ
ؤسسÙة⬠â«Ùز ÙÙÙدرâ¬
â«Ø§Øª ØÙاÙ?ز ÙÙÙة⪠Øâ¬ÙتدابÙر دعÙ
⪠Øâ¬Ùتعز اâ¬
â«Ø§ØªÙجÙØ (⪠)2â¬Ø³ÙتØÙب اÙتÙÙ?ÙØ° اÙÙØ§Ø¬Ø ÙاÙستثÙ
ارâ¬â«Ø§ÙتÙÙÙØ© Ùذات صÙØ© عÙ٠اÙÙ
ستÙ٠ااÙسترâ¬
â«Ø¹ ااÙستثÙ
Ø§Ø±Ø (⪠)3â¬ÙÙد أظÙر⬠â«ÙÙتغÙب عÙ٠بعض اÙصعÙبات اÙت٠ÙاجÙتÙا Ù
ؤخ اâ¬
â«Ø± اÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠Ù?٠تÙÙ?ÙØ° تÙ
ÙÙÙ Ù
شرÙâ¬
â«ØªÙÙÙÙ
Ø£ÙظÙ
Ø© ÙÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠بشأ٠اÙÙ
شترÙات ÙاإÙدارâ¬
â«Ø© اÙÙ
اÙÙØ© ÙاÙضÙ
اÙات Ø£ÙÙا Ù
تÙائÙ
Ø© عاÙÙ
Ùا٠Ù
ع اÙÙ
Ù
ارسات اÙدÙÙÙØ©â¬
â«Ø§ÙجÙدة شرÙØØ© Ùضع بعض اÙتعدÙاÙت اÙت٠سÙتÙ
تÙÙ?ÙØ°Ùا Ù
٠خاÙÙ Ø®ØØ© عÙ
٠اÙبرÙاÙ
جâª\.â¬â¬
â«â¢ اÙÙ
دÙ?Ùعات اÙÙ
رتبØØ© باÙÙتائج⪠\.â¬ÙتÙ
صرÙ? تÙ
ÙÙ٠اÙبرâ¬
â«Ø§Ù
ج ÙÙ?Ùا ÙÙÙتائج بÙ
جرد تØÙÙ٠اÙÙتائج⪠\.â¬ÙباÙÙظر Ø¥Ù٠اÙÙضع اÙØاÙ٠اÙÙØ´ اÙÙ
اÙÙâ¬
â«Ø§Ùذ٠تعاÙÙ Ù
Ù٠اÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠ÙاإÙصاÙØات اÙاÙزÙ
Ø© ÙÙتغÙب عÙÙ Ùذا اÙÙضع⪠Øâ¬ÙÙا٠Øاجة Ø¥ÙÙ ØÙاÙ?ز ÙÙÙØ© ÙÙÙâ¬
â«Ø© اأÙج٠اÙت٠ستؤت٠ثÙ
ارâ¬
â«Ùا عÙ٠اÙÙ
دÙ⬠â«Ù
٠اÙØÙÙÙ
Ø© ÙÙÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠ÙتÙÙ?ÙØ° بعض اإÙصاÙØات اÙصعبة ÙصÙرâ¬
â«Ø§Øª ضرÙرÙØ© ÙÙÙ ÙÙÙست باÙضرÙرâ¬
â«Ø© سÙÙة⬠â«Ø±Ø±â¬ â«Ø§â¬
â«ØاÙ?ز ÙÙÙا اÙتخاذ ٠ا⬠â«Ø§ÙÙ
تÙسØ⪠\.â¬ÙÙÙ
ث٠تÙ
ÙÙ٠اÙبرâ¬
â«Ø§Ù
ج ÙÙ?Ùا ÙÙÙتائج ÙÙÙس Ù?ÙØ Ø¨Ùاء عÙ٠اÙÙ
دخاÙتâ¬
â«Ø§ÙتÙÙ?ÙØ°âª\.â¬â¬
â«Ø§Øª Ùتائج Ù
ستÙ٠أÙداÙ? تØÙÙر اÙبرÙاÙ
جâ¬
â«Ø¬âª \.â¬Ø£ÙداÙ? تØÙÙر اÙبرÙاÙ
ج ÙÙ
ؤشرâ¬
â«Ø£ÙداÙ? تØÙÙر اÙبرÙاÙ
جâ¬
â«âª \.19â¬ØªØسÙ٠اأÙداء اÙÙ
اÙÙ ÙاÙتشغÙÙÙ ÙÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠ÙÙØ°Ù٠جÙدة اÙخدÙ
ات اÙÙ
ÙدÙ
Ø© ÙÙعÙ
اÙØ¡ ÙتأÙ
Ù٠إÙ
دادات اÙÙ
Ùا٠Ù?Ùâ¬
â«Ø© Ù?٠اÙÙØ³Ø ÙاÙجÙÙبâª\.â¬â¬ â«Ù ÙاÙØد Ù
٠اÙخسائر Ù?Ù Ùâ¬
â«Ø§ÙÙات Ù
ختار⬠â«ØªÙÙس اÙÙبرâ¬
â«Ø§Øª Ùتائج Ù
ستÙ٠أÙداÙ? تØÙÙر اÙبرÙاÙ
جâ¬
â«Ù
ؤشرâ¬
â«Ø§Øª Ø£ÙداÙ? تØÙÙر اÙبرÙاÙ
ج اÙÙ
ÙترØØ© ÙÙ (⪠)1â¬Ùسبة اÙتشغÙÙ (⪠)2( Ø)Ùªâ¬Ùسبة اÙدÙÙÙ (⪠)3( Ø)Ùªâ¬ØÙ Ø´ÙاÙ٠اÙعÙ
اÙØ¡ Ù?٠غضÙÙ âª24â¬â¬
â«âª \.20â¬Ù
ؤشرâ¬
â«Ø§ÙÙاتâ¬
â«Ø¹âª )5( Øâ¬ÙÙ
Ùات اÙÙ
Ùا٠اÙÙ
ØÙ?Ùظة Ù?Ù Ùâ¬â«Ù اÙØ°ÙÙ ÙØصÙÙ٠عÙ٠اÙÙ
Ùا٠عÙÙ Ù
دار اÙساعة ØÙا٠أÙاÙ
اأÙسبÙâ¬â«Ø³Ø§Ø¹Ø© (⪠)4( Ø)Ùªâ¬Ø³Ùا٠تÙÙس اÙÙبرâ¬
â«Ø¹ (اÙعدد) ÙÙسبة اإÙÙاث Ù
ÙÙÙ
(âª\.)Ùªâ¬â¬â«Ø§ÙÙØ³Ø ÙاÙجÙÙب⪠)6( Øâ¬Ø§ÙÙ
ستÙ?ÙدÙ٠اÙÙ
باشرÙÙ Ù
٠اÙÙ
شرÙâ¬
â«âª \.21â¬Ø³ÙدعÙ
اÙبرÙاÙ
ج Ù
جااÙت اÙÙتائج اÙثاÙثة اÙتاÙÙØ©âª:â¬â¬
â«âª \.iâ¬Ø¶Ù
ا٠ساÙÙ
Ø© اÙÙضع اÙÙ
اÙÙ ÙÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠عÙ٠اÙÙ
د٠اÙØÙÙÙ ÙتØسÙ٠أدائÙا اÙتشغÙÙÙâ¬
â«âª\.iiâ¬ØªØسÙ٠جÙدة اÙخدÙ
ات اÙÙ
ÙدÙ
Ø© ÙÙعÙ
اÙØ¡ ÙتعزÙز اÙعاÙÙات Ù
عÙÙ
âªØâ¬â¬
â«Ø© Ù?٠اÙÙØ³Ø ÙاÙجÙÙب⬠â«Ù عÙ٠اÙÙ
د٠اÙØÙÙÙ ÙتشجÙع ااÙستخداÙ
اÙÙ?عا٠ÙÙÙ
Ùا٠Ù?Ù Ùâ¬
â«Ø§ÙÙات Ù
ختار⬠â«âª\.iiiâ¬ØªØ£Ù
Ù٠إÙ
دادات اÙÙ
Ùا٠ÙتÙÙس اÙÙبرâ¬
â«âª 21â¬Ø£Ùت âª2018â¬â¬ â«Ø§ÙصÙ?ØØ© ⪠1â¬Ù
Ù âª14â¬â¬
â«Ø§ÙبÙ٠اÙدÙÙÙâ¬
â«Ù
شرÙع إصاÙØ ÙØاع اÙÙ
Ùا٠Ù?٠تÙÙس )âª(P162165â¬â¬
â«Ø¬Ø§Øª) Øسب Ù
جا٠اÙÙتائج اÙت٠تÙ
⬠â«Ø§Øª اأÙÙÙÙØ© (Ø£ÙداÙ? اÙتÙÙ
ÙØ© ÙاÙÙ
ؤشرâ¬
â«Ø§Øª اÙÙ
تÙسØØ© ÙÙØ°Ù٠اÙÙ
خر⬠â«âª \.22â¬Ù?ÙÙ
ا ÙÙÙ ÙائÙ
Ø© (غÙر شاÙ
ÙØ©) باÙÙ
ؤشرâ¬
â«Ø§Øª Ù
رتبØØ© باإÙÙÙ?اÙ⪠Øâ¬ÙØ£Ù Ù
ؤشرâ¬
â«Ø§Øªâ¬ â«Ø§Øª بشأ٠اÙÙ
ؤشرâ¬
â«Ø§Øª اÙت٠سÙتÙ
استخداÙ
Ùا ÙÙ
ؤشر⬠â«Ø±Ø±â¬ â«ØªØدÙدÙا ÙÙÙاس اإÙÙجازâ¬
â«Ø§Øªâª \.â¬Ø³ÙتÙ
أثÙاء اإÙعداد اتخاذ اÙ٠اâ¬
â«Ø§Øª اÙت٠سÙتÙ
تضÙ
ÙÙÙا Ù?٠إØار Ùتائج اÙبرÙاÙ
ج⪠\.â¬ØªÙ
تØدÙد اÙÙ
جÙ
Ùعة اأÙÙÙÙØ© Ù
٠اÙÙ
ؤشرâ¬
â«Ø§Øªâ¬ â«Ø³ÙتÙ
استÙعابÙا Ù?Ù Ø®ØØ© عÙ
٠اÙبرÙاÙ
ج⪠Øâ¬Ùأ٠اÙÙ
ؤشرâ¬
â«Ø¨Ùاء عÙ٠اÙتÙÙÙÙ
اÙتÙÙÙ ÙÙبرÙاÙ
ج ÙسÙتÙ
Ù
ÙاÙشتÙا باÙتÙ?صÙÙ Ù
ع اÙØÙÙÙ
Ø© اÙتÙÙسÙØ© أثÙاء اإÙعدادâª\.â¬â¬
â«Ùâ¬
â«ÙØا٠اÙÙتائج ⪠: 1â¬Ø¶Ù
ا٠ساÙÙ
Ø© اÙÙضع اÙÙ
اÙÙ ÙÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠عÙ٠اÙÙ
د٠اÙØÙÙÙ ÙتØسÙ٠أدائÙا اÙتشغÙÙÙâ¬
â«âª \.1â¬Ùسبة اÙتشغÙÙ (âª)Ùªâ¬â¬
â«âª \.2â¬Ùسبة اÙدÙÙÙ (âª)Ùªâ¬â¬
â«âª \.3â¬ØªØ¹Ø¯Ù تسعÙرâ¬
â«Ø§Øª اÙÙ
Ùا٠سÙÙÙا عÙ٠أساس Ùتائج ÙÙ
Ùذج Ù
اÙÙ Ù
تÙ?٠عÙÙÙâ¬
â«âª \.4â¬Ù
عد٠اÙتØصÙÙâ¬
â«âª \.5â¬ØªÙÙÙع عÙد اأÙداء بÙ٠اÙدÙÙØ© ÙاÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
ÙاÙâ¬
â«âª \.6â¬ØªØ³ØªÙ?Ùد اÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠Ù
٠استثÙاء Ù
٠اÙÙاÙÙÙ âª( 9-89â¬Ø§ÙÙ
ادة ⪠22â¬Ø«Ø§ÙثاÙ) ÙÙØصÙ٠عÙÙ Ù
رÙÙØ© تشغÙÙÙØ© Ø£Ùبرâ¬
â«ÙØا٠اÙÙتائج ⪠:2â¬ØªØسÙ٠جÙدة اÙخدÙ
ات اÙÙ
ÙدÙ
Ø© ÙÙعÙ
اÙØ¡ ÙتعزÙز اÙعاÙÙات Ù
عÙÙ
â¬
â«âª \.1â¬ØÙ Ø´ÙاÙ٠اÙعÙ
اÙØ¡ Ù?٠غضÙ٠⪠24â¬Ø³Ø§Ø¹Ø© (âª)Ùªâ¬â¬
â«Ù ÙاÙجÙÙÙâ¬â«âª \.2â¬Ø¥Ø¹Ø¯Ø§Ø¯ ÙتÙÙ?ÙØ° ÙظاÙ
تعÙÙض اÙÙ
ظاÙÙ
عÙ٠اÙÙ
ستÙÙÙ٠اÙÙ
رÙزâ¬
â«âª \.3â¬Ø¥Ø¹Ø¯Ø§Ø¯ استرâ¬
â«Ø§ØªÙجÙØ© ااÙتصااÙت ÙاÙÙ
عÙÙÙ
اتâ¬
â«Ù)â¬â«âª \.4â¬ØªÙ
ت اÙÙ
ÙاÙ?ÙØ© عÙ٠اÙÙÙÙ٠اÙتÙظÙÙ
٠اÙجدÙد ÙÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠(بÙ
ا Ù?Ù Ø°Ù٠إÙشاء ÙسÙ
تجارâ¬
â«Ø§Ù? عÙ٠اÙÙ
شارÙع ااÙستثÙ
ارÙØ© (اÙدرâ¬
â«Ø§Ø³Ø§Øª اأÙÙÙÙØ© ÙاÙÙ
ÙاصÙ?ات اÙتÙÙÙØ©)⬠â«âª \.5â¬Ù
عد٠درâ¬
â«Ø§Ø³Ø§Øª اÙتعاÙد Ù
٠اÙباØÙ ÙØ¥Ùعداد ÙاإÙشرâ¬
â«Ø¹ تجرÙب٠ÙتØÙÙØ© اÙÙ
Ùا٠ÙÙ?Ù ÙظاÙ
اÙبÙاء ÙاÙتشغÙÙ ÙتØÙÙ٠اÙÙ
ÙÙÙØ©â¬â«âª \.6â¬Ø¥ØاÙ٠عÙ
ÙÙØ© Ù
ÙاÙصة ÙÙ
شرÙâ¬
â«Ø© Ù?٠اÙÙسØ⬠â«Ù عÙ٠اÙÙ
د٠اÙØÙÙÙ ÙتشجÙع ااÙستخداÙ
اÙÙ?عا٠ÙÙÙ
Ùا٠Ù?Ù Ùâ¬
â«Ø§ÙÙات Ù
ختار⬠â«ÙØا٠اÙÙتائج ⪠:3â¬ØªØ£Ù
Ù٠إÙ
دادات اÙÙ
Ùا٠ÙتÙÙس اÙÙبرâ¬
â«ÙاÙجÙÙبâ¬
â«Ø¹â¬â«Ù عÙ٠خدÙ
ات اÙÙ
Ùا٠عÙÙ Ù
دار اÙساعة ØÙا٠أÙاÙ
اأÙسبÙâ¬â«âª \.1â¬ØصÙ٠سÙا٠تÙÙس اÙÙبرâ¬
â«Ø§ÙÙات Ù
ختارâ¬
â«Ø© Ù?٠اÙÙØ³Ø ÙاÙجÙÙب⬠â«âª \.2â¬ÙÙ
Ùات اÙÙ
Ùا٠اÙÙ
ØÙ?Ùظة Ù?Ù Ùâ¬
â«âª 21â¬Ø£Ùت âª2018â¬â¬ â«Ø§ÙصÙ?ØØ© ⪠1â¬Ù
Ù âª14â¬â¬
â«Ø§ÙبÙ٠اÙدÙÙÙâ¬
â«Ù
شرÙع إصاÙØ ÙØاع اÙÙ
Ùا٠Ù?٠تÙÙس )âª(P162165â¬â¬
â«Ùâ¬â«âª \.3â¬ÙÙ
Ùات اÙÙ
Ùا٠اإÙضاÙ?ÙØ© اÙت٠ÙتÙ
Ø¥ÙتاجÙا ÙصاÙØ ØªÙÙس اÙÙبرâ¬
â«Ø§ÙÙات Ù
ختارâ¬
â«Ø© Ù?٠اÙÙØ³Ø ÙاÙجÙÙب⬠â«âª \.4â¬Ø§ÙÙ
Ùا٠اÙÙ
Ùدرâ¬
â«Ø© Ù?Ù Ùâ¬
â«Ø¯âª\.â¬ÙصÙ? اÙبرÙاÙ
جâ¬
â«ØدÙد تÙ
ÙÙ٠اÙبرÙاÙ
ج ÙÙ?Ùا٠ÙÙÙتائجâ¬
â«ØÙرت اÙØÙÙÙ
Ø© ÙاÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠برÙاÙ
ج Ø£Ù
٠إÙ
دادات اÙÙ
Ùا٠Ù
ع اأÙÙداÙ? اÙثاÙثة اÙتاÙÙة⪠)1( :â¬Ø¶Ù
اÙ⬠â«âª\.23â¬â¬
â«Ø³Ø§ÙÙ
Ø© اÙÙضع اÙÙ
اÙÙ ÙÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠عÙ٠اÙÙ
د٠اÙØÙÙÙ ÙتØسÙ٠أدائÙا اÙتشغÙÙÙ⪠)2( Øâ¬ØªØسÙ٠جÙدة اÙخدÙ
اتâ¬
â«Ø§ÙÙ
ÙدÙ
Ø© ÙÙعÙ
اÙØ¡ ÙتعزÙز اÙعاÙÙات Ù
عÙÙ
⪠Øâ¬Ù(⪠)3â¬ØªØ£Ù
ÙÙ ÙتعزÙز اÙÙصÙ٠إÙÙ Ù
Ùا٠اÙشرب عÙ٠اÙÙ
ستÙ٠اÙÙØÙÙ⪠\.â¬ØªØ¯Ø¹Ù
ØدÙد تÙ
ÙÙ٠اÙبرÙاÙ
جâ¬
â«Ù عÙ٠اÙÙ
د٠اÙØÙÙÙ⬠â«ÙÙ?Ùا٠ÙÙÙتائج اÙÙدÙ?Ù٠اأÙÙÙ ÙاÙثاÙÙ ÙÙØ°Ù٠جزâ¬
â«Ø¡ Ù
٠اÙÙدÙ? اÙثاÙØ« اÙÙ
تÙ
Ø«Ù Ù?٠تأÙ
Ù٠إÙ
دادات اÙÙ
Ùا٠ÙتÙÙس اÙÙبرâ¬
â«Ø§ÙÙات Ù
ختارâ¬
â«Ø© Ù?٠اÙÙØ³Ø ÙاÙجÙÙبâª\.â¬â¬ â«ÙتشجÙع ااÙستخداÙ
اÙÙ?عا٠ÙÙÙ
Ùا٠Ù?Ù Ùâ¬
â«Ù⪠Øâ¬ÙتØسÙ٠أدائÙا اÙتشغÙÙÙ Ùاستعادة⬠â«ÙÙدÙ? برÙاÙ
ج إصاÙØ Ø¨Ø±ÙاÙ
ج Ø£Ù
٠إÙ
دادات اÙÙ
Ùا٠إÙ٠تعزÙز Ùدرâ¬
â«Ø© اÙشرÙØ© ÙاستÙاÙÙÙا اإÙدار⬠â«âª\.24â¬â¬
â«ØªÙازÙÙا اÙÙ
اÙÙ⪠\.â¬ÙÙ
ا ÙÙدÙ? Ø¥Ù٠تØدÙØ« اÙشرÙØ© ÙتعزÙز جÙدة اÙخدÙ
ات اÙÙ
ÙدÙ
Ø© ÙعÙ
اÙئÙا ÙضÙ
ا٠ساÙÙ
Ø© ÙضعÙا اÙÙ
اÙÙ ÙاÙØÙ?اظ عÙÙâ¬
â«Ø£ØµÙÙÙا⪠\.â¬ÙسÙتØÙب Ùذ٠اÙبرÙاÙ
ج اÙتزâ¬
â«Ø§Ù
ا ÙاضØا Ù
Ù ÙÙ Ù
٠اÙØÙÙÙ
Ø© ÙاÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠ÙتØبÙ٠اÙبرÙاÙ
ج بشÙÙ Ù?عاÙâª\.â¬â¬
â«Ø§Øª دÙÙار تÙÙس٠(⪠1\.5â¬Ù
ÙÙار دÙâ¬
â«Ø§Ùر Ø£Ù
رÙÙÙ) ÙÙضÙ
âª9â¬â¬ â«ØªÙدر ÙÙÙ
Ø© برÙاÙ
ج إصاÙØ Ø¨Ø±ÙاÙ
ج Ø£Ù
٠إÙ
دادات اÙÙ
Ùا٠بØÙاÙ٠⪠4â¬Ù
ÙÙار⬠â«âª\.25â¬â¬
â«ÙâªØâ¬â¬â«Ø¹ÙØ© (اÙظر اÙجدÙ٠⪠\.)1â¬ÙÙد تÙ
باÙÙ?ع٠تÙ
ÙÙ٠اÙÙ
ÙÙÙات اÙرئÙسÙØ© ÙبرÙاÙ
ج إصاÙØ Ø£Ù
٠إÙ
دادات اÙÙ
Ùا٠Ù
٠اÙجÙات اÙÙ
اÙØØ© اأÙخرâ¬â«Ù
ÙÙÙات Ù?رâ¬
â«Ù⪠)2( Øâ¬Ù
ÙÙ٠اÙÙ
ØاÙ?ظة عÙ٠اÙÙ
Ùا٠اÙØ°Ù ÙÙدÙ? Ø¥Ù٠تØسÙ٠أداء اÙشبÙØ© اÙذ٠تدÙÙر بشÙÙâ¬â«Ø¨Ø§Ø³ØªØ«Ùاء (⪠)1â¬ØªØ£Ù
ÙÙ Ù
Ùا٠اÙشرب Ù?٠تÙÙس اÙÙبرâ¬
â«Ù (اÙÙ
ÙÙ٠⪠Ø)1â¬ÙااÙستثÙ
ار اÙÙ
تعÙ٠بتخÙ?Ùض اÙÙ?اÙد⬠â«ÙبÙر خاÙ٠اÙعÙد اÙÙ
اضÙ⪠\.â¬Ø³ÙدعÙ
تÙ
ÙÙ٠اÙبرÙاÙ
ج ااÙستثÙ
ارâ¬
â«Ø§Øª اÙÙ
تعÙ٠بتÙÙس اÙÙبرâ¬
â«Ø§ÙÙ
ائ٠Ù?٠جÙÙب ÙÙØ³Ø Ø§ÙباÙد (اÙÙ
ÙÙ٠⪠Ø)2â¬ÙتÙ
ÙÙ٠اإÙصاÙØات اÙÙ
تÙخاة (اÙÙ
ÙÙÙ âª\.)3â¬â¬
â«Ø بتÙ
ÙÙ٠⪠150â¬Ù
ÙÙÙ٠دÙâ¬
â«Ø§Ùر Ø£Ù
رÙÙÙ Ù
٠برÙاÙ
ج إصاÙØ Ø£Ù
٠إÙ
دادات اÙÙ
Ùا٠Ù
٠خاÙÙ ÙÙج ثاÙØ«Ù⬠â«Ø³ÙÙÙÙ
برÙاÙ
ج اÙتÙ
ÙÙ٠اÙÙ
Ùتر⬠â«âª\.26â¬â¬
â«Ø§ÙÙ
ØاÙر ÙرÙز عÙ٠ثاÙØ« ÙØاÙات Ù
٠اÙÙتائجâª:â¬â¬
â«Ø³ÙÙ? Ùشجع ÙØا٠اÙÙتائج ⪠1â¬Ø§Ø¥Ùجرâ¬
â«Ø§Ø¡Ø§Øª ÙتØسÙ٠اÙÙضع اÙÙ
اÙÙ ÙÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠عÙ٠اÙÙ
د٠اÙØÙÙÙ ÙتØسÙ٠أدائÙا⬠â«â¢â¬
â«Ø§Ù تشÙ
Ù Ùذ٠اإÙجرâ¬
â«Ø§Ø¡Ø§Øª زÙادة اÙرسÙÙ
Ù?ÙØ Ø¨Ù Ø£Ùضا٠اعتÙ
اد ÙÙ
Ùذج Ù
اÙÙ Ùجع٠تعدÙاÙت اÙرسÙÙ
Ø£Ùثر Ù
ÙضÙعÙØ© ÙÙÙ
Ù٠تÙÙعÙا⬠â«Ø§ÙتÙظÙÙ
Ù⪠\.â¬Ùâ¬
â«Ù
سبÙا⪠-â¬Ø¹Ù٠عÙس اÙØرÙÙØ© اÙÙ
عتÙ
دة اÙÙÙÙ
⪠-â¬Ùادخا٠صÙغ Ù?Ùرسة ÙØ±Ø¨Ø Ø§ÙتعرÙÙ?ات بتØÙر تÙاÙÙÙ? اÙÙ
دخاÙت (عÙ٠سبÙ٠اÙÙ
ثا٠أسعارâ¬
â«âª 21â¬Ø£Ùت âª2018â¬â¬ â«Ø§ÙصÙ?ØØ© ⪠1â¬Ù
Ù âª14â¬â¬
â«Ø§ÙبÙ٠اÙدÙÙÙâ¬
â«Ù
شرÙع إصاÙØ ÙØاع اÙÙ
Ùا٠Ù?٠تÙÙس )âª(P162165â¬â¬
â«Ø© اÙÙ
اÙÙØ© اÙداخÙÙØ© ÙاÙÙ
Øاسبة اÙتØÙÙÙÙة⪠\.â¬Ùأخ٠اÙâ¬
â«Ø±âª Øâ¬Ø³ÙتضÙ
Ù ÙØا٠اÙÙتائج Ùذا إعداد⬠â«Ø§ÙÙÙرباء)⪠\.â¬ÙÙ
ا سÙرÙز ÙØا٠اÙÙتائج Ùذا عÙ٠تØسÙ٠اإÙدارâ¬
â«ÙتÙÙÙع عÙد أداء بÙ٠اÙدÙÙØ© ÙاÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
ÙاÙ⪠Øâ¬Ø¨Ø§Ø¥ÙضاÙ?Ø© Ø¥Ù٠اØتÙ
ا٠Ù
ÙØ Ø§ÙشرÙØ© اÙÙ
زÙد Ù
٠اÙÙ
رÙÙØ© اÙتشغÙÙÙØ©âª\.â¬â¬
â«Ø³ÙرÙز ÙØا٠اÙÙتائج ⪠2â¬Ø¹Ù٠تØسÙ٠جÙدة اÙخدÙ
ات اÙÙ
ÙدÙ
Ø© ÙÙعÙ
اÙØ¡ ÙتعزÙز خدÙ
Ø© اÙعÙ
اÙء⪠\.â¬Ø§ÙÙدÙ? اÙعاÙ
Ù٠جع٠اÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ⬠â«â¢â¬
â«Ø§Ù
ÙØ© Ø¥ÙÙ⬠â«Ø© عÙ٠اÙتÙ?اع٠بØرÙÙØ© Ø°ÙÙØ© Ù
ع اÙØ´ÙاÙ٠اÙÙاردة Ù
ÙÙÙ
⪠\.â¬ÙÙ
Ù٠أ٠تتضÙ
٠اإÙجرâ¬
â«Ø§Ø¡Ø§Øª اÙر⬠â«ÙتÙزÙع اÙÙ
Ùا٠أÙثر تÙجÙا٠ÙØ٠اÙعÙ
اÙØ¡ ÙÙادرâ¬
â«Ù ÙÙ
Ù٠أÙâ¬â«Ù⪠Øâ¬ÙتØدÙØ« اÙÙÙÙ٠اÙتÙظÙÙ
Ù ÙÙشرÙة⪠Øâ¬ÙتÙÙ?ÙØ° Ø¢ÙÙØ© تعÙÙض اÙÙ
ظاÙÙ
⪠\.â¬ÙÙا٠أÙضا٠تدابÙر أخر⬠â«ØªØÙÙÙ Ùذا اÙÙدÙ? Ø¥Ùشاء ÙسÙ
تجارâ¬
â«Ø§Øª اÙت٠ا٠تÙ
تÙ٠اÙشرÙØ© باÙضرÙرâ¬
â«Ø©â¬ â«ØªØ³Ø§Ø¹Ø¯ Ù?٠تØسÙ٠جÙدة اÙخدÙ
ات اÙÙ
ÙدÙ
ة⪠\.â¬ÙتشÙ
Ù Ùذ٠اÙتدابÙر تÙÙ?ÙØ° بعض اÙدرâ¬
â«Ø§Ø³Ø§Øª اÙÙ
تعÙÙØ© بااÙستثÙ
ارâ¬
â«Ø© Ù
ÙارÙØ© باÙÙسبة ÙÙا ع٠ØرÙÙ ØرÙ? خارجÙ⪠Øâ¬Ø£Ù تØدÙد Ù
ت٠تÙÙ٠اÙشرâ¬
â«Ø§ÙØ© بÙ٠اÙÙØاعÙ٠اÙعاÙ
ÙاÙخاص Ø£Ùثر ÙÙ?اءة Ù?٠تÙدÙÙ
خدÙ
ات⬠â«Ù
Ùزâ¬
â«Ø¹ ÙÙ?Ù ÙظاÙ
اÙبÙاء ÙاÙتشغÙÙ ÙتØÙÙÙâ¬â«Ø§ÙÙ
ÙاÙ⪠Øâ¬Ù
ع اÙترÙÙز عÙÙ Ù
ØØات اÙتØÙÙØ© ÙÙ
ØØØ© اÙÙ
ÙدÙة⪠Øâ¬Ø§ÙØ°Ù ÙتÙ
اÙتخØÙØ ÙÙا ØاÙÙا٠ÙتÙÙ٠أÙÙ Ù
شرÙâ¬
â«Ø§ÙÙ
ÙÙÙØ©âª\.â¬â¬
â«Ù⪠Øâ¬ÙدعÙ
ااÙستخداÙ
اÙÙ?عا٠ÙÙ
Ùارد اÙÙ
Ùا٠Ù?Ù ÙØ³Ø ÙجÙÙب⬠â«ÙÙدÙ? ÙØا٠اÙÙتائج ⪠3â¬Ø¥Ù٠تغØÙØ© اÙØÙب اÙÙ
تزâ¬
â«Ø§Ùد عÙÙ Ù
Ùا٠اÙشرب Ù?٠تÙÙس اÙÙبر⬠â«â¢â¬
â«Ø© اÙØاÙÙØ©â¬
â«Ø± Ø£Ùبر⪠\.â¬Ø¥Ø°Ø§ ÙÙ
ÙتÙ
تÙسÙع اÙÙدر⬠â«Ø§ÙباÙد⪠Øâ¬ØÙØ« تÙÙ٠اÙÙ
Ùا٠شØÙØØ© بشÙ٠خاص ÙÙÙاÙ
Ø´ تÙÙÙ?تÙا Ù
رتÙ?عة âª-â¬Ùظ اÙâ¬
â«Ø± Ø£Ù٠اÙتØÙÙØ© تÙعب د٠اÙâ¬
â«Ù Ù?Ù
٠اÙÙ
تÙÙع Ø£Ù ÙØµØ¨Ø ÙÙص اÙÙ
Ùا٠ØÙÙÙØ© ÙاÙعة بØÙÙ٠عاÙ
⪠\.2022â¬Ø³ÙتÙ
بÙاء Ù
ØØØ© جدÙدة Ø¥ÙÙتاج اÙÙ
Ùا٠غرب تÙÙسâ¬â«Ù?٠تÙÙس اÙÙبرâ¬
â«Ø§Ø¡Ø§Øª ÙÙÙ Ù
Ùا٠ÙبÙرâ¬
â«Ø© ÙاÙبÙ٠اÙتØتÙØ© اÙخاصة بتخزÙ٠اÙÙ
Ùا٠Ù
Ù Ø´Ù
ا٠اÙباÙد ØÙØ« تتÙÙ?ر Ù
Ùارد اÙÙ
ÙاÙ⬠â«(باجة) ØÙØ« تستÙÙ
٠اÙØÙÙÙ
Ø© إجرâ¬
â«Ø§Ùد ÙÙسÙا٠عÙ٠اÙÙ
Ùا٠Ù?٠اÙعاصÙ
Ø© تÙÙس ÙاÙبÙدÙات اÙÙ
جاÙرâ¬
â«Ø©âª Øâ¬ÙÙ
ا ستÙÙ?ر اÙÙ
اء ÙÙ
ÙØÙة⬠â«Ø§ÙسØØÙة⪠\.â¬Ø³ØªØºØ٠اÙÙ
ØØØ© ا ÙجدÙدة اÙØÙب اÙÙ
تزâ¬
â«Ø§ÙتصادÙØ© ÙاجتÙ
اعÙØ© ÙبÙرâ¬
â«Ø© ÙÙد اÙتØÙÙر (Ù
رÙ?Ø£ تÙÙس اÙÙ
اÙÙ)⪠\.â¬Ø³ØªØ³Ø§ÙÙ
عÙ
ÙÙØ© إعادة تأÙÙÙ Ù
ØØØ© Ø¥Ùتاج اÙÙ
Ùا٠اÙÙائÙ
ة⪠Øâ¬Ø§Ù سÙÙ
ا اÙÙØدتÙ٠اÙÙتÙÙâ¬
â«ØªÙ
بÙاؤÙÙ
ا Ù?٠عاÙ
٠⪠1970â¬Ù⪠Ø1983â¬Ù?٠ضÙ
ا٠تÙÙ?Ùر اÙÙ
Ùا٠عÙ٠اÙÙ
د٠اÙØÙÙÙ Ù
Ù Ùذ٠اÙÙ
ØØة⪠\.â¬Ø³ÙتÙ
Ø®Ù?ض Ùسبة اÙÙ
Ùا٠اÙÙ
Ùدرâ¬
â«Ø© عÙâ¬
â«Ø© Ù?٠اÙÙØ³Ø ÙاÙجÙÙب⪠\.â¬ØªØ¹Ø§Ù٠بعض Ùذ٠اÙÙâ¬
â«Ø§ÙÙات ØاÙÙا٠Ù
Ù⬠â«ØرÙ٠اÙØد Ù
٠اÙخسائر اÙÙ
ادÙØ© ÙاÙتجارÙØ© عÙÙ Øد سÙاء Ù?٠اÙÙâ¬
â«Ø§ÙÙات اÙÙ
ختارâ¬
â«Ø§Ø¯Øª اÙخسائر بشÙÙ ÙبÙر خاÙ٠اÙعÙد اÙÙ
اضÙ⪠\.â¬ÙÙا٠Ù
ÙاÙشات جارÙØ© Ø¥Ùعداد عÙد ÙائÙ
عÙ٠اأÙداء Ù
ع Ù
شغÙâ¬â«Ø®Ø³Ø§Ø¦Ø± تص٠إÙ٠⪠ØÙª50â¬ÙÙد زâ¬
â«Ù⪠Øâ¬ÙاÙذ٠سÙØ´Ù
٠اأÙÙØ´ØØ© اÙتاÙÙة⪠:â¬Ø§ÙÙØ´Ù? ع٠اÙتسربات ÙاصاÙØÙا⪠Øâ¬ØªØسÙ٠إدارâ¬
â«Ø© اÙشبÙة⪠Øâ¬Ø¥Ø¹Ø§Ø¯Ø© تأÙÙÙ Ø®ØÙØ⬠â«Ø®Ø§Øµ ÙÙ
دÙÙØ© صÙ?اÙس اÙÙبرâ¬
â«Ø§Ø£ÙÙابÙب⪠Øâ¬Ø§Ø³ØªØ¨Ø¯Ø§Ù تÙصÙاÙت اÙخدÙ
Ø© Ùعدادات اÙÙ
Ùا٠اÙخاØئة ÙتØدÙØ« Ùاعدة بÙاÙات اÙعÙ
اÙØ¡âª\.â¬â¬
â«Ø³ÙتÙ
تØدÙد ÙتعرÙÙ? Ù
جÙ
Ùعة Ù
٠اÙÙ
ؤشرâ¬
â«Ø§Øª اÙÙسÙØØ© أثÙاء اإÙعداد ÙÙÙاس Ùتتبع اÙÙتائج اÙÙسÙØØ© أ٠اÙØ®ØÙات اÙÙ
تداخÙØ© Ù?٠أÙداÙ?⬠â«âª\.27â¬â¬
â«ØªØÙÙر اÙبرÙاÙ
ج⪠Øâ¬Ø¨Ù
ا Ù?Ù Ø°Ù٠اÙÙ
ؤشرâ¬
â«Ø§Øª ÙضÙ
ا٠تØبÙÙ ÙÙ Ù
٠اÙØرÙ?ÙÙ⪠Øâ¬Ø§ÙØÙÙÙ
Ø© ÙاÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
ÙاÙ⪠Øâ¬ÙعÙد اأÙداءâ¬
â«Ùâª\.â¬â¬ â«Ø© Ù?٠اÙÙØ³Ø ÙاÙجÙÙب⪠Øâ¬ÙتÙبÙØ© اÙØÙب اÙÙ
تزâ¬
â«Ø§Ùد عÙ٠اÙÙ
Ùا٠Ù?٠تÙÙس اÙÙبر⬠â«Ù
ث٠اÙتعدÙاÙت عÙ٠اÙتسعÙرâ¬
â«Ø§Øªâª Øâ¬ÙØ®Ù?ض ÙÙ
Ùات اÙÙ
Ùا٠اÙÙ
ÙدÙرâ¬
â«Ø© اÙÙ?اÙØØ© ÙاÙÙ
Ùارد اÙÙ
ائÙØ© ÙاÙصÙدâ¬
â«Ø²Ø±â¬â«Ø© اÙتÙÙ
ÙØ© ÙااÙستثÙ
ار ÙاÙتعاÙ٠اÙدÙÙÙ⪠Øâ¬Ù٠اâ¬
â«Ø²Ø±â¬ â«Ø³ÙتÙ
تØدÙد ÙÙعÙÙ Ù
٠اÙÙ
ؤشرâ¬
â«Ø§Øª بعÙاÙØ© باÙتشاÙر Ù
ع ٠اâ¬
â«Ø§Øª اÙÙ
رتبØØ© باإÙÙÙ?اÙ⪠Øâ¬ÙاÙت٠Ùشار Ø¥ÙÙÙا باسÙ
"اÙÙ
ؤشرâ¬
â«Ø§Øª اÙÙ
رتبØة⬠â«Ø© اÙÙ
اÙÙØ© ÙاÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
ÙاÙ⪠\.â¬Ø£Ùâ¬
â«Ø§Ù اÙÙ
ؤشر⬠â«Ø²Ø±â¬â«Ù⪠Øâ¬Ù٠اâ¬â«Ø§ÙبØرâ¬
â«Ù" غÙر اÙÙ
رتبØØ© باإÙÙÙ?اÙ⪠\.â¬Ø³ÙÙ? ÙدÙ?ع Ø¥Ùجاز اÙÙ
ؤشرâ¬
â«Ø§Øª اÙÙ
رتبØة⬠â«Ø¨Ø§Ø¥ÙÙÙ?اÙ" ÙثاÙÙا تÙ٠اÙت٠Ùشار Ø¥ÙÙÙا باسÙ
"Ùتائج اÙÙ
ؤشرâ¬
â«Ø§Øª اÙÙسÙØØ© اأÙخرâ¬
â«Ø¨Ø§Ø¥ÙÙÙ?ا٠اÙبÙÙ ÙتÙدÙÙ
اأÙÙ
Ùا٠اÙÙ
خصصة ÙÙبرÙاÙ
ج ÙÙ٠اأÙÙ
Ùا٠اÙت٠ستÙÙ
٠اÙÙ
Ùارد Ù
٠اÙØÙÙÙ
Ø© اÙتÙÙسÙØ© ÙاÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙعâ¬
â«Ø§ÙÙ
Ùا٠ÙتÙÙ?ÙØ° جÙ
Ùع Ø£ÙØ´ØØ© اÙبرÙاÙ
ج اÙÙ
تصÙØ© بÙØاÙات اÙÙتائج اÙÙ
Ø°ÙÙرâ¬
â«Ø© أعاÙÙâª\.â¬â¬
â«âª 21â¬Ø£Ùت âª2018â¬â¬ â«Ø§ÙصÙ?ØØ© ⪠1â¬Ù
Ù âª14â¬â¬
â«Ø§ÙبÙ٠اÙدÙÙÙâ¬
â«Ù
شرÙع إصاÙØ ÙØاع اÙÙ
Ùا٠Ù?٠تÙÙس )âª(P162165â¬â¬
â«Ù⪠\.â¬Ø§ÙÙ?Øص اÙبÙئ٠ÙااÙجتÙ
اع٠اأÙÙÙÙâ¬
â«[اآÙثار اÙبÙئÙØ© ÙااÙجتÙ
اعÙØ© اÙÙ
ØتÙ
ÙØ©Ø Ø§ÙÙ
عرÙ?Ø© ÙاÙÙ?ÙÙ
اÙعاÙ
ÙÙظاÙ
اÙبرÙاÙ
ج Ø¥Ùدارة اÙÙ
خاØر ÙاآÙثار اÙبÙئÙØ© ÙااÙجتÙ
اعÙØ©Ø ÙاإÙØار اÙزÙ
Ù٠إÙØاÙ٠تÙÙÙÙ
â¬
â«Ø§ÙÙظÙ
اÙبÙئÙØ© ÙااÙجتÙ
اعÙØ© بÙ
ا Ù?Ù Ø°Ù٠اÙتشاÙر بشأ٠Ù
شرÙع تÙÙÙÙ
اأÙÙظÙ
Ø© ÙاإÙÙ?ØµØ§Ø Ø¹ÙÙ]âª\.â¬â¬
â«âª \.28â¬ØªØµÙÙÙ? اÙÙ
خاØر اÙبÙئÙØ© Ù
عتدÙ⪠\.â¬ÙÙÙس Ù
٠اÙÙ
تÙÙع أ٠تØÙ?ز استثÙ
ارات اÙبرÙاÙ
ج أ٠آثار بÙئÙØ© أ٠اجتÙ
اعÙØ© ØÙÙÙØ© اأÙج٠ا٠ÙÙ
Ù٠عÙسâ¬
â«Ù
سارÙا⪠\.â¬Ù
٠اÙÙ
تÙÙع أ٠تÙÙ٠اآÙثار ⪠/â¬Ø§ÙÙ
خاØر اÙبÙئÙØ© ÙااÙجتÙ
اعÙØ© اÙسÙبÙØ© Ù
ØدÙدة اÙÙØا٠Ùأ٠تÙÙÙ Ù
Øددة Ù?Ù Ù
Ùا٠اÙعÙ
Ù⪠\.â¬ÙباÙتاÙÙâ¬
â«Ø³ÙتÙ
اÙتعاÙ
Ù Ù
عÙا Ù?Ù Ù
ÙاÙع Ù
Ùا٠اÙعÙ
Ùâª\.â¬â¬
â«âª \.29â¬ØªØµÙÙÙ? اÙÙ
خاØر ااÙجتÙ
اعÙØ© Ù
عتدÙ⪠\.â¬ÙÙس Ù
٠اÙÙ
تÙÙع Ø£Ù ÙÙÙÙ ÙاÙستثÙ
ارات Ù?٠إØار اÙبرÙاÙ
ج آثار اجتÙ
اعÙØ© سÙبÙØ© ÙبÙرة⪠\.â¬ÙستشÙ
Ùâ¬
â«Ø§Ø§ÙستثÙ
ارات Ø¥Ùشاء Ù
ØØØ© ÙÙ
عاÙجة اÙÙ
ÙاÙ⪠Øâ¬Ùإعادة تأÙÙ٠شبÙØ© اÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
Ùا٠Ù?Ù Ù
ÙاØÙ Ù
ختارة ÙÙØد Ù
٠اÙخسائرâ¬
â«Ø§ÙتÙÙÙØ© Ùاستبدا٠اÙعدادات ÙإصاÙØÙا ÙتØدÙد اÙخسائر اÙتجارÙة⪠\.â¬ÙبÙÙÙ
ا ÙÙ
Ù٠أ٠تÙØÙÙ Ùذ٠اأÙÙØ´ØØ© اÙÙ
تعÙÙØ© باÙبÙاء عÙÙ ØÙازة اأÙراضÙâ¬
â«Ø¥Ø§Ù أ٠اÙتأثÙرات ⪠/â¬Ø§ÙÙ
خاØر ااÙجتÙ
اعÙØ© ستÙÙÙ Ù
ØدÙدة ÙÙÙ
Ù٠اÙتØÙÙ
Ù?ÙÙا⪠\.â¬Ùد ا٠تÙتج أ٠آثار اجتÙ
اعÙØ© سÙبÙØ© Ù
٠جزء اإÙصاÙØ Ù?Ùâ¬
â«Ø§ÙبرÙاÙ
ج⪠Øâ¬Ø§ÙØ°Ù ÙتÙÙÙ Ù
٠تعزÙز اأÙداء اÙÙ
اÙÙ ÙاÙتجار٠ÙاإÙدار٠ÙÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
ÙاÙâª\.â¬â¬
â«âª \.30â¬Ø³ÙتÙ
إعداد تÙÙÙÙ
اÙÙظاÙ
اÙبÙئ٠ÙااÙجتÙ
اعÙ⪠Øâ¬ÙاÙتشاÙر ØÙÙÙ⪠Øâ¬ÙاÙÙØ´Ù? عÙÙ Ùب٠اÙتÙÙÙÙ
⪠\.â¬ÙسÙÙ? Ùدرس تÙÙÙÙ
اÙÙظاÙ
اÙبÙئ٠ÙااÙجتÙ
اع٠ÙØاÙâ¬
â«ÙسÙا٠ÙتأثÙرات اÙبرÙاÙ
ج اÙÙ
ØتÙ
ÙØ© Ù
Ù Ù
ÙظÙر بÙئ٠ÙاجتÙ
اعÙ⪠\.â¬ÙÙ
ا سÙتضÙ
٠استعراض Ø£ÙظÙ
Ø© اإÙدارة اÙبÙئÙØ© ÙااÙجتÙ
اعÙØ© ÙاÙÙدراتâ¬
â«Ø§ÙتÙÙ?ÙØ°ÙØ© ÙÙÙÙئات اÙØÙÙÙ
ÙØ© اÙÙ
عÙÙØ© اÙت٠ستشار٠Ù?٠اÙبرÙاÙ
ج ÙتÙÙÙÙ
Ù
د٠تÙاÙ?ÙÙا Ù
ع اÙÙ
بادئ ÙاÙسÙ
ات اأÙساسÙØ© اÙÙ
Øددة Ù?٠اإÙجراءاتâ¬
â«Ø§ÙتشغÙÙÙØ© رÙÙ
⪠\.9\.00â¬Ø³ÙتضÙ
Ù Ù
ØتÙ٠تÙÙÙÙ
اÙÙظاÙ
اÙبÙئ٠ÙااÙجتÙ
اعÙ⪠Øâ¬Ø¹Ù٠سبÙ٠اÙÙ
ثا٠ا٠اÙØصر⪠Øâ¬Ù
ا ÙÙÙ⪠)1( :â¬ÙصÙ? Ù
Ùجز ÙÙبرÙاÙ
جâªØâ¬â¬
â«Ø¨Ù
ا Ù?Ù Ø°Ù٠اأÙÙداÙ? ÙاÙعاÙÙات بÙ٠برÙاÙ
ج اÙØÙÙÙ
Ø© ÙتÙ
ÙÙ٠اÙبرÙاÙ
ج ÙÙ?Ùا ÙÙÙØªØ§Ø¦Ø¬Ø (⪠)2â¬Ø§ÙÙ
خاØر ÙاآÙثار ÙاÙÙ?Ùائد اÙبÙئÙØ© ÙااÙجتÙ
اعÙØ©â¬
â«Ø§ÙÙ
ØتÙ
Ùة⪠Øâ¬Ø¨Ù
ا Ù?Ù Ø°Ù٠أ٠ÙضاÙا Ù
ØتÙ
ÙØ© تتعÙ٠بØÙازة ÙØ£ÙراضÙØ (⪠)3â¬Ø§ÙترتÙبات ÙاآÙÙÙات اÙÙ
ؤسسÙØ© اÙÙائÙ
Ø© ÙÙتعاÙ
Ù Ù
ع اÙÙ
خاØر اÙبÙئÙØ©â¬
â«ÙااÙجتÙ
اعÙØ© اÙÙ
ØتÙ
ÙØ©Ø (⪠)4â¬ØªØدÙد اÙÙ
جااÙت اÙت٠ÙÙبغ٠ÙÙÙ
ؤسسات اÙÙ
ÙÙ?ذة تØسÙ٠اإÙجراءات ÙاأÙداء Ù?ÙÙا Ù (⪠)5â¬Ù
دخاÙت اÙتÙÙÙÙ
اÙÙ
تÙاÙ
Ùâ¬
â«ÙÙÙ
خاØرâª\.â¬â¬
â«âª \.31â¬ÙتÙ
استبعاد تدخاÙت اÙÙ?ئة أ⪠\.â¬ÙÙ
ع Ø°ÙÙ⪠Øâ¬Ø³ÙتÙ
Ù?Øص استثÙ
ارات اÙبرÙاÙ
ج بعÙاÙØ© ÙتÙÙÙÙ
Ù
ا إذا ÙاÙت أ٠تدخاÙت Ù
٠اÙÙ?ئة (Ø£) Ù
درجة⪠\.â¬ÙÙâ¬
â«Ø¡ عÙÙÙâªØâ¬â¬ â«Ø¡Ø§ Ù
٠اÙبرÙاÙ
ج⪠Øâ¬ÙÙ
ا ÙÙ Ù
ÙصÙص عÙÙÙ Ù?٠اإÙجراءات اÙتشغÙÙÙØ© âª/â¬Ø£Ù?ض٠اÙÙ
Ù
ارسات ⪠Ø9\.0â¬ÙبÙا Ù⬠â«ØªÙÙÙ Ù
Ø«Ù Ùذ٠ااÙستثÙ
ارات جز Ùâ¬
â«Ø³ÙØرص اÙÙ?رÙ٠عÙ٠أا٠تتسبب ااÙستثÙ
ارات اÙÙ
Ø®ØØ ÙÙا Ù?٠أ٠آثار بÙئÙØ© أ٠اجتÙ
اعÙØ© Ù
عاÙسة تÙÙÙ Øساسة Ø£Ù ØÙÙÙØ© اأÙج٠أ٠اÙâ¬
â«ÙÙ
Ù٠عÙس Ù
سارÙا ÙÙ
ا سÙØرص أ٠تÙÙ٠اÙتأثÙرات خاصة باÙÙ
ÙÙع⪠Øâ¬ÙÙÙ
Ù٠عÙسÙا Ù?٠اÙغاÙب ÙÙÙ
Ù٠اÙتخÙ?ÙÙ? Ù
ÙÙا بÙ?عاÙÙØ© باستخداÙ
â¬
â«Ø§ÙÙ
Ùارد اÙÙ
ØÙÙØ©âª\.â¬â¬
â«âª 21â¬Ø£Ùت âª2018â¬â¬ â«Ø§ÙصÙ?ØØ© ⪠1â¬Ù
Ù âª14â¬â¬
â«Ø§ÙبÙ٠اÙدÙÙÙâ¬
â«Ù
شرÙع إصاÙØ ÙØاع اÙÙ
Ùا٠Ù?٠تÙÙس )âª(P162165â¬â¬
â«Ø§ÙتÙاصÙâ¬
â«Ø§ÙبÙ٠اÙدÙÙÙâ¬
â«Ø¯Ø§ÙÙÙÙ ÙاÙ
Ùس دÙرÙاÙ⬠â«Ø§Ø§ÙسÙ
â¬
â«Ùائد Ù?رÙÙ⬠â«Ø§ÙÙ
Ùصب⬠â«Ø®Ø¨Ùر اÙتصاد٠Ù?٠اÙبÙÙØ© اÙتØتÙة⬠â«Ø§ÙÙ
Ùصبâ¬
â«Ø§ÙبرÙد ااÙÙÙترÙÙÙ âªdcamos@worldbank\.orgâ¬â¬ â«âª5360+4244â¬â¬ â«Ø±ÙÙ
اÙÙاتÙ?â¬
â«Ù
ØÙ
د Ù?اض٠ÙداÙ⬠â«Ø§Ø§ÙسÙ
â¬
â«Ùائد Ù?رÙÙ⬠â«Ø§ÙÙ
Ùصب⬠â«Ø§ÙÙ
Ùصبâ¬
â«Ø®Ø¨Ùر Ù?٠إÙ
دادات اÙÙ
Ùا٠ÙاÙصرÙ? اÙصØÙâ¬
â«Ø§ÙبرÙدâ¬
â«âªmndaw2@worldbank\.orgâ¬â¬ â«âª5772+4413 /â¬â¬ â«Ø±ÙÙ
اÙÙاتÙ?â¬
â«Ø§Ø§ÙÙÙترÙÙÙâ¬
â«Ø§ÙÙ
Ùترضâª/â¬Ø§ÙعÙ
ÙÙâª/â¬Ø§ÙÙ
ستÙ?Ùدâ¬
â«Ùزارة اÙتÙÙ
ÙØ© ÙااÙستثÙ
ار ÙاÙتعاÙ٠اÙدÙÙÙ⬠â«Ø§ÙÙ
Ùترضâ¬
â«Ù
دÙرة⬠â«Ø§ÙÙ
Ùصب⬠â«ÙÙØ«ÙÙ
اÙØÙ
زاÙÙ⬠â«ÙÙتÙاصÙâ¬
â«Ø§ÙبرÙد ااÙÙÙترÙÙÙ âªk\.hamzaoui@mdci\.gov\.tnâ¬â¬ â«âª0021671892653â¬â¬ â«Ø±ÙÙ
اÙÙاتÙ?â¬
â«Ø§ÙÙÙااÙت اÙÙ
ÙÙ?ذةâ¬
â«Ø§ÙشرÙØ© اÙÙØÙÙØ© اÙستغاÙÙ ÙتÙزÙع اÙÙ
ÙاÙ⬠â«Ø§ÙÙÙاÙØ© اÙÙ
ÙÙ?ذةâ¬
â«Ù
دÙر اÙدراسات⬠â«Ø§ÙÙ
Ùصب⬠â«Ø¹Ø¨Ø¯ اÙرؤÙÙ? اÙÙÙÙصر⬠â«ÙÙتÙاصÙâ¬
â«Ø§ÙبرÙد ااÙÙÙترÙÙÙ âªa\.nouicer@sonede\.com\.tnâ¬â¬ â«âª0021671494341â¬â¬ â«Ø±ÙÙ
اÙÙاتÙ?â¬
â«ÙÙÙ
زÙد Ù
٠اÙÙ
عÙÙÙ
اتâ¬
â«Ø§ÙبÙ٠اÙدÙÙÙâ¬
â«âª1818 H Street, NWâ¬â¬
â«âªWashington, D\.C\. 20433â¬â¬
â«Ø§Ùï®Ø§ØªÙ?âª(202) 473-1000 :â¬â¬
â«âªWeb: http://www\.worldbank\.org/projectsâ¬â¬
â«âª 21â¬Ø£Ùت âª2018â¬â¬ â«Ø§ÙصÙ?ØØ© ⪠1â¬Ù
Ù âª14â¬â¬
â«Ø§ÙبÙ٠اÙدÙÙÙâ¬
â«Ù
شرÙع إصاÙØ ÙØاع اÙÙ
Ùا٠Ù?٠تÙÙس )âª(P162165â¬â¬
â«âª 21â¬Ø£Ùت âª2018â¬â¬ â«âª 1â¬Ù
Ù âª14â¬â¬ | APPROVAL |
P154219 | Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
Deposit Insurance Strengthening Project (P154219)
Report Number: ICRR0022182
1\. Project Data
Project ID Project Name
P154219 Deposit Insurance Strengthening Project
Country Practice Area(Lead)
Bulgaria Finance, Competitiveness and Innovation
L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD)
IBRD-85960 31-Dec-2018 319,734,000\.00
Bank Approval Date Closing Date (Actual)
18-Mar-2016 31-Dec-2019
IBRD/IDA (USD) Grants (USD)
Original Commitment 327,465,000\.00 0\.00
Revised Commitment 327,465,000\.00 0\.00
Actual 319,734,000\.00 0\.00
Prepared by Reviewed by ICR Review Coordinator Group
Paul Holden John R\. Eriksson Christopher David Nelson IEGFP (Unit 3)
2\. Project Objectives and Components
DEVOBJ_TBL
a\. Objectives
The Objective of the project (PDO) was to strengthen the financial and institutional capacity of the Borrower
so as to enable it to meet its deposit insurance and bank resolution obligations\. (Financing Agreement, p\. 5)\.
The ICR (p\. 8) notes that âthe Borrowerâ refers to the Bulgarian Deposit Insurance Fund (BDIF)\.
Page 1 of 14
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
Deposit Insurance Strengthening Project (P154219)
The objective can be parsed into two key outcomes:
ï Outcome 1: Strengthen the financial capacity of the BDIF
ï Outcome 2: Strengthen the institutional capacity of the BDIF
b\. Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Will a split evaluation be undertaken?
No
d\. Components
Initially the project specified only one component, which was âstrengthening the financial and institutional
capacity of the BDIF, (estimated total cost at appraisal US$327\.47 million equivalent; actual financed cost
was US$319\.743 million)\. However, this was parsed into two components in the PAD to reflect the two
outcomes of the PDO, (ICR,pp\.8-9[JE1] ) although in the Loan Agreement (p\. 5) it is shown as one
component\.
The first component aimed to strengthen the financial capacity of the BDIF in order to be able to have
sufficient financial capability to meet disbursement requirements in the event of a further bank failure\. In
2014, a failure of the fourth largest bank in the country had drained the liquidity of the BDIF\. The failure
necessitated the payout of EUR1\.9 billion (ICR p\. 6), with the assistance of a government loan\. The payout
exceeded the EUR 1\.07 billion of accumulated reserves of the BDIF by a substantial margin, leaving it with
only EUR232 million in reserves by March 2015, which would have been insufficient to cover payouts in the
event of a further bank failure\.
The component was to be achieved through meeting ten Disbursement Linked Indicators (DLIs) on which
disbursements of the tranches of the loan were based\. The first group of these involved measures to
increase the reserves of the BDIF to the equivalent of one percent of covered deposits\. The second group
of DLIs involved the recovery of assets from the bankrupt bank in order to further augment reserves of the
BDIF\. The third set of DLIs involved securing a backstop loan to be drawn in the event of a bank failure
requiring additional disbursement of reserves\. This loan could not be from the World Bank since the
objective of this set of DLIs was to broaden the sources of funding\.
The second component aimed at strengthening the institutional capacity of the BDIF\. The measures to be
taken were based on the recommendations of the International Association of Deposit Insurers (IADI),
which focused on improving the ability of the BDIF to recognize and respond to potential banking sector
problems through sharing information between the Bulgarian National Bank (BNB) and the BDIF\. In
Page 2 of 14
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
Deposit Insurance Strengthening Project (P154219)
addition, an Independent Asset Quality Review of the Commercial Banks in Bulgaria was being undertaken,
the results of which were to be shared with the BDIF\. An additional sub-component was the improvement of
the ability of the BDDIF to engage in deposit payouts and bank resolutions in the event of bank failure\.
[JE1]The ICR is clear that the PAD split the PDO in two\. This is important since if It was only the ICR that
did so, assessing the efficacy of achievement of each sub-PDO separately, rather than just the original
PDO, could be questioned\. It is not clear in what document and when only the one PDO was cited\. Perhaps
in the Financing Agreement (FA)?
e\. Comments on Project Cost, Financing, Borrower Contribution, and Dates
The total cost of the project at appraisal was estimated at EUR300 million ($327\.465 million equivalent)\. The actua
amount disbursed was $319\.734 million, with the difference being accounted for by exchange rate fluctuations\. The
was financed through World Bank Investment Project Financing\.
Disbursements were as follows:
ï A EUR100 million advance payment plus EUR150 million on the achievement of five DLIs;
ï A further disbursement of EUR50 million during project implementation\.
While there was no co-financing, the borrower also secured a loan of EUR300 million from the European Bank for
Reconstruction and Development (EBRD)\.
The borrower did not contribute to the financing of the project because of the liquidity crisis\.
Dates: Relevant dates were; Approval, March 18, 2016; Loan effectiveness June 28, 2016; Original closing Decem
2018\. There was a level 2 restructuring on December 6, 2018 which extended the closing date to December 31, 20
when the actual closing occurred\. The restructuring also changed the results framework but did not change key ou
targets\.
Page 3 of 14
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
Deposit Insurance Strengthening Project (P154219)
3\. Relevance of Objectives
Rationale
PDOs were relevant for the World Bank Country Partnership Framework (CPF) for 2017-2022 under Area
One, Strengthening Institutions for Sustainable Growth (CPF p\. 16), one of the three objectives of which is
âimproved resilience and stability of the financial sectorâ\. It goes on to add (p\. 18) âA pivotal dimension of
the WBG support under this Objective is a financing instrument to the BDIF â
The PDOs remained relevant\. The 2019 Country Learning Review (p\. 1) states: âThe main program areas
of the CPF remain relevantâ¦in the financial sector, additional support for institutional strengthening of the
deposit insurance schemeâ\. The contribution of the project supported strongly the compliance of the BDIF
with the core principals of the IADI\. The relevance of objectives is rated âhighâ\. The banking system was in
crisis and there was a substantial risk of loss of confidence in financial institutions, which could have
resulted in a financial meltdown\.
Rating Relevance TBL
Rating
High
4\. Achievement of Objectives (Efficacy)
EFFICACY_TBL
OBJECTIVE 1
Objective
Strengthen the financial capacity of the BDIF
Rationale
The results chain for this objective involved strengthening the financial capacity of the BDIF through
rebuilding its reserves, which had been completely depleted by the payouts associated with the failure of the
KTB bank\. The rebuilding of reserves was to occur through:
i\. The collection of premiums in 2016 and 2017 from the remaining commercial banks\. This had been
the mechanism for funding the BDIF in the past, but premiums had not taken balance sheet risks of
the banks into account\.;
ii\. Going forward, premium payments would be adjusted for risk so that banks with riskier portfolios
would pay additional amounts;
iii\. The loan from the World Bank:
Page 4 of 14
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
Deposit Insurance Strengthening Project (P154219)
iv\. An additional loan of EUR300 million from the EBRD;
v\. Recovery of assets from KTB, the failed bank\.
Recovery of assets under item (v) was complicated by the fact that shareholders of KTB contested in court
the withdrawal of the banking license\. Since assets could only be sold by the BDIF once the banking license
was withdrawn, rebuilding reserves through this channel was delayed\. Initially, a requirement of the World
Bank loan had been that asset recovery would lead to the BDIF having a reserves to deposit ratio of 1\.5
percent\. This was changed in the restructuring to one percent on the basis that the court case was outside
the control of the BDIF\. This also changed the requirement of one of the DLIs regarding the recovery of
assets from the bankrupt KTB Bank\. However, the ICR (p\. 13) notes that the case had been ongoing for more
than two years and that the resources were âalready in a KTB bankruptcy account at the BNB and could not
be used for purposes other than the recovery of creditorsâ\. Furthermore, asset recovery from KTB was
assisted by amendments to the Bank Bankruptcy Law (BBL) that were undertaken specifically for this
purpose\.
The rebuilding of the financial capability of BDIF was in accordance with the findings by the IADI that the
âassessment recommends that the authorities should aim for expedited replenishment of the deposit
insurance fundâ (ICR p\. 9)\. The BDIF essentially had negative reserves since payouts had exceeded its
accumulated reserves\. The total payout amounted to EUR1\.9 billion, compared with the accumulated
reserves of the BDIF of EUR1\.07 billion, with the balance covered by the government loan\. This allowed for
the reimbursement of 95 percent of insured deposits and 102,250 of insured depositors by the end of
February 2015\.
There was no evidence of malfeasance in the payouts to depositors\. The ceiling on the amount of each
payout to KTB depositors was in accordance with the EU deposit insurance directive of EUR100,000\. There
were also exclusions on payouts to shareholders (shareholders with more than five percent voting power,
members of the bank management and supervisory board, directors, auditors, together with closely related
parties, and sophisticated investors such as government institutions, municipalities, pension funds and
insurers (Interview with the TTL)\.
The outcome indicator for this PDO was that BDIF reserves reach the equivalent of one percent of covered
deposits in the absence of bank failures compared with a baseline of 0\.75 at the end of December 2015 (ICR
p\. 26)\. The original target had been 1\.5 percent\. The target was formally revised to one percent on December
17, 2018\. However, by the completion of the project, actual reserves amounted to the equivalent of 2\.16
percent\. The target was exceeded\.
Page 5 of 14
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
Deposit Insurance Strengthening Project (P154219)
The rating for this objective is âhighâ on the basis that not only did the rebuilding of reserves go ahead in a
satisfactory manner in spite of the court case, but also that by completion of the project, reserves were double
the target amount\. In addition, all protocols for payouts were observed\.
Rating
High
OBJECTIVE 2
Objective
Strengthen the Institutional Capacity of the BDIF
Rationale
The causal chain for this objective involved the following measures that were designed to strengthen the
institutional capacity of the BDIF:
i\. An updated information sharing agreement between BDIF and BNB on the financial status of
commercial banks that would increase the amount of information available to the BDIF regarding the
financial health of the institutions whose deposits it insured;
ii\. BNB shared with BDIF the results of its Asset Quality Reviews of the commercial banks, which would
have a similar effect as the previous measure;
iii\. The BDIF conduct a survey of the public awareness of its role in order to build knowledge and
confidence in the banking system;
iv\. That the BDIF prepare a contingency plan that would be operationalized in the event of future bank
failures so that it could act expediently in a time of crisis\.
These measures were all put in place and plausibly relate to strengthening the institutional capacity of the
BDIF\.
Additional measures for institutional strengthening of the BDIF were put in place and monitored by the project
team as part of ensuring the DLI conditions were met\. These contributed to institutional strengthening and
included contingency planning, information sharing with the regulator and the collection of risk based premia
as contributions to the BDIF (ICR, p\. 12)\.
The outcome results indicator was that the BDIF perform âits legally mandated technical functions, including
in any future bank failures in which its resources are utilizedâ\. The technical functions of the BDIF were
Page 6 of 14
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
Deposit Insurance Strengthening Project (P154219)
achieved compared with these not being in place at the outset of the project\. They were based on the
recommendations of the IADI\.
However, this outcome indicator also partly refers to future actions that did not take place within the life of the
project\. The project team maintained (interview with the TTL) that âit is still possible to assess the
improvement in institutional capacity based on the progress achieved in specific areas that required
strengthening at the time of project preparation, according to the IADI assessmentâ\. The measures that were
put in place strengthened the institutional capacity of the BDIF\. However, the outcome indicator chosen did
not measure this\.
Given these minor shortcomings, the rating for this objective is Substantial\.
Rating
Substantial
OVERALL EFF TBL
OBJ_TBL
OVERALL EFFICACY
Rationale
The first outcome indicator was met and exceeded by the end of the project, so that in the event, the
reduction of the reserve to deposit ratio that occurred as part of the restructuring was not needed\. With regard
to the institutional strengthening of the BDIF, the measures required were all put in place by the end of the
project, though the evidence base for institutional transformation is limited\.
The second outcome indicator was achieved, except for that portion relating to future actions, which were
impossible to achieve since they related to future bank failures, the occurrence of which were not possible to
know\. Navigating these indicator issues makes it difficult to be certain of the institutions long term capacity to
deal with future bank failures\.
With a "High" rating for objective 1, strengthening the financial capacity of the BDIF and a "Substnatial" rating
for strengthening the institutional capacity of the BDIF, the overall efficacy rating is Substantial\.
Page 7 of 14
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
Deposit Insurance Strengthening Project (P154219)
Overall Efficacy Rating
Substantial
5\. Efficiency
The ICR (p\. 17) indicates that economic rates of return (ERR) were not estimated as part of the analysis of
project efficiency, since the nature of the project did not lend itself to such calculations\. Nevertheless, efficiency
was based on a scenario analysis that compared what might have occurred if the BDIF had not received the
World Bank loan\. The analysis identified the positive âchain effectâ that consisted of:
ï Obtaining the EBRD loan that probably would not have been granted if the World Bank loan had not
occurred;
ï Being able to repay the government loan, that carried a significantly higher interest rate than the World
Bank loan\.
The rebuilding of reserves, the restoration of confidence in the financial system, and the improvement in the
regulatory structure occurred significantly faster as a result of the policy actions in the World Bank loan\.
Efficiency is therefore rated substantial\.
Efficiency Rating
Substantial
a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal
and the re-estimated value at evaluation:
Rate Available? Point value (%) *Coverage/Scope (%)
0
Appraisal 0
ï¨ Not Applicable
0
ICR Estimate 0
ï¨ Not Applicable
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome
Page 8 of 14
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
Deposit Insurance Strengthening Project (P154219)
With a high rating for relevance of objectives, a substantial rating for efficacy and a substantial rating for
efficiency, the overall outcome rating is Satisfactory
a\. Outcome Rating
Satisfactory
7\. Risk to Development Outcome
The greatest risk to the banking system of Bulgaria was that the project not go ahead\. With the fourth largest
bank in the country having failed and the confidence in other banks in the financial sector weakening, there
was a high degree of systemic risk that could have resulted in a more general banking collapse\.
Furthermore, the PAD (p\. 6) points out that the failure of KTB exposed weaknesses in the supervisory
framework of the BNB, further casting doubt on the ability of other banks to weather the storm that had
begun with KTBâs failure\.
The risk to achieving the development outcome was reduced not only by strengthening the BDIF but also by
improving the overall regulatory structure of the financial system, including the cooperation between the
BDIF and the BNB\. Nevertheless, increasing the equity portion of the balance sheets of the commercial
banks would further reduce the risks to the system\.
8\. Assessment of Bank Performance
a\. Quality-at-Entry
The design of the project was sound against a background of the severe pressure on the financial system
of Bulgaria\. There was ambiguity in some of the DLIs and the design of the project did not fully consider
the possibility of delays in the recovery of assets from KTB bank\. Since the shareholders of KTB opposed
the removal of the banking license, resolution was delayed\. Asset recovery could only occur once the
banking license had been withdrawn\. The process was complicated and necessitated the issue being
considered by a court system that was unfamiliar with bankruptcy issues\. This could possibly have been
foreseen when the project was being designed, but it is difficult to envisage any changes in the outcome\.
Apart from this issue, the project was well designed to assist the BDIF weather the storm through which it
was going\. The project was not without risks, in particular arising from the possibility that the Bulgarian
authorities would not have the ability and willingness to implement the necessary measures\. The
inclusion of the DLIs ensured that disbursements would only take place once certain conditions had been
Page 9 of 14
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
Deposit Insurance Strengthening Project (P154219)
met\. This reduced risks by incentivizing the BDIF and the BNB to expedite the necessary reforms and
upgrading of processes in order to ensure the timely disbursement of funds\.
The soundness of the project prepared against a background that included the possibility of systemic
meltdown as well as strong project design contributed to a satisfactory quality at entry
Quality-at-Entry Rating
Satisfactory
b\. Quality of supervision
The continuity of the World Bank team was a strength of the project\. It enhanced supervision and
strengthened the working relationship with the client institutions, thereby contributing to the success of the
project\. Although the BDIF had not had previous experience with similar projects (ICR p\. 23), this continuity
built up a level of trust that resulted in ongoing communication and discussions between the BDIF and the
project team\. The ICR points out (p\. 23) âThe achievement of each DLI was verified by the BDIF and
confirmed by the WB team and independent performance auditor\.â
The ICR also points out that although technical assistance was not part of the project, the World Bank team
worked closely with the BDIF to provide in-depth comments on documents prepared by this staff,
particularly those related to the DLIs\. The ICR notes (p\. 23) that the BDIF placed substantial value on this
support\.
The close working relationship that developed between the Bank team and the two key institutions as a
result of strong supervision contributed to the outcome\. All necessary steps were taken to ensure that the
policy actions were implemented and the support of the Bank team was highly valued\. The quality of
supervision is therefore rated highly satisfactory\.
Quality of Supervision Rating
Highly Satisfactory
Overall Bank Performance Rating
Satisfactory
9\. M&E Design, Implementation, & Utilization
Page 10 of 14
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
Deposit Insurance Strengthening Project (P154219)
a\. M&E Design
The design of the M&E framework for the financial strengthening of the BDIF was in the main, clear\. The
causal chain linking prior actions with outputs and the outcome was easily derived\. Since the project linked
to disbursements to the achievement of the DLI indicators, which were in general clearly specified and
unambiguous, the M&E framework provided a system of control that was relatively clear-cut and not open
to alternative interpretations that could have led to conflict\. Furthermore, a verification process was put in
place to independently certify that the DLI's had been achieved, which further reduced the potential for
disagreement over what had been achieved\.
With regard to the outcome indicator that measured the achievement of the institutional strengthening of
the BDIF, the indicator referred not only to actions that had been achieved (that the BDIF perform its
legally mandated technical functions) but also future actions (including in any future bank failures in which
its resources are utilized)\. Having an indicator that related to future bank failures outside the time frame of
the project essentially nullified its usefulness, especially since the policy actions were designed to limit
further failure of banks\. Nevertheless, with respect to institutional strengthening, the project linked the
recommendations of the IADI to the PDO, which again allowed for armâs length criteria to be utilized\.
b\. M&E Implementation
Since the M&E framework related closely to the achievement of the DLI's, it was not difficult to ascertain
the extent of progress against the PDO that related to the financial strengthening of the BDIF\. The ICR
notes (P\.22) that for each DLI achieved, a notification letter was submitted by the BDIF\. In addition,
progress reports were submitted that outlined achievements in the preceding period as well as plans for
the next period\. These were then discussed as part of the supervision missions\.
c\. M&E Utilization
The ICR (p\. 22) states âThe WB team had to confirm achievement of DLIs based on evidence provided
by the BDIF as per the verification protocol, and the discussions during missions allowed the team to
make the decision about extending the project closing date and revising one of the PDO indicators\.â
Apart from the selection of an indicator that was of little use, as described above, the M&E framework
made a substantial contribution to the success of the project\.
M&E Quality Rating
Substantial
10\. Other Issues
Page 11 of 14
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
Deposit Insurance Strengthening Project (P154219)
a\. Safeguards
No environmental or social safeguards were triggered by the project
b\. Fiduciary Compliance
The ICR (p\. 22) notes that financial records and audit reports were inspected by a Financial Management
Specialist on a regular basis and there were no findings of non-compliance\.
c\. Unintended impacts (Positive or Negative)
In order to speed up the recovery of assets from KTB, the BBL was amended, which strengthened the
institutional framework for the financial system\. An unintended positive impact of the project was an
improved bankruptcy framework\.
d\. Other
N/A
11\. Ratings
Reason for
Ratings ICR IEG
Disagreements/Comment
Outcome Satisfactory Satisfactory
Bank Performance Satisfactory Satisfactory
Quality of M&E Substantial Substantial
Quality of ICR --- Substantial
12\. Lessons
The ICR offers the following lessons with some modification of language by IEG:
Results based financing, particularly when combined with an effective results framework that
involves unambiguous success criteria can be a powerful instrument to achieve PDOs\. In Bulgaria,
project design ensured that disbursements occurred upon achievement of clearly specified criteria
that were independently verified\. Although funds were used to bolster the financial position of the
Page 12 of 14
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
Deposit Insurance Strengthening Project (P154219)
BDIF, they also resulted in the financial strengthening of the institution as well as enhancing its
institutional capabilities\. This could be a valuable lesson for World Bank operations directed at
supporting deposit insurance schemes\.
In the design of projects in which disbursement depends on achieving DLIs, it is important to
consider the implications of indicators, the achievement of which are beyond the direct control of the
borrower\. In Bulgaria, the process of bankruptcy of KTB had to go through the courts, which led to
delays in its liquidation and recovery of assets\. This is an issue that needs to be considered at the
preparation stage of the project\.
IEG offers an additional lesson:
The importance of continuity in project teams is often overlooked\. Continuity ensures that confidence
is engendered and that unforeseen issues that inevitably arise during the course of a project can be
resolved in a timely manner\. In Bulgaria, continuity of the project team contributed substantially to
the successful completion of the project\.
13\. Assessment Recommended?
---
14\. Comments on Quality of ICR
The ICR is well written and describes the issues faced by the World Bank and the BDIF clearly\. It describes
well the challenges facing the BDIF as the implications of the failure of KTB Bank spread through the financial
system\. Its description of the DLIs is clear and notes how these contributed to the achievement of the PDOs\.
More discussion of the institutional issues would have been welcome, but overall it is a sound document\.
a\. Quality of ICR Rating
Substantial
Page 13 of 14
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
Deposit Insurance Strengthening Project (P154219)
Page 14 of 14 | APPROVAL |
P000340 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No\. 6808
PROJECT COMPLETION REPORT
CAMEROON
ZAPI INTEGRATED RURAL DEVELOPMENT PROJECT
(CREDIT 776-CM)
May 29, 1987
Western Africa Projects Department
Agriculture D
This document has a restricted disiribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CA}IEROON
ZAPI INTEGRATED RURAL DEVELOPMENT PROJECT
CURRENCY EQUIVALENTS
US $1: At Initiation CFAF 245
At Completion CFAF 350
WEIGHTS AND MEASURES
Metric System
ABBREVIATIONS
AGRRD World Bank Rural Development Division
CFAF Westafrican Franc Zone Currency Unit
CODES Branch Committee
(Comite de Succursale)
CODEVI Village Development Committee
(Comitt6 de Dgveloppement Villageois)
COGEST Management Committee
(Comig de Gestion)
DEP Studies and Planning Department (MINAGRI)
EPL Local Progress Enterprise
(Entreprise de Progres Local)
ERAP Inputs Supply Center
(Entreprise Regionale d'Approvisionnement des Paysans)
FNFP National Fund for Forestry and Fisheries
(Fonds National Forestier et Piscicole)
FONADER National Fund for Rural Development
(Fonds National de Developpement Rural)
IITA International Institute for Tropical Agriculture
IPD Pan-African Institute for Development
(Institut Pan-Africain de Developpement)
MINAGRI Ministry of Agriculture
ONAREST National Research Organization
(Office National da la Recherche Scientifique et Technique)
PMB Produce Marketing Board (Office National pour la
Commercialisation ues Produits de Base - ONCPB)
PROVIV Commercial Food Crop '\.arketing Organization
SODECAO Cocoa Development Society
(Socigtg de Dgveloppement du Cacao)
USAID US Agency for International Development
ZAPI Integrated Priority Action Areas
(Zones d'Actions Prioritaires Integr6es)
Fiscal Year (Government and ZAPI): July 1 to June 30
MOR OMCIAL US ONLY
THE WORLD BANK
Washtngton\. D\.C\. 20433
U\.S\.A\.
Office of DiecIt\.ewtaI
Opetton t atuarnf
May 29, 1987
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Completion Report on Cameroon Zapi Integrated
Rural Development Pro1ect (Credit 776-CM)
Attached, for information, is a copy of a report entitled
"Project Completion Report on Cameroon Zapi Integrated Rural Development
Project (Credit 776-CM)" prepared by Western Africa Regional Office\.
Further evaluation of this project by the Operations Evaluation Department
has not been made\.
Attachment
Ram K\. Chopra
for Yves Rovani
This document has a rstricted distributon and may be usd by rcipients only in te performance
of their official duties\. Its contents may not otherwe be diclsed without World ank autborutlon\.
CAMROON
ZAPI INTEGRATED RURAL DEVELOPMENT PROJECT
CREDIT 776-CM
PROJECT COMPLETION REPORT
Table of Contents
Page No\.
BAsrc DATA SHEET
PREFACE ii
EVALUATION SUMMARY ±1±
I\. INTRODUCTION I
II\. PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL 3
III\. PROJECT IMPLEMENTATION 5
IV\. PROJECT PERFORMANCE 13
V\. PROJECT IMPACT 21
VI\. FINANCIAL PERFORMANCE AND ECONOMIC RE-EVALUATION 23
VII\. INSTITUTIONAL DEVELOPMENT 26
VIII\. BANK AND BORROWER PERFORMANCE 29
IX\. CONCLUSIONS AND PROPOSITIONS 31
ANNEXS
HAP IBRD 12998R
CAMEROON
ZAPI INTEGRATED RURAL DEVELOPMENT PROJECT
CREDIT 776-CM
PROJECT COMPLETION REPORT
Preface
The following is a Project Completion Report (PCR) of one of
three rural development projects financed by the Bank in Cameroon in 1978\.
Two other projects were identified at the same time as this project:
(i) the Rural Development Fund Project (Credit 723-CM) which was audited in
1986 (Report No\. 6282 dated June 17, 1986); and (ii) the Western Highlands
Project (Credit 784-CM) which was completed in 1984\.
The ZAPI Integrated Rural Development Project (Credit 776-CM) was
appraised in March 1977 and was approved on March 7, 1978\. The credit
became effective on October 4* 1978 and amounted to US$8\.5 million compared
with an estimated overall project cost of US$12\.2 million equivalent, of
which the foreign exchange component amounted to US$4\.9 million\. The
project's closing date was extended from June 30 to December 31, 1984\. The
Government of Cameroon was the Borrower while the ultimate recipient of the
credit was the development company Integrated Priority Action Areas (East
ZAPI)\. Final disbursement reached 92% of the total credit amount and the
remaining US$0\.7 million was cancelled\.
The PCR was originally prepared by the Government with the
assistance of consultants\. The Western Africa Regional Office finalized
the attached PCR based on a review of the appraisal report (No\. 1737a-CM)
dated February 17, 1978, the President's Report (No\. P-2190-rC') dated
February 22, 1978, the Credit Agreement dated April 17, 1978, project
files, and interviews witb Bank staff\. A completion mission visited the
country in March 1986\.
A draft PCR was sent to the Borrower on April 1, 1987, for
comments\. Comments received from the Borrower are attached as Annex 10\.
This project has not been subjected to an audit by OED\.
- Ii -
ZAP1 nUERY RAL DREPT PROJ
CRD? 776-01
PROJECT COOKLRMTON REPORT
BASIC DATA SUIT
KEY PROJECT DATA Appraisal Actual or Actual as 2 of
Estimsta Estimated Actual App raI 3s1 1aapI/
Project Costs (US$ million) 12\.2 12\.8 1OO
Credit Amount (US$ million) 8\.5 7\.8 92 (US$0\.7 a cancelied
Date Board Approval 3/07/78 -
Date Effectiveness 10/04/78 -
Date Physical Components Completed: 12/31/83 06130/85
Proportion then completed 100S 302 30
Closing Date 06/30/84 12/31/84
Institutional Performance Good Poor
Agronomic Performance Good Poor
Nuober of Direct Beneficiaries 85,000
CUMULATIVE DISBURSEMENTS
FY79 FY80 FY81 PY82 m3 PYSA FY85
Appraisal Estimate (USS million) 1\.0 4\.9 6\.1 7\.3 8\.3 8\.5 8\.5
Actual (US$ million) 0\.2 2\.9 4\.5 5\.9 6\.1 6\.1 7\.8
Actual as 2 of Esttiate 20 59 73 81 74 72 92
Date of Final Disbursement 12/16/85
MISSION DATA
41
No\. of fandays Specializatlons Perf\. 3/ Types of
mission Date Persons in Field Represented 1/ Ratina 2/ Treai Problems
(a-7fyr\.
Ident\./Prepart4on 4/76/
Pra-Appraisal I 11/76 - - - - - -
Pre-Apprala l II 2/77 - _ _ _ _ _
AppraieAl 3/77 8 25 - - - -
Post-Appraisal 9/77 3 18 ,f,c - - -
Supervision 1 1/79 4 15 a,o\.f,a 2 1 FH
Supervision 2 6/79 1 18 a 2 2 in
Supervision 3 6/80 4 15 a,a,a,f 2 1 tqt
Supervision 4 11/80 3 13 ps,af 2 2 FP
Supervision 5 4/81 4 17 p\.a\.a,Soeio 2 1 FM
Supervision 6 10/81 3 13 p\.a,Div\. Ch\. 2 1 FM
Supervision 7 5/82 2 18 poo 2 3 FKT
Supervision 8 2/83 1 15 a 3 3 FMK
Supervision 9 10/83 2 13 a 3 2 ENT
Supervision 10 6/84 3 9 *,eof 3 1 Pt
Supervision 11 t1/84 2 5 a,s 3 1 FT
Completion 5/85 1 4 f - - -
Completion 3/86 3 8 b - -
ena EPn Ela E- E3M Eau ESm ElM El ElM Elm mu
\.,#* _ 88\.1 88\.0 9\.1
Aepmi_i 7$\.6 29\.7 104\.5
Nesetlatia 5at18 18\.1
8\.7 \.e6 2Z\.6 61\.4 36\.5 12\.2 21\.C 7\.2 12\.5 20\.5
ouX 1~~ 9 1\. \. I \. t e\.
TOAl JS\.St 135\.8 2\.6 36\.6 28\.6 91\.4 U\.s 12\.8 21\.6 7\.2 12\.6 496\.5
OtMER PROJECT DATA
Borrower Government of Cameroon
Executing Agency Zapi East
Fiscal Year July 1 to June 30
Nate of Currency FCFA
Currency Excbange Rate:
Appraisal Year Average 245 FCFA * US$1\.0
Intervening Years Average 329 FPFA * US$L\.0
Completion Year Average 380 KCFA * US$1\.0
Preceding Project None
Pollow-on Project None
l/1 a * agrticulturist; b * agricultural economlst; c a financial analyst;
d - economist; e * rural enginaer; f - agronomist\.
2/ 1 - problem-free or minor problem\.; 2 m oderate problems and
3 - major problems\.
3/ 1 - improving; 2 * stationary; and 3 w deteriorating\.
/ P * financia,; M managerial; T - tachnical; P * political\.
- iii -
CAMEROON
ZAPI INTEGRATED RURAL DEVELOPMENT PROJECT
CREDIT 776-CM
PROJECT tOMPLETION REPORT
Evaluation Summary
Introduction
The project was designed to build upon an approach to rural
development in the less populated areas of Cameroon which had been
initiated on a pilot scale in the late 19609\. The "Zones d'Actions
Prioritaires Integrees" (ZAPIs) were planned as non-profit farmers
organizations responsible in specified zones for all activities necessary
to promote overall commercialized development including organizing credit,
inputs, training and marketing\. As such, the project was in line with two
major elements of the Cameroonian rural development strategy:_
(a) decentralization of development activities to incorporate local
self-governing organizations where feasible; and (b) the expansion of
export crops in harmony with improving food crop production\.
Objectives
The project was designed to extend ZAPI activities into five
priority zones of the Eastern Province with the objective of improving the
production and marketing of cocoa, robusta coffee and food crops, and of
diversifying its operations with the development of social services\. The
project was to reorganize and expand extension services, develop an applied
research program on food crops and a crop protection service, reorganize
ZAPI's management structure, expand staff training, upgrade and expand
coffee processing plants and transport infrastructure, improve commercial
management, and construct rural water points and health centers\. Project
operations involved coordinating the provincial services of three
ministries; feeder roads were to be constructed under a parallel project
(1494-CM)\. Total project costs were estimated at US$15\.0 million\. The IDA
credit was for US$8\.5 million\.
Implementation Experience
The project ran into problems from the outset\. An objective of
the project had been to maintain ZAPI as an independent entity and to
provide funds to expand its activities and improve its efficiency, and,
thereby, to enable it to eventually be able to support the expanded program
from its own cash flow\. However, the development of functions extraneous
to its primary responsibilities, and a rapid doubling of staff
overstretched the already rather weak management, and controls
- iv -
deteriorated\. The abilities of the different provincial services to support
project actions varied considerably\. Furthermore, ZAPI's financial
position had deteriorated before the start of the project, and the initial
infusion of Government funds was used to pay off debt already incurred\.
Because of the cash flow problem, the construction program was delayed and
subsequently a significant part, which was considered least essential, was
eliminated\. The program for modetnizing coffee processing, and
expenditures for strengthening ZAPI operations were un'ertaken as
programmed, although with delayed timing\. Actual disbursements against the
credit of US$8\.5 millon were US$7\.8 million covering 522 of project costs\.
The final disbursement was made in December 1985, and the balance of
US$700\.000 was cancelled\. Almost 75Z of the amount disbursed was for
vehicles, equipment, and operating costs\.
Results
A formal re-estimation of the economic rate of return was not
attempted because of lack of data, but it is clear that it would be
substantially lower than the 25% calculated at appraisal\. While coffee
production reached appraisal estimates, cocoa production has only increased
slightly and, because of delayed installation, the output of the coffee
factory and quality levels have been below projections\. Food crop _
production is uncertain\. At the same time, project costs were 25% above
appraisal estimates\. Long-term benefits from the project will, however, be
realized from (a) nurseries which supply improved planting material;
(b) coffee and coffee plantings which would have not been undertaken
without the project; (c) the improved food crop varieties which were
identified; and (d) the improvements in coffee quality and marketing
procedures which are slowly being realized\. However, ZAPI has not been
strengthened overall as an institution and, in fact, became unwieldy\. The
additional staff have not been moulded into an effective organization,
especially iu extension, and administration and financial controls
remain weak\.
Sustainability
ZAPI is not now financially self-sustaining and shows no prospect
of generating sufficient funds to support the organization developed under
the project\.
Findings and Lessons
In common with many other area-based projects, this was too
complex for the modest and young organization which was called upon to
implement it\. Consequently, it was overwhelmed\. The premises of the
project that firstly the major constraint to agricultural development in
the province was farmers' lack of knowledge of available techniques and
that, secondly, this deficiency could be made up by adding a field staff to
disseminate this knowledge onto a nascent commercially-oriented organiza-
tion dealing with farmers, were shown not to be valid\. An approach which
may have yielded better results would have been:
(a) to concentrate more directly on improving the efficiency of
commercial practices and operations of ZAPI which might have
ensured its viability; and
(b) to have concentrated on pilot agricultural productOon operations
and, thus, slowly expanded the organization on the basis of
proven activities\.
In retrospect, action to reduce the complexity of the project and
sharpen its focus during its early stages when the problems were
identified, might have had a major positive impact on the subsequent
performance\.
CAMEROON
ZAPI INTEGRATED RURAL DEVELOPMENT PROJECT
PROJECT COMPLETION REPORT
(Credit 776-CM)
I\. INTRODUCTION
Bank Group Lending
1\.01 The project was the Bank Group's twelfth lending operation for
agriculture and the first area development project in Cameroon\. It fol-
lowed six tree crop projects (oil palm and rubber - totalling US$93\.6
million), specialiged projects, for: rice (two totalling US$5\.7 million),
livestock (US$29\.1 million), and cocoa (US$6\.5 million), and a rural
development fund project (US$7\.0 million)\.
The Agricultural Sector
1\.02 Agriculture provides a livelihood for about 75% of Cameroon's
population and, at appraisal in 1977, it contributed 35% to GDP and 70% of
the value of total exports, principally as cocoa, coffee and cotton\. About
90% of agricultural production originates from the traditional smallholder
sector (including coffee and cocoa production), and 10% from, mainly state
owned, oil palm and rubber plantations\.
1\.03 Cocoa and coffee are the principal smallholder cash crops in
Cameroon, each producing exports of about 100,000 tons per year from an
estimated total production area of 600,000 ha\. Low average yields of about
250 kg/ha from cocoa and 250 kg to 400 kg/ha from Arabica and Robusta
coffee reflect ageing plantations, inadequate cultivation and poor treat-
ment against pests and diseases (capsid attack and Black Pod disease on
cocoa and scolytes attack on Robusta coffee) set in a context of unattrac-
tive producer price incentives\.
1\.02 Until the mid 1970s actions for improving food crop production
were largely overshadowed by the emphasis on export crops\. Cameroon is
self-sufficient in food, relying on traditional staple crops of roots
(cassava, yams etc\.,), cereals (maize, sorghum and millet) and vegetables,
occasionally supplemented with livestock products\. In the mid 1970s,
however, the Government started actions to improve food crop production,
specifically to ensure adequate supplies for the growing urban population\.
1\.05 Production inputs, which were about 50% subsidised, were
generally supplied by the provincial Ministry of Agriculture (MINAGRI)
delegations but frequently poorly timed and inadequate in quantities\. The
MINAGRI delegation in Eastern Province also organized field extension and
crop protection services\. Primary marketing for cocoa and coffee was
generally the responsibility of farmer cooperatives while licenced traders
were mainly responsible for buying, bulking and transporting for
exportation by the Produce Marketing Board (PMB)\.
-2-
Project Origin
1\.06 The "Zones d'Actions Prioritaires Integrees" (ZAPIs) were initi-
ated in 1966 under the second five-year plan\. They were planned as
non-profit farmers' organizations responsible in specified areas (zones)
for all activities necessary to promote overall commercialized 4qvelopment,
including animating the population, as well as organizing credit, inputs
supply, training, and produce marketing\. The ZAPI movement commenced with
developments in five zones in the Center-South region in 1966\. "ZAPI de
l'Est" (ZAPI) is a development company which was created by Presidential
Dectee in 1972 under MINAGRI supervision, with the major objective of
progressively developing a peasant-directed cooperative type structure\. It
was, therefore, considered an appropriate institution for implementing a
development project for the Eastern Province\.
1\.07 The basic organizational focus of the ZAPIs was the village,
typically representing a group of about 100 farmers who nominated a leader
as their contact farmer and created their own representative committee
(CODEVI)\. Groups of about 12 villages (1000 farmers) coordinated them-
selves into "surccursales" (approximately sector level) which each elected
a committee (CODES)\. Some three surccursales combined to create a central
organizational unit (at zone/department level), called the "enterprise du
Progres Local-EPL" again with an elected management committee (COGEST)\.
The COGEST formed the main point of contact for ZAPI (and, therefore, the
project) management\. The ZAPI Director General organized and coordinated
the day to day operation of ZAPI services in line with plans and budgets
approved by the surccursales, provided the central focus for production
services, including inputs supply centers (Enterprise Regionale
d'Approvisionnement Paysans-ERAP), training and extension services\.
1\.08 The ZAPIs were attached to the MINAGRI from whom they contracted
production services through the provincial delegation and obtained subsidy
funds for inputs (at uniform levels with other farmers in the country)\.
Farmers paid an init\.ial subscription (CFAF 1,000) on joining ZAPI, thereby
creating a capital base\. This was complemented by annual receipts from
fees charged for inputs and marketing services; these were intended to
cover the administrative costs of the ZAPI\.
1\.09 The project represented a step in an evolutionary strategy from
central towards regionally controlled development of the agriculture
sector\. The project embodied two key strategies underlying the Cameroon
Government's national development plans: (i) the decentralization of
sectoral developments to rural areas, incorporating local self-governing
organizations and restricting the demand for fiscal support from Govern-
ment; and (ii) the expansion of export crops in harmony with improving food
crop production\. The project was one of a set of rural development efforts
in Africa analysed as part of a research project in the early 19709 which
led to the Bank publication "The Design of Rural Development" (Uma Lele
1975)\. It was designed to test new approaches to the productive
-3-
development of the poorest rural populations in line with the special focus
in Bank lending followinh the 1973 Annual Meeting\. This project was,
therefore, of particular interest for the Bank\.
II, PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL
2\.01 Identification and Preparation\. In early 1976, an AGRRD/RMWA
reconnaissance mission identified Eastern Cameroon as a relatively
impoverished area of the country (per capita income estimated at US$85,
versus about US$250 per annum for the entire country)\. Eastern Province,
one of the most isolated area in Cameroon, had been seriously neglected in
previous development efforts and laeked most amenities (roads, schools,
hospitals and water supply)\. As a result, cor-munications were difficult,
the rate of illiteracy was high and health standards were poor\.
Agriculture had been neglected and the population was not dynamic\.
2\.02 An AGRRD mission in April 1976 identified ZAPI as an appropriate
development vehicle through which improved small farmer support services
could be delivered\. Preparation of the ZAPI Eat Integrated Rural
Development Project (the project) was coordinated by the ZAPI Est Director
General during 1976 under the auspices of the Planning Department of
MINAGRI (DEP) which organized a technical commission to decide on the
components\. The Bank closely supervised the preparation process, including
hiring specialist consultants (using PPF) to advise on coffee processing/
economics, fisheries, health, rural water supply, and feeder road aspects\.
An inter-ministerial orientation committee was esLablished to ensure
coordination between sectors\. The Bank also organized a socio-economic
study covering the proposed project area\. Two pre-appraisal missions by
the Bank (11/76 and 2/77) helped Government to finalize the preparation
report\.
2\.03 Appraisal and Negotiations\. A five-man mission completed field
appraisal work in March 1977 and a post appraisal mission visited Cameroon
in September 1977 to confirm the project's organizational and applied
research aspects and to prepare for negotiations\. Negotiations were held
in Washington at the end of January 1978 and finalized on Febritary 10, 1978
following agreement of a Government's request to increase t\.e total credit
by US$500,000 (to US$8\.5 million) to finance costs for additional technical
assistance personnel\. The credit was approved by the Board on March 28,
1978 and it became effective on October 10, 1978\.
2\.04 Bwnk Supervision\. The project was one of a series of integrated
rural development projects in all regions which were supported by IDA in
early/mid 1970s\. These projects had three common features; they were: (i)
targeted at the poorest and most neglected populations; (ii) involved a
range of productive and social investment choices for the target popula-
tion; and (iii) centred on self-help community management and autonomous
operation\. Because of the project's innovative objectives, responsibility
- 4 -
for its preparation and initiation was conferred on the Rural Development
Division (AGRRD) of the Central Projects Staff (CPS)\. This continued from
1976 until 1982 when supervision of the ongoing project was taken over by
WAP Department\.
Project Description
2\.05 The project was designed to consolidate and extend the ZAPI
activities in five priority zones of the Province with the objective of
improving the production and marketing of cocoa, Robusta coffee, and food
crops and diversifying its operations with the development of social
services\. The Project's objectives were centred on balanced crop
production, the organization, processing and marketing of cocoa and Robusta
coffee, and social developments\. It was expected to directly beunefit
13,200 farm families whose average net farm incomes were to increase from
US$490 to US$720 per year\. The social developments were expected to
benefit some 85,000 people\.
The Agrinultural Production objectives for existing crops involved
diffusing improved production technology through: reorganized agricultural
training, extension, and inputs services (including crop protection service
for caysid control in cocoa; and cocoa/coffee seedling nurseries)\. To help
counter the dominance of export crops production, specific provisions were
included for: (i) initiating bottomlands rice production; (ii) developing
applied research programs to improve production, storage and processing of
food crops grown under traditional systems; (iii) introducing fish culture;
and (iv) providing rural credit\.
(a) The Institution Development objectives involved: (i) reorganizing
ZAPI's management structure to manage an expanded action program;
(ii) enlarging ZAPI's subscribed capital and constructing offices
and other facilities; (iii) providing training opportunities for
ZAPI staff; (iv) strengthening and transforming peasant group
structures into farmer-run organizations and associations; and
(v) establishing a monitoring and evaluation system\.
(b) The Processing and Marketing provisions involved: (i) upgrading
and expanding the coffee processing plants; (ii) improving the
transportation and storage infrastructure; (iii) increasing the
efficiency of ZAPI's commercial management; (iv) stimulating
commercial operations for supply and distribution (farm inputs
consumer goods and pharmaceutical products)\.
(c) The Socio-Economic Developments included: (i) improving access to
primary health facilities; and (ii) constructing rural water
points\.
2\.06 Particular features concerning these services were: (i) the
signing of conventions with existing government agencies for implementing
components and providing services which were exogenous to ZAPI's normal
operations: (ii) the accent on actions for women and young farmers; and
(iii) the emphasis on detailed monitoring and evaluation to guide the ZAPI
management and analyse the project impact\.
2\.07 The added need to improve the feeder roads system was expected to
be met by the "Feeder Roads Project" (Loan 1494 CM)\. This project was
approved in November 1977, with the intention of enabling the Department of
Roads of the Ministry of Equipment (MINEQ) to build, develop, upgrade and
maintain some 540 km of roads in the project zone\. The project was expect-
ed to build and maintain about 280 km of roads serving the plantations
through a small roads unit which was to be set up with financing from the
Feeder Roads Project\.
III\. PROJECT IMPLEMENTATION
Effectiveness and Start-up
3\.01 The credit became effective or\. 10/04/78, seven months after
signature\. By July 1978, the initial developments were encouraging:
Government provided FCFA 470 millions for ZAPI Est's capital increase (75%
higher and 2 months earlier than stipulated in the credit agreement)\.
Conventions were promptly signed with ONAREST (research component),
Ministry of Health, and the FNFP (filsheries component) anri staff were
transferred to the project\. The Administrative Council was established
with the Governor of Eastern Province as president\. Consultants (Planning
Assistance) were hired to help initiate the work programs and budgets\.
3\.02 Conversely, unqualified personnel at field and office levels and
logistical problems for credit processing by ZAPI resulted in procurement
delays and a slow start-up for the extension and training components\. Lack
of collaboration within the Bank and between the Bank and the Government
agencies concerned delayed the procurement of road building machinery and
building of the training center\. Better training and closer attention by
Bank supervision missions could have reduced these delays\.
3\.03 Two fundamental problems became apparent at project start-up and
persisted throughout the implementation period\. The first concerned the
calibre and rapid expansion in numbers of ZAPI staff, where the incumbent
personnel, who were technically experienced but lacked formal training,
were superseded by younger graduates with limited practical experience and
less knowledge or commitment to the ZAPI philosophy and for whom status and
material gains predominated\. At field level, the number of (men and women)
extension workers was increased to meet project objectives\. As a result,
within a year of start-up the ZAPI staff increased from 200 to 483, in
principle with the approval of ZAPI management, the Government and IDA\.
The result was that a relatively small and united team was replaced by a
-6-
large "community" in which strains and rivalries surfaced between different
groups and many of the new recruits could not relate to the farmers or
their aspirations\.
3\.04 The second fundamental problem concerned ZAPI's cash flow\. At
appraisal it was expected to avoid financing problems by: (i) the capital
increase for ZAPI; (ii) the creation of a special account with an initial
deposit of FCFA 150 milliom$, which would be regularly replenished; and
(iii) the advance payment of subsidies\. Although Government respected its
initial obligations, both the capital increase and the initial deposit
served to pay-off outstanding debts\. Therefore, there was no operating
fund to meet the initial demands for project expenditures, a problem which
worsened over time and was exacerbated by inexperienced project management
(para 4\.04) and the start-up of ZAPI's marketing services\. Had ZAPI's
capital and financial situation been more thoroughly analysed at appraisal,
the impact of this problem could have been significantly lessened\.
Revision
3\.05 As early as the second supervision mission, the project manage-
ment proposed some modifications, including: abandoning of the planned
extension to other zones and shortening the duration of the project from
five to four years in order to take account of the depreciation of the
dollar and domestic inflation in Cameroon\. Although the former was
accepted, the shortening of the project implementation period was declined
by the Bank at that time, because it was considered too early in the
operations\. Subsequent progress showed that project forshortening could
not have been justified by lack of funds\. Nonetheless, fundamental changes
ma\.de were in the construction program in PYI, with the elimination of a
uumber of buildings that were considered nonessential in the light of the
financial crisis with which ZAPI was faced (the ZAPI headquarters in
Bertoua and the Training Center were not built, the number of storaga sheds
and pro-pharmacies and health centers was reduced and the planned buildings
were not provided for research nor for the 24 technical support centers)\.
3\.06 As far as the individual components are concerned, the swamp rice
program started late and was abandoned, ostensibly because of the lack of
farmer interest\. Fish culture was much reduced due to reorganization of
the Ministry of Livestock\. Although ZAPI was supposed to take over
responsibility for pest and disease control in the project area, it decided
to leave it in the hands of the crop protection service of the provincial
delegation of MINAGRI\.
3\.07 Accounting and financial control problems existed from the
outset\. Eventually, faced with project management's inability to submit
reliable accounting statements at the proper time, the Bank suspended
disbursements from May 1983\. This continued until restricted disbursements
resumed early in 1985 specifically for: (i) completing the audit of the
accounts up to 1983; (ii) hiring an expatriate Administrative and Financial
-7-
Director for ZAPI (9/1984 to 12/1985); and (iii) employing consultants for
preparation of the completion report and for reviewing technical
operations\. On termination of the project (final disbursement 12/16/85)
$700,000 of credit (audited) was cancelled\.
Implementation Schedule
3\.08 According to the initial supervision reports and annual reports
submitted by ZAPI, the development plan started well, despite some delays\.
However, the situation rapidly deteriorated mainly due to poor
coordination, cash flow problems, deficits on commercial operations and
excessively high expenditures, and this led to a state of crisis and a
change of general manager in September 1982\. The new General Manager
reduced the project objectives and made his top priority the improvement in
commercial operations\. To some extent, this objective has been achieved
and marketing operations now appear to be profitable, although it is not
possible to confirm this due to the present state of the accounts\.
3\.09 Regarding the project components directly administered by ZAPI,
the coffee processing program (construction of the Belabo plant and
modernization of the other plants) was implemented between 1980 and 1982\.
The expenditures for vehicles, equipment, technical assistance, training
and monitoring and evaluation were also completed, but without any lasting
impact on ZAPI\. The construction program was cu-rtailed as indicated
above\.
3\.10 With regard to the programs sub-contracted by ZAPI, it should be
noted that the applied research program (ONAREST/IITA) was carried out on
schedule and well done despite the decision against constructing the agreed
facilities\. Conversely, the health and family fish ponds programs en-
countered delays and were only partially completed\. The feeder roads
component, financed under Loan 1494 CM, only came into operation in mid-
1980\. However, there was insufficient specification in mvehinery
procurement, and the road construction equipment subsequently proved to be
too light for the tropical forest conditions in Eastern Province and,
therefore, the project was ineffective\.
3\.11 Although the major problems (especially the cash flow shortages,
poor accounting methods, the losses on commercial operations, ZAPI's
dependence on the Department of Agriculture for pest and disease control
measures, and the delays in the feeder roads program) had become evident by
1979, no effective remedial measures were implemented, despite: (i) the
presence of technical assistance (particularly on the accounting and
finance sides); (ii) the completion of additional marketing studies; (iii)
the establishment of a monitoring and evaluation studies; and (iv) the
fielding of regular and intensive IDA supervision missions and many
meetings with the Government\. By and large, the lack of follow-through
from these provisions resulted from the inexperience of the technical
assistance team, ZAPI management's inability to implement changes, and on
-8-
excess of "benefit of the doubt" in Bank and central Government\. The
deteriorating situation was evident and decisive reorganizational action
was needed\.
Reporting
3\.12 The monitoring and evaluation system provided for regular reports
at all levels (daily, weekly, monthly, quarterly, twice-yearly and yearly),
which was probably, unnecessarily ambitious\. Summaries of the various data
are presented in the annual project reports prepared by the monitoring and
evaluation unit\. This practice had already been followed by ZAPI Est for
several years prior to project initiation and, by and large, the project
adopted the same indicators and the same method of presentation (including
the hiring of specialists)\. The major shortcoming of these reports was
they included only technical indicators and no financial analysis\. The
latter (generally late and often of doubtful reliability) were provided by
the administrative and financial management\.
Procurement
3\.13 There are no detailed procurement records because of poor
accounting and financial controls and the dearth of associated progress
reports\. Supervision and disbursement records indicate that procurement
-s, generally in compliance with the credit agreement, although, bulking of
oiaers and ICB for contracts exceeding US$100,000 were not rigorously
respected\. However, acceptable deviations resulted from:
(a) Preference being given to local suppliers who could provide spare
parts and after-sales service (the cost of keeping a defective
piece of equipment idle usually exceeds any savings on the
purchase price); and
(b) preference was given to splitting between two or more suppliers
first to avoid creating a monopoly vis-a-vis the project, and
second so as not to overload the after-sales service capacity of
any one supplier\. If the cost of local purchases of imported
goods is included, foreign purchases ran slightly above the
appraisal estimates\.
3\.14 Project Management complained of financial problems and delays In
project implementation due to the reimbursement procedures\. However, this
would have been minimized by streamlining and by more extensive use of the
direct payment procedure\. Moreover, the financial problems raised seem to
be due more to the fact that the proposed revolving fund was diverted to
cover commercial losses rather than to provide working capital\.
Total Project Cost and Financing Resources
3\.15 The design of the accounting system used by ZAPI did not
differentiate between costs related to commercial operations (\.including
share of overhead), costs associated with activities envisaged under the
project, and other possible costs (other projects or specific subsidies)\.
Furthermore, the cost accounting system does not provide data in a usable
from, e\.g\. costs of commercial operations by reference to the PMB 1/ scale
and by activity center, project costs by reference to the classification
system used in the appraisal report\.
3\.16 An audit report on the ZAPI accounts up to June 30, 1983 did not
present detailed analyses of all annual costs and commercial receipts
(although this analysis is now being made)\. The analysis of project costs
given in the 1983 auditors' financial report refers only to the
reimbursement requests sent to IDA, which account for less than half of the
financing assistance received by ZAPI during the project implementation
period\. In addition, it was not possible to determine whether this analysis
was based on the total costs submitted for reimbursement or on the share
reimbursed by IDA\. Therefore, it has only been possible to estimate the
final cumulative cost and to compare it with the estimates given in the
appraisal report\. (Tables 1-3 in Annex 3 summarise the estimates of
project financial operations)\. The more detailed analyses will be made as
part of the final audit of project accounts for 1983/84 and 1984/85\. 3\.17
Project costs totaled US$15\.0 million equivalent, including the following
estimated relative contributions from Government and IDA sources up to
1984:
Original Actual
Allocation Disbursement
US$000 US$'o00
Government of Cameroon 3,730\.0 7,200\.0
IDA 8,500\.0 7,799\.3
Total 1230\.0 142
This summary, which excludes Government's contributions to ameliorate the
ZAPI Est debts accummulated prior to project initiation in 1978, indicates
1/ The PMB (Produce Marketing Board - Office Nationale pour la
Commercialisation des Produits de Base ONCPB) is responsible for
coordinating and organizing the purchase and exportation of most
export crops: coffee, cocoa, cotton, palm oil, and groundnuts\.
- 10 -
that between 1978 and 1984, the Government's contributions to ZAPI opera-
tions (US$7\.2 million equivalent) was nearly double the predictions at
appraisal\.
3\.18 The following table compares actual credit disbursements with
credit funds allocated in the appraisal budget:
Orghial Actal Actual to
Allocatitm x of Total D2xrmmt X of Total Alloatim
Cateoy/kI ptlqn M$'000 Allcation US$ 00( DdisWrs u UB$'000
1\. Civil 4Wbrks 1,400\.0 16 335\.1 4 (1,064\.9)
2\. Vedcles and RpAp\. 2,640\.0 31 2,868\.1 37 228\.1
3\. Technical Assist\.
and Trahn*g 1,610\.0 19 1,698\.1 21 88\.1
4\. Operating Costs 2,820\.0 33 2,868\.0 37 48\.0
5\. Refund of Proj\.
Facility 30\.0 1 30\.0 1 -
Total Disburs ent 8,500\.0 10D 7,799\.3 100 (700\.7)
Credit Fund
Cancelled (12/16/85) 700\.7
Total Credit Fund 8500\.0
This analysis indicates that: i) the severe cut-back on construction
proposals was unnecessary: ii) expenditures on vehicle/equipment purchase
and operating costs exceeded the appraisal budget by approximately
US$276,000; and iii) the technical assistance and training expenditures
also exceeded provisions\.
3\.19 The project cost was approximately 30% above the original esti-
mate\. The cost overrun was financed by Government's fiscal budget\.
However, lack of rigorous financial control on the part of the Government
and of monitoring of the use of its financial resources (either directly or
through audited annual accounts or status reports) boosted unproductive
costs\. To avoid this problem in future, it will be necessary to introduce
precise methods to ensure stricter monitoring of the use of financial
resources granted by MINAGRI to the projects and organizations under its
supervision\. This need is being tackled within the DEP as part of the
agriculture component of the Second Technical Cooperation Project(Cr\.
1168-CM) by the appointment of a financial analysis specialist\.
- 11 -
Performance of Consultants, Suppliers and the Borrower
A\. Consultants
3\.20 The Project Appraitsal provided for about seren man years of
technical assistance; including 36 months for an admiListrative and
financial director and 48 months designated for short-term consultancies on
technical and organization aspects\. The Government retained a group of
consultants (Planning Assistance from Utah) to coordinate this work\. Their
prime objective was to help improve the organization of ZAPI and to develop
a monitoring and evaluation scheme\. They also organized studies on tech-
nical aspects of the project and particularly, for coffee processing and
ZAPI's commercial operations\.
3\.21 The consultant group devised and installed a number of planning
and control devices but, by and large, these were too theoretical and
sophisticated for the calibre of project management\. Although they
operated partially and provided information for progress reports, they were
not self-sustaining and ceased with the consultants' departure in 1983\.
The consultants also made proposals for planning systems, job descriptions
and work monitoring for the ZAPI employees\. However, this was largely
unimplemented because the consultants proved incapable of providing a
guidance tool with simple technical indicators and financial performance
charts\.
3\.22 An expatriate financial director, assigned by the consultant
group for three years, endeavoured to improve the accounting system and
financial controls\. However, this was done without rectifying ZAPI's
inherent capital crisis, improving its financial controls, or deciding a
precise action plan with Government for resolving the considerable debt
problems which existed at project initiation\. Several efforts to rectify
this situation were attempted during project implementation with the
assistance of foreign auditors, but with little success\. The Bank should
have been far more decisive in requesting strong Government action on this
matter\.
3\.23 For monitoring and evaluation, although a credible baseline study
was made, the report was presented only in May 1981 after two years of
project operation, thereby negating the possible impact\. During this
period, project operations were being monitored and a follow-up study(in
1982) focussed on crop yields and raised many useful questions and revealed
a number of discrepancies between different sets of production data\. This
report, as with the periodic M & E analyses (para 4\.21) were neither
assimilated by project management nor applied to subsequent (re)planning
exercises\.
3\.24 Among the technical studies undertaken, the proposal for coffee
processing although feasible, implied extensive charges to previous
- 12 -
operations without proposing appropriate pilot actions, phasing, or
training for farmers and ZAPI personnel\. Under the new ZAPI Director
General, appointed in 1982, a system of decentralized coffee hulling is
being introduced, although this was not considered in the processing study\.
A study for developing ZAPI's commercial operations proposed new grading
and pricing schedules for coffee\. However, these were never adequately
applied (possibly because they were not fully understood or accepted by the
relevant Government authorities) and because the lack of financial analysis
in ZAPI resulted in the PMB reimbursing less than the actual processing
costs\.
3\.25 Because of the lack of progress by the ZAPI Training Unit, the
new Director General decided to amploy a specialist organization to run
courses for in-service training and farmer animation\. Therefore, from 1983
to 1985, INADES (based in Yaounde) organized a series of correspondence and
field courses related to the farm production cycle\. These appear to be run
reasonably well but the themes are rather vague due to negligible liaison
with the ZAPI Technical Department\.
3\.26 The Project Completion Report, prepared by Project Management
(assisted by consultants Louis Berger) was inadequate; its recommendations
focussed on the need for more studies and more technical assistance rather
than suggesting reasons for lack of results and proposing remedial actions\.
B\. Contractors and Suppliers
3\.27 Although the majority of the constructions proposed under the
project were cancelled (para\. 4\.02) the following buildings were completed:
one cooperative office, three rural training offices, seven stores, one
health center, and seven dispensaries\. These buildings all involved simple
structures and despite some delays, were satisfactorily completed using
local contractors\. Similarly, the construction of a new coffee processing
plant (at Belabo) and improvements to existing coffee hulling plants were
satisfactorily completed, the former through ICB involving a local
contractor and the latter witn local construction companies\.
3\.28 The construction of village water-points, although less than
proposed (33 springs piped compared with 82), were well executed by the
MINAGRI provincial rural engineering service (Genie Rural)\. Conversely,
the similar convention with the MINEQ feeder road service upgraded only 72
km of roads (of 540 km proposed) and provided no subsequent maintenance\.
3\.29 The foreign and local suppliers of goods and materials all
performed satisfactorily, albeit with considerably delays compared with
appraisal proposals\.
C\. The Borrower
3\.30 After its initial support, in the absence of positive progress
- 13 -
Government became reluctant to comply with demands from ZAPI's management\.
Although, the Government fulfilled the major part of its undertakings
(increase in capital, recruitment of staff, substantial subsidies', these
were often paid late and not as scheduled\.
3\.31 It appears that the Project was the subject of controversy inside
the principal ministries and institutions concerned (MINAGRI, MINPLAN, and
PMB'\. This led to antagonism which included the associated organizations
(Ministries of Health and Livestock), and might have been inevitable in
view of the complexities involved\. However, had Government been more
attentive to the need for rationalisation physical operations and project
coordination (as proposed several times by Pioject Management and IDA
supervision missions), the situation would have improved\. Such rationali-
zation might have included: dissociating the different components to a
series of pilot actions, in the most suitable locations, including, for
crop production: focusing extension advice, improving the delivery of
Inputs, and streamlining marketing operations\.
3\.32 In the event, since 1983 Government authorities have almost
totally ignored communications on or from ZAPI, including the new Director
General's reorganization proposals (presented in December 1982)\. There has
been no regular field supervision or financial analysis by the MINAGRI
Planning Division (DEP), and the ZAPI Administrative Council (which is
statutarily required to meet bi-annually) has not been convened since March
1984\.
IV\. PROJECT PERFORMANCE
Strategy
4\.01 When compared with the underlying philosophy which sought firstly
to accelerate development in Eastern Province by integrating development
through a model that could be applied, at least partially, to all depart-
ments in the region, and secondly to give farmers' associations a larger
management role, the project cannot claim to have achieved any significant
improvement over the original state of affairs\. Facilities for rural
development have changed little and agricultural prodtictivity fell short of
the objectives\. The various ZAPI operations are no better coordinated and
the collaboration between different regional organizations has not been
strengthened\. The proposed establishment of new ZAPI's was abandoned
because of the need for economies, and the farmers' associations in the
village (CODEVIs) still deal only with local coffee and cocoa collection
and credit, as they did 15 years ago, and still have only a mainly advisory
role at the zone cooperatives (EPL) level\. In effect, the provisions for
project development were weighted in favor of physical and institutional,
rather than production or commercial objectives\.
- 14 -
Physical Development
4\.02 The project included provisions (totalling US$1\.8 million or 152
of total costs) for the construction of offices, training, research and
health facilities, coffee processing plants, stores, water-points and
feeder roads\. Because of the previous neglect in Eastern Province, this
was important for achieving accelerated development\. Annex 4, Table 4-1
shows that less than 30% of these construction were realized\. This
resulted partly from poor planning and coordination but mainly because of
the decision taken in PY1 to reduce this component in order to economize on
credit funds (para 3\.05)\. In view of the dearth of facilities in general
in the region, this decision adversely affected both the implementation of
the components concerned and the sustainability of the services involved,
and was a significant influence in reducing project staff morale\.
Institutional Development
4\.03 The ZAPI organigram is shown in Annex 4 (Figure 1)\. Institution
development was the central focus of the project and involved over 40X of
budgeted project costs: training, extension/cooperatives, and ZAPI
Management 20% (US$929,000 and technical assistance 22% (US$1\.1 million)\.
At appraisal, no fundamental reorganization was considered necessary and,
in fact, the institutional focus, involving four aspects of ZAPI's
operation: organization and management, training, extension, and
monitoring and evaluation, represented a reasonable institutional basis for
project implementation\.
(a) Organization and Management
4\.04 Despite of the increase in its capital base, (para 3\.01) and the
support services provided by technical assistance agents and consultants
and the training program, ZAPI's organization and management capacity has
not improved\. The project was plagued by inability to recruit personnel
from the region with experience and competence to implement a complex
development program in a previously neglected area\. This problem was
reflected in the calibre of the two directors general and, particularly in
ZAPI's departmental directors (agricultural production, finance and admini-
stration, and marketing)\. This lack of experience also reflected in the
accounting system (para 3\.11) and persisted throughout the project imple-
mentation period\. It proved equally difficult to recruit competent indivi-
duals from outside the region, particularly because of the lack of
amenities\.
4\.05 It has been impossible to obtain balance sheets and ,in fact, the
accounting year end of June 30 was inappropriate for management accounting,
because it divided two cropping years\. Separate operating accounts are not
available either for the marketing operations or for the semi-autonomous
agencies (for food crops: PROVIV, and for consumer supply stores: ERAP)\.
- 15 -
At best, only an approximation can ae attempted using non-accounting
procedures\.
4\.06 Despite the initial objective to strengthen ZAPI's overall
management during project implementation, the organizational structure
changed several times and there was frequent turnover of key personnel
(e\.g\., seven cases where the post changed four times and 13 cases where the
post changed three times)\. No key post was held by the same person
throughout the project implementation period\. Inevitably, this discontinu-
ity obstructed the development of an effective management organization\.
4\.07 At the time of the PCR mission, some improvements had been
achieved (particularly in the marketing department)\. However, even now,
although ZAPI's management team meets regularly and operates in an organ-
ized fashion, there is a lack of forward planning and dynamism\. The
operational relationship between ZAPI headquarters and the zone coopera-
tives (EPLs) is unclear, particularly with regard to the degree of autonomy
and the real responsibilities of the EPLs; the headquarters staff have very
little regular contact with work in the field and the general impression is
that of a cumbrous machine that is merely ticking over\. Whole sect'ons of
the staff (especially those concerned with extension work and the women's
programs) no longer have operational goals or work programs and consider
themselves neglected and despised by the management\. In fact, the project
appraisal was far too vague on the objectives and mechanisms for developing
the cooperative movement; phased training and organizational development
programs should have been planned for each zone\.
4\.08 On the other hand, for key decisions, the ZAPI management itself
is still very dependant on the bodies responsible for decision-making, (for
example, the Administration Council, which has not met for two years and
for supervision i\.e\., the DEP)\. Suggestions and requests from ZAPI man-
agement generally receive no response from Government\.
(b) Training Activities
4\.09 The project was intended to establish a rural development train-
ing center to develop a capacity in the ZAPI Training Unit for providing:
(i) a variety of residential courses for ZAPI staff and farmers; (ii)
technical support for district cooperative organizations; and (iii) sem-
inars and training programs for Government departments and agencies from
Eastern Province and for similar operations in the West Africa Region\.
Provisions were also included for senior staff training at specialist
centers l't Cameroon and abroad\.
4\.10 The training center was axed during the economies decided in PY1,
thereby seriously impairing the fundamental objective of the training
component\. Although the Training Unit continued to operate (with technical
assistance) and some training courses were organized for project staff,
this had no lasting effect and largely failed to help improve farmers'
- 16 -
operations because of the lack of coordination and supplies of inputs\.
With the arrival of the new Director General in 1982, it was decided to
contract in-service and farmer training to a specialist training group
INADES (see para 3\.24)\.
4\.11 Regarding training for senior project personnel, 28 staff bene-
fitted (10 in 1981/82 and 18 in 1982/83)\. Of these, six of the second
group attended extended courses in Europe and twelve attended shorter
courses in Cameroonian institutions\. Some of the trainees from the extend-
ed courses left ZAPI after their training and therefore, the project did
not diractly benefit\. Also, as this training involved four different
centers, it is difficult to assess how much of the improvement was due to
the appropriateness of the training course for the ZAFI work and how much
to the per3onal qualities of the trainees\. However, this type of training
helped to broaden the outlook of a number of the staff, and improved their
ability to do their job (particularly in the organization and management
field)\. The effect of the short training courses was rather limited
because they were not linked closely enough with the actual work and were
not based on discussions of results achieved and problems encountered, and
because the monitoring and evaluation data were not available in time\.
4\.12 With regard to training of farmers, it was intended to institute
routine training schemes\. In fact, this was restricted to the few visits
by members of the cooperatives' management committees to other rural
development in Cameroon and to short training sessions\. These sessions
could be extremely effective when linked with specific problems, for
example, preparation of the marketing year statements and keeping the
various management records connected with this work\.
(c) Extension Activities
4\.13 (i)\. Field Extension Services The project was intended to
establish a "training and visit" type extension program and to develop
specific programs for women and young farmers\. The system has worked
rather intermittently and with varying degrees of success\. The problems
associated with a lack of personal transport and the decision not to bul;d
the training center tended to be used as excuses for inefficient work\.
When the means of transport were available, they were most frequently used
for travel outside the zo-\.e ad for purposes other than work, which led to
the motorcycles for agents based in the villages being withdrawn and
replaced by bicycles, which in itself provided an excuse for not meeting
work plans\.
4\.14 To some extent, this reflected the poor management controls\.
However, in reality, the extension problem was more fundamental: with
regard to coffee and cocoa, the project did not introduce any significant
new technical innovations beyond those that had been recommended for the
last 20 years, mainly because of a lack of detailed production themes$
- 17 -
unreliable inputs supply and inconsistent extension advice\. 2/ The
potential for demonstration plots (using farmer leaders) was not well
developed\. Most of the established farmers in the original zones were
convinced that the recommendations were well-foun\.ed and the main problems
were more related to the unaveilability of inputs and the poor organization
of pest and disease control services than with the extension advice\. The
program for women was only partially effective (para 4\.17) and the program
for young farmers was not carefully followed; in fact, the project was
unable to discourage rural exodus by young people\.
4\.15 (ii)\. Physical Inputs Supply\. The supply of selected cocoa seed
pods and coffee plant cuttings, for which the only sources were the
Nkoevone, Abond Mbang or Barong Bitang agricultural stations, left much to
be desired, in both quality and quantity, and ZAPI's attempts to establish
its own nurseries were no more successful (although these operate reason-
ably well now--albeit still producing insufficient quantities)\. Deliveries
of fertilizer from the MINAGRI credit organization (FONADER) were irregular
or insufficient (partly for reasons of national policy which limited the
quantities available according to the amount of the subsidy, but also in
retaliation against ZAPI for using the farm3rs' credit repayments to offset
its own cash flow problems)\.
4\.16 (iii)\. Crop Protection Service Concerning the supply of knap-
sack sprayers, a variety of types were available due to variation in the
results of procttrement bidding and the ups and downs of the manufacturers'
agencies in Cameroon\. Of these types supplied, half were regularly out of
operation due to minor problems, generally involving the unavailability of
spare parts\. The pest and disease control unit that was to be set up under
the project was funded but was not taken over by ZAP! and remained under
the pest control service of the provincial Department of Agriculture\. The
ZAPI management, the extension workers and the farmers accuse the Depart-
ment of favoring the non-ZAPI zones, of providing sporadic and late
services, and failing to keep accurate records of the areas treated\.
Certainly, no reliable data is available for the actions of the provincial
pest control service and the lack of increased production from Eastern
Province belies any supposed progress during project implementation\. If
the proposal to establish a central unit at Doume, had been implemented,
or, better still, had an organization been set up based on the zone
cooperatives (EPLs) and coordinated by their management committees, the
dependence on an outside agency could have been avoided and ZAPI would have
been fully responsible for ensuring efficient crop protection,
2/ For example, in 1973, the research staff and the farmers seemed to be
interested in a new idea, shade trees (in particular, PLAMINGIA) which
apparently had a very favorable effect on yields\. The idea was never
mentioned again\.
- 18 -
4\.17 (iv) Assistance to Women The project proposed expanding the
women's programs by the recruitment of a female extension worker and a
female social worker at each of the technical assistance centers\. The
precise content of the proposed extension program for women was not de-
fined\. In the economic return calculations, an estimated annual increase
of 6% was attributed half to better marketing opportunities due to improve-
ment of the roads and half to a reduction in storage losses, also connected
with improvements in transportation\. The extension program for women
farmers was therefore not expected to have any direct effect on production\.
E
4\.18 In fact, the women', ^rogram was substantially reduced over
project proposals and the dist\.-ction between social work and agricultural
extension was dropped\. The female extension workers, who had very little
knowledge of agriculture (mainly through INADES correspondence course)
tried to work in cooperation with the research service on the testing and
distribution of new varieties\. However, since no arrangements were made
for groups of women farmers to propagate the new varieties, supplies were
very short\. Credit for fertilizer or other inputs for food crops was
unavailable\. Moreover, the female extension workers, apparently on the
advice of the research service, devoted their efforts to promoting single
crop cultivation and row-cropping, despite the fact that research in the
zone itself had demonstrated the value of mixed cropping and that single
row-cropping increases women's labor without any corresponding increase in
production\. Finally, no arrangements were made for iaproving marketing of
additional foodcrop supplies\.
4\.19 (v) Research The potentially valuable results of the project's
research component (for example, the development of a variety of maize
resistant to certain viruses) were not disseminated to farmers, due to poor
liaison between the research services and ZAPI, the lack of credit and the
absence of a seed production program with women's groups, the cutting back
of the women's programs, and the failure to link higher production with
increased marketing opportunities\.
4\.20 The project's basic technical/production problems, whether
related to coffee, cocoa or food crops, lay in the quality of the technical
advice, the effectiveness of the inputs supply, the availability of credit,
and the crop marketing arrangements\. It is pointless developing a large
staff of extension workers and training and equipping them, if the techni-
cal themes have not changed for 20 years and are already generally accepted
by the farmers who do not put them into practice only for lack of inputs,
equipment and spare parts or because they must await the pest and disease
control teams from the provincial department of agriculture\.
(d) Monitoring and Evaluation
4\.21 The project envisaged establishing a monitoring and evaluation
system to provide information for both management and planning\. A unit was
- 19 -
in fact established, with staff at ZAPI headquarters, an agent in each EPL
and permanent and temporary survey workers\. Training and supervision of
the unit was provided through consultancy visits of experts from Planning
Assistance in collaboration with DEP - which was intended to coordinate the
M and E activities\. The monitoring and evaluation unit produced reasonable
quality work\. However, as the baseline study was delivered late and was
rather too broad in scope, it failed, to provide a basis for comparison\.
4\.22 In 1982, two studies were undertaken which attempted to calculate
production and yield data for the major crops in the project area\.
Unfortunately, the findings leave more questions unanswered than they
resolve and inspire very little confidence since the production figures
arrived at are four or five times greater than the recorded quantities
marketed\.
4\.23 In addition to its other work, the monitoring and evaluation unit
carried out regular surveys of planters, the most recent of which suggested
that rural exodus from Eastern Province is increasing\. It made a number of
srecial surveys, for example, to obtain the farmers' opinions about
fertilizer in the two EPLs where they had shown some reluctance in using
it\. The unit was also responsible for compiling data as a basis for
preparing the pro-ress reports, however, this information lacked
consistency\. The major failing of the monitoring and evaluation unit was
the overemphasis on monitoring the work of the ZAPI employees in terms of
the amount of time given to each activity, a task that properly belonged to
the technical divisions, and therefore neglected what should have been its
main function, namely, the compilation of production records and impact
data to provide guidance to management\. At the present time, the ZAPI Study
and Programming Division has been abolished and some remaining elements of
the monitoring and evaluation activity have been transferred to the
Technical Division\.
Marketing, Processing, Credit and Supplies
(a) Marketing and processing of Coffee and Cocoa
4\.24 In 1967 the Government authorized ZAPI to market coffee in
unprocessed/cherry form, an innovation which was well received by the
planters because it enabled them to sell their coffee in the village
instead of having to travel and wait, often for days, to have it hulled by
private traders\. Responsibility for local collection was very soon taken
over by the village associations and was performed fairly efficiently\. The
cherry coffee was shipped for hulling to the three ZAPI plants (at N'Ka,
Doume and Angossas)\. In 1976, ZAPI also assumed responsibility for
exporting coffee\. ZAPI acquired a reputation for poor quality coffee
which, together with its lack of export experience and inadequace controls,
led to difficulties in disposing of the stocks (often meaning delays of up
to two years), as well as losses due to damage and theft during storage and
transport and the rejection of some consignments because of poor quality\.
- 20 -
4\.25 With the start of the project, the practice of buying coffee in
cherry form continued, but with emphasis on improving quality\. The three
coffee processing plants, whose design and equipment were outmoded, were
replaced or modernized under the project\. A new plant, with mechanical
sorting, electronic grading and packaging facilities, was constructed on
the railb,ad at Belabo\. Despite some installation delays and certain
adjustment and maintenance problems (lack of spare parts when required due
to cash flow difficulties), the plant and equipment are now operating well
and the management is good\. However, the quantities currently being
processed are economically inadequate\. The project also provided financing
for marketing studies, but these emphasized the failings of the ONCPB price
schedule and organization, rather than focussing on the need to improve
ZAPI's operations\.
4\.26 In the case of cocoa, the CODEVIs were respoDsible for collection
at the local level\. ZAPI sold the quantities purchased to exporters, with
very narrow operating margins and without taking full advantage of the PMB
price schedules\.
Food Crop Marketing
4\.27 Trials with marketing food crops in Eastern Province started in
the Doume EPL in 1983\. On this basis, a semi-autonomous body, named
PROVIV, was established with financial and technical assistance from the
Swiss cooperation agency for constructing a central multi-purpose storage
and handling center at Bertoua and for financing the purchlase and operation
of trucks\. Although PROVIV had a chequered career, it addressed an import-
ant problem for farmers who had difficulties in finding outlets for surplus
produce\. However, it was not a commercial succeds\. The staff was too big
(and still is despite the further cuts in 1986); the administration was
bureaucratic and there was a lack of proper working procedures (no operat-
ing accounts)\. Moreover, the marketing operations were not commercially
oriented, there was inadequate supervision, and constant shortage of liquid
funds (the revenues were swallowed up in the ZAPI overheads) and of working
capital\. The operation could have been financially profitable if: (i) the
market areas were carefully selected; (ii) the volume of food crops brought
to market were anticipated in terms of the numbers both of preferred
customers and of sales outlets; (iii) the turnover of stocks is efficiently
handled; and (iv) major cuts in labor costs are achieved and payment of the
remaining staff is made, at least partially, by results\.
Commercialization of Inputs Supply
4\.28 The handling of supply and distribution of goods by the semi-
autonomous body, called ERAP (e tablished in 1973 - para 4\.02), suffered
similar operational inefficiencies to PROVIV\. Especially during the
marketing season, the planters' demand for building materials (corrugated
iron and cement), farm tools, spare parts, and some basic consumer items
like soap and kerosene, are very large\. When ERAP cannot supply these
- 21 -
needs, farmers resort to private traders, who offer them comprehensive
support (pre-harvest loans, marketing, sale of consumer goods)\. Here, too,
attempts are being made to improve operations, e\.g\. a reduction in the
range of goods sold, the introduction of wholesale buying from a few
suppliers with payment after 60 or 90 days, sales of old stock at auction\.
But even these efforts will not transform ERAP to profitable operation
until there is: (i) a major reduction in staff (an energetic team of three
or four people would be more than enough at Bertoua/Belabo); (ii) the
introduction of comprehensive operating procedures; and (iii) the EPL
retail stores are transferred to the farmer's organizations\.
Agricultural Credit
4\.29 ZAPI has always provided credit services, first with its own
funds, then as intermediary using FONADER funds\. Loans were made for a
variety of putrose: agricultural inputs, rehabilitation of plantations,
housing construction, and schooling\. At the present time, the only type of
credit available is for agricultural inputs and for schooling\. The organi-
zation responsible for making loans and collecting the payment in ZAPI is
the CODEVI (Village Development Committee) and because payments are deduct-
ed on a group basis at the time of cocoa/coffee marketing, the farmers'
repayment rate has been consistently between 85X and 95%\. One of the most
serious problems has resulted from the tendency by ZAPI management to
divert credit funds repaid by farmers to finance its own operating expenses
instead of reimbursing FONADER\. Sometimes, this resulted in credit funds
being unavailable for the following year\. Another cause of dispute has
been the low mark-up of return for the services performed by ZAPI (1% of
the interest rate), which in inadequate to cover the direct expenses
involved\. Credit operations should have been reorganized to provide larger
operating margin and to leave the profit with the farmers' organizations
(EPL), which would serve to cover bad debts and to create a revolving fund
which could be lent by the farmers' organizations for the various needs not
covered by FONADER loans\.
V\. PROJECT IMPACT
Production
5\.01 The dearth of reliable data makes it difficult to determine the
project's impact on production\. ZAPI purchased and marketed some 5,000
tons of Robusta coffee in 1984/85 compared with 3,000 tons in 1978/79\. If
this level of purchases is sustained or improved, it would represent
positive impact\. However, the statistics for total coffee (and cocoa)
sales from Eastern Province show no significant change in recent years\. It
is conceivable that the project's actions prevented a decline in cocoa and
Robusta coffee production which might otherwise have occurrea due to
generally poor incentives\. Alternatively, it is more likely that the
- 22 -
increased purchases resulted from ZAPI's improved marketing performance,
indicating that some smallholders have switched from private traders\.
Project actions were focussed more on coffee than cocoa production, despite
the fact that both have similar production areas in Eastern Province and
the smallholders prefer cocoa\. The quantity of cocoa handled by ZAPI was
static throughout the implementation period\.
5\.02 Despite repeated requests by IDA supervision missions, there were
never any reliable basic in icators, such as the total number of coffee and
cocoa trees, the distribution between young plantations not yet in produc-
tion, plantations in production and abandoned plantations, or typical
yields for different ecological areas\. The various data on areas and
yields show discrepancies of up to twice as much between the appraisal
report and the various papers prepared by the monitoring and evaluation
unit\. In these circumstances, it is difficult to assess the impact of the
project on production or to try to identify key indicators from which
progress could be determined\. Annex 5, Table 5-1 contains a summary of the
estimates of the cumulative production situation\. However, this contains a
number of inaccuracies and is only, therefore, indicative\. For example,
the estimated area of new plantations (which reached 2,636 ha for cocoa and
826 ha for coffee in 1984) is based on the number of seed pods or plants
distributed and not on the number of plants established\. Again, the
productive versus the planted areas are unknown, a factor which could have
a profound effect on determining average yields\.
5\.03 In fact, although technically feasible, due to the under-develop-
ed status of agriculture in Eastern Province, the decision to purchase
coffee in cherry form and to centralize hulling operations was premature
without extensive trials and essential streamlining of organization and
training for ZAPI operators and farmers\. A comparative study should have
been made into the possibility of buying green coffee and decentralizing
hulling (see para 5\.06)\. A particularly worrying aspect of the whole
coffee marketing operation was the inability, at any time during project
implementation, to improve the efficiency of the flow from collection
through processing to exportation, due to inadequate marketing operations\.
As a result, an operation that could have made a profit continued to make
losses and there was no positive action to resolve the problem\. Belatedly,
ZAPI management is now reorganizing coffee marketing\.
5\.04 Similarly, there is no reliable data for trends in food crop
production in the project area\. Bottomlands rice production was not
sustained and has, in fact, been ignored since the Director General was
replaced in 1982\. This component could have made a contribution with
better focus during its conception and planning, and more attention during
execution\. The priority locations, optimum areas and organization of
planters should have been examined in far more detail, as should have the
best crop varieties\. Farmers did not favor rice, but high unit value
vegetable fruit products could have been profitable (even with the problem
of evacuation to demand centers, e\.g\. Yaounde 250 km by air, road or rail)\.
- 23 -
The development of fish ponds also failed to materialize more because of
inappropriate planning and inadequate development attention, than because
of low potential or lack of interest\.
5\.05 From a financial and economic viewpoint, instead of developing a
profit-making operation, coffee and cocoa marketing operations demanded
more funds throughout the implementation period, thereby exacerbating
ZAPI's overall cash flow problems\. A report produced by the ZAPI
Commercial Division in 1986, calculated that, out of the total ZAPI debt,
estimated at US$6\.8 million, about 60% consists'of the accumulated deficits
on the marketing operations\. The new Director General (1982) gave priority
to this problem: the accumulated coffee stocks were sold and exportation
was phased out, first by contracting with a private exporter and then by
entering into an agreement with PMB\. Through detailed discussion on the
coffee and cocoa baremes (price schedule), the management has succeeded in
obtaining complete pre-financing of its coffee crop by PMB plus reasonable
margins for both products, delivered to Douala\. These arrangements should
make it possible to convert ZWI's marketing operations to produce a profit
of about CFAF 350 million in a normal year\. 3/
5\.06 ZAPI is now establishing a series of decentralized coffee hulling
units located in strategic centers (a total of 17 processing units is
proposed), purchasing only hulled coffee 4/ \. According to the provi-
sional estimates, the savings resulting from an improvement in quality,
from application of the real extraction rate 5/ and from reduced trans-
port cost should be enough to make the operation profitable (the planned
investment, which has probably been underestimated, amounted to CFAF 120
million (US$350,000 in 1984 terms)\. The capital investment for processing
plants under the project probably represents one of its most favorable
aspects, and tha quality of marketed coffee has improved significantly\.
However, it is worth noting that the Belabo factory (which includes elec-
tronic grading and densimeters) is far too sophisticated for current
national policy, which does not allow higher prices for top quality coffee\.
3/ Estimates by ZAPI's Commercial Division; there has been no discussion
as yet with the Administration and Finance Division on the detailed
distribution of costs (in particular, the share of ZAPI overheads to
be charged to the marketing operation)\.
41 Or possibly in some cases a combination (cherries and hulled coffee),
since it appears that the large-scale planters prefer to sell their
coffee hulled and the small planters in cherry form, to avoid long
period of waiting for small quantities to be hulled\.
5/ ZAPI is obligated to apply a theoretical processing rate of cherry
coffee/green coffee of 0\.58 whereas the real rate is nearer 0\.56\.
- 24 -
Nonetheless, the project was positive in stimulating improvements in coffee
quality, especially when the world market is becoming more and more
competitive\. Hopefully, the continuing dialogue with Government and
studies on producer prices (and subsidies) will provide incentives for a
majority of farmers to improve their cultivation product quality\.
Research
5\.07 The project's research component was partly effective\. An
applied agricultural research capability, orientated to the eastern forest
region, was created where none existed before\. Achievements included: (i)
completion of basic studies and presentation of reports (soils analysis/-
mapping, crop varieties, socio-economic survey), (ii) trials of food crop
varieties from the region, selection and multiplication of seeds/planting
materials (maize, groundnut, cassava), and (iii) the development and
organization of a research center\. Regrettably, due to cancellation of the
building program and the premature stop on operating funds, this research
ability is not firmly implanted and important research topics have been
dropped\. However, the national crop research ins\.itute (IRA) is providing
some recurrent financing and the work will hopefully be revitalized under
the national Agricultural Research Project (IBRD/PY87)\.
VI\. FINANCIAL PERFORMANCE AND ECONOMIC RE-EVALUATION
Financial Results
6\.01 A summary of the operating accounts for the period July 1, 1978
to June 30, 1984 a comparative table of costs for the 1984/85 crop year are
shown Annex 6\. Since the project costs were not posted separately from
commercial costs and the latter were not analyzed on the same basis, only a
global comparison can be made between actual financial results and the
appraisal projections (see para 3\.16)\.
6\.02 The financial resources received from Government during the
project implementation period (July 1, 1978 to June 30, 1984) totalled CFAF
6\.8 billion (US$18\.9 million), including a loan of CFAF 1 billion and a
capital increase of CFAF 0\.4 billion, as compared with CFAF 3 billion
(US$8\.3 million) envisaged in the appraisal report\. In addition, there
were cumulative losses of CFAF 2\.4 billion (US$6\.6 million)\. Therefore,
the total Government financing provided to ZAPI during this period was as
follows:
- 25 -
CFAF billions 1S$ Million
- Total funds advanced 6\.805
- Less loan and capital increase 1\.380
- Net financial provision 5\.425
- Plus cumulative operating losses 2\.355
total Government financing 7\.780 21\.6
6\.03 Review of the provisional results for 1984/85 shows that:
Mi) the annual deficit to maintain ZAPI's existing operations
rose to about US$2\.3 million (compared with about US$0\.7
million before the start of the project);
(ii) cocoa production has remained virtually unchanged;
(iii) coffee production handled by ZAPI has risen from 3,000
tons in Year 1 of the project to nearly 5,000 tons in
1984/85\.
Factors affecting these results were: i) the 1983/84 drought, which
reduced coffee production to 16% of the previous year's figure; ii) lack of
monitoring of the use of project funds, including diversion of funds for
equipment to the financing of operating deficits; and iii) general lack of
monitoring of expenditures, which resulted in increases in numbers of
personnel to compensate for inefficiency, and increases in salaries and
benefits out of proportion to the receipts expected from the commercial
operations\. As a result, ZAPI now has a very inefficient superstructure
which cannot be financed out of current revenue\. A detailed analysis of
complete project costs will be made when the accounts for FY 1983/84 and
1984/85 are audited\. Further development proposals for Eastern Province
should be postponed until this situation is clarified (see letter to
Government 04/16/86 - Annex 9)\.
Financial clauses
6\.04 Although the appraisal report mentions a number of commitments as
regards management and monitoring measures that were to be introduced
before and during the preject, none of them were fully carried out\. This
was primarily due to lack of managerial capacity and financial resources in
ZAPI, the associated organizations, and DEP, agency, a fact which was not
sufficiently analysed during the appraisal\.
6\.05 The financial control measures stipulated for the credit funds
were unfortunately not extended to the finances received from Government\.
Moreover, in the absence of coordinated monitoring by the supervisory
organization of the use of funds from all sources, some expenditures may
have been financed twice\. The progress reports mentioned in the appraisal
report were not submitted regularly and the annual accounts were audited
only globally, toward the end of the project\.
- 26 -
Economic Re-evaluation
6\.06 It is premature for a full calculation of the project's rate of
return, since several investments have not yet begun to produce results\.
Nevertheless, some elknents, when compared to the estimates, show that the
real rate of return will be substantially lower than the 25% calculated at
appraisal\. For example: i) project costs were more than 25% over
appraisal estimates, and certain components were not implemented or fell
short of expected targets; ii) ZAPI's annual deficit has more than tripled;
iii) although coffee prodqction rose and met the appraisal targets for
years 6 and 7, the increases in yield under the project are not
substantially greater than those for the rest of the region or the country;
iv) cocoa production has not increased significantly; and v) although
improvements have started in PY5, the benefits from processing and
marketing are not yet apparent, because of the under-utilization of coffee
processing equipment and the higher operating costs which are not being
offset by an inerease in revenue due to higher quality\.
6\.07 The lack of data and the delayed impact from some components make
it difficult to calculate an economic rate of return for the project\.
However, taking into account the negative aspects outlined above, an ERR of
about 0% can be predicted, for the following reasons: (a) Long-term bene-
fits will be realized from: (i) nurseries established under the project
which continue to operate; (ii) new cocoa and coffee plantings which would
not have been created without the project; (iii) applied research develop-
ments, especially with food crop variety; and (iv) improve quality and
handling efficiencies from the coffee processing and marketing developments
should eventually be positive; and (b) Government preparedness to enforce
the accounting and financial control measures proposed in the audit report
and associated studies made in 1985/86\.
6\.08 The Bank's appraisal report or working papers should have includ-
ed more detailed analysis and projection of ZAPI's balance sheets and
operating accounts, from the period proceeding the start of the project and
through project maturity (say PYIO)\. This would have indicated the expected
improvements in financial results and projected cash flow estimates of how
the expected return would be distributed among the various partners in the
development project, i\.e\. the growers, ZAPI and the Government (through
increases in direct revenues or those of state agencies, e\.g\. PMB)\. This
analysis would have underlined the importance of government policy changes
to ensure the expected returns\.
- 27 -
VII\. INSTITUTIONAL DEVELOPMENT
General
7\.01 The project's institutional development involved three aspects:
a) for the ZAPI management b) for Government and the implications for
developments outside the five project operational zones; and (c) for the
development of farmers' organizations\. Although fundamental to the project
objectives (and to the IDA's justification for%support), the last aspect
was not isolated as a specific target\.
7\.02 (a) External Impact - In ZAPI's relations with the outside world,
it is difficult to identify the specific responsibilities of each agency\.
However, it is evident that, contrary to its charter as a development
agency, and despite the many activities that were financed by the project,
ZAPI does not play any coordinating role regional development\. It is
still dependent on the provincial Department of Agriculture and there is a
lack of collaboration\. It no longer has regular contacts with the
Livestock Department (which has taken over the fisheries program), with the
Ministry of Health, or with the Ministry of Equipment (feeder roads)\.
Contacts with the research agencies are still only occasional and have not
led to regular exchanges between research staff, extension workers and
farmers\.
7\.03 On the national level, relations with PMB have improved
considerably and those with FONADER are somewhat better\. Contacts with the
DEP (the principal interlocator between ZAPI and MINAGRI) are less frequent
than in the past, and proposals put forward by ZAPI often receive no reply\.
Since the accumulated debt has not yet been paid off, relations with the
banks and the suppliers have not improved\. Lastly, the Administrative
Council which has not met for two years, has shown itself disinterested in
or incapable of either preventing the crisis or managing it and equally
unable to take timely decisions about reorganization\.
7\.04 (b) ZAPI Management - As it was the major focus of the project,
the internal difficulties have already been analyzed in Chapter III\. In
summary the factors that prevented the objectives being realized during
project implementation were:
(iv) (v) the ZAPI staff more than doubled (200 on the
paid staff in 1977; and, despite declarations and
statements of intention, the number has been
continued at about 450 since 1979) without having
any significant effect on the number of planters
reached or the quantity of cocoa/coffee produced;
(vi) the financial resources provided by Government to ZAPI
(which was about US$0\.3 million between 1970 and 1974 and
- 28 -
increased to US$0\.6 million when the project was
launched), escalated to US$1\.7 million annually during the
project implementation period\. In addition to the special
credits requested for paying off previous debts (some
US$8\.3 million), the proposed ZAPI budget for 1985-86
included a request for US$1\.7 million equivalent for
operations and equipment\. These increases far exceeded
the rate of inflation;
(ii) the ability of the ZAPI Administration and Finance
Division to prepare accounting documents on time has not
improved, and even those produced are invalid for
management guidance;
(iii) the monitoring and evaluation system has not been
maintained and it does not provide the key indicators that
would give guidance to the management;
(iv) the training programs have almost come to a halt, with the
exception of the INADES correspondence courses for
planters and junior staff;
(v) the extension program is almost ineffectual, lacking any
innovative technical ideas, or assistance for improving
the distribution of inputs and goods, or the efficiency of
pest and disease controls\. Extension work among women on
growing food crops did not develop any lasting impact;
(vi) the administration is generally weak; there is little
coordination between the divisions; in the Head Office
there is tension between the various grades of staff;
there is little contact between the Head Office and the
EPLs, and the definition of the responsibilities as
between Head Office, EPLs, and farmers' organizations is
unclear, and the junior staff have become disillusioned;
and
(vii) the decision not to build the proposed ZAPI headquarters
and other facilities, which means that the staff continues
to work in old and unsuitable offices\.
Since 1984 the Commercial Division has been quite active; it has formulated
a policy and laid down operating and supervisory procedures\.
7\.05 (c) Farmers' Organizations - The farmers' organizations, which
were quite active when the project started (especially the CODEVIs and the
management committees at EPL Level), have little progress during recent
years\. They have not taken on any new economic or technical responsibili-
ties\. They were not fostered to manage any profitable operations, which
- 29 -
might have given rise to new commercial activities\. Their only source of
funds is the payment of CPAF 1\.400 (US$4\.0) per ton as commission to the
CAMA (commission d'achat des marches autog6rfs independent purchasing
committee) and the "bonipoids" (weight difference
bonus) 6/
7\.06 The project seems to have had largely negative effects on farmer
groups which are: i) disillusioned by constantly hearing the dogmatic
statement "ZAPI business is your business," while experience has shown that
they have no share in decision-making 7/ ii) frustrated with a project
from which it appeared that all the money issued for the staff (vehicles,
buildings - which are often not utilized) without improving the situation
of the planters; and the undesirable effects of the money poured into the
project\. This financial distortion (where "the project" is regarded as an
endless source of money) has led to the elimination of voluntary labor and
the disappearance of the traditional standards for payment\. Similarly, the
farmers' leaders ("contract" farmers) in the CODEVIs considered that the
training given by the project ought to lead to a civil service position or,
at least, some remuneration for effort\.
7\.07 The search for a "participatory" dialogue, disconnected with the
management by the farmers' organizations of specific profitable economic
activities, can only lead to conflict\. The ZAPI management now proposes to
change the EPLs into cooperatives; but its efforts to kindle interest in
cooperatives by social lectures have been feeble and inadequate\.
Management and Organization Consultants
7\.08 The management and organization consultants were handicapped by
the inactivity in most government and parastatal institutions\. This had
the following results: (i) socio-political motivations prevailed over
technical or economic considerations within ZAPI (the project); (ii) power
was appropriated for personal ends at various hierarchical levels of ZAPI
(iii) there was a lack of discipline and aversion on the part of management
to taking disciplinary action, given the socio-political environment; and
(iv) there was lack of decision-making, disciplinary action and efficient
supervision on the part of the General Management, the Administrative
6/ The difference caused by rounding down the weight in kgs\. to the next
lower whole number, between the weight for which planters are paid,
and the weight actually bought\.
7/ "When we go to Bertoua and see how things are actually run, and how we
received, how can we believe that ZAPI is really our business?"
(Meeting with peasant representatives)\.
- 30 -
Council and the supervisory organizations, which weakened the consultants'
creditability and effectiveness\.
7\.09 In response, the tendency of the consultants was to accommodate
these problems or to try to bypass the organization and delegate work to
outside assistance\. None of the consultants seem to have offered to
suspend work pending resolution of the negative situation regarding the
project operations and this possibility appears not to have been proposed
by supervision missions\.
VIII\. BANK AND BORROWER PERWORMANCE
8\.01 Project Justification and Objectives _ This project analysis
shows a few points of positive impact, particularly the applied research
work and coffee processing/marketing, distinct pointers to negative impact
(e\.g\. farmers' groups), and little evidence of either sustainable opera-
tions or constructive pointers for future developments in Eastern Province\.
However, none of this was due to faulty basic objectives or Justification\.
The focus on Eastern Province as a neglected region was entirely valid (and
still is), the need to encourage balanced expansion and upgrading of cash
and food crops production is still pertinent, and, above all, the search
for sustainable, self-financing, farmer organized rural development (with
minimal Government intervention) remains sociologically and economically
desirable\. The objectives were not realised because of: i) inadequacies in
identification, analysis and phasing, and indecisive guidance during
implementation, on the Bank's side; and ii) neglect and recalcitrence
regarding and policy requirements, organization of inputs services, appro-
priate staffing and monitoring/supervision, on Government's side\.
8\.02 Identification and Phasing - The expectation of achieving the
anticipated development in Eastern Cameroon in five short years was based
on three fallacies:
(i) although the neglected situation and the serious lack of
basic infrastructure in Eastern Province were recognized,
these constraints were not realistically reflected in the
development objectives;
(ii) it involved too many components (infrastructure, produc-
tion, processing/marketing, and social services); and
(iii) it involved collaboration between organizations from five
technical ministries all with different degrees of pre-
paredness and commitment (a common fault with Bank
projects prepared at that time)\.
- 31 -
8\.03 Four basic faults are apparent in the Bank's thinking at that
time:
(M) the motivation seems to have come more from the idealism
and euphoria of the Bank's thrust in the mid 1970s, than
from the lessons of past experience and realistic analy-
sis;
(ii) the project's conception resulted from the expectation
(real or perceived) that an arbitrary economic rate of
return was paramount, irrespective of the fundamental
difficulties to be tackled;
(iii) the concept of integrating the development of several
different sectoral ministries which, therefore justified
additional Bank input (from a special division - AGRRD),
so as to provide a guide for accelerated rural development
in other similar areas; and
(iv) the belief that lack of knowledge on the part of farmers
was a major constraint to crop production\.
8\.04 The project preparation process appeared to be ideal: it extended
over two years, was organized by the ZAPI management, coordinated by
MINAGRI/DEP, supervised by several IDA missions, and included as a number
of specialist studies\. Unfortunately the prices did not analyse, in
sufficient detail organizational or management capacity of ZAPI's manage-
ment, or ZAPI's true financial situation; two factors which were keystones
to the end result\.
8\.05 A more realistic project design might have reflected the limit-
ations and included pilot actions only in an initial three year period\.
This should have involved: institution strengthening (for ZAPI and the
provincial delegations of sectoral ministries)* definition of precise
production packages, detailed infrastructure planning,
technical/organizational surveys to determine the best approach for
achieving the sociological objectives, focussed training for project
personnel to counter the previous neglect in Eastern Province, and emphasis
on improving efficiency of ZAPI's commercial operations\. These technical
and organizational changes should have been accompanied by phased policy
changes (on producer prices and input supplies)\. That these weaknesses
were not questioned at appraisal, might have resulted from the fact that
the same IDA team was responsible throughout the process (and, indeed, into
the eary years of supervision)\.
8\.06 Implementation Guidance - It is commendable to anticipate the
need for additional supervision during the start-up of a new type of
project (both to assure strong initiation and for the Bank's own learning
experience)\. However, irrespective of its usefulness, the IDA's initial
- 32 -
supervisory time was exorbitant (36\.3\. 23\.6 and 43\.9 man-weeks in FY 79, 80
and 81 respectively)\.
8\.07 Although the financial, organizational and policy problems were
evident from the early supervision missions, for more than four years
(1978-1983) IDA repeatedly suggested solutions and proposed action by
Government but received no substantive reaction\. In response to the
inertia, more positive action to effect change by simplifying the
objectives and reducing the tempo, or, at the extreme, to cancel the
credit, would have been appropriate\. One reason for not taking firmer
action was probably the project's "experimental" nature, another was the
lack of close dialogue with all of the ministries concerned\. The position
of AGRRD in isolation from the regular projects and programs operations for
Cameroon was an impediment\. It is also possible that the familiarity of
the supervisory staff in its dealings with project management, as
demonstrated in successive post-mission letters, weakened the appearance of
objectivity of their work and the scope for firmness of action\.
8\.08 The basic lack of dynamism in the project supervision was
exacerbated by the inappropriateness of the consultant group who, although
academically qualified and imaginative, lacked practical experience of
project management and problem solving\.
8\.09 Borrower Performance - The Government's involvement in project
preparation, through continuous input from MINAGRI/DEP and an interminis-
terial coordinating committee, was more thorough than with any other Bank
group financed project (before or since)\. Unfortunately, this active
involvement declined after appraisal: there was little initiative by
cooperating ministries (Health, Livestock* and Equipment) to prepare for or
to develop their specific components - and DEP failed to provide the
essential start-up coordination in Yaound6\.
8\.10 In fact, despite its statutory obligation for supervising and
evaluating projects, the DEP appears to have played a steadily decreasing
role in the project\. Without this link, there was no way that the central
policy and organizational changes could be realized; specifically
concerning: producer prices and handling payments for cocoa and coffee;
regulation of ZAPI's debts and provisions for recurrent expenditures;
adequate and timely supplies of inputs and crop protection services; and
actions to assure key investments (particularly buildings)\. Added to this
was the confusion of titular responsibility, which occurred in mid project
between MINAGRI and MINPLAN; this worsened the lack of support\. There was
ample evidence (from project performance and repeated Bank communications)
of ZAPI's financial difficulties and personnel problems (numbers, ethnic
interests and misuse of funds), yet Government elected not to take action\.
- 33 -
IX CONCLUSIONS AND PROPOSITIONS
Conclusion
9\.01 General - The general conclusions on the results of the ZAPI Est
Integrated Rural Development Project are summarized below\. These reactions
were conveyed to Government by letter to the Minister of Agriculture on
April 16, 1986 (Annex 9-a)\.
9\.02 The ZAPI Est Development Company operated reasonably effectively
from its conception in 1967 until 1976 when performance deteriorated due
to: commencing export operations on its own behalf, the precipitation of
financial problems, and inexperienced and untrained management\. The
project was intended to help resolve these problems and to trigger
accelerated development in Eastern Province\.
9\.03 The project had a positive impact with respect to applied
research and seed production, the construction and rehabilitation of coffee
processing factories, and training for middle level staff\. However, by and
large, the ZAPI experience epitomises the problems of multi sector
"integrated" rural development projects, especially in relatively isolated
and less favored regions\. The following points were particularly salient
to this project:
(i) the project included too many diverse components involving
services from five technical ministries as well as a
significant building program;
(ii) the project actions were initiated before the implementing
authority (ZAPI Est) was organizationally prepared, a
problem which was never surmounted even after the ZAPI
Director General changed in 1982;
(iii) the associated organizations of the ministries outside
agriculture (health, roads, livestock and research) in the
project area were even less prepared than ZAPI Est, were
somewhat reticent, and were not actively coordinated;
(iv) the central MINAGRI services (for inputs supplies) were
inadequate throughout the implementation period; and
(v) finally, the central Government was never strongly
committed to the project: titular responsibility changed
from the Ministry of Plan to the Ministry of Agriculture
during implementation, the calibre of project management
staff was always wanting, and financing was consistently
inadequate\.
9\.04 On the Bank's side, problems resulted from:
- 34 -
(i) a certain idealism concerning the project's strategy for
autonomous development (cooperatives);
(ii) indecisive action by successive supervision missions to
rectify persistent management and financial faults; and
(iii) overemphasis on economic viability as opposed to allowing
adequate time in the first instance for institution
building, e\.g\. by 3-5 year start-up phase\.
9\.05 Detailed Aspects - The project has had limited real impact on
production, despite a large increase both in staff and in the costs (which
continued after the end of the project)\. At the institutional level, there
has been no improvement in the internal organization, while the extension,
monitoring and evaluation, and training programs have either had little
lasting impact or have been abandoned\. ZAPI did not take advantage of the
project to establish itself as the regional coordinator of development
activity\. Finally, no positive improvement has been made in the develop-
ment of farmers' organizations relative to operations prior to 1978\.
9\.06 These observations should, however, not lead to the abandonment
of the two fundamental concepts which led the Bank's original support for
the project, namely, coordinated rural development centered on farmers'
participation\. However, if it is to succeed, coordinated rural development
must be founded on a hard core of profitable economic activities, for which
the necessary skills are available, supported by sufficient management
ability to react very rapidly to changing circumstances\. There must be a
clear division of responsibility between the farmers' organizations and the
development company and there must be a continuous training program for the
farmers, linked with day-to-day activities\. None of these conditions were
to be seen in the project\. There were a number of economic and social
activities, but they were in juxtaposition and not integrated, and they
were not placed in an order of priority\. At the beginning, management was
ZAPI's weak point; it was unable to come to grips with the marketing
system, and the farmers' organizations had neither an incentive to run
their operations well, nor the possibility of making profits that could be
reinvested, since all the trading profits were absorbed by ZAPI's running
costs\. Furthermore, rhetoric aside, there was no clear division of
functions between the farmers' organizations and the development company,
nor a medium-term plan for a gradual transfer of responsibility, backed by
a training program\.
- 35 -
A 3
Table 3-1
&Zy f Prfit & Lou Acumt
For Petod July 1, 1970 to Jun 30 1985
(in \.O0D CPA kem)
PROJECT PERIOD
1977/78 1978/79 1979180 1980181 1981/82 1t9/3 193/4 Sj 11/85 185/86
(1) ~~~ - -Ws-_ _ (2)3 (3)14 -o -2-7
Sa1mofodsurcoma 674511 634768 7 1063837 4700 511381 4 2 625260
Lo eDa of oid 356556 558381 675944 1865903 757 151 479092 4093027 752622
a Mg = WC& DI 117955 96387 7 61 ( 2006) (42451) 3282" 279675 (127362)
Sam of ,c p proam ic w q 1 865 589 2 195 657 4 073 153 4 216 758 3 730 60 4 811 662 20 592 671 2 113 01
Pnbctun t* tinto stok 353 709 396 646 461 032 761 682 117 221 (1 487 238) 1 653 052 527 912
1 537 253 2 690 4 611 746 5 476 366 4 855 630 3 356 713 22 526 39 2514 351
Thtuar pM&Xtoim - 5 309 1 564 31 000 830 - 38 703 -
s9w* pmfit 149085 94 718 31 176 - 7 197 36 824 319000 543
intmt\. 6 dividsds 4 755 4 402 1 519 4 871 5 512 27 520 48 579 1 542
Pvia u td b - - - - 53 - 536 -
TM mm 1 691 093 2 793It 4646605 512 237 4 869 705 3 421 057 2 933 216 516 436
RI \. rbbls b 6s lies 911 133 1 415 282 4 148 077 4 396 240 3 914 844 1 211 197 15 996 773 2 399 649
Trwrt 206 696 196 513 156509 114 375 123 778 121465 919 338 100 507
Other seWAva 205 07 317 650 178 903 310 245 245 659 177 655 1435 199 139 890
9A\. y qeat1 wes 108 684 286 521 58 038 45 545 49 606 575 265 1 123 659 54 692
Staff expW 269 230 378 217 378990 329 326 426029 516428 2 289228 463493
Rates 6 T 71755 684 609 522 797 31 651 669 986 1222 232 3 487 030 4 04
latest pud 51 693 186 855 167 044 93 621 193 585 168 779 861 577 1 609
Dqmr _iatim 85637 201 741 175 370 413 70& 363 535 139894 1 379966 174 250
s_ CUolo& STEM 1 900 837 3 667 388 5 785 816 6 018 792 5 987 022 4 132 915 27 492 778 3 338 094
Erxcu an g 94o eof dimi:U (- 3) - 7 000 53 473 - - 60 470 -
aYE l 2 (- 209 747) ( 874 269) (1 132 11) ( 453 082)(1 117 317) ( 711 858) (4 499 084) ( 821 658)
(lWtD ES_nQG 325 096 703 032 992 681 312 060 489 144 150 000 2 972 813 254 875
IUDlC N=2 115 349 ( 171 237) ( 140 130) ( 140 222) ( 628 173)( 561 858) (I 526 271) ( 566 973)
Preo ryaw 147 210 299 286 269 809 153 311 529 916 319 400 1 718 852 190 246
- - duq(-731 947) ( 684 650) ( 157 570) ( 289 156) ( 282 002) ( 408 573) (2 53 898) ( 46 000)
Dl of fixed ts 1 762 1 000 2 386 1390 40 10 6 58 6 608
N ult (- 467 626) ( 555 681) ( 25505) ( 274 677) ( 380 219) ( 651 021) (2 354 729) ( 415 929)
pwr\. SuAw\. per sdui of Plizaa amm 250 000 369 241 408 587 1 242 130 30 175 40 681 861 803 3 23D 617 260 000 260,000
-t for miiw aplctlw
atod fer In d me\. - - - - ( 467 578) ( 467 578) +316 522 +151 056
250000 369241 408587 1 242 130 30 175 iO681 394225 2763039 576522 411 056
Diffsm ( 44145) +294445 ( 249449) + 4 685 +448463 ( 244 225) +209 774 (321 647)
Qi\.tity of coom pnvb&W (Tom) nta 1 613 1 462 1 755 1 601 1 001 1 460
- of coffcinee I=n Qla d) n/a 5 096 5 575 4 858 7 735 1 225 8 413
- of pro_sdcoffs* 0") n/a 2 986 3 111 3 089 4 324 696 4 950
Coffee nuy= 58,b 55,8 63,6 55,9 56,8 58,8
(1) pFm tot vecelwd\.
(2) Pwial fixir with aatelm of coffee sals and de"pscatl of fi samts\.
(3) Akmts for ti lt 6 &ad qxte of 1985/86 not yet wailable\.
- 36 - AM 3
Table 3-2
C-
ZAPI lNII IEIQIM PTW
Sdw&\.le of fNnmtAdl SaicM
(in\. O000 M from C"A)
Frcal MI/m NlMD am DM (S A ) SM1 MM L _ r\. CPTL GM
Year OP Invt\. Total b t\. t\. Totdr Ot ti wt\. TM\.td erg\. lh_et\. t l0 UrYN G00t\. WLM
1967/68 42,0 42,0 - 42,0 42,0 4,0 46,0
68/69 45,0 45,0 45,0 45,0 45,0
69/70 52,0 52,0 52,0 52,0 52,0
70/71 81,1 81,1 81,1 81,1 81,1
71/72 91,0 91,0 91,0 91,0 91,0
72/73 - - - - 0,8 102,4 103,2
73/74 101,0 101,0 101,0 101,0 101,0
74/75 119\.0 119,0 119,0 119,0 119,0
75/76 165,0 165,0 165,0 165,0 - 165,0
76/77 200m0 2m0,0 m0,o 200,0 2,0
77/78 250,0 250,0 250,0 250,0 250,0
SI?AL 1 146,1 1 146,1 - - - - - - 1146,1 - 1 146,1 0,8 106,4 1 253,3
1978/79 260,0 260,0 69,0 25,5 94,5 40,2 23,6 63,8 369,2 49,1 418,3 330,0 798,3
79/80 2D,o 5O,0 700,0 208,6 351,4 560,0 408,6 851,4 1 260,0 1 260,0
80/81 950,0 50,0 1 000,0 292,1 222,0 514,1 1 242,1 272,0 1 514,1 1 514,1
81/82 100,0 200m 300,0 208,2 9,8 218,0 308,2 209,8 518,0 518,0
82/83 - 500,0 500,0 40,7 32,1 72,8 40,7 532,1 572,8 1 000,0 1 572,8
1 510,0 1 250,0 2 760,0 818,6 640,8 1 459,4 40,2 23,6 63,8 2 368,8 1 914,4 4 283,2 1 000,0 - 380,0 S 663,2
83/84 200,0 - 200,0 661,8 280,0 941,8 861,8 280,0 1 141,8 1 141,8
84/85 260,0 150,0 410,0 - - - 260,0 150,0 410,0 410,0
85/86 260,0 350,0 610,0 - - - 260,0 350,0 610,0 610,0
SE= 2 230,0 1 750,0 3 980,0 1 480,4 920,8 2 401m2 40,2 23,6 63\.8 3 750,6 2 694_ 6 445,0 1 00 380,0 7 82,_0
MM ML 3 376,1 1 750,0 5 126,1 1 480,4 920,8 2 401,2 40,2 23,6 63,8 4 896,7 2 694,4 71591,1 1 000,0 0,8 486,4 9,078,3
ut; S 4 596,1 3 203,2 7 799,3
-37- AU 3
Tobl 3-3
khuyals of Rda win_t Iplkatla by ham of bpwAiuwe
a s Mo\.ued b Zqi-#\. bz n
4p CA FivDm)
Tahi1C&1 COrastb out fr\.-Paoj\.ct-
Iwlicat1m~ civul wa,* zw4unt VehIdma Assistuc frIj*InI ningaotAl CO,t TOTAL Declarmd
Nmba X CA I CAT 2A CAT 2 8 C 3A CAT 3 C 4 CAT 5 U AK Z Paosved
1978-79 Ito 13 629 424 1239 617 23 625 209 55 611 205 431 987 13 01058 94 547 050 94547 050
1979-80 14 to 32 3 707 976 298476 386 49 19589 95 876 146 2 50505 110202 782 559976685 559967 65
198041 33 to 51 55 994 058 143 753 463 22 201 273 60 768 132 16 134 149 215 227 79 514 070 865 514 078 865
1981/82 52 to 68 7 614 383 2 165 484 - 102 796 871 10 774 864 96 603 402 217 934 984 217 954 984
1082/83 69 to 77 75 541 1399107 30 680 078 13 9150 2 783 26 24 305 864 72 835 355 73 931 299
1983/84 78 t 81 - - 32 487 221 3 082 408 - ^ 191 142 923 226 712 552 226 712 769
1984/85 82 to 93 41 129 527 17 997 181 21 880 697 5 239 445 328 65 310 953 8R7 397 32962 386302 727
1985/86 94 to 110 - 72 222 917 94 338158 46 452 054 - 104 603 212 317 616 381
Tl)UAS (CFA FrW) 109 150 909 537 254 155 274 408 506 383 417 761 32 960 715 1 064 050 428 - 2 401 242 474
tgWd at Dr\. 31, 1985
lb\. 98 0D(IM (3 90D 000) ( 3 900 0O
lb\. 100 ZAPIFAST (89 077 693) ( 624 509) ( 89 702 202)
NO\. 107 (R ID1 (2 100000) ( 2 IODOO)
No\. 108 ZAPI S (3D 000 000) (3000 0OD)
No\. 109 CDM (6 775 000) ( 6 775 O)
et rewved at De\. 31, 19SI
(aFA Frams) 109 150 909 537 254155S 185 330 813 370 642 761 32 960 715 1 033 425 919 - 2 268765 272
Goat per lAd B__
latter of Fab 6\.1986 (US$) 335,070,38 2 868 121,26 1 698 102,92 2 868 205,70 30 000,00 7 799 320,26
- 38 - AM 3
Table 3-4
ZAPI D 1D mam DEIVarW rm=
QCarism of Maieted miA Actua Costa of Cocoa NWd Coffee Naiwatlna
(F"1A IWO9)
Facto Caldata Cost Actual Coat _alez 0ated
Coffee ootal Direct WIt t Total ___ P _ofit
ANDOM 28 050,0 9 965,5 38 015,5 41 936,2 5 748,3 47 684,5 + 9 669,0 2D 606,5
DLTA8 9 288,0 1 802,7 11 090,7 35 085,8 700,7 35 866,5 + 24 775,0 11 027,5
DNtAlG 22 815,0 1 806,0 24 621,0 38 157,1 3 412,0 41 569,1 + 16 948, 15 517,5
IXR)~ 22 498,5 2 255,2 24 753,7 44 992,9 2 513,5 47 506,4 + 22 752,7 19 817,0
WMNG 11 029,5 3 351,6 14 381,1 47 404\.9 2 645,5 50 050,4 + 35 669,3 6 256,2
I3EUJ)U4X= 44 072,0 8 674,9 52 746,9 56 021,1 6 680,0 62 701,1 + 9 954,2 36 187,0
LS IE: ZAU (ioq,erstives 137 753,0 27 855,9 165 608,9 263 598,0 21 780,0 285 378,0 + 119 769,1 109 411,7
BELAED 146 010,0 - 146 010,0 108 221,1 43,603,1 151 824,2 + 5 814,2 61 679,5
M =1 48,670,0 - 48 670,0 246 775,4 - 246 755,4 + 198 105,4 97 846,2
332 433,0 27 855,9 360 288\.9 683 977,6 65 383,1 683 977,6 + 323 688,7 269 937,4
Coma Purdse - 569 961,3 569 961,3 567 317,6 - 567 317,6 - 2 643,7 -
CoffeeFordu 2 106 555\.1 - 2 106 555,1 2 050 548,2 - 2 60 548,2 - 56 06,9 -
G-rqe - - - 65 383,1 (65 383,1) - - -
H&P wters Costs 2438-988,1 597 817,2 3 036005,3 3 381843,4 -0- 3 301043,4 + 265038,1 268 937,4
- - 424 641,2 - 424 641,2 + 424 641,2 -
2 438 988\.1 597 817,2 3 036 805,3 3726 484,6 - 3726484,6 + 689679,3 268 937,4
LoS For the Cwpai (lt ieiid HA & Plf and before fd AsMew Dgprv ) 420 741,9
689 679,3 689 679,3
k2ts: - Oe for 1984/85 wre eatluted at 172,3 ilUicm aid le f EW & PW at 30 ud1\.nUw,
= ui the odr sid hmmlens reesivable e aily 260 WJim CFA frama\.
- Actal Trarnport cost tarUge e iitu) w alLoced o the basis of the Tnsort
shre ImIided In the calculaed eost\.
- 39 -
Table 4-1
ZAPI INTEGRATED RURAL DEVELOPMENT PROJECT
Physical Development Indicators
Appraisal Project
Construction Type Objectives Achievements
1) Headquarters offices
ZAPI Est Headquarters Buildings 937 m2 0
District cooperative (EPL) headquarters 3x343 m2 1x424 m2
offices
2) Training
Rural Development Training Centers 1182 m2 0
3) Extension
Farmers' Training Centers 24x102 m2 3x104 m2
District cooperative (EPL) extension 5x16 m2 0
offices
4) Foodcrop Research
Staff house lx170 m2 0
Field building 2x20 m2 0
5) Consumer Supply Stores (ERAP) and Marketing
Centers
District cooperative (EPL) stores 6x250 m2 2x162 m2
Village shops 4xlOO m2 0
Woodsheds 5x25 m2 2x46 m2
Reserve store 8xSO m2 5x130 m2
6) Health Facilities
Health Center 3 1
Maternity Annex 1 0
Prepharmacy 14x25 m2 7x62 m2
Prepharmacy store lx50 m2 0
7) Water Supply
Developed springs 82 33
New wells 6 0
8) Feeder Roads
Improve and maintain (km) 540 72
Construct and maintain (km) 280 0
9) Coffee Plants
New coffee processing plant 1 1
Improvement of small hulling plants 3 3
Installation of new hulling plants 2 1
CAMEROON
INTEGRATED RURAL DEVELOPMENT PROJECT - ZAPI
ORGANIZATIONAL CHART
\. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
- - - - - - - - - - - - - - - -- 3 -\.~A\.sp WI\.
$_ \.e sigm I WGiWS~iS~& WI\.
ZAP) ZpAcuP~4 CA-teF I 0-5V\.WP 25 Vw
I * U~~PhdO_ A*v* b
- j ~ *~o**Im"'
_o,t~[51 *L'
I 0_ef I I ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~O
_~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I
S\. - \.o
Vd_1r _ Et_ \.
v~~\.1sF 1*(o Eb
- 41 - XS
T" 5-1
2W1 L4S1 E9A!W MtAL IND 1W
Pr ndati e Co t P D m f2 1D3 PM4 PY5 PY6
197I /1979 1979/198D 198D/1961 1981/1982 19w2/193 1983/198
1977/1978 AP AC to AC AP AC4t AC AD AC If AC
I) rxffea
Total am In prodkis (hl\.)/ 11500 6700 11S00 670D 11500 6700 11500 6700 11500 670 11500 6700 11600
Feti aple tD t oif (t2/422 92D 443 IOOD 462 IO0 1177 1160 0 132D 815 132D 1200
NW p1aah vitldxt fttilser (aM\. ha) - 12 50 27 150 84 30D 227 500 643 50O 826
NWpluseijv1th ftril2r (OAU\. hb) 50 0 150 0 300 0 500 0 500 0
Total rw plase (emu ha 9/ - 12 100 27 300 84 600 227 1ODD 643 100 826
)1kta\. le cafttf pudmad by 2I (t) 2304 2800 3670 2840 2955 21Y0 3226 292D 3018 3Q40 420D 304O 710
Maktathle ffee p d In Ent\. It,\. (t) 7928 8724 8818 10675 8151
20of the p o pt\.m 1, pzd- W by Z2WI 292 421 33S 292 372
hf ybi 2o tb ret\. P n A/ 288 317 320 395 296
harap YIld of du ZAP2 a kajlsW1 20D 418 319 423 257 429 280 436 261 453 365 453 IQ'J
2Ctoal er prtci 11500 6600 11500 660 11500 6600 11500 6640 11500 660D 12987 66D 12300
NVe platn (andt tI\.J 8/ 259 20D 814 600 1260 IO00 1602 1400 2248 140D 2636
Totam wifth bot c ',aetrol (lv)= 568a 3300 8047 6600 5043 6600 3067 660D 6950 66C0 663
S with better cpwid am 49S 50 702 I0S 44S IQ 272 100 5 I=2 502
Cbow Pmel by 2UWI (t) 1143 1980 1546 2150 1613 2310 1460 2310 1707 2360 160D 2360 1000
om prod in thI Eat\. Pen,inoe (t) 7928 8724 8818 10675 8UI1
2 of tlbg pwvince prahut\. pars by Wb MIi4n 18 La 13S 21
Aveeqa yield of the prwilme (taibI) "193 212 215 265 198
*rp yield of the zAP a0 (lrha)- 99 300 134 325 140 350 126 350 14 347 123 347
lBttmim* Rim
om-7-Q 9 dated)- - 3D 0 90 0 110 0 110 110
New d rom m ta (xmdxted)= 30 0 30 0 105 0 18D 0 180 180
Incrental prodcntios (t) - 21 45 74 234 402 402 402
PRuddyua by 2A1ZJ (t= 129 5 10 7 0
4) Tnlad Plebar iam \.,,212
-lb\. l i W 212 212 103 150 103 212 103 212 103 212 103 212 212
lb\. TM ftily pos- - - 29 42\.4 59 40D 70 695 1 136 tOQO 1OOO
rotat au of ad g bump pand e) 42\.4 42\.4 21\.5 4\.5 21\.5 42\.4 21\.5 42\.2 21\.5 42\.4 21\.5 42\.4 42\.4
totares, of wa fadly b (os) - - 5\.2 10\.6 12\.0 14\.2 21\.4 22\.5 3D\.0 22\.5 30\.0 30\.0
46\.9
Ttd a 42\.4 4U\.4 26\.7 21\.2 32\.1 54\.4 35\.7 44\.0 72\.4 44\.0 72\.4 72\.4
Pm&wtin of adetiu brp (t) 12\.7 12\.7 6\.4 6\.7 10\.7 29\.7 10\.7 63\.8 15\.0 42\.4 \.4\. 42\.4 42\.4
dc of nm fsdly PM" t, - 3\.2 5\.3 18\.0 9\.9 42\.4 15\.7 45\.0 N\.L 45\.0 45\.0
129 32\.1
Total pMoutim (t) 12\.7 12\.7 9\.6 27\.9 16\.0 47\.7 20\.6 74\.5 3D\.7 87\.4 LA\. 87\.4
A/ t apraisa do to s a" of coffa tn prabatias w eatimmed at 6700 ha; h \. accordin tD tu book data sumy caid
aot by UiP !E unittdhe total uvs in prodi1ction isdr be abt 1150D be\. *Ala th 1984 ptubal Osm* bad 19\.411 be\.
I At pralual it stiatd that by by3 M ab 402 of do totl e wuld mimve am WpLicatm of dbot 400 Is\. of a frtilzr 0h
bit the aAs ow d 253\. by P4 the djectivw to fertIlIz bot 43S of di total a it w fertilie we applil\.
By PY4 do 227 ha pIwAal gaiat a objectiv of 60 ha or 37S; bh r, thi b plobay arsgrated, efz dt lm plated to e*tted
an the base of yetr plats ailable ie tIn n Ia \.
4/ Ta fiwa d thats V) do CAMP yiels wm owretiaee at appralsali ii) yielids within t poject mm ae m r dbrt
die aes ; ad 1 2W'I pura asly dust aadslzd of th ?evs'a codta ad ass-fifth of ts s pm&Ctimu
5/ 7T1um of 1983 dtu*t\.
i/ At qpralel ee total ses of oa in pr-dmation mm estitd at 6XO ha bat acwonia to dt bauc da am it sild rar be do
11500 hb, tAl thu 1964 ^IlAltal cow\.u dind 32\.400 h\.
7/ Tm fig asly inicetiv slw daiy we bad an dot r of yae cooa plaits allable in asa e\.
i ci pd amtol ha st bon improved wler the pn ,ece\. ZAP! did sot tde am eo aticqWad t nt a \.
/ It _s nt very melitic duet by f3 oe better capddi atol idil own tda total a 'tth mom
1I0 Thee fie a d thret wa little tweet a the rim prodoctian &iiw p?Oi\.e biql_tati
im/ Tv qytity of pay psrsm by IWV decrased fea U29 t In PYO to 7 Cm in PY4\.
12 At appraiel it - eatlatd dat 212 bmTp pads with a total asm of 42\.4 ha adss In the p aect m ordis to the
psasil epuame for inlaild fi the _ umar of barra pads ms 103 iuAtad of 212 xd tho totl m 21\.5 bsat of 42\.4 ha\.
Uk/ Atcorig to ZAP'\. ataft dxt SU of dt 136 fay pa% that hs bb carsd ar the pject am atea l project s\.
T i\. T 5' podmal fti im&Atd by tdh mb-project _ ad aom cavalusted\.
- 42 -
Annex 9-a
Son Excellence Jean-Baptiste Yonke
Ministre de l'Agriculture
Yaoundg
Cameroun
Subject: ZAPI Est Integrated Rural Development Project (Cr\. 776-CM)
Final Sugervision Mission
Mr\. Minister,
We have just completed our final supervision mission for the
above project and are now writing the project completion report for
information of the Bank and the Government of Cameroon\. We would like to
arrange a meeting between all relevant parties within the next few months
to review the completion report in detail\. In the meantime we would like
to share with you the main conclusions from the mission's round-up meeting,
on February 25, 1986, for which Mr\. Kamga the Director of the MINAGRI
Planning Department was President\.
1\. Principal Conclusions at Project Termination
For the main part, the objectives of the project (institutional
development; agricultural production - cocoa, coffee and food crops;
processing and marketing developments; and socio-economic developments)
have not been realised\. The main reasons for this lack of achievement are
as follows:
i) The project had too many components involving the services of
five technical ministries (Agriculture, Livestock, Health, Public
Works, and Research)\.
ii) The ZAPI Est was a weak organisation at the outset of the project
and was therefore not capable of implementing the physical
developments without considerable preparatory reorganization and
training\. No time for this evolutionary development was allowed
for in the scheme of development for the project\.
iiI) The organisations in Eastern Province responsible for the
associated components (agricultural production services, rural
water points, fisheries, health, feeder roads, and research) were
less prepared than ZAPI Est to implement their respective
developments\.
iv) There was a lack of dynamic, innovative management at the head of
ZAPI Est throughout the project Implementation period, as a
result of which, the organisation, suparvision and coordination
was totally insufficient\. Associated with this, ZAPI Est's
Administrative Council met only infrequently and failed to give
strict directives to project management\.
- 43 -
v) There was a lack of detailed work planning and budgeting and the
monitoring, and evaluation was weak and the limited results which
were produced were ignored\. As a result, the project proceeded
in a vacuum which, inevitably, resulted in paucity of management
information which has also affected the thoroughness of the
ex-post evaluation\.
vi) A situation of inadequate accounting and weak financial
controls in ZAPI Est persisted throughout the project\. This
resulted in a serious financial situation involving losses of
Government funds, some of which are still unexplained - as was
identified in the reports produced by the consultant accountant
(Mr\. P\. Gista)\.
vii) The development of permanent training facilities for ZAPI Est
personnel and for other project staff, and for farmers was not
realised;
viii) The Government was not strongly committed to the project, as
shown by: the titular responsibility changed between the
Ministries of Plan and Agriculture during implementation; the
failure to appoint experienced and competent management staff;
and the persistent lack of financial resources;
ix) The supporting services of the Ministry's Agricultural
Department, especially for crop protection treatment for coffee
and cocoa, but also for fertilizers, were constantly insufficient
(in quantity and quality) and badly timed\.
x) The marketing of coffee and cocoa was poorly coordinated
and supervised by the Produce Marketing Board (ONCPB)\.
2\. Short-term Proposals for Remedial Actions
At the end of the project, certain of the problems listed before
had started to be improved, notably the marketing arrangements for coffee
and cocoa\. However, the planning, supervision and coordination within ZAPI
Est is still lacking\. As a consequence, the round-up meeting agreed on the
following program of urgent remedial actions:
i) Restrict the Government's investment and operating budget for
ZAPI Est for the year 1986-87 to an absolute minimum biding
management and financial reorganization\.
ii) Analyze the competence of the entire personnel of ZAPI Est and
Immediately reduce their numbers to the minimum necessary to
assure the basic agricultural production and marketing services\.
This will involve removing about 180 persons from the payroll of
ZAPI Est\.
iii) Complete the revision of the ZAPI Est accounts and balances for
- 44 -
the two years up to 30/6/85 and rectify the queries about
outstanding funds (which were raised by the last audit and
subsequent work of the consultant accountant - M\. Gista)\.
Complete the audits up to the closing date of the IDA Credit
776-CM\. Because of the serious arrears, this exercise will
involve the replacement of the chef comptable, revision of the
work organization of the remaining accounting personnel, and the
temporary employment of a competent audit company to expedite the
work\.
iv) Immediately introduce a system of work programming and budgets
for each service of ZAPI Est, together with a simple but thorough
system for monitoring actual progress and for preparing short but
precise quarterly progress reports for information of the
Ministers concerned\.
v) Develop a basic agricultural production programme for the 1986-87
campaign involving realistic targets for numbers of farmers to be
touched and the key locations involved, training programs and for
the timely and adequate provision of inputs\.
vi) Devise more detailed physical and financial stocks and sales
controls for coffee and cocoa between the Marketing Department
and the Financial and Administrative Department of ZAPI Est\. We
believe that a team from the MINAGRI Planning Department
(including the experts in place) should be able to effectively
expedite this urgent programme with the assistance of an
accounting/audit company and an experienced agronomist\.
We recommend that the Administrative Council of ZAPI Est should
assemble immediately to examine the problems of the society in detail and
give specific directives for their resolution\. Thereafter, the Council
should meet quarterly during the next year to review progress and advise
the Minister on a long term development plan for Eastern Province\.
3\. Long term Proposals for Development in Eastern Province
The Director of the MINAGRI Planning Department requested that
the Bank prepare terms of reference for a study, to commence as soon as
possible, for proposing a concise plan for future development in the
Province\. This we will be pleased to do, and we will send you our draft
proposals within the next few weeks\.
Sincerely yours,
Ben Thoolen
Chief
Agriculture Division D
Western Africa Region
_ 45 - ANNEX 9-b
Page 1
Propositions for Future Rural Development in Eastern Province
1\. ZAPI should not be abandoned\. Instead, lessons shoul be
drawn from the successes or failures of the past and the gains should be
consolidated and ZAPI should revert in earnest to the original
principles\.
(a) First, it is essential to make a clear distinction between
what can be expected of a public service undertaking
(especially extension activities and the improvement of the
position of women) and profitable commercial activities\. The
former should be subsidized by the State; all the others
should be shifted gradually to the cooperatives and their
unions coffee processing, (coffee processing, marketing of
coffee and cocoa, aiding the marketing of food products,
supply of goods and inputs, and credit)\.
(b) Second, using the items in the PMB price schedule and the
detailed accounting statements, a number of additional activi-
ties (collection 1/ hulling, transportation) could eventually
be transferred either wholly or in part to the cooperatives
(at least, to the more efficient ones), with the corresponding
payments for services performed\. When there is only a partial
transfer of activities and others are still carried out by
ZAPI (e\.g\. maintenance of machinery, accounting, transporta-
tion from Belabo to Douala), there must be a service charge
that is clearly identified and paid for accordingly\. On the
other side, the cooperative (at the EPL level) would have to
accept the corresponding outlays, including those for the
essential staff\. The manager of the EPL can become the
manager of the cooperative, with a salary that can, if neces-
sary, be paid wholly or partially by the State, especially for
the smallest cooperatives\.
2\. The Administrative Council must be properly constituted, with
a core of interested representatives from Eastern Province\. The choice
of ZAPI General Manager must be left exclusively to this Council and
should not be imposed by the State with prior approval from the super-
1/ For the crop year 1985-86, according to the price schedule for
coffee, collection was paid at the rate of CFAF 19,334 per ton;
hulling at the rate of CFAF 25,137 per ton, and transportation at
the rate of CFAF 43,258 per ton\.
46 -
ANNEX b-9
Page 2
vising Ministry" (Article 34 of Law No\. 73/15 dated December 7, 1973
confirmed by Article 42 of Decree No\. 74/874 dated October 29, 1974,
which provides for making a government official available)\. The State
should develop an effective supervisory role through the DEP\.
3\. With a prudent policy of accumulating reserves,(required by
the recent PMB pricing regulations), the operating margins on both
coffee and cocoa should enable the accumulation of reasonable surpluses\.
A small part of these could perhaps be distributed in the form of
bonuses to individuals; but the largest portion should be set aside as a
credit security fund, for making loans for purposes not covered by
FONADER credit, or for providing initial working capital for priority
social developments or for making joint investments approved by
cooperativen or by their village sections\.
4\. The feasibility for developing a cooperative union should be
considered, with responsibility, for example, for sorting and grading
the coffee, shipping coffee and cocoa to Douala, negotiating with PMB,
the banks and FONADER (for credit), making wholesale purchases of goods
for the ERAP central store, and for the work carried on by PROVIV
(following reorganization to make it commercially efficient)\. Some of
these activities should be fully commercialized and self-financing (ERAP
and PROVIV), while grading and sorting are covered by specific line
numbers in the PMB price schedule, and still others would come to be
regarded as overheads, export profits, or insurance\. Until the cooper-
ative union is formed, these tasks will have to continue to be carried
out by ZAPI, but with entirely separate accounting for both revenue and
expenditure\.
5\. The development company should receive financial assistance to
carry on the work, with a smaller staff, of extension services, liaison
with research groups, seed propagation in conjunction with farmers'
groups, programs for women, pest and disease control, and education in
cooperative principles and methods\. This last should be closely
associated with day-to-day activities and should give priority to
management questions, explaining the financial results to the
cooperators as a vhole, and discussions on the possible uses of
surpluses\. The provincial MINAGRI cooperatives service (COOP/MUT)
should perform a supervisory role (supervising audits, ensuring
adherence to the law, and providing assistance at General Meetings\.
6\. Until these arrangements have been effectively established, it
would be pointless to extend the ZAPI areas or to restart export
activities\. In the meantime, in order to make the factory at Belabo
more profitable, ZAPI could, (as is already being discussed), make
contracts with private traders that would enable the factory both to
sort and to grade larger quantities\.
- 47 -
AhNEX 9-b
Page 3
7\. At Government level, the underlying policy problems (which
recur in most ara developmet projects), must be urgently resolved\.
This includes: installing a systematic review sechanism for producer
prices; streamlining the procurement, qualities, quantities and timing
for farm inputs supplies (Including thb provision of crop protection
services) on a couercialized basis; accelerating the exploitation of
applied research work; and redefining the role of the MINAGRI provincial
delegation\. Because of their fundaametal Importance and national
significance the rosolution of theo problems should be the principal
focus of the Bank's involve mn t in the Agricultural Sector\. Some small
progress has been made In these ar"s In Bank dialogue with Government
in recent years, and efforts should be redoubled to resolve the
problems, possibly in the context of a sector adjustent loan\.
- 48 - Annex 10
TRANSLATION OF COMENTS BY BORROWER
Ministry of Public Health Republic of Cameroon
Yaounde 27 April 1987
The Minister of Public Health
Subject: Project Completion Report
Cameroon-Integrated Rural Development Project
ZAPI East (Credit 776-CAM)
To: Mr\. Graham Donaldson
Chief, Agriculture and Human Resources Division
Operations Evaluation Department
World Bank
1818 H St\. N\. W\.
Washington, D\. C\. 20433 USA
Dear Sir,
I refer to your letter of April 1, 1987 attaching the above
report for our comments\.
I have the pleasure of informing you that I have the
following observationss
1) The preparatory phase did not take sufficiently into
account the local socio-economic aspirations, whi:h
explains the lack of interest on the part of the
beneiiciaries;
2) The intervention of five ministries (Health, Agriculture,
Transport, Livestock Research) without preliminary
definition of tasks has not been conducive to the
coordination of act!-cies;
3) Working in parallel with the Produce Marketing Board, the
project opted for managing marketing operations, while,
at least initially, the project should have used an
agency more experienced in these activities\.
4) Excepting some isolated actions in training traditional
midwives, the health component has not appreciable
progressed, especially in the construction of medicine
dispensaries as foreseen in the Fifth Development Plan;
- 49 -
5) the organization of management activities appeared
cumbersome, which led to much effort given to decision
making and its follow-up\.
In nn=mary, the project concentrated too quickly in searching
for economic results while neither staff nor beneficiaries were
sufficiently prepared for the implementation of the project\.
To maintain and reinforce the lessons learned, it would be
desirable to reorient the strategy of these types of projects to new
approaches:
- Detailed preliminary studies
- Sensitizing and mobilizing beneficiaries
- Determination of what are the different tasks
- Restructuring management
- Staff training and appropriate programming
Sincerely yours,
Pr\. Victor Anomah Ngu
MAP SECTION
| l_\.r _ _ N I G E R / C H A 0 T ha b> n @ s ZK, n bA
C H A D T~~~~~~~~ta W\.Od 8o,* S StffV excA,S~
Lafe ?~_\.X_ s , _ ,, <SUDA N LWAK CHA *D, \.*
8URKtNA,' ' - \.o ht\. * ,--
and tfhe k't ~tan,a F
FASO (r\ , I r mn d\.an,0,n
/ Sand~~~~~~~~\. and 0~ bol,da~an d0o
I~~~~~~~~ \ > /) Z N I GERIA ,\.-_ttontondt'arOosttus' \.z
Z l~~~~~~~~~~~~~~~~~~~~~~~o )Z\. eJ5 QEP U 8' _ rof K\.tr o} _ ,<1,t50
;,~ff 'h W\.4 R\.*and Ih\.
NI ER IA /w 1 - \.4~ - _
>
>1 ~ ~ ~ ~ ~ ~ ~~o jZ I< or / CETA PIA nremrtc ,cva
> 0\. P'\., REPUBLIC ,
CAMEROON1% r2 1?m
EQUATORA'j-4
GUINEA V\.--
Guinea~4: I PEOPLE'S Z A I REC H A
'71 ~~ )REP\. Of\. \
AtLAANTIC GABON 1H
0 CFA A T\? f H
CAMEROON
ZAPI RURAL DEVELOPMENT PROJECTP0
PROJECT AREAS
ZAPI ZONE BOUNDARIES
-10- _ Paved roads _0
Grovel roods
Earth roads 0 20 40 0 60 10,0 t20 140 160 F 'I
--o-4- Railroads KILOMETERS i7; °
0 2p 40 60 80 \. \.
international airports MtLES
\.Ports MLS\.
-- --- Rivers
- Provincial Boundories
-*- International Boundaries | 5
C,i -1\ X,, g \\. - _
X / t t O
N I G E R I A 4Nr- - arn\./
j J\/ O B T iNkmbat ) _ f K gMeigonga /
' \.-\.t / Mbengwt BambUi Kumbor
BA tMENDA !OO <, r - - CENTRAL
/,, Mome ;kxF 5J ;XH A F R I C A N
GO , S Ul j/ 8gaogrMbOUdOUSA ,> -
| \.) W F{5 b 4 - p 5 ~~cr\. O U TH8<2 R E P UB LI C
Mundemba i yj ego RTo
\.-\.>C >- 9z~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~T8afPgu, B-9S1! )
l~~~ boo ? ,,
Esfko rTfAOUNDl! OAko~nolno UA SJ )
Ntui~rO Eboko /kYokodouri
BLIEQUATORbATORA ;OTO , (\ 1/
_ OC~EANEUTOILJANATORIALON3 EPE' E\. FTE OG \
Gulf of \.r \.-,1,Sgmima
Guinea~~~~
OCEAN EQUATORIAL GUINEA ~~~~~G A B 0 N3 PEOPLE'S REP\. OF THE CONGO 1
EQUATORIAL GUINEA 1~~~~~~~~~~~~~~~~~~~~~~~~~~~0
OD~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
I0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-1 CO,1 \. ~ | APPROVAL |
P006438 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No\. 16694
IMPLEMENTATION COMPLETION REPORT
BRAZIL
ENDEMIC DISEASE CONTROL PROJECT
Loan 2931-BR
June 6, 1997
Social and Human Development Group
Latin America and the Caribbean Regional Office
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties\. Its contents may not otherwise be disclosed without
World Bank authorization\.
CURRENCY EQUIVALENTS
(as of June 5, 1997)
Currency Unit = Real (R$)
R$ 1\.00 = US$ 1\.07
FISCAL YEAR
January 1 - December 31
ABBREVIATIONS AND ACRONYMS
CODEPRO Coordenadoria de Gerencia de Projetos
Project Management Coordination Unit
COGEP Coordenadoria de Ger8ncia de Projetos
Project Management Coordination Unit
DALY Disability-Adjusted Life Years
FIOCRUZ Fundacao Instituto Oswaldo Cruz
Oswaldo Cruz Institute Foundation
ENS Fundacao Nacional de Sauide
National Health Foundation
FSESP Fundacao Servicos de Saude Publica
Public Health Services Foundation
IBAM Instituto Brasileiro de Administra=ao Municipal
Brazilian Institute for Municipal Administration
IEC Information, Education and Communication
IERR Internal Economic Rate of Return
KAP Knowledge, attitudes and practices
MOH Ministry of Health
MPAS Ministerio da Previdencia e Assistencia Social
Ministry of Social Security and Welfare
NHF National Health Foundation
NGO Non Government Organization
PAHO Pan American Health Organization
SES Secretaria Estadual de Sauide
State Health Secretariat
SUCAM Superintendencia para Campanhas de Saiude Puiblica
Superintendency for Public Health Campaigns
SUS Sistema Unico de Saude
Unified Health System
UNICEF United Nations Children's Fund
Vice President Shahid Javed Burki
Director Gobind T\. Nankani
Country Sector Leader Alain Colliou
Staff Memeber Alexandre V\. Abrantes
FOR OFFICIAL USE ONLY
IMPLEMENTATION COMPLETION REPORT
BRAZIL
NORTHEAST ENDEMIC DISEASE CONTROL PROJECT
Loan Number 2931-BR
TABLE OF CONTENTS
PREFACE \.1i
EVALUATION SUMMARY \. ii
PART I: FINDINGS AND LESSONS
A\. Background \. 1I
B\. Project Objectives \.3
C\. Project Implementation \.5
D\. Project Sustainability \.8
E\. Performance \.8
F\. Assessment of Outcomes \. 10
G\. Future Operations \.11
H\. Key Lessons Learned \. 12
PART II: STATISTICAL INFORMATION
Table 1: Summary of Assessments \. 14
Table 2: Related Bank Loans/Credits \. \. 15
Table 3: Project Timetable \. 16
Table 4: Loan Disbursements: Cumulative Estimated and Actual \. 16
Table 5: Key Indicators for Project Implementation \. \. 17
Table 6: Key Indicators for Project Operation \. 18
Table 7: Studies Included in Project \. 19
Table 8a: Project Costs \. 21
Table 8b: Project Financing \. 21
Table 9a: Cost-effectiveness Analysis \. 22
Table 9b: Cost-benefit Analysis \. 23
Table 10: Status of Legal Covenants \. 25
Table 11: Compliance with Operational Manual Statements \. 26
Table 12: Bank Resources: Staff Inputs (SW, Actual) \. 26
Table 13: Bank Resources: Missions \. 27
Table 14: Documents in Project File \. 28
Map: IBRD Nos\. 21334 and 20434
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties\. Its contents may not otherwise be disclosed without
World Bank authorization\.
DEFINITIONS
CHAGAS DISEASE: (American Trypanosomiasis) is a disease which occurs in Central and South
America, is caused by a parasite known as Trypanosoma cruzi\. The disease is observed at any
age, altough children are mainly affected\. The disease can present itself as a congenital, acute or
chronic affliction, affecting mainly the heart and the gastrointestinal tract, and leading to
dilatation of the heart, arrhythmia, heart failure, megaesophagus and megacolon, all of which
result in severe disability and can lead to death\. Humans and marsupials are the major disease
reservoir\. The disease is predominantly transmitted by vector bugs of the genera Triatoma,
which are largely disseminated throughout rural areas of Latin America, where mud huts of the
agricultural workers are their favorite habitats\. Transmission occurs predominantly at night,
since the bugs attack only at night\. Other less usual methods of transmission are transplacental,
blood transfusion and laboratory transmission from infected syringes or blood\. Residual
insecticides applied to floors, walls and thatch will elimintate most vectors, but reinfestation can
occur in a few months\. Chagas' disease flourishes only where socio-economic levels are low,
and long-term control measures involve economic rehabilitation, in particular, better housing:
thatched roofs and unplastered mud walls must be replaced with materials and designs where
bugs find no harbor\.
SCHISTOSOMIASIS is a disease caused by a species of parasites known as Schistosoma
mansoni\. The disease causes a variety of symptoms affecting mainly the liver\. Severe forms can
lead to liver failure and death\. There is a strong relationship between the intensity of infection
(parasite load) and severity of the disease\. Patients eliminate the parasite's eggs through the
feces\. When these eggs end in water they hatch and produce free living forms (miracidium)
which invade some particular species of snails which act as intermediary hosts\. In the snails, the
miracidia evolve into free swimming larval forms (cercariae) which abandon the intermediary
host and on contact with humans penetrate the skin and migrate to the bowel and the liver\.
Humans acquire the infection by wading, swimming, bathing or washing clothes and utensils in
the streams containing free-swimming cercariae, which have developed in snails and penetrate
the human skin\. Three species of snails (intermediary host) exist along the northeast Atlantic
coast and in other focal areas throughout the country\. Control is based on diagnosis and
treatment of patients with appropriate chemotherapy (oxaminiquine and praziquantel), avoidance
of pollution of surface waters, elimination of the vector with moluscicides, prevention of human
contact with the infected water, health education and community participation, ideally in an
integrated approach\.
LEISHMANIASIS is a disease caused by protozooa known as Leishmania\. The disease can
present itself as a severe visceral disease (kala-azar), or as a chronic cutaneous or muco-
cutanuous sore (Tegumentar American Leishmaniasis -- TAL)\. Kala-azar is predominantly a
disease of children under 10 years of age\. The disease reservoir are dogs, humans and rodents\.
The vector which transmits the disease from one reservoir to another in the Americas is the
Lutzomia sandfly\. When the appropriate sandfly feeds on an infected dog or person, it ingests
the parasite with the blood meal\. These develop in the sandfly into intermediate forms which are
passed to the new hosts when they next feed\. In the new host the parasite reassumes its
leishmania form and migrates to deep-seated organs such as the liver or the spleen (visceral
leishmaniasis), or they go back to the skin\. Leishmaniasis control is based on identifying and
treating infected persons, attacking the sandfly, as well as the animal reservoir of infection\.
Pentavalent antiominals are the choice for treating kala-azar and TLA\. Sandfly bites can be
partially avoided by sleeping on the upper floors of houses and using repellents\.
IMPLEMENTATION COMPLETION REPORT
BRAZIL
NORTHEAST ENDEMIC DISEASE CONTROL PROJECT
Loan Number 2931 -BR
PREFACE
This is the Implementation Completion Report (ICR) for the Northeast Endemic
Disease Control Project in Brazil, for which loan 2931-BR in the amount of US$109
million equivalent was approved in June 1988 and made effective in December 1988\. In
1991, US$20 million and in 1993, US$ 7 million were canceled from the original loan
amount reducing the loan amount to US$82 million\. The loan Closing Date was June 30,
1996\.
The ICR was prepared by Alexandre Abrantes (Senior Public Health Specialist,
LASHD), in collaboration with Claudia Rosenthal Dariush Akhavan, James Cercone
(consultants), Renato Gusmao (PAHO) and Brenda C\. Enuton (Operations Analyst,
LASHD)\. Assistance in the production of the report was provided by Sarah Menezes
(Task Assistant, LASHD)\. It was reviewed by Alain Colliou (Country Sector Leader,
LAl) and Orville Grimes (Projects Adviser, LA1)\. The Borrower provided comments
that are included in the project file\.
Preparation of this ICR began during the Bank's final completion mission, on July
10, 1996\. It is based on material in the project file\. The borrower provided reports and
other materials and contributed insights through interviews\.
ii
NORTHEAST ENDEMIC DISEASE CONTROL PROJECT
Loan Number 2931 -BR
EVALUATION SUMMARY
BRAZIL
Introduction\. A significant portion of Brazil's territory is located in the tropical zone,
where the environment is rich in vectors and reservoirs of communicable diseases\. Many of
those have become endemic, primarily due to insufficient control measures, exacerbated by
limited resort to treatment even for those diseases that are treatable\. At the time of project
preparation, the health status in the Northeast was poor, as evidenced by the low life
expectancy at birth of 51 years (65 years for the whole country), high infant mortality rate
of 125 per 1,000 live births (67/1,000 for the whole country), and an exceptionally high
prevalence of endemic infectious diseases including Chagas'disease, schistosomiasis, and
leishmaniasis\. Endemic diseases were, and still are, responsible for a considerable burden of
death, disease and disability, with direct and indirect economic impacts, such as high costs
of medical and hospital care, low labor productivity and loss of productive years of life\. In
the early 1980s, endemic disease control programs were short of resources, and covered
less than one half of the population living in high endemicity areas\.
In 1986, the Government of Brazil asked for the Bank's help in addressing the
burden of disease caused by endemic diseases in Northeast Brazil\. The Bank was becoming
familiar with such projects, as the health sector had made control of communicable disease
a priority\. In Brazil, the Bank had already financed a malaria control component, within the
Northwest Region Integrated Development Program - Health (Ln\. 2061-BR)\. This time,
the Brazilian Government wanted to extend and strengthen its endemic disease control
efforts in the Northeast, and to develop a successful management program within the
Superintendency for Public Health Campaigns -- SUCAM, a federal agency represented in
all 26 States, with 40,000 staff, which had general responsibility for endemic disease
control in Brazil\.
Project Objectives\. As originally conceived, the project's objective were to reduce the
prevalence of Chagas'disease, schistosomiasis, and leishmaniasis in the Northeast, and
bring the intensity of human infection to minimum levels where only epidemiological
surveillance activities would be needed to keep these diseases under control\. This was to be
done mostly through vector control\. A second objective was to strengthen SUCAM's
capacity and efficiency to expand control activities in the Northeast\. A complementary
objective was to support the MOH activities to reduce the occurrence of new AIDS cases\.
The project involved five components: (1) prevention and control of disease transmission,
i\.e\. vector control; (2) institutional development; (3) community mobilization; (4)
operational research; and (5) AIDS prevention and control\.
iii
The project covered about 1018 municipalities in which the responsible vectors
were prevalent, in nine Northeastern states (Alagoas, Bahia, Ceara, Maranhao, Paraiba,
Pernambuco, Piaui, Rio Grande do Norte, and Sergipe), and in sections of the states of
Minas Gerais, Goias, Parana, and Rio Grande do Sul\. The target high-risk population
covered by the project was 12\.2 million for Chagas disease; 30 million for Schistosomiasis,
and 8\.4 million for Leishmaniasis\.
Implementation Experience and Results\. The project got off to turbulent start, due to
political and institutional instability\. By the end of 1992, after five years of project
implementation, only 34 percent of the loan funds had been disbursed\. Management was
poor during the early years, and SUCAM was eventually dissolved and absorbed into
another federal agency\. This happened at the time of the Collor government, under which
there were four Ministers of Health and six different project managers\.
The situation greatly improved after 1992, when the Bank and the Borrower
agreed to a radical reorientation of the project\. The strategy was to target vector control
on the basis of epidemiological information, and to complement traditional vector control
with early diagnosis and vigorous treatment\. After 1993, implementation accelerated and
the project ended 30 months after the original closing date with full disbursement and
significant and positive impact on the incidence, the severity and the mortality of Chagas
Disease, schistosomiasis and leishmaniasis\. Vector transmission of Chagas disease
transmitted by TJ infestans has almost been interrupted as well as blood transfusion\. The
1995 kala-azar epidemic in Piauf and Maranhao was brought under control much faster
than a similar epidemic which took place 10 years earlier, and the fatality rate was a
fraction of what it had been in the previous epidemic\. Between 1988 and 1996, the project
is estimated to have prevented about 18,500 deaths, which translates into about 520,000
disability adjusted life years (DALYs) saved\. With an US$140\.8 million investment
involved, the project cost about US$558 per DALY saved, which places it among the high
cost-effectiveness health interventions (Table 9a)\. The project saved about US$470 million
in direct and indirect benefits with a total present net present value (benefits - costs = NPV))
of just over US$370 million, or 2\.5 times the total investment\. This corresponds to an
internal economic rate of return (IERR) of over 500 percent and a pay back period of
aproximately five years\. That is, by 1993, the project had already generated retums
equivalent to the total investment of US$140 million over the period of 1988-1996 (Table
9b\.)\.
Also important was the creation of a new scheme of management and
accountability for health projects that did not exist previously, and the transfer of more
power and authority for health programs to states and municipalities\. Many towns now
have laboratories to make diagnoses, trained staff to administer treatments, and specialists
who can control different vectors and reservoirs in infected areas\. Further, the project
introduced management contracts, performance indicators, monitoring, supervision and
evaluation, which are now common practices not only in the National Health Foundation
regional offices, but also in state and municipal health secretariats\.
iv
Sustainability and Lessons for Future Operations\. The project leaves an extended
Chagas control program, an expanded Schistosomiasis control program, and new
knowledge of how to control kala-azar epidemics\. It leaves a network of equipped and
staffed laboratories, as well as a better defined reference system and strengthened
institutional capacity to deal with endemic diseases in the Unified Health System (SUS)\.
Some states and municipal health secretariats are now ready to take responsibility for
financing and organizing endemic disease control\. Changes in the SUS payment system,
consisting in the reimbursement of traditional health promotion and disease prevention
interventions carried out by states, municipalities or NGOs, ensure sustainable financing
of the recurrent costs associated with endemic disease control\.
BRAZIL
NORTHEAST ENDEMIC DISEASE CONTROL PROJECT
(Loan No\. 2931-BR)
PART I: FINDINGS AND LESSONS
A\. BACKGROUND
Endemic Diseases\. This project was designed to assist the Government in a
five-year program to arrest the increasing trends of three endemic diseases, Chagas' disease,
schistosomiasis, and leishmaniasis in Northeast Brazil\.
Endemic Diseases\.
(a) Chagas'disease\. At the time of project preparation, there were about 6 million
Chagas' disease patients in Brazil, of which 60 percent lived in the Northeast, and another
15 million more were at risk of contracting the disease by living in inadequate dwellings
infested with the vector (Triatoma infestans)\. In addition, many more were at risk of
getting infected through blood transfusions and transplacental infection\. The existing
Chagas' Disease Control Program covered 2050 municipalities in 19 states, which had been
identified as endemic areas by the 1981 national Chagas'serological survey\. In the absence
of vaccines and effective pharmaceuticals suitable for large-scale treatment of Chagas'
disease, interruption of transmission had to rely on insecticides to ensure vector control,
blood donor screening and blood transfusion control, which had been proven successful in
medium-scale trials in Brazil and in other countries\. Home improvements, to get the vector
out of the household, was used as the long-term approach for solving the problem\. Between
1975 and 1986, the Program was able to reduce incidence to low levels in only 414 (20%)
of those municipalities, and more than 60 percent of blood banks did not screen donors for
Chagas' disease, due to lack of laboratory resources and technical staff\.
(b) Schistosomiasis\. At the time of project preparation eight to ten million people
were infected with the parasite and another 30 million were at risk of contracting the
disease\. The disease occurred mostly along the Northeast Atlantic coast, where a particular
species of snail which serves as the intermediary host to the Schistosoma mansoni parasite
is very common\. The disease had been spreading to other areas in the Country, due to
significant migrations of infected people, which led to the contamination of soil and
waterways where the intermediary host snail existed\. The Brazilian Program for
Schistosomiasis Control had been successful in controlling the disease in some areas, by
using chemotherapy and application of molluscicides in infected waterstreams\. But, by
1986, the Program only covered about 40 percent of infested areas, i\.e\., in the states Minas
Gerais and Bahia, due to lack of resources and organizational weakness\.
2
(c) Leishmaniasis\. The vector sandfly and the main disease reservoir (infected
dogs) exist throughout the Northeast, including in many urban areas\. A 1985 serologic
survey showed that all Northeast states had infected dogs, with a prevalence ranging from 1
percent in Paraiba to 50 percent in Piaui\. In the 1980s, Leishmaniasis Control Program
activities had been reduced due to lack of resources and institutional weakness, thus leading
to an alarming increase in new cases: between 1979 and 1985, the number of reported cases
increased from 3,243 to 16,200 per year, 95 percent of which were reported in the
Northeast\. Unreported new cases could easily have tripled this figure\. Over 8 million
people were estimated to be at risk\. The National Leishmaniasis Control Program focused
on vector control, i\.e\., using insecticides to eliminate sandflies, and elimination of infected
dogs\. By 1996, however, the activities of the Program were restricted to relatively few and
scattered areas in the Northeast, representing less than 25 percent of the endemic area\.
(d) AIDS\. AIDS appeared in the mid-1980s as a new fatal viral disease which
created a serious public health problem due to its explosive propagation in the country\. In
1987, there were 267 new cases reported in Brazil in only 4 months\. The onl\.- effective
measures available were information, education and communication aimed at changing
risky behavior, and HIV screening of blood donors and control of tranfusions\.
At the time of project preparation, the three major federal institutions supervised
by the Ministry of Health were responsible for endemic disease control in Brazil: the
Superintendency for Public Health Campaigns (SUCAM), the Public Health Services
Foundation (FSESP), and the Osvaldo Cruz Foundation (FIOCRUZ)\. States and
municipalities played a minor role in endemic disease control\. SUCAM implemented
nationwide programs of prevention, control and surveillance; it was semi-autonomous
and was the lead agency for endemic disease control\. It was represented in each of the 26
states and employed over 40,000 workers\. The agency was noted for its strong staff and
line organization, its excellent record in implementing endemic disease control
programs, and, in particular, its ability to sustain programs in remote areas under difficult
conditions\. In 1988, SUCAM created a Coordination Unit for Project Management
(COGEP) to coordinate Bank-supported projects: the Northeast Endemic Disease Control
(Ln\. 2931-BR) and the Amazon Basin Malaria Control Project (Ln 3072-BR)\. In 1991,
SUCAM and FSESP were closed and their functions transferred to a new institution: the
National Health Foundation (NHF), with headquarters in Brasilia\. The NHF created a
special unit, CODEPRO (Coordenadoria de Gerencia de Projetos) to manage Bank-
funded projects\.
Brazil's Constitution of 1988 called for universal health coverage for all citizens\.
This Constitution established the principles of a Unified Health System (SUS) which
would publicly finance personalized health services for the entire population, to be
provided through a decentralized network of public and private providers\. The SUS was
created in 1990, and state and municipal governments have been progressively gaining
more health care planning and management responsibilities, including those of endemic
3
disease control\. SUS hospitals and ambulatory networks did not have a tradition of
diagnosing or treating endemic diseases\. Most endemic disease patients seeking care in a
SUS facility were referred to SUCAM (later NHF) units\.
B\. PROJECT OBJECTIVES
Objectives\. The main objective of the project was to reduce the prevalence of
Chagas'disease, schistosomiasis, and leishmaniasis to levels at which only
epidemiological surveillance was needed to keep these diseases under control\. The
project also aimed at improving the institutional capacity of SUCAM to carry out disease
prevention programs in the Northeast\. The project would also assist the development of a
National AIDS and STD Control Program\.
Definition\. To achieve this goal the project would: (a) control the presence of
disease vectors and intermediary hosts in the households and in neighboring
environments, by applying pesticides and carrying out health education; (b) reduce the
human reservoir of these diseases by early diagnosis and treatment of target population
groups; (c) set up surveillance activities for populations at risk; (d) strengthen SUCAM's
capacity and efficiency to expand control activities in the Northeast; and, (e) support the
MOH activities aimed at reducing the occurrence of AIDS cases\.
Cost and Timing\. At an expected cost of US$218 million to be supported by a
US$109 million Bank loan, the project was made effective in December 1988, to be
completed on June 30, 1993, and closed by June 30, 1994\. The project closing date was
extended 24 months to June 30, 1996\. There were two cancellations from the original
loan amount: US$20 million in 1991, and US$7 million in 1994\. Thus, the revised loan
amount was US$82 million for Loan No\. 2931 -BR\.
Achievement of Objectives\. As a result of the project, hospital admissions and
deaths from Chagas' disease, schistosomiasis, and leishmaniasis have all decreased,
suggesting a reduction in the incidence and/or a reduction in the severity of these
diseases\. Vector and blood transmission of Chagas' disease was interrupted in large
endemic areas\. The number of severe schistosomiasis cases and the respective mortality
were significantly reduced\. The cyclical visceral leishmaniasis (kala-azar) epidemic,
which occurred in 1995 in Piaui and Maranhao, was brought under control much faster
and with many fewer deaths than a similar epidemic having occurred 10 years previously\.
Chagas'disease\. The project reduced the incidence of transfusional Chagas' disease
by 89\.7 percent, more than the 80 percent reduction which had been set as a target a the
time of project preparation\. Hospital admission and mortality rates decreased
significantly\. Vector and transfusion transmission have been interrupted in large endemic
areas, and the Triatoma infestans (vector) have been eradicated from most States\. There
are several indirect indications that transmission and incidence of Chagas' disease are
decreasing: (a) between 1989 and 1995 alone, the prevalence of houshold infestation by
4
the T\. infestans fell by more than 20 percent; (b) between 1957 and 1995, the number of
municipalities in the endemic area (i\.e\. 2,500 municipalities) where transmission has been
interrupted rose from 414 to over 940, bringing the population at risk from about 70
million down to about 40 million; (c) between 1987 and 1995 the proportion of positive
blood donor samples decreased from about 1 percent to less than 0\.7 percent; (d) between
1986 and 1996 the number of cases caused by transfusion of infected blood fell from
20,000 per year to about 500 per year; (e) between 1985 and 1995, the number of hospital
admissions due to Chagas' disease decreased from about 751 to less than 123; and finally
and most importantly (f) between 1975 and 1985, Chagas' disease specific mortality, for
the age groups which could have benefited significantly from the project (i\.e\., aged 10-14
and 15-19), dropped by about 89 percent\.
Schistosomiasis: Between 1988 and 1996, the number of hospital admissions due
to schistosomiasis in the Northeast dropped from 2,900 to 1,400, and the number of
hospital days dropped by 50 percent, from about 23,000 to 14,000, suggesting a reduction
in incidence and/or a reduction in the severity of the disease\. During the same interval
the schistosomiasis mortality rate dropped from 9\.8 to 5\.8 per million inhabitants, a 41
percent reduction, which is smaller than the 50 percent reduction target set at the time of
project preparation\. Most of the Northeast region currently has a prevalence of only 25
percent from the figures of 1988, with some parts showing a lower prevalence of 5 to 10
percent\.
Leishmaniasis: In 1995, the Northeast experienced an epidemic of kala-azar, one
that has occurred cyclically every 10 years\. As a result, the number of cases jumped from
700 to 1,500 cases per year, which were observed in the late 1980s and early 1990s, to
3,600 in 1995\. The project was able to bring the number down to 2,500 in less than a
year, and down to pre-epidemic levels in less than two years, much faster than during the
epidemic which occurred ten years before\. In addition, and in spite of the epidemic, the
kala-azar fatality rate dropped from 7\.9 per 100 cases in 1988, to 3\.51 per 100 cases in
1996, suggesting better diagnosis and treatment of cases\. The project did not manage to
reduce the incidence of kal-azar by 30 percent as anticipated at project appraisal\. The
epidemiological information on cutaneous leishmaniasis is scarce and does not allow for
proper evaluation and does not allow to judge whether the project did reduce the
incidence of the disease by 50 percent as estimated at project appraisal\.
Rabies: although not part of the original project, and at the request of the
Borrower, the Bank agreed that the activities of Rabies Control could be associated with
those of canine leishmaniasis control\. As a result, the coverage of dog anti-rabies
vaccination grew significantly from 56 percent in 1989 to over 83 percent in 1995, and
the number of rabies cases dropped by 50 percent, from 57 in 1995 to 31 in 1995\.
Institutional Development\. The project left a network of well-equipped public
health laboratories in the Northeast and in Minas Gerais; a large pool of trained
professionals (enough to staff all regional offices); and hundreds of trained middle level
staff, not only in the NHF federal and regional offices, but also in state and municipal
5
health secretariats\. The project leaves an expanded Chagas and schistosomiasis control
programs, and new experience in how to control a kala-azar epidemic\. In addition, many
personal health care services of the Unified Health System acquired the capacity and the
supplies necessary to diagnose and treat patients with Chagas' disease, schistosomiasis
and leishmaniosis\. Furthermore, the project introduced a new management culture and
instruments, including management contracts, performance indicators, monitoring,
supervision, and evaluation\.
C\. PROJECT IMPLEMENTATION
Implementation and Major Factors Affecting Project Implementation\. The project
tested two major approaches over the traditional endemic disease control programs which
focused on the eradication of vectors and elimination of infected reservoirs\. First, the
project began to target vector control to a limited number of municipalities and localities
with the highest incidence of Chagas' disease, schistosomiasis, or leishmaniasis, as
opposed to the traditional approach of making widespread use of insecticides and
moluscicides to eradicate the vectors and reservoir snails\. Second, much more emphasis
was put into early diagnosis and vigorous treatment of patients, both in the NHF facilities
and in the health services of the Unified Health System (SUS)\.
After a slow start and a 24-month extension of the closing date, the project used
the full proceeds of the loan:
Part A: Prevention and Control of Disease Transmission\. This component of the
project executed 80 percent of funds, financing the application of pesticides,
molluscicides, household sanitation and rehabilitation, the elimination of dogs infected
with leishmaniasis, as well as the diagnosis and treatment of patients\. Activities were in
most cases carried out in partnership between the SUCAM/NHF and municipal health
secretariats\. In most cases, the former provided for the training, equipment and supplies,
while the later provided the necessary community health workers\. The decentralization
process of the activities involved in this strategy remains effective, and the local
responsibility for the programs keeps growing\.
(a) Chagas' disease: This subcomponent executed about 17 percent of project
funds, five times more than had been anticipated at appraisal\. The project financed the
purchase of insecticides, trained hundreds of field inspectors, which constitute the
backbone of vector control, created a serologic surveillance system based on 12 reference
laboratories, left one reference entomologic laboratory for the diagnosis and study of the
Triatoma genera, controlled transmission via contaminated transfusions, and left a
network of well-equipped personal health services which provide improved care for
Chagas patients\. In the case of blood safety, public awareness and assistance from PAHO
led Brazil to pass significant legislation in 1989 and 1993, while the project made it
possible for increasing the proportion of transfusions for which the blood sample had
been tested from 10 percent in 1987, to over 60 percent in 1996, which means that the
potential infected transfusions dropped from 20,000 per year in 1987 to about 5,000 in
6
1996\. In addition, the project established endemic disease control partnerships between
the federal agency (NHF/SUCAM) and numerous states and municipalities\.
(b) Schistosomiasis: This subcomponent executed about 35 percent of project
funds, close to what had been anticipated at appraisal\. The project allowed
SUCAMINHF to extend its control activities to extensive endemic areas which
previously had not been covered\. In Minas Gerais alone, the project extended coverage
with schistosomiasis control activities from 30 to 380 municipalities\. The strategy
adopted for the control of schistosomiasis included: (i) early diagnosis and treatment of
infected people; (ii) basic household sanitation; and (iii) information, education and
communication (IEC)\. Again partnerships with municipalities were key to the success of
the operation\. The project installed laboratories, provided supplies and equipment and
trained local agents to perform diagnostic tests and refer patients for treatment in the
network of local health care services\. In addition, the project piloted the introduction of
mass-treatment of schistosomiasis in school health programs, in municipalities with a
high incidence of the disease\. The project also helped set up health promotion teams at
the municipal level, which carried out significant amount of IEC activities\. The project
showed that it is very difficult to eliminate low-level transmission with the traditional
control approach\. Disease eradication depends very much on environmental and
household sanitary conditions, and thus the project fostered collaboration with the
environmental sector and provided for training of thousands of municipal sanitation
agents in endemic areas\.
(c) Leishmaniasis: This subcomponent executed about 28 percent of project
funds, close to what had been estimated at appraisal\. In the case of cutaneous
leishmaniasis, and given the paucity of epidemiological data, the project focused on
establishing an adequate information system, on establishing laboratories capable of
diagnosing the disease, and on training doctors and other health care personnel in the
appropriate treatment of the disease\. In the case of kala-azar, the project set up a network
of laboratories, provided equipment and supplies for controlling the sandflies, established
a network of municipal kennels equipped for diagnosing and eliminating infected dogs,
and established treatment protocols, trained doctors and other health care personnel in
treating the disease\. Treatment of this form of the disease requires specialized medical
expertise, which most physicians did not have\. Therefore, one of the main contributions
of the project to the reduction of the incidence of this disease was the establishment, with
the assistance of PAHO, of treatment protocols for kala-azar, training of medical
personnel and the provision of the Glucantime, the effective chemotherapeutic agent,
which is difficult to get because it is produced by only one company in the world\. The
second largest contribution of this component was to establish a network of laboratories
and kennels to diagnose canine leishmaniasis and eliminate infected dogs, the disease
reservoir, from which humans get infected via the bite of sandflies\. For example, before
the project, the city of Belo Horizonte could not process more than 3,000 canine serologic
tests per month, while there was a need to carry out some 100,000 such tests\. Finally, the
project financed the development and tested the use of a new serologic diagnostic method
for canine leishmaniasis (TRALD), one which allows cutting the time taken to diagnose
7
the canine disease from days to minutes, and disposal of the infected dog on the spot,
thereby reducing the transmission of the disease\.
(d) Rabies and other\. as mentioned earlier, at the request of the Borrower the
Bank authorized that the activities of Rabies Control be associated with those of canine
leishmaniasis control\. As a result the rate of dog anti-rabies vaccination grew
significantly from 56 percent in 1989 to over 83 percent in 1995\.
Part B: Community Mobilization\. This component executed around 4 percent of project
funds, a little less than originally estimated\. The project established state- and municipal-
based information, education and communication (IEC) teams, and financed production
of educational materials, such as posters, brochures, and videos, and supported
community participation in endemic disease control programs\. Most of the educational
activities were carried out by community health workers\.
Part C: Operational Research\. This component executed about 0\.7 percent of project
funds as had been planned\. Operational research was delayed mainly due to management
problems at SUCAM/NHF and the lack of a tradition of collaboration between health
services and academia\. In the latter part of project implementation, its importance for the
improvement of institutions and programs was recognized and, by 1996, the project was
funding 22 research and development projects (Table 7)\. Eighteen studies funded under
the project were presented at the most important tropical disease forum in Brazil,
resulting in 12 publications, and 4 abstracts, some of which were considered particularly
innovative\. This component also financed a post-graduate scholarship program to
strengthen the pool of endemic disease control specialists\.
Part D: Institutional Development\. This component executed 16 percent of project
funds, leaving (a) a large pool of trained personnel, (b) management information systems
which allow monitoring the epidemiological situation and the execution of different
program activities, and (c) improved public health service facilities, vehicles and
equipment which make the endemic disease control programs viable\. These investments
had been originally designed to apply to SUCAMINHF facilities only, but ended up
benefiting municipal and state health secretariats which took more and more
responsibility for endemic disease control as the project developed\. The project helped
forge sound partnerships between the federal agency and state and municipal health
secretariats, between academia and public health services, as well as new intersectoral
collaboration between the health sector and the education and environment sectors\.
Part E: AIDS ControL This component executed about 4 percent of project funds,
financing the production of mass media campaigns and various educational materials, and
the acquisition of equipment and supplies for blood banks and public health laboratories\.
The project helped establish the National AIDS and STD Control Program and prepare a
specific investment project which the Bank is now financing (AIDS and STD Control
Project, Ln\. 3659-BR)\.
8
D\. PROJECT SUSTAINABILITY
This project leaves behind a strong base from which Brazil can continue its already
successful endemic disease control programs\. The infrastructure and equipment established
by the project, all the staff of whom were trained by the project, and the experience gained
in the fields of management and partnerships should not disappear now that the Bank's
involvement has ended\. The introduction of endemic disease control activities among the
expenditures reimbursable by the Unified Health System (SUS) will cover recurrent costs
and further ensure sustainability\.
The project put endemic disease control on the agenda of state and municipal
governments, as well as on the agenda of other key agencies operating in the regions which
are increasingly assuming responsibility for vector-borne disease control\. The project
introduced a financing system by which the Unified Health System reimbursed
municipalities for endemic disease control activities, making the decentralization of
endemic disease control financially sustainable\. The project trained hundreds at the state
and municipal levels, enabling a follow-up of all necessary activities, and the
decentralization of health actions in the region\. These benefits were gained in spite of the
fact that the project was implemented at a time of political and macroeconomic instability,
of reduced technical and managerial capabilities, and changing and uncertain institutional
environ-ments\. The project also leaves a culture of management and accountability which
did not exist before\. Management contracts, performance indicators, monitoring,
supervision and evaluation were introduced by the project and are now common practice
not only in the regional offices of NHF but in state and municipal health secretariats\.
E\. PERFORMANCE
Borrower Performance\. Project management was poor during the early years of
project implementation, due to frequent changes in Government\. In the early 1990s, a
series of political appointees in a volatile political environment almost brought the project
to a halt\. During the project's life, there were eight Ministers of Health\. These resulted in
further changes at other levels of government, including six project coordinators in 1991
and 1992 alone, halting actions and decisions and thus delaying project implementation\.
Also, priorities changed from one administration to another, and commitments made in
prior administrations were not always maintained by others\.
In its early stages, project implementation was also slowed by counterpart fund
and procurement problems\. Counterpart funds were difficult to secure during the first
part of project implementation, but have been adequate and timely since 1994\. The fact
that the Bank allowed the use of Special Account funds to be used as advances, together
with matching counterpart funds, facilitated disbursements, because there was no longer a
9
need for the counterpart funds to cover the full cash flow up to the reimbursement\. The
project disbursed the full proceeds of the loan with only small deviations from the
proportions agreed with the Bank for each disbursement category\.
Intemational competitive bidding for insecticides and pharmaceuticals was
extremely difficult because the international market is oligopolistic\. The interest groups
involved are extremely powerful, and tried to invalidate the bidding procedure in court\.
As a result, further large purchases of insecticides, pharmaceuticals, and specialized
equipment were done using limited international bidding, through PAHO\. The latter
process was very efficient: prices were very good, and the process was transparent\. But it
took longer than six months between the request to purchase and the delivery of the
goods, much longer than both the Borrower and the Bank had anticipated, but still within
the time taken by other UN agencies such as UNICEF\. National competitive bidding at
state and municipal levels was more effective than similar bidding at the federal level to
purchase smaller quantities of goods, again because of the interests involved in a large
federal bidding processes, and because the federal level was not able to plan and carry out
procurement and distribution in a timely fashion, resulting in periods of lack of inputs
alternating with others of inefficient stockpiling\.
In 1992, project management became competent and stable and from 1993,
showed excellent performance\. Some committed Northeast governors and mayors took
responsibility for endemic disease control, developed state- or municipal-based endemic
disease control programs and allocated local funds to communicable disease control\. At
the federal level, strong support by the Minister and by the President of the National
Health Foundation between 1993 and 1995 accelerated project implementation\.
Bank Performance\. The Bank and the Borrower identified and prepared the
project in much detail\. The staff appraisal document and the respective background
documentation are very complete\. Retrospectively, we can now say that there were three
significant flaws in terms of the objectives set for the project and project design\. First,
neither the Staff Appraisal Report (SAR), nor the Loan Agreement, set measurable and
realistic project outcome indicators which would have allowed closer monitoring and
evaluation of development objectives\. The key indicators in the SAR consisted of
process/output indicators, with a heavy emphasis on vector control (Table 6), which did not
allow questioning whether the selected strategy was helping to reach the development
objectives\. Second, there was no clear objective or strategy to reduce the severity and
mortality of either schistosomiasis or leishmaniasis, as the focus of the programs was to
eradicate the vectors and the infected reservoirs\. Third, the project design was too rigid and
did not accommodate a quick response to epidemics which took place during the period of
project implementation\. Between 1988 and 1996, the Northeast suffered several epidemics,
including cholera and a very serious outburst of Dengue and, in both instances, the project
was unable to support the swift response which was necessary, without having to make a
major amendment of the loan agreement\.
The Bank kept a steady level of project supervision from the early stages of project
implementation, although it may have started with an excessive focus on vector control and
10
sometimes showed rigidity in the interpretation of the loan agreement\. This rigidity may
have been warranted during the period of political and managerial instability\. Project
supervision became more outcome-oriented and flexible after 1993, when the Borrower
appointed competent and stable project management, turning the project into a very good
performer\. From 1993, project supervision emphasized: (a) outcome indicators (i\.e\.
reduced incidence, reduced mortality, reduced fatality rates, and reduced hospital admission
rates), as opposed to project outputs (i\.e\., houses sprayed, stool or dog serum tests
processed, etc\.) or inputs (i\.e\., procurement and disbursements); (b) diagnosis and
treatment, in addition to traditional vector or reservoir control; (c) shifting the
accountability for project performance from the PCU to states and municipalities; (d)
intensive informal supervision through electronic mail with communications flowing to and
from the PCU more than once a week (the project was one of the first to have an All-in-I
account at the Bank's Resident Mission, and later switched to a Brazilian Internet server);
and (e) flexible interpretation of the Loan Agreement to adapt to new environmental and
political realities during the long period of project implementation\.
F\. ASSESSMENT OF OUTCOME
Between 1988 and 1996, the project is estimated to have prevented about 18,500
deaths, which translates into about 520,000 disability adjusted life years (DALYs) saved\.
Given the US$140\.8 million investment involved, the project cost about US$558 per
DALY saved, which places it among the high cost-effectiveness health interventions (Table
9a)\. The project saved about US$470 million in direct and indirect benefits with a total
present net present value (benefits - costs = NPV)) of just over US$370 million, or 2\.5 times
the total investment\. This corresponds to an internal economic rate of return (IERR) of over
500 percent and a payback period of aproximately five years\. That is, by 1993, the project
had already generated returns equivalent to the total investment of US$140 million over the
period of 1988-1996 (Table 9b)\.
Chagas' disease\. The project is estimated to have prevented 12,500 cases of
Chagas' disease, and 3,800 deaths, translating into about 72,900 DALYs saved, 48 percent
from averted deaths and 52 percent from averted disability\. With an investment of about
US$23 million, the component is estimated to have costed US$260 per DALY saved, which
places it among those with highest cost-effectiveness ratio\. Even if we did not consider
indirect economic benefits associated with the life years saved, the program would have
returned US$2\.30 for each invested dollar\. The project saved a total of US$37 million in
direct benefits associated with reduced treatment costs of Chagas' disease patients and
another US$82 million in indirect benefits associated with foregone output saved\. The net
present value of these benefits was US$50 million, which correspond to an internal
economic rate of return (IERR) of 164 percent (Table 9b)\.
Schistosomiasis\. The project is estimated to have prevented at least 3,400
schistosomiasis deaths, which translates into 67,000 DALYs saved\. With an investment of
11
about US$65 million the component is estimated to have cost US$980 per DALY saved,
which puts it among the moderately good cost-effective interventions\. The project saved a
total of US$6 million in direct benefits associated with reduced treatment costs of
schistosomiasis patients and another US$87 million in indirect benefits associated with
foregone output saved\. The net present value of these benefits was US$18 million, which
correspond to an internal economic rate of return (IERR) of 56 percent (Table 9b)\.
Leshmaniasis\. The project is estimated to have prevented 770 cases of kala-azar,
and avoided 11,300 deaths, which translates into 380,000 DALYs gained\. With an
investment of about US$53 million, the component costed about US$140 per DALY saved,
which places it among the most cost-effective public health programs\. This analysis has to
be read with caution\. For lack of a better model, the cost effectiveness analysis uses a
general epidemic model to estimate the expected number of cases and deaths, one which
assumes that the disease exists in an endemic state, that epidemics occur every ten years,
and that incidence increases with every successive epidemic\. The model is robust for many
epidemics, but may be speculative for leishmaniasis, given the general lack of
understanding about the epidemiology of the disease\. The project saved a total of US$260
million in direct benefits associated with reduced treatment costs leishmaniasis patients and
another US$494 million in indirect benefits associated with foregone output saved\. The net
present value of these benefits was US$302 million, which correspond to an internal
economic rate of return (IERR) of over 2,000 percent (Table 9\.b)\. The main reason for the
relatively high estimates for the net present value of the component, and the consequently
elevated rates of return, is that the deaths by kala-azar occur in very young children
causing a loss of 30 to 35 DALYs per death, and deaths to the sequelae of Chagas, for
example, occur at roughly 45 years of age, with an associated loss of about 20 years\.
Additionally, the DALYs gained due to Chagas' prevention are spread over 20 years in
the past and roughly another 25 to 35 years into the future, thus the effects of the discount
factor (3% for the DALYs) are much more pronounced than in the case of kala-azar
where the majority of the deaths averted are attributable to the period of the project and
not in the distant future\.
G\. FUTURE OPERATIONS
Environmental and demographic conditions in the Northeast, i\.e\., poor household
and environmental sanitary conditions, and the strong migration in and out of the region,
will continue to favor the occurrence of communicable diseases which are endemic in the
area\. State and municipal capacity to control such diseases has greatly improved, but is still
weak in many places\. Some states and municipalities, such as Minas Gerais, Bahia,
Pemambuco, and Ceara, are now able to take more responsibility for communicable disease
control than before, but other states such as Alagoas will continue to need strong assistance
from the federal level, i\.e\., from the National Health Foundation\. Bank support for a
follow-up communicable disease control operation is thus justifiable\. Such a follow-up
operation will probably (a) have broader objectives (i\.e\., include the control of
12
communicable diseases which cause a heavier burden of death and disability, which may
vary by State, and allow for quick response to unexpected epidemics); (b) include demand-
driven components to finance state and municipal communicable disease control
subprojects; and (c) have an institutional development component to (i) strengthen the
capacity of weaker states and municipalities, and (ii) assist in restructuring the National
Health Foundation, from a federal vertical program organization toward a mostly
regulatory, monitoring and technical assistance agency\.
More broadly, conditions for future operations in the health sector are good\.
Political, economic, institutional, and managerial conditions have improved significantly,
and the country is much more capable of carrying out social programs with objectivity and
efficiency\. With better-trained human resources and improved management capability
achieved through this project and other health-related Bank projects, future health
operations in Brazil should be implemented with fewer obstacles and in less time\. Future
operations in the health sector, including those in the area of communicable disease control,
should include efforts towards the decentralization and municipalization of health care
activities through the SUS\.
H\. KEY LESSONS LEARNED
Through the experience gained during project implementation the following are the
key lessons learned:
(a) Chagas' disease: (i) the severity of the disease seems to be associated with
reinfection\. When the program manages to eliminate the Triatoma from the household, the
level of reinfection of patients decreases and the clinical course of the already infected
person is more benign; (ii) it is possible to interrupt vector transmission with rigorous
application of residual insecticides, on the basis of careful epidemiological stratification by
municipalities and by community; (iii) the preferred vector, Triatoma infestans, is strictly
domestic and does not become peridomiciliary; as a corollary, the vector can be eradicated
through house improvements and targeted application of insecticides;
(b) Schistosomiasis: (i) early diagnosis and vigorous treatment can reduce the
severity of the disease; (ii) it is very difficult to completely eliminate low-grade
transmission by means of diagnosis and treatment alone; eradication of the disease requires
long-term solutions, including better home and environmental sanitation; (iii) adding the
treatment of schistosomiasis to intestinal deworming in school health programs increases
the cost-effectiveness and efficiency of the program;
(c) Leishmaniasis: (i) the severity of kala-azar is closely associated with
malnutrition; (ii) the new immunology-based, on the spot, diagnostic test for canine
leishmaniasis (TRALD) is a valid and efficient alternative to the traditional diagnostic
method; it allows immediate elimination of infected dogs which are the natural reservoir of
13
human disease; (iii) well-defined standard treatment protocols, training of health care
personnel and supply of appropriate antimonials can control the spread of a serious kala-
azar epidemic and reduce the severity and fatality of cases;
(d) Management contracts, performance indicators, monitoring, supervision,
and evaluation are crucial to successful project implementation\. There is also a need for
further decentralized management and accountability;
(e) Competent and stable project management is necessary for continuity of the
project in a changing political environment\. In the early 1990s political appointees in a
volatile political environment almost brought the project to a halt;
(f) Government commitment is key for the project\. States with more committed
governors were more successful than others\. At the Federal level, strong support by the
Health Minister between 1993 and 1995 accelerated project implementation;
(g) Training and other forms of institutional strengthening should be
implemented at least at the same pace as investments in civil works and equipment;
(h) Flexible project design and interpretation of the Loan Agreement are
necessary so that projects can be adapted to new environmental and political realities which
may arise during the long period of project implementation;
(i) The Unified Health System (SUS) can play an important role in endemic
disease control at two levels: first, by reimbursing health promotion and disease prevention
activities carried out by municipalities, states and the National Health Foundation; and
second, by providing early diagnosis and prompt treatment endemic diseases through the
public and health care provider network contracted with the SUS; and
(j) UN specialized agencies such as PAHO/WHO and UNDP can offer
valuable technical assistance and facilitate project implementation in the areas of
procurement and contracting\.
14
PART II: STATISTICAL INFORMATION
Table 1: Summary of Assessments
A\. Achievement of Objectives Substantial Partial Negligible NotApplicable
Macro policies E li x
Sector policies x a El
Financial objectives O O O x
Institutional development x El Ol El
Physical objectives x O O O
Poverty reduction O x O O
Gender issues l O O x
Other social objectives O x O E
Environmental objectives O x O O
Public sector management x Oi O
Private sector development E l O x
B\. Project Sustainability Likely Unlikelv Uncertain
x n °
C\. Bank Performance Highly Satisfactory Satisfactory Deficie
Identification n x g
Preparation assistance x O O
Appraisal 0 x Oi
Supervision x Oi E]
D\. Boffower Performance Highly Satisfactory SatisfacoI Deficient
Preparation El x g
Implementation X after 93 a X before 93
Covenant compliance x O C
Operation n x 0
Highly Highly
E\. Assessment of Outcome Satisfactory Satisfactory Unsatisfactory Unsatisfactory
x x
Disease Institutional 0
control development
15
Table 2: Related Bank Loans/Credits
Loan/ Year of
Credit Title Purpose Approval Status
Preceding operations:
Loan 2061-BR To improve the health status of Rond6nia's increasing 1981 Closed
Northwest Region Integrated population with malaria control, extension of basic 6130/88
Development Program - Health services, training of health workers and operational
research\.
Loan 2448-BR To improve the Government's ability to address a 1984 Closed
National Health Policy Studies variety of health needs through strengthening policy 12/31/89
formation\.
Loan 2447-BR To improve the health status in five main target areas 1984 Closed
Sao Paulo Basic Health Care and nine health districts in Greater Sao Paulo and 6/30/92
improve the cost-effectiveness of health services
delivery within Greater Sao Paulo\.
Loan 2699-BR
NE Basic Health I To improve the health status of 3\.6 million small 1986 Closed
farmers and other poor people living in specific areas 12/31/95
of the states of Minas Gerais, Bahia, Rio Grande do
Norte, and Piaui\.
Following operations:
Loan 3072-BR
Amazon Basin Malaria Control To reduce malaria transmission in Amazonia and 1989 Closed
prevent its reintroduction to areas now under control\. 6/30/96
Loan 3135-BR
NE Basic Health II To strengthen basic health services in selected low- 1989 Closing
income areas of the Northeast and to reinforce Date
implementation of sectoral reforms, including the 12/31/97
decentralization of financial resources and
administrative authority within the NE states\.
Loan 3659-BR
AIDS & STD Control To strengthen AIDS and STD prevention and services, 1993 Closing
and build up institutional capacity for AIDS and STD Date
control at the Federal and State levels\. 6/30/98
Loan 4047-BR
Health Sector Reform To improve the delivery of care under the Unified 1996 Closing
Health System (SUS), which is the sole source of Date
publicly subsidized care for the poor\. 12/31/00
16
Table 3: Project Timetable
Steps in Project Cycle Date Planned Actual Date
Identification April 1985 April 1985
Preparation June 1986 June 1986
Appraisal June 1987 June 1987
Negotiations November 1987 November 1987
Board Presentation February 1988 March 1988
Signing April 1988 June 1988
Effectiveness September 1988 December 1988
Midterm Review May 1993
Project Completion June 1993 December 1995
Loan Closing December 1993 June 1996
Table 4: Loan Disbursements: Cumulative Estimated and Actual
(US$ million)
FY 88 89 90 91 92 93 94 95 96
Appraisal Estimate 8\.0 24\.5 50\.0 76\.0 98\.0 109\.0 -- -- --
Actual -- 8\.0 11\.5 24\.8 33\.4 37\.0 48\.9 67\.0 77\.9
Actual as % of 33 23 33 34 34 60' 82 95'
Estimate
l US$27 million was canceled from the original loan amount of US$109 million; the percentage therefore was based
on the revised loan amount of US$82 million\.
17
Table 5: Key Indicators for Project Implementation
Indicators Actual Date Accomplished
PMU organization and staffing September 1988
Accounting systems and procedures A substantial review of the financial
management, accounting and audit
aspects of the project was carried out in
August 1989\.
Annual action plan First plan received in December 1988
Financial Project Monitoring Manual March 1989
Project Implementation Manual June 1989
Annual progress report First report received in March 1990
Midterm review of the project May 1993
Scientific meeting to discuss and December 1995
disseminate results of operational
research funded under the project\.
18
Table 6: Key Indicators for Project Operation
I\. Key Operating Indicators in SAR Estimated Actual
1 \. Average number of houses sprayed/trip 6 to 15 6 to 15
2\. Daily average of houses sprayed/guard 2 to 5 2 to 5
3\. Daily average of stool tests processed/laboratory technician 200 200
4\. Daily average of treatments administered/guard 15 to 30 15 to 30
5\. Average number of dogs tested/trip 30 to 60 30 to 60
6\. Daily average of household visits/guard 15 to 30 15 to 30
7\. Monthly average of dogs eliminated/No\. tested positive 90% 90%
8\. Average cost per case diagnosed NA NA
9\. Average cost per case treated NA NA
10\. Average cost per death averted NA US$7,611
11\. Average cost per DALY saved NA US$271
19
Table 7: Studies Included in Project
Study
1\. Comparative study of the use of Glucantime, Pentamidine and Aminosidine
in the treatment of primary skin lesions caused by Leishmania braziliensis\.
Philip Marsden\. Tropical Medicine Unit, Universtity of Brasiilia
2\. Evaluation of the Direct Aglutination Test for the serologic diagnosis of
visceral leishmaniasis in the State of Para\. Fernando T\. Silveira\. Instituto
Evandro Chagas/National Health Foundation
3\. Use of imumologic parameters for the evaluation of schistosomiasis and
Chagas' disease surveillance and control programs\. Sumie H\. Shimizu\. Sao
Paulo Institute of Tropical Medicine\.
4\. Evaluation of the Direct Aglutination Test for the serologic diagnosis of
visceral leishmaniosis in the State of Ceara\. Hermenio Lima Filho\. Federal
Unity of Ceara\.
5\. Impact of rapid reservoir elimination in the reduction of the prevalence of
canine kala-azar in the Rio Curu Valley\. Marcus D\.M\. Braga\. Tropical Medicine
Unit/Federal University of Ceara\.
6\. Chagas' disease morbidity and potential control in two areas in NE Brazil\.
Jose R\. Coura\. Fundacao Oswaldo Cruz\.
7\. American Tegumentar Leishmaniasis in the State of Maranhao\. Clinical and
epidemiologic characteristics\. Comparison between the systemic and lesional use
of antimonial drugs in the treatment of skin lesions\. Jackson M\. L\. Costa\.
Federal Universtity of Maranhio Medical School\.
8\. Eficacy of Chagas' Disease Control\. Case-control study\. Carlos M\. F\.
Antunes and Mariangela Carneiro\. Federal University of Minas Gerais
9\. Chagas' Disease hospital morbidity in Brazil\. Susete B\. Franca\. Community
Medicine and Nutrition Unit, NESCON, Federal University of Minas Gerais\.
IO1\. Schistosomiasis morbidity in Queixadinha, Cari, Minas Gerais\. Federal
1University of Minas Gerais Medical School
I11\. Medical care for Chagas' disease patients in the Unified Health System\.
Proposal for evaluation\. Eliane D\. Gontijo\. Federal University of Minas Gerais\.
12\. Integrated research and development of American Tegumentar
Leishmaniasis in the State of Sao Paulo\. Jose E\. Tolenzano\. Adolfo Lutz
Institute\. Sao Paulo State Health Secretariat
13\. Leishmania donovani FML\. A new tool for the diagnosis and control of
blood transfusions and for the development of vaccines against kala-azar\.
Clarissa B\.P\. de Souza\. Federal University of Rio de Janeiro\.
14\. Evaluation of recombinant leishmania proteins for the development of
vaccines and diagnosis of kala-azar\. Ronaldo A\. do Amaral\. Federal University
of Rio Grande do Norte\.
20
15\. Clinical and epidemiological study of schistosomiasis in irrigation areas in
NE Brazil\. Amaury D\. Coutinho\. Funda,ao Oswaldo Cruz/Pemambuco\.
16\. Production of fluorescein marked antibodies for the imunofluorescence-
based diagnosis of kala-azar\. Sinval P\. Brandao\. Funda,cao Oswaldo
Cruz/Pernambuco
17\. Ecology of lesihmaniasis vector sandlies in Bahia State\. Italo Sherlock\.
Funda,ao Oswaldo Cruz/Bahia
18\. Epidemiology of kala-azar in Novo Mundo, Piaui\. Carlos H\. Neri Costa\.
Federal Universtity of Piaui\.
19\. Epidemiology of acute Chagas' disease cases in the Sao Luis Island,
Maranhao\. Triatoma rubrofasciata as the probable vector\. Sebastiao A\. S\.
Valente\. National Health Foundation/Maranhao\.
20\. Use of PCR in the evaluation of the impact of specific treatment for
Tripanosoma cruzi\. Mariane M\. A\. Stefani\. Federal University of Goias\.
21 Vaccination against visceral leishmaniasis and against muco-cutaneous
canine leishmaniasis with semi-defined antigen from Leishmania braziliensis\.
Mauro Marzochi\. Funda,ao Oswaldo Cruz\.
22\. Evaluation of DOT-ELISA recombinant test for the laboratorial diagnosis of
canine kala-azar\. Ronaldo Amaral\. Federal University of Rio Grande do Norte\.
21
Table 8A: Project Costs
Appraisal Estimate (US$M) Actual (US$M)
Item Local Foreign Total Local Foreign Total
Costs Costs Costs Costs
I\. Control/Prevention of 83\.0 73\.5 156\.5 64\.6 60\.6 125\.2
Transmission
II\. Community Mobilization 7\.7 2\.9 10\.6 3\.3 2\.8 6\.1
III\. Operational Research 1\.3 \.0\.2 1\.5 0\.9 0 3 1\.2
IV\. Institutional Development 20\.2 3\.6 23\.8 10\.8 13\.3 24\.1
V\. Control & Prevention of 6\.1 1\.6 7\.7 2\.4 5\.0 7\.4
AIDS
TOTAL BASE COST 118\.3 81\.8 200\.1 82\.0 82\.0 164\.0
Physical Contingencies 6\.5 4\.7 11\.2 - - -
Price Contingencies 3\.8 2\.9 6\.7 - - -
TOTAL PROJECT COSTS 128\.62 89\.4 218\.0 82\.0 82\.0 164\.0
Table 8B: Project Financing
Appraisal Estimate (USSM) Actual (US$M)
Local Foreign Total Local Foreign Total
Federal Government 109\.0 -- 109\.0 82\.0 82\.0
IBRD 19\.6 89\.4 109\.0 82\.0 82\.0
TOTAL 128\.6 89\.4 218\.0 82\.0 82\.0 164\.0
2 Excludes taxes of US$9\.4 million equivalent\.
22
Table 9a: Cost Effectiveness Analysis Summary\. 1988-1996
Endemic Disease Control Costs Program Project
Chagas'Disease US$516\.7 million US$23 million
Schistosomiasis US$140\.2 million US$65\.3 million
Leishmaniasis US$95\.2 million US$52\.5 million
Total US$140\.8 million
Endemic Disease Control Effectiveness
Chagas' Disease
No of cases prevented 277,000 12,500
No of deaths prevented 85,000 3,800
No of DALYs saved 1\.6 million 72,900
Schistosomiasis
No of cases prevented
No of deaths prevented 7,300 3,400
No of DALYs saved 143,000 67,000
Leishmaniasis (kala-azar only)
No of cases prevented 1,400 770
No of deaths prevented 20,500 11,300
No of DALYs saved 690,000 380,000
Total No\. of deaths saved 112,800 18,500
Total No\. of DALYs saved 2,433,000 519,900
Endemic Disease Control Cost-effectiveness
Chagas'disease US$315 US$315
Schistosomiasis US$980 US$980
Leishmaniasis (kala-azar only) US$139 US$139
Average cost/DALY saved US$558
Note: Chagas' Disease Control Program analysis covers 1975 to 1995\.
Schistosomiasis and Leishmaniasis Control Program analysis covers 1988 to 1996\.
The cost figures are all converted into 1996 U\.S\. Dollars\. A three percent
discount rate was applied for each year into the past and, in the case of benefits, into the
future\. Effectiveness was measured in terms of burden of disease prevented, in disability
adjusted life years -- DALYs\.
The impact of the project is assumed to be proportional to part of the program
investment financed under the project\. The estimate is conservative, as the project added
value to the traditional ongoing program, by bringing in many of the program innovations,
on both the technical and the managerial sides\.
23
The impact of the Leishmaniasis control subcomponent counts only the benefits
associated with reducing incidence and mortality of kala-azar\. It does not account for the
possible impact of the project on cutaneous leishmaniosis, nor does it include the benefits
accrued from adding the rabies control to the subcomponent\.
Table 9 b: Cost-benefit Analysis Summary\. 1988-1996
(US$ million)
Investment/Cost Program Project
Chagas' disease
Total investment 517 23
Present value 503 16
Schistosomiasis
Total investment 141 65
Present Value 100 47
Leishmaniasis
Total investment 95 53
Present value 66 36
Total Project Investment 753 141
Total Project Present Value 668 99
Benefits
Chagas ' disease
Direct cost savings 828 37
Indirect cost savings 2119 82
Benefits, present value 1557 66
Net benefit, present value, (NPV) 1054 50
Schistosomiasis
Direct cost savings 12 6
Indirect cost savings 187 87
Benefits, present value 139 65
Net benefit, present value, (NPV) 39 18
Leishmaniasis
Direct cost savings 472 260
Indirect cost savings 897 494
Benefits, present value 615 339
Net benefit, present value, (NPV) 550 302
Total Project Benefits
Direct cost savings 839 20
Indirect cost savings 3203 663
Benefits, present value 2310 469
Net benefit, present value, (NPV) 1642 371
Internal Economic Rate of Return (IERR) 89 535
The estimated quantitative benefits generated from the project are based on the
observed reduction in morbidity and mortality in Brazil over the period 1988 to 1996\.
The estimated reductions over the period of evaluation were converted into quantitative
benefits in terms of a reduction in the demand for health services and a reduction in the
burden of disease\. The estimates for the reduction in the demand for health care services
24
are evaluated based on the observed estimates of demand for ambulatory and hospital
level services, in terms of frequency of utilization and cost per incident\. Reductions in
the burden of disease are based on an analysis of the total Disability Adjusted Life Years
(DALYs) saved due to the reduction in morbidity and mortality\. The reduction in the
burden of disease is then translated into economic benefits by attaching the value of the
average minimum yearly salary to each DALY, and discounting the stream of benefits
using a discount rate of eight percent (8%)\.
There are two reasons for selecting an 8% discount rate, a little lower than would
be appropriate for a private investment project\. First, the highly redistributional nature of
the project, demonstrated by a high proportion of the target population in the lowest tiers
of the income distribution\. Second, the public goods nature of the investment provides
justification for a discount rate different from the discount rate traditionally assumed for
investments where the output is a private consumption good\.
In order to determine the total Net Present Value of the project, and to calculate
the observed rate of return, the benefits are then weighed against the investment costs of
the project, both during the period 1988-1996 and, in the case of Chagas', over the period
1975 to 1996\.
The analysis assumes a distribution of the estimated benefits between the program
and the NE Endemic Disease Control Project that is roughly proportional to the share of
expenditure attributable to the project relative to the overall program, the distribution of
direct and indirect benefits over the period of evaluation\.
Total project benefits were determined by converting the total DALYs saved and
the reduction in health care services utilization into monetary terms\. The cost estimates
used to determine monetary benefits related to reductions in the utilization undoubtedly
underestimate the total economic value of the project given the fact that the estimates
consider only the direct costs to the health care system\. Indirect costs, such as savings in
time and transport costs, time costs for family members who look after the patient, and
time and money costs of preventive action taken by households and the community are
not considered in the present analysis due to a lack of data\.
The analysis of the Chagas' disease program spans a period of 21 years, from
1975 to 1996, due to the chronic nature of the disease and the protracted period of
evolution\. The respective project benefits and costs are prorated for the years of project
implementation\.
25
Table 10: Status of Legal Covenants
Original Revised
L\.A\. Covenant Fulfillment Fulfillment
Section Type Status Date Date Description of Covenant Comments
3\.01(a) 5 C Carry out project through Complied with\.
SUCAM/NHF with due
diligence and efficiency\.
3\.01 (b) 10 C Write Convenio with States\. Complied with\.
Write Termo Aditivo to the
Convenio with FIOCRUZ
regarding the research
component\. Write Termo
Aditivo to Convenio with
PAHO\.
3\.01c/d 10 C Not assign, amend, abrogate, or Complied with\.
waive convenio without Bank
authorization\.
3\.01(e) 5 C Hire staff required for project Complied with\.
execution, directly or through
States or Municipalities\.
3\.01(f) 5 C Ensure that project manager is Complied with\.
acceptable to the Bank\.
3\.02 10 C Procurement and hiring of Complied with\.
consultants according to Bank
procedures\.
3\.03 10 C Complete a KAP survey Complied with\.
regarding endemic diseases in
the target States\.
4\.01(b) I C Have records and accounts for Complied with\.
each fiscal year audited by
independent auditors acceptable
to the Bank\.
26
Table 11: Compliance with Operational Manual Statements
[ N\.A\.
Table 12: Bank Resources: Staff Inputs (SW, Actual)
Stage FY
Tota
86 87 88 89 90 91 92 93 94 95 96 97 1
Preparation 9\.0 80\. 4\.2 93\.5
3
Appraisal 12\.7 12\.7
Negotiations 7\.3 7\.3
Supervision 2\.6 14\.7 18\.5 13\.0 14\.0 9\.6 13\.6 7\.2 93\.2
Mid-Term Review 16\. 16\.7
I'TOTAL T9;\. 8 2 16'8 t \.A'T*' W 7 _tA *1_
27
Table 13: Bank Resources: Missions
Performnance Rating'
*I
Days in Specialized
Stage of Project Cycle Month/ No\. of Field Staff Skills Impl\. Devt\.
Year Persons Represented Status Objs\. Types of Problems
Identification 3/85 4 12 PH, 0
Preparation 6/86 2 14 PH
9/86 7 12 PH, O, L
12/86 4 12 PH, P, F,
3/87 7 18 PH, P, M, 0,
l ~~~~~~~~~~~~~F
Appraisal 6/87 4 8 PH, P, 0, L,
PLW** 4/88 5 6 PH, P, L, D,
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ F _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __F
Supervision:
I 8/88 1 5 PH 1 1
II 2/89 1 17 PH 1
III 8/89 2 12 PH, IC I 1
8/89 1 7 F
IV 3/90 1 12 PH, TD I I
V 10/90 2 11 PH, E 2 1 M, F
VI 4/91 1 14 PH 2 1 M
VII 10/91 1 12 PH 2 1 M
VIII 5/92 2 14 PH 3 1 M, L
IX 12/92 2 12 PH 2 2 M, PR, F
X 5/93 4 11 PH, ED 2 2 M, PR
(Mid-Term Review)
XI 12/93 2 14 PH, ED 3 2 L, M, F, PR,
XII 7/94 3 12 PH, MS, ED S S F
XIII 2/95 3 12 PH, ED, MS S S F, PR
IX 4/96 1 7 PH HS HS
Completion I I_I_ I
* D = Disbursement specialist; E = economist; ED = endemic disease specialist;
F = financial analyst; IC = IEC specialist; L = legal; M = management specialist; MS = malaria specialist;
0 = operations specialist; P = procurement specialist; PH = public health specialist; TD = tropical diseases
specialist\.
** PLW = Project Launch Workshop
'Ratings: I/HS = minor problems 2/S = moderate problems; 3 = serious problems\.
2Types of Problems: L = legal; M = management performance; F = availability of finds; PR = procurement\.
28
Table 14: Documents in Project File
1\. Projeto de Controle de Doencas Endemicas no Nordeste -- PCDEN\. Acordo de
Emprestimo No 2931\. Borrower/Government project completion report
2\. AnAlise de Custo-Efetividade do Componente de Doenca de Chagas no PCDEN, by
Dariush Akhavan, November 1996\. Cost-effectiveness analysis of Chagas' Disease
component\.
3\. AnAlise de Custo-Efetividade do Componente de Esquistosomose no PCDEN, by
Dariush Akhavan, November 1996\. Cost-effectiveness analysis of schistosomiasis
component\.
4\. Analise de Custo-Efetividade do Componente de Leishmaniose no PCDEN, by
Dariush Akhavan, November 1996\. Cost-effectiveness analysis of leishmaniasis
component\.
5\. Cost-benefit Analysis of the Brazil Northeast Endemic Disease Control Project, by
James Cercone, May 1997\.
6\. Borrower's comments on the implementation completion report\.
I
IBRD 21334
(VENEZUELA *o * (FRENCH BR 4C
I SSURINAME\GUIANAr BRAZIL
C O L O M B I A Bo?1I \. EDaVI5SS /ON J fL AMAZON BASIN MALARIA CONTROL PROJECT
MALARIA CONTROL PROGRAM
, A=T A N t/C
J f- P A4-- W0\.A<N I f/< C;4AQ= - RiORA 7' Z AEDONORTE
\. resinCEARA /RO EDNRT
\ PARAIBoA o Pessoa
P E R U > < < gG0W 4 g ~~~~~~~B eA H I A :tSERGIPE
-- \ t? A, _ | w ~~~~~~~~~~~BRASIUAL@% ±\.
\ < ~B O L I VIA t 2 Goionio ? 5 oow 2
t ' ~~~~~~~~~~9 t g~~~~~~Ca p Tn6fibo Otoni
r oaoo AU I ancndl
g \ r _ _ > (!Z)MATO GROSSO~ - U\.-,OrOINAS G ERA1S1\. C\.1
- C i /'; C \ \ g CompoGrondee * Belo /ESPIRITO SANTO
) ii aOSL dJNb Rbo> Hrizonte\.-\. OThbworao ,rjiNric
-20* ~< - *,o SAOA; i itoFr,o ° F/ANTCpmo
A N p tz \ ~\PAR AGUAY \ , Canpins0 t\. D:o E JANEIRO fl C L 4 N
(CHILE? \\. noSd 5o Pa°Io\. '~ RiodeJaneiro
8 / Santo \. P>RANA tOA
(\. ;t )_ s Parnwago\.9==: Attack Phonse Priority I
- _ ) j {[ 2 2_j~~~~~~~~~~~~~~ANTA CATARINA Attack Pirate Priority 11
SOUTH3-- \ r , > F¢rionoi°lis r |~~~~~~taja Under Sorceillonce
dt~~~~~~~~~~' B N T IcL KI A R \. ~1¢ A ,9/ Vcoio °Tba o*Fnsoesiduol Tronstniucion
1Bl
<*>,asl,¢ / r'a,n\.cn\.n\.,ceooc/ ,RIO GRANDE DO SUL4 '9 Notional Capital
iona~~~cnc\.n,anc\.nin\. -/ 0 State Capitol\.s ERGIP
AME'RICA - ~c-o^> | \on p t Alegret 7Trae\.ondonlas Salvador
( \.aen\.F\.nrc9l F on 1>- 2a' FP *oy KItOME IERi O t00 200 300 400 S200ae3anare
_l'CrANv/ l rnon PJsoo) dotas0>J 'Legal Amoconio" Boundory
e , OOF2 l X 0 f *\ i MIIES 0 W0~~~~~~~~~~~~6 6 2Io 300 *--International Bsoundaries
k 0 t h FC C % 2 U R U G U AY ls -Riers 0
;~~~~ ~ 0 L° IO£\.D O V\ I Ao4 0
,__\. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~JAr\.IUAn 191/9
IBRD 20434
B R A Z I L
NORTHEAST ENDEMIC DISEASES CONTROL PROJECT
® State Capitals Northeast Region Boundary
® National Capitol -- State Boundaries
- -- International Boundaries
50 , 4 40°
| VENEZUELA 0elemANA -Im PROGRAM FOR
' ( /FECGUYANA GUIANA aoLuis LEISHMANIASIS CONTROL
1t -L t' c tFRENCH GUIANA/\. :t
COLOMBIA C ' QSURINAME/ (Fr\.) 'A Fortaleza
0~ MARANHA *< ~' C A %R R RARNO N I
Area of Maps P NOR, t ess
NORTHEAST J / -
B R A Z I L ij7 j 4 ~ 0
PERU < REGION / 0 G AArocu
U1 Bras il- GOIAS -®Solvodor
k BOLIVIA \.(7
Brasilia 15
f PARAGUAY >\,t
(t > 87 ~~~~~~~~~~~~~Goi6nia( g 2 Xt
£) P A % U A Y L A G oi6 ni P ro ject A re a s ;
/ T0*OOflOflOPOfldr \.MINAS GERAIS ESPIRITO r §7
re\.~~~o'\.uoo,\.~~~~ SANTO20
'nanoue \.oooa,osdo\.e\. 20 Bela'-'~~~~~~~~~~~~~20
ARGENTINA o'inoSOTfctddB0w Beoio3 I ViAri2
\ zilNlU-l\AV FtY hll<WIF I ~~~~~~~~~~~~~~~~~~~~Horezonte Vit6ria
CHILE 'URUGA \ZrvIAn ii
( v:zolrroWz\.rr: SAO PAULO j \.JRIO DE 0, , 300 MILES
l JANEIRO
;, vUlVlN Vw--",Sao Paulo Rio oe 0 400 KILOMETERS
00 -a 4 t5 Janeiro 400 350
50° 450 40 ' 50b ' \. 45
®Bel6m r- PROGRAM FOR @lBelI6n PROGRAM FOR
Sao Luis SCHISTOSOMIASIS CONTROL 5 is CHAGAS CONTROL
PF at)l-zoFrtaleza
-50 AANA 50 K -5~
MARAIM14A H~~~~~~~~~~~~~~~M4ANIIp ~® CEAgA 50 RAD
PARA \.' era*s\. BEAN00 Nata5 TerosR R Natal
PARA 0 _ ;o Psw PARA 8 t ^
>t j~~~~~~~~'u~Joao Pessoa Joaox Pessoa
IPIAI Fe cifRec,fe 9 J U IJN$)t% Recife
°ca'u Aroca'u SE 3X\. GOAS 0
I ~~~~~~~~~~~~~~A-I
GOIAS )j GOIAS ' aa ' OSalvador
Brasilia 15 Broslia 15t
Go,6n,onii3 ) / Project Areas; Goianiat Project Areas:
\.0/X //a/ A UndeConlf F7 Under Control
IITO New Control Activities MNAS GERAIS SIE RITO New Control Activities
100 -- / // ®~~~~~~~~~~~ 20tr "t0 (/ ®Vit6ria20
SAO PAULO RODE 0 300 MILES SAO PAULO 'RIRO DE \. 300 MILES
4 , S 0 400 KILOMETERS
SaoPal Paulo Rio de R\.d
,, (3 45° Janeiro 315- 35° J' neiro 400 350
JULY 1987
IMAGING
Report No\.: 16694
Type: ICR | APPROVAL |
P002019 | Document of
The World Bank
FOR OMCIAL USE ONLY
Rqrt No\. 5936
PROJECT PERFORMANCE AUDIT REPORT
NIGERIA: FOURTH POWER PROJECT
(LOAN 847-UNI)
November 22, 1985
Operations Evaluation Department
This decamedt lbw a -estricted distrilem mayO be age bY reciplmis oNlY la the Peforaande Of
their allela ducles Incdel maW me adwerwise be diselend wihtod Werld Bank asbhtleaon\.
FOR OMFICIAL USE ONLY
PROJECT PERFOEMANCE AUDIT REPORT
NIGERIA: FOURTR POWER PROJECT
(LOAN 847-UNI)
TABLE OF CONTENTS
Page No\.
Preface \.
Basic Data Sheet \. III
Evaluation Suamary \. \. v
PROJECT PERFORMANCE AUDIT MEMORANDUM
I\. PROJECT SUMMARY \. 1
II\. SUPPLEMENTARY COMMENTS \. 9
Distribution Planning and Expansion \. 11
Rehabilitation and Development Program \. 12
Self-reliance \.eo\. *\. 13
Institutional Reforms: Accountability and
Autonomy \.0\.0 \. 18
Inter-agency Coordination \. 19
Staff Morale and Incentive Package \. 20
Sustainability of Power Supply Industry
and Facilities \.o\.e\.e\.e\.s 20
III\. CONCLUSIONS \. 21
Annex Table 1 - 4 \. 23
Appendix I - Comments from NEPA \. 27
Appendix II - Comments from the Co-financier (CIDA) \. 30
PROJECT COMPLETION REPORT
1\. Introduction \. \. 32
2\. Project Preparation and Appraisal \.********** 33
3\. Project Implementation \. 37
4\. Operating Performance \. \. 48
5\. Financial Performance \. 48
6\. Institutional Performance and Development \. 49
7\. Project Justification \. 51
8\. Bank Performance \. 53
9\. Conclusions 0\.6000\.60060\.00\.00\.0\. 54
Thidocument hs a trded ditribuioU ad amy be ud by socipleets only in the perforMsge of
thdew offici duti\. Its contents may not otherwis be disclosd without Word Bak atherladi\.
TABLE OF CONTENTS (Cont'd)
Page No\.
ANNEXES:
1\. Estimated and Actual Project Costs \. 56
2\. Economic Justification \. \. \. \. 57
3\. Schedule of Supervision Missions \. 61
PROJECT PERFORMANCE AUDIT REPORT
NIGERIA: FOURTH POWER PROJECT
(LOAN 847-UNI)
PREFACE
This report presents the results of a performance audit of the
Fourth Power Project (Loan 847-UNI)\. The Bank provided a US$76\.0 million
loan, and the Canadian International Development Agency (CIDA), a US$ 0\.9
million grant\. Tae loan was made to the National Electric Power Authority
(NEPA) and was fully disbursed on April 25, 1980 and closed by June 30, 1980\.
This report consists of a Project Performance Audit Memorandum
(PPAM) prepared by the Operations Evaluation Department (OED), and a Project
Completion Report (PCR) prepared by the Western Africa Regional Office\.
The PCR was prepared by a consultant who reviewed Bank reports,
project records and files\. He also prepared a detailed PCR for NEPA\. The
PPAM is based on similar sources,1/ including the two PCRs prepared by NEPA
and the Bank, and a three-week OED mission to Nigeria\. In reviewing the
generation, transmission, and distribution components, the audit mission
visited Kainji, Jebba, Ilorin, Oshogbo, Kano, Yola, Egbin and Lagos\. Many
adjoining towns and villages were also visited including: New Bussa,
Erinile-Offa, Bacita, Okinni village, Igbaye, Bichi, Dawakin-Tofa, Gaya, and
Wudil\. In addition to meeting NEPA's field staff, several residential,
commercial and industrial consumers and potential customers were
interviewed\. The mission is grateful for the assistance provided to it by
NEPA\.
The PCR has examined the performance under the project with some
emphasis on financial and institutional development\. While reviewing these
issues, the audit has considered the project's economic justification and the
sector's need for reform and rehabilitation measures, including:
(a) distribution planning and expansion;
(b) rehabilitation and development program;
(c) self-reliance;
1/ Appraisal Report No\. PU-98, June 1972; President's Report No\. P-1108,
June 1972; the Loan and Guarantee Agreements, June 1972; correspondence
with the borrower, supervision mission reports, and internal Bank
memoranda on the project issues contained in the Bank files; country
economic memoranda, sector reports, and several studies by consultants\.
(d) institutional reforms: accountability and autonomy;
(e) inter-agency coordination;
(f) staff morale and incentive package; and
(g) sustainability of power supply industry and facilities\.
Following normal OED procedures, copies of the draft report were
sent to the country and the co-financier for comments\. Comments received
have been reproduced in Appendices I and II and referred to in the audit
report\.
PROJECT PERFORMANCE AUDIT BASIC DATA SHEET
NIGERIA: FOURTH POWER PROJECT
(LOAN 847-UNI)
KEY PROJECT DATA
Appraisal Actual
Total Project Cost (million US$) 126 178
Cost Overrun () - 34
Loan Amount (million US$) 76\.0 76\.0
Date Physical Components Completed 9/77 5/81
Proportion completed original completion
date (%) - 75
Economic Rate of Return
- Kainji Extension (%) 23 /a
- 1972-78 Program (n\.a\.) 7a
Financial Performance (min\.) 8% return 5% return /b
Institutional Performance - below expectations
OTHER PROJECT DATA
Original Revisions Actual
Plan
First mention in files 1969
Government application 1971
Negotiations 5/72
Board Approval 6/29/72
Loan Agreement Date 6/30/72
Effectiveness Date 6/26/73
Closing Date 12/31/77 12/31/78 6/30/80 /c
12/31/79
Borrower: National Electric Power Authority (NEPA)
Guarantor: Federal Republic of Nigeria
Fiscal year of Borrower: ending March 31 (until 1980)
Follow-on Projects:
(1) Lagos Distribution Project (Power V)
(2) Power Transmission and Distr\. Project (Power VI)
Loan Numbers: (1) : 1766 -UNI (2) : 2085 - UNI
Amounts: (1) : US$100 million (2) : US$100 million
Loan Agreement dates: (1) : 2/19/80 (2) : 6/23/82
/a Because of the present underutilization of capacity no meaningful rate
of return can be estimated\.
/b Non-revalued asset base, PPAM, Annex Table 2\.
/c Final disbursement was on 04/25/80\.
MISSION DATA
Month/ No\. of No\. of No\. of Date of
Item Year weeks Persons manweeks Report
Pre-appraisal 3-4/71 2 2 3
Pre-appraisal 10/71 2 2 4
Appraisal 1-2/72 5 3 15 6/16/72
9 22
Supervision I 12/72 2 3 5 1/09/73
Supervision II 11-12/73 3 2 4 1/18/74 and
3/29/74
Supervision III 6/74 1 1 1 7/03/75
Supervision IV 2/75 1 2 2 3/07/75
Supervision V 5/77 2 1 2 6/15/77
Supervision VI 1/78 1 1 1 2/23/78
Supervision VII * 6/78 1 1 1 6/28/78
Supervision VIII * 8/78 1 1 1 9/22/78
* In connection with pre-appraisal of Lagos Distribution Project\.
-v-
PROJECT PERFORMANCE AUDIT REPORT
NIGERIA: FOURTH POWER PROJECT
(LOAN 847-UNI)
EVALUATION SUMMARY
Introduction
The Fourth Power project (Loan 847-UNI) was the Bank's first loan
to the newly established National Electricity Power Authority (NEPA)\. The
project bad generation, transmission and distribution components, including:
two generating units (200 MW total capacity) at Kainji; a second 330 kV
transmission line (420 km) from Kainji to Lagos; the expansion of distribu-
tion networks and the establishment of new service centers in over 80 cities
and towns; a study of power development strategy; and technical assistance to
NEPA\. The Bank provided a US$76\.0 million loan, and CIDA, a US$0\.9 million
grant\. The Bank loan was closed on June 30, 1980\. The project was
physically completed in May 1981\.
Objectives
Since NEPA was a new organization, the project supported it with
technical and financial assistance to meet the country's growing requirements
for electrical energy\. It was also intended to help sustain the Authority's
efforts in developing and reforming its management, system planning,
operation, finances, and training program (PCR, para\. 2\.11)\.
Implementation Experience
Technically, the project was a success\. The 34% overall increase
in project cost is mainly caused by distribution subprojects which had
considerably expanded in scope (PPAM, para\. 20)\. These subprojects also
experienced considerable time-overruns (5-36 months)\. On the whole, however,
the time overruns are in line with similar experiences in several major oil
exporting countries\.
NEPA considers the performance of consultants, contractors, and
equipment manufacturers to have been generally satisfactory\. Further, after
clearing some initial misapprehensions, no significant procurement problem
arose during the implementation phase (PCR, paras\. 3\.17-3\.20)\. The Bank
experienced some difficulty in getting timely government approval for sending
supervision missions (PCR, para\. 8\.03)\.
- vi -
Results
An "investment that is quickly used to full capacity should have a
high return" in Nigeria (PCR, para\. 7\.08)\. This is because the country is
populous and large, with rich natural resources, requiring, in the medium-
term, most of the additional supply capability created under the project,
provided that the electricity supply industry is operated efficiently, the
system reliability improves significantly, and the distribution network
expands rapidly\. Without major reforms these objectives cannot be realized
and the project's economic rate of return would be negative\. Because of
water deficiency in dry periods, the additional generating capacity installed
at Kainji is underutilized, and owing to maintenance/repair problems and
other institutional weaknesses the expansion of the transmission grids has
yet to yield appreciable gains in overall system reliability and efficiency\.
Also, this project followed a strategy of providing electricity from the
national grid in areas where the market for power is highly underdeveloped
(forward linkage strategy)\. Such a development policy is hard to justify,
unless: the reliability of electricity supply improves markedly, the size of
captive market (auto-generators) sags spontaneously in response to cheaper
and better public supplies, the system losses fall from over 30% to a
reasonable level (12-14%), and the distribution networks in existing centers
expand considerably (PPAM, para\. 13)\.
Financial agreements, under the project, constitute a sound basis
for a good financial management system\. The rate of return covenant could
not be achieved\. Compliance, which was possible, would have required an
average of 50% additional tariff increase in the period 1974-80 and a
doubling of NEPA's rates in 1983\. Moreover, the Anthority and the Bank have
yet to agree on a methodology to revalue assets (PPAM, para\. 23)\.
NEPA's overall performance should be viewed in the light of:
institutional development in a conglomerate society where the emphasis is on
integration of diverse cultural groups even within parastatals; the oil
syndrome, creating severe imbalances in the economy; and geographical
disparity in income distribution (PPA14, paras\. 32-34)\. These macro-problems
have affected, for example: the staff's career development, which has not
been solely based on individual performance or merit; supplies of spares,
skills and natural gas; and the Authority's investment decisions, often
reflecting socio-political rather than economic objectives\.
Sustainability
Sustainability depends on NEPA's self-reliance, accountability, and
autonomy\. Self-reliance has human-resource, know-how, and financial dimen-
sions\. To secure it NEPA needs to develop a well-administered training
program\. But so far it has disregarded the need for supportive Nigerian
counterparts\. This indifference to training requirements cannot be remedied
by the external funding of expatriate teams\. The Bank must make the
establishment of such a training program a key provision of its future loan
covenants (PPAM, para\. 49)\. In addition, the Authority must increase inter-
nal savings through a series of measures\. A substantial increase in tariffs,
- vii -
although necessary, is insufficient\. Any tariff increase needs to be accom-
panied with significant improvement in system efficiency\. Self-reliance also
requires that the Government gradually eliminate fuel price and interest rate
subsidies\. Once achieved, it would make NEPA accountable and help secure its
autonomy (PPAM, para\. 63)\.
Findings and Lessons
Field visits in areas served by the project (PPAM, para\. 35)
provided good evidence of hurdles impeding full utilization of capacity
created under the project\. The visits confirm:
(a) NEPA's impressive physical assets, largely underutilized and in
need of maintenance/repair;
(b) the economy's great dependence on auto-generators, emphasizing the
existence of a large potential market, and the need for reliable
and least-cost public supplies; and
(c) a weak distribution network, the task of its rehabilitation and
rapid extension posing the most severe development challenge to
NEPA's management skill and technical competence\.
If left unresolved, these problems would hamper the country's economic
development\. The reform package to rehabilitate the sector and ensure the
sustainability of power institutions and facilities is summarized in PPAM,
para\. 80\.
PROJECT PERFORMANCE AUDIT MEMORANDUM
NIGERIA: FOURTH POWER PROJECT
(LOAN 847-UNI)
I\. PROJECT SUMMARY
1\. The National Electric Power Authority (NEPA) was established in
1972 by merging the Electricity Corporation of Nigeria (ECN), and the Niger
Dams Authority (NDA)\. The new organization has been mandated to maintain an
efficient, well-coordinated and cost-effective system of electricity supply
in generation, transmission and distribution facilities throughout Nigeria\.
To accomplish these objectives NEPA had to overcome formidable obstacles\.
The oil boom triggered rapid expansion of demand for electricity supply\. But
the Authority was new and had few well-trained and experienced staff to
effectively respond to the demand upsurge\.
2\. During the appraisal of the Fourth Power Project (Loan 847-UNI),
ECN and NDA prepared, with the help of the World Bank, a six-year investment
program (FY1973-78)\. The Fourth Power Project, constituting an important
part of the program, included:
- Two new generating units (100 MW capacity each) at Kainji, with
associated switchgears, a 330/132 kV substation, and reinforce-
ment of four existing substations;
- A second 330 kV transmission line (420 km\.) from Kainji to Lagos,
plus four associated substations;
- Expansion of distribution network in 43 cities, and electrification
of 41 townships;
- A study of power development strategy, including Kainji hydrology;
preparation of a long-term expansion plan; and also design and
specifications of the next generation station\. In addition, the
project envisaged management studies, and technical assistance to
NEPA\.
3\. These subprojects, reviewed in the ensuing paragraphs, became part
of a massive expansion program which went far beyond the original six-year
plan\. The extent of NEPA's investment in generation and transmission sub-
sectors can be inferred from the following statistics\. The generation capa-
city in operation expanded by about five-fold from 600 MW in 1973 to about
3,000 MW in 1985 with a further 2,300 MW under construction\.1/
1/ See footnote 5\. Further, between 1973 and 1980 the Authority
constructed 2,390 km of 330 kV lines, 2,810 km of 132 kV lines, nine 330
kV substations, and forty-seven 132 kV substations\. Currently, NEPA has
about 9,000 km of 330 kV and 132 kV lines, twenty 330 kV substations,
and eighty 132 kV substations\. Many transmission lines are lightly
loaded, supplying state population centers throughout Nigeria\.
-2-
"Whereas the Bank participated in the financing of a substantial part of
early additions, its contribution to those implemented after 1976 was small"
- Borrower's PCR, para\. 4\.06\.
4\. This impressive physical infrastructure is underutilized, and
provides an unreliable service\. The considerable increase in system losses
and the rapid groath of captive capacity2/ suggest that tbe operating effi-
ciency of the system needs to be upgraded\. Without a comprehensive sector
rehabilitation program focusing particularly on quality and extension of
service to the existing service areaa, many parts of the Fourth Power
Project, which would continue to be greatly underutilized, will not have been
justified\.
5\. The Kainj i multi-purpose dam, located on the Niger river, was
Nigeria's principal source of power supply in the early 1970s\. The power
house, at the site, was designed to accommodate 12 generators, each with 80
MW capacity\. Four of these units were installed in the 1960s with the Bank's
financial assistance\. Two Kaplan-type generators, with 200 MW aggregate
capacity, were built under the Fourth Pcwzr Project\. Another two propeller-
type units, totalling 240 MW capacity, were installed later but without Bank
assistance\.
6\. Currently, Kainji has 760 MW in installed capacity\. Of the six
units, financed by the Bank (including the Fourth Power), three were out of
service in February 1985, curtailing operable capacity to 500 MW\. Moreover,
since the stored water behind the dam was very low, not all the operable
capacity was being utilized: in February 1985, only 320 MN were being used
as base load, and 360 MW3/ as peak load\. Thus because of the drou ht, the
additional capacity, under the project, can be partially utilized\./ The
repair work on the three units, which are out of service, will probably be
completed in 1985\. Considering the possibility of long term subnormal water
inflows, NEPA needs to assess the best way of using the 1,320 NW installed in
Kainji and Jebba\.4/ Of this capacity currently about 500 NW is being
operated for meeting the base load, and 650 YW for satisfying the peak load\.
2/ Auto-generators, established mostly by the manufacturing industry,
provide for their critical needs, and are known as captive plants\.
3/ National Control Center, Oshogbo, February 26, 1985\. This assessment is
based on hydro conditions prevailing at the time of audit mission in
February 985\. Since then heavy rains have improved the hydro outlook\.
4/ The capacity at Jebba (6 x 93\.5 MW) is largely underutilized\. Since the
water release from the Kainji largely determines Jebba's generation
capacity, of the five completed units in February 1985, one or two
operated at non-peak hours and three, periodically, at peak hours
(February 26, 1985: 175 MNW base-load, and 270 MNW peak-load)\.
- 3 -
7\. After the commissioning of Egbin and Shiroro, NEPA will have over
5,300 MW5/ of installed capacity, requiring probably some 1,300 KW (30%) in
reserve margin\. For a good part of the projected reserve margin at peak
hours, the system could depend on Kainji and Jebba provided that: peak
demand expands at least twofold from the current level of 1,600-1,700 KW; the
power stations and transmission system are well-maintained, and efficiently
operated as an integrated system; they are not underutilized because of fuel
shortages, notably natural gas; and stored water behind Kainji and Jebba is
conserved to enable the full use of the reserve margin primarily as peaking
and for coping with major system failures\. It will be several years before
such a stage of development can be reached and the installation of the two
generators under the project be vindicated\.
8\. Given the potential use of Kainji station for purposes of reserve
margin, the selection of Kaplan-type units over the propeller-type generators
has probably been wise\. This is because the Kaplan units can be operated
flexibly, much below capacity if necessary\. In contrast, the propeller-type
units must operate near full capacity\. A comparison of the two in Kainji, in
terms of water usage per unit of energy generation, provides no conclusive
evidence that one type enjoys a decisive operating cost advantage over the
other\. The ability to use units below capacity would be handy when supplies
are to be tailored, at the margin, to the size of additional loads because of
unexpected system outages\.
9\. The construction of a second 330 kV line from Kainji to Lagos was
envisioned by project consultants in 1964\. The line was to be completed when
the peak demand of the interconnected grid had reached 1,200 MNW\. But the
first line proved less relidble than NDA and consultants had assumed\. This
was because numerous savanna fires in the area proved to be serious, disrupt-
ing supplies\. For improving reliability, the Government advanced the comple-
Clon of the second line by three years and this became a part of the Fourth
Power Project\.
10\. In addition, Nigeria has constructed a third 330 kV line from Jebba
to Oshogbo, providing a transmission capability far beyond what can currently
be generated at Kainji, Jebba or even later from Shiroro\. Yet, as noted in
5/ Kainji 760 MW Delta 312 MW
Jebba 560 MW Egbin 1,320 MW
Shiroro 600 MW Others 70 MW
Sapele 1,030 MW
Afam 660 MW Total 5,312 MW
For the short, and possibly medium-term, NEPA's system will be energy
constrained because of low water level at Kainji and fuel supply limita-
tions affecting Egbin\. Further, because of foreign exchange shortage
and excess power capacity, installation of generators on Shiroro Dam,
which has been completed, was deferred\. Therefore, effective capacity
utilization would be gradual\.
the PPAM, para\. 3, the infrastructure for a reliable electric supply industry
has been put in place\. They must be maintained well and operated effici-
ently\. Because of maintenance problems, weakness elsewhere in the system,
and unmanageable fires, the fast growth of the transmission network did not
improve reliability\. Almost every manufacturing firm and medium and large-
sized commercial establishment must have auto-generators\. These sets are
being used frequently and have replicated a major part of public investment
in the electricity supply industry\.
11\. The distribution program, accounting for two-thirds of the proj-
ect's actual cost, constituted the core of the Fourth Power\. The program
included: reinforcement of the facilities in Lagos, and ten major towns;
interconnection of some of these centers by 132 kV line, and the electri-
fication of adjoining townships; extension of electricity to 73 towns,
mostly through 132 kV lines, and also construction or reinforcement of
distribution facilities at these centers\. PPAM, Annex lable 1 summarizes the
scope of distribution program\.
12\. The extension of NEPA's service to power consumers has followed a
forward, rather than a backward linkage strategy\. Many utility companies in
developing nations have first developed their markets and distribution facil-
ities, and after sufficient growth in loads to justify linkage to the
national grid\. transmission lines were extended to such centers\. But NEPA
has, in most ca3es, extended its transmission and sub-transmission lines to
towns with inade\.qua:e distribution facilities\. This is true of, fc\.% example,
most of the 73 towns electrified under the Fourth Power Project\. Also, the
330 kV super grids have been extended to fairly small load ceaers like
Gombe, and Birnin Kebbi\.
13\. SAR states6/ "no detailed analysis has been made to determine
whether, at the opportunity cost of capital, it would be cheaper in present
worth, to connect the townships to the Kainji rather than to generate power
locally by small captive generating units\. There are, however, strong rea-
sons in judgment to believe that connection tc the network is the most econo-
mic solution; incremental cost of Kainji power is very low, and due to high
transp3rtation costs, poor maintenance, and small unit size, captive diesel
power generation is very expensive\." This strategy has been costly\. NEPA's
insta\.:1-d geaerating capacity, albeit eiecgy-constrainid (see foc;note 5),
has so far a devEliped market for less than 1,700 M4 peak capacity\. This
discrepency between distribution system End supply f\.?cilities is also in
evidence at the transmission and subtransmission luvels\. Morcover, the
attainable reliability at the generation and transmission levels is unmatched
at the distribution end\. This is because, except for the Lagos market the
Nigerian distribution networks are radial rather than ring systems\. The
advantage of a ring over a radial system stems from the possibility of pro-
viding power to the coasumer from both ends of a loop, but of course at extra
cost\. The lack of reliability at the distribution level hinders efforts to
6/ SAR, Report Uo\. PU-98, Annex 9, para\. 2\.
- 5 -
diminish dependence on the captive power plants\. Therefore, unless system
reliability greatly improves, the available capacity is better utilized, and
the captive market sags spontaneously as cheaper NEPA power becomes avail-
able, the forward linkage strategy of the Fourth Power Project would be hard
to justify\.
14\. Nevertheless, NEPA displaced its own diesel generators in most
places that were connected to the national grid\. These sets were later rein-
stalled in isolated load centers, although in some major towns, (for example,
Maiduguri and Kaduna) they were left to operate as standbys\.
15\. An additional benefit was the Authority's expanding distribution
networks, which have been serving an increasing number of customers:
1973 1975 1978 1979 1980
Number of connections, 338 438 708 829
of which residential (265) (353) (590) (694)
(in '000)
Energy sales, 1,752 2,343 3,571 4,178 4,006
of which residential (633) (895) (1,496) (2,082)
(in GWh)
NEPA's generation and 2,108 2,906 4,592 6,500
power purchases (in GWh)
Actual systems losses 16\.9 19\.4 22\.2 38\.4
as % of generation
SAR's projection of 19\.5 18\.5 17\.0 16\.0
system losses
Source: Borrower's PCR, paras\. 4\.11-4\.12\.
16\. During the 1973-79 period NEPA's customers increased 16% a year and
its sales 15% a year\. In the year 1980 system losses reached a peak of
38\.4%, probably because of large unmetered consumption, resulting from "the
substantial tariff increase of early FY 1980" - Borrower's PCR, para\. 4\.13\.
System losses continue to be inordinately high\.
17\. NEPA prepared a power system development plan under the Fourth
Power Project in 1976\. In addition to the completion of Sapele gas-fired
steam plant (720 MW), the plan called for the construction of hydropower
plants at Shiroro Gorge (600 MW) on the Kaduna river, and at Jebba (540 KW)
on the Niger river\. Moreover, in reviewing the Niger river hydrology in
November 1972, the consultant recommended the installation of at least four
more units in addition to the generators partially funded by the World Bank
- 6 -
(Borrower's PCR, para\. 3\.81)\. Sapele and Jebba schemes, and the Shiroro dam
have already been completed\. Generators have yet to be installed in Shiroro,
and Jebba is short of one generating set\. Two additional propeller-type
units have also been installed at Kainji (PPAM, para\. 5)\.
18\. The only Bank project item qualifying as management study was the
valuation of NEPA's assets as of April 1, 1972\. Since then asset additions
in the balance sheets are at cost\. NEPA has desisted from any further asset
revaluation and has turned down revaluation methods proposed by the Bank\.
19\. According to the SAR, the cost of the Fourth Power Project was
estimated at $126\.0 million, of which $76\.9 million was in foreign exchange
(SAR, para\. 4\.05)\. The Bank funded $76\.0 million of the foreign exchange
cost and CIDA the balance ($0\.9 million)\. Of the Bank loan, $73\.0 million
(96%) was disbursed by mid-1977, six months before the original closing
date\. Three more years were needed for disbursing the balance ($3\.0 mil-
lion)\. The loan was closed on June 30, 1980\.
20\. The slow disbursement of the last $3\.0 million reflects the long
delays experienced by several distribution schemes\. Otherwise, the Kainji
extension and the completion of the second 330 kV transmission line fell 6-11
months behind the original schedule\. Together, the cost of generation and
transmission components were 4-1/2 Z less than the SAR estimate\. The follow-
ing table presents the project's time and cost overruns:
Cost Overrun (% of SAR Estimate) Project
Time over- Foreign Composition
run (in Local Exchange Total (%)
months) Cost Cost Cost SAR Actual
Kainji extension 6-11 17 (-) 12 (-) 6 17 12
Reinforcement of
330 kV substations 20 100 17 40 3 3
Second 330 kV line 6 9 (-) 20 (-) 10 20 14
Distribution schemes 5-36 53 82 68 53 66
Power development
studies - (-) 20 (-) 25 C-) 23 4 2
Management studies - - 32 22 3 3
40 31 34 100 100
Source: Borrower's PCR
The actual cost and the completion dates of many distribution schemes cannot
be compared with those in the SAR, because in most cases their scope had been
significantly modified\. Given that Nigeria experienced significant price/
- 7 -
cost7/ increases and operated under severe constraints, such as port conges-
tion and skill shortages, the time and cost overruns are in line with similar
experiences in several other major oil exporting LDCs over the same period\.
21\. Financial agreements with NEPA, under the Fourth Power Project,
form a sound basis for a good financial management system\. The covenants
require: (a) prompt valuation of assets; (b) at least an 8% rate of return on
revalued assets; (c) methods of valuation and revaluation acceptable to the
Bank; and (d) proper and timely audit of NEPA's accounts and financial
statements by independent firms acceptable to the Bank and submission of the
audited accounts to the Bank not later than four months after the end of each
fiscal year\.
22\. The fixed assets of ECN and NDA, which were merged to form NEPA,
were evaluated as of April 1, 1972 (Borrower's PCR, para\. 5\.13)\. Since 1972,
however, the Authority's assets are presented in terms of their historical
values\.
23\. The Bank and NEPA have yet to agree on a revaluation method\.8/
The SARs on the Fifth and the Sixth Power Projects present possible revalua-
tion methods\.9/ PPAM Annex Table 2 illustrates the difference in NEPA's
financial performance under a non-revalued and revalued asset base\.
24\. The table shows that NEPA could not generate enough revenue to
satisfy the rate of return covenant\. Compliance with the terms of agreement
would have required a tariff increase of about 50% during the 1974-80 period
and about 100% in 1983\.
25\. Although tariffs increased greatly in 1979, the gap between the
prevailing and the required rates has widened\. Because of heavy investments,
still in the pipeline, the required rate increase will be more than 100%\.
This assessment is reflected in the spread between the rates of growth of
work in progress (WIP) and of net fixed assets in operation (NFA)\. As a
proportion of NFA, WIP increased from 6% in 1973 to 98% in 1983; its annual
growth rate being 56% during the ten-year period\. In contrast, NFA increased
16\.9% a year and power sales 13\.4% a year over the same period\. Further, in
the absence of significant financial assistance from the Federal Government,
the divergence between the WIP and the NFA growth rates would signal signifi-
cant cash flow problems\.
71 17% p\.a\. in domestic market and 11% p\.a\. in foreign markets over the
1972-80 period\. In contrast to the actual price escalation, the SAR had
allowed for 3% annual rate of price increases (SAR, para\. 4\.05)\.
8/ See NEPA's comments and OED notes, Appendix I, p\. 3\.
91 Report No\. 2502-UNI, October 1, 1979, Annex 7\.01, p\.3; Report
No\. 3041-UNI, September 10, 1981, Annexes 6\.06-6\.09\.
- 8 -
26\. NEPA's cash flow position is also aggravated by a large accumula-
tion of unpaid bills\. The audit mission's field visits confirm the existence
of serious administrative problems, already recognized by the Authority's
Enquiry Committee on billing and collection:10/ meter readers often esti-
mate electricity bills without reading the meters for several months\. This
negligence is encouraged by not providing close supervision and control, and
by not paying for the full cost of meter readers' visits\. Further, the
unpaid bills pile up for several months\. As they grow so does the prospect
of disconnections ending in permanent defaults\.
27\. As regards the timeliness of NEPA's audited accounts, the auditing
of the 1982 financial statement is still incomplete\.11/
28\. NEPA had little difficulty with procurement under international
competitive bidding (ICB)\. Some problems arose at the outset, since a sub-
stantial part of the procurement had begun before conclusion of the loan
agreement\. Also, NEPA's staff were relatively inexperienced in following ICB
guidelines\. Provisions, such as alternative finance clause in tenders, did
not help either\. The Bank's 1973 supervision mission focused, therefore, on
clarification of the ICB procedures, and resolution of the pending issues\.
No significant procurement problems arose thereafter\. The Bank supervision
missions were not readily welcome, however\. The PCR states that these mis-
sions visited Nigeria at unusually long intervals (PCR, para\. 8\.03), chiefly
because of delays in obtaining Government approval to such missions\. Cur-
rently, mission visits are cleared satisfactorily by the Government and NEPA\.
29\. NEPA used consultants for the Kainji extension, the transmission
project, the distribution program, the Kainji hydrology, and studies concern-
ing management and power sector studies\. NEPA considers their performance
satisfactory\. However, the Authority considers the failure of some auger-
bored pile foundation along the Kainji-Lagos transmission line a result of
faulty design rather than of deficient construction method (PCR, para\. 3\.30)\.
30\. Also the contractors and equipment manufacturers generally per-
formed well\. There was -only one instance of a contractor not fulfilling his
obligations and forcing NEPA to complete installation with its own workforce-
- PCR, para\. 3\.32\.
31\. No major difficulty arose in the commissioning of Kainji extension
and transmission systems\. One of the generators, commissioned in February
1976, ran without major interruption for six years, but was severely damaged
10/ The Enquiry Committee, established in May 1984, was to examine the
billing and collection procedure and recommend measures for correct
billings and expeditioas collections\. The Committee issued its report
in November 1984\.
11/ See NEPA's comments, Appendix I, p\. 3\.
in 1982 and has to be replaced\. NEPA is not fully satisfied with the perfor-
mance of generators (PCR, para\. 3\.36)\. As regards distribution, many systems
were overloaded nearly from the start because of the fast growth of demand
and the delay which the program had suffered" - PCR, para\. 3\.37\.
II\. SUPPLEMENTARY COMMENTS
32\. Despite NEPA's impressive physical assets, the Authority's past
accomplishments are open to question\. This is because of sizeable underuti-
lized capacity, high losses, lack of reliability of electricity supply,
replication of a large part of public generation by auto-generators in the
productive sector, and an inability to collect bills, establish an effective
training and maintenance/repair programs, expand rapidly distribution ser-
vices, and raise staff morale\. However, NEPA's performance needs to be
assessed in light of major constraints and problems that also apply to other
parastatals and have an adverse impact on the country's overall development
efforts\. For example, it is important to develop in Nigeria, as it is in
many other countries, a much stronger merit system whereby career development
and promotion are closely linked to individual job performance\. In addition,
a merit system should be supported by sufficient financial compensation to
permit public sector institutions to compete effectively with the private
sector, particularly at the management and higher skill levels\. Major
advances in both of these areas will be essential for improving staff morale
and for raising productivity\.
33\. The "oil syndrome" poses another problem in Nigeria\. The experi-
ence of most oil-rich LDCs and Nigeria points to the difficulty of implement-
ing a least-cost, balanced, and cost-effective program in an economic envi-
ronment, severely constrained by manpower and institutional weaknesses, and
by physical bottlenecks\. Rich windfall gains from petroleum exports encour-
aged an easing of financial and economic disciplines\. Abundant foreign
exchange income had shifted the development strategy towards the acquisition
and construction of physical assets\. Human resource and institutional devel-
opment as well as upgrading the quality of service have generally received
scant attention\. NEPA's future growth strategyl2/ must, therefore, focus on
neglected areas, especially: institutional and human resource development;
expansion of the distribution services; balanced and cost-effective program-
ming; and improved coordination within NEPA and with outside agencies\.
12/ The two follow-on projects have primarily focused on improving Lagos
distribution system (Power V), the rehabilitation and expansion of the
distribution network to 23 cities, and the construction of the Egbin
interconnection line to the existing 330 kV grid (Power VI)\. Because of
NEPA's needs for repair and rehabilitation of generation and transmis-
sion facilities, the 23 cities distribution system originally envisaged
in the Sixth Power Project was replaced by a rehabilitation program in
September 1984\.
- 10 -
34\. A third difficulty, exacerbated by the oil boom, is about NEPA's
investment decisions, particularly concerning new transmission lines\. In the
past, these decisions often reflected socio-political objectives, which led
to, for example, the extension of power lines to areas before markets could
be established\. These investments were frequently unaccompanied by an ade-
quate provision of distribution facilities\. Nevertheless, the audit finds
that NEPA has succeeded in building supply infrastructures and the backbone
of a sound distribution network\.
35\. For assessing performance under the Fourth Power project, the audit
mission visited several sub-project sites\. Since the project is sectoral in
scope, comprising generation, transmission/subtransmission facilities, and
some 73 distribution networks, these visits have provided the perspective for
improving the utilization of facilities, created under the project, and rein-
forcing their economic justification\. The visits confirm:
(a) NEPA's impressive physical assets, largely underutilized and in
need of maintenance/repair;
(b) the economy's great dependence on auto-generators, emphasizing the
existence of a large potential market, and the need for reliable
and least-cost supplies; and
(c) a weak distribution network, the task of its rehabilitation and
rapid extension posing the most severe development challenge to
NEPA's management skill and technical competence\.
These problems, if left unresolved, would prevent the restructuring of the
electricity supply industry into a dynamic and sustainable sector capable of
supporting the country's economic activities\. The ensuing themes, emanating
from field visits and discussion with Nigerian officials, concern:
(a) distribution planning, and rapid expansion of service network
necessary for tapping excess capacity in other parts of the system;
(b) rehabilitation and development program concentrating on: mainte-
nance/repair, de-bottlenecking, curtailment of system losses,
upgrading service reliability and the quality of supply, and prepa-
ration of a least-cost expansioa program;
(c) measures supportive of NEPA's effort at self-reliance in human
resource development and finance;
(d) institutional changes to underpin the Authority's accountability
and autonomy;
(e) inter-agency coordination, notably with the Nigerian National
Petroleum Corporation (NNPC), and Rural Electrification Boards
(REB); and
- 11 -
(f) promotion of staff morale, through administrative reforms and
introduction of an incentive package for NEPA's employees\.
The following paragraphs review these issues\.
36\. Distribution Planning and Expansion\. Despite massive investment in
generation and transmission sub-sectors, the distribution networks are in a
rudimentary stageL3/ of development\. Still, 85-90% of Nigerians are without
electricity supply, and the quality of service to those who are connected is
poor\. Although the rehabilitation of generation and transmission lines
requires considerable skill (PPAM, paras\. 41-47), the extension of a well-
managed distribution network is more difficult and time-consuming\. Also, the
lack of reliable socio-economic information necessary for service expansion
renders efforts at a detailed analysis of demand and potential beneficiaries
largely futile\. The following table compares recent efforts in this area:
SALES PROJECTIONS
(TWh)/a
Forecasts by: 1987 1992
A\. NEPA, Jan\. 1985 7\.6 12\.4
B\. Consultants, Aug\. 1984
1\. Global
- low 16\.0 26\.8
- medium 16\.5 28\.5
- high 17\.7 32\.2
2\. Semi-Global 11\.5 16\.7
/a Tera (T) = one trillion\.
37\. The growth of demand for public power supply is largely constrained
by NEPA's inability to generate enough energy, extend service network, and
improve the quality of supply\. For example, electricity sales suffer because
of the limited availability of uninterruptible power, shortages of trans-
formers, meters, poles, etc\., and a pervasive lack of interest, at local
levels, in the potential beneficiaries\. Middlemen and private contractors
often intervene to provide connection and internal wiring services, many of
them defrauding potential consumers\. In brief, NEPA has yet to develop and
promote a connection and internal-wiring package that could be provided inex-
pensively and at a competitive price\.
13/ NEPA's network is quite extensive, comprising: 50,000 km\. of overhead
lines, 4,000 km\. of underground cables, and over 9,000 transformers\.
But many distribution systems are in poor condition, because of
inadequate maintenance and/or lack of spare parts\.
- 12 -
38\. Demand projections need to be based on a detailed analysis of
socio-economic conditions in each district, with a focus on the demand of
productive establishments in manufacturing, agriculture and tertiary sec-
tors\. During its field visits the audit mission was struck by the absence of
information\. Even in important population centers, key socio-economic data
are unavailable\. In addition, the Authority must develop its own rural elec-
trification (RE) data-base and program\. Currently, for electrification pur-
poses, many large population centers are classified as rural\. Quite a few of
them are also located in the proximity of subtransmission lines, awaiting
service\.
39\. Advance preparation for the extension of distribution networks is,
therefore, essential\. Expatriate consultants cannot remedy the weakness,
since they also must have access to key socio-economic information, based on
local surveys\. Distribution planning must, therefore, be introduced at the
Authority's central office and at the 22 district headquarters\.
40\. Although a few REPA managers recognize the importance of distribu-
tion planning, the requisite competence is absent at almost all levels\. In
the districts the planning competence can probably be established under the
district engineer\. But the capability, once developed, needs to be protected
against day-to-day operational assignments that could deflect the planning
staff from their main objectives\. The team must also receive active techni-
cal and monitoring support from the NEPA headquarters\.
41\. Rehabilitation and Development Program\. Maintenance/repair jobs
are more than a prioritized series of physical wears and tears, and defects
that need correction\. A diagnostic team of expatriate consultants have
already identified maintenance and repair works\. But the main task remains:
the establishment of a maintenance and repair function within NEPA as an
organized and effective operation\. Therefore, while rehabilitating the
existing facilities, NEPA needs to strengthen its maintenance/repair unit,
develop skills and the strategy necessary for an effective and continuous
maintenance operation, and acquire spare parts in advance, making them read-
ily available for planned maintenance and unforeseen outages\.
42\. More specifically, a considerable portion of the generation
capacity (about 1,000 MW) is currently inoperative because of the unavail-
ability of essential spare parts\. Morever, de-bottlenecking efforts need to
focus on removing specific shortages in spare parts, skills and gas sup-
plies\. Foreign exchange limitations have caused prolonged delays in obtain-
ing supplies\. The establishment of an annual foreign exchange currency bud-
get for the import of maintenance equipment and spare parts would mitigate
supply availability\. The level of funds necessary for such imports should be
based on an independent assessment of the Authority's requirement for a com-
prehensive and effective maintenance and repair program\. Moreover, the acute
shortage of skills has impaired maintenance/repair work\. The commissioning
of Egbin thermal station, sharply escalating the need for technicians, is
expected to exert added pressure on the supply of scarce skills\. Also,
inadequate gas supply, beyond NEPA's control, has curtailed power production
- 13 -
in Afam\. More seriously, delays in building the Escravos-Lagos gas transmis-
sion line will severely restrict supplies from Egbin for a few years\.
43\. As for the transmission grids, a comprehensive maintenance manage-
ment system needs to be introduced, focusing on the establishment of targets,
reporting systems, and audits\. The Transmission Division within NEPA needs
to be strengthened for setting standards, monitoring equipment use, and pro-
gramming maintenance/repair works\. Even in the distribution sub-sector reha-
bilitation should take precedence over extension\. A key area, meriting con-
siderable attention, is the elimination of transmission and distribution (T &
D) losses\. NEPA's objective should be to pare down the loss rate from over
30% to a reasonable level (say 12-14%)\. Causes of the high loss could be
overloading, poor maintenance, and unauthorized usages\. NEPA must precisely
identify the cause, work out an action program to lower the loss rate, and
establish a strong monitoring system to promptly accomplish the loss reduc-
tion objective\.
44\. In addition, NEPA needs to maintain an inventory of essential dis-
tribution equipment for undertaking a planned maintenance program\. Cur-
rently, the Authority is seriously short of distribution transformers in many
areas, resulting in load shedding and insufficient use of overhead facili-
ties\.
45\. Maintenance/repair works would, no doubt, upgrade the quality of
service\. System rehabilitation must, however, be followed by a least-cost
expansion program\. As discussed elsewhere (PPAM, para\. 36), distribution
networks should expand rapidly so as to ensure a more effective use of excess
generation and transmission capacity\. They must also be converted, where
possible, into cost-effective ring systems\.
46\. Given the excess capacity in generation and transmission sub-
sectors, NEPA has enough time for the preparation of the next phase of an
expansion program\. In addition to natural gas and petroleum, Nigeria has
been endowed with considerable hydro-energy resources\. Although the Kainji
and Jebba projects have cast doubts on the advantage to be gained from this
potential, a balanced development program should encompass a continuing study
of the country's hydro-resources, particularly small-scale schemes which
could be supportive of a decentralized system of power supplies and supplies
to remote areas\. The emphasis must, however, be on cost-effectiveness\.
47\. Self-reliance\. A sound self-reliance policy must be based on:
(a) the development of a good technical staff, expertise, and know-how;
and
(b) the generation of sufficient internal savings to fund NEPA's debt
service, a good slice of investment outlays and removal of interest
rate and fuel subsidies\.
- 14 -
48\. Human Resource Development\.14/ The Nigerian education system
turns out graduates of acceptable quality for the Authority's operation\.
However, NEPA is unable to attract, train, and retain a sufficient number of
graduates because of intense competition from other sectors for high quality
cadre\. Since 1976 the Authority is required to pay civil service salary
scales, which are unattractive\. The private sector has been employing a good
part of NEPA's experienced staff\. Although because of the recent downturn in
the Nigerian economy the severity of competition for skills from the private
sector has diminished, the private manufacturing sector still depends appre-
ciably on expatriate staff for high professional, technical, and administra-
tive tasks\. Some of these slots can be filled by NEPA employees\. A 1981
study5/ shows the basic salaries in the comparator organizations to be, on
average, 80-100% more than in NEPA\. Therefore, these firms continue to
attract qualified staff from NEPA\.
49\. The Fourth Power Project had no training component\. The Nigerian
Government and NEPA had already concluded an agreement with a foreign con-
sulting team in 1973, seeking assistance in management and training during
the initial years of the Authority's operation\. The contract with the con-
sulting team was for 1,200 man-months of services\. The head of the team
functioned as Assistant General Manager, an adviser to the General Manager,
and Chief of the Corporate Planning Division\. The team's main emphasis was
on training\. They also helped introduce management tools and methods in
various areas\. NEPA's management was, however, "somewhot disappointed at
rather low level of communication and thus of know-how transfer achieved
between the team and the higher echelon of NEPA- Borrower's PCR, para\.
6\.03\. But NEPA had also undertaken to appoint Nigerian counterparts to work
with the team, and did not do so\. When the team left Nigeria, the Author-
ity's training program suffered\. Under the Fifth Power Project, the Bank
undertook to finance the work of another team (312 man-months)\. NEPA has,
again, disregarded the need for supportive Nigerian counterparts and as the
team will be completing its term by the end of 1985 no well-organized group
will be left to assume the function\. This indifference to training require-
ments cannot be remedied by external funding of the expatriate teams alone\.
NEPA must display a keen appreciation of the importance of organizing an
effective program by establishing a competent Nigerian team and supportive
facilities, designed to meet the Authority's considerable skill require-
ments\. The Bank should make the establishment of such a training program a
key provision of covenants for any future loan, and then provide suitable
matching funds to supplement NEPA's own efforts\.
50\. The Authority is currently short of top professional staff, both
technical and administrative\. Although it has enough employees at the middle
level (the artisan group), comprising roughly 30% of the work-force, they are
14/ See NEPA's comments, Appendix I, p\. 2\.
15/ NEPA, Salary Structure and Conditions of Service, from Final Report of a
Consultant, September 1981\.
- 15 -
insufficiently trained\. This is because the artisan group receive inadequate
in-service training and work supervision from the limited number of profes-
sionals\. A 1982 study reveals that on many of the lines and substations wor\.
standards were poor\. This has been partly because of the artisans' lack of
knowledge or skill and more importantly because of lack of site supervision
and discipline\. The study recommends that considerable improvement might
result by introducing an experienced foreman/instructor linesman into each
district\. Further, new thermal stations at Afam, Sapele, and Egbin have been
and are being established\. Although equipment manufacturers have helped to
train some of the required operators, these stations are short of qualified
skills\. In brief, four priority training fields merit attention\. They con-
cern: the professional class; the artisan group; the cadre needed for new
fields; and the team of planners for preparation and monitoring of expansion
programs\. Such a program needs to be closely monitored and periodically
evaluated so that the right type of staff receive training; the program
develops skills effectively; and possible abuses of the system are minimized\.
51\. After completing a few years of apprenticeship, NEPA's professional
and engineering staff, numbering over 700, qualify for overseas training\.
This does not mean that all professionals need to be sent abroad\. The
program is desirable for at least three reasons: to acquire technical
knowledge in new fields (for example for managing and operating efficiently
Sapele, Afam, and Egbin stations); to expose staff to system maintenance,
management and operation in other countries; and to improve staff morale\.
Because of foieign exchange limitations, NEPA has de-emphasized its overseas
training program\. Every year, at least 10% of NEPA's senior staff need to
receive advanced training in foreign utility companies and similar centers\.
The investment should help curtail system inefficiency, upgrade staff morale,
and reduce dependence on foreign consulting services\. Overseas training will
not be enough, however\. The 1982 study, referred to earlier, indicates
severe shortages of qualified engineering staff at principal and senior
engineering levels where a large number of positions are vacant\. Even if
sufficient graduates join NEPA, a large training program will be required for
them in Nigeria\.
52\. The NEPA staff belonging to the artisan class exceed 8,000\. They
are craftsmen, operation and maintenance technicians, with a variety of
skills\. They constitute the bulk of the Authority's technical field staff\.
Each year, about 20% of this group need to be trained and retrained\. The
existing training centers at Ijora and Kainji, and the supportive Nigerian
staff, are woefully inadequate for this task\. The Authority needs new
training centers at Afam, Kaduna, and Jos\. Also operation and maintenance
training for steam power generation at Egbin and Sapele must be established
and reinforced\. An effective training program for the artisan group must be
prepared, involving: the determination of training requirements of each
district for specific skills, reflecting the trainee's job performance and
know-how; the preparation of suitable curricula with the help of consultants;
the training and retention of a core of skillful Nigerian teachers; suitable
accommodation for trainees coming from remote areas; and the periodic
evaluation of the program's effectiveness\.
- 16 -
53\. In addition, NEPA needs to train a team of planners for Lagos and
district centers to program rehabilitation and expansion work (PPAM, paras\.
38-40), and to monitor and evaluate progress\. The training program should
instruct trainees how to prepare a least-cost expansion program, and how they
should collect and analyze key socio-economic information needed for arriving
at sound judgment about the system's extension to new areas\.
54\. The Authority also has over 10,000 unskilled employees, many of
them redundant16/ workers\. NEPA needs to increase the usefulness of this
group by arranging a program for skill development in the regular Nigerian
educational and training institutions throughout the country\. Incentives
must be provided to the group to acquire the necessary skills\.
55\. Interest Rate and Fuel Subsidies\. Earlier, the audit referred to
financial self-reliance (PPAM, para\. 47), which requires substantial tariff
increases, prompt collection of unpaid bills (PPAM, paras\. 21-26), improve-
ment in the system's operation and investment efficiency, and elimination of
fuel and interest rate subsidies\. Financial self-reliance is, therefore, a
complex objective\. The ensuing paragraphs (56-61) focus on the elimination
of interest rate and fuel subsidies, and on tariff adjustment\.
56\. As shown in PPAM Annex Table 4, domestic loans financed the bulk of
NEPA's investment during the period 1973-83\. "The majority of NEPA' loans
have come from the Federal Government, on soft terms\. Interelst has been at
5%, with repayment over 25 years, including a five-year moratorium in inter-
est, and a five-year grace period on principal repayments\. The effective
interest rate on such loans (allowing for the interest moratorium) has been
about 3%\.17/ But given that during 1973-83 prices in Nigeria increased
10-14% a year, Government has been subsidizing NEPA with an appreciably nega-
tive interest rate (6-9% a year)\.18/ In the power sector the persistence of
a negative real interest rate has been accompanied by an increase in unuti-
lized capacity and possibly a desire on the part of NEPA for financial gains
ensuing from investment in real resources\. An example of the gain follows:
NEPA which could have borrowed, N 100 mn in say the year 1973 would have been
committed to repay, at prevailing interest rates during the 1973-83 period N
134 an\. In contrast, the financial value of assets created by such an
16/ In several areas visited by the audit mission, NEPA's field offices had
6-7 employees\. In one instance 4 were watchmen, watching probably an
idle old machine! in another place, again, 4 were classified as
watchmen, but with hardly anything to watch\.
17/ SAR, Power VI Report No\. 3041-UNI p\. 32\.
18/ Real interest rate (r)= nominal interest rate (i), divided by inflation
rate (p): r = (1+1 )\.
-+-1
(L+4p )
- 17 -
investment would have been N 300 man\. Positive interest rates19/ need,
therefore, to be introduced for promoting economy, cost-effective investment,
financial self-reliance, and possibly institutional autonomy\.
57\. Moreover, NEPA needs to pay fuel prices'9/ which reflect their
economic opportunity cost\. Currently, high pour fuel oil used by NEPA is
greatly subsidized\.20/ Similarly, the price of gas for Egbin need to
reflect its netback value\. Already under the Gas Technical Assistance
Project, a study is expected to determine the level and the structure of
natural gas tariff\.21/ Since the long-run marginal cost of electricity
supply in Nigeria will partly depend on the price of gas, power tariffs need
to gradually reflect such costs\.
58\. Tariffs\. Power tariffs have not changed since August 1979\.22/ As
discussed elsewhere (PPAM, paras\. 24-25) the prevailing rates are insuffi-
cient to provide the sector with a reasonable rate of return and pay for the
cost of capital, which currently is negative\. The objective of tariff
adjustment should be:
(a) to secure a steady improvement, in the medium-term, in the sector's
financial performance; and
(b) to achieve, shortly after realizing the financial objective and
improving system efficiency, a tariff level reflecting the future
cost of power supply\.
59\. This dual approach in reforming the tariff system responds suitably
to the Nigerian needs, since, with the exchange rate distortion, subsidized
capital and fuel costs, the low capacity utilization and a high system loss
rate, the LRMC calculation is bound to be arbitrary\. Under the Fourth Power
Project, the consultants had studied an LRMC pricing system\. A recent
interim report presents questionable results because of several dubious
assumptions\.
60\. NEPA should develop the know-how to continue refining, in-house,
the LRMC pricing study, which needs to be based on a least-cost expansion
program for an increasingly efficient electricity supply industry\. These
191 For NEPA's comments and OED notes, see Appendix I, p\. 2\.
20/ 1\.1 kobo/liter, ex-refinery prices or about 11% of the international
cost, at official exchange rate\. See, Nigeria: Issues and Options in
the Energy Sector, UNDP/World Bank Energy Sector Assessment Program,
August 1983, p\. 132\.
21/ The President's Report on a $25 million Loan to NNPC, February 23, 1984,
Report No\. P-3620 UNI, para\. 61\.
22/ See NEPA's comments, Appendix I, p\. 1\.
- 18 -
refinements should measure the divergence between the prevailing level/
structure of rates and the LRMC tariffs\.
61\. However, the immediate focus must be on a substantial increase in
power rates, in real terms, so that an 8% financial rate of return on the
sector's revalued assets is secured at the end of a four to five year
period\. This gradual approach at securing the rate of return objective is
necessary since NEPA's investments are highly underutilized and work-in-
progress constitutes a considerable slice of the Authority's assets\. For
achieving this objective, power rates need to be adjusted quarterly by
combining23/ an index that accurately measures changes in the cost of capi-
tal goods for the electricity supply industry (CGEL Index) with another
component introducing a sustained rate of increase in tariffs, in real terms,
so as to achieve the sector's overall financial objective\. The appropriate-
ness of a sector-specific price index for capital goods stems from the need
to recover investment cost by reflecting changes in such costs in the tariff
level\.
62\. Institutional Reforms: Accountability and Autonomy\. The achieve-
ment of financial self-reliance should be accompanied with NEPA becoming
increasingly accountable and autonomous\. According to Onosonde Commission,
accountability means parastatals achieving socio-economic goals in a cost-
effective manner\. Objective criteria must, therefore, be devised for measur-
ing performance in attaining stated goals\. "The principle of cost recovery
or cost minimisation, as appropriate, must be rigorously enforced, and desir-
able rates of return on total capital employed must be prescribed by Govern-
ment\."24/ In its loan agreements with the Bank, the Government has already
stipulated for NEPA the achievement of an 8% rate of return on revalued
assets\. Therefore, the Authority's accountability can be interpreted to mean
the achievement of the 8% rate of return objective in 4-5 years, accompanied
by significant improvement in system efficiency\.
63\. Improved self-reliance and accountability should ensure greater
autonomy\. NEPA needs to enjoy an autonomous employer status within the uni-
fied grading system\.25/ Such a status would confer on it the freedom to
23/ Tariffs need to be adjusted as follows:
First quarter: A price index, reflecting quarterly changes in the cost
of capital goods, to be expressed in cedis, for the electricity supply
industry (CGEL Index) + -1 1\.10\.
Second quarter: CGEL Index\.
Third quarter: CGEL Index + V 1\.10\.
Fourth quarter: CGEL Index\.
24/ Presidential Commission on Parastatals, 1981, p\. 45\.
25/ Onosonde Commission recommended that unified grading system should be
distinguished from the unified salary system; jobs in different
parastatals should be re-evaluated to ensure that the right grade is
maintained for each job; and each organization with an autonomous
employer status should determine the pay or price for the job in
accordance with factors relevant to its operations\.
- 19 -
price job levels with reference to prevailing rates in comparator organiza-
tions in Nigeria\.
64\. In addition, NEPA needs institutional autonomy\. That means the
Government and the supervising ministry would determine broad sectoral objec-
tives and policies, but scrupulously refrain from dictating the project con-
tent of expansion programs\. Since power projects must be least-cost and
because they support development schemes, particularly in the manufacturing
sector and need to be complemented by other investment schemes funded by
different agencies, NEPA's investment decisions should be fully explained to
the Nigerian planning and funding authorities (PPAM, para\. 67)\. Currently,
the Authority's investment decisions \. are primarily determined by
socio-political rather than economic considerations\.
65\. A series of important organizational changes within NEPA have also
been identified by the British Electricity International Limited (January
1982)\. Implementation of these recommendations would greatly streamline the
Authority's structure and help improve its performance\.
66\. Inter-agency Coordination\. Better coordination needs to be
achieved at the federal level between NEPA and the Nigerian National
Petroleum Corporation (NNPC), at the state level between NEPA and Rural
Electrification Boards (REB), and within NEPA between the Distribution
Division and Rural Electrification Department within the Commercial
Division\.26/ NEPA reports to the Ministry of Mines, Power and Steel which
is unable to provide inter-agency coordination\. For example, Egbin station
is nearing completion but NNPC's Escravos-Lagos gas pipeline has yet to be
constructed\. Thus the non-availability of gas would severely restrict the
use of Egbin's capacity\. A suitable inter-agency coordinating mechanism
should have obviated this problem\.
67\. The weakness is not remedied at the the federal level by the
Federal Ministry of National Planning (FMNP), or the Federal Ministry of
Finance (FMF)\. FMNP does not perform an effective planning function in the
energy sector\. They have little information concerning the sector\. The
energy parastatals are also not required to provide FMNP with information\.
Although FMF allocates funds in hudget review sessions to parastatals, major
decisions are made by the Economic and Finance Committee where six permanent
secretaries, including FMNP's, decide on economic questions, often prior to
any technical analysis by FMNP staff\. What is more, NEPA receives block
allocation without being subject to project by project scrutiny of its
investment program\. This lack of information concerning NEPA's operation at
the federal planning center, and the uncritical processing of its investment
program has hardly promoted institutional accountability or inter-agency
coordination, notably with NNPC and REB\.
68\. Coordination o' extension planning with REB will become increas-
ingly important as the electricity network gets extended beyond the existing
load centers\. NEPA and REB's respective roles in planning and programming
26/ See NEPA's comments, Appendix I, p\. 2\.
- 20 -
service extension to potential beneficiaries (85-90%) is ill-defined and
ambiguous\. Unless the problem is resolved, NEPA will not be able to formu-
late a comprehensive and cost-effective distribution expansion program\.
Moreover, NEPA's Rural Electrification Department need to form an RE unit
within the Distribution Division which, as argued earlier, should be equipped
to do an effective planning job (PPAM, para\. 36-39)\.
69\. Staff Morale and Incentive Package\. NEPA's staff receive modest
pay which should be reassessed in light of salaries for corresponding jobs in
the private sector (PPAM, para\. 48)\. The Authority should, however, be able
to motivate, attract and retain staff not because of high monetary rewards,
but primarily because they perceive NEPA as providing a good opportunity for
career development and as giving an incentive package focused on their basic
needs\. Elsewhere, the need for human resource and career development has
been emphasized (PPAM, paras\. 48-54)\. A good training program should be
supplemented by a work environment, where promotion and career development is
based primarily on individual performance and merit (PPAM, para\. 32)\. A
well-balanced incentive package is also necessary, including housing benefits
and mass transportation facilities to work place\. To sum up, a strong and
sustainable power sector requires an accountable but autonomous institution
that is able to attract, train and retain a highly competent technical staff,
necessary for achieving cost-effective investment and efficient operation\.
70\. Sustainability of the Power Supply Industry and Facilities \. The
audit has argued for self-reliance, accountability, and autonomy\. They cons-
titute the three pillars of a sustainable power supply industry\.
71\. Self-reliance has human-resource, know-how, and financial dimen-
sions\. To secure it NEPA needs a well-administered training program, with an
overseas content to familiarize key staff with the latest relevant develop-
ments in technology\. It must also have an important local training compo-
nent\. In addition, the Authority must increase internal savings\. A substan-
tial increase in tariffs, although necessary, is insufficient\. Any tariff
increase must be accompanied with significant improvement in system effici-
ency\. For achieving this objective, the reform measures have to include:
marked improvement in system reliability, an appreciable and spontaneous fall
in captive plant requirements, the high utilization of generation and trans-
mission capacities, a lowering of system losses from over 30% to a reasonable
level (12-14% range), the extension of distribution network, accurate bill-
ings, and the prompt collection of unpaid bills\. Self-reliance also requires
the elimination of fuel price and interest rate subsidies\. As argued in PPAR
para\. 63, self-reliance would make NEPA accountable and help secure its auto-
nomy\. However, a sector rehabilitation and development program needs to be
prepared to achieve these objectives (self-reliance, accountability and
autonomy), and ensure the sustainebility of the power sector\. Such a pro-
gram, which should be partly funded by a Bank loan, is summarized in PPAM,
para\. 80\.
- 21 -
III\. CONCLUSIONS
72\. Physically, the Fourth Power Project was successfully completed,
with distribution sub-projects greatly modified (PPAM, paras\. 5-16)\. The
unreliability of power supply, the fuel constraints and the imbalances in
system's facilities have impeded realization of the project's potential
benefits\.
73\. The generating capacity at Kainji and Jebba are underutilized,
because of water shortages\. Should the water problem persist the capacity
can still be used chiefly as peaking reserve margin, subject to certain
conditions (PPAM, para\. 7)\. Moreover, the expansion of transmission grids,
under the project, has yet to produce appreciable gains in overall system
reliability (PPAM, para\. 10)\. Also, the strategy of providing electricity
from the national network to areas where the market for power is not yet
developed cannot be justified without certain pre-conditions (PPAM, paras\.
12-13)\.
74\. Since NEPA experienced significant price escalation and operated
under severe constraints, such as port congestion A skill shortages, the
project's cost overrun is not excessive and the time overruns are in line
with similar experiences in many major oil-exporting countries (PPAM, para\.
20)\.
75\. Of the Bank loan, $73\.0 million (96%) was disbursed by mid-1977\.
Three more years were needed for disbursing the balance ($3\.0 million) -
PPAM, para\. 19\.
76\. NEPA could not satisfy the rate of return (ROR) objective\. The
covenant, which was reasonable, required an average of 50% rise in tariffs
during 1974-80, and a doubling of rates in 1983\. Because of heavy
investment, still in the pipeline, the required increase in tariffs will be
more than 100% for an 8% ROR on revalued assets in the near-term\. Moreover,
NEPA's cash flow position is aggravated by a large accumulation of unpaid
bills; its audited accounts are also considerably behind schedule (PPAM,
paras\. 21-27)\.
77\. As for implementation, NEPA considers the overall performance
of consultants, contractors and equipment manufacturers to have been
satisfactory (PPAM, paras\. 29-30)\. Further, after the clarification of
procedures under the ICB, the Authority had no serious procurement problems
(PPAM, para\. 28)\. The Kainji extension and transmission systems were
commissioned without major difficulties\. But one of the generators, which
went on stream in early 1976, was severely damaged in 1982 and the stator
winding has to be replaced (PPAM, para\. 31)\.
78\. NEPA's performance needs to be assessed in the context of major
challenges confronting Nigeria (PPAM, paras\. 32-34)\. These problems have
inevitably overshadowed the Authority's operations\. For example, staff
promotion could not be based exclusively on performance and merit\. Moreover,
the sector has been short of spare parts, skills, and gas supply, and state
- 22 -
governments have often influenced NEPA's investment decisions, reflecting
socio-political goals rather than economic objectives\.
79\. A sustainable power supply industry depends on self-reliance,
accountability, and autonomy\. Self-reliance has human-resource, know-how,
and financial dimensions\. To secure it NEPA needs to develop a well-adminis-
tered training program\. So far the Authority has disregarded the need for
supportive Nigerian counterparts\. This indifference to training requirements
cannot be remedied by the external funding of expatriate teams\. The
Authority must display a keen appreciation of the importance of organizing an
effective program by a fully competent Nigerian team\. Also, the Bank needs
to make the establishment of such a training program a key provision of any
future loan covenants (PPAM, para\. 49)\. In addition, the Authority must
increase internal savings through a series of measures\. Tariff increases
need to be accompanied by significant improvement in system efficiency\.
Self-reliance also requires that the Government eliminate gradually fuel
price and interest rate subsidies (PPAM, para\. 63)\.
80\. Field visits in areas served by the project and discussions with
Nigerian officials have shed light on major hurdles that impede improved
utilization of capacity under the project\. The reform package to remove
these obstacles and help to ensure system's sustainability include:
(a) measures to secure NEPA's self-reliance, accountability and auto-
nomy, focusing on reducing system losses, improving utilization
rate and system reliability, collectit\.g unpaid bills, adjusting
tariffs and eliminating fuel and interest rate subsidies (PPAM,
para\. 70);
(b) training of professionals, the artisan class, and the planning team
(PPAM, paras\. 48-54);
(c) distribution network rehabilitation and expansion;
(d) institutionalization of maintenance and repair functions within
NEPA (PPAM, para\. 41);
(e) establishment of an annual foreign exchange currency budget for the
import of maintenance equipment and spare parts; the level of the
fund to be based on an independent assessment of NEPA's requirement
for a comprehensive and effective maintenance/repair program (PPAM,
para\. 42);
(f) institutional reforms within NEPA for implementing the major recom-
mendations of the British Electricity International, January 1982
(PPAM, para\. 65);
(g) the institution of an effective planning system within the Federal
Ministry of Planning, and within NEPA (PPAM, paras\. 66-67); and
(h) a study of Nigeria's small hydropower potentials (PPAM, para\. 46)
in support of a more decentralized and renewable energy supply
system\.
-23- ANNEX
Table 1
DISTRIBUTION PROGRAM
UNDER THE FOURTH POWER PROJECT
Time Cost
overrun overrun
Name of the Scheme Description (in months) (Z)
1\. Lagos Metropolitan Seventeen 132/33/11 kV and
Distribution 33/11kV substations,
uprating Akangba-Maryland
overhead line from 33kV to
132 kV and 20 km of new cable 24 72
connection\.
2\. Major Towns Lower voltage switchgears at
10 substations; transformers:
seven 30 MVA 132/33 kV, three
132/33 kV, and four 15 MVA
132/11 kV\. 36 Not
Comparable
(NC)
3\. Aba-Calabar 110 km of 132 kV transmission
line\. 5-24 68-122
4\. Oshogbo-Ilorin-Akure 132 kV lines, and electrification
of 11 townships\. 6-12 NC
5\. Zaria-Funta-Gusau 132 kV lines, associated
substations, and distribution
facilities\. 13-36 NC
6\. Countrywide Electrification of 73 towns,
Electrification including: more than 500 km
Program of 132 kV lines to feed the new
systems, 33 kV lines inter-
connecting towns to the grid;
33/0\.415 kV transformers, corres-
ponding switchgears and low
voltage distribution facilities\. 14-36 NC
Source: Borrower's PCR, paras\. 3\.36-3\.79
NEPA'S ASSETS, SALES AND RATES OF RETURN
ON REVALUED AND NON-REVALUED ASSET BASE, 1973-83
(Assets in Million Nairao)
Net Fixed Rate of Return
NEPA's Grogs Net Fixed Work Total Revaluation Assets in Net Income (2)
Sales Fixed Accumulated Assets in in Fixed Index 1/ Operation, Before Non-Revalued Revalued
(CUb) Assets Depreciation Operation Progress Assets (1972-1) Revalued Interest Base Base
1973 1,750 460 132 327 18 345 118 386 17 6\.0
1974 2,020 465 149 316 34 350 157 496 15 4\.6 3\.4
1975 2,343 488 165 323 75 398 183 591 13 4\.1 2\.4
1976 2,707 518 180 338 157 495 197 666 14 4\.4 2\.2
1977 3,243 543 199 344 278 622 219 753 13 3\.7 1\.8
1978 3,571 729 201 528 395 923 248 1,309 14 3\.3 1\.4
1979 4,178 833 229 604 647 1,251 287 1\.733 22 3\.9 1\.4
1980 4,070 1,039 262 1,047 446 1,493 341 3,570 100 12\.1 3\.8
1981 5,627 1,825 369 1,456 674 2,130 374 5,445 148 11\.9 3\.2
1982 5,916 1,999 445 1,554 1,050 2,604 374 5,812 111 7\.4 2\.0
1983 6,150 2,067 528 1,559 1\.532 3,091 390 6,080 75 4\.8 1\.3
Annual
Change
(M) 13\.4 16\.3 14\.9 16\.9 56\.0 24\.5 12\.7 31\.7
1/ The International Financial Statistics (IFS) provides data on (a) the consumer price index in Nigeria,
rnd (b) import unit values for developing countries (oil importers)\. The revaluation index is derived from
the conaumer price index and the import unit value index\. Annual changes in these two indicators have been
combined at a ratio of 3565, reflecting roughly the relative dependence of capital formation in the Nigerian
electricity supply industry on the domestic and foreign sources of supplies\.
Sources Borrover's PCR, Supervision Hisasion Reports, and IFS\.
bi\.
POWER RATES AND RATE OF RETURN (ROR) COVENANT
(Revenues in Million Nairas)
Additional Net
Revenues Required
Needed for Tariff/
Actual Compliance Power Power Rates Net Revenue
Operating With the Sales (kobo/kWh) Increase
Revenues ROR Covenant Total in GWh Existing Required (%)
1974 63 20 83 2,020 3\.1 4\.1 32
1975 70 30 101 2,343 3\.0 4\.3 43
1976 83 37 120 2,707 3\.0 4\.4 47
1977 97 44 141 3,243 3\.0 4\.3 43
1978 126 68 194 3,571 3\.5 5\.4 54
1979 166 100 266 4,178 3\.9 6\.4 64
1980 264 Ill 376 4,070 6\.5 9\.2 42
1981 403 216 619 5,627 7\.2 11\.0 53
1982 426 338 764 5,916 7\.2 12\.9 79
1983 434 398 832 6,150 7\.0 13\.5 93
M
-26 - AMiEX
Table 4
CHANGE IN NEPA'S ASSETS AND LIABILITIES, 1973-83
(IN MILLION NAIRAS)
1973-76 1976-80 1980-83 Total
Assets 224 1,693 1,493 3,410
Fixed 151 998 1,597 2,746
Others 73 695 1/ (-) 104 664
Liabilities 224 1,693 1,493 3,410
Equity capital 38 139 383 560
Local loans 141 1,420 737 2,298
Foreign loans 15 15 171 201
Others 30 119 202 351
1/ Largely cash and bank baiances\.
Source: Borrower's PCR, and Supervision Mission Reports
- 27 -
COMMENTS FROM THE COUNTRY APPERDIX I
Page 1 of 3
NEPA's COMMENTS
NATIONAL ELECTRIC POWSR AUHOKITY
SL M^1~4
i\.
'epeber 20, 1?8
hir\. Y\. --atanabe,
Director\.
Operations Evaluation Lepartment,
The -vorld Bank,
I818 B ttreet, N\.W\.,
H-ashinton D\.C\. 20433,
L\. S\. A \.
Dear M'r\. V-atanabe,
PROrMT P1ROR:'lC-c ; trDIT REPORT -
FOURTH Pl\.EL PRc1C%T L3; N 847-V1Z1)
16eference your letter doted July 31, 1985, plea se find below our brief
commeants on a few issues raised in the report\. The report on the whole
seeff zit even if rather hard ots the ;uthority's overallperformance, alIven
the conditionE (socL%l and economic mainly) under which XuM- has to
render services on semi-commercial basis with its inhorent capital
Intensive Investments typical of such on Industry\. L-nlike its counternarts
In developed countries where Investments can directly be related to
revenue returns with reasonable profit rer7ina, NEP operates under rather
difficult and complex soclo-economic factors much outside Its control\.
Comment on more specific issues are appended below: OED loLas
(a) TAdff a
The last Tariff revision was in 1979\. Consideerln the inflation- NEPA's races of return
ary effects on prices in Nigeria, It Is obvious that a tariff (RORs) on revalued asset
considered reasonable In 1979 would by 1985 have become base were much lower rhan
inadequate to meet a reasonable rate of return\. Costs of t figures given In
lnade~ateborrower's comments\. Since
materials, labour have risen by at least 4 times\. Similary the i an inflationary env-
income and expenditure accounts for the years 1981 to 1984 ronment RoRs\. derived from
have been showing dwindling net profit, with the rate of return historical values, greatly
of 9\.70%\. 10\.20%, 6\.75, 4\.65 and about 41 In 1980\. 1981, distort the real financial
1982\. 198! and 1984 respectively\. This trcrd scente reflect picture, the calulatlon
the economic aeession In the country attectat most of the of such rates mst take
f~OtIfl~the revalued rather than
private sector as well\. It is therefore correct that the historical assets as theIr
Electricity Tariff need to be substantially revised to make base\. B t a
is possible for the Authority to meet at least the 8% return stipulates an OZ financial
expected by the BRD\. rate of return on revalued
assets (PPAR, par&\. 61)\.
The Authority has indeed employed the services of EDF for
a study which could result to the revision of the Electricity
taritf The report on the EDF Study is expected to be
received within a short time\. After the appraisal of the
report the Management hopes to submit its proposal ta the
Federsb wileitary Govrumoa for consideration\.
- 28 -
NATIONAL ELECTRIC POWER AUTHORITY APPENDIX I
Page 2 of 3
(b) Fuel Price\.1!um1dx!- OED Notes
Fuel price subsidy is a delibrate government policy and it Th audit sests that the
is appUicable to every sector of Nigerian economy\. The NlgerUn Government size up
report seem to suggest that NEPA should withdraw from this the extent of fuel subal-
subsidy\. It Is unrealistic to expect NEPA to reject the dies nd e1-Imiunte them
subsidy enjoyed by the Nigerlan citizens just In order to be gradually\.
autonomous\. For the purposes of comparison it will suffice
to compare NEPA with companies operating in Nigeria rather
th3a foreign companies who might have their local advantage
in terms of cost of production and cost of equipment for
which NEPA has to Import possibly at hlhly inflated costs\.
(c) Snhsidv n Interest Rate:- The audit recommads that the
Nigerian Governstent charge a
NEPA is a Government utility and its operations cannot be positive rather than a nega-
completely discociated from Government policy\. 3overnment t I r
policy often makerit mandatory for NPA to embark on projects lerin 56\.ratn (PPA
aimed at promoting social policies of Government but which should present the Government
do not necessarily fall within NEPA's priority and its financial with the cost of services for
scope\. It is therefore fair if Government subsidtses the their waidatory projet\.
Interest rate so as not to throw the burden of Jovernment A must Insist that these
policy completely on the a costs are fully recovered
frow\. the beneficiaries and/
(d) Transmission and DistrUnItion Logat
It is obvious that 30% loss rate is abnormal and unacceptable\.
The ikely sources of non-techrcal losses are beln2 identified
though they could be sail to be largely due to over-loading,
plifering, illegal connections etc\.
\.Management has already as a first step commenced on
consumer audit aimed at identifying all premises connected
to NZPA mains, so that as a second step it will ensure that
they are billed\. Other steps will then follow to achieve
Improvement In billing and debt collection\. It Is also Intended
that all power injection points will be metered so as to quantify
the losses related to a given area and assess the viability of
DIstrict ServiCe\.
(4) Manower and 1rainine Poararme:-
It is true that the Authority is short of middle and top profe-
ssional staff\. Training is equally Inadequate\. Local
traintg programme has to be exploited adequately, however\.
overseas training which exposes personnel to new ideas, and
practice In other countries will be undertaken\. However it
should be noted that with the current service conditions even
to sttract the right material for training is dilficult and worse
still the economy seem to subtly regard NEPA as a training
ground for staff of other services I
(f) Inter aency Coordination:-
As the eport has stated we have observed a few Instances
which reveal Inadequate Inter -ency Coordination\. The
Federal Military Government itself has indentiLfed this
weakness and a delibrate attempt towards Intor Agarcy
Coordination is being encouraged particulary La the next
Development Plan 1986 - G99o\.
- 29 -
NATIONAL ELECTRIC POWER AUTHORITY APPENDIX I
Page 3 of 3
OED Notes
(g) Audtd Accounts:-
The Accounts of 1982 has n3w been auditad but the Auditors
are yet to conclude the don estic report\. The Audit of 1993
Accounts will -e co*npleted soon\. Vigorous efforts are being
made to complte the audit of 1984 and 1985 accounts before
the end of June 1985\. so as to meet the Nigerian Government
directive\.
(h) ftvaluation of Asts:-
At present the Authority is preoccupied on rendering the audited Asset revaluation is essential
accounts promptly and uo to date\. In vieA of the arreers of for an upward revision of
accounts, It la advisable to be up to date on accounting ifs\. in an ueeding
Instead of disaipatag energy on Assets revaluation\. As operation to the power sector
soon as the accounting is up to date, about June 1986, that NEPA's assets are
It Is anticipated that the two accounts will be prepared, properly revalued and a mean-
one on historical basis and the other on the revalued ingful ROR, as recomended in
current value of asstss the audit, is enforced\.
fours sincerely\.
Originif Signed BY:
Ennr\. D\. A\. OYEYELE
EnMr\. D\. A\. Oyeyale\.
foro General p neanaeer\.
cc: *4NEP' a aCe)
cc: World Bank Resident Mission,
Plot 1309A
Karimu Kotun Street,
Victoria Island\.
ee: 44 (Fswer
Agmnce canadienne de Canadan Intemationai - 30 - APPENDIX II
dveoppemernt intemnaticnal Development Agency Page 1 of 2
u (Outec) HuO\. 0u@bc
caaa Canada
KAGG4 K1AOG4 COMENTS FROM THE CO-FINANCIER
CIDA's COMMENTS
AW-reowrce ow w
702/00126
September 24, 1985
BY COURIER
Mr\. Yokinori Watanabe
Director
Operations Evaluation Department
The World Bank
1818 H Street, N\.W\.
Washington, D\.C\. 20433
Dear Mr\. Watanabe:
Further to your letter of July 31, 1985, we have reviewed
the World Bank Project Performance Audit Report on the
Fourth Power Project in Nigeria (Loan 847-UN1) together
with the Completion Report\. We have found both papers to
be methodical and comprehensive and would like to
congratulate your Department for a successful report\.
Since the Canadian involvement in the project related
enclusively to management consultancy and tiaining, you
will understand that we have found the report's description
of training and human resources problems (paras 47-54 of
the Audit Report) to be particularly useful\. Fundamental
to the Canadian contribution in the Fourth Power (and
continuing into the Fifth Power) is the problem of a lack
of counterpart staff\. The Canadian consultants have
reportedly indicated that the number of Nigerians assigned
to them for training was well below what they could absorb,
especially during the first year of their task\. The
problem is directly related to the level of pay, benefits
and incentives available to NEPA staff\. We found that
it is impossible to impart technology, train staff and
institutionalize an efficient and self reliant organiz-tion
when staff do not exist, are too busy with other duties to
be seconded for training, or do not have the requisite
capabilities, desire or incentive\. Further, any staff
that it is possible to train under these conditions will
immediately depart to achieve improved conditions elsewhere\.
\.2
Canadra SEPZ
- 31 - APPENDIX II
Page 2 of 2
Until this problem of pay scales and other incentives can be
resolved, little meaningful progress will be made in the
essential area of modifying NEPA into an efficiently
operating, self reliant organization\. As noted in the
Report (pages 18-19) no progress on these critical items
have occured to the date of the draft\.
It is impossible to assess whether it would be feasible to
build into any financing agreement a conditionality which
could resolve this situation\. Increases in benefits as
necessary to attract and retain staff with the required
capabilities within NEPA would result in massive problems
within all other agencies of the Nigerian Government\. An
adjustment of benefits for all agencies would have a marked
effect upon the national economy\.
It appears from the report that a middle approach has been
contemplated with increased benefits becoming available
only to some essential agencies\. However, again it appears
nothing has been accomplished in this area\.
It is not feasible to stop all capital investment in electric
system development either as a lever to impress on the
Government of Nigeria the importance of this problem or
during the period it takes for the Government to agree to
institute changes\. It is however necessary to recognize
this fundamental problem in the electric sector and every
effort should be made to convince the Government of Nigeria,
and NEPA, of the absolute necessity of resolving this problem,
if an effective, efficient and self reliant utility is to be
achieved with all of the important economic and developmental
benefits which will accrue to it\.
Until such can occur, it will be necessary to continue to
include, as a condition of the funding availability, the
technical assistance of offshore specialists in all elements
of utility planning, engineering, management and operation\.
Technology transfer and training elements can begin to be
included when NEPA becomes capable of assimilating such
elements\.
The problem of local human resources continues to affect
any development activity in Nigeria\. Despite this ongoing
concern, we are pleased to note that the Bank considers the
Fourth Power Project to have been a success on the whole
and we share this assessment\.
Your sincerely,
\. a gton
Country PVogram Director
GhanalRegional Program
Anglophone Africa Branch
- 32 -
NIGERIA
FOURTH POWER PROJECT : LOAN 847-UNI
COMPLETION REPORT
1\. INTRODUCTION
1\.01 This completion report reviews the implementation and
effectiveness of the Fourth Power Project financed under US$ 76 million
Loan 847-UNI made in 1972 to the National Electric Power Authority
(NEPA)\. The project included the addition of two 100 MW units at Kainji
hydro plant, 330 kV substation facilities, a second 330 kV transmission
line from Kainji to Lagos, expansion of distribution systems, power
development studies, management studies and technical assistance\. The
report explores the background to the project, describes the
implementation of the project and the problems encountered, reviews the
project justification, and evaluates the performance of the borrower,
consultants, contractors and the Bank during project implementation\.
The Electric Power Sector
1\.02 In the early 1970's public electricity supply was the
responsibility of Electricity Corporation of Nigeria (ECN) and Niger
Dams Authority (RDA)\. Whereas ECN was developing and operating
generation, transmission, and distribution facilities throughout the
country, NDA was responsible for planning, implementing, and operating
hydropower facilities on the Niger river (i\.e\. at that time the Kainji
plant) and associated transmission facilities\. In the 1960's, the Bank
had already played a significant role in the development of the power
sector as it had assisted:
- ECN with Loan 372-UNI (1964) for US$ 30 million to finance
transmission and distribution facilities and
- NDA with Loans 383-UNI (1964) for US$ 82 million and
572-UNI (1968) for US$ 14\.5 million to help finance the
first stage of the Kainji hydropower plant\.
In spite of this assistance, both entities' management and operations
deteriorated during the second half of the 1960's and in particular
during the civil war (1967-69) which, inter alia, dramatically worsened
the utilities' shortage of competent managerial personnel\.
Context of Project
1\.03 In 1970, in order to create the basis for improving the
physical and administrative performance of the sector, Government, after
discussions with the Bank, appointed a consultant to study the power
supply industry to make recommendations on a possible merger of ECN and
- 33 -
NDA as well as on improving management\. In 1971, the consultant submitted
a report outlining a new Government owned utility to be set un by
consolidatiug ECN and NDA\. The new entity was to be provided with
strong central management superimposed on a decentralized organizational
structure\. The power sector consultant also pointed out the scarcity of
competent staff and the need for recruiting additional highly qualified
personnel for top positions\. The sector study became one of the main
foundations for both the creation of NEPA and the Bank's Fourth Power
Project in Nigeria\.
Sources for this Repoit
1\.04 This completion report is essentially based on the Borrower's
Completion Report dated May 1984 which in turn uses progress and
completion reports by the consultants for the main project items\. The
report also includes information from the Bank's supervision reports and
files concerning this project as well as the two subsequent projects,
Power V and VI (Loans 1766- and 2085-UNI)\.
2\. PROJECT PREPARATION AND APPRAISAL
Origin and Preparation of Project
2\.01 In 1968-70, i\.e\. during the final implementation period of
Kainji hydro (first stage) and in the aftermath of the civil war, demand
growth rates were between 20 and 25% per year and at the same time
institutional deterioration of ECN and NDA became alarming\. Meanwhile,
the Bank was emphasizing economic development in Africa and a further
operation in the Nigerian power sector seemed particularly promising\.
Indeed, such a project could not only help this large sector implement
an investment program that, in view of the fast demand increase, had to
be large, but also assist in improving management and operations in the
sector\. This would also permit Nigeria to reap the full benefits of the
previous Bank operations\.
2\.02 In 1970 the Governsent agreed to have a consultant carry out the
power sector study referred to in para\. 1\.02 above\. In early 1971, before
the consultant submitted its report, the Government also agreed that
the Bank, together with the managements of ECN and NDA should start to
define the proposed project\. This essentially took place in the context
of two pre-appraisal missions the Bank carried out in March/April 1971
and in October 1971\. When the first mission took place, the sector consul-
Eaint had already reached preliminary conclusions\. During the second mis61on
the Bank team was able to discuss the final report with the Nigerian
authorities\. This led to the Government's decision to prepare the
merger of ECN and NDA into a new authority, the National Electric Power
Authority - NEPA - which was to start operations on January 1, 1972\.
- 34 -
2\.03 In the course of the pre-appraisal missions, the Bank team and
the specialists of the two utilities prepared an investment program for
NEPA's first six years of operation\. This FY73-78 plan remained
somewhat sketchy and subject to substantial uncertainty as, in the
absence of detailed and coordinated development programs for ECN and
NDA, the plan had to be based on the following rather general documents:
- the second National Development Plan,
- three consultants' reports on distribution reinforce-
ment and electrification, and
- a report on the electrification of 140 towns\.
2\.04 In January/February 1972, although Government had not yet
implemented the merger of NDA and ECN, the Bank appraised the project\.
The appraisal proved difficult due to the vagueness of the information
available, which did not permit the mission to ascertain the investment
program substantially beyond the level reached during the pre-appraisal\.
However, given the rate of load growth even more serious power shortages
undoubtedly would have occurred if the project had been delayed until
all detailed engineering studies were completed\. The available
financial data was inaccurate and out of date\. This was particularly
the case for ECN, as the last audited accounts concerned the fiscal year
ending March 31, 1970 (i\.e\. FY70) and the auditors' report qualified
them as not fully representing the company's financial position\.
2\.06 The most serious obstacle to a full project appraisal was the
Government's refusal to allow the Bank to study the legislation
concerning the creation of NEPA before its formal approval\. Only in
early May 1972, after the promulgation of Federal Decree No\. 24 (1972)
setting up NEPA as of April 1, 1972, was the Bank in a position to
ascertain that the legislation was such as to permit the Bank to
complete project appraisal\. The creation of NEPA was a requisite for
making the loan, as otherwise the Bank would have to lend to the
Government, and the Bank's Loan Committee had declined such a solution\.
2\.07 A further subject of discussion was the necessity (perceived
by the Bank) for NEPA to obtain expatriate management assistance for the
first few years of its operation\. Originally, the Bank envisaged the
appointment of three expatriates as General Manager, Assistant General
Manager Planning , and Assistant General Manager Finance as a condition
of effectiveness of the loan\. During negotiations in late May 1972 the
Bank dropped the condition that the three top managers be expatriates\.
However, it agreed with the Nigerians that loan effectiveness would be
subject to NEPA signing an agreement, satisfactory to the Bank, with a
management firm or a large public utility to provide a team of experts
to assist and train NEPA's senior staff\.
- 35 -
2\.08 During project preparation, some controversy arose in connection
with the design of the Kainii extension\. The consultants NDA had hired for
this sub-project, proposed propeller turbines as being more advantageous
than Kaplan units which had been installed in the first stage
development of the hydroplant\. Whereas the Bank agreed with the
consultants, NDA, judging that the additional flexibility provided by
Kaplan turbines was worth more than the cost difference, disagreed\.
Finally, NDA prevailed and the Bank agreed to keep the Kaplan turbines
in the Bank project\. A similar discussion occurred in connection with
the transformers for which the consultants had suggested the same
arrangement as for the existing units, i\.e\. the connection of two units
to a single transformer\. However, NDA decided to adopt the more
flexible solution assigning to each unit its own transformer\. The Bank
also concurred to this lesser change\.
2\.09 Following the October 1971 pre-appraisal mission, further
project preparation and appraisal had to be compressed into a relatively
short schedule to achieve loan signing in FY72\. Nevertheless, it seems
fair to note that, had the Bank insisted on a more detailed project
preparation, the operation would have materialized about a year later as
NEPA would have had to hire consultants to carry out at least the
distribution extension and electrification studies\. Such a delay could
have had a negative impact on the institutional development of the
sector, as the management training assistance contract could well have
been further postponed\.
2\.10 On June 30, 1972 the parties signed the documents for the
US$ 76 million Loan 847-UNI at a 7\.25% interest rate, for a term of
25 years, including a 5 1/2 year grace period\. However, almost a whole
year elapsed before loan effectiveness on June 26, 1973\.
Project Objective
2\.11 The Bank project essentially pursued three goals:
- to assist NEPA in financing and implementing a first stage
investment program;
- to help the new utility build up a management, operational,
financial, and training capability that would make it able
to operate successfully and meet the rapidly increasing
demand; and
- to support the Authority's planning of further development\.
Through the achievement of these goals the project was meant to help
provide Nigerian industry, commercial enterprises, as well as urban and
- 36 -
increasingly also rural dwellers with reasonably reliable electric
energy in the quantity required and at reasonable cost\.
Project Description
2\.12 The Bank project covered about one third of NEPA's total
planned investment for FY73 to FY78\. It included the following items:
A\. First Kainji Extension consisting of the addition of two
100 MW generating units (the fifth and sixth units in the
sequence, Nos\. 11 and 12 in the layout) and associated
switchgear, and a 330/132 kV substation at Kainji\. The
units, which were expected to be commissioned in
October 1975 and April 1976, respectively, were to bring
the installed capacity of Kainji to 520 MW\.
B\. Installation of additional transformers, capacitors,
reactors, and related switchgear at the 330 kV substations
of Akangba, Oshogbo, Onitsha\. and Kaduna\. These were to
improve the reliability of the major substations of the
system and to be completed by March 1977\.
C\. Construction of a second 330 kV transmission line, about
420 km lung, from Kainji to Lagos and extension of the
Kainji, Jebba, Oshogbo, and Akangba substations\. These
facilities, which were expected to be completed by March
1977, were aimed at increasing the reliability of the power
supply in Lagos\.
D\. Reir\.orcement of the existing distribution system in 43
cities and towns, and electrification of 41 sizeable
townships by connecting them to the Kainji grid\. The work
was to be carried out during FY72 through FY77\. They were
grouped into 10 schemes (for details see para\. 2\.02 of the
Borrower's Completion Report): Lagos, Major Towns,
Aba-Calabar, Onitsha, Oshogbo-Ilorin-Akure, Ibada\.,
Jebba-Bacita-Pategi, Zaria-Funtua-Gusau, Kano, and 15 other
towns\.
E\. Power development studies consisting of a review of the
Kainji hydrology, preparation of a long-range (15 year)
sector expansion program including feasibility studies of
the projects for development during the next phase, and
design specifications for the next generating plant\.
F\. Management studies and technical assistance\. This item,
which complemented the expected Canadian technical
assistance program, included management studies by
consultants and advisory services\.
- 37 -
2\.13 Beyond the implementation of the physical items and the
services listed above the project included the following measures:
- In consultation with the Bank, NEPA was to determine,
within 18 months of the connection to the National Grid of
an area formerly served by a diesel station, whether it
would hold the units in reserve at their existing site,
move them to serve other isolated areas, or scrap them\.
- Government was to set up NEPA's basic organization and
management, in particular by appointing, in agreement with
the Bank, the three top managers and implement with an
expatriate management consultant or a large power utility a
management assistance and training program (para\. 2\.07)\.
- NEPA, once set up, was to define all internal procedures
required for efficient operations\.
3\. PROJECT IMPLEMENTATION
Conditions of Effectiveness
3\.01 Apart from the usual requirements for execution and
ratification of the Loan Agreement, the latter included three special
conditions of effectiveness concerning:
- the appointment of NEPA's three top managers (para\. 2\.07),
- the securing of management and training assistance
(para\. 2\.07), and
- the provision of ECN's and NDA's consolidated audited
balance sheets as of March 31, 1972\.
3\.02 The Government met the second condition and part of the first
in January 1973 by contracting a team of consultants for management and
training assistance\. Included in the contract was the provision of an
Assistant General Manager Finance and an Assistant General Manager
Corporate Planning who at the same time was to be head of the consul-
tant'steam and the special adviser to the General Manager\. At about the
same time it appointed the former Chief Executive of NDA as General
Manager of NEPA\. In view of the excellent qualifications of all the
proposed managers, the Bank, though it originally had thought of an
expatriate filling the top position, did not object to the appointments\.
3\.03 Although by early 1973 Government had fulfilled all three
special conditions of effectiveness, the Bank had to postpone the limit
- 38 -
for effectiveness from December 27, 1972 as originally foreseen, in
steps to June 29, 1973 mainly because the processing of the Loan
Assumption Agreement took much longer than expected\. Finally, the loan
became effective on June 26, 1973, i\.e\. about half a year later than
planned\.
Changes in the Project
3\.04 NEPA carried out parts A, B, C, and E of the facilities and
services included in the Bank project essentially as foreseen during
project appraisal\. A change of some substance occurred in part B
(installation of additional transformers and switchgear at 330 kV
substations) where NEPA, with Bank agreement, included a 90 MVA
330/132 kV transformer for the Benin substation, as detailed analysis of
the system had shown the need for this addition\.
3\.05 The main changes occurred in part D of the project
(reinforcement of distribution systems and electrification)\. As the
basis for the appraisal was rather preliminary, it is not surprising
that the thorough studies carried out after loan signature produced
proposals for development significantly different from those originally
envisaged\. The modifications mainly concerned the towns foreseen for
priority electrification and hence the subtransmission systems feeding
them\. The 132 kV-transmission system, however, remained as planned\. As
the appraisal mission had anticipated the possible need for modifying
the list of towns to receive a distribution system\. Schedule 2 (Project
Description) of the Loan Agreement provided for the possibility of such
changes\. Thus, the adjustments of the project description, once NEPA
and its consultants had finally defined the priorities, proceeded
without difficulties\.
3\.06 If there had not been any changes of substance in the project
definition (except for those in the electrification component discussed
above), the proportion of the Bank contribution to total cost for many
items would have been much smaller than envisaged at appraisal\. This
was mainly the case for items implemented in the latter part of the
project period, in particular distribution extensions and
electrification works\. Indeed, as a result of the first large increases
in oi\. prices in 1973-74, the economic boom in Nigeria made costs soar\.
Thus, the rates of inflation in 1974 to 1976 averaged 17% against an
average of 3% in the appraisal estimates\. The impact of inflation was
aggravated by the fact that many items suffered long delays in delivery\.
Thus, the Bank had to become selective in the application of its funds
to ensure that components in the project did not suffer from
under-funding\. In agreement with NEPA, from 1975 onwards it allocated
the funds not committed by that date to the country-wide electrification
program aimed at maximizing the number of people having access to
electricity in reasonable quantity and quality\.
- 39 -
Implementation Schedule
3\.07 NEPA commissionea units 11 and 12 at Kainji (Part A of the
project) in February and August 1976, i\.e\. 6 and 11 months late,
respectively\. The main reasons for the delays lay with the turbine
manufacturer for both units and the generator supplier for unit 12\.
Turbine manufacturing did not proceed at the speed expected, during
overland transport of the turbine for unit 11 the transporter broke down,
a grass fire damaged the wicket gates of unit 11, the turbine shaft
of unit 12 was damaged during unloading at Lagos port and had to be
returned to Europe for repair, and a similar accident occurred to
the generator shaft, which the supplier had to ieplace\.
3\.08 The above delays refer to the contractual completion dates\.
The schedule used for project appraisal foresaw completion in
October 1975 (unit 11) and April 1976 (unit 12)\. Thus, with respect to
these dates commissioning was only 4 months late for both machines\. The
contractual schedule established by NEPA and its consultants for this
project part foresaw a total design, manufacturing, transport, and
erection time of 36 months which would have been tight under any circum-
stances and was certainly too tight under those foreseeable in Nigeria\.
3\.09 For execution of part B of the project covering the extension
of the 330 kV substations associated with the Kainji plant, NDA and
later, NEPA carried out engineering, procurement, and supervision of the
work with their own resources\. The facilities should have started
operating at the same time as the three new units at Kainji\. Until
early 1975 the contractors had incurred less than three month-' delay\.
They completed the installations at Oshogbo, Onitsha, Kaduna, and Benin
two to four months late, i\.e\. essentially in time for picking up the
additional supply from Kainji\. However, in August 1975 the transformer
for the Akangba substation feeding the Lagos area was damaged during
delivery and the supplier had to return it to the factory for repair\.
This increased the delay to 20 months, which was significant, as it
impaired the planned improvement of supply in the capital city\. Here,
though tight, the construction schedule does not seem to have been
unrealistic\.
3\.10 For the engineering work of Part C of the project comprising
the second 330 kV transmission line Kainji-Lagos and associated switchgear
in \.33U kV-substations NDA had contracted an engineering consultant
who NEPA retained\. At the time of project appraisal the schedule
called for completion by March 1977\. Commissioning took place in May
1977, which was two months late with respect to this schedule but about
six months later than foreseen in the contract, in which NEPA had
insisted on a tighter schedula, which appears to have been somewhat too
ambitious, though in this case, too, unforeseen difficulties arose\.
First, the congestion in Lagos port, which peaked in 1975, delayed
unloading by months\. Then, the contractor, faced with sky-
rocketing costs on a contract with fixed prices for the imported
- 40 -
goods and service, considered prematurely terminating the contract\.
Until NEPA and its consultants had persuaded the contractor to continue
construction valuable time was lost\. The supplier of the additional
substation equipment was also late but he completed the facilities
before the line was ready\.
3\.11 As discussed in para\. 3\.05 the main changes with respect to
the appraised project occurred in Part D concerning reinforcements of
distribution systems and electrification\. Sections 3\.5 to 3\.10 of the
Borrower's Completion Report analyze the implementation of this part in
as much detail as the information available in late 1983 permitted\. In
summary, it consists of three components:
- The Countrywide Electrification Program established on the
basis of the studies which NEPA consultants carried out in
1973; included in a first stage development the electrifi-
cation of 73 towns; this was carried out under six contracts
partly financed by the Bank\.
- The reinforcement of existing distribution systems of which
the most important part was the first stage of the Lagos
Metropolitan Distribution Project essentially covered by
one contract partly financed by the Bank; in most other
distribution reinforcement projects included in the Bank
project, NEPA constructed facilities at a voltage less than
33 kV with its own workforce or used contractors it
supervised directly; though the Bank project also included
these items, NEPA financed them out of resources other than
Loan 847-UNI\.
- The 132 kV transmission lines and switch ards connecting
the new and reinforced distribution systems to the National
Grid were carried out by NEPA assisted by consultants
within the framework of contracts partly financed by the
Bank\.
3\.12 For the reasons set forth in para\. 3\.05 it is impossible to
meaningfully compare actual and forecast work progress and investment in
the individual systems listed under Part D in para\. 2\.04\. However, the
analysis of the implementation of the individual contracts discussed in
sections 3\.5 to 3\.10 of the Borrower's Completion Report allows one to
conclude that the contracts suffered delays ranging from 3 months to 3
years with respect to the contractual completion dates and that the main
reasons for the delays were:
- temporary scarcities of construction materials (cement,
steel, wooden poles, etc\.);
- 41 -
- NEPA's difficulties in marshalling an adequate supply of
distribution equipment;
- difficulties arising from Nigeria's weak infrastructure
(e\.g\. ports of Lagos and Port Harcourt);
- lack of personnel for the work NEPA carried out itself;
- the fact that the foreign exchange part of most contracts
was on a fixed price basis which, after 1973-74, when world
market prices were rapidly increasing, led several
contractors into difficulties and made them reluctant to
proceed;
- changes in design during execution;
- several strikes; and
- difficulties with wayleaves\.
The above delays, together with those mentioned earlier (in particular
para\. 3\.10) made it impossible for NEPA to meet the demand and to
improve the quality of supply\. Thus they were the main cause of the
large increases in private captive plant (see para\. 4\.01) that took
place during the project period\.
3\.3 Though NEPA carried out the four sets of studies included in
Part E of the project, the Bank only financed the determination of the
most desirable sequence of new generating plant, the preliminary design
of the next addition (Sapele gas-fired steam plant) and the feasibility
analysis of township electrifications\. This work also incurred some
delays but they were limited and had no major consequences\.
3\.14 As CIDA financed the management assistance, the Bank's
contribution to Part F of the project covering management studies
was limited to financing the valuation of NEPA's assets as of
March 31, 1972 carried out in 1974\.
3\.15 In general, project implementation was fraught with
difficulties which had their origin in the following shortcomings:
- Though officially NEPA started operating on April 1, 1972,
it took all of that year and part of 1973 to get the new
utility reasonably organized\.
- Demand for electricity had already increased at high rates
before 1973, but the oil boom starting in 1973-74 brought a
dramatic and persistent call for increased supply\. Thus
NEPA had to accelerate the construction of new facilities,
which in turn required more resources, in particular
- 42 -
skilled personnel; however, during the entire project
period, NEPA was sorely short of such staff\.
- During practically the entire project implementation period
NEPA had to operate in a general environment characterized
by overtaxed national infrastructure and administration on
the one hand and shortages in all types of resources except
capital on the other\.
- Prcject implementation had to start when sector planning
was still only at a preliminary stage\.
3\.16 In reality, it seems there would have been little leeway for
NEPA and the Bank to proceed differently\. They might have avoided some
difficulties by more detailed planning before starting the project but
this would have been at the expense of incurring even longer delays
resulting, in turn, in further pressure from dissatisfied actual and
potential consumers\.
Procurement
3\.17 NEPA, in most cases assisted by consultants with extensive
international experience, carried out procurement of the items financed
by the Bank generally in accordance with the Bank's Guidelines for
Procurement\. However, in the starting phase of the project, NEPA and
the Bank had to overcome some difficulties, which took the form of
incomplete or late submission of tender documents to the Bank, late
comments by the Bank on documents by NEPA, and protracted discussion
about some clauses\. The reasons for these difficulties were mainly
related to:
- Government policies or at least practices which were in
contradiction to the Bank's Guidelines;
- the fact that a substantial part of the procurement had
already started before signing of the Loan and Guarantee
Agreements and that, from the Nigerians' point of view, it
was far from clear that the Loan would materialize in time
to cover the items already in the pipeline before mid-1972;
- some of the NEPA staff responsible for procurement not
having had substantial previous exposure to international
competitive bidding in accordance with the Bank's
Guidelines;
- The regionalization of the Bank which took place in
mid-1972 and put new teams in charge of the operations in
Nigeria in general and in NEPA in particular\.
- 43 -
3\.18 The most important point of disagreement between the Bank and
NEPA concerned NEPA's inclusion of a clause asking bidders for
alternative financing in the tender documents for several contracts\.
The Bank objected to this clause, but NEPA, having acted on the
Government's instructions, could not comply with the Bank's requirements
without Government's agreement\. Ultimately, the Government, NEPA, and
the Bank agreed that the latter would not object to documents including
the controversial clause for biddings taking place before
November 15, 1973\.
3\.19 The Bank was justified in giving in to the Nigerians on the
alternative financing clause as the analysis of the bids for the
contracts for Parts A and B of the project had shown that the bidd,rs
had not offered any attractive financing\. In fact, most of the
competing firms had not offered any financing at all\. Therefore, it
would appear that the clause did not discourage the invited firms from
bidding and therefore did not limit competition to any notable degree\.
3\.20 In July 1972, immediately after regionalization, the Bank
decided to send a supervision mission to Nigeria, primarily to clarify
the procurement issues\. However, the Government asked the Bank to
postpone such a mission\. It finally took place in December 1973 and was
successful\. From then on, procurement proceeded without complications\.
Costs
3\.21 In accordance with NEPA's investment plan as estimated at
appraisal time, annual expenditures on new facilities and associated
services were to increase from N 21\.4 million (US$ 32\.5 million) in FY73
to N 54\.8 million (US$ 83\.3 million) in FY78\. Actually, they greifrom
N 22\.0 million (US$ 33\.4 million) to N 323\.7 million (US$ 515 million)
within the same time span\. Table 2\.01 of the Borrower's Completion
Report gives further details\. The main reasons for this discrepancy are
the following:
- The actual inflation rate over the period was on average
about 13% against an estimated 3%\.
- The high demand called for a large additional investment\.
- Due to local constraints related to the boom starting in
1973-74, costs substantially increased even in real terms\.
3\.22 Annex 1 compares the estimated and actual project costs\. It
shows that the Kainji extension and the second Kainji-Lagos line cost
less than estimated mainly because the foreign exchange component, i\.e\.
the cost of equipment and foreign services was lower than forecast\.
This shows that the corresponding base line cost estimates were
- 44 -
essentially accurate\. The difference was of the order of the allowance
for physical contingencies (about 10%) which, as no additions were
necessary, NEPA did not need to use\. The influence of inflation was
practically nil, as NEPA let the contracts on a fixed price basis for
the imported goods and services and the main payments became due before
the unforeseen inflation could substantially affect costs\. The local
cost part exceeded the estimates because, on the one hand, base line
costs were possibly underestimated and, on the other, the civil works'
contracts were subject to escalation which became effective in the
latter part of the contract period\.
3\.23 This also applies to the reinforcement of the 330 kV
substations except that here all coscs were higher than estimated
because of the addition of a transformer which NEPA installed in Benin\.
3\.24 It is impossible to compare in a meaningful way estimated and
actual costs of distribution reinforcement and electrification as set
forth in Annex 1 because the two sets of figures, though they concern
the same type of items, do not refer to the same physical facilities\.
The available information shows that the estimate underrated the base
line costs because it was based on a technical concept\. The more
detailed investigations carried out after the project started called for
more expensive facilities and modified the estimate\. Furthermore, NEPA
constructed and installed the items discussed here in the latter part of
the project period i\.e\. after 1975\. Therefore, their costs were heavily
affected by inflation not covered\.by the price contingency allowance
included in the appraisal estimate (para\. 3\.21)\.
3\.25 The estimated and actual costs of the planned development and
management studies do not allow a meaningful comparison either, as in
part they cover different items\.
Disbursements and Financial Sources
3\.26 As discussed in para\. 3\.21, from FY75 on, NEPA's annual
investment was much higher than expected (see also Table 2\.01 of the
Borrower's Completion Report)\. As at the same time the project period
was longer than forecast, the contribution of the Bank in terms of total
investment was much lower than expected\. Even in the original project
period, i\.e\. FY1973-78, it amounted to only about 11% against 30%
estimated at appraisal time\.
3\.27 Section 3\.15 of the Borrower's Completion Report discusses
the actual Ydrawdown of the loan and the allocation of the used funds to
the various categories\. At an early stage of project implementation it
became evident that the electrification program would cost substantially
more than expected\. As this type of investment has an immediate impact
on the living standard of low income people, particularly in rural
areas, the Bank and NEPA agreed that any excess funds from the loan
account would be applied to the foreign exchange cost of electrification
contracts (para\. 3\.06)\. This was done when the Bank decided not to
- 45 -
contribute to the financing of the civil works for the Kainji extension
and again when, after thorough discussion, the Bank agreed not to cancel
the amount originally earmarked to meet the foreign cost of the Kainji
generators\. Indeed, after internatia -al competitive bidding for which
a Japanese firm was the lowest evaluated bidder, the Government decided
to finance the equipment through a Japanese line of credit offered in an
entirely different context, i\.e\. not in connection with the alternative
financing clause in para\. 3\.18 above\.
3\.28 From the approximately N 64 million (US$ 102 million) of the
project not financed by the Bank, CIDA provided some N 3\.0 million
(US$ 4\.8 million) whereas NEPA (thriugh internal cash generation) and
the Government (through loans) contributed the rest\.
Performance of the Consultants
3\.29 In connection with the Bank project, NEPA used the services of
consultants for:
- the Kainji extension;
- several transmission projects;
- the Aba-Calabar transmission project;
- the Lagos Metropolitan Distribution Project, part of
the Countrywide Electrification Program, and for the
long range sector expansion program; and
- the review of the Kainji hydrology\.
3\.30 The performance of the above consultants, most of whom had
already worked for ECN and NDA, was satisfactory\. In connection with
the design of the Kainji-Lagos transmission line difficulties arose
when, after the completion of the facility, some auger-bored pile
foundations failed (two cases occurred on another line not included in
the Bank project)\. Apparently such foundations do not perform well in
wet lateritic soil\. NEPA considered the failure a result of faulty
design rather than of deficient construction methods\. It decided to
reinforce all the foundations of the type that had shown tailures\.
- 46 -
3\.31 Several of the consultants received payments owed them only
after long delays\. This is surprising as NEPA could have drawn a large
part of these sums from the Bank loan but failed to do so\.
Performance of Contractors
3\.32 Sections 3\.2 to 3\.10 of the Borrower's Completion Report deal
in detail with the performance of NEPA's contractors\. Taking into
account the difficult circumstances prevailing during project execution,
the equipment manufacturers performed reasonably well\. Indeed, the long
delays several of them incurred were to a limited extent their
responsibility\. There seems to have been only one instance of a
contractor not fulfilling his obligations and forcing NEPA to complete
installation with its own workforce, i\.e\. the supplier for transformers
for Major Towns Scheme\.
3\.33 Two local companies carried out major contracts in the
context of the Bank project\. Company A performed satisfactorily overall,
though a Bank supervision mission felt that part of the delay incurred
in connection with the Lagos Metropolitan Distribution project was\.-the
result of the contractor's poor planning\. However, Company B worked
poorly throughout, as it was inadequately staffed, financed, and
equipped\. To complete the work (one lot of the Countrywide Electrifi-
cation Program) NEPA had to bring in a foreign firm as "assisting
subcontractor"\.
3\.34 Several local civil contractors carried out subcontracts for
firms that had won packages involving supply, erection, and
construction\. In several instances difficulties, in particular delays\.
occurred in connection with such subcontracts, mostly because of poor
management and lack of experience compounded by the difficult
environment\. In the case of the Lagos Metropolitan Distribution Project
the originally designated civil works subcontractor had to be replaced\.
Performance of Borrower
3\.35 During the entire project execution NEPA was overtaxed\. In
FY73 to FY75 it was struggling to get organized\. When, with the
assistance of the consultant's team, management had substantially
improved, NEPA was swamped by the demands which the dramatically
increased investment program made on it on the one hand and the
operating difficulties arising from the rapid increase in consumer
demand on the other\. As it was not in a position to recruit, train, and
retain enough skilled people (para\. 6\.03)\. it never had a chance to get
abreast of events and had mostly to concentrate on avoiding the worst\.
This resulted in many instances of late availability of construction
sites, delayed project modifications, poor planning, and
non-availability of crews to carry out the physical work for wh±ch NEPA
was directly responsible\. Thus, there is little doubt that NEPA also
contributed to the delays incurred in several project items\.
- 47 -
Operations
3\.36 During commissioning of the units of the Kainji extension the
contractors had to correct only minor deficiencies and during the
warranty period NEPA did not find any defects in the equipment, which
ran without major interruption until, in 1982, the generator of unit 11
was so severely damaged that it had to be replaced\. The causes of the
accident are the subject of an in-depth investigation the results of
which were not available when this report was written\. Apart from this,
NEPA is aot fully satisfied with the performance of the units (in
partici::\.ar generator controls and the hydraulic pumps of the governors),
as it has to replace the pumps far too often\. NEPA also feels that the
expertise of the operation and maintenance personnel needs further
im;irovement and is preparing an appropriate training program\.
3\.36 The equipment corresponding to the extension of 330 kV
substations has worked satisfactorily since commissioning\. The same
applies to the second Kainji-Lagos line after zontractor completed the
reinforcement of the auger bored pile foundations in lateritic soil
(para\. 3\.31)\.
3\.37 It is impossible to judge accurately the operation of the
facilities covered under distribution reinforcement and electrification\.
Whereas the transmission and subtransmission installations seem to have
worked without major difficulties, many distribution systems were
overloaded nearly from the start because of the fast growth of demand
and the delay which the program had suffered\. Combined with this
overload, substandard maintenance arising from NEPA's chronic lack of
sufficiently skilled personnel resulted in many operational
shortcomings\. Deficient equipment quality or installation cannot be
identified as a factor contributing to these inadequacies\.
- 48 -
4\. OPERATING PERFORMANCE
4\.01 Chapter 4 of the Borrower's Completion Report discusses the
development of NEPA's operations in comparison with that expected at the
time of appraisal \. An increase of demand substantially beyond that
expected, a shortfall in the available supply capability and the
resulting substantial amount of suppressed demand characterize these
operations\. The deficit in availability in turn resulted from a
combination of delays in the commissioning of new plant and failures in
existing facilities\. As a consequence, customers installed an
inordinately high amount of captive plant, recently estimated to exceed
600 MW\.
4\.02 These disappointing developments occurred even though NEPA's
management, assisted by the consultant's team, achieved marked
improvements particularly in the fields of management and information
systems, operational planning, and financial control\. However, the
stumbling block was the lack of implementation capability at lower
echelons related to the difficulties NEPA experienced in finding,
training and retaining the skilled staff it needed (para\.6\.03)\.
5\. FINANCIAL PERFORMANCE
5\.01 Chapter 5 of the Borrower's Completion Report discusses
details of NEPA's financial performance which was characterized by:
- after FY73, a return on net fixed assets between 3 and 5%,
i\.e\. far below the 8% stipulated in Loan Agreement; FY80,
the year immediately after two consecutive tariff increases
(which about doubled the revenue per kWh), is an exception
with a 12% return;
- internal cash generation decreasing from 76% of capital
expenditure to 7% and then increasing to 42% after
implementation of new tariffs;
- a current ratio decreasing to 1\.3 and then jumping to
nearly 6\.0 after the 1979 tariff adjustment dramatically
increased the cash account;
- gross customers' receivables increasing from 4 to about
6 months' billings;
- an investment program far in excess of that foreseen and
increasingly financed through long term debt thus entailing
an increase in the debt/equity ratio from about 30:70 to
80:20\.
- 49 -
5\.02 The improvement in the revenue situation at the end of the
project period, as satisfactory as it may appear, conceals numerous
serious problems\. In 1980 NEPA's statistics show a sharp increase in
energy unaccounted, which may be a result of the high level of unmetered
consumption, perhaps a consequence of the tariff increase\. Furthermore,
accounts receivable have consistently increased and reached a critical
level reflecting persisting if not worsening collection problems\.
6\. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT
Organization and Management
6\.01 Federal Decree No\. 24 of 1972 creating NEPA and defining its
role and structure remained valid during the entire project period\. It
seems quite adequate for pursuing the objectives the Government had set
for NEPA, i\.e\. essentially to develop and maintain an efficient,
coordinated and economic supply of electricity for all parts of the
country\. The organizational set-up envisaged in the decree was
adequate, too\. Neither the decree governing NEPA nor this set-up were
at the root of the institutional problems that plagued NEPA especially
during the second half of the project period and thereafter\.
6\.02 More problematic than the above decree was legislation that
was not primarily directed against NEPA but seriously affected it, in
particular:
- the partial abrogation in 1977 (Enterprises Promotion Act)
of the exemption NEPA had been granted from the obligation
of all companies doing business in Nigeria to incorporate
themselves in the country (see Borrower's Ccmpletion
Report, para\. 3\.88),
- the ordinances defining the procedures for the approval of
awards and the granting of import licenses, and
- the subjection of NEPA to civil service salary scales\.
6\.03 The first of the above measures restricted international
competitive bidding but it did not affect the Bank project, as at the
time it became effective all bidding under Loan 847-UNI was completed\.
In the context of the Fifth Power Project (Loan 1766-UNI), Government
agreed to exempt companies with contracts finar-Ced through the loan from
incorporation\. The second measure did not substantially affect the
Fourth Project either, as Government also implemented it late in the
project period\. However,the third, decided in 1975, is the most
important reason for NEPA's limited achievement of the project
objectives\. Civil service salary scales, compared with remunerations in
the private sector, were far too low for NEPA to attract and retain the
skilled personnel it needed\. This problem still affects NEPA today\.
- 50 -
Many employees stay with NEPA only until they have received sufficient
training to allow them to get better paid jobs in other sectors of the
Nigerian economy\. The Bank was fully aware of the importance of the
salary issue throughout the project period\. However, it could not
address the problem, which affected all parastatals, in the context of a
NEPA project alone\. Therefore, within the Sixth Power Project, the Bank
asked for a comparative analysis of salary scales in the Nigerian
economy as a basis for possible corrective measures\. Government
appointed a commission under Mr\. Onosode to examine the problem in 1981
but declined to act upon its recommendations\. Up to late 1984, no
progress of substance had occurred and NEPA's skilled staff losses
continue\.
6\.04 Chapter 6 of the Borrower's Completion Report discusses the
institutional aspec\.ts related to the Fourth Power Project in more
derail\. It shows, in particular, that at the time of the project the
management assistance program vas successful in introducing
efficient management procedures and in Improving training both
quantitatively and qualitatively\. Unfortunately, after project
completion, improvement did not proceed further\. It seems that, on the
contrary, the quality of management has again deteriorated, not so much
at the top as at middle levels, where the difficulty in retaining
qualified staff is most pruLLLct\.
Covenants
6\.05 NEPA employed consultants to carry out the project (Section
3\.02 of Loan Agreement) and to prepare a long-range sector expansion
program as well as feasibility studies for the next generating plant
(Section 3\.08 of Loan Agreement)\.
6\.07 NEPA had a consultant carry out a valuation of NEPA's
assets as of March 31, 1972 in accordance with Section 4\.05 of the Loan
Agreement\.
6\.08 As already discussed in Chapter 5 above, NEPA never came near
to meeting the rate covenant (Section 5\.05 of Loan Agreement) requiring
the utility to earn a return on net fixed assets in operation of at
least 8%\.
6\.09 After the fact, it is difficult to judge whether at any time
in the past debt service coverage as defined in Section 5\.07 of the Loan
Agreement was lower than 1\.5 and therefore called for NEPA to obtain
Bank agreement for incurring further long term debt\. It seems that in
FY77 and FY78 this was the case\. However, there appears to be no record
that NEPA ever asked the Bank for such approval\.
- 51 -
7\. PROJECT JUSTIFICATION
Demand
7\.01 Chapter 4 of the Borrower's Completion Report compares
forecast and actual energy generated and sold as well as the
corresponding system loads\. It shows in particular that up to FY79
annual growth of generation deviated little from the average of 16\.2%,
which is slightly lower than the 17% forecast\. Growth of sales,
however, with an average 15\.6%, was somewhat lower than the 17\.5%
expected\. This reflects an increase of the losses from about 17% of
energy generated and purchased in FY73 to about 19% in FY 79 as against
a forecast decrease from 19\.5 to 16\.5%\. Also between FY73 and FY79,
peak load on the National Grid increased from 340 to 979 MW, whereas the
appraisal report forecast a growth from 362 to 931 MW\. FY 1980 and to a
lesser degree the following years show a striking departure from the
above trends with total system losses about twice as large as those in
preceding years\. In the second half of 1983, NEPA had not yet reached
definite conclusions about the reasons for the anomaly\. However, it
seems to be the result of large unmetered consumption\.
7\.02 In any event, even though the reliability of NEPA's data is
limited, it is fair to state that the demand expected in 1972
materialized\. In fact, there always has been suppressed demand, be it
in the form of connected customers not receiving as much power and
energy as they required, or potential consumers that NEPA was not in a
position to connect up\. The installation of captive plant in excess of
600 MW is a consequence of this situation\.
Least Cost Solution
7\.03 The 1972 appraisal showed that the first Kainji extension was
the least cost solution as the capital cost alone of the two additional
hydro units was already lower than that of any thermal alternative\.
This, of course, still holds after completion of the project, as the
actual equipment cost was lower than that estimated at appraisal time,
whereas, between 1972 and 1976, cost of thermal units underwent
substantial increases\. The reservation made in the appraisal report
that among the hydraulic turbine types propeller units would have
represented the least cost solution still holds (para\. 2\.08)\. Indeed,
the slightly greater efficiency of Kaplan turbines does not appear to
justify the additional cost of such units and the benefits of their
better flexibility are not easily quantifiable\. Moreover, it is worth
noting that the next units NEPA installed at Kainji are of the propeller
type\.
7\.04 Within the general transmission concept of NEPA, which NDA had
determined and justified in the context of the first stage of the Kainji
development, the second 330 kV Kainji-Lagos line was the least cost
solution as there was no alternative to it\.
- 52 -
7\.05 In 1972, the appraisal team had no detailed analysis available
to show that the proposed distribution extensions and electrification
represented the least cost solution to provide electricity to the
corresponding areas of development\. The consultant's studies,
conducted under this project, established this fact and also
optimized the design\. As the actual costs of the projects executed are
substantially higher than those estimated by the consultants in current
terms but only some 10% higher in constant terms, it is fair to assume
that after construction the consultants' conclusions remain valid\.
Economic Return
7\.06 Applying the method which was used for the appraisal and
which led to a return of 23% results, after project completion, in a
comparable rate of 28% for the first Kainji extension\. However, this
return is sensitive to changes in the basic assumptions\. A reduction of
10% in the assumed revenues from non-industrial consumers and a 10%
increase in the rather uncertain transmission and distribution costs
reduces the rate by 5 and 3 percentage points, respectively\.
7\.07 As the construction of the second 330 kV line Kainji-Lagos was
justified essentially through further extensions of the Kainji plant,
only the justification for the advancement of its construction by three
years had to be established\. The evaluation set forth in the appraisal
report demonstrated that the return for this early construction was
about 12%\. The data used, however, was rather speculative\. At this
time, similar data is still affected by high uncertainty\. However,
qualitatively, it can be said that the frequency of faults observed
were, in the years 1972-1975, rather in excess of the 17 per year used
for the appraisal\. Therefore, it seems reasonable to state that the
return on this part of the project is likely to be higher than that
estimated in 1972\.
7\.08 Since the costs were unreliably established in the first place
there is little point in trying to determine the return on the
individual distribution expansion and electrification projects
(para\. 3\.24) or on the sum of the programs\. Instead it seems more
meaningful to calculate instead a return on the entire FY72-78 tranche
of NEPA's investment program which includes over 95% of the above
distribution and electrification program and a similar percentage of the
Bank project\. This results in a rate of 12%, which, at first sight, is
adequate\. It is evident that an investment that is quickly used to full
capacity should have a high return\. Nevertheless, the above result
should not lead to an exaggerated sense of satisfaction, as the
implementation of the Fourth Power Project went in parallel with the
deeply worrying increase in the installation of captive plant referred
to in para\. 4\.01 with an associated loss to the Nigerian economy which
substantially reduced the positive economic benefit of the investment
program discussed here\. The above rate of return on the tranche of
investment is not overly sensitive to a variation in the parameters as a
10% reduction in the estimated benefits only reduces it by 2\.5
percentage points\.
- 53 -
8\. BANK PERFORMANCE
Assessment of the Borrower's Implementation Capacity
8\.01 Early on in project preparation the Bank perceived the need
for considerable outside assistance to NEPA's manaEiment in order to
ensure that a Bank project had a reasonable chance of success\. The
100 man-year Canadian program agreed between Government and the Bank was
adequate\. The fact that after some understandable initial difficulties
the project progressed satisfactorily until about 1975 tends to confirm
this judgment\. The less satisfactory performance after 1975, both In
project implementation and in operations, to a large extent resulted
from circumstances beyond NEPA's control, particularly the economic boom
which overtaxed Nigeria's institutions and infrastructure\.
8\.02 Initially, the Bank had envisaged that NEPA's General Manager
would be an expatriate\. However, in 1972, it agreed to the appointment
of NDA's former Chief Executive to NEPA's top position\. This was a wise
decision as the appointee proved very competent and later developments
showed that a foreigner would never have had the ear of the Board and of
the Government to the same extent\. Thus, this choice enhanced the
Borrower's implementation capacity\.
Supervision
8\.03 Annex 3 sets forth a schedule of the supervision missions the
Bank carried out in connection with the project\. It is characterized by
the unusually long intervals of 1, 1 1/2, and 2 years between full
missions\. This was mainly due to delays in obtaining Government
agreement to such missions\. Thus, the Bank had to delay the most
important supervision mission (the second), which was to clarify the
pending procurement issues, from mid-1973 to the end of that year\. The
missions that took place towards the end of project implementation were
supervisions that the Bank carried out in connection with pre-appraisal
and appraisal of the Fifth Power Project in 1978, i\.e\. at a time when
Government and NEPA's interest in cooperation with the Bank had
increased again\. However, these late missions contributed little to
improve project results\. Currently, mission visits are cleared satis-
factorily by the Government and NEPA\.
Working Relationship
8\.04 Relations between Bank staff and Government officials were
generally good even though the relationship between the institutions was
to some extent at arm's length throughout project preparation and
implementation\. The latter is reflected in the Government's exceedingly
- 54 -
cautious response to the Bank's request for information about the
content of the planned legislation concerning NEPA (para\. 2\.06), and to
the Bank's request for permission to carry out supervision missions
(para\. 8\.03)\. This reluctance was further increased once the oil boom
started, as that on the one hand reduced the need for Bank financial
assistance and, on the other hand, reduced the Bank's contribution to
NEPA's investment program to a small proportion\.
8\.05 At the start of project implementation, relations with the
Borrower were difficult, as its management was not properly organized
until early 1973\. The fact that the various managers of the former ECN
and NDA were in competition for the top positions in NEPA also made
contacts delicate\. Once management was set up and initial difficulties
overcome, in particular those in connection with procurement, working
relationships with NEPA substantially improved\.
9\. CONCLUSIONS
9\.01 The project did not succeed in fully meeting all of the
objectives set out in para\. 2\.11\. NEPA completed the physical part of
the project, but it did so in rather loose cooperation with the Bank,
although the latter often manifested its willingness to contribute to
the solution of the many operational, organizational, and institutional
problems that existed from the start and cropped up from time to time\.
The main reason for this was the oil boom, which temporarily freed
Nigeria from the need to seek financial support from development
institutions\. As the economy thrived, the Government, which had always
been quite reluctant to accept the conditions attached to Bank loans,
became even more opposed to such conditions\. Therefore, the next Bank
operation (Power V), that was supposed to assure the continuity of the
policies and measures associated with the Fourth Power Project, did not
materialize until October 1979, i\.e\. about four years later than planned
in 1973\.
9\.02 The build-up of a strong management and training capability,
though it occurred, did not result in a lasting improvement, mainly
because NEPA's salary scales did not permit the utility to retain highly
qualified and motivated staff in the numbers required\. The growth of
demand, which was extraordinarily fast for a relatively large utility,
also contributed to NEPA's inability to maintain the quality of
management and financial control, however modest, it had attained after
the first three years of the project\. The same factors hampered the
improvement of NEPA's quality of supply which, in some parts of the
country and particularly in Lagos, even deteriorated, making it
exceedingly difficult to implement the tariff increases necessary to set
the utility on a strong financial base\.
9\.03 The Bank's support of NEPA's planning activities was probably
the most successful of the measures associated with the project, though
in this area too, a more timely follow-up via an earlier Bank project
- 55 -
might have helped avoid the deterioration observed in recent years, and
which the two successive Bank operations as yet have not succeeded in
reversing\.
9\.04 In retrospect, with the benefit of hindsight, one might ponder
the wisdom of proceeding with the loan given the reluctance of the
Government to provide information required for project appraisal
(para\. 2\.06) and the inadequate project preparation (para\. 2\.04)\. Given
the importance of assisting in such a critical sector and the importance
of institutional development it is difficult to argue that the Bank
should not have proceeded\. It is also difficult to see what the Bank
should have handled differently to assure the success of the project\.
Indeed, whatever influence it could have had under the circumstances
foreseeable at the time of appraisal was nearly eliminated when the
economy unexpectedly soared as a consequence of the first round of large
increases in oil prices making the Government further doubt the value of
a close relationship with the Bank in the power sector\.
Annex 1
NIGERIA
FOURTH POWER PROJECT
COMPLETION REPORT
Estimated and Actual Project Costs
million N (million US $)
Actual Appraisal Estimate Cost Variation
in Z of Estimate
Local Foreign Total Local Foreign Total Local Foreign Total
Part A: First Kainji extension 3\.4 9\.7 13\.1 2\.9 11\.0 13\.9 + 17 - 12 - 6
(2 units of 100 MW each (5\.4) (15\.5) (20\.9) (4\.3) (16\.8) (21\.1)
and extension of sub-
station
Part B: Reinforcement of 330 kV 1\.4 2\.1 3\.5 0\.7 1\.8 2\.5 +100 + 17 + 40
substations (including (2\.2 (3\.4) (5\.6) (1\.0) (2\.8) (3\.8)
Benin)
Part C: Second 330 kV line 6\.2 9\.0 15\.2 5\.7 11\.2 16\.9 + 9 - 20 - 10
Kainji-Lagos (9\.9) (14\.4) (24\.3) (8\.6) (17\.2) (25\.8)
Part D: Reinforcement of exis- 32\.8 41\.0 73\.8 21\.4 22\.5 43\.9 + 53 + 82 + 68
ting distribution sys- (52\.5) (65\.6) (118\.1) (32\.5) (34\.2) (66\.7)
tem and electrification
Part E: Power Development 0\.8 1\.5 2\.3 1\.0 2\.0 3\.0 - 20 - 25 - 23
Studies (1\.3) (2\.4) (3\.7) (1\.5) (3\.1) (4\.6)
Part F: Management Studies 0\.8 2\.5 3\.3 0\.8 1\.9 2\.7 0 + 32 + 22
1\.31 (4\.0) (5\.3) 1121 (2\.9) (4\.1)
Total 45\.4 65\.8 111\.2 32\.5 50\.4 82\.9 + 40 + 31 + 34
(72\.6) (105\.3) (177\.9) (49\.1) (77\.0) (126\.0)
- 57 -
Annex 2
Page 1 of 4
NIGERIA
FOURTH POWER PROJECT
COMPLETION REPORT
Economic Justification
1\. Basic Assumptions
1\.01 For the computations to confirm that the executed sub-projects
represent least cost solutions to meet the corresponding objectives and
to determine the economic rate of return, the present report uses the
following basic assumptions:
Costs and benefits are expressed in constant 1978 Naira
i\.e\. of the year when most of the project was completed\.
- The computations use a shadow exchange rate of US$ 1\.25 to
the Naira\. The market price for local labor was used as in
Nigeria there was no unemployment of the type of skilled
and semi-skilled manpower that NEPA required\.
2\. Least Cost Solution
First Kainji Extension
2\.01 The total cost of the 200 MW extension was US$ 21 million,
which corresponds to 105 US$/kW which is substantially less than the
least expensive thermal alternative\. In 1978 prices, the latter cost in
excess of 250 US$/kW\. Even taking into account that to make the
alternative strictly comparable one might have to add to this one-third
of the cost of the additional 330 kV line Kainji-Lagos, the unit capital
cost of the extension would still not exceed 150 US$/kW\. Furthermore,
considering that the operating costs of the thermal alternative would
have been much higher than that of the hydro, it is safe to state that
the first Kainji Extension was the least cost way of adding 200 MW of
generating capacity\. If one assumes that a thermal plant of 130 MW
would be capable of producing 800 GWh annually, i\.e\. the minimum output
of the extension (which under normal circumstances can generate 1350 GWh
annually), the capital costs of the hydro extension and the thermal
alternative would, under the worst case for the extension, be about
equal at US$ 30 million\.
Second 330 kV Kainii-Lagos Transmission Line
2\.02 Within the general concept of the Nigerian transmission
- 58 -
Annex 2
Page 2 of 4
system, NDA's consultants had already demonstrated in the 1960's that a
330 kV system was the least cost solution for further development of the
transmission network\. Therefore, the duplication of the existing line,
once the latter's capacity was fully used, was the least cost expansion
of the system within the overall concept of the grid\.
Distribution Extension and Electrification
2\.03 At project preparation time, only general studies of these
items existed\. Therefore, ECN hired consultants to study some of the
sub-projects ultimately included in the Bank project, in particular, the
Lagos Metropolitan Distribution Project, the Major Towns Scheme, and the
Zaria-Funtua-Cusau Scheme\. These studies as well as those included in
the Bank project mostly concerning electrification, set forth standards
for such facilities in Nigeria\. Such standards describe the least cost
alternative to provide the service in the quantity and quality desired
within a uniform concept\. The qualitative standards were set on the
basis of experience and judgment in agreement with the Bank\. They still
seem reasonable, even if in many places the quality of supply is
deficient, as the latter is mostly due to substandard maintenance and
not to inadequate design and/or equipment\.
3\. Economic Rate of Return
First Kainji Extension
3\.01 The appraisal team assumed that, of the 1350 GWh assignable to
the extension, non-industrial consumers would use 650 GWh and industries
270 GWh, the remaining 270 GWh representing losses\. Costing the first
tranche at the price customers were paying in 1972 and the second
tranche at the cost of generation by captive plant led to a return of
23%\.
3\.02 The present analysis proceeds similarly\. However, the costs
also include one third of the cost of the second Kainji--Lagos line, as
the latter is required to assure a reasonable reliability but is only
justified in connection with the further extensions\. For the
non-industrial consumption, in accordance with NEPA's income statement,
the cost of transmission and distribution is about 0\.025 N/kWh and the
revenues in 1977 correspond to 0\.032 N/kWh\. On the basis of the 1983
Energy Sector Assessment generating costs by captive plant are at least
0\.025 N/kWh\. Therefore, the economic cost and benefit streams are as
follows:
- 59 -
Annex 2
Page 3 of 4
Year 1973 1974 1975 1976 1977 1978-2002
(in million N)
Costs
Capital 3\.0 2\.0 5\.0 8\.0 3\.0
Operation 0\.2 0\.8
Transmission and 4\.0 16\.2
Distribution
Benefits
Revenue from non-
industrial consumers 5\.0 20\.8
Savings on captive
generation 1\.5 5\.7
3\.03 The resulting rate of return is 28% which is high but
understandable as the revenues from non-industrial consumers
(0\.032 N/kWh) are substantially higher than those assumed in 1972
(0\.024 N/kWh)\. However, the result is sensitive to changes of the
parameters, in particular the cost of transmission and distribution
(which is uncertain)\. A 10% increase in the latter reduces the return
by some 3 percentage points\. It is even more sensitive to the tariff
for non-industrial consumers as a decrease of this rate by 10% reduces
it by 5 percentage points\. However, future tariffs are unlikely to be
lower in real terms than those of 1978 used here\.
Second Kainji-Lagos Transmission Line
3\.04 Originally, NDA and its consultants considered the
commissioning of the second line necessary at the time when peak load in
the interconnected system wculd have reached 1200 MW, which they
forecast to be the case by about 1980\. However, as the reliability of
the first line was much lower than expected, they proposed to advance
construction of the second line by three years\. The Bank concurred and
included the item in the Bank project\. The appraisal team demonstrated
that advancing the installation of the line by 3 years yielded a return
of at least 12% on the basis of the benefits of the increased
reliability to industrial consumers valued at the shadow-priced salaries
paid to workers to make up the production lost during power
interruption\. However, the data used for calculating this return was
rather uncertain\. The same still holds after completion of the project\.
Nevertheless, it would seem that the 17 interruptions per year which the
appraisal team used were exceeded at least twice between 1972 and 1975\.
Furthermore, the cost of the line was lower than expected and the demand
- 60 -
Annex 2
Page 4 of 4
increased roughly in line with the forecast\. Thus it seems reasonable
to assume that the rate of return on advancing the construction of the
line by three years is probably higher than estimated in 1972\.
1972-78 Investment Program
3\.05 As set forth in para\. 7\.08 of the report, it is not worthwhile
calculating a return on the distribution extension and electrification
projects\. On the other hand, it is worth determining such a return on
the 1973-78 tranche of NEPA's investment program\. This return
corresponds to the discount rate equalizing incremental cost and
incremental revenues related to the investment program\. The
corresponding cost and benefit streams with operating cost calculated on
the basis of NEPA's income statement and benefits on actual tariffs
until FY79 and 0\.055 N/kWh (i\.e\. substantially lower than the FY80 rate
of 0\.065 N/kWh) for the following years, are as follows:
Fiscal Capital Cost Operating Cost Revenues
Year
(in million N)
1973 22 --
1974 21 -- --
1975 65 2 10
1976 116 5 20
1977 146 10 35
1978 324 15 50
1979 -- 20 70
1980 -- 27 118
3\.06 The resulting return is 12%\. It is rather sensitive to a
change in the tariff prevalent from 1980 onwards, as a 10% drop in the
rates reduces it by about 2\.5 percentage points\. However, a 10%
increase in the operating costs reduces it only by about 0\.5 percentage
points\.
- 61 -
Annex 3
NIGERIA
FOURTH POWER PROJECT
COMPLETION REPORT
Schedule of Supervision Missions
Date of Duration Mission Months since
mission days staff previous mission
12/72 12 Engineer No\. 1
Fin\. Anal\. No\. 1
Economist No\. 1
12/73 20 Engineer No\. 1 12
Fin\. Anal\. No\. 1
06/74 6 Fin\. Anal\. No\. 1 7
02/75 7 Engineer No\. 2 8
Fin\. Anal\. No\. 1
05/77 10 Engineer No\. 2 27
01/78 10 Fin\. Anal\. No\. 2 8
06/78 5 Engineer No\. 2 5
08/78 1 Fin\. Anal\. No\. 3 2
The last three missions were carried out in connection with the
pre-appraisal of the Power V Project\.
 | APPROVAL |
P007793 | R E S T R I C T E D
FILE COpy Report No\. P90
This document was prepared for internal use in the Bank\. In making
it available to others, the Bank assumes no responsibility to them for
the accuracy or completeness of the information contained herein\.
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
REPORT AND RECOMMENDATIONS
of the
PRESIDENT
to the
EXECUTIVE DIRECTORS
on a
PROPOSED LOAN
to the
REPUBLIC OF PANAMA
for a
HIGHWAY REHABILITATION AND MAINTENANCE PROJECT
in
PANAMA
July 1, 1955
INTERNATIONAL BAN\. FOR RECONSTRUCTION AND DEVELOP1'ENT
REPORT A]CD RECOiMVENATIONS CF THE PRESIDENT TO THE
EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE
REPUBLIC OF PANAMA FOR A HIGHWAY REHALBILITATION
AYD 1AIIYTENANCE PROJECT
1\. I submit the following report and recommlendations on a pronosed
loan of $5\.9 million to the Republic of Panama, to assist in financing a
program for the rehabilitation of its highway system\.
PART I - HISTORICAL
2\. At the request of the Government of Panama, a Bank mission visited
Panama during August and September 1954 to study a 4-year program of highway
construction prepared by the h;inistry of Public llorks\. After a study of the
program and of the organization of the Highway Department of the Vinistry of
Public Works, the mission concluded that a program of road construction weas
premature and that it would be preferable for the Government first to under-
take a program for the rehabilitation of the existirg highway system and to
strengthen the highway organization\.
3\. These recommendations were adopted by the late President Remon as
the basis of a new national highway policy for Panama, and he created in the
Ministry of Public 'Torks a Comisi6n de Caninos, Aeropuertos y 1Niuelles (CAM)
which was made responsible, among other things, for all matters pertaining
to highways\. The new policy is fully supported by Dr\. Ricardo Arias who
succeeded to the Presidency after the assassination of President Remon earlier
this year\.
4\. As a first step in strengthening the highway organization, the Govern-
ment, early in 1955, hired competent consultants and placed them in executive
positions in the Highway Department of CAM\. Their first task was to prepare
a report entitled "A 4-Year Program for Administrative Reorganization, Per-
sonnel Training, Rehabilitation and Maintenance of Public Highways," which
was presented to the Bank in April 1955\.
5\. This program appeared to be suitable for Bsnk financing, and formal
loan negotiations began on June 15, 1955, with Mr\. Roberto Heurtematte,
Comptroller General of the Republic of Panama, as the representative of the
Government\.
6\. If the proposed loan of $5\.9 million were made, the total amount
of Bank loans to Panama would be equivalent to '7\.39 million\. The Bank has
already made the following loans to Panama-
- 2 -
"1\.2 million, 7-year, 4-5/8,0 loan of September 25, 1953
to the Instituto de Fomento Economico for agricultural
machinery;
$\.29 million, 8-year, 4-5/8% loan of September 25, 1953
to the Instituto de Fomento Economico for the construc-
tion of a grain storage plant in Panama\.
PART II - DESCRIPTION CF THE PROPOSED LOAN
Borrower
7\. The Borrower wc,uld be the Republic of Panama\.
Amount
8\. The loan would be in an amount in various currencies equivalent to
%'5\.9 million\.
Purnzose
9\. The proceeds of the loan would be used to provide the Borrower with
the foreign currency for the financing of equipment, machinery, materials and
services required for the following project which would be carried out by CAi"i:
(a) the organization and strengthening of the Highway
Department of CAM so that it will be able to carry
out effectively the maintenance and the construction
of public highways and roads in "anama;
(b) a program for the selection and training of personnel
to fill the administrative and supervisory positions
created in the newly organized Highway Department,
including the positions now held by the consultants,
and a program for the traiiiing of skilled labor at all
levels in proper methods of maintenance and construc-
tion of highways and the operation, servicing and repair
of equipment;
(c) the reconstruction of approx\.imately 645 km of primary
roads and 380 km of secondary roads, including improve-
ment in base, pavement, surface, shoulders, bridges ard
culverts\. The roads would be widened and re-aligned
where necessary\.
Interest\. Commission and Commitment Charges
10\. The loan would bear interest at the rate of 4-1/4% per annum,
including the statutory commission of 1%\. The commitment charge would be
3/4 of 1% per annum and would accrue from the Effective Date of the Loan
Agreement or 60 days after the Loan Agreement is sie ied, whichever is earlier\.
Amortization
11\. The loan would be for a period of 9 years\. The loan would be
serviced by semi-annual principal and interest payments beginning May 1,
1959 and ending May 1, 1964 as set out in Schedule I of the proposed Loan
Agreement\.
Legal Instruments and Legal Authority
12\. A draft Loan Agreement between the Republic of Panama and the Bank
is attached (No\. 1)\. The following are points of special interest in the
proposed Loan Agreement:
(a) Section 5\.09 would require the Borrower to retain
consultants satisfactory to the Bank who would serve
as executives in the Highway Derartment in such posi-
tions and for such periods as prescribed by the Banlc;
(b) Section 5\.10 would require the Borrower to be guided by
the recommendations of the consultonts with respect to
the organization of the Highway Department and policies
for the recruitment, training and dismissal of personnel;
(c) Section 5\.11 would require the Borrower to bind itself
not to undertake or execute any major project for the
construction of new highways unless it had previously
satisfied the Bank that the necessary funds to carry out
this projpct were available\. For the purposes of defini-'
tion, a pzoject costing more than 25,000 balboas would be
considered to be a major project\. The Inter-American High-
way would be excluded from the provisions of this Section\.
13\. The National Assembly of Panama has authorized the'Government to
contract loans abroad up to 10 million balboas or their equivalent in other
currencies\.
14\. The report of the Committee provided for irn Article III, Section
4(iii) of the Articles of Agreement is attached (No\. 2)\.
Local Financing
15\. In order to ensure that there will at all times be sufficient funds
to meet the local expenditures of the project, notwithstanding fluctuations
in the collection of revenues allocated to highwray works, the Government of
Panama, on June 15, 1955, entered into an agreement with the Banco Nacional
de Panama whereby the Banco Nacional will open a special line of credit, for
a 4-year period, for amounts up to the sum of 250,000 balboas (ap7roximately
3 months' requirement of local funds over the 4-year period of the program)\.
Its validity would have to be affirmed in the legal opinion for the purposes
of the Effective Date as specified in Section 7\.01 of the proposed Loan Agree-
ment\.
- 4 -
PART III - APPRAISAL OF TIE PROPOSED LOAN
16\. A detailed appraisal of the project (No\. 3) has been distributed
(R-886)\.
Justification of the Prolect
17\. Except for activities connected with the Canal and the Canal Zone,
the economy of Panama is almost wholly dependent on agriculture\. The main
agricultural areas are some distance from the principal consuming centers
and almost all produce has to be transported overland\.
18\. The poor condition of the existing roads causes excessive wear and
tear on motor vehicles, high fuel consumption and slow transport service, all
of which raise transportation costs\. High transport costs seriously reduce
farm prices and remove the incentive to produce\. Poor roads also force farm-
ers to limit output to products which can withstand the rigors of transport\.
By improving and speeding up road communications, the project would have
important and far-reaching effects on agricultural production and contribute
substantially to the development of Panama\.
19\. The new establishment of a highway department organized to carry
out permanent maintenance and construction of highways and the training of
personnel to staff such an organization should improve the effectiveness and
reduce the costs of future highway maintenance and construction\.
Method of Procurement
20\. All equipment and materials bought abroad will be acquired on the
basis of international bidding or shopping\.
Economic Situation
21\. A rerort on the current economic position and prospects of Panama
(W\.H\. 39-a circulated under Secretary's Memorandum 1-225 on April 6, 1955)
outlined the advances in production achieved in recent years and indicated
the need for more basic investment, especially in roads and power, to support
further economic development\. It pointed out that government finances had
improved over the previous two years, with higher revenues and a steep reduc-
tion in the floating debt\. Service on public external debt (including the
loan now proposed) will average about il\.8 million over the next five years\.
This would not be a heavy burden on government finance nor on foreign exchange
earnings\.
22\. As indicated in the economic report, recent treaty negotiations with
the U\.S\.A\. have led to agreement for an increase in the Canal annuity from
$430,000 to l,930,000, besides other provisions favorable to the economy,
such as greater opportunities for Panama to supply the Canal Zone market\. The
new treaty has been ratified by Panama and is now awaiting ratification by
the U\.S\.A\.
-5-
Prospects of Fulfillment of Obligations
23\. The outlook for the satisfactory execution of the project is favor-
able\. The work of the consultants hired by the Panamanian Government has
started in a most promising way and there is every prospect that it will so
continue\.
24\. The economic benefits which can be expected from the rehabilitation
of the existing road system of Panama would fully justify the exnenditure
and, indeed, compare more than favorably with any equivalent investment in
any other sector of the country's economy\.
25\. I have every confidence that the Borrower should be able to meet
its obligations\.
PART IV - COMPLIANCE -JITH TIE ARTICIES CF AGREEIENT
26\. I am satisfied that the Droposed loan would comply with the require-
ments of the Articles of Agreement of the Bank\.
PART V - RECOMMENDATIONS
27\. I recommend that the Bank make to the Republic of Panama a loan in
various currencies equivalent to $5\.9 million for a term of 9 years, with
interest (including commission) at the rate of 4-l/4A per annum and on such
other terms as are specified in the draft Loan Agreement, and that the Execu-
tive Directors adopt a resolution to that effect in the form attached (No\. 4)\.
Eugene R\. Black
July i, 1955 | APPROVAL |
P077752 | Documentof
The World Bank
FOROFFICIAL USEONLY
ReportNo: 36316-CN
PROJECT APPRAISAL DOCUMENT
ONA
PROPOSED LOAN
INTHEAMOUNT OF US$147 MILLION
AND A
PROPOSED GRANT FROM THE
GLOBAL ENVIRONMENT FACILITY TRUST FUND
INTHEAMOUNT OFUS$5MILLION
TO THE
PEOPLE'S REPUBLIC OF CHINA
FOR A
SECOND SHANDONG ENVIRONMENT PROJECT
January 30,2007
UrbanDevelopment Sector Unit
East Asia and Pacific Region
This document has a restricted distribution and may be used by recipients only in the
performance o f their official duties\. Its contents may not otherwise be disclosed without
World Bankauthorization\.
CURRENCYEQUIVALENTS
(ExchangeRateEffectiveMay 9,2006)
CurrencyUnit = RenminbiYuan (RMB)
RenminbiYuan 8\.0065 = US$1\.O
US$0\.1249 = RMB 1\.0
FISCALYEAR
January 1 - December31
ABBREVIATIONS AND ACRONYMS
FOROFFICIAL USE ONLY
Vice President: James W\. Adams
Country ManagerDirector: David Dollar
Sector Manager: Keshav Varma
Task Team Leader: Shenhua Wang
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not be otherwise disclosed without World Bank authorization\.
CHINA
Second ShandongEnvironmentProject
CONTENTS
Page
A\. STRATEGIC CONTEXT AND RATIONALE \. 1
1\. Country and Sector Issues \. 1
2\. Rationalefor Bank Involvement\. 2
3\. Higher Level Objectives to Whichthe Project Contributes\. 3
B
\. PROJECT DESCRIPTION \. 4
I\. Lending Instrument \. 4
2\. Project Development Objective and Key Indicators\. 4
3\. ProjectComponents\. 5
4\. Lessons Learned and Reflected in the Project Design\. 5
5\. Alternatives Consideredand Reasonsfor Rejection\. 6
C\. IMPLEMENTATION \. 7
1\. Partnership Arrangements\. 7
2\. Institutional and Implementation Arrangements \. 7
3\. Monitoring and Evaluation of Outcomes/Results\. 8
4\. Sustainability\. 9
5\. Critical Risks and Possible Controversial Aspects\. 9
6\. Loan and Grant Conditions and Covenants\. I O
D APPRAISAL SUMMARY
\. \. 11
1\. Economic and FinancialAnalyses\. 11
2\. Technical\. 13
3\. Fiduciary\. 13
4\. Social\. 14
5\. Environment\. 15
6\. Safeguard Policies \. 16
7\. Policy Exceptions and Readiness\. 17
8\. Compliance with Readiness Criteria\. 18
Annex 1: Countryand Sector Background \. 19
Annex 2: Major RelatedProjectsFinancedby the Bankand/or OtherAgencies \.27
Annex 3: ResultsFrameworkandMonitoring \. 28
Annex 4: DetailedProjectDescription \. 32
Annex 5: ProjectCosts\. 38
Annex 6: ImplementationArrangements \. 41
Annex 7: FinancialManagementandDisbursementArrangements \. 43
Annex 8: Procurement \. 51
Annex 9: EconomicandFinancialAnalysis \. 61
Annex 10: SafeguardPolicyIssues \. 79
Annex 11:ProjectPreparationand Supervision \. 100
Annex 12: Documentsinthe ProjectFile \. 103
Annex 13: Statementof Loansand Credits \. 105
Annex 14: Countryat a Glance \. 110
Annex 15: IncrementalCost Analysis \. 112
Annex 16: GEF Reviewby ScientificandTechnicalAdvisoryPanel \. 122
Annex 17: StrategicPartnershipInvestmentFund \. 130
Map Section
IBRD35288\. 34859
CHINA
SECOND SHANDONG ENVIRONMENT PROJECT
PROJECT APPRAISAL DOCUMENT
EAST ASIA AND PACIFIC
EASUR
Date: January 30,2007 Team Leader: Shenhua Wang
Country Director: David R\. Dollar Sectors: Sewerage (76%); Water supply
Sector ManagedDirector: Keshav Varma (13%); Solid waste management (11%)
Project ID: PO77752 Themes: Pollution managementand
Lending Instrument: Specific InvestmentLoan environmental health (P)
Environmental screeningcategory: Full
Assessment
Global SupplementalID: PO90377 Team Leader: ShenhuaWang
Lending Instrument: Specific Investment Loan Sectors: Sanitation (100%)
Focal Area: I-International waters Themes: Access to urban services andhousing
SupplementFully Blended?: Yes (PI
[XILoan [ ] Credit [XI Grant [ ] Guarantee [ ] Other:
For Loandcreditdothers:
Total BankFinancing: US$147\.00 million
ProposedTerms: Variable SpreadLoan
GracePeriod: 5 years
Years to Maturity: 20 years
CommitmentFee: 0\.75% ofundisbursedbalance, subject to waiver
Front-End-Feeon BankLoan: 1%subiect to waiver
RECONSTRUCTIONAND
DEVELOPMENT
GLOBAL ENVIRONMENT FACILITY 5\.00 0\.00 5\.00
Total: 134\.11 147\.00 281\.11
Borrower:
The People'sRepublic o f China
ResponsibleAgency:
SPPMO
No\. 46 Xiaoweisi Road
Jinan
Shandong Province
China
250001
Tel: 86-531-8708 8023; 8791 5106 Fax: 86-531-8794 1408
sppmo@jn-public\.sd\.cninfo\.net; sppmo@163\.com
:Y 7 8 9 10 11 12 13 14
4nnual 0\.00 10\.00 20\.00 25\.00 30\.00 32\.00 20\.00 10\.00
Sumulative 0\.00 10\.00 30\.00 55\.00 85\.00 117\.00 137\.00 147\.00
-Y 7 8 9 10 11 12 13 14
4nnual 0\.00 0\.50 0\.50 0\.50 1\.oo 1S O 0\.50 0\.50
Sumulative 0\.00 0\.50 1\.oo 1S O 2\.50 4\.00 4\.50 5\.00
Does the project depart from the CAS incontent or other significant respects?
Re$ PADA\.3 [ ]Yes [XINO
Does the project require any exceptions from Bank policies?
Re$ PAD D\.7 [XIYes [ ] N o
Have these been approved by Bankmanagement? [XIYes [ ] N o
I s approval for any policy exception sought from the Board? [ ]Yes [XINO
Does the project include any critical risks rated "substantial" or "high"?
Ref: PAD C\.5 [XIYes [ ] N o
\.#
Does the project meet the Regional criteria for readiness for implementation?
Ref: PAD D\.7 [XIYes [ No
\.I
Project development objective Re$ PAD B\.2, TechnicalAnnex 3
The development objective i s to improve the environmental conditions inparticipating
municipalitieskounties through a package o f priority interventions, including upgrading and
development o f wastewater collection and treatment facilities, river embankment rehabilitation,
solid waste management, water supply improvements, industrial pollution monitoring, and
enhancement o fthe financial performance and efficiency o f key urbanenvironmental service
agencies\.
Global Environment objective Re$ PAD B\.2, TechnicalAnnex 3
The Global Environmental Objective o fthe GEF activity is to reduce land-based pollution along
the Yantai coast and the Bohai Seathrough development o f a pilot septic-tank management
system inYantai and dissemination o fthe Yantai model inShandong Province and inother parts
o f China\.
Project description [one-sentence summary of each component] Re$ PAD B\.3\.a, Technical
4nnex 4
The proposed project has the following four components: (1) wastewater collection network and
Itreatment facilities inGaomi, Huantai, Qixia, Weifang, Weihai, Yantai and Zaozhuang, with
associated river embankmentrehabilitation inQixia, Weifang and Zaozhuang, and development
of apilot septic tank managementsysteminYantai co-financed by GEF; (2) solid waste
management inHeze and Rizhao; (3) water supply improvements inGaomi and Huantai; and (4)
institutional development andcapacity buildingfor utilities, Environmental Protection Bureaus
(EPBs) and decision makers (see Annex 4 for a detailed description, Annex 5 for a cost
breakdown and Annex 15 for the GEF activity incremental cost)\.
Which safeguardpolicies are triggered, ifany? Re$ PAD 0\.6, TechnicalAnnex10
Environmental Assessment (OP/BP/GP 4\.01)
Involuntary Resettlement (OP/BP/4\.12)
Dam Safety (OP4\.37)
Significant, non-standardconditions, if any, for:
Re$ PAD C\.7
Board presentation:
None
Loadcredit effectiveness:
No project specific conditions\.
Covenants applicable to project implementation:
(a) Maintainthe SPPMO and localPMOSthroughout implementation staffed with qualified and
adequate personnel;
(b) On-lend the loanandpass the grant onterms andconditions satisfactory to the Bank;
(c) Qixia, Weifang and Zaozhuang to prepare and submitto the Bank, no later than February
28,2008, an operation and maintenanceplan (including financing) of their respective river
embankmentandwastewater components;
(d) By June 30,2009, Heze and Rizhao to complete a study report of the fees and user charges
neededto recover the costs of solidwaste managementservices; the report ofthat study, to
includeproposalsfor improved collections, and a detailed action planto enablerecovery ofcosts
to begin on January 1,2011,after taking into account the Bank?scomments on the study report
and action plan;
(e) Wastewater companies, together with the relevant governmental agencies such as local
municipaladministration bureausand EPBs, to take measuresto ensure effective monitoring and
enforcement arrangementson acceptablewastewater quality entering its sewers andto record
activities inperiodic project progressreports (PPRs);
(f) By December 3 1,2007, Gaomi, Qixia and Weifang to: (i) completion of remedial
ensure
work on involved dams, and (ii) submit satisfactory operational plansofthe dams to the Bank;
(g) By February 28 o f each year (withthe exception ofthe first annual report being due on
August 31,2007), an independentpanelof damsafetyexpertsto report on progressinremedial
work andon the safety ofthe four dams; and
(h)Within one year fromthe commissioningofthewater supplyinvestments,the Huantai
County Governmentto cause the industrieslocatedinthe serviceareaofthe HuantaiWater
Supplyand Wastewater Company, whichhavetheir owngroundwater sources ofwater supply,
to shut down such suppliesandconnectto the HuantaiWater Supply andWastewaterCompany
water supply system\.
CHINA: Second ShandongEnvironmentProject
A\. STRATEGIC CONTEXT AND RATIONALE
1\. Countryand Sector Issues
1\. China is experiencing rapid economic growth and urbanization, with over 40
percent of the population currently living inurbanareas, up from 29 percent in 1995\.
Over the next 15 years, that trend i s expected to continue with the urbanpopulation
projected to reach 50 percent by 2020\. This increase i s a result o f several factors, notably
the government's decision to reduce controls governing populationmobility and a falling
demand for farm labor\. The rapid urbangrowth is puttingpressure on cities to expand
their public infrastructure, increase municipal services and provide employment for
migrants\. Strong city performance is, therefore, critical to China's sustainable growth and
economic development\. Major urbanenvironmental problems that are associated with
fast growth, such as air and water pollution, are priority areas for development assistance\.
China has taken steps to address these problems through various programs andpolicies,
including the recent development o f national guidelines for reforming the country's
wastewater and solid waste sectors\. These guidelines encourage utilities to set adequate
user fees to achieve sufficient cost recovery, including capital costs, andpromote private
sector investment inutility operations\.
2\. Shandong Province, situated on the east coast o f China, has a 3,000-km coastline
on the conjunction betweenthe Bohai and Yellow Seas, both o f which drain a major part
o f the province\. The province i s divided into 17 municipalities and 139 counties, districts
and cities\. Ithas a population o fnearly 92 million, with approximately 40 percent of
people living inurbanareas\. Shandong Province i s one o f the fastest growing provinces
inChina\. From 2001to 2005, its average GDPgrowth rate was 13\.18 percent\. In2005,
Shandong's GDP totaled RMB1, 847 billon Yuan, rankingsecond inChina, with a
growth rate o f 15\.2 percent\. However, its strong economic performance has come at a
highenvironmental cost andinvestmentinenvironmental protectionhas not keptpace
with the province's rapideconomic development\.
3\. Infrastructure deficiencies generally found inShandong's fast growing smaller
cities and county towns include: (a) poor quality and intermittent drinkingwater supply,
due to inadequate water resources, which hinder the development o freliable municipal
water supply systems; (b) lack o f proper solid waste management systems; (c) low
resistance to flooding as many cities andtowns are built along rivers or adjacent to flood
plains without adequate protection, resulting inrecurring flood damage and insufficient
landfor urbanexpansion; and (d) unsatisfactory sanitationconditions, including
insufficient drainage and wastewater treatment and serious pollution o f rivers, leading to
severe damage o f the shallow Bohai Sea ecosystem\. Wastewater and solid waste services,
which are managed by municipal departments,are often supply driven, with limited
incentives to increase the efficiency o f service provision or improve cost recovery\.
1
4\. The Shandong Provincial Government (SPG) has embraced the central
government's policies and guidelines for improvingthe efficiency o f services and
ensuring full cost recovery by promoting institutional reform through the establishment
o f separate self-financing companies and ensuring that adequate tariffs for the services
are inplace\. Its policies on water resources call for accelerated restoration o f ground and
surface resources through enhancing the treatment and re-use o f wastewater\. Inthe
wastewater sector, provincial guidelines require that by 2010municipal cities and county
towns adequately treat 65 percent and 40 percent o ftheir wastewater, respectively, and
that across the province 20 percent o ftreated effluent be re-used\. Inthe solid waste
sector, provincial guidelines require that by 2010 municipal cities and county towns
develop adequate solid waste management treatment anddisposal facilities to handle 70
percent and 40 percent o f waste, respectively\. Shandong has also signed a Memorandum
o f Agreement initiated by the UnitedNations Development Program/Global Environment
Facility/International Maritime Organization (UNDP/GEF/IMO) Regional Program to
foster collaborationamong adjacent provinces inmanagingthe pollution o f rivers and
reducing land-based discharges into the Bohai Sea\.
5\. Inaddition, the Asian Development Bank(ADB) is also working with Shandong
Province to support pollution control inthe Hai River Basin\. The ADB's Hai River Basin
Pollution Control Project would finance construction o f wastewater treatment facilities,
installation o f water recycling systems and the development o f appropriate solid waste
management systems, along with technical assistance (TA) and capacity building
activities\.
2\. Rationale for BankInvolvement
6\. The World Bank has worked successfully with Shandong Province on a number
o f projects, including the Shandong Environment Project (SDEP), approved in 1997 and
closed inDecember 2005, and the Huai River Pollution Control Project, which was
approved in2001and i s shortly to close\. The proposed project would build on the strong
relationship established with the province by bothdeepening and broadening the extent o f
support for the province's agenda to sustainably improve environmental conditions,
particularly through improved wastewater and solid waste management\. As China
possessesrelatively little experience inthe comprehensive management o f solid waste,
the project presents the opportunity not only to bringbest international practices to China,
but also to support the implementationo fnational guidelines on solid waste management\.
7\. The province, with the approval o f the national authorities, has requested Bank
support for this proposed project andexpressed an interest inadditional support from
GEF' to demonstrate septagemanagement techniques\. These techniques would
contribute to a reduction inland-based pollution reachingthe Bohai Sea, a pollution
hotspot inthe seas o f East Asia\. The GEF financing i s made available through the
IGEF, established in 1991, helps developing countries fund projects and programs that protect the global
environment\. GEF grants support projects related to biodiversity, climate change, international waters, land
degradation, the ozone layer, and persistent organic pollutants\. GEF is the largest single funder of projects
to improve the global environment\.
2
Strategic PartnershipInvestment Fundfor PollutionReductioninthe Large Marine
Ecosystemsof East Asia (the Fund), which operatesunder GEF's OP10, the contaminant-
based operational program\. OP10stresses the removal of barriersto pollutionreduction,
which the Second Shandong Environment Project (SDEP2) targets by addressing septage
managementina holistic way\. The GEF activity i s consistentwith GEF Strategic
Objectives (SOs) inthe International Waters Focal Area\. It is consistentwith SO1
(catalyzereform and investment)as it will mobilize financial resourcesfor implementing
policy/institutional reforms andpollution-reducing investments to address septic tank
servicing\. With respect to SO3 (innovative demonstration), the GEF activity will
demonstrateseptage collection and itsjoint treatmentwith wastewater, which is a
technical novelty inChina and represents the least-cost technical solution inYantai\. The
GEF activity generatesa mix of localandultimately global benefits by reducingpollution
(Biochemical Oxygen Demand(BOD), nutrients) to the East China Sea\.
8\. GEF assistance is consistentwith: (a) China's strategy for reducing municipal
water pollution and (b) various international agreements, includingthe recommendations
of the Partnerships inEnvironmental Managementfor the Seas of EastAsia (PEMSEA),
the Bank's partnerinthe Fund\.The GEF activity is consistent withthe aims and
objectives of the World Summit on SustainableDevelopment, to which GEF subscribes\.
The Johannesburg Declaration made a renewedcommitment to sustainable development
and resolvedto speedily increaseaccess to suchbasic services as clean water\. Inaddition,
the MillenniumDevelopment Goal for environmental sustainability includes atarget to
halve, by the year 2015, the proportion ofpeople without access to safe drinking water\.
Reducing water pollution contributes to furthering all of these aims\.
9\. China i s eligible for GEF assistance through the World Bank, and the proposed
activity fulfills all seven conditions stipulated by the Fund\.The conditions stipulate that a
project: (a) is located inthe coastal watershed of East Asian Large Maritime Ecosystems
(LMEs); (b) demonstratesaninnovative techniqueto combat land-basedpollution; (c)
has a likelihood for replication inChina and East Asia; (d) would not proceedwithout
grant financing; (e) has supporting co-financing available; (f) has been endorsedby
China's GEF FocalPoint at the Ministry of Finance(MoF); and (g) meets relevant Bank
appraisal criteria\.
3\. Higher LevelObjectivesto Whichthe ProjectContributes
10\. The proposedproject will address two key themes inthe Bank's new Country
Partnership Strategy (2006-2010): (a) managing resource scarcity and environmental
challenges, especially relatedto water pollutionreduction and conservation; and (b)
promoting balancedurbanization and improvingthe quality of urbanlife\. Itwill also
supportthe government's EleventhFive Year Plan(2006-2010) which sets out a "people-
centered" strategy, aimed at achieving a "harmonious society" that balanceseconomic
growth with ecological concerns\.
11\. The GEF activity would facilitate China's efforts inmeeting the Putrajaya
Declaration of Regional Cooperationfor the SustainableDevelopment of the Seas of East
3
Asia, o f which China i s a signatory\. The declaration calls for nations to mobilize financial
resources for implementingpolicy and institutional reforms and stress-reducing
investments to address priority trans-boundary water issues, including reducing land-
based pollution o f a shared water body\. Inaddition, the resources mobilized under this
project are mainstreamed into the regular program o f a GEF agency, inthis case the
World Bank, under the framework o f the Strategic Partnership among nations andthe
GEF agencies that supported the PlanofImplementation ofthe World Summit on
Sustainable Development\.
12\. The GEF activity would take place within the Yantai wastewater component o f
the project\. GEF support would enable implementationo fthe proposed major
institutional and technological reform requiredto reduce land-based pollution which
would not otherwise be carried out\. The proposedproject will be implemented
simultaneously with the ADB supported Hai River Basin Environment Project\. This
would provide an opportunity for the two institutions to work collectively with the
province on key sector reform issues\.
B\. PROJECTDESCRIPTION
1\. LendingInstrument
13\. The lending instrumentsare a Specific Investment Loan and a GEF co-financing
grant\. The loan will be a single currency, variable spread loan with a maturity o f 20
years, including a five-year grace period, at the Bank's standard interest rate for LIBOR-
based U S dollars\. There will be a Front-end Fee o f 1percent and a commitment charge o f
0\.75 percent on the unused portion o fthe loan, subject to any waivers\.
2\. ProjectDevelopmentObjectiveandKey Indicators
14\. The development objective i s to improve the environmental conditions in
participating municipalities/counties through a package o fpriority interventions,
including upgrading and development o f wastewater collection andtreatment facilities,
river embankment rehabilitation, solid waste management, water supply improvements,
industrial pollution monitoring, and enhancement o f the financial performance and
efficiency o f key urbanenvironmental service agencies\.
15\. The Global Environmental Objective o f the GEF activity i s to reduce land-based
pollution along the Yantai coast andthe Bohai Sea through development o f a pilot septic-
tank management system inYantai and disseminationo fthe Yantai model inShandong
Province and inother parts o f China\.
16\. The key indicators to be usedto gauge progress inmeeting the objectives are
detailed inAnnex 3\.
4
3\. Project Components
17\. The proposed project has the following four components: (a) wastewater
collection network andtreatment facilities inGaomi, Huantai, Qixia, Weifang, Weihai,
Yantai and Zaozhuang, with associated river embankment rehabilitation inQixia,
Weifang and Zaozhuang, and development o f a pilot septic tank management system in
Yantai co-financed by GEF; (b) solid waste management inHeze and Rizhao; (c) water
supply improvementsinGaomi and Huantai; and(d) institutional development and
capacity building for utilities, Environmental Protection Bureaus (EPBs) and decision
makers (see Annex 4 for a detailed description, Annex 5 for a cost breakdown and Annex
15 for the GEF activity incremental cost)\.
4\. Lessons Learned and Reflected in the Project Design
18\. China has the largest lendingportfolio inthe Bank, and its quality is among the
bestperforming\. Previous assessmentsby the Bank's Independent Evaluation Group and
Quality Assurance Group have confirmed satisfactory project management,
implementationand outcomes\. Experience from a hllrange o f projects financed by the
Bank inthe infrastructure sector points to the importance o f borrower ownership,
appropriate and efficient planningo f capital investments, as well as appropriately-
designedfinancing and institutional arrangements for proper operation and maintenance
as key factors inproject success\. The key lessons learned from previous projects have
been incorporatedinto the project design and are described below\.
19\. Borrower ownership and commitment\. The province has shown strong
commitment to the project by issuingthe required policy guidance and by setting up the
project management and implementing agencies\.
20\. Deepening, institutional reforms to ensure financially-sustainable water and
sanitation services\. On the basis o f a provincial government circular on cost recovery
pricing, all project municipalities/counties have already increased wastewater tariffs from
Y0\.80/m3 to Y1\.00/m3\. The project design has incorporatedTA for all project utilities
and local governments towards deepeningintuitional reforms andfurther improving the
efficiency and effectiveness o f utility services\.
21\. Industrial pollution control\. Recent Bank experience inChina has indicated that
proactive steps are requiredto control industrial pollution, including: heightenedcitizen
and decision-maker awareness o f environmental protection; involvement o f independent
agencies inmonitoring and reporting o f pollution sources; establishment o f an emergency
response system; and strengthening the capacity o f local EPBs\. These have been built
into the design o f the project\.
22\. Tendencyto over-design basic infrastructure\. Dueto the use o funrealistic
population projections and per capita consumption levels, local governments have tended
to over-design basic infrastructure, especially water supply and wastewater systems\. This
has ledto a waste o f resources and higher thannecessary user charges\. This concern has
5
been addressed inthe proposedproject through a detailed analysis and assessment o f
population projections and water demand levels\.
23\. Inadeauate investment inwastewater collection systems and water supply
networks\. Duringproject preparation, feasibility study (FS) reports that focused only on
wastewater or water supply treatment plants were identifiedandmodified to ensure that
there i s adequate investment inwastewater collection systems and water supply networks\.
24\. Over-estimated proiect cost\. Inprevious Bank-supportedurbanprojects inChina,
the use ofconventional methods for estimating costs (which are partlybasedon "norms"
rather than on market prices) has resulted inan overestimation o f project costs\.
International and local consultants have conducted an independent reviewof cost
estimates to ensure that the costs reportedinthe final FS report for all components are as
close to market rates as possible\.
5\. Alternatives Considered and Reasons for Rejection
25\. An interactive selection process was adopted to ensure project ownership and a
general agreement on development objectives\. Based on requests made by various
municipalities, the provincial task force used criteria, including development priorities,
needs, economic viability and financial capacity, to select a pipeline o f investment
proposals\. The final selection o fthe project components reflects the reality that these are
institutionally the weakest interms of provision o f services, as compared to other
municipal activities\.
26\. Extensive analysis o f alternatives was conducted for each proposedproject
component\. Duringthe feasibility stage, the designinstitutes carried out comprehensive
analyses, evaluating each o f the wastewater and water supply components, various
alternatives for location, technologies and numbers o f wastewater treatment plants
(WWTPs) and water works (WW)\. In-depthconsideration was also given to alignments
for transmission mains, construction o fpumping stations incomparison with gravity
flows, selection o f combined or sanitary sewer systems, and different layouts o f
wastewater and water supply networks\. Ineach instance, the alternative with the lowest
evaluated cost and least environmental and resettlement impacts was selected\.
27\. Location o f a GEF-supportedpilot septic tank management activity inYantai with
joint sewage-septage inXinanhe WWTP was compared with other possible alternatives
and found to be the optimal site\. Yantai Municipality has a sincere interest in
implementing and disseminatingthe pilot project\.
28\. The analyses carried out for the solid waste management component inHeze
compared a sanitary landfill facility with an integrated municipal solid waste processing,
recycling and composting facility\. The latter option was selected as it would produce
marketable products for a large horticultural industry inthe city while reducing the
amount o f waste requiring landfilldisposal\.
6
C\. IMPLEMENTATION
1\. PartnershipArrangements
29\. The Bankwould co-finance the project with the GEF Trust Fundunder the Fund,
managed by the Bank (see Annex 17)\. The GEF activity is integral to the activities
financed by the Bank\.The activities financed by the Bank andby the GEF Trust Fund
would be properly coordinated to ensure appropriate sequencing and optimum results\.
2\. InstitutionalandImplementationArrangements
30\. Shandong Province established a leading group (LG) headed by a vice-governor
to give policy guidance to its departments and municipal implementing agencies\. The LG
designated the existing Shandong Provincial Project Management Office (SPPMO) to
coordinate the preparation activities o f the city/county governments' proposed
investments\. SPPMO has hadprevious experience incoordinating the implementation o f
Bank-financed projects, including SDEP and the Huai River Pollution Control Project\.
3 1\. The LGs and project management offices (PMOS) at municipality/county level
would provide policy guidance and coordinate the implementation o f their respective
components\. SPPMO would be responsible for coordination o f TA and construction
management sub-components, including preparation, jointly with Shandong Province
Finance Bureau (SPFB), o fthe financial management manual to achieve a consistent
quality of accounting work (see Annex 7)\. A procurement manual, and centralized
reviews o f procurement for bothInternational Competitive Bidding(ICB) andNational
Competitive Bidding(NCB) contracts at the provincial level, would help inmitigating
procurement constraints (see Annex 8)\.
32\. Implementation arrangements\. All implementing companies/agencies are owned
by the participating municipalities andcounties\. Withthe exception o f Weifang and
Zaozhuang, the water supply, wastewater and solid waste companies would have overall
responsibility for implementation o ftheir respective components\. The companies would
design, construct, own, operate and maintainthe project-financed assets\. InWeifang
Municipality, the wastewater and river embankment components would be implemented
by a municipally-owned entity, and thereafter maintained by the responsible municipal
departments\. InZaozhuang Municipality, the wastewater andriver embankment
components would be implemented, and thereafter maintained by a recently established
municipally-owned entity\. The institutional development and capacity building
component o fthe project would include assistance to the implementing agencies andto
the parent local governments, as appropriate, to strengthen the management and financial
oversight of implementing agencies for improved service delivery\. The names o fthe
agencies responsible for implementing the various components are included inAnnex 6
and further details are provided inthe Project File\.
33\. The provincial and Yantai municipal LGs, supported by SPPMO and Yantai
PMO, would also give guidance to the GEF-supportedpilot project including designing
7
the respective policies and monitoring and evaluation o fresults\. The Yantai Xinanhe
Wastewater Treatment Company would implement the wastewater treatment component,
andYantai Municipality the septagemanagement component\. The preparatory study
identifyingthe institutional arrangements, septage collection andjoint treatment has been
completed\. Any remaining studies and development o fthe project monitoring and
evaluation system and a dissemination strategy will be completed by December 31,2007\.
34\. Flow o f funds\. The loan o f $147 millionwould be made to the People's Republic
o f China at the standardinterest rate for LIBOR-based U S dollar single currency loans\.
China would on-lend the proceeds o f the loanto Shandong Province on the same terms
and conditions\. Shandong Provincewould on-lend the respective amounts o fthe loanto
the municipalities and counties on the same terms and conditions except for a mark-upo f
0\.2 percent on the interest rate\. The municipalities and counties would on-lend the loan to
their respective companies at an interest rate not less thanthe Bank's rate to China plus
0\.2 percent\. All companies would bear the respective costs o fthe Front-end Fee,
commitment charges and foreign exchange risks\. A part o fthe loan, including respective
costs o f the Front-end Fee, commitment charges and foreign exchange risks, would be
allocated to Shandong for the institutional development and capacity building
component\. The GEF grant would be passedon to Yantai Municipality through
Shandong Province with no mark-up\.
35\. Retroactive financing\. Eligible civil works, goods and services contracts awarded
from June 15,2006 until loan signing, up to a limit o fUS$14\.15 million, may be financed
retroactively from the loan\.
3\. Monitoringand Evaluationof Outcomes/Results
36\. Annex 3 lists the mainoutcome indicators for the project, as well as the principal
results indicators for each component\. SPPMO and the respective PMOSwould regularly
collect the data required for monitoring and evaluation o f outcomes/results and include
these incomponent semi-annual progress reports\. On the basis o f the progress reports,
SPG and SPPMO would: (a) review the results; (b) take appropriate corrective actions,
where and when necessary; and (c) produce consolidated project semi-annual progress
reports for the Bank\. Implementationprogress would be monitoredthrough semi-annual
progress reports (Annex 6), separate financial monitoring reports (Annex 7), and
resettlement implementationmonitoring reports and environmental management
monitoring reports (Annex 10)\. All operations o f the GEF-supported pilot project will be
monitored indetail and evaluated against project targets and against targets at the LME
scale (the Fundindicators) (see Annex 17); results will be included in SDEP2 semi-
annual progress reports\. The Bank will review these reports and recommend corrective
actions for the pilot project, as needed, and make suggestions for dissemination activities\.
8
4\. Sustainability
37\. The dedication o f Shandong Province, at all levels, to improve urban
environmental services indicates a highprobability that the project and its outcomes
would be sustainable\. The municipalities and counties have demonstrated their
commitment to the project\. For example, they have already established wastewater and
solid waste companies under the Company Law duringpreparation and at appraisal they
provided assurances that the necessary physical, financial and staff resources will be
available to carry out the project\. Sustainable improvement o fthe financial performance,
efficiency and effectiveness o fkey urbanenvironmental services, which is the key to
project success, is underpinnedby Government Tariff Regulation 1192 (1999) and
covenants inthe legal agreements\.
38\. Shandong Province would also actively participate inthe broad disseminationo f
the Yantai experience andwould support the application o f lessons learned from this
innovative activity to other municipalities\. Accordingly, it will arrange, jointly with
Yantai Municipality, annual workshops attended by other coastal municipalities within
Shandong to follow the progress and benefits o fthe Yantai pilot project, thus initiating
dissemination o f the experiment from its start\. The first o f such workshops i s planned for
early 2007\. Shandong Provincewould report the lessons andexperiences from the Yantai
pilot to central government agencies including MoF, the National Development and
Reform Commission (NDRC) andthe Ministryof Constructionto promote further
dissemination activities inother provinces o f China\.
5\. CriticalRisks and Possible Controversial Aspects
39\. Potential project risks relate mainly to institutional and\.financia1factors as
indicated inthe following table\.
PotentialRisks Proposed RiskMitigationMeasures RiskRatingwith
Mitigation
Projectlevelgovernance\. Close supervision of fiduciary and safeguard
issues\. M
Delayinrequiredtariff setting Agreementreachedwith keyprovincialand
andcollectionmechanisms, municipalleaderson setting realistic targets
and low user fee collections, basedon a comprehensivefinancialanalysis; S
threatening financial
sustainability\. TA packageon financial strengtheningduring
projectimplementationstage\.
To ComponentResults
Inadequatetechnical and Timelytrainingon Bankrequirementsand
managerialcapacity of some procedures; TA packageon project
implementingagencies implementationincludingindependentRAP
resultingindelayedproject andenvironmentmonitoring, andclose M
implementation, includingthe supervisionby SPPMOandthe Bank\.
ResettlementAction Plan
(RAP)\.
Counterpartfunding Counterpart fundingplanreviewedand M
9
insufficient or late\. confirmedby SPFB prior to appraisal\.
Environmentalpollution TA to strengthen EPB monitoring and
control measuresnot enforcement; pollution level data collection M
effectively enforced\. improvement\.
Compostedmaterial from Heze Process operational manualand quality
compostingfacility not control measures includingtrainingof plant
meeting standards for staff will be developedandinstituted\. M
agricultural andhorticultural
applications\.
Overall risk rating\. M
6\. Loanand Grant ConditionsandCovenants
Loan effectiveness:
40\. No project specific conditions\.
Implementation covenants:
(a) Maintain SPPMO and local PMOSthroughout implementation staffed with adequate
qualified personnel;
(b) On-lend the loanandpassthe grant on terms and conditions satisfactory to the Bank;
(c) Qixia, Weifang andZaozhuang to prepare and submit to the Bank, no later than
February 28,2008, an operation and maintenance plan(including financing) o f their
respective river embankment and wastewater components;
(d) By June 30,2009, Heze and Rizhao to complete a study report ofthe fees and user
charges needed to recover the costs o f solid waste management services; the report of that
study, to include proposals for improvedcollections, anda detailed action planto enable
recovery of costs to beginon January 1,2011,after taking into account the Bank's
comments on the study report and action plan;
(e) Wastewater companies, together with the relevant governmental agencies such as
local municipal administration bureaus and EPBs, to take measures to ensure effective
monitoring and enforcement arrangementson acceptable wastewater quality entering its
sewers and to record activities inperiodic project progress reports (PPRs);
(0ByDecember 31,2007, Gaomi, QixiaandWeifang to: (i)ensure completion of
remedial work on involved dams, and (ii) submit satisfactory operational plans o fthe
dams to the Bank;
(g) By February28 o f each year (withthe exception o fthe first annual report beingdue
on August 31,2007), an independent panel o f dam safety experts to report on progress in
remedial work and on the safety o f the four dams; and
(h) Withinone year from the commissioningo fthe water supply investments, the Huantai
County Government to cause the industries located inthe service area o fthe Huantai
10
Water Supply and Wastewater Company, which have their own groundwater sources o f
water supply, to shut down such supplies and connect to the Huantai Water Supply and
Wastewater Company water supply system\.
Financial covenants:
(a)(i) Commencing in2008, the water supply company o f Gaomi to generate revenues
from water supply operations sufficient to cover operating and maintenance costs (before
depreciation), increases inworking capital, debt service, and 20 percent o f the average
capital expenditures made ina three-year period; and (ii) commencing in2011,or another
date to be agreed, the water supply company o f Huantai to generate revenues from water
supply operations sufficient to cover operating andmaintenance costs (before
depreciation), increases inworking capital, debt service, and 20 percent o f the average
capital expenditures made ina three-year period;
(b)(i) Commencingin2008, the wastewater companies o f Gaomi, Weihai and Yantai to
produce total revenues to permit them to break-even (ie\., total revenues to cover
operating costs and the greater o f depreciationor debt service); and (ii)
commencing in
2011,or another date to be agreed, the wastewater companies o f Huantai and Qixia to
produce total revenues to permit them to break-even (i\.e\., total revenues to cover
operating costs andthe greater o f depreciationor debt service);
(c) Commencing in2008, the Rizhao Municipal Environmental Engineering Company
Ltd(REEC) to producetotal revenues to permitit to break-even (Le\., total revenues to
cover operating costs and the greater o f depreciationor debt service); and
(d) To ensure that any future debt canbe serviced satisfactorily, the water supply,
wastewater and solid waste companies will incur no additional debt without the Bank's
agreement, unless a reasonable forecast shows that they would have a debt service coverage
o f at least 1\.3 times\.
Audit covenants:
(a) The annual audit reports o f project consolidated statements will be due to the Bank
withinsix months after the endo f each fiscal year; and
(b) Annual audit reports onthe financial position and operatingresults o fthe utility
companies will be due to the Bank within six months after the end o f each fiscal year\.
D\. APPRAISAL SUMMARY
1\. EconomicandFinancialAnalyses
41\. Economic analysis\. A cost-benefit analysis was conducted for each component\.
These analyses examined the alternatives considered, including different technical
specifications, different locations anddifferences inthe scale o f each component, to
ensure that the best alternative was chosen to achieve the component objectives\. "With"
11
and "without" senarios for each component were also examined to derive the incremental
costs and benefits o f each component\.
42\. Economic costs for each component were identified as the base cost plusphysical
contingencies, i\.e\., without inflation or taxes\. Benefit proxies were identified for each
component, e\.g\., healthbenefits and increased industryproductionvalue due to newly
available water from the water supply projects, reduction inflood damage costs for the
river embankment component, and pollution reductionbenefits from the wastewater and
solid waste treatment components\. The estimated economic internal rates of return
(EIRRs)for these components are inthe range o f 11\.8 to 21\.6 percent (the discount rate
used is 10 percent, as recommended by the NDRC (in2002)\. Sensitivity analyses
conducted to test the impact o f switching the values o f critical variables confirm that the
estimated EIRRs are robust\.
43\. Following GEF guidelines, the economic analysis for the GEF component i s an
Incremental Cost Analysis, whereby the incremental benefit from the GEF intervention
(monetary andotherwise) is compared to the additional cost o f GEF component operation
(see Annex 15)\.
44\. Financial analysis\.The total disposable receipts o f Shandong Province in2004
were RMB124\.1 billion Yuan\. Through prudent management, total budgetary
expenditures have risen less than receipts, resulting insurpluses\. The average annual cost
o fthe project investments represents a small fraction o ftotal disposable receipts\. The
project cost i s therefore easily affordable to the province\. A financial analysis o f
participating local bodies was also performed\. Inall cases, the average annual counterpart
funding requirements are less thanthe projected annual growth rates o f locally generated
taxes, suggesting that the local governments can fund all their requirements from these
sources\. Financial projections were prepared for each utility (water supply, wastewater
and solid waste management) company on an annual basis over the period 2006-2020\.
The projections are based on the following financial objectives o f the participating
municipalities and counties: (a) water supply companies: each company to (i) generate
revenues from its water supply operations sufficient to cover operating and maintenance
costs (before depreciation), increases inworking capital, debt service, and 20 percent o f
the average capital expenditures made ina three-year period, and (ii) maintain a debt
service coverage ratio o f not less than 1\.3 times; and (b) wastewater and solid waste
management companies: each company to produce total revenues to (i) cover operating
costs (including depreciation), and the amount by which debt service exceeds the
provision for depreciation, and (ii) maintaina debt service coverage ratio o f not less than
1\.3 times\.
45\. The projectedaverage tariffs are included inAnnex 9\. Projectedfinancial
statements and detailed operational and financial monitoring indicators for each company
are included inthe Project File (see Annex 12)\. The operation andmaintenance and debt
service costs o f the wastewater and river embankment components would come from
budgetaryallocations (see Annex 9), for which Qixia, Weifang and Zaozhuang are
12
covenantedto prepare, no later thanFebruary 28, 2008, anoperation and maintenance
plan (including financing)\.
2\. Technical
46\. The project componentswere studiedby highquality Chinese design institutes
and reviewed by international consultants\. The implementing agencieshave retainedthe
services of the design andtendering institutes to complete the engineering designs, cost
estimates andbiddingdocuments\. Project designs are technically sound, representthe
least cost alternative and use good engineering practices\. Where possible, the calculated
wastewater flow datawere supportedby measurements inthe field\. Selection of
wastewater treatment technology, wastewater collection systems andsolid waste facilities
has been basedon operational practices, taking into account the specific conditions inthe
project citieskounties\. The Yantai GEF-supported activity is oriented towards removing
legal, institutional andtechnical barriersfaced inthe septage sector inChina\. The
primary objective is to develop methods for servicing septic tanks andtreating septage
sludge, activities that are almost non-existent inChinesecities\.
47\. The approachesselectedfor solid waste managementare sound\. InRizhao, the
expansion of the existing landfill is incompliance with regulatory requirementsas a
sanitary landfillwith proper measures for leachate, landfill gas, surface and groundwater,
andmonitoring\. InHeze, integrated solid waste managementactivities would recover
recyclable materials, produce compost and waste-derived fuel, thereby reducing the
amount of waste requiring final disposal at the sanitary landfill\.
3\. Fiduciary
48\. Financia2 management\.The adequacy ofthe project financial management
systemwas assessedbasedon guidelines issuedby the Financial Management Sector
Board on November 3,2005\. The assessment concluded that the project meetsminimum
Bankfinancial managementrequirementsas stipulated inBP/OP 10\.02\. Itfound that the
project will have inplace an adequateproject financial managementsystemthat can
provide, with reasonableassurance, accurate and timely informationon the status of the
project inthe reporting format agreedwith the Bank (see Annex 7)\.
49\. Procurementassessment\.The procurement capacity assessment concluded that
the procurementrisk is consideredaverage\. There will, however, be aneedto further
enhance the procurement capacity of SPPMO andthe PMOS,through training, advisory
support from the Bank office inBeijing and guidance from supervision missions\. For
further details onprocurement, see Annex 8\. TheProcurementCapacity Assessment is
available inthe Project File (Annex 12)\.
50\. SPPMO has selected two firms, namely the China Instrimpex International
Tendering Company andthe provincialConstruction Engineering Tendering Center, as
procurement agents for ICB andNCB procurement, respectively\. Both are experienced
13
andcompetent procurementagents, and familiar withthe Bank's procurement
procedures\.
4\. Social
5 1\. Social benefit\. People inthe project area would benefit from the proposed
construction o f wastewater treatment facilities, solid waste collection andtreatment
system, water supply works andriver embankment\.A social assessment was carried out
for each o f the proposed components\. Various social aspects were covered, including
participation, gender, social inclusion and exclusion, behavior change, impacts on
poverty and social risks\. These social aspects were addressed through improved project
design\. The process o f carrying out the assessmentsshowed that local people are
supportive o f the project activities since they can perceive benefits\. They will have access
to an improvedwater supply system compared to the heavily fluoridated water they have
had upto now, particularly inGaomi\. Solid waste and wastewater investments can
improve the sanitary environment andreduce exposure to waste-borne diseases\. The
Yantai GEF pilot project would generate various social benefits, such as the creation o f
better residentialenvironments by eliminating septic tank overflows, reducingpollution
o f the sea, improving the quality o f bathing beaches andreducingthe probability o f the
spread o f contagious diseases\.
52\. Participation\. Public consultation and participationplayed a key role in
formulating RAPs\. The affected residents, businesspeople and district governments
participatedinthe census, inventory and formulation o fthe livelihood rehabilitation
strategy, measures andrelocation sites\. Their feedback was incorporated inthe RAPs\.
The stakeholders who participated inthe RAP preparationwould continue to participate
inthe implementationofthe RAP\.
53\. Poverty impacts\.Special attention was paidto poor andvulnerable groups during
project design and RAP preparation\. First, the project design ensured that poor and
vulnerable people would have equal access to the services provided by the project\.
Second, special arrangements have been made for this group o fpeople to ensure that the
services provided would be affordable\.
54\. Social risks\. The key adverse social impacts and social risks o f the project are
largely related to land acquisition andhousing demolition\. Inaccordance with local laws
and regulations, and World Bank OP 4\.12 on Involuntary Resettlement, RAPs were
prepared for the different components\. The RAPSare based on a detailed census o f the
affected people, inventory o f affected assets, socio-economic surveys and extensive
consultations with the project-affected people\.
55\. Monitoring ofsocial impacts\. Both internal and external monitoring i s designed
as part o fthe project resettlement management\. Independent monitoring would cover not
only the physical progress o f RAP implementation, including compensation payments,
allocation o f residential sites, farmland allocation and restorationo f infrastructure, but
would also review the public consultation process, grievance redress mechanisms and
14
restorationo fthe livelihoods o f the affected farmers\.
56\. Indigenouspeople\. The detailed socio-economic survey indicates that the project
will not affect any minority ethnic groups\. Therefore, the Bank's Policy on Indigenous
Peoples i s not applicable\.
57\. Gender\.The social assessmentwas carried out usinga gender-sensitive approach\.
Women accounted for about 50 percent o f the population interviewed duringthe socio-
economic survey, for focus group discussions and individual interviews\. There are no
gender issues which need to be addressedinproject design and implementation\.
5\. Environment
58\. Environmental assessment\.The project is classified as Category A under OP
4\.01\. The project consists o f several urbaninfrastructures investments, including
wastewater management and solid waste management innine medium-sized and small
cities in Shandong Province\. Environmental Assessments (EAs) have beenconducted for
all the components\. An EA for each o f the project cities was carried out and an
environmental management plan(EMP) developed\. These followed national procedures
and standards as well as the Bank's safeguard policies\. The EAs cover the project
description, baseline conditions, projectjustification, benefits, analysis o f alternatives,
potential environmental impacts, mitigation measures (both at construction and
operational stages), EMPs, public consultation and information disclosure\. The major
findings o fthese EAs and EMPs are presented inAnnex 10\.
59\. Environmental benejit\. The project would bringabout positive impacts and
benefits to boththe environment and communities inthe project cities, including reduced
untreated wastewater discharges, improvedwater supply systems, improved solid waste
collection, transportation and disposal, and community and economic development\. The
Yantai GEF pilot project would demonstrate management o f septic tanks resulting in
environmental improvements\. Inaddition, through dissemination inShandong Province,
it would contribute to a reductioninland-based pollution reaching the marine
environment\.
60\. Mitigation measures\. The project would cause mostly short-term adverse impacts
duringconstruction and some duringthe operationphase\. The EMPs specify appropriate
mitigation measures, supervision andmonitoring plans, institutional arrangements and
training and associated cost estimates\. Major mitigation measures include control o f
construction practices, contractor management, analysis o f alternative alignments,
materials and designs and installation o fnoise insulation and barriers at sensitive
receptors\.
61\. Safety ofdams\. Four existing reservoirs, Xiashan, Wangwu, Bailanghe, andAnli,
would be involved inthe project, either to provide raw water for water supply, or for
flood regulation\. The safety status o fthese dams was reviewed inthe context o f
OPBP4\.37, Safety o f Dams\. Startingfrom 2003, the province had conducted dam safety
15
inspections andassessments on all large and major mediumsized dams, resulting inthe
project dams being classified as Class C dams, i\.e\., with quality defects, or unable to
function under the design conditions\. Onthe basis of that finding, the central Ministryof
Water Resources (MWR) and ShandongProvince developeda remedial program to
correct the identifieddeficiencies\. This is plannedfor completion in2007\. Untilthe
remedial reinforcement is completed the water level and the impounding level inthe
affected dams will be kept at safe levels\.
62\. Assurances were given during negotiations that: (a) Gaomi, Qixia and Weifang will
complete the remedial works by December 31,2007; and (b) ShandongProvince will
cause Weifang and Yantai eachto establish anindependentpanelof damsafety experts
whichwill report byFebruary 28 of eachyear (withthe exception ofthe first annual
report being due on August 31,2007), on progress inthe remedial work andon the safety
of the four dams\. The technical parameters, safety status and status ofremedial actions of
the four dams involvedinthe project are given inAnnex 10\.
6\. Safeguard Policies
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment (OP/BP 4\.01) [XI [I
Natural Habitats (OP/BP 4\.04) [I [XI
PestManagement (OP 4\.09) [I [XI
Cultural Property (OPN 11\.03, being revised as OP 4\.11) [I [XI
Involuntary Resettlement (OP/BP 4\.12) [XI [I
Indigenous Peoples (OP/BP 4\.10) [I [XI
Forests(OP/BP 4\.36) [I [XI
Safety of Dams (OP/BP 4\.37) [XI [I
Projects inDisputedAreas (OP/BP/ 7\.60)* [I [XI
Projects on International Waterways (OP/BP 7\.50) [I
* [XI
By supportingthe proposedproject,the Bankdoes not intendto prejudicethe final determinationofthe
parties'claims onthe disputedareas\.
a\. What is the safeguard screening category of theproject? (SI, S2, S3, SF):
Category S2
b\. What is the environmental screening category of theproject (A, B, C, FI):
Category A
c\. Ifapplicable, what are the key safeguard policy issues raised by theproject:
The EA has not identified any serious environmental negative impacts\. Sewage
collection andtreatment, river embankment,solid waste management and GEF
components would have positive impacts on the cities' environmental conditions\.
d\. Ifapplicable, what are the main results of any safeguardpolicy related studies,
and how have they been incorporated into theproject?
N/A
16
e\. What is the borrower capacity to implement the safeguardpolicies
recommendations, and, ifthe capacity is insufficient, how will this capacity be
brought into the required level?
SPPMO, which has guided the preparation and successful implementation o fthe
Shandong Environment Project (Ln4237-CHA) andthe Huai River Basin
Pollution Control Project (Ln4597-CHA), has been strengthened by additional
staff and given the responsibility to manage project preparation and
implementation\. The project will also support training, capacity buildingand
implementation assistance to SPPMO and the PMOS\.Inaddition, the Bank will
closely supervise safeguard implementation\.
f What types of consultations have been conducted regarding safeguard issues?
How did these consultations influence theproject design?
Duringthe project EA, there were at leasttwo rounds o fpublic consultationin
each city, involvingpublic opinion questionnaires among directly-affected people,
supplemented by meetings with key stakeholders\. Issues and concerns raisedwere
incorporated into the project EAs and EMPs, as appropriate\.
g\. Whenwere the safeguard studies made available in the Infoshop?
January 26,2006\.
h\. Whenand where safeguard studies were made available in the cooperating
country?
January 25,2006 inthe project citieslcounties\.
a\. Does the project require any exceptions from Bank policies? N o
Ifso\. what arethev andhoware thev iustified?
I b\. Have these been atmoved bv Bank mananement? I NIA I
63\. The project has obtaineda waiver from Bankmanagement with regardsto the
current BP 4\.01 requirement relating to translations o f EIA reports\. Chinese language
EIA and RAPreportshavebeenprepared for project activities proposedineach city; and
have been reviewed and disclosed separately ineach project city and inthe Bank
Infoshop as appropriate\. Inaddition, a consolidated EIA and EMP for the project
covering all cities, and a summary RAP for the entire project, have been prepared in
Englishand disclosed\. These documents include detailed findings andrecommendations,
and address insufficient depth and detail all the critical issues anddate needed to support
their findings and recommendations\. Bankmanagement is satisfied that onthe basis of
staff review o fthese documents, as well as a review o fthe local language reports by
qualified country office and international staff, that the Bank has complied with the
reviewobligations set out inOP 4\.01 without the needto resort to translate all o fthe
detailed city specific reports into English\.Inaddition, Bank management i s satisfied that
the Bank would meetthe disclosure objectives set out inthe policythrough disclosure of
17
the above Englishlanguage documents, together with the disclosure of city specific EIAs,
EMPsand RAPSinthe Chinese language\. The project will comply fully with all other
Bankpolicies\.
8\. Compliancewith Readiness Criteria
Requirement Status
1\.Fiduciary (financial management andprocurement) Yes
arrangements inplace-
2\. Proiect staff and consultants mobilized- Yes
3\. Counterpart funds budgetedheleased - Yes
4\. Tender documents for first year procurement are being Yes
prepared and will be approved during negotiations -
5\. Disclosure requirements met - Yes
6\. Results assessment arrangementscompleted: monitoring and Yes
evaluation (M&E) institutional obligations spelled out; M&E
capacity inplace; indicators specified; baseline data collected
7\. Co-financing agreements signed - N/A
8\. LandacauisitionDlans readv - Yes
18
Annex 1:Countryand Sector Background
CHINA: Second ShandongEnvironmentProject
Background
1\. Shandonghas a land area of 156,700 km2and a 3,000-km coastline on the Bohai
and Yellow Seas, bothof which drain amajor part of the province\. ShandongProvince
has 17 municipalities, 31county-level cities and 60 counties\. About 40 percent ofthe 92
millionpopulationlive inurbanareas\. With surface as well as ground water polluted to
different degrees, and water resourceper capita at one-sixththe national average,
shortages of cleanwater have become the major bottleneck for development\. Besides its
negative impact on water resources, the uncontrolled wastewater pollutionof rivers
contributes to serious damage of the Bohai Sea's ecosystem\. Pollutionof rivers, together
with inadequatesolid waste services inmany municipalities, has ledto a deterioration of
the urbanenvironment\.
2\. Provision of urbanwater supply, wastewater and solid waste services i s the
responsibility of municipalities/counties and their agencies\. In2004, wastewater agencies
served over 30 million urban residents, of which 20 million had combined systems
(12,675 km) and 10million had separate systems (7,400 km)\. Wastewater generatedin
municipalities and counties reached2\.64 billion m3/year,of which 1\.35 billion m3/year
(51%) and 1\.29billion m3/year(49%) were residential and industrial volumes,
respectively\. The capacity of municipal/county treatment plants,jointly treating
residential and industrial wastewater, reached 1\.24 billion m3/year,(47% o f wastewater),
and in2005 it increasedto 1\.8 billion m3/year,(50% of wastewater)\.
3\. In2004, the province's water supply agenciesproduced2\.64 billionm3of
drinking water, servicing about 24\.6 million people (at an average of 300 liters per capita
per day), or about 68 percent of the total urbanpopulationY2inaddition to industry,
commerce and institutions, through over 4\.6 million water connections\. Inthe same year,
the province generatedapproximately 11\.29 million metrictons ofmunicipalsolid waste,
with a collection capacity of 10\.89milliontons\. Ofthis, only 3\.6 million tons (24\.6%)
were treatedor disposed of in"harmless" ways\.
4\. The Shandong Environmental ProtectionBureau (SEPB) regularly monitors the
environmental quality o f Shandong's rivers\. Its 2004 statistics show that out of the 50
rivers monitored, over 47 percent failed to meet the Class V quality standard, which
represents the environmental limit of acceptability\. Pollutionloads dischargedinto rivers
from municipalities/counties, expressed inChemical Oxygen Demand(COD), reached
almost 800,000 tondyear, of which about 430,000 tondyear (5 1% of total) were
residential\.
5\. Septic tanks, which are available, and a cost-free on-site treatment facility, are not
used\. Historically, the municipalities/counties have constructedcombined drainage
systems to collect raidstorm water as well as wastewater\. Inorder to block the solids in
wastewater from reaching recipient rivers, national regulations require that residential
Remainingpopulationare self-suppliersmainlyfrom own wells\.
19
buildingsuse septic tanks as an on-site treatment facility\. The efficient functioning o f
these tanks depends on the timely servicing and removal o f accumulated sludge\. Due to
the expense involved, the tanks are emptiedonly whenthere is a blockage\. Municipalities
have not paid attention to this issue for various reasons; lack o f data on the number,
location and size o ftanks, and lack o f information on the number o f users are among
them\. The absence o f septic tank servicing hashad a serious environmental impact\.
Reasonably well-operated septic tanks would catch solids andremove about 35 percent o f
pollution from wastewater\.
Sector Strategy
6\. For immediate improvement o fthe water sector, the Shandong strategy calls for
(a) accelerated restoration o fthe ground and surface water environment, discontinuation
o f ground water extraction and limitation on its use by industries; (b) increased collection
o f generated wastewater and treatment to achieve 65 percent and 40 percent o f treatment
inmunicipalities and county towns, respectively, enhancement ofthe quality o fthe
treated effluent, and where possible, re-use o fthe treated effluent instead o f using fresh
water; and (c) upgrading the management systems o f sector operating agencies\.
7\. Inthe solid waste sector, the overall strategy is to develop adequate solidwaste
management treatment and disposal facilities to handle 70 percent o f waste from
municipalities and 40 percent o f waste from county-level towns, with an overall target o f
60 percent\. Specific goals include: (a) reforming and strengthening the regulatory,
management and institutional capacities; (b) establishing tariff levels andtariff collection
systems and; (c) establishing waste recycling policies and promoting public awareness
for waste reduction, re-use and recycling (3Rs)\.
Key Issues
8\. The key issues currently hindering Shandong's wastewater sector development
are: (a) the ratio betweentreated and untreated wastewater inShandong is still very low;
only about 50 percent o f wastewater i s adequately treated; (b) construction o f wastewater
collection systems i s allocated low priority, therefore not matching for several years the
larger capacity o f WWTPs; (c) the on-site treatment function o f septic tanks is not used,
and responsible units with equipment for tank operation, such as fecal collection tankers
and disposal facilities for septage, do not exist inany municipality/county; inaddition,
the construction o f septic tanks i s still required innew developments which are already
provided with separate sewer systems, makingthe septic tanks redundant; (d) the level o f
wastewater tariffs set and collected by the municipalities is low and inadequate for
satisfactory operation o f boththe treatment and collection systems; and (e) the
management o fthe wastewater sector needs upgrading3and changed from a supply
drivenapproach to a management style that is responsive to consumers; due to its
obvious dependence on water supply, the wastewater sector could be planned, operated
Wastewater companies are not involved indrainage\. Therefore, inlocationswith combined sewerage the
wastewater company owns and operates only the interceptorsewers and treatment plants\. Ina separate
system the wastewater company owns and operates the entire wastewater collection system andtreatment
plants\.
20
and managedjointly withwater supply through independent and financially self-
sufficient water supply and wastewater corporations, owned by municipalities\.
9\. Issues inShandong Province's solid waste sector include: (a) fragmented
management responsibilities, with municipal governments responsible for disposal
facilities, district and county-level cities for waste collection, and community
organizations for maintaining sanitary conditions for localized areas, including street
cleaning\. Inaddition, the environmental sanitation departments are regulatory agencies as
well as owners andoperators o fwaste management systems and facilities, which does not
foster a market economy nor accountability; (b) a lack o f provincial policies, which
would apply central government guidelines for operatingwaste management
infrastructure and regulatingtariffs; (c) an almost complete absence o fpolicies and
programs inplace for the 3Rs\. Public awareness o f the 3Rs i s almost non-existent; and
(d) a lack ofproperly designed and operated solid waste disposal facilities, as well as
collection and transportation systems\. Waste disposal facilities are often simple "open
dumps" with little attentiongivento the potential contamination o fsurface and
groundwater resources\.
10\. Inthe water supply sector, the issue ofshortages inwater resources is serious,
requiring the construction o f reservoirs on perennial rivers, installation o f long-distance
transmission mains and drilling o f 300 to 400-meter deep wells\. A substantial quantity o f
water supply i s accessedby residents and industriesthemselves from their own wells,
complementing the inadequate capacities o f municipal/county centralized systems\. While
the municipal/county water supply production and distribution facilities havebeen
gradually expanded, little attention has been givento non-revenue water control and
centralizedwater flow/pressure control intransmission and distribution mains\.
AddressingIssuesand Constraints
11\. The province has been encouraging municipalities to (a) prioritize wastewater
collection, wastewater treatment, and the re-use o f treated effluent intheir investment
plans; (b) upgrade their municipal solid waste management systems, which have become
pressing urbanenvironmental issues on account o f sub-standard collection and the poor
sanitary conditions o fexisting disposal facilities; (c) establish corporate enterprises for
the management ofwastewater, either jointly with water supply, or as independent self-
financing agencies; (d) set wastewater charges on a full cost recovery basis inaccordance
with central government policy directives as set out inCircular (1999) 1192,jointly
issued in September 1999 by the Ministryo f Construction, NDRC and the State
Environmental ProtectionAdministration; and (e) establish corporate enterprises for
management o f solid waste operations as independent self-financing agencies towards
recovering the costs o fproviding solid waste collection and disposal services\.
12\. Inaddressingthe issue of septic tanks, Shandong hasrequested GEF assistance
for Yantai, one o fthe municipalities proposed for inclusion in SDEP2, to initiate
investmentsina very under-financed and insufficiently managedpart o fthe wastewater
sector inChina\.
21
13\. Promotion of urbanwastewater re-use has beengiven highpriority inthe State
Council Circular Number 36 of 2000, which outlines anumbero fpolicies on water, such
as increasing the water recycling rate, requiring the adoption of water saving facilities,
increasing the urbanwastewater treatment rate, and regular publication of water quality
monitoring data for major cities\. Shandong has issued guidelines encouraging re-use
aiming at 20 percent of effluent re-use by 2010\. Also, new WWTPs should reserve
adequate land for potential future re-use facilities\.
14\. With its strong commitment to improvingits water environment, the province has
also co-signedthe Memorandum of Agreement initiated by the UNDP/GEF/IMO
Regional Program, establishing the Bohai SeaEnvironment Management Project withthe
goal of fostering collaboration among adjacentprovinces inmanagingpollution and
reducing waste discharges\.
15\. The central government recently issued guidelines on reforming the solidwaste
management sector\. These guidelines recommendthat utilities establish sufficient tariff
levels to cover operations and debt service costs, and encouragethe contracting of utility
services to the private sector to improve efficiency\. Severalmunicipalities have taken
steps inaccordance with these guidelines, but many others have not yet done so due to
capacity constraints\. There is also a serious lack of oversight andregulatory capacity in
the solid waste managementsector\. Followingthe central government's initiative,
Shandong has designatedmunicipal solid waste managementas one of the key areas of
municipal service for development\. The province plans, by 2010, to develop 111new
solid waste treatment and disposal facilities (excluding 16facilities inQingdao)\. 14
municipalities also planto develop large-scaletransfer facilities\. These newprojects
would provide atotal treatment and disposal capacity of 38,400 metric tondday\. TA
under SDEP2 would develop a solidwaste sector reform program to addressmost ofthe
issues identified\.
Contributionof the Projectto the Borrower's Objectivesfor the Sector
16\. This project would undertakeavariety of environmental activities innine small to
mediumsizedmunicipalities/counties to assist Shandonginaddressingkey issues inthe
wastewater, solid waste and water supply sectors, which are consideredthe weakest
among the municipal services\. Accordingly, the project components include investments
inwastewatercollection andtreatment, solid waste systems, andwater supply and
institutional strengtheningof the respective operating agencies\. Participating
municipalities/counties are locatedthroughout the province; three are on the coast, while
the others are inland\. The resulting environmental improvements would be substantial
andwould contribute to improving the livability ofthe cities through expanding the
collection of wastewater, removing pollution loads currently reaching recipient rivers,
collecting municipal solid waste and disposing it inatechnically and environmentally
acceptable fashion, contributing to rehabilitation of ground water resources, and reducing
the publichealthhazardsposedby insufficient managementof rawwastewater and solid
waste\.
17\. The proposedsolid waste sub-projectswould provide muchneededwaste
processing, recycling and sanitary disposal facilities inHeze and Rizhao\. Furthermore,
22
the two sub-projects would provide solid waste collection and disposal services to an
additional population o f approximately 335,000 urbanresidents by the year 2010\.
18\. The GEF-supported activity inthis project would demonstrate the feasibility o f
ensuringnormal servicing o f septic tanks through technical and institutional
arrangements and the positive impact that this would have on reducing pollution in
recipient rivers\. The GEF activity has significant potential for replication inShandong,
other provinces inChina, andthroughout East Asia\. Cities inShandong and inChina
generally collect wastewater by a mix o f combined systems inolder areas and separate
systems innewly developed areas\. Even ifthe long-term plans are for the conversionof
all systems to separate systems, the highcosts involved meanthat this is unlikely to
happen on a significant scale for several decades\.
19\. The GEF project would focus onthe role o f septic tanks inwastewater systems,
document their contribution to pollution control inareas provided with combined sewer
systems, and demonstrate the waste o f resources resulting from the current country-wide
practice o f requiring that septic tanks are constructed inareas even when they are already
provided with separate systems, where their function i s nil\.Accordingly, Shandong
would impressupon respective municipalities to consider, intheir own projects, the
upgrading o f septic tank servicing inareas providedwith combined systems even before
the results ofthe Yantai experiment are made available\. Shandong Province would also
actively participate indisseminating the Yantai experience broadly upon completion o f
the GEF-supported activity andwould consider applying regulatory steps supporting the
applicationo fthe lessons learned from the experiment inother municipalities\.
20\. Institutional strengthening o f operating agencies i s one o fthe most important
components o fthe project\. The existing operating agencies are generally weak, with three
o fthem established only recently\. Their managerial, planningand financial capacities
would need to be built up duringproject implementation\. Current wastewater tariffs are
relatively low, and fees collected by municipalities for solid waste management also low
with none covering operational costs\. The status reflectsthe recent OEDreport4findings
that wastewater fees paid by households, industry and other institutions inChina typically
cover only about 30 percent o f operational costs, and less than 20 percent o fthe costs o f
operation and maintenance\.
21\. The Shandong project objective is to accelerate institutional progress within
municipal governments and respective utilities, leading to gradual improvement inthe
overall financial health o f the agencies (without which a slow downward spiral i s
imminent) and to improve the efficiency and effectiveness o f urbanservice delivery,
including customer satisfaction\.
22\. The project would be located inthe following six cities and three counties\.
The World Bankand China's Environment1993-2003\.
23
23\. Gaomi is the capital City of Gaomi County, one of 12 counties within Weifang
Municipality\. Ithas 261,000 inhabitants inanarea of 24\.7 km2,and i s expectedto grow
to apopulation of 500,000 by 2020\. The component is located inthe town but its water
supply will also provide water to seven surrounding small townships\. The town's
industriesinclude textiles, food processingand machine manufacturing\. The total GDP of
the county is RMB 8\.8 billionYuan, sharedbetweenthe first, secondandtertiary sectors
(18%, 50%, and 32%)\. The GDP comes mainly from industrial activity, with a substantial
proportion related to the agricultural sector and a quite weak service sector\. The surface
water from Wangwu and Xiashan Reservoirs will provide from 85 percent to 100percent
of water, while the remaining 15 percent, from Jiaohe well-field, would be gradually
abandoned due to increasedwater pollution\. The component would expandwastewater
collection to serve two existing treatment plants\. The treatedeffluent from Gaomi
WWTP would flow into the Xiao KangRiver, with a requiredenvironmental quality of
Class V\.
24\. Heze Municipality, located inthe southeastmainland, has a current population of
380,000 inan area of 37\.6 km2,which is expectedto grow to 720,000 by 2020\. The total
GDP i s RMB5\.8 billionYuan, sharedbetweenthe first, second andtertiary sectors (21%,
41%, and 35%)\. Despite an important chemical and food-processing base, Heze has one
ofthe weakest GDP levels within the medium-sized towns of Shandong\. Heze
municipality, with support from the province, has expressedinterest inparticipating in
the Clean Development Mechanism(CDM)' managedbythe Bank's Carbon Finance
(CF) Business Unit\.Participation inthe CF would provide the municipality with
substantial revenues from selling the reduction ingas emissions to the Bank through the
CDM\.
25\. Huantai, the capital City of Huantai County, one of eight withinZibo
Municipality, is located near the Bohai Sea\. Its 180,000 inhabitants inanarea of 11\.6km2
are expectedto increaseto 400,000 in2020\. The component also affects four neighboring
townships (Guihe, Tianzhuang, Tangshanand Guoli)\. The industriesof the town include
leather processing, medical chemistry, paper mill, food, building materials and machine
manufacturing\. The total GDP of the town i s RMB10billion Yuan, sharedbetweenthe
first, secondandtertiary sectors (8%, 61%, 31%), which indicates a large proportion of
industryinthe economy\. Huantai is closely linkedto the developmentofZibo town, one
ofthe richest and biggest areas of Shandong\. Iti s plannedthat, before 2025, Huantai
would constitute the northern urbandistrict of Zibo City\. Surfacewater from the Yellow
River, transferred through Xicheng Reservoir, would replace mainly groundwater
extractedby industries, leaving that source exclusively for residential use\. The
component would expandwastewater collection andprovide a WWTP\. Treated effluent
from Huantai would go into the Dong Zulong River, with arequiredenvironmental
quality of Class V\.
The CDM establishedby the Kyoto Protocol allows industrial countries to meet their greenhouse gas
emissionreduction through projects generatingemissionreductions indeveloping countries\. Under this
project, the CDM initiative does not have any linkage to the GEF grant\.
24
26\. Qkia is the capital City of Qixia County, one of 11counties withinYantai
Municipality, with 99,000 inhabitants\. The total GDP of Qixia i s RMB6\.7 billionYuan,
shared betweenthe first, second andtertiary sectors(24%, 43%, 33%), which indicates
that farming makes up a large part of the local economy\. The component i s located inthe
Qixia Economic Development Zone, 20 kmnorthwest of the town\. The zone currently
has apopulation of 35,000, which i s projectedto reach 63,000 by 2020\. Industriesinthe
zone's current area of 18 km2include cement production, machine tools, electrical
components, clothes making, fruit storage andprocessing\. The component would expand
the wastewater collection system, includingupgrading of the river embankments,and
provide a WWTP, water from whichwould be dischargedinto the Baiyang River, which
feeds the drinking water reservoir for Yantai, with requiredenvironmental quality Level
1B\.
27\. Rizhao Municipality, located inthe Shandongpeninsula, i s the second largestport
of the province on the Yellow Sea, with apopulation of 430,000 inan area of 40 km2\.
The population is expectedto grow to 820,000 by 2020\. The economy is chiefly
supported by the harbor and heavy industry\.The total GDP is RMB11\.5 billion Yuan,
sharedbetweenthe first, secondary and tertiary sectors (21%, 51%, 28%), which
indicates the importance of the agricultural sector andthe weakness of the service sector\.
28\. WeifangMunicipality, located onthe Bohai Sea, has apopulation of 970,000 in
an area of 118 km2\.The population is expected to grow to 1\.8 millionby 2020\. The city
industriesincludechemicals, textiles, papermaking, foodprocessing andmachine
manufacturing\. The total GDP is RMB28\.2 billionYuan, sharedbetweenthe first, second
andtertiary sectors (5%, 6O%, 35%), which indicates the importance of industrial
production andthe weak of the agricultural sector inthe economy\. The component,
reflecting the detrimental effect of pollution during extended dry periods intwo central
districts, would upgrade river water quality through the transfer and treatment of city
effluent downstream of the city\. Extensive improvement to the river embankments,
includingupgrading of flood protection, i s also included\. The recipient of Weifang
effluent is the BailangRiver, with planned quality withinand downstream of the city o f
Class V, about 50 kmdownstream of Weifang before discharging into the Bohai Sea\. The
environmental regulation requires Class I11quality\.
29\. Weihai Municipality, located inthe Shandongpeninsula, is a port on the Bohai
Sea with 590,000 inhabitants inan area of 62 km2\.The population is expectedto grow to
1\.25 million by 2020\. The city industriesinclude electronics, chemicals, plastics, food,
construction materials, textile and machine manufacturing\. The total GDP i s RMB22\.5
billion Yuan, sharedbetweenthe first, second andtertiary sectors (7%, 54%, 39%),
which indicates a good balancebetweenthe industrial and service sectors\. The
componentwould expandthe wastewater collection systeminthe central district to serve
atreatment plant which i s under construction\. Effluentsfrom Weihai would flow into the
Yellow Sea through a sea outfall, with arequiredenvironmental quality of Class 11\.
30\. Yantai Municipality, located inthe Shandongpeninsula, is aport on the Bohai
Sea with 1\.1million inhabitants inanarea of 135 km2\.The city industriesincludetextile,
energy generation, chemicals and light equipment manufacturing\. The total GDP i s
25
RMB50\.3 billion Yuan, sharedbetweenthe first, secondandtertiary sectors (5%, 58%,
37%) indicatingthat a large part is industrial, and very small proportionis agricultural\.
The component would expandthe wastewater collectionsystems intwo districts,
including a WWTP andre-use of treated effluent\. The GEF-supported activity would
demonstratethe impact of regular servicing of septic tanks andjoint treatment of septage
with wastewater, on reducing pollutionloads\. Effluentswould be directed to the Yellow
Seawith a requiredenvironmental quality of Class I\.
31\. Zaozhuang Municipality, locatedinthe southern mainland, has apopulation of
390,000 inan area of 42\.3 km2,which is expectedto grow to 480,000 by 2020\. The city
industriesinclude coal miningandprocessing,power generation, chemicals, food
processing and light equipmentmanufacturing\. The total GDP is RMB3\.57 billionYuan,
sharedbetweenthe first, second andtertiary sectors (7%, 54%, and 39%)\. The per capita
GDP is RMB7,275 Yuan, which i s about halfofthe provincial average\. The component
would expand wastewater collection systems inthe central districts along two rivers,
includingtheir upgrading, to serve two WWTPs, one existing andthe second under
construction, andre-use oftreated effluent\. The recipients ofthe city effluent are the Yi
Chengshaand Xisha Rivers, with plannedquality within anddownstream ofthe city of
Class IV\.
26
Annex 2: M a j o r Related Projects Financed by the Bank and/or Other Agencies
CHINA: Second Shandong EnvironmentProject
Sector Issue
Yangtze Flood
Restorationof social and economic EmergencyRehab\.
infrastructuredamaged by flood\. (Ln\.4438, Cr\. 3169 S S
andICRNo\. 24876)
Irrigation, drainage, flood prevention,
protectionofthe river bank, improves critical Yangtze Dike
sectionsof existingmaindykes inHunanand Strengthening S S
HubeiProvinces, and supports institutional (Ln\. 45700)
reforms\.
Policies,institutionalarrangementsfor water
supply, wastewaterand pollution control;
water and wastewatercollection in Jinan; Shandong S
water resource management in the Xiaoqing EnvironmentProject S
River basin; andmanagement of pollution (Ln4237)
control andenvironmentalservices\.
Water supply, municipaland industrial Japanese Bankfor Implementationperformancereported
wastewatertreatment, air pollution International satisfactory\. Assistance focusedexclusively
management (several projects)\. Cooperation on investment\.
Urbanservices, environment, water resources Asian Development
(severalprqjects)\. Bank Performancereportedsatisfactory\.
IPDO Ratings:HS(Highly Satisfactory); S (Satisfactory); U(Unsatisfactory); HU(Highly Unsatisfactory)
27
Annex 3: ResultsFrameworkandMonitoring
CHINA: Second ShandongEnvironmentProject
ResultsFramework
PDO Use of Outcome
Information
The development objectiveofthe -Citizens' satisfactionwith Benchmarkingthe performanceand
project is to improvethe wastewater, solid waste andwater efficiency of public services
~~
environmentalconditionsin supply servicesinparticipating satisfactoryfor citizens
participatingmunicipalities/counties cities/counties
throughapackageof priority -Improvementof water quality
interventions, includingupgrading within participatingcities/counties
and development ofwastewater -Percentage of populationconnected
collectionandtreatmentfacilities, to WWTPs
river embankmentrehabilitation, solid -Percentageoftreated effluentreuse
waste management, water supply -Rate of compliance of connected
improvements,industrialpollution industrieswith the discharge
monitoring, and enhancement ofthe standards
financialperformanceandefficiency -Percentageof populationprovided
of key urban environmentalservice with solid waste services
agencies\.
GEF GlobalEnvironment GEF Component: Benchmarkingthe performanceof
Objective: Pollution dischargeto Bohai Sea the septic tanks management and
The GlobalEnvironmentalObjective reduced efficiency ofreductionof pollution
of the GEF activity is to reduce land-
basedpollution through
demonstrationanddisseminationof
the Yantai model inShandong
Province
IntermediateResults ResultsIndicatorsfor
Oneper Component EachComponent Use of ResultsMonitoring
Wastewater Component: WastewaterComponent: Wastewater Component:
Expandedwastewaterservices in -Volumeofwastewatertreated inthe -Key performancedata in
participatingcities/countiesof cities/counties managementinformationsystem of
ShandongProvincewould (a) -Rateof wastewatertreated in the wastewater companies
substantiallyimprovethe local cities/counties -Input inprovincial database for
environment; and(b) reducethe -Reductionof pollution loadreaching defining sector policiesandplanning
pollution loadreachingrecipient the recipientrivers further expansionofwastewater
riversandthe Bohai Sea\. services inparticipating
cities/countiesand elsewherein
ShandongProvince
SolidWaste Component: SolidWaste Component: Solid Waste Component:
Expandedsolidwaste services in -Weight of municipalsolid waste -Key performancedata in
participatingcities/countiesof collectedandtransferredto sanitary managementinformation system of
Shandong Provincewould improve landfills solid waste companies
localenvironment -Rateof municipalsolid waste -Input in provincial databasefor
collectedandtransferredto landfill defining sector policiesand planning
further expansionof solid waste
services inparticipating
cities/countiesand elsewherein
ShandongProvince
* Via reports from independenttechnic, and socialauditteams\.
28
R wlts Framework(Continue
IntermediateResults ResultsIndicatorsfor
Oneper Component EachComponent
Water Supply Component: Water Supply Component: Water Supply Component:
Substantialreductionof groundwater -Population-accessto water supply -Key performancedata in
mining and improvedwater supply services managementinformationsystem of
services in participating -Water productionfrom groundand water supply companies
cities/countiesof ShandongProvince\. surface sources -Input inprovincialdatabase for
-Non-revenue water as percent of defining sector policies, with regard
water produced to protectionof groundwater in
particular, andplanningfurther
expansionofwater supply servicesin
participatingcitieskountiesand
elsewherein ShandongProvince
Sector Development and Capacity Sector Development and Capacity Sector Development and Capacity
Building Component: Building Component: Building Component:
-Improvementof the financial -Cost recoveryratio ofwastewater -Key performancedata in
performanceand efficiency of key managementoperations managementinformationsystem of
urban environmentalservicesunder -Cost recovery ratio of solid waste wastewater, solid waste, and water
the controlof participating management operations supplycompanies
cities/countiesin ShandongProvince\. -Cost recovery ratio of water supply
management operations
-Improvementofthe capacity ofthe -Numbers of installationof online -EPB key performancedatain
EPB inmonitoring of industrial automatic monitoringstations at managementinformationsystem
pollution control\. industrialdischargesites
-Public disclosure ofthe status of
compliance of majorpollution
enterprises
GEF Component: GEF Component: GEFComponent:
Pilot demonstration of (a) impact of -Volumeof septage collectedin -Evaluationof achievement of pilot
servicedseptic tanks on reductionof Yantai demonstrationobjectives, inputsand
pollution inrecipientrivers; and(b) -Volumeof septagejointly treated outputs
disseminationexperiment in with wastewater inYantai -Dissemination planofpilot
Shandongcities\. demonstrationachievementsin
ShandongProvinceandin China
29
Arrr igementsfc ResultsM nitoring
Targel llectionand RI wting
Baseline Mid-Term Data Responsibilit
Dec 2005 Review Collection y for Data
Dec 2009 Instruments Collection
-Citizens' satisfaction Consolidated SPPMO SPPMO,
with wastewater,solid Semi-annual Reports, participating
waste andwater supply (a) 66% (a) 75% (a) 92% PPR Independent cities/counties
servicesin participating audits
cities/counties
-Improvementofwater
quality incitiedcounties 0 148km 148km
from ClassV to Class VI
-Percentageof population 58% 80% 85%
connectedto WWTPs
-Percentageof treated 0\.2% 15% 21%
effluentreuse
-Rate of compliance of
connected industrieswith 60% 70% 90%
the dischargestandards
-Percentageof population
providedwith solidwaste 84% 90% 95%
services
GEF Component: Consolidated Independent SPPMO,
-Pollution dischargeto Semi-annual audits Yantai
Bohai Sea reduced 0 680 1700 PPR municipality
(BOD todyear)
Results Indicators for
Each Component
Wastewater Consolidated SPPMO, SPPMO,
Component: Semi-annual Supervision participating
-Volume of wastewater 103 197 226 PPR Reports cities/counties
treated (million m3/year)
-Rate of wastewater
treated in the 65% 70% 80%
cities/counties(%)
-Reductionof pollution
loadreachingthe recipient 9,400 20,000 28,000
rivers(ton COD/year)
(a) Summary Social t iessmentofthe Second Shandon, kvironment Pi iect, February 2 16\.
30
A pangerne led)
3llection and R jorting
Data Responsibility
Outcome Indicators Baseline Frequency
Dec 2005 zompletion Collection for Data
Dec 2009 Dec 2013 and Reports Instruments Collection
Solid Waste Component: Clonsolidated SPPMO, SPPMO,
\.Municipal solid waste Semi-annual Supervision participating
:ollected andtransferredto 293,460 387,265 450,775 PPR reports citiesicounties
sanitarylandfill(todyear)
Water Supply Component: Consolidated SPPMO, SPPMO,
-Populationaccessto water 84% 97% 97% Semi-annual Supervision participating
supply services(YO) PPR reports citieshowns
-Water production
a) Total millionm3/year 46\.72 75\.55 104\.03
b) Groundwater/totalwater 85% 39% 39%
production(YO)
c) Liters/capita/day 101 115 127
-Nomevenue water in % of
water produced(%) 25% 22% 20%
Sector Development and Consolidated SPPMO, SPPMO,
Capacity Building Semi-annual Supervision participating
Component: PPR reports citiedcounties
-Cost recovery ratio of
wastewatermanagement 2\.5% 1\.5% 1\.2%
operations (YO)
-Cost recovery ratio of solid
waste management operations 1\.O% 1\.3% 1\.4%
(Oh/\.)
-Cost recovery ratio of water
supply management 1\.6% 1\.5% 1\.2%
operations(YO)
-Numbers of installationof
online automatic monitoring 366 600 800
stations at industrialdischarge
sites
-Public disclosure ofthe Annual Quarterly Monthly
status of compliance of major Report Report Report
pollution enterprises
GEFComponent: Consolidated SPPMO, SPPMO, Yantai
-Volumeof septage collected 50 150 Semi-annual Supervision Municipality
in Yantai (1,000 tonsiyear) PPR reports, GEF
-Volumeof septagejointly monitoring
treated with wastewater in 50 150 and
Yantai (1,000 tonsiyear) evaluation
program
31
Annex 4: DetailedProjectDescription
CHINA: Second ShandongEnvironmentProject
1\. The project's physical components ofwastewater, solid waste and water supply
are located insix cities: Heze, Rizhao, Weifang, Weihai, Yantai, and Zaozhuang, and
three counties: Gaomi, Huantai, and Qixia\. The pilot GEF-supported septic tank
management activity is associatedwithYantai\. The institutional development and
capacity buildingcomponent is spreadover institutions involvedinthe project and
wastewater, water supply and solid waste sectors\. The detailed description ofthe project
i s as follows\.
Component1:WastewaterManagement-US$206\.9 million
2\. Component includesconstruction o f wastewater collection systems, treatment
plants, treatedeffluent re-use facilities, pilot septic tanks managementand associated
river improvements\.
Pipeline Pump Nameof
City/ Collection Length km
County Network Diameter Capacity
WWTP' AssociatedRiver Improvement
mm m3/day m3/day
Gaomi a) Sanitary sewers for 63\.6 km 20,000 -- __
existingWWTP; 400-1000 serving
existing
b) Interceptorfor 8\.4 km WWTP
ChengbeiWWTP 1200-1650
combined system\.
Huantai Sanitary sewers for 79\.1km __ Bei, _ _
BeiWWTP\. 300-1200 70,000
mVday
Qixia Primaryand 60 km _ _ Dongsheng, a) Embankment(4\.9 km) with
secondarysanitary 300-800 20,000 serviceroad(6 m wide) on crest at
sewers and trunk mYday left bank of the BaiyangRiver;
collectorsfor b) Tube rubber weir 1\.5 m high at
DongshengWWTP\. the Yandi River\.
Improvementofriversis a part ofthe project as an investmentassociatedwith wastewater, mainlyfor
protectionof interceptorslaidalongthe rivers\. The respectivemunicipalities requestedthat suchprotection
works include upgradingofthe riverbanks(parks andgreenery)andthe Bankhas not objected\. Civil works
contractswould combinebothwastewaterandriver improvementsinto one contract\.
32
Table 1:Wastewr er and Ass aiatedE ver Impro :ment(Continued)
Pipeline Name of
City/ Collection Length km Pump WWTP,
County Network Diameter Station Capacity AssociatedRiver Improvement
mm mVday
Weifang a) Interceptorsewers 32\.0 km(2 x _&/day
_ a) Retainingwalls (2 x 16km) and
on bothbanks along 16\.0km) bundroad(6 m wide) along banks in
the BailangRiver; Sizes from urbansection;
1\.65m x 1\.5 b) Excavationof silt from the river
m to 3\.2 x 2\.9 bottom' along21\.7 km, and400,000
m m3of abandonedsolid waste dump;
b) Pre-treatmentof Oxidation c) Two rubber and4 concretegated
flow interceptedalong pond - weirs to form about 4 m depth inthe
the BailangRiver\. volume: river;
360,000 m3 d) Planttrees, greenery, and
landscapinginurbansection
Weihai a) Extensionof 62\.9 km Power -- (573,000 mz)\.
__
sanitary sewers in 300-1400 supply/
districtsIand 11; controls
b) Transmissionmain 1\.65 km wang-
from LaojiPSto 1400 dao and
WWTP #2; Laoji
c) Replacementof 7\.0 km Pump
treated effluentrising 1000 stations
main;
d) Emergency outlet 1\.65km
from WWTP #2to 1200
Laoji PS\.
Yantai a) Interceptorsewers; 14\.1km Mup\. Xinanhe
400-1200 new 80,000
b) Treatedwater reuse 1\.0 km 20,000 m31day
supply pipe; 300 and
Laishan
c) Extensionof sea 3\.2 km upgrade
outfall\. 1500
Zao- a) Interceptorsewers 13\.2 km a) Xisha River: rehabilitation(10\.2
zhuang andcombined sewers 600-1500 km), including embankments,
for DongshaWWTP; removalof silt from the river
bottom', 14tube rubber weirs, 5
b) Trunk mainsand 27\.6km bridges, walkways, and78,000 m2
sanitary sewers 300-1400 river banks greening;
servingXisha WWTP; b) DongshaRiver: rehabilitation
(4\.9km), including embankment,
c) Treatedwater reuse 16\.4km removalof silt from the river
supply pipe to enhance 350 and 500 bottomg,5 rubber weirs (15-28
flows in Dongshaand wide, dia 3\.0 m), sevenbridges, 7
XishaRivers\. kmwalkways, and 118,000 mz
banksgreening\.
~________
7 Total volume estimatedat 2\.0 million m', of which 200,000 m3would be used for the greeningof
riverbanksand 1\.8 million m3would be disposed of at sanitary landfill\. Silt would be excavatedfrom the
river after the rainy seasonwhen the river dries out\.
Total volume estimated at 102,000 m3,ofwhich 31,300 m3would be usedfor the greeningofriverbanks
and 70,700 m' would be disposed of at sanitary landfill\. Silt would be excavated from the river after the
rainyseason when the river dries out\.
Total volume estimatedat 37,000 m3,which would be usedfor the greening ofriverbanks\. Silt would be
excavated from the river after the rainy seasonwhen the river dries out\.
33
Number of
City' Septic N o of Fecal Daily Septage
County Tanks in Tankers in Collected Auxiliary Facilities
the Pilot Operation m3/day
Area
De-silting deviceat pumpingstation
Yantai 1,700 14 130 Parkinglot for fecal tankers
Washing bay for fecaltankers
Past experiencesof Yantai andthe various agencies involved, as well as those of PEMSEAandthe World Bank will be
revisited\. Sinceno informationneedsassessmenthasbeen conductedinthe past, effort will be exertedto ascertainthe
following, either throughamix of techniques, such as, secondarysourcesof information,focused group discussions
and individual interview: (i)Awarenesslevel; (ii) Informationsource; (iii)Information andtrainingneeds; (iv) System
of disseminationand feedback; and (v) Relevantcomments andsuggestions\.
The results will serve as basisinthe productionand dissemination\. It will also ensurethat the informationis relevantto
the public, the channelsand approachusedeffective, andthe materialsusefulas preparatoryto consultationactivities\.
In additionto the project-fundeddissemination activities describedabove, the GEF activity will also include separately
funded-activitiesto disseminate and promotethe adoptionof various technologies andpilot projects\.
34
Component2: Solid WasteManagement-US$24\.3 million
3\. Component includes construction of: (a) an integrated solid waste processing,
recycling, composting and sanitarylandfillfacility inHeze; and (b) sanitary landfill
extension, transfer stations, and collection facilities inRizhao\.
Table 2: SolidWaste
City/
County Disposal Facility Collection Facility Supporting Equipment
Heze a) Waste processing and recycling, -- Excavator, waste compactor,
capacity o f 660 tonslday; earth mover, various loaders,
b)New sanitary landfill, pesticide vehicle, water spray
site capacity o f 2\.38 million m3, applicator, 11five-ton tip
service life o f 20 years at 280 trucks, vacuum truck, fuel
tonslday; and truck, electronic scale,
c) Composting plant, various operational vehicles,
Processing 304 tonslday\. etc\.
Rizhao PhaseI1o f sanitary landfill, Construction o f 20 3 excavators, waste
site capacity o f 3\.24 million m3, waste collection compactor, 2 earth movers,
service life o f 18years at 500 stations with capacity various loaders, 3 five-ton tip
tonslday, leachate collection and o f 8 tons per station; 20 trucks, pesticide application
treatment\. five-ton waste transport vehicle, five-ton fuel truck,
vehicles, 10 street various vehicles, etc\.
cleaning vehicles, 10
street washing vehicles,
10 five-ton construction
demolition transport
vehicles\.
35
Component3: Water SupplyManagement-US$34\.6 million
4\. Component includes construction and rehabilitation of WW, transmission mains,
distribution network, and upgrading of central control systems\.
Tal
Transmission Main Distribution
City/ ww Lengthin km Network
County Capacity m3/day Diame r in mm Length in km
Raw Water Treated Water Diameter in mm
Gaomi a) New Kanjia WW To Kanjia WW FromKanjia WW 93\.0 km,
30,000m3/day; 9\.8 km, 1000 10\.3 km, 1000, and 125-800
b) Increasedcapacity of mm 10\.5 km, 800 (incl\. supply to
NanhuWW fiom 30,000 villages with high
m31dayto 45,000 m3/day; fluoride water 58
c) Increased capacity of km 125-300)'0
BeihuWW from 15,000
m'lday to 30,000 m3/day;
and
d) Upgradewater supply
system, central control
room, control ofNRW\.
Huantai a) New WW 14\.9 km
100,000 m31day;and 1100 100-1100
b) Upgradewater supply
system, central control
room\.
Component4: InstitutionalDevelopmentandCapacityBuilding-US$4\.5 million
5\. Component includes the following:
(a) Construction management and business development(US$2\.55 million) to support:
(i) reviewandadvisoryservicesforprojectmanagement;(ii)
design procurement support
for NCB and ICB; (iii) construction supervision; (iv) monitoring implementation of
agreed EMPs andRAPS;(v) institutional improvements to the water supply, wastewater
and solid waste managementcompanies; and(vi) financial operational improvements to
the water supply, wastewater and solid waste managementcompanies;
10A new Kanjia WW (30,000m3/d) will provide water for replacinga self-supply from individual wells in
the city and ina few surroundingvillages, with a population of about 120,000, where the healthdepartment
requestedpiped supply to replacewell water containinghigh levels of fluoride\. Alternative treatmentof
that contaminatedwater was neverconsidered\. A systembasedonwater with high fluoride would require
constructionofproduction wells, treatment (possibly by ion exchange), raw and treatedwater pumping, and
disposalof wash-water from treatment\. Ifgroundwater sources would be used, (evenwhen that source i s
being abandoneddue to dropping water levels) it would be a better alternative to avoid high fluoride water
pocketsand constructproduction wells innon-fluoride areas, which existsaroundKanjia\. The current
surface source is the abundant surface waters (Wangwu Reservoir with a volume of 74 million m3)obtained
by gravity up to the WW\. The water demand ofthe villages is about 6,000m3/day,representingabout 20
percentofnew capacity; the latter alternativewill have, due to the economy o f scale, lower investmentunit
costs per m3than for the separate constructionofproduction wells and WW\.
36
(6) Sector studies (US$0\.5 million) to: (i)develop, through a solid waste sector study, an
integrated framework that would facilitate the reform oftechnical, regulatory and
managementpolicies and programs, identify environmental issues, improve efforts inthe
3Rs, strengtheninstitutional capacity, establisheffective tariff, fee or charge structures
and collection systems, anddevelop a more competitive marketeconomy for solid waste
management; and (ii) reinforce the debt management capacity at the municipal and
provinciallevels of government through: a) a debt management study; b) upgradingthe
debtmanagement system; andc) strengtheningthe capacity of the SPFB\. Inaddition,
associatedwith the proposedproject, a water sector performance assessment, financedby
the Consultant Trust Fund, is implementedby SPPMO\. The assignmentwill collect and
process data for urbanwater benchmarking inShandongProvince on the basis ofthe
IBNET toolkit that will allow learning, sharing informationand adopting best practicesto
bring about changes inperformance\. The report of the assessment will analyze the results
and compare Shandongwater supply utilities with its peers innorthern China and around
the world\.
(c) Capacity building of provincial EPB (US$1million) to support priority studies and
training inthe following two areas: (i) extension of on-line monitoring systems - "Digital
Environment "-which would include design and implementation of networks for data
collection, transmission andprocessing, design and implementation of management
informationsystems, provisionof equipment for monitoringrivers, andtraining for
systemoperation; and (ii)study on restoration of watersheds\.The componentwill
a
assist the provincialEPB instrengtheningits pollution control capacity, including
controlling industrial pollution at source\.
(d) Capacity enhancement of provincial and local government decision-makers and
project owners (US$0\.55 million) to provide advice and assistance to decision-makers in
addressingurbanenvironmental issues through focusedtraining and study tours\.
37
Annex 5: ProjectCosts
CHINA: Second ShandongEnvironmentProject
1\. The estimated total cost of the project is US$270\.33 million, including
contingencies, taxes and duties\. Estimates are based on FS Reports with unitprices
adjusted to those received inrecent bids and updated to end-2005\. Physical contingencies
are estimated at 7\.5 percent of baseline costs andprice escalation is based on a projected
national inflation rate o f 2\.0 percent for 2006 and thereafter and an international inflation
rate of 3\.4 percent for 2006, 1\.5 percent for 2007 through 2009 and 1\.3 percent thereafter\.
Summary cost estimates are provide below:
ProjectCosts by Component Local IForeign I Total
US%million
A\. Wastewater Management
Gaomi Country Wastewater 6\.17 2\.45 8\.62
Huantai Country Wastewater 10\.23 3\.66 13\.89
Qixia Wastewater andAssociated River Improvement 6\.79 2\.34 9\.13
Weifang Wastewater and Associated River Improvement 49\.14 17\.47 66\.61
Weihai Municipal Wastewater 11\.18 4\.51 15\.69
Yantai Municipal Wastewater and GEF 13\.50 10\.25 23\.75
Zaozhuang Wastewater and Associated River Improvement 36\.69 8\.00 44\.69
SubtotalWastewaterManagement 133\.70 48\.68 182\.38
B\. SolidWaste Management
Heze Solid Waste 10\.00 3\.31 13\.31
Rizhao Solid Waste 5\.70 2\.25 7\.95
SubtotalSolidWaste Management 15\.70 5\.56 21\.26
C\. Water Supply
Gaomi Water Sumlv, 10\.84 4\.06 14\.90
I I
Huantai Water Supply 11\.47 4\.02 15\.49
SubtotalWater Supply 22\.31 8\.08 30\.39
D\.TechnicalAssistance andCapacityBuilding
Technical Assistance and CaDacitv Building 4\.52 4\.52
Subtotalof TechnicalAssistance and CapacityBuilding - 4\.52 4\.52
BASELINE COSTS 171\.71 66\.84 238\.55
Physical Contingencies 12\.88 4\.30 17\.18
Price Contingencies 10\.80 3\.80 14\.60
TOTAL PROJECT COSTS 195\.39 74\.94 270\.33
Interest during Construction 7\.32 7\.32
Commitment Charges 3\.46 3\.46
TOTAL COSTSTO BEFINANCED 206\.17 74\.94 281\.11
38
Table 2: TotalCost
Bank GEF Counterpart Charges duringTotalCosts
Loan Grant Fund Project to be
cost Implementation Financed
54% 2% 44% 100% -
52% 2% 42% 96% 4yo 100%
39
Total Yantai
PilotProjectComponent costs GEF Municipality
US$ million
Establishment o f Septic Tank Institution 0\.52 0\.52
2\.07 2\.07
I Project
Provision of Facilities and Equipment
Operations I 0\.82 I 0\.82 I
Joint Sewage-SeptageTreatment inXinanhe 0\.04 0\.04
Consulting Services 0\.98 0\.98
Project Management, Monitoring, Evaluation 0\.77 0\.37 0\.40
I Dissemination and Dromotion 0\.20 0\.20
TotalPilotProjectCosts 5\.40 I 5\.00 I 0\.40
40
Annex 6: ImplementationArrangements
CHINA: Second ShandongEnvironmentProject
1\. ImplementingAgencies\. Water supply, wastewater and solidwaste municipal
agencieswould have overall responsibility for implementation of the project, and upon
completion, as the facilities' owners, for their operation andmaintenance\.The
implementing agencieswould report to the participating municipalities and counties\. The
implementing agenciesandproject components are shown inthe following table\.
ImDlementineAgencies
Municipality ProposedComponent ResponsibleAgency
Weifang Municipality (1)Water Supply Gaomi City Water Supply
(2) Wastewater Company
Heze Municipality Solid Waste Management Heze Yuwa Solid Waste
Management Company
Zibo Municipality (1) Water Supply Huantai Ji Yuan Water Supply
(2) Wastewater andDrainage Company
Qixia DongshengWater
Yantai Municipality Wastewater, Associated
River Improvement Supply and Drainage
Company
Rizhao Municipal
Rizhao Municipality Solid Waste Management Environmental Engineering
Co\. Ltd\.
Weifang Municipality Wastewater, Associated Weifang Municipal
River Immovement Maintenance Division
Weihai Municipality Wastewater Weihai Water Management
Group Company
Yantai XinanRiver
Wastewater Wastewater and Drainage
Yantai Municipality Company
GEF-Septic Tank
Management Yantai Municipality
Zaozhuang Municipality Wastewater, Associated ZaozhuangYiyuan
River Improvement Wastewater Treatment Center
2\. InChina, the standardpatternfor assistingimplementing agencieswithprojects
supportedby foreign financing includes formation of a LGat the key agency level, to
provide guidelines andto facilitate various approvals\.A PMO, reporting to the LG,
normally manages day-to-day operations ofthe project\. Inaccordance with those
procedures, Shandong has establishedthe following implementation arrangements\.
3\. ProvincialLeadingGroup\.A provincialLG, headedby avice-governor of
Shandong Province, has beenestablishedto guide formulation andto give policy
direction to implementing agencies\. Membersincludethe Mayors of Heze, Rizhao,
Weifang, Weihai, Yantai and Zaozhuang Municipalities and Gaomi, Huantai and Qixia
Towns, andthe directors of the mainprovincialgovernment bureausand commissions,
41
includingthe Provincial Development and ReformCommission (DRC), Provincial
Finance Bureau, ProvincialConstructionBureau, the ProvincialEPB and Land
ManagementBureau\. The LGhas designatedthe ShandongProvincialConstruction
Bureau as the provincial agency for managingpreparation and implementation of SDEP2\.
The Bureauhas decidedto use, for day-to-day managementand coordination ofthe
project, its existing SPPMO\.
4\. ProvincialProjectManagementOffice\. SPPMO'sresponsibilities include:(a)
overall project coordination, managementandmonitoring; (b) annual budget preparation;
(c) project-wide quality assurance; (d) regular progress reporting (on physical
implementation, safeguards and financial management)to SPG andthe Bank, including
cost management, project impact and environmental improvement assessment; (e)
interagency coordination andprocurement support; and (f)training and TA facilitation\.
The ShandongProvincial ConstructionBureauhas reinforced SPPMO recently withnew
staff for financial andprocurement functions, and would provide additional staff as
necessary\.SPPMO has adequate office space, furniture and equipment including
computers, printers, copiers and scanners, telephones, vehicles and various office
supplies\.
5\. A firmof consultantswould support SPPMO inoverall project management,
advisory services, and reporting, includingreviews of: (a) detailed engineering designs
andbidding documents; (b) procurement support for NCB and ICB (bidevaluation and
contract awards); and (c) construction supervision and contract management\.
6\. MunicipaYCountyLeadingGroupsandPMOs\.Arrangements at the provincial
level are mirrored at the municipalkounty level\. The participating municipalities and
counties have establishedand staffed LGs and PMOs\. The responsibilities of the PMOs at
the municipal andcounty levels areto guidethe preparation andexecutionof the project
components withintheirjurisdictions\. They would receive functional guidance from and
report to bothLGs and SPPMO\. A separate firm of consultantsprovided underthe
PackageA consultancy contract will assist Yantai Municipality and its PMO inmanaging
the GEF-supportedpilot project\.
7\. The skill mix of SPPMO and the PMOs would be adjustedfrom-time-to-time, as
necessary, to reflect the needs of the various phases ofproject preparation and
implementation\.
42
Annex 7: FinancialManagementandDisbursementArrangements
CHINA: Second ShandongEnvironmentProject
1\. ExecutiveSummary\. The Bankconductedanassessment ofthe adequacy ofthe
project financial management systemof SDEP2\. The assessment, based on guidelines
issuedby the FinancialManagementSector BoardonNovember 3,2005, has concluded
that the project meets minimumBank financial managementrequirements, as stipulated
inBP/OP 10\.02\.Theprojectwill haveinplace anadequate project financial management
systemthat canprovide, with reasonable assurance, accurateand timely informationon
the status ofthe project inthe reportingformat agreedwith the project and as requiredby
the Bank\.
2\. Funding sources for the project include the Bank loan, GEF grant and counterpart
funds\. The Bank loanproceeds and GEF grant will flow from the Bank into the project-
designated accounts (DAs) to be set up at andmanagedby SPFB, to the Municipal
Finance Bureaus (MFBs), to the County's Finance Bureaus (CFBs) ofthe implementing
cities, then to various project implementing entities, and finally to contractors or
suppliers\.The Bank loan and GEF grant will be signedbetweenthe Bank andthe
People's Republic of China through its MoF, and on-lending agreementsfor the Bank
loanwill be signed betweenMoF and SPG through SPFB, and then betweenSPFB and
various MFBs and CFBs, and finally on-lent to various implementing entities\. The
constitution of counterpart funds will be appropriations from municipal and county
governments\.
3\. No outstanding audits or audit issues exist with any of the implementing entities
involved inthe project\. However, the task team will continue to be attentive to financial
managementmatters during project supervision\.
4\. Audit Arrangement\.The Bankrequires that project financial statementsbe
audited inaccordance with standards acceptableto the Bank\. Inline with other Bank-
financed projects inChina, the project will be audited inaccordance with international
auditing standardsandthe government auditing standardsof the People's Republic of
China\. The Shandong Provincial Audit Office has beenidentifiedas auditors for the
project\. Annual audit reports will be issuedby the above audit office andwill be subject
to review by the China National Audit Office (CNAO)\. The Bank currentlyaccepts audit
reports issuedby CNAO or provincial/regional audit bureaus/offices for which CNAO is
ultimately responsible\.
5\. The annual audit report ofthe project's consolidated financial statements will be
due to the Bank within six months after the end of eachcalendar year\. This requirement
i s stipulated inthe Bank's legal agreements and the GEF Grant Agreement\. The
responsible entity and timing are summarizedas follows:
Audit Report Submitted by Due Date
Consolidated project financial statements SPPMO June 30 each calendar year
43
6\. Inaddition, annualaudit reports onthe financial positionandthe operating results
of the following companies will be due to the Bank within six months after the end of
each calendar year: Gaomi City Water Company, Heze Yuwa Solid Waste Management
Company, Huantai Ji Yuan Water Supply and Drainage Company, Qixia Dongsheng
Water Supply and Drainage Company, Rizhao MunicipalEnvironmental Engineering
Company, Weihai Water Management Group Company, and Yantai Xinan River
Wastewater and Drainage Company\.
7\. The financial statements for these entities are not fiduciary requirements,but
rather for sustainability purposes\. The requirementsfor this audit will not be includedas
part of the loan covenant butrather includedinSection 1I\.B\.o f Scheduleo f the Project
Agreement\.
8\. FundsFlow andDisbursementArrangements\.Fundsflow for the Bankloan
and GEF grant will follow Bank andMoF requirements\.Two DAs, one each for the loan
and grant, will be establishedand managedby SPFB\. The funds flow will be as follows: ir
L
MFBofHeze ' Heze YuwaSolidWaste
--+ MFB of Rizhao RizhaoMunicipalEnvironmental -
- - EngineeringCo\. Ltd
D WeifangThreeRivers Construction -
A Co\., Ltd\.
CFB ofGaomi Gaomi City Water CompanyLimited -
S -
B P MFB of Weihai Weihai Water ManagementGroup e
A F
N B r h YantaiXinanRiverWastewater -
TreatmentCo\. Ltd\.
b \. , I
CFB of Qixia Qixia DongshengWater Supply and -
DrainageCo\. Ltd
ZaozhuangCity Yiyuan Wastewater -
TreatmentCenter
HuantaiJi Yuan Water Supply and -
MFB ofZibo CFB of Huantai Drainage Company
9\. Counterpart funds mainly will be appropriations from municipal and county
governments\. The appropriations will be providedto the implementing entities through
various MFBs or CFBs\.
44
10\. Bank loanproceeds would be disbursed against eligible expenditures as indicated
inthe following table:
Table 1:Loan DisbursementSchedule
45
11\. The GEF pilot project will be implemented by Yantai Municipality\. GEF grant
proceeds would be disbursed against eligible expenditures as the following table shows\.
Table 2: GEF DisbursementSchedule
Amount
Category of the Grant Expendituresto be
Allocated Financed
(US$ million)
(1) Goods and works for the
implementation o fthe project at
Tongbozi pumpingstation and 2\.37 100% I
Xinanhe WWTP
(2) Consultants' services, training and
dissemination under the project 1\.81 100%
(3) Incremental oDerating:costs 0\.82 100%
I Total I 5\.00 I I
12\. Four disbursement methods are available for the project: reimbursement, advance,
direct payment and special commitments\. The statement o f expenditures (SOE) will be
usedto document expenditures against the contracts not subject to prior review; invoice
payment evidence will be required for expenditures against the contracts subject to the
Bankreview\. Two DAs, one each for the World Bank loan andGEF grant, will be
segregated accounts established inSPFB\. For the World Bank loan, the authorized
allocation o f DA i s proposed to not exceed US$15 million\. For the GEF grant, the
authorized allocation o f DA i s proposed to not exceed US$0\.75 million\. SPFB will be
directly responsible for the management, monitoring, maintenance and reconciliation o f
the DA activities o ftheproject\. Supportingdocuments requiredfor Bank disbursements
will be prepared and submittedby respective project implementing entities through
MFBsandCFBs ineach city, thento SPFB for final verification and consolidation before
sending to the Bank for further disbursement processing\. The flow of withdrawal
applications i s as follows:
46
Heze Yuwa Solid Waste Company 7 MFBofHeze -
Rizhao Municipal Environmental
EngineeringCo\. Ltd
- MFBofRizhao -
Yantai Xinan River Wastewater
TreatmentCo\. Ltd\. - 4-j MFB of Yantai N
Qixia DongshengWater Supply and CFB of Qixia
DrainageCo\. Ltd -
ZaozhuangCity Yiyuan Wastewater b MFB of -
TreatmentCenter Zaozhuang
HuantaiJi Yuan Water Supply and CFB of Huantai MFB ofZibo -
Drainage Company
MANAGEMENTAND REPORTINGREQUIREMENT
13\. Implementing entities\.At the provincial level, the existing SPPMO will be
responsible for coordinating the preparationand subsequent implementation o fthe
project\. Each city or county will have its own local PMO for coordination, while detailed
implementationwill be conducted by relevant entities\. The detail organization chart is as
follows:
47
GaomiPMO Gaomi City Water Company Limited
HezePMO +HezeYuwa Solid Waste Company
HuantaiJi Yuan Water Supply and Drainage Company
QixiaPMO QixiaDongshengWater Supply and DrainageCo\. Ltd
Rizhao Municipal Environmental EngineeringCo\. Ltd
Weifang PMO WeifangThree RiversConstructionCo\., Ltd\.
Weihai Water ManagementGroup Company
Yantai Xinan River Wastewater TreatmentCo\.
T trl
Zaozhuang Zaozhuang City Yiyuan Wastewater TreatmentCenter
PMO
14\. Budgeting\.Although the cost table has beenprepared for the project andthe
project will prepare its annual implementing plan, the budgeting systemwithinthe
project i s usually not well maintained or monitored\. The Financial Management
Specialist (FMS) will work with the related entities to improve their budgeting system
duringproject implemenation\.
15\. Accounting\. The administration, accountingand reporting o f the project will be
set up inaccordance with the Circular #13 : "Accounting Regulations for World Bank
FinancedProjects'' issued inJanuary 2000 by MoF\. The circular provides in-depth
instructions for accountingtreatment o fproject activities and covers the following:
Chart ofAccounts;
0 Detailed Accounting Instructions for Each Project Account;
0 Standard Set o f Project Financial Statements; and
0 Instructions on the Preparation o fProject Financial Statements
16\. The standard set o fproject financial statements mentioned above has beenagreed
between the Bank and MoF and applies to all Bank projects appraised after July 1, 1998 and
includes the following:
Balance Sheet;
0 Summary o f Sources and Uses ofFundsby Project Component;
0 Statement o f Implementation o f Loan Agreement /Grant Agreement;
48
0 Designated Account Statement; and
0 Notes to the Financial Statements
17\. Eachof the implementing entities will be managing, monitoring and maintaining
their respectiveproject accounting records\. Originalsupporting documents for project
activities will be retained by the originating implementing entities\. Inaddition, each
implementing entity will preparefinancial statements, which will then be submittedto
SPPMO\. SPPMO will thenreview and approve these financial statements\. Subsequently,
SPPMO will preparea consolidated project financial statement for submission to the
Bank for reviewand comment on aregular basis\.
18\. That adequateproject accounting staff, with educational background and work
experience, commensurate with the work they are expectedto perform, is one ofthe
factors critical to successful implementation of project financial management\.
Discussions, observation and review of the educational background and work experience
of the staff identifiedfor financial and accounting positions inthe implementing entities
(both "project" and "entity"), confirm that staff are qualified and appropriate to the work
they are expectedto assume\.
19\. To strengthenfinancial managementcapacity and achieve consistent quality of
accounting work, a project financial managementmanual (the Manual) will beprepared\.
The Manual will provide detailed guidelines on financial management, internal controls,
accounting procedures, fund and asset managementandwithdrawal application
procedures\. The Manual will be preparedby SPFB and submittedto the Bank\.The FMS
will review andprovide feedback, andthe Manualwill be finalized anddistributedto all
the relevantfinancial staffbefore loaneffectiveness\.
20\. As most ofthe financial staff are newto Bank-financed projects, awell-designed
and focused training program inproject financial management should beprovided by
SPPMO prior to project effectiveness, to all financial and accounting staff to ensure a
good understanding and knowledge of the following:
0 Bank's Financial ManagementPolicy and DisbursementProcedures;
Fund/Asset/Contract Management;
0 Format and Content of Project Financial Statements;
0 Audit Requirement; and
0 On-lending and RepaymentManagement
21\. Implementing entities will use the computerized financial management system,
"User Friend(Yong You)", a well-established accounting software package approved by
MoF, for this project\.
49
22\. Internal controland internal auditing\. The related accountingpolicy, procedures
andregulationswere issuedby MoF, andthe project will follow these documents\. The
funds flow will be arrangedand monitored through the finance bureaus, andwill be based
on an expenditure reimbursement basis\.
23\. There i s no formal independent internal audit department for the project\.
However, this will not impact on the project's financial management as SPPMO
management and monitoring, and annual external audits will serve as mechanisms to
ensure that financial management controls are functioning appropriately\.
24\. Financial reporting\. The format andcontent o f project financial statements
represent the standardproject financial reporting package agreed betweenthe Bank and
MoF, and have been discussed and agreed among all parties concerned\. In-line with the
Financial Monitoring Report (FMR) guidelines, the un-auditedproject consolidated
financial statements will be submittedas part o f FMRto the Bank on a semi-annual basis
(prior to February 28 and August 31each year), and will include the following four
statements:
a Balance Sheet;
0 Summary o f Sources and Uses o f Funds by Project Component;
a Statement of Implementation o f Loan AgreemendGrant Agreement; and
a Designated Account Statement
25\. Eachimplementing entity will prepare its own project financial statements, which
will then be consolidated by SPPMO\. The project consolidated financial statements will
be sent by SPPMO to the Bank for review and comment on a regular basis\.
26\. Financial covenants\.No additional financial covenants are proposedother than
the standard financial covenants (e\.g\. maintaining project accounts inaccordance with
sound accountingpractices, audit requirement and SOE) as described inthe legal
documents\.
27\. Supervisionplan\. A detailed supervisionplanfor this project will be included as
part o f the China Audit Strategy document\. This document takes into considerationthe
size o f project and the financial management risk rating o fthis project\.
50
Annex 8: Procurement
CHINA: Second ShandongEnvironmentProject
A\. General\.
1\. Procurement for the project would be carried out inaccordance with the World
Bank's "Guidelines: Procurement under IBRDLoans and IDA Credits" dated May 2004;
and "Guidelines: Selectionand Employment o f Consultants by World Bank Borrowers"
dated May 2004, and the provisions stipulated inthe Legal Agreement\. The general
description o f various items under different expenditure categories is provided below\. For
each contract to be financed by the loan, the different procurementmethods for
consultant selection, the need for pre-qualification, estimated costs, prior review
requirements, and time frame are agreed betweenthe Borrower and the Bank inthe
Procurement Plan\. The Procurement Planwill be updated at least annually or as required
to reflect the actual project implementationneeds and improvements ininstitutional
capacity\.
2\. Procurement of works\. Works procuredunderthis project would include:
WWTPs, sewers and interceptors, water treatment plants(WTPs), raw water and water
distribution pipelines, solid waste landfills,pump stations, river rehabilitation, etc\.
Procurement will be done usingthe Bank's Standard BiddingDocuments (SBDs) for all
ICB, and the Chinese Model BiddingDocuments (MBDs) agreed with the Bank for all
NCB\.
3\. Procurement of goods\. Goods procured underthis project would include:
wastewater collection and treatment equipment,water treatment equipment, solid waste
treatment equipment, office equipment, vehicles, etc\. Procurement will be done usingthe
Bank's SBDs for all ICB, andthe Chinese MBDs agreed withthe Bank for all NCB\.
4\. Selection of consultants\. Consulting services procured under this project would
include: ConstructionManagement and Business Management (PackageA):will
provide support to SPPMO for: (i) review andprocurement examination for N C B
design
and ICB; (ii) construction supervision; (iii)advisory services for construction and project
management; and (iv) capacity buildingo f SPPMO; and support institutional
development and capacity buildingo f existing and newly established water, wastewater
and solid waste management companies under the project\.Solid WasteStudy (Package
B): will provide advisory on: (i) standard o f classification; (ii)
technology o ftreatment;
(iii)institutional improvement; and (iv) tariff collection system\. Debt Management
(Package C):will reinforce the debt management capacity at the municipal and
provincial government levels through: (a) a debt management study; (b) upgrading the
debt management system; and (c) strengthening the capacity o f SPFB\. Upgradeof
Financial Management System (PackageD): will provide assistance inimproving the
existing financial management system\.CapacityBuildingfor ShandongProvincial EPB
(PackageE):will support priority studies focused on training such as: (i) extension of on-
line monitoring systems-- "Digital Environment"--which would include design and
implementation o f networks for data collection, transmission andprocessing, design and
implementation o f management information systems, provision o f equipment for
51
monitoringrivers, andtraining for systemoperation; and (ii)wetlandstudy\. Capacity
a
Strengtheningof ProvincialLeaders and Project Owners (PackageF): will provide
training and study tours for a selected number of key provincial leaders from DRC, the
Finance Bureau, the Construction Department and project owners\. Capacity
Strengtheningof Provincial Financial Department (Package G):will provide training
and study tours for key leaders from the Finance Departmentfor project management,
andDevelopment of ManagementSystemfor Septic Tanks (PackageH)\.
5\. Short lists of consultantsfor services estimatedto cost less thanUS$300,000
equivalent per contract may be composed entirely of national consultantsinaccordance
with the provisions ofparagraph2\.7 ofthe Consultant Guidelines\.
6\. Other\.Underthis project, a sub-component will be supportedby a grant of US$5
million from GEF\. This sub-component includes civil works and equipment of Dongbozi
Pump Station andXinanhe WWTP, and development of management system for septic
tanks includingprocurement of related equipment\.
B\. Assessment of the Agency's Capacityto ImplementProcurement\.
7\. Procurementactivities will be carried out by the following entities\.
ProjectComponent ProjectManagementOffice/
ImplementingAgency
Gaomi Wastewater and
Water Supply Gaomi Water Supply Co\.
Huantai Water Supply and Huantai Water Supply & Drainage Co\. (to be established
Wastewater appraisal)
Qixia Wastewater I before
DongshengWater Supply and Drainage Co\. Ltd\.
Weifang Wastewater Three RiversProject Construction and Development Co\.
(Please note: agency is differentinAnnex 6)
Weihai Wastewater Weihai Water Management Group Co\.
Yantai Wastewater 1IYantai Xinanhe Wastewater and Drainage Company
``lidWasteand
Wastewater Zaozhuang YiyuanWastewater Treatment Center
Heze Solid Waste Heze Yuwa Solid Waste Treatment Co\. Ltd\.
(Please note: agency is differentinAnnex 6)
Rizhao Solid Waste Rizhao MunicipalEnvironment Engineering Co\. Ltd\.
TA and Consulting Services SPPMO
52
8\. The ShandongConstruction Engineering Tendering Center was employed to
conduct NCB procurement and InstrimpexInternational Tendering Company for ICB
procurement\. IneachPMO at least one staff personhas beendesignatedfor procurement\.
At the provinciallevel, two staffpersonswill beresponsiblefor coordination of
procurement activities\. As a component of the project, international consultantswill also
be employed for procurement management\.
9\. On January 9,2006, Mr\.ZhentuLiu,a Bank procurement specialist, carried out
anassessment ofthe capacity ofthe implementingagency to conduct procurement
actions for the project\. The assessment includeda review ofthe organizational structure
for implementing the project and the staffing of the project implementation agencies and
SPPMO\.
10\. Most of the issueshisks concerning the procurement aspects of project
implementation have beenidentified and include: (i) most of the project implementation
units (PIUs) are newto World Bankprojects; and(ii) natureofproject components is
the
technically diverse\. The corresponding corrective measures that have beenagreedare: (i)
centralized procurement - SPPMO will employ one tendering company for NCB and
another for ICB, while SPPMO will oversee all the procurement activities with the
assistance of international consultants (PackageA inthe description of consulting
services above); and (ii) experience of previous projects (SDEP and Huai River Pollution
ControlProject) will be adopted\.
11\. The overall project risk for procurement is AVERAGE\.
C\.ProcurementPlan\.
12\. The Borrower, at appraisal, developed a ProcurementPlan for project
implementation, whichprovides the basis for the procurement methods, prior or post
review, contract estimate, implementation schedule, etc\. This planhas been agreed
betweenthe Borrower andthe Bankteam onNovember 6,2006 andis available in
SPPMO\. It will also be available inthe project's database and inthe Bank's external
website\. The ProcurementPlanwill be updatedinagreement with the Bank team
annually or as requiredto reflect the actual project implementation needs and any
requirementsfor improvement ininstitutional capacity\.
D\.Frequencyof ProcurementSupervision\.
13\. Inadditionto the prior review to becarriedout from Bankoffices, the results of
the capacity assessment ofthe implementing agency has recommendedthat a supervision
mission visit the field once every halfyear to carry out procurement supervision, and
once each year for post review ofprocurement actions\.
E\.AdvanceContractingandRetroactiveFinancing\.
14\. Advance contracting would be applied for expendituresincurredafter June 15,
2006 (completion of appraisal) for civil works contracts and employment of consulting
53
firms\. Procurement of contractors and consulting services, including required
advertisements, will be carried out inaccordance with Bank Guidelines\. Proposed
advanced contracting and retroactive financing is summarized inthe table below\.
Contract
Note: Shandong Province was remindedthat payments made inthe expectation o fretroactive financing are
at the Borrower's risk and do not commit the Bankto makinga loan for the operations or fmancing such
payments\.
54
0
(0
~ m
N
n
P 8 P P
I
8 P P
m m
0 0
z z
~
vl
vl
2
v) s
0 z
0
v)
3
v)
80
c3
+
a)
a) s
p- 5e z 0) t- t
e 0 c! B
e
t- :
z
0
t- t-
0 0 r-0
P e P e e e P
P e P P e e
m I!
m m
z 0 0
z
0
0
2 P
2 :a)
5 +
5+ 5
a,
ea,
0)
w3
\.6
E
I
co
N w
r 0 co (0
N N
v)
er
r
I v-
r-0
N
e d
z N N r
e
e
r r- B
r B
r (D
t- e s B e
0 8 t-
0 t-
0 0
P P P
P P P
m
0 m
0 m
0
v) v)
? In
r h
r
z
m In
v!
v-
Y
cd
v) N N 0
v) 0 *) 8 8 cy
I
s5
0 e
r r r W
0
I 8Er- E
0
r-
0 0 0 0
?
h Q) 2
cn ?
co \
h
\0 0
6 ? \
h
0 h
0
P P P P
P P P P
m
0
v)
2 0a! v) W a!
r 2 z W r
2 0
I I
I
00
b 0
0 0
0 hl
hl
3h
h1
'C
8
pc
v, 2
3 v,
0 2 8 v,
0 3 c?
0
i
Ym
\.-m
?
\.-bo
E
3
Y
821 y
rcr
- LL
0
Y
m
\.3
cl
cd
W
2
4 'C
8
a
m 00
d
0 2
Annex 9: EconomicandFinancialAnalysis
CHINA: Second ShandongEnvironmentProject
EconomicAnalysis
1\. The project will support improvements inthe urban environment and infrastructure
development of selected cities and counties inShandong Province\. Itprovides a comprehensive
assistancepackage to the province by financing components inthree major areas: wastewater,
including associated river embankments, water supply and solid waste management\. Together,
these components will enhance the participating cities and counties' overall economic
development potential through a healthier environment, strengthened river protection and
improved livability\. Detailed information, including assumptions for each sub-component and
calculation, i s available inthe Project File\.
CentralAssumptions
\. Shadow pricingand conversionfactors (e\.g\. o fforeign exchange, wages) have been
applied based on the recommendations contained inthe current NDRC official document,
"Guidance on Feasibility Study of Investment Projects" (2002) and the specific situation
under the projects discussed\. The conversion factor for the exchange rate i s 1\.08 and for
\. wages i s 0\.88\.
The discountratehasbeentakento be the cost of capital inChina for mediumrisk
investments, currently assumed to be 10percent per annum\.
costs
2\. Component costs include capital costs, as well as operation andmaintenance costs\.
Capital costs cover the costs o f land, civil works and equipment, as well as the costs o f any
associated resettlement, and have been phased over the constructionperiod\. Operation and
maintenance costs have been identifiedfor the project period following commissioning\. Both
capital and operation and maintenance costs have been adjusted to remove the effects of
inflation, duties andtaxes\.
A\. Wastewater ManagementComponent
3\. Objective\. The primary objective o fthe wastewater management component is to reduce
land and water resource pollution by buildingwastewater collection systems, treatment plants,
treated effluent re-use facilities and associated river improvements in six citiedcounties\. This
component will also help enhance the health o f ordinary people and improve the ecological
environment\.
4\. Alternatives considered\.The pros and cons of a wide-range of alternatives were carefully
examined duringthe preparationo f each sub-component\. Such alternatives include different
locations, treatment process, and technical designs and so on\. InYantai, for example, the choice
o f location and capacity o f the WWTP was selected on the basis of less land occupation and cost
effectiveness; the location o f the pumping station was chosen based on the ease of construction\.
61
5\. InQixia, the location ofthe plantwas selected inconsiderationo fless damage to existing
vegetation and more convenience for water reuse\. InZaozhuang, minimizingthe discharge o f
polluted waters into rivers ina newly built area and minimizing resettlement inold areas were
some o f the factors considered indeciding the design o f the systems\.
6\. Benefits\. The expected incremental benefits o fthe wastewater sub-components are
substantial and are generated by all three project approaches - sewage collection, treatment and
river rehabilitation\. The most obvious andimmediate benefit is that the wastewater, previously
going into the rivers without any treatment, will be treated and, as a result, will reduce negative
environmental impacts and will inturn leadto substantial positive health impacts for ordinary
people\. A direct economic benefit i s the wastewater treatment fee, newly collected under the sub-
components, which represents the value placed on the service or the willingness to pay\. Another
direct benefitis the cost saving resulting from the utilization o f recycled water\. Inaddition, the
river embankment sub-components will ensure that flood damage, such as to personal property,
enterprises and public facilities, during flood years i s avoided, A cost-benefit analysis has been
conducted for each sub-component with associated sensitivity analysis\. The results are shown in
the table below the EIRRs for all the projects are above the 10percent discount rate and
-
sensitivity tests confirm that EIRRs are robust\.
Net Present Sensitivity
WastewaterandRiver Value
Improvement ovpv) EIRR - 10% + 10%
(10,000 Investment Investment
Yuan)
Gaomi 4,229 18\.0% 20\.6% 15\.0%
YantaiXinanhe WWTP and Septage Treatment(GEFCo-financedComponent)
7\. The economic analysis for the Yantai component needsto be viewed inconjunctionwith
the detailed incremental cost analysis o fthe GEF component presented inAnnex 15\.
8\. Benefits\. The benefits o f this component are additive to the benefits from the extension o f
the Xinanhe WWTP and the sewage collection network\. These combined investments are
expected to contribute significantly to the improved wastewater service inYantai urban area
through collection and septage treatment and reduction o f land-based pollution discharged into
the Bohai Sea\. There are substantial benefits expected to accrue as a result o f the septage
collection and treatment, including reducingthe level o f BODpollutants\. The direct benefits
identified, inadditionto the wastewater treatment and reusebenefits o fthe baseline component,
62
are: (a) septage collection andtreatment; (b) reduction inBODpollutants; and (c) environmental
benefits from reducingpollution, improvement inpublic health and living conditions, and
improvementsto the aesthetic and scenic surroundings for Yantai's urbanresidents\. The
environmental benefits are difficult to quantify, however, they are expected to be substantial\.
9\. EIRR and sensitivity analysis\. By includingthe GEF pilot component into the Xinanhe
wastewater treatment, the EIRRo fthe base case improved by 4 percent (see table above)\. The
total combined benefits which will accrue over the life o fthe project are estimated to be 73
million Yuan inNPV terms at 10percent discount rate, or three times higher than a scenario
without the GEF increment\. The results o fthe sensitivitytests o f the economic benefits stream
show that the costs of the project have to increase by about 40 percent inorder for the EIRRto
drop below 10percent\. The expected benefits have to drop by more than 35 percent for the EIRR
to fall below the hurdle rate and the break-even point for NPV=O\.
B\.Water Supply Component
10\. Objectives\.The primary objective o fthe water supply component is to expand the water
supply andthe water supply networks inthe project areasby constructing andrehabilitating
WW, transmission mains, and distribution networks andupgradingcontrol systems\. The
component will improve the living conditions o f ordinary people, increase industrial production
capacities, and reduce general water shortages and groundwater exploitation by making newly
available water to households as well as to industries\.
11\. Alternatives considered\.The pros and cons o f a wide range o f alternatives were carefully
examined during the preparation o f each sub-component\. InGaomi, for example, four alternative
locations were considered for the Chengxi water plant and the final option was selected on the
basis o f cost effectiveness andthe impact on areas with severe water pollution\. The design of a
water delivery pipe from Xiashan Reservoir- with a single pipe as the final choice- has taken into
consideration the lower cost andreduced project complexity as a result o f one-time construction\.
InHuantai, the final selectiono fa water intake location inXincheng Reservoirwas made by
comparing two alternatives, with the objective o f ensuring a stable and sufficient water supply\.
Another example inHuantai i s its choice o f water treatment process, which was based on the
consideration o f better pollution abatement\.
12\. Benefits\. Significant benefits will be generated underthe water supply component\. A
major benefit will be the improvement inhealth o f the residents o f 74 villages inGaomi, where
the widely usedgroundwater has a highcontent o f fluorine\. Villagers here suffer from chronic
fluorine poisoning\. The newly-available tap water to these villages under the water supply
component will improve the quality o ftheir lives\. The component will also make available more
raw water to industries and thereby help increase industrial production\. The water supply
component will also help address the issues o f water shortages and groundwater exploitation\.
Quantification o f the benefits was calculated based on willingness-to-pay, more value-added
industrial production (due to newraw water), and cost-saving as a result o f improved health\. The
estimated EIRRsare shown inthe table below -all are above the 10percent discount rate andthe
sensitivitytests confirm the robustness o fthe EIRRs\.
63
NPV Sensitivity
Water Supply (10,000 EIRR - 10% of + 10% of
Yuan) Investment Investment
Gaomi 11,136 20\.2% 24\.2% 17\.2%
Huantai 17,098 21\.6% 23\.3% 20\.2%
C\. SolidWaste Component
13\. Objectives\. The objective o f the solid waste component is to provide a higher standardo f
collection and cleansing service to the municipalities through the gradual expansion o f solid
waste collection services and the development o fnew waste treatment and disposal facilities\.
14\. Alternatives considered\. A wide range o f alternatives were considered interms of
location, treatment scheme, composing technologies and so on\. The final choice was made by
comparing the advantages and disadvantages of each alternative\. InHeze, for example, the
location o f the treatment plant was chosen by taking into consideration the distance from
residential areas, the length of power line, the cost o f landvalue andthe local UrbanMaster Plan\.
InZaozhuang, remediation o fthe existingdumpwas chosenas the preferredapproachversus
transporting waste to other landfills\.
15\. BeneJits\. The benefits o f the solid waste component are substantial\. They will improve
the quality of surface as well as groundwater by reducingthe amount ofpollution, enhance the
health and quality o f life of residents and increase the livability o f the city\. The quantifiable
economic benefits under this component include: a solid waste treatment fee to be collected;
increased land value due to newly-available land, previously covered by loosely piledwaste, for
either commercial or domestic utilization; and the utilization o f marsh gas\. The results o fthe
cost-benefit analysis are presented inthe table below\. The estimated EIRRsfor these components
are all higher than the 10 percent discount rate used\. Sensitivity analyses conducted to test the
impact of switching values o f investment confirm that the estimated EIRRsare robust\.
Table3: InternalRate of Return\.Water ComDonent
NPV Sensitivity
SolidWaste (10,000 EIRR - 10% + 10%
Yuan) Investment Investment
Heze 4,018 15\.1% 15\.9% 11\.9%
Rizhao 4,749 18\.6% 17\.6% 19\.8%
FinancialAnalysis
16\. ProvincialFinances\.The table below summarizes the actual andprojectedreceipts and
expenditure data from 2003 to 2012 for Shandong Province\. The table shows that project
expendituresand counterpart fundingrequirements represent a fraction (less than 0\.5 percent in
any givenyear) o f Shandong Province's total receipts\. Shouldparticipatinglocal governments
not be able to raise all their counterpart fundingrequirements, or provide funds for operation and
64
maintenance and debt service, Shandong Province would have no difficulty inproviding the
needed support\.
Table 4: ShandongProvincialFinances
(Y billion, current terms)
Projected
I 1 2003 I2004 1 2005 I2006 I 2007 I2008 I 2009 I 2010 I 2011 I2012 I
TotalDisposable
Receipts 104\.3 124\.1 147\.6 175\.6 208\.9 248\.4 295\.5 351\.5 418\.1 497\.3
GeneralBudgetary
Expenditures 101\.1 118\.9 141\.4 168\.2 200\.1 238\.0 283\.2 336\.8 400\.6 476\.6
Project Expenditures - 0\.11 0\.51 0\.66 0\.54 0\.20 0\.10
Project Exp\.as % of
Receipts - 0\.06 0\.24 0\.27 0\.18 0\.06 0\.02
CounterpartFunds
as % of Receipts 0\.0 0\.05 0\.05 0\.03 0\.01 0\.0
17\. Municipaland CountyFinances\.A financial analysis was carried out for each
participating municipality and county\. Analyses o fthe historical receipts and expenditures
statements show that some o fthe participating municipalities andcounties are ina deficit
situation inthat their local tax receipts are not able to cover their statutory expenditures\.
Accordingly, they rely on transfers from higher authority, i\.e\. Shandong Province and/or the
central government\. All capital expenditures have traditionally beenfundedfrom such transfers\.
18\. Upto the end o f2004, local governments separatedtheir sources offunds into two
accounts: on-budget funds and off-budget finds\. On-budget finds include receipts from statutory
taxes and levies, such as the urbanconstruction and maintenance fund\. Off-budget funds include
non-tax receipts such as some types o f user charges collected by administrative departments, e\.g\.
long term leases o f land\. Commencing on January 1,2005, on- and off-budget funds have been
combined into one account, which i s simply calledthe "budget"\.
19\. The fiscal impact o fthe project has beenanalyzed against 2003-2004 total disposable
receipts, the data for which were provided by the participating municipalities and counties
through the SPFB\. To project future revenues (and expenditures), conservative annual increases
were assumed for all municipalities\. Details are inthe ProjectFile (see Annex 12)\. The following
data indicate (a) project expenditures, and (b) counterpart fundingrequirements, each as a
percentage o f receipts for each municipality\.
Heze Municipality 2006 2007 2008 2009 2010
Project expenditures as % of receipts 0\.09 0\.44 0\.64 0\.51 0\.11
Counterpartfunding as % of receipts 0\.04 0\.21 0\.30 0\.24 0\.05
65
Rizhao Municipality 2006 2007 2008 2009 2010 2011
Project expenditures as % of receipts 0\.00 0\.37 0\.73 0\.90 0\.40 0\.07
CounterDart fundina as % of receiDts 0\.00 0\.17 0\.34 0\.42 0\.19 0\.07
I WeifangMunicipality incl\. Gaomi County I 2006 2007 2008 2009 2010 2011
I I 1 I I I
Project expenditures as % of receipts 0\.27 2\.76 1\.78 1\.41 0\.65 0\.09
Counterpartfunding as % of receipts 0\.13 1\.30 0\.84 0\.66 0\.30 0\.04
WeihaiMunicipality 2006 2007 2008 2009 2010 2011
Project expenditures as % of receipts 0\.13 0\.44 0\.36 0\.22 0\.04 0\.01
Counterpartfunding as % of receipts 0\.06 0\.21 0\.17 0\.10 0\.02 0\.01
Yantai Municipality, incl\. Qkia County 2006 2007 2008 2009 2010 2011
Project expenditures as % of receipts 0\.01 0\.30 0\.43 0\.24 0\.08 0\.03
Counterpartfunding as % of receipts 0\.00 0\.14 0\.20 0\.11 0\.04 0\.01
Zaozhuang Municipality 2006 2007 2008 2009 2010 2011
Project expenditures as % of receipts 0\.40 2\.37 1\.67 1\.12 0\.29 0\.07
Counteruart funding as % ofreceiuts 0\.19 1\.11 0\.78 0\.53 0\.14 0\.03
Zibo Municipality, incl\. Huantai County 2006 2007 2008 2009 2010 2011
Project expenditures as % of receipts 0\.05 0\.64 0\.75 0\.31 0\.13 0\.06
Counterpartfunding as % of receipts 0\.02 0\.30 0\.35 0\.15 0\.06 0\.03
20\. Inall cases, the average annual counterpart fundingrequirements are lessthanthe
projected annual growth rates o f locally generated taxes, suggestingthat the local governments
can fund all their requirementsfrom these sources\. Moreover, counterpart funding requirements
will bemet from various sources, including state bonds, domestic bank loans, internally
generated funds, as well as landsales and from the local finance bureaus (see the table below)\.
Therefore, the actual demand for funds from local taxes will likely be only the amounts indicated
inthe table below, under the headingo f"Finance Bureau", except that inZaoahuang
Municipality counterpart funding contributions would come from landsales as well\. Debt service
attributable to the project would be equivalent to between about 0\.1 and 2\.0 percent o f each
municipality's regular capital budget\.However, debt service on about 54 percent o f project
investments would be met from user charges, andwould not, therefore, be a drain on municipal
budgets\. Additionally, the operation and maintenance expenses on the same 54 percent o fproject
investments would be met from user charges\.
66
Qixia wastewater &
river embankments 35\.82 47\.04 82\.86
Rizhao solidwaste 34\.04 38\.96 73\.00
Weifangwastewater
& river 292\.84 3 14\.08 606\.92
emhankments
Weihaiwastewater 63\.19 78\.16 141\.35
Yantai wastewater 84\.59* 86\.00 170\.59
Zaozhuang
wastewater & river 167\.51* 235\.36 402\.87
embankments
Zaozhuangsolid
waste 1\.48 9\.84 11\.32
21\. Local GovernmentPreliminaryDebtAnalysis\. Analysis of dataprovided by SPFB on
the debt situation ofparticipating localmunicipalities and countiesindicates that the levelofdebt
per capita varies greatly amongthem\. The average indebtednesslevel (Y490 per capita) should
not be a cause for concern as comparedto GDP per capita among the nineparticipants (average
about Y17,274)\. However, three out of the nineparticipants have atotal debt to total revenue
ratio that exceeds 60 percent, with Weihai beingthe highest (79%), followed by Gaomi (62%)
and Yantai (61%)\. Details are inthe Project File (see Annex 12)\.
22\. Utility FinancialAnalysis\. Financialprojections havebeenpreparedfor eachutility
(water supply, wastewater and solid waste management) company on an annual basis over the
period 2006-2020\. The projections are basedon the following financial objectives of the
participating municipalities and counties: (a) water supply companies: each company to: (i)
generate revenuesfrom its water supply operations sufficient to cover operating and maintenance
costs (before depreciation), increases inworking capital, debt service, and 20 percent of the
average capital expendituresmade inathree-year period; and (ii) maintain a debt service
coverage ratio of not less than 1\.3 times; and (6) wastewater and solid waste management
companies: each company to produce total revenuesto: (i) operating costs (including
cover
depreciation), and the amount by which debt service exceeds the provisionfor depreciation; and
(ii)maintain a debt service coverageratio of not less than 1\.3 times\. Projected financial
statements and detailed operational and financial monitoringindicators for each company are
included inthe Project File (see Annex 12)\. The projected averagetariffs over the
implementation period of the project are given inTable 6\.
GaomiWater Supply and Wastewater
23\. The Gaomi City Water Supply Company Limited(GWSC), a state-owned(by Gaomi
County within Weifang Municipality) company was established in 1986\. Wastewater operations
were mergedwith the company in 1999\.While the name ofthe company was not amendedto
reflect its additional wastewater responsibilities, its business licensewas so amended\. The total
staff strengthof the company is 376, of which about 31are wastewater operational staff\. The
managementis responsible for bothwater supply and wastewater operations\. GWSC serves the
urbanpopulation of Gaomi City which currently is about 261,000\. The population is projectedto
increaseto 350,000 by 2010\. GWSC would be responsiblefor the design, implementation,
67
ownership and operation and maintenanceofthe proposedwater supply and wastewater
investments, andfor borrowing, and repaying World Bankloanproceeds\.
24\. Water supply services are currently largely suppliedby industrieswith self-supply\.
GWSC operates one WWTP; another WWTP is under construction under a "Build-Operate-
Transfer (BOT) operation\.
25\. Water supply andwastewater tariffs were last adjustedon January 1,2005 as follows:
Tariffs Water Supply Wastewater Combined*
RMB/mj(from January 1,2005)
Residential 1\.354 0\.70 2\.617
Industrial 2\.194 0\.80 3\.625
I Commercial I 3\.194 I 0\.90 I 4\.805 I
Construction 3\.994 0\.90 5\.669
Special* * 4\.394 0\.90 6\.101
Average 2\.80 0\.80 3\.60
*The industrial, construction and specialtariffs include (i) resourcefee ofY0\.33/m3on surface water; and
awater
**(ii)businesstaxes\.
Car wash, etc\.
26\. The water supply operations of GWSC havebeenprofitable for at leastthe past four
years (2002-2005)\. As indicated above, GWSC increasedits water supply tariffs from the
average of Y2\.35/m3to Y2\.80/m3, an increaseof about 19percent, assuring its continued
profitability\.
27\. GWSC increasedits average wastewater tariff from Y0\.50/m3 to Y0\.80/m3 also on
January 1,2005, an increase of 60 percent, makingits wastewater operations profitable\.
Heze SolidWaste Management
28\. The Heze Yuwa Solid Waste ManagementCompany Limited(HSWC), a state-owned
(by Heze Municipality) company, was establishedon December30,2005\. The initial staffing of
HSWC came fromHeze's Domestic SolidWaste ComprehensiveTreatment Center, whichwas
established inApril 2005 with a staff of four persons, to be responsiblefor preparingthe solid
waste component\. HWSC would be responsiblefor the proposedBank-financedinvestmentsof a
composting plant and a sanitary landfill only, and for borrowing, and repaying World Bank loan
proceeds\. Two district governments, whose wastes would be depositedinthe new facilities,
would continue to be responsible for collection of wastes from (a) households, commercial
establishments, institutions and industries, and (b) transportation of wastes to the newlandfill
and composting plant\. HWSC would initially serve apopulation of460,000\.
29\. Solidwaste fees and charges were last adjusted in2004\. The current solid waste charge
for residents is Y1\.OO/person/month\. However, the true costs of providing solid waste services
are probably not knownwith much certainty\. Assurances were given during negotiations that
Heze arrangeto complete areport by June 30,2009 ofthe fees anduser charges neededfor the
68
recovery ofthe costs ofproviding solid waste collectionanddisposalservicesto domestic,
institutional, commercial users andindustrial users; the report is to include proposalsfor improved
collection systems, includingoptionsfor privatizing collections, andadetailed, time-bound action
plan, acceptable to the Bank,to enable the recoveryofthe costs to begincommencingJanuary 1,
2011, after taking into accountthe Bank's commentsonthe report and actionplan\.
HuantaiWater Supply and Wastewater
30\. The Huantai Ji YuanWater Supply andDrainage Co\. Ltd\. (HWDC), a state-owned (by
Huantai County within Zibo Municipality) company, was established on March21,2006\. The
initial staffing of HWDC is eight persons, to rise to about 110upon commissioning of the works\.
HWDC would serve the towns of Guihe, Guoli andTainzhuang which are located ina new
development zone, which is not currently served by apublic water supply or wastewater system\.
3 1\. Underbothits water supply andwastewater sub-components, HWDC would be
responsible for the design, implementation, ownership and operation and maintenance of the
proposedBank-financed investments, and for borrowing, andrepaying World Bankloan
proceeds\. The water supply sub-component includes a WTP of 100,000 m3/dayto serve industry,
whichpresently has self-supplysources\. On completion ofthe WTP investment, the industrial
sources would be shut down\. Underits wastewater managementsub-component, HWDC would
construct a WWTP to treat industrial effluent includingthat of apaper mill, andthe domestic
effluent currently being pre-treatedby the paper mill's WWTP\.
32\. Other thanthe secondary andtertiary network belonging to the industries already
established inthis service area, there is no existing publicly-owned primary network, either in
water or wastewater\. HWDC would, therefore, begin with no existing assets to be taken over\.
33\.
2004, and wastewater tariffs, last adjustedon December 1,2005, are as follows:
For indicative purposesonly, water supply tariffs inHuantai City, last adjustedon May 1,
Water Supply* 1 Wastewater Combined
FromMay 1,2004 FromDecember 1,
2005
Residential 2\.22 1\.oo
1\.oo 3\.22
Industrial 2\.87 3\.87
Commercial 2\.97 1\.oo 3\.97
Construction 2\.97 1\.oo 3\.97
Special 2\.97 1\.oo 3\.97
Average rda 1\.00 d a
34\. Financial projections show that following completion and commissioning of the works in
2008, HWDC would, commencing 2009, need to establishthe following avera e tariffs inorder
to meet the covenantedrequirements:Y1\.5l/m3for water supply and Y1\.1O/m for wastewater\.
B
69
Qixia Wastewater
35\. The Qixia DongshengWater Supply and Drainage Company Limited(QWDC), a state-
owned (by Qixia County within Yantai Municipality) company, was establishedinOctober
2005\. QWDC currently has six staff; the number is projectedto rise to 41 by completion of the
project\. Its service area is confined to the Qixia Economic Development Zone, located about 20
kmfrom QixiaCity, with apopulationof about 40,000\. The Qixia State Assets Management
Company Limitedowns the share capital of QWDC on behalf of Qixia City\. QWDC would be
responsible for the design, implementation, ownership and operation and maintenanceof the
proposedwastewater investment,and for borrowing, and repaying World Bank loanproceeds\.
36\. There are no existing wastewater assets inthe service areato betaken over by QWDC\. A
separate wastewater systemincludinga WWTP andstorm water and river embankment
investments i s to be constructedunderthe project\. The Qixia City Government would be
responsible for storm water operations\. Water supply to the area is currently provided by
industry through self-supplyof groundwater\. QWDC's water supply operations would only
commence when surface water from abranchof the SouthbJorth Water Transfer Scheme
becomes available\. At that point, all ground water installations would be closed down\.
37\. There are no water supply or wastewater tariffs being collected inthe Economic
Development Zone\. The Qixia Water ConservancyBureaucollects a water resource fee
(Y0\.50/m3)\. When surfacewater supplies become available to the Economic Development Zone,
QWDC would commencebilling and collecting its own water supply tariffs, and collection of
the water resourcesfee would bediscontinued\. QWDC would start billing andcollecting a
wastewater tariff only after it completes the project-financed investments\.
38\. The proposedwastewaterhiver embankmentinvestment (Y82\.8 million) by Qixia County
i s affordable, having an impact of only 0\.03 percent on Yantai Municipality's (the parent
municipality of Qixia County) disposable receipts, and 0\.31percent on Yantai's net balances\.
Rizhao Solid Waste Management
39\. REEC, a state-owned (by Rizhao Municipality) company, was establishedin2002\. It
would be responsiblefor the design, implementation, ownership and operation andmaintenance
ofthe proposedsolid waste facilities, namely (a) the secondphase expansion of the existing
landfill, (b) the construction of about 20 waste collection stations, and (c) the purchase of
vehicles and on-site equipment, and for borrowing, and repaying World Bank loanproceeds\.
REEC already owns and operatesRizhao's Phase 1landfill facilities\. On completion ofthe
project-financed investments, REEC would take over the existing 36 waste collection stations
and associatedvehicles and equipment\.The service area is the Donggang District of Rizhao City,
with apopulation ofabout 300,000\. REEC's other responsibilities include construction of
environmental investments, e\.g\. WWTPs\. Its current staff strengthis 36\.
40\. Residentsare currentlypaying a chargeof Y3\.00/person/month for solid waste collection
services\. This charge, which was institutedin2003, is collected by property management
companies, which remit the collections to the Charging Office of the Rizhao Environmental
70
Sanitation Department\.The Charging Office bills andcollects directly from institutions,
commercial enterprises and industries\.REEC currently charges Y26\.5Yton for disposing of
wastes brought to its (Phasel) landfill\. The Rizhao FinanceBureau also provides REEC with
funds to defray its costs for collecting wastes from parksandother public areas\.
41\. The true costs of providing solid waste services are probably not knownwith much
certainty\. Assurances were given during negotiations that Rizhao arrangeto complete areportby
June 30,2009 ofthe fees anduser charges neededfor the recovery ofthe costs ofproviding solid
waste collection anddisposalservicesto domestic, institutional, commercial users and industrial
users; the reportto include proposalsfor improvedcollection systems, including optionsfor
privatizing collections, andadetailed, time-bound actionplan, acceptable to the Bank, to enable the
recoveryofthe costs to begincommencingJanuary 1,2011,after taking into accountthe Bank's
comments onthe report and action plan\.
WeifangWastewater
42\. The Weifang Municipal Administration Bureauis responsible for operating the
wastewater and drainage networks inWeifang City\.
43\. The following wastewater assets are inoperation:
0 No\. 1WWTP of 100,000 m3/daycapacity\. This planthas beenunder a BOT operation for
severalyears under a 20 year contract, and is statedto be treating 110,000 m3/day;
No\. 2 WWTP of 40,000 m3/daycapacity\. This plantis owned by HautingDistrictandhas
just commencedoperation;
0 No\. 3 WWTP 20,000 m3/daycapacity\. This plant is owned by Fangzi District andhasjust
commenced operation;
Two pump stations of 70,000 m3/dayand 30,000 m3/daycapacity, operatedby the
Transfer-Operation-Transfer (TOT) operator ofNo\. 1WWTP; and
Sewer network (combined inthe old city; separate systems innew developments) owned
and operatedby district governments\.
44\. The only wastewater investmentsbeing proposedfor Bank financing are interceptors on
each side of the Bailang River, which are to be built into each embankment which is to be raised
and strengthened\. The cost of the wastewatedriver embankmentinvestment is about Y606\.9
million\. The embankments are, andwill continue to be maintained by the Weifang Municipal
Maintenance Division, which reports to the Weifang MunicipalAdministration Bureau\. As the
interceptors would be part ofthe embankmentsthe Weifang Municipal Maintenance Division
would be responsible for operating andmaintaining them as well\. Other investments being
proposedare (a) building of a counter gate; (b) building of rubber dams; and (c) dredging ofthe
riverbed\. The responsibility for ownership and the operation andmaintenanceof these
investmentswill also rest with Weifang Municipal Maintenance Division\.
45\. The investmentsproposedby Weifang Municipality are affordable, having an impact of
only about 0\.4 percent on its disposable receipts, and about a 5\.0 percent increaseinexisting debt
service\.
71
46\. The Weifang MunicipalThree River Rehabilitation Office would manage the
construction of the project on behalf of Weifang Municipality\. This Office has hadpast
experience inimplementing similar type investments\. Weifang Municipality would sign all
procurement contracts and be the borrower of World Bank loanproceeds\.
47\. The following wastewater tariffs, last adjustedonNovember 1,2004, are currently being
billed and collected by the Weifang Water Supply Company:
Water Supply* I Wastewater Combined
Tariffs RMB/m3
FromAugust 1, FromNovember 1,
1999 2004
Residential 2\.00 0\.90 2\.90
Industrial 2\.60 1-00 3\.60
Commercial 3\.70 1\.10 4\.70
Special 4\.20 1\.10 5\.30
Average d a 1\.oo d a
* Includes a water resource fee o f Y0\.50/m3\.
48\. The above wastewater tariffs have beencalculated to cover the operating costs (excluding
debt service onNo\. 1WWTP) of all three WWTPs, the two pump stations, andthe network
betweenthe pump stations andNo\. 1WWTP\.
49\. The price paidto the TOT operator is statedto be Y0\.93/m3\.This includesthe operations
ofthe No\. 1WWTP, two pump stations, andthe network betweenthe pump stations andthe
WWTP\. The monthlypayment is about Y2\.9 million\.
50\. The water supply company bills and collects the wastewater tariffs\. The Weifang
Municipal Water Saving Office bills and collects wastewater tariffs from industrieswith self-
supplywhich discharge to sewers\. The collection rate is statedto be about 50 percent\.
5 1\. Financial Proiection\. As there will be no corporate wastewater company involved in
providing wastewater services, only simplified(cash) financial projections were prepared\. These
show that wastewater tariffs would needto be increasedby about 25 percent in2008 and20
percent in2011(see Table 6)\. The proceedsof wastewater tariff collections would cover
operation and maintenancecosts, TOT paymentsand debt service on the Bank loan\.
WeihaiWastewater
52\. The Weihai Water Management Group Company (WWMC), a state-owned(By Weihai
Municipality) company was formed in2003 with the merger of wastewater operations with the
existing water supply company\. WWMC is responsible for (a) water supply services; (b) raw
water supply; and (c) wastewater operationsinWeihai City\. Itwould beresponsible for
implementing, and operating andmaintaining the proposedwastewater investments under the
project as well as owning and operating andmaintaining the existing investments\.
72
53\. WWMC's wastewater responsibilities are divided between(a) a drainagecompany @\.e\.a
separate cost center) responsiblefor the network, includingthe primary, secondary and tertiary
sewers, andpump stations; and (b) three WWTPs (each operating as separate cost centers)\. As
most of Weihai City has separate wastewater and storm water systems, WWMC is responsible
only for the wastewater network\. The total staff strengthof WWMC is 820 of which200 are
responsiblefor wastewater operations\. One managementteam is responsible for all WWMC's
activities\.
54\. No\. 3 WWTP of 50,000 m3/daycapacity is expectedto commence operations inJuly
2006\. O fits total capacity, 40,000 m3/dayis to be madeunder a BOT operation\. Inthe future,
when flows increase, WWMC would be responsiblefor operating the remaining 10,000m3/day
capacity\.
55\. The following wastewater tariffs, last adjustedon January 1, 2005, are currently being
billed and collected by WWMC:
Tariffs RMB/mj
FromAugust 15, --
2000 FromJanuary 1,
2005
Residential 2\.05 0\.80 2\.85
Industrial & Inst\. 2\.05 0\.80 2\.85
Commercial 2\.05 0\.90 2\.95
Construction 5\.35 0\.90 6\.25
Special 5\.35 0\.90 6\.25
Average nla 0\.83 nla
Water reuse 1\.00
* Includes a water resource fee of RMB 0\.35/m3
56\. WWMC's wastewater tariff structure includes the BOT cost (currently estimatedat
Y0\.937/m3)\. In2005, WWMC incurreda small loss on its wastewater o erations\. By the end of
2006 it expects to adjust its wastewater tariffs to an average of Y1\.1O/m at which time it would
r3
expect to break even\. WWMC's water re-use tariff is statedto be Yl\.00/m3\. Currently, it is
selling its re-use water to the municipality for greeningpurposes\. Ithas, however, received a
letter of interest from the HuaNengEnergy Plant to purchase its re-use water\.
57\. WWMC's collection rate is said to bebetween95 to 98 percent\. However, the collection
rate (by the Water Resources Bureau) of wastewater tariffs billedto industrieswith self-supply
discharging to the sewer network is said to be only 10percent\. The Weihai Municipal
Government would address this issue either by closing down the self-supply and transferring the
service to WWMC ifthere i s spare capacity inits system, or improving the collection
performance\.
73
Yantai Municipality
58\. The Yantai XinanRiver Wastewater and Drainage Co\. Ltd\. (YWDC), a state-owned (by
Yantai Municipality) company, was established on March 14,2006\. The service area o f YWDC
covers three districts
MupingDistrict all o fwhich are connected to Xinanhe WWTP\. YWDC would take over the
- - the southern part o f Zhifu District, Laishan District andthe western part o f
ownership and operation andmanagement o f (a) Xinanhe WWTP, (b) the trunk sewers serving
the plant; and (c) associatedpumpstations only\. The secondary andtertiary network would
remain with the district governments for operation and maintenance\. YWDC would be
responsible for the design, implementation, ownership and operation and maintenance o f
Yantai's proposed component, andborrow, and repay World Bank loan proceeds\.
59\. Valuation o fthe existing assetsto be taken over by YWDC is underway and i s expected
to be completedby September 30,2006\. The associated secondary andtertiary sewers would, as
stated above, remainwith the districts for the time being\. Being old infrastructure, there are few
details available o ftheir value, size, etc\.
60\. As there is presently no breakdowno f data on water supplied, wastewater flows, and
customers served, etc\. inYWDC's service area, the Yantai Municipal Government (YMG) has
agreed that after its establishment, YWDC would beginto collect all relevant data inits service
area\. YWDC would, by December 31,2007, prepare financial projections o f its future operations
which would show, amongst other things, the levels o f tariffs that would be necessary to sustain
its operations and service its debt requirements\. The company would also benefit from TA to be
provided under the Package A consultancy contract\. Yantai officials confirmed that YWDC
would not commence with any existing debt to be serviced as Xinanhe WWTP and associated
assets were financed solely from budgetary allocations\.
61\. Wastewater tariffs\. The following wastewater tariffs, last adjusted on March 1,2006, are
beingbilled and collected by the Yantai Water Supply Company:
Water Supply* I Wastewater Combined
Residential 2\.20 0\.70 2\.90
Industrial 2\.80 0\.90 3\.70
Commercial 2\.80 0\.90 3\.70
Construction 2\.80 0\.90 3\.70
SPecial 9\.00 1\.oo 10\.00
Average n/a n/a n/a
Water re-use 1\.20
62\. Should YWDC establish facilities for the production and sale o f re-use water; the price
would likely be inthe region o f Y1\.20/m3,which is currently the sale price o f Taoziwan WWTP
located inthe northernpart o f Zhifu District\.
74
63\. The wastewater tariffs o f YWDC would be billedand collected by the water supply
companies serving its service area\. The collection rate o f wastewater tariffs from industries with
self-water supply i s said to be low\. It i s the intention o f YMG to phase out such self-supply\.
Underthe project, Yantai would receive TA to help improve collection rates, or design an
improved collection system\.
Zaozhuang Wastewater
64\. The Zaozhuang Yiyuan Wastewater Treatment Center (ZWTC), a state-owned (by
Zaozhuang Municipality, an entity with a legal person status) company was established in2004\.
Its responsibilities include the construction and operation and maintenance o f the wastewater,
river rehabilitation and solid waste investments proposed to be financed under the project\. The
current staff strength i s about 100\. Zaozhuang Municipality would be the borrower o f World
Bank loan proceeds, and be responsible for repayment\.
65\. Zaozhuang's existing WWTP, or Dongsha WWTP, o f 70,000m3/day capacity, is situated
on the southeastern part o f Shizhong District on the DongshaRiver\. The WWTP was financed by
the Austrian Government and commissionedin 1997\. A 50,000m3/day water re-use plant i s now
under construction at the site\. The WWTP is statedto be treating about 50 percent o fthe
wastewater and storm water flows o f Shizhong District\. It i s operated and maintained by the
Zaozhuang Municipal Drainage Management Division\. There i s an old combined network inthe
core urban area o f Shizhong District\. This i s operated and maintained by the Zaozhuang
Municipal Engineering Management Division\. The Zaozhuang Municipal Government (ZMG) i s
planning to construct a WWTP o f 40,000m3/day capacity on the Xisha River on the southwestern
side o f Shizhong District\. The central government requires Zaozhuang to complete this WWTP
by January 1,2007 to coincide with the completion o fthe South/North Water Transfer Scheme\.
For that reason, the plant i s being financed partly by state bonds, central government grants and
partly by local resources\. ZMG originally plannedto construct the plant under a BOT contract\.
However, inview o f the urgency to complete its construction by the end o f 2006, ZMG i s
proceedingwith its construction, expecting to complete it under a partial BOT arrangement, or
failing that, to enter into a TOT contract for its operation\.
66\. The proposed wastewater investments under the project include: (a) a combined
interceptor and combined sewers to serve Dongsha WWTP; (b) combined trunk mains and
sanitary sewers to serve Xisha WWTP; and (c) re-use pipe work at both WWTPs\.
67\. Other investments to be financed under the project include river rehabilitation on boththe
Dongsha and Xisha Rivers, embankments for flood protection, greening o f the embankments,
rubber dams, dredgingand the demolition andreconstructiono f five bridges\.
68\. ZMG is aware that unless it rationalizes its current institutional arrangements for
wastewater collection, treatment and disposal, four agencies would be involved inthe service\.
These four agencies are the Zaozhuang Municipal Drainage Management Division for Dongsha
WWTP; the Zaozhuang Municipal EngineeringManagement Divisionfor the combined network
inthe urbancore areaof ShizhongDistrict; ZWTC for the project-financed investments; anda
possible BOT/TOT operation o f Xisha WWTP\.
75
69\. Therefore, ZMG proposes to: (a) issue a tender for, or negotiate a TOT contract to
operate its Dongsha WWTP; and (b) make ZWTC responsible also for the old combined network
currently being operated and maintained by the Zaozhuang Municipal Engineering Management
Division(ZMG has already issued a circular directing ZWTC to take over and operate the
combined sewer system\. ZWTC would do so after the project-financed investments are
commissioned\.)\. Inthis way, one organization - ZWTC -would be made responsible for
operating and maintaining all existing and proposed wastewater and storm water networks in
Shizhong District, to serve two prospective privately operated WWTPs\.
70\. The total investment inwastewater and river embankment improvements i s Y402\.8
million\. Zaozhuang's investment insolid waste is Y11\.3 million\. The investments are affordable
to Zaozhuang, having only about a 1\.2 percent impact on disposable receipts, and about 7 percent
on existing debt\.
71\. The Zaozhuang Water Supply Company bills and collects wastewater tariffs on its water
bills\. The following wastewater tariffs, last adjusted in2005, are being billed and collected:
Water Supply* I Wastewater Combined
From October 1,
2000
Residential 1\.25 0\.70 1\.95
Industrial 1\.75 0\.80 2\.55
Commercial 1\.75 0\.80 2\.55
Construction 2\.45 0\.90 3\.35
I Self-sumh I 0\.75 I 0\.90 I 1\.65 I
Surface Water 0\.30 0\.90 1\.20
Heating Supply n/a 0\.25 0\.25
Low Income n/a 0\.25 0\.25
* Families
Includes a water resource fee\.
72\. Zaozhuang also has industries with self-supply o f water which discharge to the sewer
network\. The Zaozhuang Water Resources Bureau bills and collects a wastewater tariff from
such industries\. The collection rate is said to be low\. It i s the intention o f ZMG to phase out such
self-supply\. Under the project, Zaozhuang would receive TA to help improve collection rates, or
designan improved collection system\.
73\. Inthe light ofthe institutional realignmentadoptedbyZMG, only simplified financial
projections were prepared\. The projections show that wastewater tariffs would need to be raised
by about 25 percent in2007 and 30 percent in2011(see Table 6)\. The tariffcollection proceeds
would cover operation andmaintenance costs, BOT payments and debt service\.
76
74\. Tariffs\. Thetable below indicatesthe projectedaveragewater supply, wastewater and
solid waste tariffs over the implementation period\.
Table 6: ActualandProjectedAverageTariffs
(Y/m3,current prices,for water supply andwastewater)
*Actual\.
Affordabilityof Tariffs
75\. Projectedtariff(water supply and wastewater) increases were comparedto average
monthly income, with particular reference to low-income households\. The tariffs result inbeing
anaverageof between4\.1 percent and 5\.2 percentofthe monthly income of low-income
households, which i s approximately withinthe accepted benchmark for affordability of utility
charges for the lower income groups, i\.e\. about 5 percent of household income\. Details are inthe
Project File (see Annex 12)\.
River Embankmentcum WastewaterInvestments
76\. Qixia County (withinYantai Municipality), Weifang Municipality andZaozhuang
Municipality have proposed river embankment works into which wastewater interceptors are to
be constructed\. These sub-componentswill be implementedby already establishedorganizations,
with responsibility for the management, and operation and maintenance of the completed
embankments, as set out inAnnex 6\. The Project Agreement includes a covenantrequiring local
governments to prepare, in2007, an operation andmaintenanceplan (including financing) for
the assets createdunderthese three components, satisfactory to the Bank, for subsequent
implementation\.
77
Fiscal Impactof River Embankmentcum WastewaterInvestments
77\. A financial analysisofthe projectedcharges (i\.e\. debt service andmaintenance cost) was
prepared for the river embankmentjwastewater investments inQixia, Weifang and Zaozhuang,
comparing the projected annual charges as a percentage o fthe local tax receipts for each local
body (see Table 7 below)\. For Qixia County, Yantai Municipality fiscal data were used for
affordability purposes\. The table indicates that the project-related debt service and maintenance
costs as a percentage o f local tax receipts range from a low o f 0\.11percent (Yantai Municipality)
to a higho f 7\.0 percent (Zaozhuang Municipality)\. The municipalities/counties have the potential
to absorb these costs from their own sources\.
Table7: Debt Serviceand OperatingCosts
For River Embankment(RE) cum WW Sub-Components
N million:currentterms)
Qixia County River
EmbankmenWastewater 2006 2007 2008 2009 2010 2011
Debt service (RE&WW) 0\.5 0\.7 0\.7 0\.8
Maintenance costs
(RE&WW) 0\.2 0\.4 0\.4 0\.4 0\.4
Percentage of local tax
receipts (of Yantai 0\.12 0\.11 0\.14 0\.15
Municipality)(RE&WW)
Weifang Municipality River
Embankment/Wastewater
78
Annex 10: SafeguardPolicyIssues
CHINA: Second ShandongEnvironmentProject
1\. The project i s classified as a Category A project, due to the complexity o f the
environmental issues associated with the WWTPs and landfills\. The design o fthe proposed
components complies with urbandevelopment plans, environmental regulations and ongoing
programs in Shandong, and with the Chinese standards stipulating the protection o f water and air
quality, minimization o f nuisances, energy saving and reduction ingreenhouse gases emissions\.
The project will bringabout positive impacts and benefitsto the environment and communities
inthenineprojectcities, includingreducedrawwastewater discharges, improvedwater supply,
improved solid waste collection and disposal, and community and economic development\. The
following Bank safeguard policies are applicable: a) environmental assessment; b) involuntary
resettlement; and c) safety o f dams\.
EnvironmentalAssessment (OP 4\.01)
2\. The project FSs were prepared by Chinese design institutes supported by the Design
Review and Advisory (DRA) Consultant assisting SPPMO\. Specialized institutes, independent o f
those who prepared the FSs, carried out environmental impact assessments (EIAs) and
Environmental MitigationPlans (EMPs) for each sub-project\. The DRA consolidated individual
EIAsand EMPs, initially prepared inChinese, into reports inEnglish\.The consolidated
documents identify potential environmental benefits and consequences o f the project, propose
measures to avoid, mitigate or otherwise compensate negative environmental impacts during
constructionand operation, and allow incorporation o f appropriate measures inthe design to
mitigate negative impacts to a minimumand acceptable level\. The documents have been
prepared on the basis o fthe country's legal andpolicy framework for pollution control and
environmental protection, the master plans and environmental plans o fthe nine project cities, as
well as applicable World Bank safeguard policies\. Technically, the consolidated EA and EMP
reports have applied methodologies set out invarious technical guidelines issuedby the State
Environmental Protection Administration and World Bank's OP 4\.01Environmental Assessment
inparticular\. The scope o fthe project covered bythe EAreport is basedonprojectFSreports for
each o f the project components\. The individual EIAs/EMPs and the consolidatedEA were
reviewed by the Bank team duringproject preparationand found acceptable\.
3\. Policv framework and institutions\. China has adopted multi-pronged policies for
managingthe water issues o fNorth China\. They include preventing andreducing water
pollution, implementing rational prices for water (including irrigation), recovering costs for the
wastewater sector, reducing consumption o f water, promoting re-use o f water, and buildingthe
South-North water transfer project\. Reflecting these national policies, Shandong has been
implementingits share inthese activities through: (a) the Bohai Blue SeaAction Program, which
i s being implemented inthree stages from 2000 through 2015 with the aim o f reducing land-
based pollution and restoring the damaged ecological system inthe sea; and (b) the South-North
project, which includes Huantai andZaozhuang within its pollution reduction program, for
constructiono f municipal sewage treatment works for the Shandong section o f the South-North
project\.
79
4\. Shandong provincial and municipal EPBs are incharge of: drafting and issuing local laws
andregulations; organizing environmental monitoring and control; supervisingthe treatment of
pollution; dealing with the major pollution incidents; and carrying out educationandtraining in
environmental protection\. Accordingly, withinits duties, SEPB reviewed and approved the
individual EIAs\.
5\. BriefProiect description\. The project's wastewater, solid waste andwater supply
components are located insix cities: Heze, Rizhao, Weifang, Weihai, Yantai, Zaozhuang, and
three counties: Gaomi, Huantai, and Qixia\. The GEF-supportedoperation i s located inYantai\.
6\. Baseline environmental conditions\. Shandong Province has an area of 156,700 km2with
a total population o f 92 million in2004\. It i s composed of 17 municipalities and 139counties\.
Shandong i s part of the North China Plain\. It borders the Bohai Sea and the Yellow Sea and i s
crossed by the Yellow River\. Mountainous terrains lie inthe centre o fthe province\. The
mountains are surrounded by the fluvial plains o f the Yellow River to the west, the Huai River to
the southwest, andthe Jaolai River inthe east, between the mainland andthe peninsula\.
7\. Many rivers in Shandong Province are seasonal, discharging only duringthe summer
months\. A great number o f reservoirs have been built for water storage and for flood protection\.
Riversinurbanareas are generally ofpoor quality, lessthanClass I11to VI requiredby
standards\. With relatively poor water resources, the province relies on substantial water
quantities diverted from the Yellow River\.The rapid demographic, urbanand economic growth
has ledto environmental deterioration\. The shortcomings insanitationand waste management
turnmanyriversinto open sewers or garbage fields, especially duringlow or no flows\. Themain
environmental issues are air pollution, water pollution and water scarcity\.
8\. Proiect alternatives\. Extensiveanalysis o f technical alternatives including the "without
project" scenario was conducted for each proposed project component duringthe feasibility stage
to ensure project ownership, consultationand agreement on the development objectives\. From
requests made by various municipalities, the provincial task force further selected a pipeline of
investmentproposals, based on development priorities, needs, economic viability, financial
capacity and environmental safeguards\.
9\. For water and waste water components, the design institutes carried out comprehensive
analyses, evaluating various alternatives for locations, technologies and numberso f WWTPs and
WW, alignments for transmission mains, constructiono fpumpingstations incomparisonwith
gravity flows, selection o f combined or sanitary sewer systems, anddifferent layouts o f
wastewater andwater supply networks\. Ineach instance, the alternative with the lowest
evaluated cost and least environmental and resettlement issues was selected\. For example, four
alternative locations were considered for Chengxi water plantinGaomi and the final option was
selected on the basis o f cost effectiveness and the impact on areas with severe water pollution\.
10\. For the solid waste component, a wide range o f alternatives were considered interms o f
location, treatment scheme, composting technologies and so on -the final choice was made by
comparing the advantages and disadvantages o f each alternative\. InHeze, for example, the
location o f the treatment plant was chosen by taking into consideration distance from residential
80
areas, the lengthof power line, the cost of landvalue andthe local UrbanMaster Plan\. Tables A
and B below are summaries ofthe selection process\.
TableA\. Alternativesfor the WastewaterComponent
Huantai
Choice between 1or 1\. OptionA: 1 WWTP with 79 km sewer 1 Lower cost
3 WWTPs network 20% longer sewer network
2\. OptionB: 3 WWTPs with 65 km sewer
network\.
Treatmentprocess 1\. CASS (Cyclic Activated Sludge 3 Higher pollutionabatement
Technology) Lower energy consumption
2\. OxidationDitch Less land occupation
3\. NO Lower investmentand operation costs
Easieroperation
Qixia
~
Location of WWTP Site 1: close to industrialarea 1 Less damage to existingvegetation
Site 2: farther from industrialarea Better conveniencefor water reuse
Better accessibility
Treatmentprocesses 1\. Oxidationditch 1 Higher landoccupation
2\. ICEAS Higher power consumption
3\. A210 Ease ofoperation
Average investment
Wastewaternetwork Two alternative routes (see FSR) 2 Higher impactontraffic
Lower cost
Yantai
Location and capacity 1\. New WWTP at Mouping 2 Less landoccupation
of WWTP 2\. ExtensionXinanhe WWTP Lower cost
Extension of Xinanhe 1\.Northof current site 1 Lower impactoneconomic (farming) activities
WWTP 2\. Eastof current site
Combinedor separate 1\. Combined 1 inold areas, 2 Minimizes dischargeof polluted waters to rivers
sewer system 2\. Separate innew-built in new- built area, while minimizing resettlement
areas in old areas
Minimizes civil works and costs inold area
Choice of interceptor 1:l
ratio
Main intercepting 1\. Pipes at bothsides of moat 2 Avoids clearance of 10,000 m2 ofbuildings,
pipes alongBeiguan 1785 m ofwalls, and one transformer
road 2\. The same, butpipe i s laidonly at one
side insome places, and sewage from the Lower cost
two sides is conveyedto this pipe
Pipelineroute 2 routes (see FSR) Less landoccupation
Pipelinespass under Xiangzhuang JigengRoadin
the forest
Lower cost
Location of pumping I\.SouthsideofYan-Weihighway 1 Easeof construction
station xossingwith Yuniao River
2\. North side
81
Choice oftreatment 1\. A2/0 1 BetterNandP removal
process" 2\. BIOLAK Land occupation 5\.3 insteadof 6\.3 ha
3\. Orbaloxidation channel Power consumption0\.3 insteadof 0\.35/0\.46
kWm3
Better operation convenience(+experiencein
China)
Lower cost:
Resp\.total investment(million RMB), annual
operation cost (thousandRMB),unit handing
cost (RMB/m') andunitoperatingcost (RMB/m3)
1\. 114; 22; 0\.77; 15; 0\.52
2\. 112; 24; 0\.82; 16; 0\.53
3\. 129; 26; 0\.89; 18; 0\.62
Choiceof Where to addthe coagulant; Polyaluminium Efficiency
dephosphorization -- Choice salt added
process'2 of coagulant between Convenienceof use
biological basin
and secondary
sedimentation
basin
Choice of 1\. Chlorinationwith liquid chloride 3 Safer operation
sterilizationprocess'' 2\. Chlorinationwith chlorine dioxyd Less landoccupation
3\. Sterilizationwith UV rays Easeof operation
Sludgemanagement 1\.Anaerobic digestion; 2 Simplicity of operation
2\. Aerobic treatment Lower investmentcost
Designofunderwater 1\. Dischargeat 7 meter depth 1 Lower cost
pipe sea outlet 2\. Dischargeat 10 meterdepth Both alternativessatisfy seawater quality criteria
~ ~ ~
Options for water 1\.Circulating coolingwater inexisting short term: 2 1 Investmentsfor deliveryare expensiveand
reuse power plants in MashanIndustrialPark or current consumptionpossibilitiesare small
MoupingDevelopmentZone longterm: 1
can be
2\. Greening irrigation Binhai road discussed
Weifang
1\. Interceptionculvert boxes 1 :1+ 1 Interceptionbox culvert+ artificialwetland
artificial wetland Rainwater adjusting storage scheme
2\. Smaller interceptionculvert boxes 1\.2+
stormwater balancetank Cost lower
Goodpollutant removal
Lower power consumption
Large land occupationbut out of city area
No water replenishmentto the river
Zaozhuang
Combinedkeparate 1\. Combined 1 in old areas, 2 Minimizes dischargeof pollutedwaters to rivers
system 2\. Separate innew-built innew- built area, while minimizingresettlement
areas inold areas
Current: BIOLAK process\. Current NP removal not sufficient\. Operation o f some parts o f the process not correct
l2Chemical dephosphorization step proposed since current P removal not sufficient\.
13Sterilization is requiredfor discharge into the sea\.
82
Minimizes civil works and costs in old area
Pipelineroute 1\.Two interceptor mains alongboth banks
2\. One interceptor maininthe middleof
the river
West bank ofDongshaRiver 1
1\.Along northouter ringroadtill WWTP Easeof connection
inthe south Savingthe needof lifting pump station
2\. Northouter ring road-HongkongSt\.-
ZaozhuangSt -RenDaWall-alongwest
bank of XishaRiver-WWTP
Eastbank of DongshaRiver
1\.North outer ringroad-XinheRd\.-
Dongshahe railway bridge-RenminRd\.-
invert siphon-west bank interceptor main
2\. Qitao Rd\.-Chang'anRd\.-RenminRd\.-
invert siphon-west bank interceptor main
Eastbank of Xisha River 2 Limited resettlement
1\. Along east bank of XishaRiver- Shorter pipe
ShiliquanRd\.-WWTP Easeof connection
2\. Xichang Rd\.- ShiliquanRd\.-WWTP
~ ~ ~~
West bank of Xisha River 1 Easeof connection
Along west bank ofXisha River-Shiliquan
Rd\.-WWTP
WenhuaRd\.- Jingji San Lu-ShiliquanRd\.-
WWTP
Transverseriver 1\.Complex section 1 More landacquisitionand resettlement
sectionpattern 2\. Rectangularsection Nicer scenery
Higher cost (188 insteado f 169million RMB,
including resettlement)
Land appreciationby 100,000 Rh4B/mu(surplus
revenueof40 million RMB at least)
~~
Rubberweirs or 1\. Rubberweirs Lower cost (174 insteadof 214 million RMB)
regulatinglocks 2\. Regulatinglocks Nicer scenery
83
Table B\. Alternativesfor the Solid Waste Component
Heze
Location oftreatment 1\. Yuwayao:North ofHeze, 8 kmto the 1 Longerdistanceto residentialarea (m)
plant center Drinking water protectionareaclose to site 2
2\. Gengwayao:North-Westof Heze, 15
kmto the center Largerstoragevolume
Shorter necessarypower line
1\. is more inaccordance with UrbanMasterPlan
Lower landvalue
Treatmentscheme 1\. Sanitary landfill 4 Minimizes environmental impact
2\. Hightemperature composting Highercost
3\. Incineration
4\. Synthetic treatment
Cornposting 1\.Storehousestatic aerobic composting Lower investment
technologies 2\. Silo intermissiondynamic Easeofoperation
composting
3\. Skip stacking machineturn-over
aerobic composting
Treatment processfor 1\. Membrane filtration and discharge 2 Lower investmentand operation costs
leachateand into surfacewater
wastewater 2\. N O with dischargeinto municipal
sewage system
Isolationof landfill 1\.Curtainwall drilling (grouting) 2 2 greater safety than 1
bottom 2\. Lining with on-site available 1lower cost than 3
materials and with artificialmaterials;
3\. Both
11\. Impact Assessment and Mitigation\. The project would have a significant positive impact
as it would improve the quality of water supply, reduce pollution of rivers andpromote the
appropriate solid waste management, and through these impacts it would bebeneficial for public
health and the quality of life of residents\. Extensionof wastewater facilities would improve
sanitation conditions for about 700,000 people, over 400,000 people will enjoy better flood
protection, and over 300,000 people will receive access to pipedpotable water\. The Huantai,
Yantai and Qixia WWTPs would remove annual pollutionloads ofmore than 13,300 tons of
BOD, 17,000 tons of suspended solids, 2,300 tons ofNH3-Nand 300 tons o ftotal phosphorus\.
Besides, the project will collect an additional 220,000 m3/dayof wastewater inGaomi, Weihai,
Weifang and Zaozhuang\. Collected wastewaterwill be treated inWWTPs builtwith other
financing sources\. It has been estimated that the additional collection will allow annual pollution
abatementof about 14,000 tons of BOD, 19,000 tons of suspended solids, 2,500 tons ofNH3-N
and 79 tons oftotal phosphorus\. Inaddition, the river rehabilitation inQixia, Weifang and
Zaozhuangwould create pleasing urbanriver landscapesand relaxing environments\.
12\. The total pollutant loadto the Bohai Sea andthe Yellow Sea will also decrease globally
through lesser pollutant loads going into the rivers indifferent cities\. The reduction inpollutant
loadsto the environment at project completion can be estimatedas follows\.
84
Reduction of Pollutant Loads to the Environment
Load Reduction
Sub- MainRecipient
project Water Body
Gaomi XiaokangRiver 5256 6935 934 29
Huantai DongZhulong River 5877 7154 818 77
andYuejinRiver
Qixia I BailangRiver I 1314 I 1752 I 256 I 26 I
Weifang BaiyangRiver 2707 3572 481 15
Weihai Yellow Sea 4408 5817 784 24
Yantai Yellow Sea 6424 8176 1226 204
(+GEF) (+300)
ZaozhuangI DongshaandXisha 1 1971 12601 I 350 I 11 I
Rivers
Key impacts durinp construction
13\. Ecoloav: The project will not involve any destruction o f valuable natural land\. The
selected project sites have no particular ecological value\. The construction may cause the cutting
o f street trees and the EMP would ensure replacement by replanting o ftrees\. The baseline survey
o f aquatic ecology inthe rivers demonstrated a highlevel o fpollution o f the riversnear project
sites and, therefore, further significant impacts ,duringconstruction are not anticipated\. Impacts
duringoperationwould be globally beneficialon the rivers andthe downstream\. Impact o fwater
supply components onthe aquatic ecology o freservoirs would be negligible since the water
withdrawn would account for only 1\.O percent to 3\.0 percent o f the average annual storage o f
reservoirs\.
14\. Historical and cultural values: There are no historical or cultural values on the project
sites reported\. However, the EMP will provide for measures to avoid all possible damage to
potential buriedcultural relics\.
15\. Landscape: To minimize potentially negative impacts o fthe newly built WW and
WWTPs an appropriate program o f landscaping and plantingo ftrees around the WWTPs would
be carried out\. The landfills would haveno impact on landscape\.
16\. Excavatedsediment: Significant volumes o f soil generated duringthe construction would
beremoved from the sites by trucks, which will result innuisance for residents and affect public
safety through risk o ftraffic accidents\. To minimize nuisances, the civil works contractor would
prepare and submit a sediment management plan\. Bottom silt from the rivers would be removed
during dry seasons after drying out o fthe rivers\. The large amounts ofthis silt, free o fheavy
metals, would be put to practicaluses such as landreclamation or production o f construction
material\. Details on the silt excavation process would be provided inthe EMP\.
85
17\. Old waste dump inWeifann: The abandonedwaste dump located on the Bailang River
island, with an estimatedvolume of 400,000 m3,will be removed\. The composition ofthe waste
i s 70 percent of construction waste materials and 30 percent of domestic waste\. Detailed
excavation procedureshave beenprovided inthe EMP\. The waste dump and surplus silt
excavatedfrom the river would be depositedat the city landfillabout 25 kmfrom Weifang\.
Key impacts during;operations
18\. Odor at WWTPs: Odor-generating wastewater treatment units would be covered or
located inbuildings with ventilation systems to vent odorous gas to high level\. Planting a
separation strip and a 100mbuffer zone would minimizethe risk ofunpleasantsmells for the
nearest residents\. Air quality monitoring duringWWTP operation would be detailed inthe EMP\.
19\. Sludge management: The total amount of sludge producedby WWTPs would be about
200 tons/day with 20 percent of dry solids\. After dewatering and stabilization, the sludge would
betransported to landfills inenclosedcontainers to avoid spill\. The landfillswould be provided
with combined anti-seeping measuresinbothvertical andhorizontal directions so as to prevent
pollution of surface and ground water\. The measuresprovided ineach component for sludge
management, render the health-related risk insignificant\.
20\. Industrial wastewater discharge: Practically all large industries in Shandong and inthe
project locations have wastewater pre-treatment facilities\. Inaddition, inthe 11th five-year
environmental protection plans, the key industrial polluters have been ordered to rectify their
pollution status\. Point pollution sources inShandong would be monitored and compliance
enforced\. To ensure the safe and stable operation of WWTPs, effluents from various industries
should meet boththe wastewater discharge standards set for the industriesconcerned and the
quality standards set for wastewaterto be discharged into municipal sewerage (CJ3082-1999)
before entering the municipal WWTPs\.
21\. Solid waste collection: The solid waste containers at collection stations would be covered
to minimize odor impact; the trucks would be air-proofto minimize odor and prevent spillingthe
waste onto the road\. The stations wouldbe covered and maintained cleanly\. Transportation to
landfillswould increasetraffic noise, dust, and traffic accident risks when passingthrough
villages\. Mitigationmeasuresinthe EMP include: a) selection and design o f access; b)
implementation of traffic safety rules; and c) training for the drivers\.
22\. Leachate: The landfill leachatewould be biologically treated at the landfill sites to reach
Class I11standard, and thenpipedto the WWTP\. The sludgeproducedwould be recycled within
the treatment process, or beusedinlandfills\.
23\. Greenhousegas emissions: The project may lead to reductions inemissions o f
greenhousegases through the collection and use of biogas at landfills, and composting inHeze\.
The production is estimated at 10-13 million m3ofbiogas\.
24\. Odors at waste disDosalsites: The odor impact would be serious inHeze, reaching about
500 mindistance\. Odor-removal processeswould be installed for the fermentation workshop,
the generatedbiogas would not be emittedwithout burning, andthe greening belt would also be
86
planted to isolate the foul odor impacts\. InZaozhuang, the landfill cover would reduce the
current impact on nearby residents\. InRizhao, due to the location o fthe site ina natural valley,
no impact from site operation is expected on residents beyond 50 m\.
25\. Mitigating, measures: A series o f mitigation measures have beenplannedto reduce the
impacts to acceptable levels duringconstructionand operation\. Mitigationmonitoring
procedures have been established, and the organizations responsible for this monitoring have
been designated\.
26\. Details o f mitigation measures, their location, time frame andthe responsible agencies for
their implementationand supervision, have been provided inthe EMP\. The EMP covers areas
such as watedwastewater management, air quality control, noise management, construction
waste management, covering piles to limit erosion, runoffmanagement and water storage in
construction, correct orientation o froads and paths, traffic management and speed control\. EMP
annexes contain a series o f `Guidelines' on site clearance, construction methodology, and debris
disposal\.
Summary of Impactsand R itigationMeasures ConstructionS ige -
PossibleImpacts Proposed Mitigation Measures Responsible
Institutes
Generally limited impacton wildlife for Monitoring of constructionsites\. PMOs
componentslocated in denselybuilt or cultivated
areas\. Contractors
Disturbancewill occur for wildlife (mainly birds) Avoid noiseat night time\. LocalEPBs
for componentslocatednear larger reservoirs\. Trees felled inthe streets or ingreenareas to be
Risk of tree cuttingalongstreets\. replacedat the end of construction\.
Vegetation clearingduringconstruction\. New vegetation\.
~ ~~~ ~~
Anticipated volumes of earthworkexcavation and A detaileddemolitionprogram, including PMOS
fill are estimatedat: phasing, proposalfor transport routeand
- Excavation: Contractors
6 million m3 descriptionof proposeddisposal sites, will be
requiredfrom the concernedcontractor(s) prior
- Fill:3\.5 million m3(+0\.5 million neededinHeze) to the startingof the works\.
- Demolition soil: 2\.5 million m3 On-site reuse of demolitionand excavation
materialas fill will be maximizedwhere
applicable\.
New vegetation after every work phase\.
Dust and sediment dischargeto rivers\. Contractor environmentalspecificationsinclude PMOs
rules for piling, compactingand sprayingsoil
waiting for evacuationor reuse\. Temporary Contractors
storage of earthpiles on constructionsites
shouldbe drained into sedimentationbasins
before dischargeto the river\.
Dust may affect nearby residents\. Sewedwater pipesnetworkswill be constructed
insegmentsinorder to minimizesoil production
duringthe construction\.
Transport ofmaterialas earthfill, earthsoil, sand Washingpostsshould be installedfor trucks
87
PossibleImpacts Proposed Mitigation Measures Responsible
Institutes
andgravelto or from sitesmay affecturban areas\. leavingconstructionsitesto limit mudtransport
in city roads\. Strict obligationsregardingsize of
trucks, of load, necessary loadcover, routes and
timing will be imposedby concerned
contractors\.
Test results show that dredgedmaterialsare not PMOs
hazardousandthey would be disposedto green
landsandforest\. During project implementation, Contractors
follow-up test would be carriedout\. Ifany
hazardousmaterialwas found, the disposal River
would be basedon the following national management
standards:a) Standards for HazardousWastes units
Identification (GB-5085-1996); b) Standards for
SludgeReuseinAgriculture (GB-4284-84);and
c) Standards for Pollution Controlfor
Landfilling of DomesticRefuse (OB-16889-97)\.
Dredging(excavation) may affectthe river bottom
and cause later infiltration of river water to Contractor environmentalspecificationsto
groundwater\. address dredgingissue\.
DredgingContractor to prepareDredging&
SedimentManagementPlanfor approval by
Municipality\.
Constructionindensely built urbanareato cause Settingup of an efficient organizationfor the PMOs
air pollution, noiseand safety problem\. environmentalsupervisionand monitoring, with
clear operationalproceduresfor rapid and Contractors
effectivetreatment of non-compliance\. Local EPBs
Preparationof detailedenvironmentalandsocial
specifications for the contractors, to bepartof
the bidding documentation\. Contractor
environmentalobligations are part ofthe
contract documentation\.
Noise from heavymachinery, particularly in Enforcement of existingnoise standards related PMOs
I
residentialareas to machinery and working period\. Contractors
No constructionfrom 10pmto 6 am\. Local EPBs
Traffic congestionresultingfrom pipenetwork Contractor obligations includepublic
constructionor bridgeworks may result in informationandappropriate construction
temporary higher levelsof pollutants(TSP, NOx, practicesand organization, with roadsigns and
CO)\. coordinationwith traffic policeto minimize
impactsand ease traffic duringworks\.
Ifinappropriatelymanaged, labourcampsmay Contractor obligations include specificationsfor Contractors
becomethe site ofepidemic burstout among the organizationandthe managementof labour
workers and spread to surroundingpopulation\. force andcamps\. PMOs
Contractor to prepareaCamp ManagementPlan Localhealth
for approval by PIU\. bureau
Monitoring of labour camps andof worker
healthconditionsby the SupervisionEngineer
88
PossibleImpacts Proposed Mitigation Measures Responsible
Institutes
andDepartmentof PublicHealth\.
Occupationalhealthand accident issues, resulting Contractor specifications includepreparationof Contractors
inseriouswounds or deathof workers\. aHealth& SafetyPlanfor approval by PIU\. In
this plan, Contractor clearly defines the safety PMOS
proceduresin case of accident on site, ensures
that minimumfirst aid equipmentis availableon Local health
all sites andensures availability and bureau
enforcementto wear PPE\.
~ _ _ _ _ _ _________
During networkconstruction, water, gas or even An informationprocedurewill be set up with PMOS
electricity maybe cut-off for afew hours to a few Contractor and concernedagency, to anticipate
days, creatinganuisancefor the concerned cut-off andto informthe public inadvance Local utility
population\. throughappropriatecommunicationmedia; bureau
Extensionof works is optimizedto reduce Contractors
durationof inconvenience\.
Possiblepresenceof archaeologicalor historical Clearancefrom culturalbureauto be obtained\. Contractors
relics duringexcavation works\.
Specificprocedures(chance-findprocedures, Local cultural
see section 4\.3) to be set up andfollowed if bureau
undergroundrelics are identifiedduring
excavation works, includingstoppage of works\.
The newly built WWTPs will contributeto Beneficiallongtermimpactto be monitoredby WWTP
reducingthe annual dischargeof BOD and SS to the EPB\.
the environment by 27,000 and36,000 tons LocalEPB
respectivelywith beneficialimpacts on
groundwater, surfacewater and seawater quality\.
Treatedeffluentdischargemay locally impactthe Monitoring of effluentquality by the operator of WWTP
river quality, but pollution level is low under the facility\. Monitoring of river water quality
efficient operation ofthe WWTP and current river nearby discharge\. Local EPB
water quality\.
Sparepower source andspare pumps to replace
Accidental dischargeof non-treatedeffluentmay accidental failure of equipment\.
occur ifWWTP is in stand-by or overloadedor if
treatmentprocess is affected by illegal industrial Strict controlof industrialdischargesinto the
discharge of toxic substance in the sewers sewer system\. Industriesshouldreducetheir
emissionsto sewers by adopting their own pre-
treatmentfacilities\.
~ ~~~
Sludgeproduction:WWTPs will produceatotal of Monitoring of sludge qualitybeforeleavingthe WWTP
ca\. 185 tonsiday of sludge with awater content of WWTP\. Appropriate monitoringof sludge
80%\. treatment andeventualdisposalas Local EPB
recommendedinthe EA\.
Preparationof sludgemanagement plan\.
27\. Publicconsultations\.Two roundsofpublic consultation were carriedout duringthe EIA,
the first at thepreparationofEIA terms ofreferencebetweenJuly andDecember2005, andthe
secondon completionof the draft EIA reports,betweenJanuary andMay 2006\. The primary
techniqueusedinpublic consultationwas a surveythroughpublic opinionquestionnaires,which
was supplementedby focused interviews andpublic meetingswithkey affectedgroupsand
89
individuals\. The people consulted included mainly those who will be affected directly by the
project\. Relevantgovernment and non-governmentalorganizations and experts from academic
and other professionalinstitutions on various environmental and socio-economic issues were
also consulted\. The detailed information on public consultations i s available inthe Project File\.
28\. Information disclosure\. Incompliance with EIA process requirements o f Chinese
government and the World Bank, the completed draft EIA and EMP reports were released in
public places inthe project areas, including libraries, EA team offices, local project owner
offices, neighborhood committees, and city's websites on the Internet\. The concerned public can
access and review the reports at these places\.
29\. Environment management plan\. An EMP has been developed as a separate and stand-
alone document for each o f the nine project cities\. These EMPs include policies and applicable
environmental standards, environmental management systems, mitigation measures, monitoring
plans, institutional arrangements, capacity-building and estimated costs for the mitigation
measures and monitoring programs for boththe construction and operation phases\.
30\. The EMP includes environmental monitoring programs for boththe construction and
operation phases\. The parameters to be monitored include resettlement, noise, dust, water quality,
andsolid waste disposal\. To ensurethe strict and efficient implementationo fthe mitigation
measures proposed, including environmental obligations duringconstruction, a program o f
monitoring activities will be required, which includes mainly two types o f monitoring (details are
inthe EMP): (a) environmental supervision, i\.e\. the general environmental monitoring of
construction sites and activities; and (b) compliance monitoring, i\.e\. the specific monitoring o f
water quality, air quality and noise level\.
3 1\. Environmental management\. Designated by SPG, SPPMO will be responsible for overall
coordination o fthe project implementationincluding EMP implementation\. SPPMO has had
previous experience incoordinating the implementationo f Bank-financedprojects, including
SDEP and the Huai River Pollution Control Project\. PMOSo f municipalitieskounties (including
EPB staff) and PIUs will be responsible for the implementationo f their respective components
including their EMP implementation\. To ensure that applicable national, provincial and
municipal environmental laws, regulations and standards, as well as the World Bank
environmental requirements are respected duringproject preparation and implementation,
environmental management units would be established bothat the SPPMO andPIU levels\.
90
DuringConstruction
~~
SDEP2 level SPPMO TA Consultants ShandongProvincial (ShandongEPB)
EPB
TA Consultants
Sub-projectlevel Implementing Construction Construction 1\.MonitoringProgrammeas
Agency and PIU Supervision Supervision definedinEMP, carriedout
Engineer (or Environmental by ConstructionSupervision
Institute)engaged Engineersand EnvironmentalEngineers
by the Agency EnvironmentalField
Site Inspectors(within 2\. Regulatorymonitoringby
localEnvironmentMonitoring
the Construction Station under authority of the
SupervisionEngineer EPB
team)
LocalEPMD
During Operation-
SDEP2 level ~ i n c i ~ ~ dEPBo n g
Sub-projectlevel Management, Environmental 1\.MonitoringProgrammeas
Operation and ManagementUnit + definedinEMP, carriedout
Maintenance Environmental by EnvironmentalMonitoring
Agency Monitoring Unit Unit
2\. Regulatorymonitoringby
localEnvironmentMonitoring
Stationunder authorityofthe
EPB
32\. Training requirements\. To ensure effective implementation o f the above measures and
plans staff o f implementationagencies will be trained inenvironmental impacts and how to
ensure timely responses to accidents\. The training program will covers issues such as
environmental laws andregulations, standards, project-relatedenvironmental science and
environmental management\. The training will be heldprior to the commencement o f
construction and will be attended by at least one senior management staff person and one
environmental staff person from each o fthe contractors and supervision companies\.
33\. Monitoring\. The EMP lists environmental performance indicators such as air and water
quality, noise levels, construction sites and camps, as well as details o f monitoring programs,
such as specific locations and time o f samplingand the agencies responsible for reviewing
monitoring programs andresults\.
34\. Supervision andreporting\. The Bank will supervise the project's environmental aspects
twice a year\. SPPMO will be responsible for reporting including semi-annual progress reports
with a sectiodchapter on EMP implementation\. Duringproject implementationbeginning in
2008, an annual report prepared by an independent monitoring agency on the EMPwill be
furnished to the Bank by February 28 of each year, along with any revisions proposedto the
EMP to achieve its objectives\.
91
35\. Fundingarrangements and schedule o fimplementation\. The costs ofmitigating the
effects from constructionwill be included inthe cost o f facilities\. Monitoring o f air and water
quality, noise, worker health, and site safetyhygiene will be conducted by local environmental
monitoring units or consultants, and financed from counterpart funds\.
36\. Budget estimates\. Tentative monitoring andtraining budgetsfor EMP are summarized in
the following table\. The cost o f monitoring includes monitoring to be carried out duringthe
operation and constructionphases\. The cost will be distributed to each project owner, and over
time\. The total cost ofthe EMPwas estimatedto be RMB21\.8 millionYuan, which represents
1\.24percent o f the overall budget (base cost) of the project\.
I Summary of EMP CostEstimatesProvided in Sub-projectEMP Reports
E Sub-project Component Construction
s/N
Gaomi Water supply 100,800 2 183,600 284,400
Huantai Water supply 1,719,200 3 1,688,700 3,407,900
Qixia Waste water 2,050,000 2 1,843,440 3,924,240
Weifang Waste water 397,000 2\.5 215,400 651,400
Weihai Waste water 894,800 2 1,765,200 2,660,000
Yantai Waste water 465,000 2 736,000 1,201,000
Zaozhuang-wastewater Waste water 2,235,480 2 1,932,480 4,167,960
I 9 Heze SolidWaste 787,700 1 3,820,300 I 4,608,000
I
I 10
TOTAL I 21,783,000
Safety of Dams (OP4\.37)
37\. Four existingreservoirs, Xiashan, Wangwu, Bailanghe, andAnli, would be involved in
the project, either to provide raw water for water supply, or for flood regulation\. The safety
status of their dams was reviewed inthe context o f OPBP4\.37, Safety o f Dams\. Startingfrom
2003, the province conducted dam safety inspections and assessmentson all large and major
mediumsized dams, resultinginthe project dams being classifiedas Class C dams, i\.e\. with
quality defects, or unable to function under the design conditions\. Onthe basis o f that finding,
the central MWR and Shandong developed a remedial program to correct the identified
deficiencies\. The remedial works for one reservoir was complete in2005; two would be
completed by end o f 2006; andthe remedial works for Weifang Bailianghe Reservoir is planned
to be completed in2007\. Untilthe remedial program is completed, the dam safety would be
assured by keepingthe water level and the pounding level lower than during normal operating
condition inaccordance with the Operating Plansfor Flood Seasonfor Dams Calcij?edas Class
C\.
38\. Assurances were given duringnegotiationsthat (a) Gaomi, Qixia and Weifang will
complete the remedial works for all four dams by December 31,2007; (b) Shandong Province
will cause Yantai and Weifang eachto establish an independent panel of dam safety experts,
which will reviewthe operation plans for all four dams prior to each flood season and
92
recommendto the province to take all necessary actions ifany to ensure the safe operation o fthe
dams duringthe flood seasons; and (c) the panelwill also report to the province andthe Bank on
progress inthe remedial work and on the safety o f the four dams by February 28 o f each year
(withthe exception ofthe first annual report being due on August 3 1,2007)\.
39\. The technical parameters, safety status and status of remedial actions o fthe four existing
dams involved inthe project are given inthe table below:
Component/ Dam
DamName Parameters SafetyStatus RemedialActions
Gaomi/ Damtype: (a) Inadequatedesignand "The Preliminary Designof
Xiashan homogeneous constructionofthe spillway, which Remedialand Reinforcementfor
earthfilled, may fail to discharge the flood Xiashan Reservoir" hadbeen
completed safely inthe event of200 year approvedby the HuaiRiver
1966, recurrence; (b) Zhenggongand Water Conservancy Commission
height 21 m, Nanxin Sections ofthe dam are of and "Construction Designof
length 32\.9 km potential liquefaction under a Remedialand Reinforcementfor
crest 6 m\. Grade VI1earthquake; (c) the main Xiashan Reservoir" by the
dam sectionmay lose its stability ShandongProvincial Water
at a higher water level causedby Bureaurespectively\.The
seepage throughthe dam body constructionofremedial works
(higher phreatic line); (d) excessive has startedin2003 with
seepage found at the bottom of scheduled completion in2006\.
many sections ofthe dam, with
collapses found alongthe dam
sections; and (e) all the electrical
and mechanicalequipment is
outdatedand cannot perform under
normal conditions\.
Gaomi/ Damtype: The dam is now, after upgrading, Shandongincluded remedial
Wangwu homogeneous able to function as it was designed, works for Wangwu dam inthe
earth filled, i\.e\. to protectthe downstream first phase of national-wide
completed against a 50 year flood, with check reinforcementprogram ofunsafe
1958, flood of 1,000 year\. dams, i\.e\. "Special Planfor
height 14\.4 m RemedialWorks and
ReinforcementofUnsafeDams
and Gates Structures ofthe
Country, 2001", approvedby
MWR\.The civilworks and
equipment installation have been
completed in2005\.
93
Component/ Dam
DamName Parameters Safety Status RemedialActions
Weifangl Damtype: (a) The dambody and foundation Followingthe completion ofthe
Bailanghe homogeneous at river course section are of dam safety assessment, the
earth filled, potential liquefaction under a "Feasibility Study Report for
completed GradeVI1earthquake; (b) seepage Remedial andReinforcement of
1960, appears at ahigher elevation on the Bailanghe Reservoir" and
height23 m, dam slope (higher phreatic line) "Preliminary Design for
length6\.7 km and excessive seepage through the Remedialand Reinforcementof
crest 6\.0 m foundation insome dam sections; BailangheReservoir" hadbeen
(c) many crackswere found onthe preparedby Weifang
gate piers and slabs o fthe Municipality andapprovedby
spillways and some ofthe cracks ShandongDRC andHuaiRiver
runthroughthe slabs, as well as Water ConservancyCommission
the concretestrengthdoes not respectively\. Suchremedial
comply with the requirementsof works havebeenscheduledto be
the national codes; (d) discharging implementedduring 2006 and
condition at the tailrace of 2007\. Prior to the completion of
releasingtunnels do not comply remedial works, the panelwill
with the requirementsof national review the operationplan for
codes; (e) the size of spillway flood season and recommendthe
sections i s not sufficient to actionsto be taken for assurance
dischargethe designflood; and (f) ofthe dam safety during the
all gates and lifting equipmentare flood seasons\. The province shall
outdated and cannotperform under commit to take all actions
normal condition\. recommendedby the panel\.
Yantai - Qixia Damtype: InAugust of2000, the Yantai Followingthe completion ofthe
County/ sand filled Bureauof Water Resourceshad dam safety assessment, the
Anli Dam with clay core, undertakenthe dam safety remedial works hadbeen listed in
completed assessment according to the Rules "Special Plan for Remedial
1960, for Dam SafetyAssessment issued Works and Reinforcement of
height 28 m by MWR and such an assessment UnsafeDams and Gates
was reviewed and confirmed by Structures of the Country, 2001",
the Dam SafetyManagement which hadbeenapprovedby
Center of MWR inSeptember MWR\. Uponthe approval by
2000\. The dam was classified as MWR, the feasibility study and
Class C dam andhad been preliminary design for remedial
included inthe first phase for the works hadbeenpreparedby
reinforcement ofunsafedams\. The Yiantan Municipality and
remedial works are to be approvedby Shandong DRC and
completedin2006\. HuaiRiver Water Conservancy
Commissionrespectively\. Upon
the approval ofthe construction
designby ShandongProvincial
Water Bureau, the construction of
remedial works startedinlate
2005 and is scheduledto be
completedin2006\.
1 dam safety class cation criteria are given below:
~
0 Class A: actualflood protectioncomplies with the requirementsof "Flood Control Standards" (GB50201-
94) and dam and its appurtenances are undernormalconditions, no major quality defects identifiedandthe
dam can perform under design conditions;
ii) Class B: actual flood protection capability is not lower than the near-termrequirementsfor the flood
protection ofthe reservoirsto be reinforced stipulatedby MWR, butnot comply with the requirementsof
94
"Flood Control Standards" (GB50201-94), dam and its appurtenances are basically under normal
conditions, the dam can perform safely with a controlled operation; and
iii) ClassC:actualfloodprotectioncapabilityislowerthanthenear-termrequirementsforthefloodprotection
o f the reservoirs to be reinforced stipulated by MWRor dam and its appurtenances are of major quality
defects threatening the safety o f operation o f the dam under design conditions\.
Involuntary Resettlement(OP 4\.12)
40\. IndividualRAPs for eachproject component were prepared inChineseby the respective
design institutes, assistedby respective PMOs, house demolitionoffices, national landresources
bureaus, affected villages and communities, andpotential displaced persons\. The initially
contemplated resettlement impacts have beensignificantly reducedthrough optimizingthe
project design and implementation arrangements\. For example, the river regulation scope in
Zaozhuangwas reduced from 80 to 40 meterwidth inresidential sub-districts, andinWeifang,
from 50 to 10 meter width\. Similar measures were taken to minimize the resettlement impacts
inthe component\. Inthe process ofprojectdesign, the project owners and design institutes
paid much attention to possible linkages with associated ongoing or previous activities\.
PMOs and the design institutes analyzed all components and found no linkage\. On the basis
of individual RAPs, the DRA Consultant produced a Summary Resettlement Report in
English, which was reviewed and approved by SPPMO and i s available inthe Project File\.
41\. Scopeof impacts\. Land: 150\.0 muis for nursery, 137\.2 mufor forest, 40\.6 mu for
garden plots, and 5\.3 mu for fisheries\. The project resettlement impacts mainly include
permanent land acquisition, residential house demolition, enterprise and public institutions
demolition, shop demolition, infrastructures and ground attachments\. All these impacts will be
scatteredacross about 32 villages or communities in 19rural townships or urban districts in
seven municipalities or counties\. Intotal 4,801 personswill be affected by the project including a
floating population, which includes: (a) 315 households(1,023 persons and 758 agriculture
labourers) affected by permanentcollective landacquisition; (b) 606 households (2,282 person)
affected by urbanresidential house dem~lition'~;(c) 120households(387 persons) affected by
rural residential house demolition; (d) 28 households(719 persons with a floating population of
598) affected by rural non-residential housing demolition; (e) five enterprises partly affected
with no affected employee; (f) six public institutions (63 persons) and 42 affected shops (147
persons); and (8) 734 persons affected inthe short-term due to temporary use of collective land\.
Total permanentacquisition of collective landby the project i s about 1391\.O mu, of which, 54\.3
muis for irrigated land, 234\.8 mufor dry pond, 258\.9 mufor riverbed, 20\.4 mufor housing
plots, 323\.6 mufor waste land, and 63\.3 mufor other types of land\. The total temporary use of
collective landis about 1143\.7 mu, including 701\.1 muof dry land, 145\.6 muof irrigated land,
95\.2 muof orchards, 155\.9 muof forest, 33\.2 muof vegetable landand 12\.7 muof small roads
on farm land\.
42\. Policy obiectives and legal framework\. The individual RAPs were preparedinline with
relevant Chinese laws and regulations, and World Bank OP 4\.12 on Involuntary Resettlement\.
The following basic principles were adoptedfor resettlement planning:
~~
l4Demolitionof structuresoccurs only inWeifangandZaozhuang
95
Acquisition o f land and other assets, and relocationo f people, will be minimized as muchas
possible\.
All project affectedpeople residing, working, doing business or cultivating landrequiredfor
the project as o fthe date o fthe baseline surveys are entitledto beprovidedwith
rehabilitationmeasures sufficient to assist them to improve or at least maintaintheir pre-
project living standards, income-earningcapacity andproduction levels\. Lack o f legal rights
to the assets lost will not bar them from entitlement to such rehabilitation measures\.
The rehabilitation measures due to landacquisition are: (i) agricultural land for landof equal
productive capacity; (ii) compensation for land acquisition andresettlement subsidy for the
farmers affectedby landacquisition; and (iii) other forms o f assistance\.
Replacement o f agricultural landwill be made as close as possible to the landthat was lost\.
Plans for acquisition o f land and other assets and provision o frehabilitation measures will be
carried out inconsultation with the affected people\.
Financial and physical resources for resettlement and rehabilitation will be made available as
and when required\.
Institutional arrangements will ensure effective and timely design, planning, consultation and
implementationo fthe RAP\.
Effective andtimely supervision, monitoring and evaluation o f the implementationwill be
carried out\.
43\. Compensationstandards\. The land acquisition compensation included landcompensation,
resettlement subsidy, andyoung crop compensation\. The landacquisition fund i s calculated
based on annual productionvalue accordingto the Law o f Land Administration\. The
compensation rates o f structures are determined based on their replacement cost\. Different
indicators, such as the prices o f new commercial houses, second handhouses inbetter
condition, economic houses and resettlement houses, are used as reference to determine the
replacement cost for housing indifferent cities\. Duringimplementation, the housing to be
demolished will be evaluated by qualified real estate evaluation institutions and the evaluated
value compared with compensation rates provided inthe RAP\. The higher value will be used
as the compensation rate\.
44\. Rehabilitation measures\. The results o f socio-economic surveys indicated that the share
of agricultural income is only 0\.1 to 26\.3 percent o f total income o f affected farmers\. Key
income i s generated from non-agricultural activities, including temporaryjobs outside the
community or small business operations\. Therefore the resettlement will have small impacts on
the income o faffectedpeople inthe rural area\. To reflectthe small impacts ontheir income,
three forms o f compensation are proposed, based on consultation with the affectedpeople: a)
cash compensation; b) landredistribution; and c) training for temporaryjobs\.
45\. Affected residents: Based on consultations withthe affected population, various
relocation methods would be applied for rural and urban affected households\. For urban
residents, the project would offer three options: a) cash compensation; b) replacement housing;
and c) a cheap house for rent\. For rural residents, the project would offer two options: a) a full
package o f cash compensation, including structures and land; andb) cash compensation for
structures and a housing plot for self build\.
96
46\. Affected enterprises, institutions, and shops: Compensation for business losses has been
provided inthe RAPs\. New sites have been planned for affected enterprises, institutions and
shops\. The employees will not be affected due to resettlement\.
47\. Affectedpublic infrastructure: Compensationbased on replacement value will be paid to
the relevant government agencies or local governments to restore the affected infrastructure and
services\.
48\. Implementation arrangements\. A multi-level organization has been established for the
implementation o fthe RAPs\. An independent monitor has been selected for resettlement
implementation\. Details o f staffing and their responsibilities are provided inthe RAPs\.
49\. Budgetand fundingarrangements\. Each component RAP contains a detailed resettlement
budgetthat covers all basic resettlement costs, management costs, contingencies, survey, design
and monitoring costs\. The basic resettlement cost includes compensation for land, houses, other
structures, standingcrops and trees, business profit loss, reconstructiono f affected infrastructure
and relocation subsidies\. The total resettlement budget is estimated at RMB315 million Yuan\.
Details o f the resettlement budget are shown inthe following table\.
651\.4 424\.5 274\.4 41\.7 179\.2 990\.1 2790\.1 8\.85%
109\.78 123\.36 104 - 475\.34 1\.51%
- - 774\.7 - I 1308\.8 2083\.5 6\.61%
Urban housing I - - - 1719\.8 - 10043\.2 11763 37\.32%
Enterprises - III - 1131\.5
III - 128\.7 1260\.2 4\.00%
Institutions - 661\.6 661\.6 2\.10%
Shops - I - 3600\.1
I - IIII 803\.7 IIIII4403\.8 13\.97%
Attachment 1\.5 16\.6 1\.51 2\.33 306\.1 6\.2 36\.8 371\.04 IIIIII1\.18%
Illegal structure - - - - - 33\.8 33\.8 0\.11%
Total of above 368\.5668 535\.8 400\.1 7573\.9 289\.4 14006\.7 23842\.4 75\.65%
Design IIIIIII ---
7\.4 13\.4 10\.72 8 151\.5 5\.8 280\.1 476\.92 1\.51%
~~~
External monitoring 11\.1 26\.7 10\.72 12 151\.5 11\.6 280\.1 503\.72 1\.60%
Internal monitoring 7\.4 13\.4 10\.72 8 75\.7 I 5\.8 140\.1 261\.12 0\.83%
Overhead 11\.1 33\.4 16\.08 12 378\.7 14\.5 700\.5 1166\.28 3\.70%
cost Gaomi t
Heze Huantai Qixia Weifang 1 Yantai Zaozhuang Total %
Training 3\.7 26\.7 5\.36 4 113\.6 1 11\.6 420\.2 585\.16 1\.86%
Contingency 40\.9 33\.4 58\.94 44\.4 378\.7 14\.5 700\.3 1271\.14 4\.03%
~
Taxes 295\.7 1125\.9 562\.69 230\.7 55\.2 1207\.3 932\.6 3410\.09 10\.82%
Sub total 377\.1I 1940\.9 I
1272\.9 675\.2 I 319\.1 I 1304\.9 I 271\.1 I 3453\.9 I 31516\.6 I
7674\.2 24\.35%
I I I I I I I I I
Total I 745\.6 J211 719\.2 8878\.8 560\.5 17460\.6 100\.00%
97
50\. Consultation and grievance procedures\. Public consultation andparticipation have played
a key role informulating the RAPS\.The affectedresidents, business people and district
governments participated inthe census, inventory and formulation o fthe livelihood rehabilitation
strategy, measures and relocation sites, andtheir feedback has been incorporated\. Each RAP
contains a list o f major consultations\. Public consultation and participation will continue during
RAP implementation\. Project information will be provided to the affected people through TV,
radio broadcast, newspapers, bulletins and posters\. The RAP will be summarized into a
resettlement information booklet and distributed to every affected household\.
51\. Grievance redress mechanism\. A grievance mechanismwas established during
preparation o fthe project resettlement plan\.The mechanism, based on the principle that
displaced persons can prosecute any resettlement aspect including compensation rates, has the
following four phases:
Phase 1: Displaced persons can appeal verbally or inwriting to the village committee or project
demolition implementationinstitution ifthey are not satisfied with resettlement plans\. For a
verbal appeal, the village committee should record with the demolition institution inwritten form
and solve the problems withintwo weeks;
Phase2: Ifdisplaced persons are still not satisfied with the decision, they can appeal to
municipal PMOs/administration institutions after receiving decision notices, andthe latter should
resolve it withintwo weeks;
Phase 3: Ifdisplaced persons are still not satisfied with the decision o f municipal
PMOs/administration institutions, they can appeal to a component leading team or local
municipal construction commission after receiving decision notices\. The latter shouldhandle the
case within two weeks; and
Phase 4: Ifdisplaced persons are still not satisfied with the decision o fthe component leading
team or local municipal construction commission, they can bring a lawsuit ina civil law court in
case o f objection to any aspect o fthe resettlement planafter receiving decision notices\.
52\. The resettled persons will be informed o fthe above procedures through meetings, or by
other means, so that they know their right to appeal\. Publishing will also be made through the
mass media to promote public awareness\. Complaints and suggestions about the resettlement
work will be sorted out and submittedto the resettlement agencies at all administrative levels for
prompt study and/or solution\. Appeals and grievances to every agency or organization are free,
and a reasonable cost will be paid from the contingencies o f the project landacquisition and
demolition offices\.
53\. Monitoring arrangements\. Internal and external monitoring is a part o f the project
resettlement management\. The project resettlement offices will carry out internal monitoring o f
resettlement implementation\. The monitoring procedures, content, staffing, responsibility,
timeframeand reporting havebeendetailed inthe RAPs\.An independent externalmonitor has
been selected for examining RAP implementation, which would include a review o fphysical
progress, compensation payments, allocationo fresidential sites, farmland allocation, and
restoration o f infrastructure\. The independent monitor will also review the public consultation
process, operationo f the resettlement project offices, grievance redress mechanisms, and
98
restorationo f livelihood o fthe affected farmers\. Independent monitoring will be conducted once
a year duringthe project implementationperiod\.
54\. Povertv impacts\. Special attentionwas paid inproject design to ensure that poor and
vulnerable groups would have equal access to the services provided by the project\. The social
assessment revealedthat tariff increases for services provided might accentuate the financial
burden on poor people, although they will benefit from the improved service\. For the time being
only a few municipalities have issuedpreferential policies for poor people, who are covered by
Dibao systemto access the services without exacerbating their financial burden\. To mitigate the
impact o f growing tariffs for services on the poor the following measures will be taken\.
55\. Public hearingmeetings will be organized before any tariff increase occurs and
representatives o fthe poor people will be invitedto participate\.
56\. A social monitoring mechanismwill be set upto monitor the impacts o ftariff increases
on the poor population duringproject implementation\. Ifthe monitoring report should indicate
that poor people are suffering from increased tariffs, SPPMO will coordinate, with the local
government involved inthe project, measures to be taken for reducing the impacts\.
PublicDisclosure (OP 17\.50)
57\. IncompliancewithEIAprocess requirements ofthe central government andthe World
Bank, the completed draft EIA and EMP reports were released inpublic places inthe project
area, including libraries, EAteam offices, local project owner offices, neighborhood committees,
and city's websites on the internet\. The concerned public can have access to, and review the
reports at these places\. The EA team plansto disclose the final EA reports inpublic places to the
general public once the final version i s completed\.
99
Annex 11:ProjectPreparationand Supervision
CHINA: Second ShandongEnvironmentProject
Planned Actual
PCN review October 2005 October 2005
Initial PID to PIC October 2005 October 2005
Initial ISDS to PIC October 2005 October 2005
Appraisal June 2006 June 2006
Negotiations AugustISeptember2006 November 2006
BoardRVP approval November 2006
Planneddate of effectiveness February2006
Planneddate of mid-termreview May 2009
Plannedclosing date December 31,2013
Key institutions responsiblefor preparation of theproject:
1\. ShandongProvinceestablishedaprovincialLGunderthe chairmanship of avice-
governor to give policy guidance to provincial agencies and municipal governments\. SPPMO,
which has guided the preparation and successful implementation of SDEP and the Huai River
Basin PollutionControl Project, has beenstrengthenedby additional professional staff and given
the responsibility to managethe preparation ofthe project\. At the municipal/county level, LGs,
PMOs, andPIUs have also beenestablished\. The list of key membersof the provincial LG,
SPPMO, PMOs and implementing agencies are shown inthe following table\.
NAME AGENCY TITLE
I PengZhenhua IProvincial Project ManagementOffice I DeputyDirector
GaomiTown LeadingGroup
DuHongjun Gaomi MunicipalPeople's Government DeputyMayor
Zheng; Youkui Gaomi MuniciPalConstruction Bureau Director
GaomiTown ProjectImplementationUnit
DuXiukun IGaomi Water Supply Company I Deputy Manager
100
Heze MunicipalLeadingGroup
Danp;Wenshena Heze MuniciDal ConstructionBureau
I I Director
Luo Dong Huantai County Dev\.and Planning Bureau Deputy Director
Zham Jiliang Huantai Countv Construction Bureau DeDutv Director
Wang Guoqun Yantai MunicipalPeople's Government DeputyMayor
Wang Guihe Yantai MuniciDal Drainage Division Director
ZaozhuangMunicipalProjectManagementOffice
ChenYucai IZaozhuang World Bank Project Office IDirector
101
2\. Bank staff and consultantswho worked on the project andrespective reviewers are
shown inthe following table\.
Name SpecializationE'roject responsibility
ShenhuaWang Task Team Leader
Raia Iver Institutions and management
Nicolas Kotschoubey GEF and StrategicPartnershipInvestment
Fund
You Ji Carbon finance
Jaroslav Kozel Sanitary engineering (consultant)
Patrick McCarthy Finance andinstitutions (consultant)
Hardy Wong Solid waste management (consultant)
Peer Reviewers
Alain Locussol, Lead Water and
Sanitation Specialist, SASE1 Sanitary engineering
DanielHoornweg, Senior
Environmental Engineer, LCSFW Solidwaste management
IJonathanKamkwalala, Lead Financial
Analyst, ECSIE Finance and institutions
102
Annex 12: Documentsinthe ProjectFile
CHINA: Second ShandongEnvironmentProject
A\. General
08 1990and 2000 Shandong Population Census 1990and
2000 China Statistical Publishing House
09 ShandongCities Construction Yearbook 2ooo 2o01
- 2003-2004 Shandong Construction Commission
B\. StudiesandDesigns
lo Institutional and Financial Assessment
Report 12-2005 Group Huit-SCE
11 Environmental Assessment Report 12-2005 Group Huit-SCE
12 Resettlementand Social Assessment Report 12-2005 Group Huit-SCE
13 Gaomi WS & WWT Project FSR draft CN & EN Tongji University Designand
2005\.12\.01 ResearchInstitute
NorthChina Municipal
14 Heze SW Project FSR draft 2005\.12\.03
CN EN Engineering Design& Research
Institute
15 Huantai WS & WWT Project FSRdraft CN & EN JinanMunicipal Engineering
2005\.11\.29 Designand ResearchInstitute
103
N o Name of document Dateof the
document Prepared by
CN
16 Rizhao SW FSR draft 2005\.12\.05 Jinan Municipal Engineering
ENabstract Design andResearchInstitute
2005\.11\.09
17 Weifang WWC & RRProject FSR draft CN & EN ShanghaiMunicipalEngineering
2005\.11\.29 DesignandResearchInstitute
CN NorthChina Municipal
18 1Weihai WWT Project FSRdraft 2005\.11-01 Engineering Design & Research
I IENabstract
2005\.11\.29 Institute
CN
19 ZaozhuangWWC & RRFSR Project draft 2005\.12\.11 Jinan MunicipalEngineering
EN DesignandResearchInstitute
2005\.11\.14
CN abstract ~ ~ ~~~
NorthChina Municipal
20 Zaozhuang SW Project Proposaldraft & EN
abstract Engineering Design & Research
2005\.10\.17 Institute
Draft Individual EnvironmentalAssessment Shandong ProvincialDIof
21 report inChinese for each sub-projectexcept 12-2005 Environmental Protection Science;
Huantaiand Zaozhuang Solid Waste Haiyang University for Yantai
22 Draft Individual Resettlement Action Plan
Report inChinese 12-2005 Group Huit-SCE
~
23 Proposalof Social Assessment Report in
Chinese 12-2005 Group Huit-SCE
24 Project Development Facility
Request for pipeline entry and PDF Block B October 17, Bank GEF Staff
approval 2005
NorthChina Municipal
25 Management of Septic Tanks in Yantai- September
Feasibility Study 2006 Engineering Design& Research
Institute
C\.BankStaffAssessments
01 ProcurementCapacity AssessmentReport Jan 13,2006 Liuecialist,
Zhentu, Procurement
EACCF
02 Financial ManagementAssessment Y i Geng, Financial Management
Jan 1272o06 Specialist, EACCF
03 Economic Calculations May 2006 Mei Wang, Economist
04 Financial Analysis April 2006 P\. McCarthy, Financial Specialist
104
Annex 13: Statementof Loansand Credits
CHINA: Second ShandongEnvironmentProject
Difference between
expectedand actual
Original Amount inUS$Millions disbursements
Proiect ID FY Purpose IBRD IDA SF GEF Cancel\. Undisb\. Orig\. Frm\. Rev'd
PO91020 2007 CN-FujianHighway SectorInvestment 320\.00 0\.00 0\.00 0\.00 0\.00 320\.00 0\.00 0\.00
PO83322 2007 CN-SICHUAN URBANDEV 180\.00 0\.00 0\.00 0\.00 0\.00 180\.00 0\.00 0\.00
PO75732 2006 CN-SHANGHAIURBANAPL2 180\.00 0\.00 0\.00 0\.00 0\.00 153\.11 -10\.22 0\.00
PO81255 2006 CN-ChangjiangPearl River Watershed 100\.00 0\.00 0\.00 0\.00 0\.00 99\.75 3\.42 0\.00
Reha
PO81348 2006 CN-HENAN TOWNS WATER 150\.00 0\.00 0\.00 0\.00 0\.00 150\.00 0\.00 0\.00
PO82992 2006 CN-GEF-Termite Control Demonstration 0\.00 0\.00 0\.00 14\.36 0\.00 14\.36 0\.00 0\.00
PO70519 2006 CN-FuzhouNantaiIslandPeri-Urban 100\.00 0\.00 0\.00 0\.00 0\.00 100\.00 6\.33 0\.00
Dev
PO84742 2006 CN-IAIL I11 200\.00 0\.00 0\.00 0\.00 0\.00 169\.04 13\.46 0\.00
PO85124 2006 CN-Ecnomic Refom Implementation 20\.00 0\.00 0\.00 0\.00 0\.00 18\.44 -1\.23 0\.00
PO85333 2006 CN-5th InlandWaterways 100\.00 0\.00 0\.00 0\.00 0\.00 87\.51 5\.75 0\.00
PO96158 2006 CN-Renewable Energy I1(CRESP 11) 86\.33 0\.00 0\.00 0\.00 0\.00 86\.11 -0\.22 0\.00
PO99992 2006 CN-LiaoningMediumCities 218\.00 0\.00 0\.00 0\.00 0\.00 218\.00 0\.00 0\.00
Infrastructure
PO94388 2006 CN-HFC-23 EmissionsReduction 0\.00 0\.00 0\.00 0\.00 0\.00 999\.84 0\.00 0\.00
PO93906 2006 CN-3rdJiangxi Hwy 200\.00 0\.00 0\.00 0\.00 0\.00 200\.00 0\.00 0\.00
PO86629 2006 CN-HeilongjiangDairy 100\.00 0\.00 0\.00 0\.00 0\.00 99\.75 0\.50 0\.00
PO67828 2005 CN-RenewableEnergy Scale-upProgram 87\.00 0\.00 0\.00 0\.00 0\.00 86\.57 43\.97 0\.00
PO75730 2005 CN-HUNAN URBANDEV 172\.00 0\.00 0\.00 0\.00 0\.00 165\.14 23\.47 0\.00
PO67625 2005 CN-GEF-RenewableEnergy Scale-up 0\.00 0\.00 0\.00 40\.22 0\.00 38\.22 -0\.35 0\.00
Program
PO72721 2005 CN-GEF-HeatReform& BldgEgy Eff\. 0\.00 0\.00 0\.00 18\.00 0\.00 16\.20 3\.27 0\.00
PO71094 2005 CN - Poor Rural Communities 100\.00 0\.00 0\.00 0\.00 0\.00 95\.95 32\.89 0\.00
Development
PO68752 2005 CN-Inner MongoliaHighway & Trade 100\.00 0\.00 0\.00 0\.00 0\.00 81\.77 3\.44 0\.00
Corrid
PO57933 2005 CN-TAIBASINURBANENVMT 61\.00 0\.00 0\.00 0\.00 0\.00 43\.41 10\.53 0\.00
PO81161 2005 CN-CHONGQING SMALL CITIES 180\.00 0\.00 0\.00 0\.00 0\.00 177\.10 19\.38 0\.00
PO81346 2005 CN-LIUZHOUENVIRONMENT 100\.00 0\.00 0\.00 0\.00 0\.00 92\.55 3\.65 0\.00
MGMT
PO69862 2005 CN - AgriculturalTechnologyTransfer 100\.00 0\.00 0\.00 0\.00 0\.00 92\.25 15\.29 0\.00
PO87291 2005 CN-PCFJinchengCoal BedMethane 0\.00 0\.00 0\.00 0\.00 0\.00 19\.13 0\.00 0\.00
Project
PO86505 2005 CN-NINGBO WATER & ENVMT 130\.00 0\.00 0\.00 0\.00 0\.00 116\.09 0\.09 0\.00
PO69852 2004 CN-Wuhan Urban Transport 200\.00 0\.00 0\.00 0\.00 1\.oo 133\.83 125\.35 0\.00
PO66955 2004 CN-ZHEJIANGURBANENVMT 133\.00 0\.00 0\.00 0\.00 0\.00 104\.05 12\.87 0\.00
PO65463 2004 CN-Jiangxi IntegratedAgric\. Modem\. 100\.00 0\.00 0\.00 0\.00 0\.00 81\.57 32\.01 0\.00
PO65035 2004 CN-Gansu& Xinjiang Pastoral 66\.27 0\.00 0\.00 0\.00 0\.00 35\.39 10\.85 0\.00
Development
PO73002 2004 CN-Basic Educationin Westem Areas 100\.00 0\.00 0\.00 0\.00 0\.00 52\.67 44\.47 0\.00
PO84003 2004 CN-GEF GUANGDONG PRD URB 0\.00 0\.00 0\.00 10\.00 0\.00 9\.82 2\.63 0\.00
ENV
PO75035 2004 CN - GEF-Hai Basin Integr\. Wat\. 0\.00 0\.00 0\.00 17\.00 0\.00 12\.93 7\.39 0\.00
Env\.Man\.
105
PO75602 2004 CN-2ndNationalRailways (Zhe-Gan 200\.00 0\.00 0\.00 0\.00 1\.00 47\.56 -44\.78 -45\.78
Line)
PO75728 2004 CN-GUANGDONGPRD URENVMT 128\.00 0\.00 0\.00 0\.00 0\.64 85\.50 -12\.39 0\.00
PO81749 2004 CN-Hubei ShimanHighway 200\.00 0\.00 0\.00 0\.00 1\.00 81\.02 15\.35 0\.00
PO77615 2004 CN-GEF-Gansu& Xinjiang Pastoral 0\.00 0\.00 0\.00 10\.50 0\.00 7\.91 6\.57 0\.00
Develop
PO77137 2004 CN-4th InlandWaterways 91\.00 0\.00 0\.00 0\.00 0\.46 73\.79 11\.91 11\.41
PO70441 2003 CN-HubeiXiaogan Xiangfan Hwy 250\.00 0\.00 0\.00 0\.00 0\.00 41\.71 28\.38 0\.00
PO70191 2003 CN-SHANGHAI URBENVMT APLl 200\.00 0\.00 0\.00 0\.00 0\.00 122\.44 36\.00 0\.00
PO68058 2003 CN-Yixing PumpedStorageProject 145\.00 0\.00 0\.00 0\.00 0\.00 79\.13 24\.00 0\.00
PO76714 2003 CN-2ndAnhui Hwy 250\.00 0\.00 0\.00 0\.00 0\.00 108\.01 20\.01 0\.00
PO58847 2003 CN-3rdXinjiang Hwy Project 150\.00 0\.00 0\.00 0\.00 0\.00 30\.70 16\.03 0\.00
PO67337 2003 CN-2ndGEF EnergyConservation 0\.00 0\.00 0\.00 26\.00 0\.00 7\.93 25\.60 0\.00
PO40599 2003 CN-TIANJIN URB DEV I1 150\.00 0\.00 0\.00 0\.00 0\.00 132\.04 42\.94 0\.00
PO71147 2002 CN-TuberculosisControl Project 104\.00 0\.00 0\.00 0\.00 0\.00 51\.52 24\.44 0\.00
PO70459 2002 CN-Inner Mongolia Hwy Project 100\.00 0\.00 0\.00 0\.00 0\.00 20\.33 -2\.34 0\.00
PO68049 2002 CN-Hubei Hydropower Dev in Poor 105\.00 0\.00 0\.00 0\.00 0\.00 22\.35 13\.35 0\.00
Areas
PO64729 2002 CN-Sustainable ForestryDevelopment 93\.90 0\.00 0\.00 0\.00 0\.00 36\.74 21\.78 0\.00
PO58846 2002 CN-Natl Railway Project 160\.00 0\.00 0\.00 0\.00 5\.00 13\.14 18\.14 0\.00
PO60029 2002 CN-GEF-Sustain\.ForestryDev 0\.00 0\.00 0\.00 16\.00 0\.00 8\.01 13\.13 0\.00
PO56199 2001 CNJrd InlandWaterways 100\.00 0\.00 0\.00 0\.00 0\.00 20\.54 8\.38 0\.00
PO51859 2001 CN-LIAO RIVER BASIN 100\.00 0\.00 0\.00 0\.00 0\.00 23\.21 20\.78 0\.00
PO58845 2001 CN-Jiangxi I1Hwy 200\.00 0\.00 0\.00 0\.00 54\.77 6\.46 61\.23 0\.00
PO56596 2001 CN-ShijiazhuangUrban Transport 100\.00 0\.00 0\.00 0\.00 0\.00 53\.90 53\.90 0\.00
PO47345 2001 CN-HUAI RIVER POLLUTION 105\.50 0\.00 0\.00 0\.00 0\.00 35\.87 35\.87 -5\.87
CONTROL
PO45915 2001 CN-Urumqi UrbanTransport 100\.00 0\.00 0\.00 0\.00 0\.00 33\.14 33\.14 0\.00
PO56424 2000 CN-Tongbai PumpedStorage 320\.00 0\.00 0\.00 0\.00 100\.00 39\.50 142\.70 3\.26
PO45910 2000 CN-HEBEI URBANENVIRONMENT 150\.00 0\.00 0\.00 0\.00 0\.00 43\.86 38\.53 0\.00
PO49436 2000 CN-CHONGQING URBANENVMT 200\.00 0\.00 0\.00 0\.00 29\.50 16\.11 101\.41 -2\.70
PO58843 2000 CN-Guangxi Highway 200\.00 0\.00 0\.00 0\.00 19\.70 3\.37 23\.07 3\.37
PO58844 2000 CN-HenanProvincialHwy 3 150\.00 0\.00 0\.00 0\.00 0\.00 25\.41 25\.41 0\.00
PO42109 2000 CN-BEIJING ENVIRONMENT I1 349\.00 0\.00 0\.00 25\.00 0\.00 234\.11 234\.11 -0\.72
PO64730 2000 CN-YangtzeDike Strengthening 210\.00 0\.00 0\.00 0\.00 0\.00 73\.99 73\.99 1\.98
PO64924 2000 CN-GEF-BEIJINGENVMT I1 0\.00 0\.00 0\.00 25\.00 0\.00 20\.21 24\.87 4\.48
PO42299 1999 CN-Tec Coop Credit I V 10\.00 35\.00 0\.00 0\.00 5\.84 15\.08 19\.02 0\.00
PO43933 1999 CN-SICHUAN URBANENVMT 150\.00 2\.00 0\.00 0\.00 0\.00 56\.29 56\.31 4\.21
PO36953 1999 CN-HEALTH I X (Shiyong Wang, Back- 10\.00 50\.00 0\.00 0\.00 0\.40 18\.14 17\.09 16\.12
UP)
PO41268 1999 CN-Nat Hwy4kIubei-Hunan 350\.00 0\.00 0\.00 0\.00 36\.50 0\.12 36\.61 0\.00
PO38121 1999 CN-GEF-RENEWABLE ENERGY 0\.00 0\.00 0\.00 35\.00 0\.00 11\.95 34\.77 25\.55
DEVELOPMENT
PO57352 1999 CN-RURALWATER I V 16\.00 30\.00 0\.00 0\.00 0\.00 1\.12 0\.86 0\.83
PO51856 1999 CN-AccountingReform& Development 27\.40 5\.60 0\.00 0\.00 0\.00 8\.06 7\.95 0\.51
PO51705 1999 CN-FujianI1Highway 200\.00 0\.00 0\.00 0\.00 0\.00 21\.16 21\.16 10\.82
PO46829 1999 CN-RenewableEnergy Development 100\.00 0\.00 0\.00 0\.00 0\.00 0\.06 0\.06 0\.06
PO36414 1998 CN-GUANGXI URBANENVMT 72\.00 20\.00 0\.00 0\.00 13\.48 26\.16 39\.07 11\.98
PO03619 1998 CN-2ndInlandWaterways 123\.00 0\.00 0\.00 0\.00 40\.21 3\.88 44\.09 7\.09
PO03614 1998 CN-GuangzhouCity Transport 200\.00 0\.00 0\.00 0\.00 20\.00 60\.43 80\.43 60\.43
106
PO03566 1998 CN-BASIC HEALTH(HLTHS) 0\.00 85\.00 0\.00 0\.00 0\.00 6\.40 4\.13 0\.00
PO03539 1998 CN-SustainableCoastalResourcesDev\. 100\.00 0\.00 0\.00 0\.00 2\.06 24\.72 26\.78 22\.00
PO44485 1997 CN-ShanghaiWaigaoqiao 400\.00 0\.00 0\.00 0\.00 0\.00 29\.26 29\.26 29\.26
PO36405 1997 CN-WanjiazhaiWater 400\.00 0\.00 0\.00 0\.00 75\.00 4\.41 79\.41 4\.41
PO03594 1996 CN-GansuHexi Corridor 60\.00 90\.00 0\.00 0\.00 0\.00 36\.40 40\.72 28\.86
Total: 10,413\.40 317\.60 0\.00 237\.08 406\.56 6,333\.76 2,082\.22 191\.56
Statementof the IFC's
HeldandDisbursedPortfolio
(US$ million)
Committed Disbursed
IFC IFC
FY Approval Company Loan Equity Quasi Partic\. Loan Equity Quasi Partic\.
2002 ASIMCO 0\.00 10\.00 0\.00 0\.00 0\.00 10\.00 0\.00 0\.00
2006 ASIMCO 0\.00 0\.00 4\.12 0\.00 0\.00 0\.00 3\.61 0\.00
2005 BCCB 0\.00 59\.21 0\.00 0\.00 0\.00 59\.03 0\.00 0\.00
2003 BCIB 0\.00 0\.00 12\.04 0\.00 0\.00 0\.00 0\.00 0\.00
2006 BUFH 8\.14 0\.00 0\.00 0\.00 8\.14 0\.00 0\.00 0\.00
2005 Babei 0\.00 5\.00 0\.00 0\.00 0\.00 5\.00 0\.00 0\.00
BabeiNecktie 11\.00 0\.00 0\.00 6\.00 8\.94 0\.00 0\.00 4\.88
1999 Bank of Shanghai 0\.00 21\.76 0\.00 0\.00 0\.00 21\.76 0\.00 0\.00
2000 Bank of Shanghai 0\.00 3\.84 0\.00 0\.00 0\.00 3\.84 0\.00 0\.00
2002 Bank of Shanghai 0\.00 24\.67 0\.00 0\.00 0\.00 24\.67 0\.00 0\.00
2005 BioChina 0\.00 3\.70 0\.00 0\.00 0\.00 3\.13 0\.00 0\.00
2002 CDH ChinaFund 0\.00 2\.02 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2005 CDH ChinaI1 0\.00 17\.99 0\.00 0\.00 0\.00 11\.38 0\.00 0\.00
2006 CDH Venture 0\.00 20\.00 0\.00 0\.00 0\.00 0\.51 0\.00 0\.00
2005 CT Holdings 0\.00 0\.00 40\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2004 CUNA Mutual 0\.00 10\.53 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2006 CapitalToday 0\.00 25\.00 0\.00 0\.00 0\.00 0\.32 0\.00 0\.00
2005 ChangyuGroup 0\.00 18\.07 0\.00 0\.00 0\.00 18\.07 0\.00 0\.00
1998 ChengduHuarong 3\.36 3\.20 0\.00 3\.13 3\.36 3\.20 0\.00 3\.13
2004 ChinaGreenEner 20\.00 0\.00 0\.00 0\.00 15\.00 0\.00 0\.00 0\.00
2004 ChinaRe Life 0\.00 0\.27 0\.00 0\.00 0\.00 0\.27 0\.00 0\.00
1994 ChinaWalden Mgt 0\.00 0\.01 0\.00 0\.00 0\.00 0\.01 0\.00 0\.00
2006 Chinasoft 0\.00 0\.00 15\.00 0\.00 0\.00 0\.00 10\.00 0\.00
2004 Colony China 0\.00 15\.31 0\.00 0\.00 0\.00 9\.29 0\.00 0\.00
2004 Colony China GP 0\.00 0\.84 0\.00 0\.00 0\.00 0\.49 0\.00 0\.00
2006 Conch 81\.50 40\.93 0\.00 0\.00 81\.50 0\.00 0\.00 0\.00
2006 DagangNewspring 25\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2002 Darong 10\.00 0\.24 0\.00 8\.00 6\.67 0\.24 0\.00 5\.33
2006 Deqingyuan 0\.00 2\.85 0\.00 0\.00 0\.00 2\.85 0\.00 0\.00
1994 Dynamic Fund 0\.00 2\.21 0\.00 0\.00 0\.00 2\.01 0\.00 0\.00
2007 Epure 0\.00 10\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2004 Fenglin 17\.64 0\.00 6\.00 13\.47 13\.64 0\.00 6\.00 12\.53
2006 FenglinHJMDF 0\.23 0\.00 0\.00 3\.27 0\.00 0\.00 0\.00 0\.00
107
2005 Five Star 0\.00 0\.00 7\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2006 GDIH 50\.85 0\.00 0\.00 0\.00 50\.85 0\.00 0\.00 0\.00
2003 Great Infotech 0\.00 1\.73 0\.00 0\.00 0\.00 1\.03 0\.00 0\.00
2006 HangzhouRCB 0\.00 10\.85 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2005 HiSoft Tech 0\.00 4\.00 0\.00 0\.00 0\.00 3\.00 0\.00 0\.00
2006 HiSoft Tech 0\.00 4\.34 0\.00 0\.00 0\.00 1\.74 0\.00 0\.00
2004 IB 0\.00 52\.18 0\.00 0\.00 0\.00 52\.18 0\.00 0\.00
2004 JiangxiChenming 40\.00 12\.90 0\.00 18\.76 40\.00 12\.90 0\.00 18\.76
2006 LaunchTech 0\.00 8\.35 0\.00 0\.00 0\.00 8\.33 0\.00 0\.00
2001 MaanshanCarbon 5\.25 2\.00 0\.00 0\.00 5\.25 2\.00 0\.00 0\.00
2005 MaanshanCarbon 11\.00 1\.00 0\.00 0\.00 5\.00 1\.oo 0\.00 0\.00
2005 Minsheng 15\.75 0\.00 0\.00 0\.00 7\.00 0\.00 0\.00 0\.00
2006 Minsheng& IB 25\.09 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2001 Minsheng Bank 0\.00 23\.50 0\.00 0\.00 0\.00 23\.50 0\.00 0\.00
2005 Minsheng Bank 0\.00 2\.80 0\.00 0\.00 0\.00 2\.79 0\.00 0\.00
2001 NCCB 0\.00 8\.94 0\.00 0\.00 0\.00 8\.82 0\.00 0\.00
1996 Nanjing Kumho 0\.00 3\.81 0\.00 0\.00 0\.00 3\.81 0\.00 0\.00
2004 NanjingKumho 31\.38 2\.23 0\.00 0\.00 31\.38 2\.23 0\.00 0\.00
2006 Neophotonics 0\.00 0\.00 10\.00 0\.00 0\.00 0\.00 10\.00 0\.00
2001 New ChinaLife 0\.00 5\.83 0\.00 0\.00 0\.00 5\.83 0\.00 0\.00
2005 New Hope 0\.00 0\.00 45\.00 0\.00 0\.00 0\.00 0\.00 0\.00
1995 NewbridgeInv\. 0\.00 0\.22 0\.00 0\.00 0\.00 0\.22 0\.00 0\.00
2005 NorthAndre 8\.00 6\.74 0\.00 0\.00 0\.00 4\.25 0\.00 0\.00
2003 PSAM 0\.00 2\.01 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
RAK China 13\.00 0\.00 0\.00 0\.00 13\.00 0\.00 0\.00 0\.00
2006 RenaissanceSec 0\.00 0\.00 20\.04 0\.00 0\.00 0\.00 0\.00 0\.00
2006 Rongde 0\.00 35\.00 0\.00 0\.00 0\.00 31\.38 0\.00 0\.00
SAC HK Holding 0\.00 1\.60 0\.00 0\.00 0\.00 1\.oo 0\.00 0\.00
2003 SAIC 12\.00 0\.00 0\.00 0\.00 12\.00 0\.00 0\.00 0\.00
2006 SBCVC 0\.00 20\.00 0\.00 0\.00 0\.00 2\.00 0\.00 0\.00
2000 SEAF SSIF 0\.00 3\.74 0\.00 0\.00 0\.00 3\.37 0\.00 0\.00
SHKejiIT 3\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2004 SHCT 38\.18 0\.00 0\.00 28\.64 29\.04 0\.00 0\.00 21\.78
2004 SIBFI 0\.14 0\.07 0\.00 0\.00 0\.00 0\.07 0\.00 0\.00
1998 Shanghai Krupp 19\.25 0\.00 0\.00 36\.75 19\.25 0\.00 0\.00 36\.75
2006 Shanshui Group 50\.00 5\.50 2\.20 0\.00 50\.00 5\.50 0\.00 0\.00
1999 Shanxi 12\.61 0\.00 0\.00 0\.00 12\.61 0\.00 0\.00 0\.00
SinoSpring 0\.00 0\.00 20\.00 0\.00 0\.00 0\.00 0\.00 0\.00
StoraEnso 20\.83 0\.00 0\.00 4\.17 11\.00 0\.00 0\.00 0\.00
2005 StoraEnso 29\.17 0\.00 0\.00 20\.83 0\.00 0\.00 0\.00 0\.00
2006 StoraEnso 50\.00 0\.00 0\.00 175\.00 0\.00 0\.00 0\.00 0\.00
2006 TBK 4\.00 0\.00 0\.00 0\.00 2\.00 0\.00 0\.00 0\.00
2006 VeriSilicon 0\.00 1\.oo 0\.00 0\.00 0\.00 1\.oo 0\.00 0\.00
WanjieHigh-Tech 9\.89 0\.00 0\.00 0\.00 9\.89 0\.00 0\.00 0\.00
2004 Wumart 0\.00 1\.62 0\.00 0\.00 0\.00 1\.62 0\.00 0\.00
2003 XACB 0\.00 17\.95 0\.00 0\.00 0\.00 0\.64 0\.00 0\.00
2004 Xinao Gas 25\.00 10\.00 0\.00 0\.00 25\.00 10\.00 0\.00 0\.00
2006 ZhejiangGlass 50\.00 24\.96 0\.00 18\.00 0\.00 0\.00 0\.00 0\.00
2003 Zhengye-ADC 10\.43 0\.00 0\.00 4\.87 10\.43 0\.00 0\.00 4\.87
108
2002 ZhongChen 0\.00 4\.78 0\.00 0\.00 0\.00 4\.78 0\.00 0\.00
2006 Zhongda-Yanjin 21\.89 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
Total portfolio: 733\.58 577\.30 181\.40 340\.89 470\.95 371\.06 29\.61 108\.03
Approvals PendingCommitment
FY Approval Company Loan Equity Quasi Partic\.
2002 SML 0\.00 0\.00 0\.00 0\.00
2004 NCFL 0\.00 0\.00 0\.02 0\.00
2007 Xinao CTC 0\.04 0\.01 0\.00 0\.14
2004 ChinaGreen 0\.00 0\.00 0\.01 0\.00
2006 LaunchTech 0\.01 0\.00 0\.00 0\.00
2005 MS Shipping 0\.00 0\.01 0\.00 0\.00
2003 PeakPacific 2 0\.00 0\.01 0\.00 0\.00
Total pendingcommitment: 0\.05 0\.03 0\.03 0\.14
109
Annex 14: Country at a Glance
CHINA: Second ShandongEnvironmentProject
East Lower-
POVERTY and SOCIAL A8la 8 middle-
Chlna Pacific Income Development diamond'
2005
Population,mid-year(millions) 1,304\.5 1,885 2,475
GNIpercapita (Atlas method, US$) 1740 1,627 1,918 Lifeexpectancy
T
GNI(Atlasmethod, US$ billions) 2,269\.8 3,067 4,747
Average annual growth, 1999-05
Population (%) 0\.7 0\.9 1\.0
Laborforce (%) 1\.0 1\.3 1\.4 Gross
primary
M o s t recent estimate (latest year available, 1999-05) capita enrollment
Poverty(%of populationbelownationalpovertyline)
Urbanpopulation (%of totalpopulation) 40 41 50
Lifeexpectancyat birth(pars) 71 70 70
Infant mortality (per1000live births) 26 29 33
Childmalnutrition (%ofchildmnunder5) 8 15 12 Access to improvedwater source
Access to an improvedwatersource (%ofpopulation) 77 79 82
Literacy(%ofpopulation age 154 91 91 89
Gmss primaryenrollment (%of scho01-agepopulation) 118 115 114 -China
Male 118 116 115 Lower-middle-income group
Female 1l7 114 113 ~
KEY ECONOMIC RATIOS and LONG-TERM TRENDS
1985 1995 2004 2005 Economic ratios*
GDP (US$ billions) 304\.9 728\.0 1,931\.7 2,228 9
Gross capitalformation/GDP 37\.8 39\.3 38\.7
Exportsof goods and serviceslGDP 0\.0 23\.1 34\.0 Trade
Gross domestic savingslGDP 33\.6 41\.5 41\.2
Gross national savings/GDP 34\.0 40\.1 42\.2 T
Current account balance/GDP -3\.8 0\.8 3\.6 5\.0
Interestpayments/GDP 0\.2 0\.6 0\.2 Domestic Capital
Total debt/GDP 5\.5 16\.2 P\.9 savings formation
Total debt service/exports 7\.7 8\.6 3\.5
Present value of debt/GDP P\.5 1
Present value of debt/exports 35\.7
Indebtedness
1985-95 1995-05 2004 2005 2005-09
(averageannualgrou4h)
GDP 9\.7 8\.8 n\.1 9\.9 8\.0 -China
GDP percapita 8\.2 8\.0 9\.4 9,2 7\.3 Lower-middle-income orou~
Exportsof goods and services 9\.4 18\.7 28\.4 23\.6 n\.3 ~
STRUCTURE of the ECONOMY
1985 1995 2004 2005
(%of GDP) /Growth o f capltal and GDP (%)
Agriculture 28\.4 18\.8 13\.1
lndustty 43\.1 47\.2 46\.2
Manufacturing 34\.9
Services 28\.5 33\.1 40\.7
1
Household final consumption expenditure 53\.2 47\.5 48\.5 00 01 02 03 04 05
Generalgov't final consumption expenditure u\.2 11\.0 13\.2
Imports of goods and services 14\.1 20\.9 31\.4 -GCF -GDP
::-
1985-95 1995-05 2004 2005
(averageannualgrou4h) Growth o f export8 and Imports (Yo)
1I
Agriculture 4\.2 3\.3 6\.3 5\.0
Industry T
42\.8 9\.9 11\.1 t1\.8 40
30
Manufactunng n\.0
Services 9\.5 9\.7 9\.a D\.l
Household final consumption expenditure 13\.2 5\.7 1\.1
Generalgov't final consumption expenditure 9\.4 8\.9 6\.8 O ' 00 0, h 03 04 d5
Gross capital formation 9\.4 33\.1 13\.0 13\.5 -Exports - 9 - l r Q O r t S
Imports of goods and services n\.3 ff\.4 22\.5 15\.3
Note:2005 data are preliminatyestlmates\.
This tablewas producedfrom the Development Economics LDB database\.
'Thediamonds showfourkey indicators inthecountry(in boid)comparedwithits income-groupaverage\. Idataaremissing,thediamondwiil
beincomplete\.
110
China
PRICES and GOVERNMENT FINANCE
1985 1995 2004 2005
Domestic prices Inflation (Oh)
(% change) I
Consumer pnces \. 16\.9 4\.0 1\.8
Implicit GDP deflator 10\.1 13\.7 6\.9 3\.8
Government finance
(% of GDP, includes currentgrants)
Current revenue 28\.0 10\.8 16\.6 17\.5
Current budget balance 7\.3 0\.6 1\.7 2\.0
Overall surpluddeficit -GDP deflator *CPI
0\.0 -1\.5 -1\.5 -1\.3I
TRADE
1985 1995 2004 2005
(US$ millions) ixpott and Import levels (US$ mill\.)
Total exports(fob) 27,350 148,780 593,369 771,511 ,000,000
Food 3,803 9,954 18,870 T II
Mineralfuels, lubricants,and related material 7,132 5,332 14,476
Manufactures 13,522 127,295 552,818 727,191
Total imports (cifl 42,252 132,084 561,423 674,331
Food 1,553 6,132 9,156
Fuel and energy 172 5,127 48,003
I
Capital goods 16,239 52,642 252,624 230,369
Export priceindex (2000=100) 52 118 102 106 99 00 01 02 03 04 05
Import price index (2000-1OOj 74 107 112 119 Exqort8 lrnwlts
Terms of trade (2000=100) 70 110 91 88
BALANCEof PAYMENTS
1985 1995 2004 2005
(US$ millions) Current account balanceto GDP (%)
Exportsof goods and services 30,489 167,974 655,827 843,537
Importsof goods and services 43,092 151,882 606,543 746,150 6 T
Resource balance -12,602 16,092 49,284 97,386
Net income 841 -11,774 -3,523 4,668
Net current transfers 243 1,434 22,898 10,000
Current account balance -11,518 5,752 68,659 112,055
Financingitems (net) 6,096 16,711 137,705 98,000
Changesin net reserves 5,422 -22,463 206\.364 -210,055 I 99 W 01 02 03 04 05
Memo:
Reserves includinggold (US$ millions) \. 80,277 622,945 826,303
Conversion rate (DEC, localNS$j 2\.9 8\.4 8\.3 8\.2
EXTERNALDEBT and RESOURCE FLOWS
1985 1995 2004 2005
(US$ millions) Composition of 2004 debt (US$ mill\.)
Total debt outstandingand disbursed 16,696 118,090 248,934
IBRD 498 7,209 11,035 11,140 A: 11,035
IDA 431 7,038 10,670 9,741 8:10,670
Total debt service 2,478 15,066 23,657
IBRD 26 810 1,054 1,139
IDA 4 63 264 296 G
Compositionof net resourceflows 117,592
Official grants 117 330 381
Official creditors 1,117 7,902 16
Private creditors 2,867 5,013 7,970
Foreigndirect investment (net inflows) 1,659 35,849 54,936
Portfolioequity (net inflows) 0 0 10,923
World Bank program
Commitments 1,092 3,148 1,285 A IBRD
- E Bilateral
-
Disbursements 565 2,269 1,188 1,131 B IDA D Other mitilateral
- F Pnvate
\.
Principalrepayments 0 364 999 1,004 C IMF
\.- G - Short-term
Net flows 565 1,905 190 127
Interestpayments 29 509 319 430
Nettransfers 536 1,396 -130 -303
Note:This table was producedfrom the Development Economics LDB database\. 8112/06
111
Annex 15: IncrementalCost Analysis
CHINA: Second ShandongEnvironmentProject
A\. BroadDevelopmentGoals andthe Baseline
1\. Background:SDEP2, for which ShandongProvince requestedBank upp port'^, has
components located innine urban centers, and includes investments inwastewater, water supply,
solid waste and institutional strengtheningof agenciesoperating the respective facilities\.
2\. The province has apopulation ofabout 90\.8 million, ofwhich approximately 36 million
(40%) live inurbanareas\. The municipalities have so far not been able to provide adequate water
supply andwastewater servicesto meet the requirementsofthe entire population\. In2004,2,639
million m3of drinkingwater was suppliedto only 24\.6 million people or about 68 percent of the
total urban population16\.This is inaddition to water suppliedto industriesand institutions
through over 4\.6 million water connections\. Inthe same year, the wastewater agencies provided
services to nearly 30 million of the urbanpopulation, of which about 20 million had combined
sewage systems (12,675 km long) while 10million had separate sewage systems (7,400 km
long)\. Together, the two systems collected approximately 1,900 million m3of wastewater, of
which approximately 900 million m3was treated\. The majority of treatedwaste water, about 832
million m3,was treated insecondary treatmentplants\. The remaining 1,000 million m3was left
untreated\. Most of this land-basedpollutionload was dischargedeither directly or via river
systems into the Bohai and Yellow Seas\.
3\. Construction regulations inChina requirethat owners provide septic tanks for their
buildings as on-site wastewater treatment\. Buildings located inareas served by separate sewers
andtreatmentplants are excluded from that requirement\.There are no regulations or guidelines
forcing owners to regularly service septic tanks\. Dueto the expenses involved with such
periodical servicing, the owners of buildings pumpout their septic tanks only whenthere are
blockages\. This situation has serious negative environmental impacts\. Raw wastewater passing
through non-functioning tanks flows through drains and adds to pollution load\. Municipalities
have so far not paid adequateattentionto this issue\. There are a number of reasons for this lack
of attention, including: an absence of septic tank legislation; a lack of responsible institutions
which have limitedcapacity; low public awareness of the problem; a shortage of funding; and
unclear responsibility for providing funding\.
4\. Sector StatusinYantai:Yantai is a coastalcity with anurbanpopulation of over one
million\. Its economy is basedon a large port andmachinery, electronics, and equipment
industries\.It is also apopular summer vacation spot for Shandong andBeijing urbanitesdue to
its sandy beaches andrelatively warm sea\.
5\. Wastewater inYantai i s collected by both separate but mostly combined sewer network
andtreated inTaoziwan and Xinanhe WWTPs with atotal capacity of 290,000 m3/day\.
Taoziwan WWTP, located inthe northof the city and inoperation since 1998, has a capacity of
250,000 m3/day,of which 210,000 m3/dayis treated by sedimentation and 40,000 m3/dayis
l5The frst project (SDEP) dealt with water supply andenvironmentin a few municipalities\.
16The remainingpopulationis self-suppliersmainly from their ownwells\.
112
treated biologically and subsequentlyre-used innearby industries\.After treatment, wastewater i s
discharged into the Yellow Seathrough a deep outfall\. Xinanhe WWTP, located inthe south of
the city andinoperation since 2003, hasa capacity of 40,000 m3/dayand serves Laishan, eastern
Zhifu and Moping Districts\. These are all served by a combined sewerage system\. The treatment
technology usedis a biologicalprocessand the effluent i s discharged into the Yellow Seaby a
sea outfall\.
6\. Yantai Baseline Scenario: Inthe baseline scenario the Bank-supportedproject (without
the GEF activity) would provide facilities for collectionandtreatment of additional wastewater
generatedby the expansion ofthe city and its boundary\. However, raw sewage from housesnot
connectedto the system and overflows of combined sewers would still reachthe sea due to non-
functioning septic tanks\.
7\. The Yantai baseline scenario includes: (a) expansion ofXinanhe WWTP from 40,000 to
120,000 m3/dayto serve the projected additional populationof 500,000 by the year 2013, as well
as additional institutions and industries; (b) construction of 14kmof interceptor sewers and
upgrading of Tongbozi pumpingstation; and (c) establishment of a self-financing municipal
enterprise, YWDC17to managewastewater activities\.
8\. The Xinanhe drainage area is servedby combined sewers discharging wastewaterpartly
into an interceptor sewer andpartlyinto the nearest (seasonal) rivers and ultimately into the sea\.
The proposed interceptor sewer will bringwastewater into the treatment plant\. The table below
shows that inthe worst-case scenario (without the Bank-supported project) the total pollution
reachingthe oceanwould be 1\.8 tons/day BOD518\.Inthe baseline scenario (IBRD only), the new
interceptor and expanded treatment plant would increasethe wastewater catchment area, and
would reducethe pollutionby 14\.4tons/day BOD5 by 2009, and reducepollutionby 21\.6
todday BOD5by 2013,It is expectedthat the project proposed institutional improvements would
ensure sustainableoperation and maintenanceof old and new wastewater facilities\.
~ ~~
'*BODs=
"YWDCwasestablishedinMarch2006\.
biochemical oxygen demand (five day laboratory test) is considered the most characteristic parameter
indicating the general quality o f water and wastewater\. It cannot be usedfor brackish waters\.
113
Capacityof Population BODS BOD5 Residual BOD5
Xinanhe WWTP served by generated in removed BOD5 discharged
in m3/day Xinanhe the area (54 in WWTP discharged" under "no
WWTP gkapitdday) (80% intorecipients project"
efficiency) scenario''
(current) 40,000 165,000 I 9\.0 7\.2 1\.8 1\.8
(extension: 2009)
80\.000 335,000 18\.0 14\.4 3\.6 10\.8
(total in2013)
120,000 500,000 27\.0 21\.6 5\.4 19\.8
Vote: BODremovalel
about 10percent of pollutionloadbekguncollectedfkompropertiesnot connectedto the drainagesystem\.
B\. YantaiGEF GlobalEnvironmentalObjective
9\. Yantai GEF Origin:While the existence of septic tanks is generally recognized, neither
the province nor the project municipalities have considered the issue o f septic tanks inthe project\.
This is chiefly due to the non-municipal ownership o fthese tanks\. However, Yantai Municipality
has agreed to study the issue andrequested GEF support to help analyze the status o f septic tanks
and find ways for improving the situation\. The province concurred that Yantai is the most
suitable recipient o f GEF support and has goals o f (1) proving that (a) regular servicing o f septic
tanks will contribute to reducingthe amount o f land-based pollution reaching the Bohai and
Yellow Seas, and (b) joint treatment o f septage with sewage inconventional municipal
wastewater plants i s feasible as well as the most economical viable solution for its disposal; and
(2) disseminating inShandong, among Bohai Declarationsignatories21and beyond the feasibility
o f the institutional and technical arrangements tested under the GEF activity\.
10\. YantaiGEFDevelopmentObjectives:The GEF activity would be implementedwithin
the Yantai wastewater component o f SDEP2\. GEF support would initiate andmake possible the
implementationo f major institutional andtechnology reforms, which would not otherwise be
carried out by any wastewater sector agency inChina\. The goal o f the pilot project is to
demonstrate to Chinese municipalities the rationale for the proper management o f septic tanks\.
The key objectives o fthe activity are to: (a) demonstrate the feasibility o f institutional and
technical arrangements required to ensure improvements inthe local environment; and(b)
disseminate among Bohai Declaration signatories and to others the positive impacts that can be
achieved by reducing the annual pollution load discharged from septic tank sources to the Bohai
and Yellow Seas\. A matrix o fthe baseline project and GEF pilot project i s shown inAttachment
1\.
19For simplificationthe impactof stormoverflows is disregarded\.
2oTreatmentcapacity is fixedat 7\.2 tonslday\.
21The BohaiDeclarationwas signedonJuly25, 2000 bythe State Oceanic Administration, Shandong, Hebeiand
LiaoningProvincesandTianjinMunicipality\.
114
C\. Alternative
11\. Yantai GEF Alternative: The GEF alternative scenario will go beyond the Bank-
supported project by: (i) providing the institutional arrangements andnecessary facilities for
regularmaintenance o f septic tanks; and (ii) experimenting with the joint treatment o f septage
with wastewater\.
12\. GEF funds would support a significant improvementinthe Yantai baseline scenario\.
With GEF support, Yantai institutions responsible for management o f drainage andwastewater
will include, within their general responsibilities, the regular servicing o f septic tanks, review
any overlapping responsibilities for this activity, develop suitable andenforceable policies and
operating procedures, and integrate their activities to implementthe proposed innovations\.
13\. The objective o f the alternative i s to demonstrate the benefits o f serviced septic tanks as
compared to non-serviced septic tanks ina limited, controlled and small representative sample\.
The rationale for the GEF alternative inYantai is the current lack o f attention given to the septic
tank problem and apoor understanding o fthe important role septic tanks play withinthe existing
combined drainage system inChina\.
14\. Yantai Sample Investigation: There are no records kept by the municipality or
wastewater agency on constructed septic tanks22\.A preliminary investigationhas therefore
provided a first insight into the septic tank issue inYantai\. This investigationinturnwill provide
the basis for a detailed institutional, investmentand operational program for the activity\.
15\. Sample field investigations, which were limitedto Laishan and eastern ZhifuDistricts
with a population o f 268,000 (2006), identifiedabout 1,700 septic tanks\. The investigation found
that about 95 percent o f existing tanks are not recorded by the construction authority and about
50 percent o f the tanks appear to be o f substandard quality, possibly too small for the level o f
wastewater generated or by-passed with outlets connected directly to the municipal drains\. The
majority of the tanks, about 85 percent, are owned by property management companies or private
owners\. About 5 percent o f the tanks are owned by YMG and for the remaining 10percent o fthe
tanks the owners are unknown\. The clogging o f outlets and overflow o ftanks are common
problems\. On a daily basis, the Yantai Drainage Management Department cleans, on an
emergency basis, several overflowing tanks\.
16\. Yantai GEFActivity Description: The GEF activity will be carried out by a STUwhich
will be established inearly 2007 by Yantai Municipality\. Itwill be attached to YWDC with
reporting lines to its Vice-president\. The STU will initiate the necessary municipal institutional
actions for facilitating regular maintenance o f septic tanks and start-up operations\. This will
include appointment o f and training for staff as well as planningand implementationo f
operations and monitoring systems, procurement o f works and goods requiredfor the pilot
project and other required tasks\.
17\. Framework Schedule: The STU will ensure the recording o fwater quality inoverflows
from interceptors between June-August 2007 the rainy season\. This will help assess pollution
-
22Recordsshouldbe kept by the owners, but that practice is very rare\.
115
reachingthe Yellow Seaprior to implementation of the septic tank managementpilot\. Starting in
early 2008, the pilot septic tank managementwill include initial servicing of septic tanks,
collection of data on the tanks and the quality of overflows from interceptors, and generally
setting up of managementand monitoringprotocols, and will last for one year untilearly 2009\.
Simultaneously, the treatment of the sewage-septagemix inthe existing (40,000 m3/day)
Xinanhe plant will start\. The full experimentonjoint treatment, inthe expandedXinanhe WWTP
(80,000 m3/day),will begininearly 2009\. The evaluation of results andwider dissemination of
the findingsfrom the pilot inShandongand other provinces are expectedto extendthrough the
endof 2010\.
18\. The GEF physical activity (pilot project) will serve eastern-Zhifu and Laishan Districts,
covering about half ofthe Xinanhe plant watershed\. The fecal tankers of the pilot project will
service septic tanks andtransport the septage into the Tongbozi pumpingstation, which i s the
last station on the interceptor sewer before Xinanhe WWTP\. Therethe septage will be de-silted
andmixedwithwastewaterbefore being sent (about 1km) intothe plantfor treatment\. All data
andthe parametersof operationswill bemonitoredandstoredinthe pilot project data-based
system\.
19\. Evaluation and dissemination of the data will also gradually be developed\. The bi-annual
and annual findings will be evaluated and first disseminatedwithin Shandong Province andthen
to major municipalities located nearest and discharging wastewater into, the Bohai and Yellow
Seas\. The final findings, including experiencewith thejoint treatment experiment, will also be
disseminatedwithinBohai SeaDeclaration signatories, to professionals andthe generalpublic in
China and East Asia\.
D\. Scope of the Analysis
20\. Baseline Scenario: The expectedoutput ofthe baseline scenario (Yantai component of
SDEP2) will include: (a) an improvedwastewater service to a population of about 335,000 (by
2013) through the establishment of YWDC; (b) expanded collection and treatment of wastewater
inthe Xinanhe watershed; and(c) areduction inland-basedpollutiondischargedintothe Yellow
Sea from 27\.0 tons/day to 5\.4 tons/day expressedinBODS\.
21\. Alternative Scenario:The output ofthe alternative scenario (GEF pilot project) will be
limitedto areduction inland-basedpollution dischargedinto the Yellow Sea generatedby a
populationof about 181,000 through the servicing of septic tanks inthe project pilot area\. The
estimated annual output would be a reduction inpollution of about 2\.7 tons of BODSper year or
about 1\.5 kgto 2\.0 kgof BODSannually per person\.
22\. Assuming that in2010 the institutionalarrangementsand the STU activity have been
expandedinYantai City, with a population of over 1\.2 million, the annual reduction of land-
basedpollution discharged into the Yellow Seawould reach about 1,700 tons of BOD5 (see
Attachment 2)\.
23\. IftheGEFexperiencefrom Yantai wasreplicatedonly inShandongmunicipalities
bordering the Bohai Sea, apopulation of about 20 million couldbe served by combined systems\.
116
The land-based pollution discharged into the Bohai and Yellow Seas could be reduced by at least
30,000 tons o f BOD5 annually\.
24\. The current status o f septic tanks inYantai i s characteristic of provinces neighboringthe
Bohai and Yellow Seas andthe pilot project will demonstrate institutional andtechnical ways o f
increasing the efficiency o f the tanks\. Global benefits o fthe pilot project could also materialize
through promotion and dissemination o f Yantai findings\.
E\. Costs
25\. Yantai BaselineCost:Withthe estimated investment costs ofXinanhe WWTP inthe
above baseline scenario o f US$11\.8 million, the cost per connected person is about US$35 and
thetreatment of 1\.O ton o fpollution per year expressed inBOD5requires anincremental
investment inXinanhe o f about US$2,200\. This approximation does not include the costs o f
wastewater collection networks and assumesthat the actual status o f septic tanks i s "non-
operative" andthat their treating impact i s zero\.
26\. AlternativeCost: Alternative costs includethe creationo finstitutional arrangements,
provision o f facilities and equipment, operations o f septic tanks servicing and disposal o f
septage\. Cost estimates for the Yantai GEF activity expanded to Yantai City and Shandong
Province are as follows\.
117
Pilot Yantai Shandong
Action Project a) City b) Provincec)
US$
Establishment of institutional arrangements 520,000 700,000 11,500,000
Provision of facilities andequipment 2,070,000 8,000,000 130,000,000
Management\. monitoring\. etc\. 1\.830\.000 3\.000\.000 50\.000\.000
Total investments d) 4,420,000 11,700,000 191,500,000
Annual operationsof septic tanks servicing 82,000 480,000 8,000,000
Septage disposal inWWTP 20,000 e) 120,000 2,000,000
Total annual operations 102,000 600,000 10,000,000
27\. The construction cost of septic tanks is not includedinthe summary cost since it has
already beentaken care of by the owners of buildings onthe basis of legislation regardingtheir
impact on pollutionreduction\. The following estimates are provided only for orientation:
construction cost of septic tanks i s lower per servicedperson as comparedto that of central
treatment plants; however, it is higher for treatment performance\. As an example, construction of
a simple septic tank23for 70 persons with a volume of 0\.15 m3per person would cost about
$1,500 or about US$20 per connectedperson as comparedwith US$35 inthe case of Xinanhe
WWTP\. With regular servicing its treatment performance expressed inBOD5would be about
35%, resulting inremoval of 20g of BOD5per capita and day (g/c/d) from initial load of 54 g/c/d\.
This meansthat the investment cost of removing 1\.O todyear of BOD5would reachabout
US$3,000 ina septic tank, as comparedto US$2,200 inXinanhe central WWTP\.
28\. Incremental Cost: Incremental costs are defined as expendituresmade inconnection
with regular maintenanceof septic tanks located inurbansections served bythe municipal
combined sewerage system includingdisposal of septage\. Those tanks have beenconstructedby
owners of buildings and do not provide the initially intendedenvironmentalhealth benefits
without regular servicing\. Municipalities will have to buildup their respective institutional and
physical infrastructure to expandtheir wastewater services to include managementof septic
tanks\. Required investments and annual operating cost estimatesbasedon the proposed GEF
pilot project inYantai are shown inthe following table\.
23 Simple septic tank function is mainlymechanical, i\.e\. sedimentation;it has a small volume (100-400 Vc)\.
Biologicalseptic tank function is biodegradation,has a volume of 1\.O m3/candmuchhigher treatment performance;
it requiresservicingonce infive years andits effluent canbe disposedof inundergrounddrains\.
118
IncrementalCost
I I Alternative: I
Parameter Baseline Pilot 1 Disseminatedin
YantaiCi\. Shandong
I I
" Province
IncrementalCost
Global environmental
benefit BOD5 0 0 0 0
a)
Domestic benefit todyear 5,250 2\.7 1,700 30,000
Investment cost US$ 11\.8 4\.4 11\.7 191\.5
Annual operating cost million 220 0\.1 0\.6 10\.0
29\. Incities, septic tanks are animportant partofthe combined sewer system, whichhas
been constructed inthe vast majority o f Chinese cities\. From an economic point o f view, the
combined system complemented by septic tanks inold and fully built parts o f cities represents a
far cheaper alternative compared to the potential replacement by a new separate system
constructed innew developments\. Replicating the GEF experiment inareas with existing
combined systems, a public utility would use, with marginal incremental costs, a dormant facility
provided by a third party\. Besides the substantial andpositive impact on the final recipient, the
Bohai and Yellow Seas, the use o f septic tanks would contribute to environmental improvement
inrivers,particularly ininner city stretches\. Jointtreatment ofseptagewith wastewater would
solve the otherwise difficult and costly issue o f its disposal\.
F\. ProcessofAgreement
30\. ShandongProvince:Shandong Provincewould actively participate inbroadly
disseminating the Yantai experience and would support the application o f lessons learnedfrom
the experiment inother municipalities\. Accordingly, it will arrange, jointly with Yantai
Municipality, annual workshops attended by Shandong municipalities to follow the progress and
benefits of the Yantai pilot project and initiate dissemination o f the experiment from its start\. The
first of such workshops i s planned for early 2007\.
119
Attachment 1: Matrix of Project ( bjectives
Scenario/ Project Development Objective
Objective / GlobalEnvironmental Higher Level Objective
I Objective
To promote sustainable (a) To manage resource scarcity
improvements inthe urban and environmental challenges,
environment inselected especially related to water
Baseline municipalities o fthe province pollution reduction and
Scenario through implementationo f sector conservation; and
reforms, priority investments in (b) To promote balanced
wastewater collection-treatment, urbanization and improve the
water supply and solid waste\. quality o f urbanlife\.
To reduce land-based pollution To mobilize financial resources
along the Yantai coast and the for implementing
Bohai Sea through development policy/institutional reforms and
Alternative GEF o f a pilot septic-tank management stress-reducing investmentsto
Scenario systeminYantai and address a priority trans-boundary
dissemination o f the Yantai water issue (land-based pollution
model inShandong Province and o f a shared water body)\.
inother arts o fChina\.
120
Attachment 2: Baseline and GEF Scenario Generated and ResidualPollution
- IScenario:IGEF- I
Item
Remaining BOD5inwastewater during 315 days Tons 20,4 10 15,410
WWTP performancez5inreduction of BOD5 % 90 90
Reduction of BOD5 inWWTPs during 315 davs Tons 18\.400 13\.900
Number ofdays with storm overflows Number 50 50
Percentageof BOD5overflowing YO 75 75
Pollutionreaching the Seas with overflows in50
days Tons 2,430 1,830
Percentage of BOD5 reaching WWTPs YO 25 25
Reduction of BOD5 inseDtic tanks during 50 davs Tons 0 800
Reduction of BOD5 inWWTPs during 50 days Tons 810 610
Total reduction of BOD5during 50 days Tons 810 1,410
Total Annual BOD5 reduction Tons/year 19,210 20,3 10
Residual Dollution in BOD4 reaching the Seas Tonshear 6\.870 5\.170
24By 2010 about 30 percentof Yantai will be served by sanitary (separate) sewers\.
25By 2010 TaoziwanWWTP treatmentwill be upgradedto tertiary technology\.
121
Annex 16: GEFReview by ScientificandTechnicalAdvisory Panel
CHINA: Second ShandongEnvironmentProject
1\. Inaccordancewith GEF guidelines, a Scientific andTechnical Advisory
Panel (STAP) review of the proposedproject has beenperformed by Dr\.Jeffrey Thornton, a
member ofthe STAP Roster ofthe GEF\. The STAP review belowwas received onNovember 21,
2006\.
J\. A\. Thornton
PhD PHCLM
ManagingDirector
InternationalEnvironmentalManagementServices Ltd\.
UnitedStates of America
Introduction
2\. This review respondsto a request from The World Bank (WB) to provide a technical
review of the proposedInternational Waters project element integrated into the Second
ShandongUrbanEnvironment Project\. This project element is proposedto be funded underthe
Strategic Partnerships modality establishedwithinthe GEF PartnershipsinEnvironmental
Management for the Seas of East Asia (PEMSEA) Program\.
3\. InotethatIamadesignatedexpertontheSTAPRosterofExpertswithparticular
experience andknowledge concerning watershed managementand land-oceaninteractions\. I
have served as Government Hydrobiologist with the Zimbabwe Government, Chief Limnologist
with the SouthAfrican NationalInstitute for Water Research, Head of Environmental Planning
for the City of Cape Town (South Africa), and, most recently, as Principal Environmental
Planner with the SoutheasternWisconsin Regional Planning Commission (USA), a position that
IholdconcurrentwithmypositionasManagingDirectorofInternationalEnvironmental
Management Services Ltd, anot-for-profit corporation providingenvironmental education and
planning services to governments worldwide\. Ineach of these positions, Ihave had oversight of
projects andprograms designedto assess contaminant loads to aquatic ecosystems from land-
basedactivities, andto develop appropriate and affordable mitigationmeasuresto reduce such
loads and minimizetheir impacts on the aquatic environment, both freshwater and marine\.
4\. This review is basedupon a thorough review ofthe Project Document (22 pagesplus
Annexes 1through 15, and 17), andthe Partnership InvestmentFundBrief(23 pages) ofthe
GEF-WB International Waters project, entitled: "Partnership Investment Fundfor Pollution
Reduction inthe Large Marine Ecosystems of East Asia," dated September 2005\. Other, relevant
documents served as reference sources, includingthe GEF Operational Strategy,Agenda 21, and
related materials establishing the necessity and priority of land-basedactivities to control marine
pollution as set forth inthe Global Program of Action for the Protection of the Marine
Environment from Land-Based Activities\. This\.review is focused primarily on the proposed
GEF-funded element ofthe muchlarger "Second Shandong Environment Project" set forth inthe
Project Appraisal Document (PAD)\.
122
Scope of the Review
5\. This review addresses, seriatim, the issues identified inthe Terms o f Reference for
Technical Review o f Project Proposals\. As noted above, this review focuses on the GEF-IW
element o f the "Second Shandong Environment Project," into which the GEF project i s fully
integrated\.
Key Issues
6\. Key issue 1\.Scientifzc and technical soundness of theproject\. Overall, the project appears
to be scientifically and technically sound\. The approach proposed, which includes a capacity
development, institutional strengthening, and demonstration project-based program, adequately
addressesthe needs to initiate actions to reduce urban-based contaminant loads to the East Asia
Regional Seas by creating and implementing an ongoing program to inspect, maintain, and
monitor onsite sewage treatment systems (septic tanks) required to be constructed insewered
areas o f China\. (The PAD notes that this requirementi s duplicative, given that onsite sewage
disposal systems are required only within areas served by public water-borne sewerage systems!
Indeed,this requirementmay actually underlie the lack o fmaintenance provided for the onsite
systems, as they may be perceived o f as having little utility inmunicipal water pollution control\.)
7\. Functioning onsite sewage disposal systems can provide a highlevel o f sewage treatment
at a relatively low cost\. Construction of traditional onsite sewage disposal systems i s well
established, and technologies are readily available to support the construction o f efficient sewage
disposal systems\.Nevertheless, ongoing maintenance o f these systems is required to ensure their
continued functioning\. One element o f the use o f onsite systems is the need for inspection,
periodic pumpingand occasional replacement o f these systems over time\. State-of-the-art
recommendations relating to septic system maintenance include annual pumpingo fthe systems
to ensure capacity, inspectiono f system integrity on a three- to four-year basis, andrelocationo f
drain field on an approximately 20-year rotation to ensure consistent treatment o fthe septage\.
Pumped septage should be disposed o f at a wastewater treatment facility capable o freceiving
pumpertruck discharge, or disposed ofby landspreading the septage\. Functioning onsite sewage
disposal facilities can provide up to 90 percent retentiono f common water contaminants, such as
phosphorus, and elimination o f bacterial contaminants\.
8\. Consequently, creating an appropriate regulatory framework, and an understanding o fthe
needfor maintenance o f onsite sewage disposal systems, as well as creating the necessary
infrastructureto service such systems, is fundamental to not only water quality management but
also maintenance o f the public health\. Where onsite sewage disposal systems coexist with onsite
water supply systems (wells or boreholes), adequate onsite sewage disposal system management
i s essential for limiting risks from waterborne diseases spread by contamination o f well water by
waste water\. Development and implementation o f an appropriate management system would
address both o f these issues\.
9\. An initial step inthis process would beto obtain data onthe locations ofthe onsite
systems, and establishment o f a data base documentingthese locations\. The resultant data base
would then support a systematic pumpingand inspection system\. This data base should be linked
123
to the building permit systemto enable regular updating o f the locations and ages o f the various
onsite sewage disposal systems, and maintenance o f inspection records\.
10\. Key issue 2\. Identijkation of global environmental beneJits andor drawbacks of the
project, and consistency with the goals of the GEF\. The proposed project establishes a
framework within which to address one the major causes o f environmental stress withinthe
aquatic environment o fthe Bohai Sea, and, ultimately, o fthe Yellow Sea into which the Bohai
Sea discharges; namely, the discharge o f untreated and under-treated septage from non-
functioning or malfunctioning onsite sewage disposal systems\.
11\. The threat o f ongoing degradation fiom wastewater discharges from urbanenclaves
includes bothwater quality degradation and public health impacts relatedto the spread o f
waterborne diseases\. Waterborne diseases remainthe single greatest cause o f infantmortality,
despite significant improvements inwater supply and sanitation\. Ifunchecked, discharges from
non-functioning or malfunctioning onsite sewage disposal systems will continue to threaten the
globally significant ecosystems o fthe Bohai and Yellow Seas\. These ecosystems, inaddition to
their inherent importance as water bodies, are either directly or indirectly connected to the trans-
boundary waters o fthe East China Sea Large Marine Ecosystem (LME)\.Consequently, true
global benefit i s presumed as a result o f this connection with the Pacific Ocean Kuroshio
Current\.
12\. The project i s consistent with the goals and objectives o f OP contributing to the
global effort to address priority environmental concerns arising from landuse practices and land-
based activities, inthis case focusing on the treatment o f sewage using onsite sewage disposal
systems, and the dissemination o f "best practices" for the management o f pollution from septage\.
13\. Inthisregard,the participationofthe relevantgovernmentalorganizations with
responsibility for wastewater treatment would be an important element inensuringthe
implementation o f the project outcomes\. This participation i s providedthrough the relevant
national, provincial, and local government agencies\. Establishment o f a functional operational
agency, as proposed inthe project document, will contribute to achieving this objective\.
14\. This project is complementary to other GEF initiatives within the East China Sea\. As
noted above, this project i s complementary to, and integrated, with ongoing WB investments in
environmental infrastructure in Shandong Province and contributes to the GEF aim o f
incrementally funding projects that contribute to sustainable economic development ina
replicable manner\. The current proposal and its companion activities would seem to be well-
suited to achieving such an aim\.
26
"demonstrate ways of overcoming barriersto the use ofbest practices for limiting releases of contaminants\.,andto
Operational Program 10 (OP 10) includesas indicative activities, inter alia, global projects which are designedto
involve the private sector inutilizing technological advances for resolving these trans-boundarypriority concerns\."
Priority trans-boundary concerns include "land-based activities\.,contaminantsreleasedfrom ships, persistent toxic
substances such as persistent organic pollutants (POPS), and targeted regional or global projects useful in setting
priorities for possible GEF interventions, meeting the technical needs of projects in this focal area, or distilling
lessons learned from experience\." This Operational Program is intendedto include "projects that help demonstrate
ways of overcoming barriers to the adoption of best practices that limit contamination of the International Waters
environment\."
124
15\. Key issue 3\. Regional context\. While the project is centered on the Bohai Sea, an internal
sea wholly within China, the connection of the Bohai Seato the Yellow Sea and ultimately via
the Kuroshio Current to the Pacific Basinargues that adequate andappropriate consideration has
beengiven to the regional context of the project\. Actions proposedto better integrate the national
regulatory initiatives within aregional program are fully consistentwith the development of a
sustainableregional approachto managingthese waters\. These actions are proposed inthe
project to strengthenthe national regulatory programs andinstitutions\.
Theproposal clearly indicates anintentionto disseminate informationandresults on aregional
basis, bothwithinthe Bohai SeaBasinand elsewhere inthe East Asia Sea region\. Inpart, this
dissemination process will utilize the offices of the Provincial government, and, potentially, lead
to development of legislative requirementsto promote onsite sewage disposal system
management\.
16\. Key issue 4\. Replicability\. The implementation of the Yantai demonstration project is a
key feature ofthis project, and clearly contributes to the potential for replication of beneficial
practices andtechniques\. Further,the inclusion of mechanismsfor disseminating information
and results achievedfosters replication of effective and successful measuresthroughout
ShandongProvince\. Notwithstanding, it is recommendedthat this project seek to ensure the
dissemination of lessons-learnedinthe broadestpossible manner, given that the joint use of
onsite sewage disposal systems inareas servedby public sanitary sewerage systemis widespread
inChina\.
17\. Key issue 5\. Sustainability of theproject\. The PAD indicates that a significant element of
the sustainability of the project rests uponthe implementation of the onsite sewage disposal
systemmaintenance initiatives by the Provincialauthority, and, through their action, by local
governments\. Inaddition, the needfor country-level actionsto replicate the project is indicated,
given the reportedwidespread nature of onsite sewage disposal systems within urbanareas\.
18\. The initial commitment ofthe Provincial authorities to support project activities provides
some assurance that the project results will be continued beyondthe immediate period ofproject
implementation with GEF support\. Further,the project proposesto address a key element of
sustainability through the development and strengtheningof appropriate governmental units and
agencies, includingthe development of necessary financing mechanismsto sustain an ongoing
septic systemmaintenanceprogram\. The development of atrained cadre o f individuals, the
strengtheningof appropriate institutions with the knowledge and ability to implementactions to
protect the LMEenvironment, andthe promulgation ofthe necessary enabling legislation are
includedas elements ofthe proposedproject\. To this end, the project document also sets forth an
array of financial and other mechanisms, bothin-handand proposed, to ensure the sustainability
of the onsite sewage systemmaintenanceprogram elements proposedto be developed during the
project\.
19\. Key issue 6\. TargetedResearch Projects\. Targetedtechnical demonstration and capacity
building projects are key features envisioned withinthe GEF International Waters Contaminant-
based Operational Program\. These activities are clearly includedas major elements ofthis
proposedproject\. There i s provisionwithinthe PAD for developing andreplicating the necessary
infrastructure to implementthe proposed onsite sewage disposal systeminspection and
125
maintenance program\. Implementationo fthese provisions i s strongly recommended\. The
interventions, funded inpart by the GEF, strive for sustainability and the continuation o f
successful interventions beyondthe project period\. For this reason, it i s most important that the
onsite sewage disposal system management measures identified by the project be internalized
withinthe appropriate ministries suchthat they continueto be implementedover the longerterm\.
Likewise, it i s equally important that the demonstration projects continue to be monitored, and
the results reportedusingthe informationdisseminationmechanisms previously identified,
beyond the project period\. Such continuity is totally consistent with the catalytic nature of the
GEF, and anessential element to the sustainability o fthe project\. Capacity buildingand
institutional strengthening, envisioned inthe PAD, thus become the basic buildingblocks upon
which this project will succeed or fail, both from the point o f view o f its sustainability and from
its scientific and technical integrity\.
Secondary Issues
20\. Secondary issue 1\.Linkage to otherfocal areas\. This project is formulated as an
International Waters project under OP 10 o fthe GEF Operational Strategy\. While no specific
cross-cutting areas are identified, the project clearly has linkages to the cross-cutting area of
protection o f aquatic biodiversity interms o f its potential beneficial impact on fisheries\.
21\. Secondary issue 2\. Linkages to other proposals\. The project recognizes the
complementarities between the management o f septage and other WB- and GEF-related
initiatives inthe region; indeed, the integration o f the GEF-financed activities into the Shandong
Environment Project provides specific linkages with the East Asia Sea LMEprojects and with
complementary land-based actions to minimize environmental degradation as a result o f land-
based activities\.
22\. Inaddition, it is recommended that the project make use o fIW: LEARN\.Such anovert
linkage provides a highdegree o f sustainability and connectivity to this project, and contributes
to the likelihood that lessons learned can and will be transferred beyond the project boundaries to
other, similar situations and locations withinthe East Asia Sea region andbeyond\.
23\. Secondary issue 3\. Other beneficial or damaging environmental effects\. The project has
no known or obvious damaging environmental impacts associated with the activities proposedto
be executed\. The beneficial impacts o fthe project have been fully articulated above, and include
the implementation o f targeted interventions that address both chronic land-based sources and
catastrophic ocean-based events that contribute to the degradation o f the Bohai Sea and its
resources\. The provision o f trained staff and institutional capacities needed to enforce and
enhance existing environmental protection regulations, and the dissemination o f successful
management measures further contribute to the benefit o fthe Sea and its drainage basin\. All o f
these benefits accrue not only withinthe project area, but, as a result o f their wider dissemination
usingthe electronic and other mediaprovided, also to the wider Yellow Sea basinand beyond\.
24\. Secondary issue 4\. Degree of involvement of stakeholders in theproject\. The involvement
o f stakeholders is limitedto governmental agencies\. Involvement o f the wider public i s catered
for through the implementation o fthe onsite sewage disposal system management program\. The
126
PAD alludes to the participation o fthe relevant regulatory agencies and ministries inthe
execution and implementation o f the project activities, andthe project explicitly indicates
support for capacity building and institutional strengthening with respect to these organizations\.
Such involvement i s critical to the sustainability o f the project and its expansion into areas not
specifically involved inthe demonstration projects\.
25\. Secondary issue 5\. Capacity building aspects\. Capacity buildingis a critical element o f
the proposed project\. Creation and strengthening o f appropriate institutions, conduct o f the
demonstrationproject, and the training o f agency staff form the core o f the GEF-financed
elements o f the Shandong Environment Project\. Annex 4, Table A, also notes that dissemination
o f lessons learned with respect to onsite sewage disposal system management practices within
the wider East Asia Seaareais anessential element o fthe GEF-financedproject activities\. These
elements should be implemented inconjunction with the best practices data base beingcompiled
by the UnitedNations Environment Program (UNEP) andthe IW: LEARNinitiatives being
executed by the UnitedNations Development Program (UNDP)\. These efforts will enable wider
dissemination o f knowledge o fpractices that have positive effects\. Such knowledge i s an
essential element inbuilding capacity and strengthening institutions inthe region\.
26\. Secondary issue 6\. Innovativeness\. Development o f appropriate management practices
for the management o f onsite sewage disposal systems i s a critical element for the protection of
the marine environment, within the context o f an integrated land- and water-based management
program\. By creating and strengthening the appropriate human resources, institutions, data
acquisition and dissemination systems, and shared management mechanisms, the proposed
management program will complement other point source pollution abatement measures being
implementedby the basingovernments and stakeholders\. The proposed actions and approaches
reflect state-of-the-art practice; their application inthe Bohai Sea Basin will significantly
advance current practice inthat specific Basin as well as withinthe region as a whole\. Inthis
manner, the project promotes innovation and development o f regionally applicable remedial
practices and experiences\.
GeneralConclusionandRecommendations
27\. Overall, it i s the conclusion o fthis reviewer that the proposed project is wholly consistent
with the GEF InternationalWaters operational program, its broader philosophy, and funding
criteria\. Consequently, this project i s recommendedfor funding\.
127
Responseby the Task Teamto the STAPExpert'sComments
28\. Dr\. Thornton's support ofthe proposedproject is very welcome\. His agreementwiththe
project's integrated approachand apilot starting with Yantai i s encouraging\.
29\. The task team would like to respondto the following comments by Dr\.Thornton inthe
order of the sections where the comments were made\. The original comments are provided in
italics and are followed by the task team response\.
1\. "An initial step in thisprocess would be to obtain data on the locations of the onsite
systems)and establishment of a data base documenting these locations\. Theresultant
data base would then support a systematicpumping and inspection system\. This data
base should be linked to the buildingpermit system to enable regular updating of the
locations and ages of the various onsite sewage disposalr systems, and maintenance of
inspection records\. ')(Key issue 1)
The team fully agrees that data collection on the locations of the onsite systems and
setting up of a database for these locations would be neededto ensure that an appropriate
managementsystemi s developedand implemented\.One of the proposed GEF financed
activities is the establishmentof such a database -a Management Information System\.
2\. "Notwithstanding, it is recommended that thisproject seek to ensure the dissemination
of lessons-learned in the broadestpossible manner, given that thejoint use of onsite
sewage disposal systems in areas served by public sanitary sewerage system is
widespread in China\. (Key issue 4)
))
The central government of China fully endorses the Yantai pilot\. During the
implementation of the project, ShandongProvince would report the lessons and
experiencesfrom the Yantai pilot to central government agencies includingMoF, NDRC
andthe Ministry of Construction to promote further dissemination activities inother
provinces of China\.
3\. "In addition) it is recommendedthat theproject make use of IW: LEARN\. )'(Secondary
issue 2)
The team fully agrees that IW: LEARNwill be usedto strengthen the linkage of the
proposedproject to others for sustainability\. The use of IW: LEARNi s incorporated in
Annex 4\.
4\. "Annex 4, TableA, also notes that dissemination of lessons learned with respect to
onsite sewage disposal system managementpractices within the wider East Asia Sea area
is an essential element of the GEF-Jinancedproject activities\. Theseelementsshould be
implemented in conjunction with the bestpractices data base being compiled by the
United Nations Environment Program (UNEPj and the IW: LEARN initiatives being
executedby the UnitedNations Development Program (UNDP)\. (Secondary issue 5)
I)
128
The team understands that capacity buildingand dissemination should be carefully
designedandconducted to achieve the project objective\. Inthis regard,the team believes
that the UNEP best practices data base and the UNDP IW: LEARNas recommended will
helpensure the applicationofbestpractices inseptic tank management from other
countries to the proposedproject\. The use o f bothtools i s suggested inthe PAD\. The
team has also required Yantai to use bothtools when they prepare the monitory and
disseminationplan\.
30\. Again, the task team expresses its appreciationto Dr\. Thornton for his comments and his
depthofunderstanding ofthe development objective andimpact ofthe proposedproject\.
129
Annex 17: StrategicPartnershipInvestmentFund
CHINA: Second ShandongEnvironmentProject
1\. In1995, 12EastAsiancountriescameto ether with acommonvisionto ensure the
sustainable development of their sharedwaters?'This partnership of governments, with the
support of GEF, UNDP, and IMO, createdthe Partnerships in EnvironmentalManagementfor
the Seas of East Asia (PEMSEA)\. One of the main achievements of the countries through their
contribution to PEMSEA has beenthe development andadoption ofthe Sustainable
Development Strategy for the Seas of East Asia (SDS-SEA),which was endorsedby each of the
12 countries inDecember 2003\. The SDS-SEA is significant as it i s the first, and the broadest,
partnershipagreementinthe region to address the managementofthe regional seas\. One ofthe
highest priorities for action inthe SDS-SEA is the reduction of land-basedpollutionthat has an
impact on the marineenvironment\.
2\. The countries ofEast Asia haverecognized that a coordinated and innovative approach
with a strong focus on scaling up investment is urgently neededto implementthe SDS-SEA\.
GEF's new operational modality--the Strategic Partnership--has provided East Asia with an
opportunity to undertakethe necessaryactions with coordinated support from GEF andthe
World Bank\. The WB/GEFStrategicPartnership InvestmentFundfor Pollution Reduction in the
Large Marine Ecosystems of EastAsia (Fund), an US$SO million grant financing facility
managedby the World Bank, was approved by GEF inNovember 2005\. The Fund forms the key
financing arm of the Strategic Partnership\.
3\. The objective ofthe Fundis to scaleup investmentsincoastal land-basedpollution
reduction inEast Asia through co-financing o fprojects that remove technical, institutional, and
financial barriers which currently limit efficient investment inpollutionreduction\. The US$SO
million grant financing provided by GEF is expectedto leverage betweenUS$SOO million and
US$1\.5 billion incounterpart financing from the World Bank and other sources, includingthe
public andprivate sectors\. The Fundhas adoptedacoordinated approachto monitoring suchthat
the contribution of all projectsto the overall objectives ofthe Fundcanbe measured\. Tables 1
and 2 below show the overall Fundindicators and the expected contribution ofthe project\.
Projectsunder the Fund
4\. The GEF-Ninrzbo Water and Environment Project (GEF-NWEP) was the first project to
be financed bythe Fund\.This project provided a significant environmental enhancementto the
IBRD-financedNWEP, which was approved by the World Bank inMarch 2005\. UnderNWEP,
Cixi City, located on the coast of the Hangzhou Bay andthe East China Sea, will construct two
WWTPs with a total treatment capacity of 150,000 m3/day\.The GEF-NWEP would enhance
Cixi's wastewater treatment strategy and coastal managementthrough the provisionof a
constructedwetland to provide tertiary treatment at the largest of the two WWTPs\. This pilot
was expectedto prove the technical and economic viability and increasedenvironmental benefits
of wetlandtreatment comparedwith the chemical tertiary treatment process more conventionally
''The ~ ~~~
original 12 countries included BruneiDarussalam, Cambodia, China, Indonesia, Japan, DPR Korea, RO Korea, Malaysia,
Philippines, Singapore, Thailand and Vietnam\. Two additional countriesjoined in2005 (Lao PDRand Timor-Leste) making a
current total of 14\.
130
usedinChina\. Inaddition, the project would support innovations incoastal managementin
China through the conservation of anatural coastal wetlandfor non-point source pollution
control, establishmentof a wetland education center, andpolicy reformto support coastal
wetlandconservation andmanagement\.
5\. The GEF-SecondShandonnEnvironmental Proiect (SDEP2) is the secondproject to be
financed under the Fund\. GEF co-financing would take place within the Yantai wastewater
component of SDEP2\. GEF support would initiate andfacilitate implementation ofthe proposed
major institutional and technological task to demonstrateto Chinese municipalities the rationale
ofproper managementof wastewater facilities\. The key objectives are to: (a) demonstrate inthe
pilot-size septic-tank project the feasibility of institutional andtechnical arrangementsensuring
improvement of local environment status, and (b) disseminateinShandongProvince, among
BohaiDeclaration signatories, andbeyond the feasibility of positive impact on reduction of
pollutionload annually discharged inthe Bohai and Yellow Seas\.
131
3 Y
3 z
0 N
N 0"
0
W
+
a 0
0
0
N 8
2
Table 2\. GEF-Second Shandong Envir
Target Indicators Explanation
Outcome Indicators 2010
Increasedinvestment in pollution reduction 215\.3 Estimatedinvestmentfrom IBRD andGEF
(US$million) (23\.8+ 191\.5) financing
Cumulativetons
(2007- Pollution Reductionby onejoint sewage-septage
Reductionindischargeof BOD to seas ofEast 15) treatmentplantupgradedunder the projectand
Asia (tons) IBRD: 42,000
GEF: 10,000 disseminationwithin ShandongProvince
IBRD +GEF:
52,000
ResultIndicators I
Removalof barriersto oollution reduction:
Number of cost-effectivetechnologies/
techniquesdemonstratedinspecific country 1 Septagemanagement:collection andtreatment
contexts
Number of institutionaland/or regulatory New institutional arrangementbetweensewage
reformsapprovedand implemented 1 company, property owners and drainage
department
Numberof countriesthat have established a
revolving fund Not applicableto this project\.
Minimumamount of capital investedin
revolving funds (US$ million) Not applicable to this project\.
Disseminationofdemonstratedtechnologies, techniquesandmechanisms:
Products:Numberof publications 1 Septagemanagementcompanyto be set up will
write handbook
Products:Numberof projectwebsites 1 Establishprojectwebsite
Disseminationof the output primarily to Bohai
Events: Numberof countryworkshops 6 Declarationsignatoriesthroughworkshops,
seminars, study tours and study visits, training,
publishingof pamphletsetc\.
Events: Numberof regional
conferences/workshopsparticipatedin TBD Participatein internationalworkshops
Number of Strategic PartnershipCouncil
meetingsparticipatedin by World Bank I Fundlevel indicator, not applicableto individual
-\.-:--*-
staff(events/year) pNJJGGlb\.
Numberof World Bank CAS which include I Fundlevel indicator, not applicableto individual
Fund IIprojects\.
133
MAP SECTION
IBRD 34859
This map was produced by the Map Design Unit of The World Bank\.
The boundaries, colors, denominations and any other information shown
on this map do not imply, on the part of The World Bank Group, any
judgment on the legal status of any territory, or any endorsement or Yunhe B o H a i
acceptance of such boundaries\. Da
Changdao
Zhangwei Xinhe Hekou
Penglai
Qingyun
H E B E I Yantai Waste
Leling
Ningjin Wudi Zhanhua Water Treatment Weihai Waste
Water Treatment
Yangxin Longkou
Majia
Kenli Fushan Yantai Weihai
Huimin Lijin
Dezhou Qixia Waste
Laishan
Binzhou Dongying Water Collection
Linxian He L a i z h o u Wa n He Muping
Shanghe Zhaoyuan Qixia
Wucheng (Yellow) Huantai Waste Rongcheng
Linyi Gaoqing Water Treatment Daguija
and Water Supply Laizhou Wendeng
Pingyuan Huang Boxing
Guangrao
Xiaoxing He He Laiyang
Xiajin Yucheng Jiyang
Huantai Weifang Waste ei Rushan
W
Linqing Zouping Water Collection
Gaotang Changyi
Shoguang Laixi
Linzi Pingdu Haiyang
Qihe Zhoucun
Zhangqiu Zibo Hanting
Licheng Weifang
Chiping Qingzhou
JINAN Zichuan Changle
Changqing Jiolai
Fangzi He H u a n g H a i
Guan Xian Boshan Linqu
Liaocheng S H A N D O N G Jimo
Anqiu Gaomi
Dong'e
Shen He
Xian Pingyin Wen Chengyang
Jiaozhou
Yiyuan Gaomi Waste
Water Treatment
Yanggu Feicheng Tai'an Laiwu Laoshan
Gangcheng Yi and Water Supply
He Qingdao
H E N A N Dongping Dawen Zhucheng Huangdao
He Xintai Jiaonan
Liangshan C H I N A
Ningyang Yishui
Wenshan Mengyin Wulian SECOND SHANDONG
He Da Sishui
Juancheng
Yuncheng Yunhe ENVIRONMENT PROJECT
Yanzhou Yinan Juxian Rizhao
(Yellow) Pingyi Solid Waste
Heze Jiaxiang
Huang Solid Waste
Dongming Juye Jinning Zoucheng Rizhao Rizhao PROPOSED PROJECT SITES
Solid Waste
Heze Beng
Fei Xian He
Wanfu He
Junan EXPRESSWAYS
Dingtao Jinxiang Nanyang Tengzhou Shanting Hedong EXPRESSWAYS UNDER CONSTRUCTION
Hu
Yutai Zaozhuang Waste Linyi HIGHWAYS
Chengwu Water Collection Louzhuang Linshui RAILROADS
Cao Xian Zaozhuang SELECTED CITIES
Weishan
Shan Xian Xuecheng Cangshan PROVINCE CAPITAL
Yicheng RIVERS
Taier Tancheng COUNTY BOUNDARIES
Weishan Zhuang
Hu PROVINCE BOUNDARIES
H E N A N
A N H U I J I A N G S U 0 20 40 60 80
KILOMETERS
JANUARY 2007
80°E 90°E 100°E 110°E 120°E To Chita 130°E
Heilong
RUSSIAN FEDERATION
RUSSIAN FEDERATION Heilong Jiang
Jiang
To
Chita
KAZAKHSTANKAZAKHSTAN
CHINA H E I L O N G J I A N G
QiqiharQiqihar
Harbin
Harbin
MONGOLIA
40°N To Changchun
Changchun
Urumqi
Urumqi Ulaanbaatar
J I L I N
TAJIKISTAN Shenyang
Shenyang
KashiKashi LIAONINGLIAONING DEM\. 40°N
L AnshanAnshan PEOPLE'S
N G O Sea of
X I N J I A N G M O Hohhot
Hohhot REP\. OF
AFGHANISTANAFGHANISTAN N EI Baotou
Baotou BEIJINGBEIJING Japan
Huang He BEIJINGBEIJING KOREA
Bo
Tianjin
anjin Dalian
Dalian
To
To Hai
MardanMardan H E B E I TIANJINTIANJIN
Yinchuan
nchuan Shijiazhuang
Shijiazhuang
Taiyuan
aiyuan REP\. OF
KOREA
This map was produced by Jinan
Jinan
the Map Design Unit of The Xining
Xining SHANXISHANXI QingdaoQingdao
PAKISTAN
AKISTANWorld Bank\. The boundaries, Lanzhou
Lanzhou Yellow
SHANDONGSHANDONG
colors, denominations and Sea
any other information shown Q I N G H A I NINGXIA
Zhengzhou
Zhengzhou JAPAN
30°N on this map do not imply, on LuoyangLuoyang
the part of The World Bank X I Z A N G G A N S U Xi'an
Xi'an JIANGSUJIANGSU
Group, any judgment on the Tongtian Huang
legal status of any territory, He S H A A N X I H E N A N
or any endorsement or
a c c e p t a n c e o f s u c h Nanjing
Nanjing
boundaries\. Hefei
Hefei Shanghai
Shanghai 30°N
NuNu ANHUIANHUI SHANGHAISHANGHAI
0 300 Kilometers Hangzhou
Hangzhou East
Lhasa
Lhasa
INDIAINDIA Lancang JinshaJinsha S I C H U A N Jiang
H U B E I
Chengdu
Chengdu Wu an
Wuh
China
0 100 200 300 Miles NEPAL ZHEJIANGZHEJIANG
Sea
80°E ChongqingChongqing
CHONGQINGCHONGQINGChang Nanchang
Nanchang
To
CHINA Nepalganj Changsha
Changsha
To
ToBHUTAN HUNANHUNAN
SECOND SHANDONG Munger
Munger JIANGXIJIANGXI
GUIZHOUGUIZHOU F U J I A N
Guiyang
Guiyang Fuzhou
Fuzhou
ENVIRONMENT PROJECT
Kunming
Kunming
PROJECT AREA BANGLADESHBANGLADESH TAIWATAIWAN
TAIWAN
SELECTED CITIES AND TOWNS Y U N N A N G U A N G X I GUANGDONGGUANGDONG
PROVINCE CAPITALS XunXun Guangzhou
Guangzhou
To
NATIONAL CAPITAL Mandalay RA Nanning
Nanning HONG KONG
HONG KONG
20°N
RIVERS 20°N MYANMARMYANMAR VIETNAMVIETNAM MACAOMACAO
JANUAR MAIN ROADS MNAANMARY
MYM LAOLAO
Haikou IBRD
RAILROADS PEOPLE'S
PEOPLE'S
DEM\.DEM\. HAINANHAINAN 35288
Y PROVINCE BOUNDARIES THAILAND To PHILIPPINES
2007 REP
REP\. Da Nang
INTERNATIONAL BOUNDARIES
90°E 100°E 110°E 120°E | APPROVAL |
P040110 | Report No\. PIC4844
Project Name Bolivia-Public Financial Decentralization\.
and Accountability Project
Region Latin America and Caribbean
Sector Public Sector Management
Project ID BOPE40110
Borrower Ministry of Finance - Bolivia
Beneficiaries Decentralized and centralized public sector
agencies/institutions in Bolivia
Financing Plan
IDA: $13\.3 mn\. GOB: $4\.0 in\.
o/w: foreign costs: $7\.0 mn\.
Local costs: $6\.3 mn\. $4\.0 in\.
Implementing Agency: 1\. Comptroller General's Office
Mr\. Marcelo Zalles, Contralor General
Contraloria General de la RepEblica
Edificio Contraloria - Piso 5
Esquina Calles Indaburo y ColAn
La Paz, Bolivia
Phone: 591 2 378-861 Fax: 591 2 392-187
2\. Ministry of Finance
Secretaria de Hacienda
Mr\. Gonzalo Afcha, Secretary of Finance
Calle Bolivar No\. 658, esq\. Indaburo
Ministerio de Hacienda
Phone: 591 2 379-240 Fax: 591 2 376-903
Projected Board Date: July 10, 1997
1\. Country and Sector Background\. Following the hyper-
inflationary period of the early 1980s and subsequent stabilization
policies, Bolivia underwent a period of moderate growth during the 1990s
followed by recent reform efforts to promote the private sector,
regulatory reform, and modify the role of the state\. The primary
reforms in this regard, surround the current capitalization program
which is envisioned to transfer public enterprises to private ownership,
while increasing the overall stock of savings in the country through the
reformed pension system being developed\. While recent fragility
reflected in a lack of adequate capital in some financial institutions
in the banking system was experienced in 1995, prompt corrective actions
have been taken to avoid any major spillover effects into the financial
sector\.
2\. During the early reform years in the late 1980s, a major step
in modernizing the role of the state, was the passage of the Law of
Financial Administration and Control Systems (SAFCO) which provided a
mandate for a normative framework for the management of public finances\.
The SAFCO Law was implemented with support from an IDA project
cofinanced with USAID and IDB, followed by a Public Financial Management
project funded by IDA, under which the normative regulations and
integrated financial management systems were developed at the central
government level\. The central theme of the SAFCO law was to achieve
enhanced accountability and institutionalization of modernized financial
management and control processes to improve economic management by the
various public entities\. The first project mainly set up the normative
framework for these new systems and strengthened the tax administration
function\. The second project began implementation of the computerized
integrated financial information systems in the central government\. The
Comptroller General's Office had the task of auditing the financial
management performance of such entities, in line with the enacted SAFCO
Law\. Under the second Public Financial Management Operation, the
Comptroller General established itself as one of the most rigorous and
competent supreme audit institutions in the region, and played a
valuable role in ensuring the effective audit of public agencies and the
quality reviews of audits performed by private firms for public sector
entities\. At the same time, the Ministry of Finance began
implementation of an integrated financial management and information
system (IFMS) across the centralized entities in the public sector\.
This IFMS system now covers the functions and procedural norms for
implementing and monitoring budgeting, accounting, treasury, cash
management, revenue collection, and debt transactions, but does not yet
cover all ministries\.
3\. The current environment of privatization, including the
transfer of public enterprises to competitive-driven private sector
ownership and to the public at large, coupled with the decentralization
of financial management and the transfer of government funds under the
Public Participation Law presents the government with new institutional
challenges\. This highlights the importance of a sound and enforceable
system of financial and operational accountability in the public sector
and assurances of adequate private sector audit systems, which will be
of greater necessity in the future\. In order to continue strengthening
the public sector's effective use of financial resources and track
public entities' performance results, a strong normative and oversight
function will be required to monitor the level of administrative and
financial management, the prudential use of public funds, and the
accountability by implementing institutions, as part of a modernized
state role\. The proposed Public Financial Decentralization &
Accountability Project seeks to ensure that the progress achieved in
implementing the reforms and IFMS under the SAFCO Law as well as the
quality of the public auditing function achieved to date, is sustained
as an integral financial management and control function which will
promote cost-effective delivery of public services\.
4\. Project Objectives\. The objective of the project is to (a)
implement uniform, professional accounting and auditing standards across
the public sector (including the recently decentralized municipalities
and regional governments) to conform to generally accepted International
Accounting and Auditing Standards adapted to the realities and needs of
Bolivia, and (b) implement integrated financial management systems under
the decentralized 'Prefecture' institutions and municipalities, which
will link into the national budget via the currently operating central
IFMS network\. The audit components will include implementation of
monitoring and corrective measures to be enforced by the Comptroller
General's Office in order to meet SAFCO Law objectives in the management
- 2 -
of public finances and execution of public investments\. In comparison
with prior projects financed by IDA in this area, this project
emphasizes the key financial oversight role of the Comptroller General's
Office (exclusively in an independent audit capacity) to instill proper
financial management practices in public agencies, and disseminate best-
practice implementation and auditing capabilities in both the public and
private sector\.
5\. In the Audit/Comptroller's area, expected results by the end
of the project, would be to have in place: (i) a fully trained, staffed
and equipped Comptroller General with the capacity to audit on a regular
basis, the finances and operations of all public entities in the
centralized public sector, (ii) a network of decentralized audit offices
in the decentralized sectors, which would liaise with the national
Comptroller's General's Office to enforce audit and accountability
norms, while conducting its own decentralized audit operations of public
sector entities, (iii) an audit quality evaluation system through which
the Comptroller General would assess the audit quality of private sector
audit firms conducting audits of public enterprises, in order to ensure
acceptable standards in the audit profession, including training as
needed for their staff, (iv) the strengthening (with the assistance of
the Comptroller General's Office) of internal audit operations within
public agencies at the centralized level and decentralized
municipalities and regional governments, (v) a program to develop anti-
corruption/forensic auditing techniques and their implementation, and
(vi) a national audit and accounting training program to increase
competent public and private sector professionals in those fields\.
6\. The financial management systems component under the Ministry
of Finance's purview, would ensure the (i) adaptation of the central
IFMS to the Prefectures and Municipalities, including design elements to
adapt to regional accounting and reporting needs, (ii) the establishment
of a nationwide network to enable regional administrations to report
financial information for budget consolidation at the national level,
(iii) management of the new regional investment funds with adequate
financial controls and investment monitoring tools, and (iv) adequate
cash transfer mechanisms with appropriate controls to assure efficient
execution of publicly funded programs\.
7\. Project Description\. Total project costs financed by IDA
would amount to $13\.3 million\. In the Comptroller General's/Public
Audit area, the project has 4 major components totaling $7\.3 million,
covering a number of subcomponents designed to meet the above-mentioned
objectives\. These will be utilized to strengthen the Comptroller
General's office to carry out its financial, operational, & oversight
audit functions, and to maintain an adequately trained professional
capacity for this purpose\. Funding will also be utilized to provide
technical assistance to regional sub-Comptrollers so as to implement
auditing provisions required under the Decentralization Law, as well as
to set up internal audit units in the public sector at large\. An anti-
corruption/forensic auditing capacity building program will be initiated
along with the promotion of public sector ethics and transparency in the
dissemination of public financial records\. Finally, for the
Comptroller's component of the Credit will be also utilized to
strengthen nationwide training programs in financial management,
-3 -
accounting and auditing in the public sector, as well as to set up a
sustainable professional program in the areas of Public Financial
Management and Government Auditing/Accountancy and to build-up private
sector capacity\. The project would contain specific sub-components
which would be designed to meet the above-mentioned objectives\. These
would consist of a combination of institution building activities,
training, and technical assistance to transfer best practice techniques
and begin implementation throughout the public sector, coordinated by
the Comptroller General's Office, as described below\.
8\. Within the Comptroller General's component, the sub-components
to be carried out via training and technical assistance, would include:
(i) strengthening procedures to evaluate audit operations of private
sector auditing firms in Bolivia, (ii) setting up audit procedures and
conducting of audits of the public sector's procurement and purchasing
systems, (iii) setting up institutional capability to conduct long term
audits to evaluate the functionality, internal controls, and linkages
with the SAFCO Law corresponding to the public financial systems of
budgeting, treasury, cash management, and accounting, as administered by
the Ministry of Finance, (iv) developing the capability for conducting
audits of information technology systems linked to public financial
management, in order to execute the above-mentioned functions and to
conduct such information system audits, (v) developing and carrying out
performance audits for environmental operations, (vi) development and
training in techniques of forensic auditing (i\.e\.: for detecting misuse
of funds), and (vii) development and training in auditing techniques for
evaluating performance of operational (vs\. financial) activities\. Also
under the Comptroller General's component , activities would include:
evaluating and auditing the systems utilized for the budgetary
distribution of public resources to regional governments and
municipalities, and the use of such resources as mandated under the
Decentralization and Popular Participation Laws, performing operational
audits on the execution of priority public investment programs, and
developing a technical assistance program so that the Comptroller
General may institute audit functions within the regional governments
and municipalities in the decentralized sector, including the
development of internal auditors\. Other project activities for the CG
would cover training and institutional support in order to augment the
technical/professional level in financial management, accounting and
auditing in the public and private sectors, strengthening and
implementing the internal audit capacity of public agencies and
entities, and ensuring sustainability in a national professional program
in Financial Management and Auditing\.
9\. For the Ministry of Finance area, the project the components
would total $6\.0 million\. It is estimated that for this, project funds
would be deployed for providing institutional support from the Ministry
to the regional administrations to implement institutional IFMS systems
tailored to specific decentralized public agencies and operations\.
Project funds would be utilized for ensuring integration of new
financial management systems across the public sector by setting up
telecommunications links and security procedures to transmit aggregate
financial data from decentralized and centralized systems to the
Ministry's national reporting system\. Funds would also be utilized to
adapt both regional and central IFMS systems to ensure that
- 4 -
decentralized financial management is adequately supported by budget
transaction and payment mechanisms which optimize the timely delivery of
budget resources and promote accountability at the operational level\.
These above components would be implemented via technical consultant
resources, information technology, and management/coordination support
which would finance the respective sub-components as delineated below\.
10\. Within the Ministry of Finance's components, the project sub-
components would include: (i) providing technical assistance support to
the regional government prefectures, to set up and implement IFMS
systems for their regional operations including investment management,
and (ii) providing institutional support to the municipal governments to
implement adequate municipal IFMS systems (budgetary, treasury
management, reporting, and accounting)\. Under these components, tasks
would include integrating the decentralized IFMS systems into a national
network for national financial reporting (covering accounting &
budgeting), via telecommunications links to obtain aggregated financial
data from decentralized agencies and regional administrations, and
adapting the centralized sector financial management systems to allow
for real-time on-line financial data transfer capabilities for national
financial reporting purposes\. For the Ministry of Finance's work, the
project would include setting up fund transfer links and appropriate
security controls with the commercial banking sector, as a mechanism for
transferring budget resources from the central government to
decentralized entities, developing IFMS capabilities in the centralized
and decentralized sectors so that budget expenditure transactions can be
entered directly by public sector executing agencies via electronic
voucher procedures, thus allowing more real-time budget availability and
expenditure reporting at the national level, implementing appropriate
financial mechanisms to ensure that the decentralized financial
management systems cover the public investment, budgeting, and
investment fund procedures implied by the Popular Participation and
Decentralization Laws, and implementing comprehensive project accounting
systems for projects under externally funded programs financed by
multilateral/bilateral institutions, for all public sector agencies
involved in executing these (e\.g\.: for proper financial management and
accounting for IDA projects to meet audit requirements)\.
11\. Project Financing\. The Credit would finance US$ 13\.3 million
equivalent over a period of 4 years out of total project costs of US
$20\.0 million\. Project costs to be financed would include 100% of
foreign exchange expenditures, 100% of after tax local expenditures, and
would cover technical assistance consulting services, training, computer
equipment, and specified operating costs\. Counterpart government
funding of US$ 4\.0 million would finance remaining costs covering local
expenditures\.
-5-
Procurement would follow standard IDA review procedures
including allowable prior review thresholds for goods and consultants, as
per IDA operating guidelines\. The project would be expected to be
completed by end-2001, and the closing date would be June 30, 2002\.
12\. Project Implementation\. The Ministry of Finance would be the
borrower of the IDA Credit, and the two implementing agencies for the
project as mentioned above, would be the Comptroller General and the
Ministry of Finance\. The two agencies would be responsible for all
elements of project execution, and it is expected that as part of
project monitoring conditions, each agency would require to maintain
sub-component records of expenditures, with respect to technical
assistance including that provided to regional sub-comptrollers,
prefecture offices and municipalities, in order to implement auditing
and financial management systems and procedures within the decentralized
framework\. Performance would be measured against indicators reflecting
the accomplishments of the various institution-building goals as
delineated under the project description section above, the execution of
public sector audits in key priority areas covering both financial and
operational audits, and the verifiable implementation of IFMS systems in
the regional administrations, with fund transfer and expenditure
reporting links to the central financial management system\.
13\. Project Sustainability\. The project seeks to encourage the
institutionalization of rigorous public sector auditing and accounting
methods through an intensive institution-building effort in the
Comptroller General's office which has already reached some of the
highest quality standards in the region, and through the training of
local Comptroller's staff in state-of-the art auditing and financial
control techniques\. It also seeks to ensure that the decentralized
regional administrations under the new public sector framework have
adequate modernized financial management systems which are integrated
functionally (i\.e\.: budget, cash management, and accounting) as well as
across the overall public sector for national financial reporting
purposes\. Building on the successful effort by the Comptroller General
by deploying foreign experts to train, tutor, and mentor national audit
professionals, the project would seek to assure sustainability by
requiring that local budget resources be available to sustain the
funding of local staff once these were trained with the help of external
expertise\. The Comptroller General is committed to this strategy to
avoid often used financing of line positions in the public sector, and
instead has given full priority for the use of such project resources to
significantly strengthen institutional capacity of the Comptroller
General's Office and related public sector functions under an in-depth,
short term transitional program\. This would also be consistent with one
of the objectives being pursued under the Civil Service Reform project,
in terms of the optimal use of external resources for financing
technical advisory or training experts under project consultancies\. The
Ministry of Finance's successful completion of IFMS systems in the
centralized sector would provide the decentralized regional
administrations with a reliable source of internal technical assistance
to set up, test, and integrate financial management information systems
throughout the public sector\.
14\. Rationale for IDA Involvement\. A major role has been played
- 6 -
by IDA in helping initiate the financial management public sector
modernization process in Bolivia\. Under the first IDA financed project,
a key milestone was achieved with the passage of the comprehensive SAFCO
Law which set the operational and policy framework for modernizing
public financial management and auditing processes\. IDA financed the
greatest part of the second project which started actual implementation
in the centralized sector of computerized IFMS systems which began
providing more transparency and organization to Bolivia's public
finances and their reporting\. A new challenge is now presented under
Bolivia's recently approved decentralized public structure, which will
require similar financial management and auditing systems to be in place
in the regional governments to ensure a smooth transition in this reform
process\. Given IDA's prior involvement in the design and oversight of
these activities, it has a comparative advantage in ensuring that this
new program maintains continuity and technical internal consistency with
the work already undertaken at the centralized sector level\. While some
setbacks occurred in the IFMS implementation stage at the central level,
these are being corrected following a restructuring of the project
unit's organization and technical staff\. However, the investment made
in these activities so far, is relatively minor when compared to the
cost of IFMS systems implemented in individual institutions or companies
in the U\.S\. and Europe\. If the most recent project successfully meets
its major targets, the investment expended for systems implemented
throughout the central government, will have been extremely cost-
effective in relation to private industry standards\.
15\. Environmental Aspects\. The project will not present any
environmental risks, and will support the development and execution of
ex-post audits for environment-related operations in the public sector\.
16\. Program Objective Categories\. The program objective category
for this project is Economic Management\.
17\. Project Benefits\. The project would provide timely input and
technical assistance during the Government's transition process to a
decentralized/regional government structure\. Given the dearth of
financial management capabilities in the decentralized, municipal, and
rural sectors, the project's institution-building work would assist in
implementing modernized technology supported systems along with the
requisite financial management and control methodologies, to ensure
transparent reporting and organization of public expenditure priorities
and their execution\. The strengthening of the independent auditing
functions in the Comptroller General's office, would instill in this
process, an assurance of accountability which would be systematically
and periodically monitored via the central level and decentralized
public audit offices\. While at a first level, the beneficiaries of the
project would be all public sector entities and institutions, at a
larger level, the main beneficiaries would be the Bolivian population,
and especially the taxpayers, given that the use of public funds would
be managed using more robust financial planning, management, and
execution systems at most levels of government\. The simultaneous
strengthening of the national audit function would provide
sustainability to these efforts and install a permanent mechanism for
internal monitoring once the project ended\.
- 7-
Contact Point: Public Information Center
The World Bank
1818 H Street N\.W\.
Washington D\.C\. 20433
Telephone No\.: (202)458-5454
Fax No\.: (202)522-1500
Note: This is information on an evolving project\. Certain components
may not necessarily be included in the final project\.
Processed by the Public Information Center week ending March 21, 1997
- 8 - | APPROVAL |
P101356 | Page 1
1
PROJECT INFORMATION DOCUMENT (PID)
APPRAISAL STAGE
Report No\.: AB784
Project Name
Additional Financing for Colombia Integrated Mass Transit Systems
Region
LATIN AMERICA AND CARIBBEAN
Sectors
General transportation sector (90%); Central government administration
(5%); Sub-national government administration (5%)
Project ID
P101356
Borrower(s)
REPUBLIC OF COLOMBIA
Implementing Agency
Ministry of Finance
Environment Category
[
]
A
[X] B [ ] C [ ] FI [ ] TBD
Safeguard Classification
[
]
S
1
[X] S
2
[
]
S
3
[
]
S
F
[
]
TBD
Date PID Prepared
April 13, 2007
Date of Appraisal
Authorization
April 16, 2007
Date of Board Approval
June 12, 2007
1\.
Country and Sector Background
Like most of Latin American countries in the last decades, Colombia has experienced a high population
increase in urban centers due to several economic and social factors\. In addition, Colombia has also
experienced several decades of armed conflict that has displaced approximately 2\.5 million people from
rural to urban areas, of which 50% have been located in the four largest cities\. As a result today 75% of
the total population of Colombia lives in cities\. This concentration process has moved poverty issues
away from rural areas into the cities, as it is now estimated that two thirds of the Colombian population
living below the poverty line is located in urban areas\. World Bank:
(Colombia Poverty Report
\.
2002)\.
Colombias largest urban agglomeration is the city of Bogotá with an estimated population of 6\.5 million,
followed by Medellín and its metropolitan area close to 3 million, and Cali and Barranquilla, each having
close to 2 million\. Pereira, Bucaramanga and Cartagena follow with populations ranging between 700
thousand and 1 million inhabitants\. Given the demographic trend and the fact that the cities have been
consolidating as pillars of productivity and economic growth as well as concentration poles of poverty
related issues, the government has come to consider urban policies as a relevant component of the
national development strategy\.
A
large proportion of the urban poor do not have access to reliable and affordable transportation, and as a
result remain excluded from employment opportunities, health facilities and interaction with the rest of
the community\. A transport system able to provide efficient mobility and accessibility for all inhabitants
in the city is a powerful tool to promote growth, alleviate poverty and achieve social and political
integration, while improving environmental conditions and triggering public space upgrading\. Improving
the quality of life in urban areas is expected to contribute to building a more equitable society\.
Colombian urban transport issues:
High dependency on public transportation systems by the poor\.
In Colombian cities, three out of four
persons use public transportation to travel to work, study or leisure\. Most of these people live in the low-
income neighborhoods of the cities\. The poor spend around 25% of household income in public
transportation, which is a relatively high rate for regional standards\. Despite this, urban infrastructure has
Page 2
2
been used inefficiently, as it has traditionally favored the use of private vehicles, which use 80% of the
space but only mobilize 25% of the people traveling within the city\.
Poor quality of public transport systems
\.
Bus transportation in Colombian cities is of low quality, low
operating speed, resulting in excessive travel times, high levels of congestion, high accident rates and
elevated levels of air and noise pollution\. In the main transport corridors of the largest cities the average
speed, in peak hours, is less than 10 km/hr, significantly lower than international benchmarks (around 20
km/hr)\. This negatively affects the cities productivity, increases the emissions of air pollutants, and rises
the exposure of the affected population\.
In terms of safety, according to the Road Prevention Fund (
Fondo
de Prevención Vial
), nearly 40 percent of all traffic accidents involve public transport vehicles\.
Inadequate regulatory framework
\.
The current regulatory framework has failed to improve the quality of
service and has not contained the cost of service provision\. In most cities, municipal authorities grant
permits to private enterprises allowing them to operate given routes\. These comp
anies dont own the
buses and their revenues rely on the number of buses they affiliate to operate the system: the more buses,
the higher the profits, resulting in an oversupply of about 50% of the needed seats\. Bus owners pay a fix
rent to the affiliated company implying that, their profit is directly proportional to the number of
passengers they serve, generating what is commonly known as the penny war (
guerra del centavo
)\.
Consequently, the bus operation system is a
de
facto
unregulated system that promotes competition in the
market (in the streets picking up passengers) and not for the market (this is, for the routes that will
provide the service under pre-established parameters)\.
Lack of institutional capacity to deal with the above issues\.
There is weak institutional capacity at the
national and municipal levels to formulate and coordinate policies aimed at improving transport planning
and traffic management\. In some cases, there is duplication of functions and responsibilities among
several authorities\. In general, operating licenses for transport companies are given without technical
criteria, for political interests and corruption prevail\.
In order to address the issues described above, the Government of Colombia (GoC) set up a National
Urban Transport Program (NUTP)\. The NUTP is an open ended program that envisages GoCs annual
transfers until 2016 for works within in large size and middle-size cities\. Currently, seven Participating
Cities that have subscribed Subsidiary Agreements for the co-financing of the implementation of works
are Bogota, Cali, Pereira-Dos Quebradas, Cartagena, Soacha, Bucaramanga, Barranquilla and Medellín-
Valle de Aburra\. The Bank project is financing interventions in all of these cities, except Cali\. The overall
purpose of the NUTP is to improve quality of life and increase urban productivity in those participant
cities and its design aims at: (i) improving the efficiency and safety of public urban passenger transport
services; (ii) providing reliable accessibility to the poor; (iii) enhancing private sector involvement in
service provision; (iv) reducing air pollution and greenhouse gases GHG- emissions; (v) driving
comprehensive urban development processes, and (vi) promoting intermunicipal coordination within the
metropolitan areas and interagency coordination within the municipalities
\.
2\. Objectives
This World Bank project will continue the support to the NUTP initiated with the Integrated Mass Transit
Project, Project ID P080246, Loan No\. CO7231\. The project is expected to continue to foster productivity
and competitiveness in participating cities, provide better services to the poor, and improve the quality of
life in urban areas\. A more reliable and quick public transport system is expected to address the low level
of mobility of the poor, by reducing their exclusion through improved access to services and opportunities
at affordable prices and reasonable travel times, hence contributing to a more socially inclusive growth
pattern\.
Page 3
3
3\.
Rationale for Bank Involvement
The Bank has extensive experience in supporting urban transport projects in Colombia and in other
countries in Latin America\. For example, in Brazil, Peru, Argentina and Chile, Bank projects supported
implementing mass transit systems, including Bus Rapid Transit Systems (BRTS), to improve travel
times and overall quality of service\. In Colombia, the Bank has had three BRTS interventions: (i) it
partially financed the construction of the first phase of Bogota Transmilenio under Loan 4021-CO
(Bogotá Urban Transport Project)), (ii) it supported the second phase for the improvement of the feeder
routes of the system under Project Loan 7162-CO (Bogotá Urban Services), and (iii) it finances GoC
transfers to the six Participating Cities of the NUTP (Bogota, Pereira-Dosquebradas, Medellin-Valle de
Aburra, Cartagena, Barranquilla and Bucaramanga through the Colombia Integrated Mass Transit System
(Loan 7231-CO)\. Under this later Loan financing, two cities have corridors in operation, namely the
Bogota Norte-Quito-Sur Transmilenio corridor (NQS) and the Pereira-Dosquebradas Megabus BRTS
system\. These three Bank operations reflect the strategic role of the Bank in the implementation of the
BRTS in Colombia\. The experience gained in this sector will be key in assisting GoC and the
Participating Cities to improve the urban transport systems, and a reference for other projects in the
region and in the rest of the World\.
4\. Description
(a) Lending instrument
This lending instrument is a US$ 207\.0 million Additional Financing for an initial Loan CO-7231
Integrated Mass Transit Systems of US$ 250\.0 million to support the GoC contribution to the NUTP\. The
first Loan financed the GoC transfers for the project civil works implementation between 2004 and the
first quarter of 2007\. This Additional Financing will finance a second time slice of GoCs contributions to
the NUTP until the end of 2007\. Since the implementation of the NUTP will go beyond 2008, it is likely
that GoC will request the Bank to provide subsequent follow on operation(s) to continue supporting the
program\.
(b)
Project development objectives and key indicators
The project supports GoC implementation of the NUTP in the Participating Cities under the IMTS
project\. This is consistent with the existing project development objectives to: (i) develop quality and
sustainable BRTS in selected medium and large cities to improve mobility along the most strategic mass
transit corridors; (ii) improve accessibility for the poor through feeder services and fare integration; (iii)
build greater institutional capacity at the national level in order to formulate integrated urban transport
policies, and at the local level in order to improve urban transport planning and traffic management,
enhancing the GoCs strategic vision for the sector in the long term\.
The Additional Financing project maintains the on-going support to the GoC, initiated with Loan CO-
7231, to: i) expand BRTS schemes in Bogotá; and ii) introduce BRTS in medium and large size cities,
replicating the experience of Bogotá and Pereira, but tailoring it to specific conditions of those selected
cities\. To achieve these objectives, the project relies on an effective public-private partnership for
developing sustainable BRTS in which the roles are assigned as follows: (i) the public sector finances and
builds segregated busways and other related infrastructure through a co-financing arrangement between
municipal and central government; (ii) private sector operators provide the buses and operate a trunk-
feeder system under a concession contract granted by the municipality; and (iii) each selected city creates
a
public BRTS agency to plan, regulate and control the operation of the BRTS and sets the user tariff that
will ensure the sustainability of the system without operational subsidies\.
Page 4
4
The key performance indicators remain the same as those for the initial Loan, and are the following:
(i)
Improved mobility and quality of public transport services in strategic mass transit corridors
as measured by:
Reduction in generalized door to door travel cost (fare, time) to users
Percentage of people rating the system as being better than
(ii)
Improved accessibility to low income population as noted by:
Increased use by the poor (two poorest quintiles) of public transport services along the
area of influence of the planned corridors, with respect to the base line without the mass
transit system, both in absolute (number of passenger) and relative terms (as percentage
of total number of passengers)\.
(iii)
Enhanced the Institutional capacity for urban transport policy formulation and system
development, measure by:
At the local level, BRTS agencies that are capable of regulating and securing the
sustainability of the system, by maintaining a passenger-per-kilometer occupation index
above 4\.5 and below 5\.4\.
At the national level, at least three BRTSs schemes operating successfully in targeted
cities and Departamento Nacional de Planeacion (DNP) systematically monitoring
program performance and its impact, in line with the requirements of the National
Economic and Social Council
CONPES- documents on
Pol
ítica Nacional de Transporte
Masivo
\.
(c)
Progress in Bank-supported NUTP projects
Through the on-going support to the NUTP under the Integrated Mass Transit System Loan, the following
progress has been achieved to date:
(i)
Development of quality and sustainable BRTS
:
Two of the BRTS are already in operation\.
The Bogota Transmilenio NQS corridor has been in operation since April 2006 with
approximately 90,000 daily users, and the Pereira-Dosquebradas BRTS has been in operation
since August 2006 with approximately 100,000 daily users\. Civil works are underway in the
remaining Participating Cities\. In total, 35 km of segregated busways have been constructed\.
(ii)
Improvement of accessibility for the poor through feeder services and fare integration
:
Feeder services and fare integration have been implemented in the BRTS in operation, and have
been included in the designs for the rest of the BRTS\.
(iii)
Institutional capacity building:
Within the Ministry of Transport (MT), an integrated
implementing unit was created with the capacity to manage the larger program; In the Participant
Cities, five BRT agencies were created using the Bogota Transmilenio institutional framework
(Transcaribe in Cartagena, Transmetro in Barranquilla, Metroplus in Medellin-Valle de Aburra,
Metrolinea in Bucaramanga, and Megabus in Pereira-Dos Quebradas)\. The agencies have been
staffed sufficiently in terms of number of staff and appropriate skills to implement and operate the
systems\.
(d)
Consistency with Country Assistance Strategy
The proposed Project is consistent with the Country Assistance Strategy (CAS) discussed by the World
Bank Board in January 2003, and with the CAS update, presented to the World Banks Board in
Page 5
5
September 2005\. The CAS recogn
izes that to assist Colombias quest for peace, it is necessary to achieve
fast and sustainable growth\. To reach such a goal the CAS gives high priority to the promotion of
competitiveness in the productive sector and to the improvement of access to high quality basic public
infrastructure services for the least privileged segments of the population\.
(e) Project
components
The Additional Financing will continue the support to Component 2 of Loan CO-7231 Integrated Mass
Transit Systems\. Component 1 (Implementing Capacity Building) will continue to be financed with the
aforementioned Loan\.
Component 2- BRTS Development (US$292\.2 million, US$207 million IBRD):
This major component
will co-finance the development and implementation (infrastructure) of BRTS and feeder routes in
selected medium and large cities according to the eligibility conditions, i\.e\. it will continue to build on
already existing project activities\. It is estimated that approximately 57 Km of segregated corridors will
be built in the Participating Cities that include Pereira, Cartagena, Barranquilla, Bucaramanga, Medellín-
Valle de Aburra, and the NQS-Corridor of the Bogotá Transmilenio BRTS\. While the scope varies
depending on local conditions, implementing BRTS under the initial project entails: i) definition of a new
regulatory framework; ii) establishment of new private operation enterprises, that will be closely
regulated by a new strong and capable local BRTS agency; iii) operational savings through the reduction
of the oversupply, that will allow private investors to acquire a high capacity modern bus fleet; and iv)
infrastructure financed with public funds coming from GoC and the municipalities\.
Alternatives considered and reasons for rejection remain similar to those set up for the initial Loan, as
follows:
Mass transit solution: Metros\.
In the past, following the experience of Medellín, Bogotá and Cali argued
in favor of a metro system that would require very large subsidies from the central government\. The
successful experience of Transmilenio proved the reliance of BRTS as an affordable cost-effective
solution\.
Financing BRTS infrastructure entirely by municipalities and GoC on lending\.
Under this alternative
municipalities would be in charge of financing the infrastructure, and the GoC could have had the Bank
loan to assist them in defraying those costs\. This was rejected for two reasons: on one hand municipalities
lack the financial capacity to undertake the interventions on their own, and/or provide the necessary
guarantee to the central government for repaying\. On the other hand, the GoCs partial and phased
contribution provides the right incentives for municipalities to focus on sound and long term policy
interventions
Channeling all GoC
s financial contributions to participant cities entirely during BRTS construction
period\.
BRTS construction period in a given city takes between 12 and 18 months\. Committing GoC
funds to finance all the BRTS planned in such a period would demand funds well beyond the fiscal
envelop assigned to the NUTP and force to delay the implementation of the proposed interventions in
certain cities\. Despite the fact that this alternative would lower financial cost, it was rejected in favor of a
phased financing arrangement in which GoC
s contribution is distributed in a number of years beyond the
construction period (2-5 years)\. This financing scheme will enable GoC to implement the program within
the fiscal space assigned to the program while increasing its leverage\.
Selecting appropriate Bank instruments to finance the GoC transfers
\.
It is proposed that the follow-on
financing for the NUTP would be structured as a series of lending operations\. The first one would be the
US$ 207 million Additional Financing to cover the NUTP transfers through the end of 2007\. Additional
Page 6
6
Financing of US$ 207 million is the best available mechanism at the current time to rapidly and
effectively meet the request of the GoC\. This Additional Financing would: (i) maintain support for the
National Urban Transport Program under the same terms defined in the current Loan; and (ii) help the
GoC to maintain the momentum of the NUTP implementation by providing timely financial support for
the entrance of new eligibility cities in the Program, which occurred faster than anticipated by the GoC
and the Bank, and (iii) provide the time to prepare a new lending operation to cover NUTP budgetary
commitments for a subsequent time slice\.
5\. Financing
Source: (US$
million)
BORROWER 92\.2
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
207\.0
Total 299\.2
6\. Implementation
Partnership arrangements
The NUTP is an ambitious program in terms of scope and funding requirements, and therefore its
implementation will take more than a decade\. The structuring of the NUTP under the National
Development Plan resulted in the expansion of the Program to seven Participating Cities to date\. The GoC
transfers that are currently committed to pay for the corresponding share of the civil works in the
Participating Cities set up in the Subsidiary Agreement\. The committed funding amounts to
approximately US$1\.4 billion to date\.
GoC requested IBRD, Interamerican Development Bank (IDB), the Andean Finance Corporation (CAF)
and the Organization of Petroleum Exporting Countries to participate in the financing of its contributions
to NUTP under independent parallel arrangements\. IDB supports the BRTS in Cali, while CAF and OPEP
supported
the Suba corridor in Bogotá\. IBRD plays the broadest role among multilaterals involved in the
implementation of the NUTP by: i) supporting the design and implementation of the program; ii)
supplying oversight role of the MOT Coordination Unit for institutional capacity building; iii) providing
technical assistance to all Participating Cities; and iv) supporting the development of six BRTS in Bogotá,
Pereira, Cartagena, Medellin, Barranquilla and Bucaramanga and other cities that are included in the
program after meeting the agreed eligibility criteria for new Participating Cities\.
Institutional and implementation arrangements
Institutional set up and Policy framework for NUTP
:
GoC established the policy and institutional
framework for the NUTP in two National Economic and Social Council (CONPES) documents
1
\.
These
policy documents defined: i) responsibilities of the key participants (MHCP, MT, DNP and participant
cities), ii) criteria for securing the financing of the BRTS by the cities and GoC, and requirements for the
flow of funds; and iii) the mandatory use of fiduciary procedures established by the Multilateral
Organizations financing GoCs contribution, when applicable\.
When the preparatory studies for a BRTS intervention in a targeted city were completed and verifications
by DNP that eligibility conditions were met, a CONPES document was issued detailing the specific
conditions and arrangements for the BRTS intervention in the selected city\. This document provides the
1
Documents 3167 Política para mejorar el transporte urbano de pasajeros May 2002 and 3260 Política Nacional
de Transporte Urbano y Masivo December 2003\.
Page 7
7
basis for the co-financing agreement (Subsidiary Agreement) to be signed between GoC (through the
Ministry of Finance) and the selected municipality\. The scope of the intervention, the financial structure
and the obligations of the respective parties were formally established through the Subsidiary Agreement\.
In particular this agreement: i) assigns overall responsibility for undertaking and financing any potential
cost overrun and/or operational deficit of the BRTS to the participating city; and ii) defines the schedule
of GoC
s financial commitments per year, previously approved by the National Fiscal Council (CONFIS)
and recorded as future budgetary commitments (
vigencias futuras
)
for proper fiscal accounting\.
Project implementation will continue financing BRTS in six cities that have signed subsidiary agreements
with GOC (Bogotá, Pereira, Cartagena, Barranquilla, Medellin and Bucaramanga)\. If other cities are
ready and fulfill eligibility conditions, GOC is expected to ask the Bank for their inclusion as a subproject
in the operation\.
Executing agencies\.
MT continue to have overall responsibility for the execution of the project, as it
occurred with Loan CO-7231, through the Coordination Unit (CU)\. The MT is the executing agency for
the technical assistance component, in charge of managing the funds and the procurement of goods and
consultant services, and provides technical support to the NUTP and leads the technical committee in
charge of monitoring and evaluating the program implementation\. The BRTS agencies created in each
participant city through municipal law (Acuerdo), approved by City Councils, will continue to be the
executing agencies of the BRTS development component\. These agencies are Transmilenio S\.A\. for
Bogota, Megabus S\.A\. for Pereira-Dos Quebradas, Transcaribe S\.A for Cartagena, Transmetro S\.A\. for
Barranquilla and its Metropolitan Area, Metroplus S\.A\. for Medellin-Valle de Aburra, and Metrolinea
S\.A\. for Bucaramanga and its Metropolitan Area\. Some cities rely on specialized municipal works
agencies (i\.e\.
Instituto de Desarrollo Urbano
-IDU in the case of Bogotá and Soacha) to carry out the
construction of the BRTS infrastructure\.
Operational manual\.
All the above institutional and implementation arrangements of the project are
detailed in an Operational Manual in which, at least the following aspects are included: (i) project
description; (ii) institutional arrangements; (iii) eligibility criteria to participate in the project; (iv)
environmental framework; (v) resettlement framework; (vi) financial management and disbursement
arrangements; (vii) procurement arrangements and standard bidding documents; and (viii) monitoring
evaluation arrangements and outputs/results indicators\.
7\. Sustainability
The sustainability of the project is predicated on the basis of the following grounds:
Institutional support
:
There are specific evidences of political support at both the national and local level\.
On one hand, the NUTP and the allocation of funds have been included in the National Development Plan
which is a National Law\. On the other hand, sub-projects in the municipalities require approval and fund
allocation by the City Councils\. The competition for GoC resources among municipalities, that the NUTP
implies, is also a powerful incentive for the involvement of municipal authorities\.
Ownership and sustainable commitment at the higher government level
\.
Municipalities and the central
government are well aware of the high visibility of the proposed interventions and have a clear
understanding of the reforms required to put the system into operation, by involving all the key
stakeholders (affiliated companies, bus owners, bus drivers, potential new operators, finance institutions
and commercial sector)\.
Page 8
8
Financial viability of the BRTS derives from
:
i) a policy decision to subsidize the infrastructure with
identified public sources to keep tariffs at affordable level, ii) current tariff design covers operational cost,
and iii) GoC has approved budgetary commitments allocated to this program\.
Existence and strengthening of local know how in transport operation
:
The successful experience of
Transmilenio and Megabus has proved that sustainable institutional arrangements for the provision of
urban transport services are feasible\. This know how was developed in Colombia and is available to
participant municipalities for the building of operational capacity\.
Strengthening of local environmental and social capacity:
requirements of World Bank policies helped in
enforcing existing laws and regulations pertaining to environmental and social dimensions\. It helped the
national and municipal governments in improving environmental management related to road
rehabilitation and it also helped improve management of social impact on affected populations, as it is the
case of land acquisitions\. As a result, each civil works component now has environmental capacity and
the involved institutions employ permanent social management teams\.
Ongoing policy dialogue
:
the original project has been instrumental in fostering and supporting a dialogue
on environmental and social issues related to road rehabilitation and transport\. As a consequence, a
resettlement policy framework is cl
ose to being finalized for the District of Bogotá and a national
resettlement policy framework is also emerging\.
8\.
Selected Lessons Learned from Past Operations in the Country/Sector and From the
Implementation Process in the Initial Project to Date
There is a role for the national governments in the implementation of urban transport services reforms\.
Reforms in the sector normally require large investments and complex technical decisions\. Given that
municipalities lack both financial and technical resources, GoCs participation becomes crucial in
promoting reforms at the municipal level\.
Reliable funds are key to implement long term reform\.
Urban transport financing should be seen as an
integrated whole, justifying the use of taxes on auto users to provide reliable funds to implement public
transport projects\. In the case of Colombian cities, gasoline surtax, mostly paid by cars users, is providing
about 34% of total NUTP cost, and more importantly is helping the municipalities to leverage funds from
GoC\.
The regulatory framework is key in advancing sound reform\.
Within the different planning stages for
urban transport reforms, most of the attention goes to the technical aspects of the projects (engineering
designs, technology, equipment, etc\.), neglecting the regulatory design of the operation\. Given the crucial
role of the private sector in the operation of urban transport systems, the planning process should
concentrate more on the definition of several issues that regulate the public-private partnership\. Efforts
should focus on improving the regulatory framework to encourage efficient and competitive bus
operations\.
Page 9
9
Environmental and social management are important to ensure successful project implementation\.
The
BRTS agencies include environmental and social management teams\. Experience has shown that the
earlier these teams are onboard and being able to participate in project design and planning, the higher the
rate of success for the particular project activity\. On the other hand, examples have shown that where
environmental and social teams were not brought onboard early on, unmanaged social issues caused
serious implementation delays, and adverse impact on the affected populations\.
Implementation strategy should have both high political commitment and strong technical support\.
Of the
several lessons that arise from the successful implementation of Transmilenio and Megabus, two are
particularly critical\. The first is that the implementation of such an initiative requires visionary leadership
willing to take risks and closely involved in the process\. The second is that there is the need to create a
high-performance implementing agencies with strong technical capacity to design, plan, control and
regulate the BRTS\.
BRTS projects implementation implications are beyond the segregated busway\.
Another lesson resulting
from the Transmilenio and Megabus experiences is that the project can not limited solely to the
construction of the segregated busway\. Other complementary actions must be implemented to guarantee
the completion of the urban transport strategy within a comprehensive perspective (reorganizing routes,
implementing traffic management measures, developing measures to reduce the existing fleet, developing
sense of community, etc\.)\. This demonstrates that the value added of a BRTS project goes far beyond the
mass transit operation along the main corridors\.
Know-how synergies are fostered by simultaneous processes in multiple Participating Cities\.
Thanks to
the multiple experiences in BRTS implementation under a NUTP, significant synergies are created in the
implementation of the project
s participating cities\. This has resulted in a continuous flow of know-how
and best practices among Participating Cities, the CU and the Bank\. Through this framework, the NUTP
is enhancing institutional capacity, fostering best practices and fast-tracking the learning curve in the
BRTS agencies that are now implementing the BRTS\. Learned lessons are related to works
implementation, procurement and fiduciary aspects, financial management, safeguards, operational
design, communication strategies, and all other relevant aspects involved in the implementation of a
BRTS\.
9\. Safeguard
Policies
a\.
What is the safeguard screening category of the project? (S1, S2, S3, SF)
S2
b\.
What is the environmental screening category of the project? (A, B, C, FI)
B- Partial Assessment
c\.
If applicable, what are the key safeguard policy issues raised by the project?
The project, under the Additional Financing, will continue implementation with the safeguard policies
triggered during the initial Loan; OP 4\.01 (Environmental Assessment), OP 4\.04 (Natural Habitats), OP
4\.11 (Physical Cultural Resources), and OP 4\.12 (Involuntary Resettlement)\.
The project generates long-term positive impacts, as access and road safety is improvement, urban space
enhanced, and reduction of emissions and exposure to air pollutants\. However, there are potential
environmental effects linked to the upgrade and re-alignment of existing roads\. The works include limited
Page 10
10
land acquisition and resettlements\. The overall impacts on environment are expected to be minor and
confined to the construction period\.
OP4\.01 was triggered due to potential adverse environmental impacts associated with construction, in
particular with regard to: (a) management of materials and waste; (b) restriction of traffic flows and
access to homes and businesses; (c) increased noise and emission of pollutants; (d) management of work
camp sites; (e) impact on green areas; and (f) interference with urban infrastructure (phone lines, piping,
electricity wires, sewage)\.
OP4\.04 was triggered due to potential impact on nearby wetlands in Barranquilla and Soacha, in
particular during the construction period\.
OP 4\.11 was triggered to potential impact on cultural heritage sites, as there is potential for chance finds
when upgrading of roads, especially in Cartagena\.
OP 4\.12 was triggered due to the need for temporary and/or permanent land takes when upgrading roads\.
To minimize and mitigate impacts, resettlement action plans are prepared and implemented to compensate
and resettle affected people appropriately\.
d\. If applicable, what are the main results of any safeguard policy related studies, and how have they been
incorporated into the project?
The concept design studies for all potential participating cities considered the environmental and
resettlement dimensions\. Guidelines for the Design, Construction, and Monitoring of Urban Infrastructure
projects were prepared as the exact locations for project activities were not determined at the time of
appraisal of the original project, i\.e\. in compliance with the requirements of OP 4\.01, the framework
approach was applied\. The framework guidelines are aimed at defining the principles for mitigating
environmental risks associated to the construction phase of the projects\. Impacts not averted at the design
stage are mitigated at the construction stage with the existence of adequate Environmental Management
Plans (EMP)\. These plans mitigate environmental risks associated to OP4\.01 (Environmental
Assessment) OP 4\.04 (Natural Habitats); and OP 4\.11 (Physical Cultural Resources)\. The Framework
Guidelines were produced, based on the existing procedures at Instituto de Desarrollo Urbano (IDU), and
in coordination with the Ministry of Environment, DNP, MT, and the participating cities
\.
Based on the Guidelines mentioned above, EMPs are required for each city to mitigate the potential
environmental impact on the project sites and surrounding areas during construction\. The EMPs were
carried out either by the same contractors in charge of developing the final infrastructure designs, or as
separate studies for each city, in close coordination with the specific designs\.
The same principle was adopted in order to design the methodology for dealing with social impact,
mainly due to the need to land and property acquisition, as required by OP 4\.12 (Involuntary
Resettlement)\. Because the exact project locations were not determined at the time for appraisal of the
original project, a Resettlement Framework Policy (RPF) was developed
to define the guiding principles
for compensation and resettlement of project affected people\. The RPF was prepared under the
coordination of DNP and IDU and with the participation of candidate cities\. As the project proceeds, the
social management team in each city prepares a Resettlement Action Plan (RAP), for project affected
people in each road segment\. The city submits the RAP to the Bank for review and approval before
acquiring the NO for the segment (contract)\. At this time, each of the participating cities is in various
stages of preparing and implementing RAPs\. Each RAP is composed of various different studies, as
required by the policy and the RPF\.
e\. What is the borrowers capacity to implement the safeguard policies recommendations, and, if the
capacity is insufficient, how will this capacity be brought to the required level?
Environment\.
As a principle, all EMPs are implemented by the contractors in charge of the civil works,
and its compliance is ensured through the bidding documents and construction contracts\. The capacity to
Page 11
11
approve and follow up the EMPs was strengthened thanks to the technical assistance component of the
initial Loan\. MT is the agency in charge of monitoring implementation of all projects\. To mitigate the
risk, during project implementation all EMPs are sent to the Bank for no objection\. All bidding
documents for the infrastructure works will include not only the EMP, but also a Manual for monitoring
their implementation\.
Resettlement\.
Each RAP follows the principles of the RPF prepared according to Bank Policy 4\.12\. Each
RAP is approved by the Bank and implemented by each local entity\. Social management and resettlement
teams were created within each project
s BRTS implementation agency\. All the participating cities have
well conformed social teams which are in charge of the preparation and implementation of the RAPs\. In
order to to strengthen the capacity of the social teams, a national resettlement workshop was organized
with support of the Bank in Cartagena in May 2006\.
What type of consultations has been conducted related to safeguard issues? How did these consultations
influence project design?
A
National Consultative Workshop on Safeguards took place during preparation of the original project,
with the participation of representatives from all candidate cities, from DNP, the Ministries of
Environment, and Transport, and from the Banks regional safeguard team\. At the workshop, the Bank
safeguard policies were explained to all participants, as well as their application to the project\.
Agreements on next steps for preparing the project and on environmental and social requirements for
implementation were established at that workshop\.
Continuously during preparation and implementation of the original project, stakeholders from different
arenas were, and continue to be, consulted\. In fact, the consultation and interaction process is an ongoing
process which includes different stages of information sharing and enabled participation, between project
representatives and different stakeholders, particularly those stakeholders who live or work along the
project roads and are affected by the civil works\. It has been recognized that this interactive process is
very important to the success of the project\.
g\. When were the safeguard studies made available at the InfoShop?
The Environmental Guidelines, the EA for NQS (Bogota), and the Resettlement Framework were
disclosed in March 2004, fulfilling the requirements set up at the initial Loan\. All RAPs and EMPs
required for Participating Cities to become eligible for Bank funding have been published\. The cities
included in the geographical expansion of 2005 became eligible for Bank funding on April 11th, 2006
(Bucaramanga), on June 8th, 2006 (Medellin-Valle de Aburra), and on June 20th, 2006 (Barranquilla)\.
h\. When and where were safeguard studies made available in the cooperating country?
Each city had produced a general EMP and RAP in order to become eligible for Bank funding\. Bank
approval of the RAP and EMP is required in order to proceed with the bidding of the construction
contract\. This information of the EMP is detailed on the bidding documents, which are published on the
BRTS agencies websites\.
Safeguard Policies Triggered by the Project
Yes No
Environmental Assessment
(
OP
/
BP
/
GP
4\.01) [X]
[
]
Natural Habitats (
OP
/
BP
4\.04) [X]
[
]
Pest Management (
OP 4\.09
)
[
]
[
]
Cultural Property (
OPN 11\.03
,
being revised as OP 4\.11)
[X]
[ ]
Involuntary Resettlement (
OP
/
BP
4\.12) [X]
[
]
Page 12
12
Indigenous Peoples (
OD 4\.20
,
being revised as OP 4\.10)
[ ]
[ ]
Forests (
OP
/
BP
4\.36)
[ ]
[ ]
Safety of Dams (
OP
/
BP
4\.37)
[ ]
[ ]
Projects in Disputed Areas (
OP
/
BP
/
GP
7\.60)
*
[
]
[
]
Projects on International Waterways (
OP
/
BP
/
GP
7\.50)
[ ]
[ ]
10\. List of Factual Technical Documents
Financial Agreement of the Metropolitan Area (Pereira
Dosquebradas) for the BRT System
OPRC Case Recommendation and Review Report, January 2004
Jose Martínez Procurement Capacity Assessment, February 2004
Daniel Boyce Financial Management Capacity Assessment
Juan Lopez Environmental Assessment
RPF and RAPs Kristine Ivarsdotter
BTOR Quality Assurance Team (QAT) Client Safeguard Training Workshop, Environmental and
Social Aspects of the Colombia Urban Transport Project
World Bank Aide Memoire and BTOR of Identification and Preparation Mission, February 2003,
March 2003, September 2003
World Bank Minutes of PCD Review Meeting October 2003
11\. Contact point
Contact: Mauricio Cuellar
Title: Transport\. Specialist\.
Tel: 57-1-3263600 Ext 245
Fax: 57-1-3263480
Email: Mcuellar@worldbank\.org
Location: Bogotá (IBRD)
12\. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-5454
Fax: (202) 522-1500
Web:
http://www\.worldbank\.org/infoshop
www\.Transmilenio\.gov\.co
www\. Megabus\.gov\.co
www\.Metroplus\.gov\.co
www\.Transcaribe\.gov\.co
www\.Transmetro\.gov\.co
www\.Metrolinea\.gov\.co
*
By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the
disputed areas | APPROVAL |
P124724 | Page 1
INTEGRATED SAFEGUARDS DATASHEET
APPRAISAL STAGE
I\. Basic Information
Date prepared/updated: 01/20/2011
Report No\.: AC6010
1\. Basic Project Data
Original Project ID: P095965
Original Project Name: Siddhirganj
Peaking Power Project
Country: Bangladesh
Project ID: P124724
Project Name: Siddhirganj Power Project AF
Task Team Leader: Md\. Iqbal
Estimated Appraisal Date: January 6, 2011
Estimated Board Date: February 22, 2011
Managing Unit: SASDE
Lending Instrument: Specific Investment
Loan
Sector: Power (100%)
Theme: Infrastructure services for private sector development (40%);Other public sector
governance (40%);Trade facilitation and market access (20%)
IBRD Amount (US$m\.):
0\.00
IDA Amount (US$m\.):
230\.00
GEF Amount (US$m\.):
0\.00
PCF Amount (US$m\.):
0\.00
Other financing amounts by source:
BORROWER/RECIPIENT
80\.00
80\.00
Environmental Category: A - Full Assessment
Simplified Processing
Simple []
Repeater []
Is this project processed under OP 8\.50 (Emergency Recovery)
or OP 8\.00 (Rapid Response to Crises and Emergencies)
Yes [ ]
No [ ]
2\. Project Objectives
The Restructuring and Additional Finance to Siddhirganj Power Project will make a
major contribution to increase the supply of electricity in Bangladesh and strengthen the
institutional capacity of the implementing agencies\.
3\. Project Description
The proposed Restructuring and Additional Finance would help cover the costs
associated with expansion of the Siddhirganj Peaking Power Project from the earlier-
proposed 300 MW peaking (open cycle) to 335 MW gas fired combined cycle unit for
base load operation\. The other components of the original project, pertaining to the gas
transmission line, the power evacuation line and capacity building of executing agencies
will not be modified\.
Page 2
4\. Project Location and salient physical characteristics relevant to the safeguard
analysis
The proposed combined cycle power plant will be constructed in the same location
identified for the open cycle power plant\. However, the combined cycle power plant will
require additional space and approximately total 9\.24 acres will be required\. The earlier
open cycle plant required about 6 acres\. The proposed site is located within Siddhirganj
power generation complex on the western bank of Sitalakhya river in Siddhirganj
Pourashava, under Narayanganj district\. It is approximately 20 km North-East of Dhaka
and is easily accessible from Dhaka-Chittagong Highway\. There are 5 gas fired power
plants (under operation and construction) within the Siddhirganj Power Generation
Complex\. These are: (i) BPDB#s 210 MW steam plant in operation, (ii) ADB funded
two120 MW capacity peaking power plants- one in operation, (iii) one 50 MW rental
power plant under construction and (iv) the proposed 300-450 MW combined cycle
power plant expected to be covered by World Bank#s additional financing\. In addition,
within 2-3 km radius, there are 3 other gas fired power plants\. These are: (i) the AES
Haripur 360 MW power plant , located about 1km downstream of the Siddhirganj site;
(ii) the BPDB 99 MW gas turbine power plant, which will soon be upgraded to around
400 MW combined cycle power plant with funding from JICA; and (iii) the NEPC barge
mounted 1#110 MW power plant\. The site of the recently closed-down Adamjee Jute
Mill is located immediately along the southern boundary of the Siddhirganj plant
complex, which is now being converted into an Export Processing Zone (Special
Economic Zone)\. On the northern side, there is a steel re-rolling mill, and also a couple of
brick kilns\. There are numerous other small and medium industries within and around the
Siddhirganj area\.
5\. Environmental and Social Safeguards Specialists
Mr Shakil Ahmed Ferdausi (SASDI)
Ms Nina Masako Eejima (LEGEN)
Ms Sabah Moyeen (SASDS)
6\. Safeguard Policies Triggered
Yes No
Environmental Assessment (OP/BP 4\.01)
X
Natural Habitats (OP/BP 4\.04)
X
Forests (OP/BP 4\.36)
X
Pest Management (OP 4\.09)
X
Physical Cultural Resources (OP/BP 4\.11)
X
Indigenous Peoples (OP/BP 4\.10)
X
Involuntary Resettlement (OP/BP 4\.12)
X
Safety of Dams (OP/BP 4\.37)
X
Projects on International Waterways (OP/BP
7\.50)
X
Projects in Disputed Areas (OP/BP 7\.60)
X
Page 3
II\. Key Safeguard Policy Issues and Their Management
A\. Summary of Key Safeguard Issues
1\. Describe any safeguard issues and impacts associated with the proposed project\.
Identify and describe any potential large scale, significant and/or irreversible impacts:
The original project has been classified as Category #A# and only Environmental
Assessment (OP/BP 4\.01) was triggered on environmental aspects\. The three different
entities prepared separated Environmental Impact Assessment (EIA) for the project\. The
additional financing will bring changes only to the power generation component, which
will not trigger any new environmental safeguard policies\. The potential impacts of the
proposed project will be related to water extraction from Sitalakhya river, emission of
gases, noise and effluent discharges to the surrounding environment during construction
and operation phases of the project\. It is estimated that proposed Siddhirganj 300-450
MW CCPP will consume approximately 12\.5 m3/sec of water which is about 9\.84% of
the total flow of water in the extreme lean period\. The total consumption of water of the
surrounding industries at Siddhirganj Power plant complex area will be net 23\.5 % of the
total flow whereas rest 76\.5% of water will be available for sustainable growth of natural
environment\. There will be noise, vibration and other disturbances around the plant
location during construction and commissioning of the power plant\. The project will not
impact on forest and physical cultural resources\. The recent and proposed developments
in the project sites have been primarily focused on power generation activities\. Within the
immediate vicinity of the project site, there are several existing power plants that have the
potential to interact in a cumulative manner with the project impacts\. EGCB (the
implementing agency) will carry out an environmental assessment on the cumulative
impacts in three years of plant operation\.
No land acquisition will be required and no resettlement issues will arise due to the
project activities\. An old and unused store house will be demolished during site
preparation\. It is not occupied by any resident therefore no relocation or resettlement is
required\. Mitigation measures for management of temporary labour camps and
recommendations to ensure compliance with health and safety measures during
construction and operation phases will be carried out including the operation of the WTP
which will be constructed behind the school building\. There are no indigenous people
residing in the vicinity of the project area\. An environmental and social impact
assessment has been commissioned by EGCB\. These reports have been publicly
disclosed in EGCB website and World Bank#s Infoshop\.
International Waterways: The new combined cycle configuration will draw about 12\.5
cubic meters per second of water from the nearby Sitalakhya river\. The Sitalkhya drains
into the Meghna and Padma rivers and ultimately the Bay of Bengal, which is defined as
an International Waterway under OP 7\.50\. The littoral states have been notified and
asked to respond by January 20, if any [to be updated once response period is closed]\.
2\. Describe any potential indirect and/or long term impacts due to anticipated future
activities in the project area:
It is possible that additional power generation capacity will be added at Siddhirganj at a
later date\. The project site is a dense industrial area and the project is likely to induce
Page 4
further industrial developments in the area, which may lead to long term adverse impacts\.
Though the project cannot do anything about it, an area based development approach is
recommended to prevent worsening of cumulative environmental impacts in the area\. The
current project is not expected to lead to any long term or indirect social impacts\.
3\. Describe any project alternatives (if relevant) considered to help avoid or minimize
adverse impacts\.
The alternative analysis between combined cycle power plant and open cycle power plant
has been carried out\. In terms of resource utilization, the combined cycle power plant is
more efficient and does not discharge high temperature steam in the air\. However, the
combined cycle power plant will have to address the issue of cooling water requirement
and its discharge\. In addition, an alternative analysis from environmental perspective
was carried out on the two proposed locations with the Siddhirganj power generation
complex and the best option is selected for the project\. The project footprint was
analyzed several times from a social impacts perspective and has been re-designed to
yield the minimum social cost option (present design)\.
4\. Describe measures taken by the borrower to address safeguard policy issues\. Provide
an assessment of borrower capacity to plan and implement the measures described\.
EGCB has updated the Environmental Impact Assessment (EIA) and conducted a Social
Impact Assessment (SIA) considering the new technology option and larger area
requirement\. The majority of the environmental impacts associated with the development
of power plant will be minimized/avoided/compensated with a careful design and
implementation of the project\. The best available and safest technologies will be
promoted\. The EGCB has used certification of ISO 14001-2004 (Environmental
Management Standard) and OHSAS 18001: 1999 (Occupational Health and Safety
Management Systems) as the eligibility criteria for selection of the contractor\. The
contractor will also have to prepare the environmental action plan based on their
equipment specification, Environmental Management Plan (EMP) prepared by EGCB
and additional studies (air quality modeling)\. As part of the institutional development,
EGCB will set-up an Environmental Monitoring Unit and recruit qualified professionals
for proper implementation and monitoring of the EMP\.
No significant social impacts are anticipated\. EGCB has adequate knowledge of WB
safeguards requirements and has carried out the SIA in compliance with Bank guidelines,
which also includes a social management plan\. EGCB will engage social specialists to
ensure implementation of the mitigation and safety measures incorporated in the SIA\.
5\. Identify the key stakeholders and describe the mechanisms for consultation and
disclosure on safeguard policies, with an emphasis on potentially affected people\.
The EIA and SIA updating included consultation with the people living close to the
Siddhirganj power generation complex and also with staff living within the complex\.
Their comments and suggestions have been reflected in EIA and SIA\.
Page 5
B\. Disclosure Requirements Date
Environmental Assessment/Audit/Management Plan/Other:
Was the document disclosed
prior to appraisal?
Yes
Date of receipt by the Bank
12/28/2010
Date of "in-country" disclosure
12/28/2010
Date of submission to InfoShop
01/10/2011
For category A projects, date of distributing the Executive
Summary of the EA to the Executive Directors
01/20/2011
Resettlement Action Plan/Framework/Policy Process:
Was the document disclosed
prior to appraisal?
Date of receipt by the Bank
Date of "in-country" disclosure
Date of submission to InfoShop
Indigenous Peoples Plan/Planning Framework:
Was the document disclosed
prior to appraisal?
Date of receipt by the Bank
Date of "in-country" disclosure
Date of submission to InfoShop
Pest Management Plan:
Was the document disclosed
prior to appraisal?
Date of receipt by the Bank
Date of "in-country" disclosure
Date of submission to InfoShop
*
If the project triggers the Pest Management and/or Physical Cultural Resources,
the respective issues are to be addressed and disclosed as part of the Environmental
Assessment/Audit/or EMP\.
If in-country disclosure of any of the above documents is not expected, please
explain why:
C\. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the
ISDS is finalized by the project decision meeting)
OP/BP/GP 4\.01 - Environment Assessment
Does the project require a stand-alone EA (including EMP) report?
Yes
If yes, then did the Regional Environment Unit or Sector Manager (SM)
review and approve the EA report?
Yes
Are the cost and the accountabilities for the EMP incorporated in the
credit/loan?
Yes
OP 7\.50 - Projects on International Waterways
Have the other riparians been notified of the project?
Yes
If the project falls under one of the exceptions to the notification
requirement, has this been cleared with the Legal Department, and the memo
to the RVP prepared and sent?
No
Page 6
Has the RVP approved such an exception?
N/A
The World Bank Policy on Disclosure of Information
Have relevant safeguard policies documents been sent to the World Bank's
Infoshop?
Yes
Have relevant documents been disclosed in-country in a public place in a
form and language that are understandable and accessible to project-affected
groups and local NGOs?
Yes
All Safeguard Policies
Have satisfactory calendar, budget and clear institutional responsibilities
been prepared for the implementation of measures related to safeguard
policies?
Yes
Have costs related to safeguard policy measures been included in the project
cost?
Yes
Does the Monitoring and Evaluation system of the project include the
monitoring of safeguard impacts and measures related to safeguard policies?
Yes
Have satisfactory implementation arrangements been agreed with the
borrower and the same been adequately reflected in the project legal
documents?
Yes
D\. Approvals
Signed and submitted by:
Name
Date
Task Team Leader:
Mr Md\. Iqbal
01/12/2011
Environmental Specialist:
Mr Shakil Ahmed Ferdausi
01/12/2011
Social Development Specialist
Ms Sabah Moyeen
01/12/2011
Additional Environmental and/or
Social Development Specialist(s):
Approved by:
Regional Safeguards Coordinator:
Mr Sanjay Srivastava
01/13/2011
Comments: Cleared on understanding that client will be encouraged to undertake a Cumulative
Impact Assessment to assess impact of other anticipated developments in the neighborhood\.
Sector Manager:
Mr Malcolm Cosgrove-Davies
01/18/2011
Comments: | APPROVAL |
P004280 |  Second western johor agricultural development project
Report No: ; Type: Report/Evaluation Memorandum ; Country: Malaysia; Region: East Asia And Pacific; Sector: Irrigation & Drainage; Major Sector:
Agriculture; ProjectID: P004280
The Malaysia Second Western Johor Agricultural Development project, supported by Loan 2740-
MA for US$55\.0 million, was approved in FY87\. When the loan was closed on June 30, 1996, 18 months
later than planned, a total of US$5\.7 million was canceled\. The Asia Regional Office prepared the
Implementation Completion Report (ICR)\. The borrower's own ICR (appendix 2) provides additional data
that complement the Bankâs ICR, including an assessment of the projectâs impact on beneficiaries\.
The project area comprised about 210,000 ha of the coastal plain of western Johor\. About 97,000
ha were low lying (less than 1 meter above s\.l\.), poorly drained, and subject to frequent flooding\. About
75,000 ha were used for agriculture, principally rubber, and the remainder was scrub and swamp\.
Frequent waterlogging reduced the areaâs productivity\. The projectâs objective was to improve drainage
and control floods in the area to facilitate development and upgrading\. The project aimed to replant
14,500 ha of existing smallholder rubber with high-yielding rubber, oil palm or other crops under the
replanting program of the Rubber Industry Smallholders Development Authority\. Planned civil works
included construction of a storage dam, main and secondary drains, and new agricultural roads and flood
protection bunds; river improvement works; resurfacing of roads and maintenance tracks along existing
secondary drains; and replacement of eight bridges\. The project would provide support to the Drainage
and Irrigation Department (DID) for engineering consulting services, equipment, vehicles and buildings\.
The major civil works were completed by the closing date and have been properly maintained\.
Work on five of the 18 contracts for drainage works and farm roads is not complete, but all are expected
to be completed by the end of 1998\. The delays resulted from inadequate counterpart funding in the
projectâs first years, major changes in the design of the bridges, land acquisition problems, inadequate
design capacity in DID, problems with contractors, and shortages of labor and materials caused by a
nationwide construction boom\. The 74 families displaced from the reservoir site have been resettled and
compensated, although titles to the new lands have not yet been issued\. Evidence suggests that the
householdsâ current incomes and living standards are higher than before the project\.
The area replanted from rubber (14,300 ha) was only slightly less than the appraisal estimate of
14,500 ha\. The distribution and anticipated yields of new crops are also close to estimates\. About 9,200 ha
were replanted with oil palm, 2,800 ha with high-yielding clones of rubber, and 2,500 with other crops\.
The crops appear to be in good condition\. An estimated 5,000 ha of oil palm abandoned because of
waterlogging have been replanted and another 15,000 ha affected by flooding rehabilitated\. Improved
water control has raised yields on some 10,000 ha of smallholder rubber and other crops by an estimated
10 percent\. A project-funded study of peat soils in the region is being used to improve soil and water
management\. Improvements to roads and bridges have led to increased traffic, shortened travel times,
reduced transport costs for produce, and increased access to employment and services for area residents\.
Flood damage in the area has been reduced, and potable water supplies have increased\. The ICR
reestimates the economic rate of return to 13 percent from 14 percent at appraisal\.
Preproject household incomes were relatively low because of difficult growing conditions and the
fact that most farmers are smallholders\. A survey carried out in 1996 of a sample of nearly 600
households shows that agricultural incomes have doubled since the project was initiated to about
RM4,300 (US$1,700) per year\. More dramatically, household incomes have increased by more than 400
percent and now average RM 11,500 (US$4,600) per year\. While the general economy has been buoyant,
a significant part of the increase reflects the off-farm employment opportunities which have become
accessible to most rural households as a result of the improved road network\.
The Operations Evaluation Department agrees with the ICR ratings for project outcome
(satisfactory), sustainability (likely), and Bank performance (satisfactory) but rates institutional
development impact as negligible rather than modest\. The project had no significant institutional
objectives and the principal implementing agency (DID) had difficulty finding qualified staff, particularly
engineers, because of high local demand\.
The principal lesson from the project is that in a rapidly developing country such as Malaysia,
attracting competent technical staff to the public sector will become increasingly difficult and that greater
emphasis should therefore be placed on involving the private sector in implementation\. The experience of
the project also underlines the importance of initiating land acquisitions for construction-oriented projects
before the projects become effective\.
The ICR is satisfactory\. No audit is planned\. | APPROVAL |
P008183 | RESTRICTED
FILE Ctpy Report No\. P-395
This report was prepared for use within the Bank and its affiliated organizations\.
They do not occept responsibility for its accuracy or completeness\. The report may
not be published nor may it be quoted as representing their views\.
INTIERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
REPORT AND RECOMMENDATIONS
OF THE
PRESIDENT
TO THE
EXECUTIVE DIRECTORS
ON A
PROPOSED LOAN
TO THE
REPUBLIC OF VENEZUELA
FOR A
SECOND HIGHWAY PROJECT
August 14, 1964
REPOaT AND RPdCOYJA-MkTI1QS 0o THE FR1ESIENT
TO TH3 EMrLcTFIrEr DPEZTO ON CA P?OPOSBJ LOAI
TO TIE RE?IJ-LIC OF VENE7UE4A
1\. I suibmit the follo-viing report and recozr-merdaticns sri a pro-
posed Ican in various currencies equivalent te -IS 2QB0*O if-lion to the
Republic of Venezuela to help finance the construction and imrprovei3ent
of tw!o trunk highwanrs in southwestern Venezuela and the conztruction of
tLwo urban exoressuays in and around Caracas\.
PART I - HIST70RCAL
2\. In 1959 a general Bankr sur-vey smiSsion to Venezuela recoinlended
the constr-uction and improvement of sorie 3,100 1r\. of high priority roads,
oJf wFhich about 90% has been corpletec\. The B9ank's first loan to Venezuela,
signed in December of _61, aind amountin to US U5 iillion, io fi-ancing
ccrstructl<ion of t-fo of -te nigh nr_iority trunk highw,-ays recolv2rer:Ccd by
the mission, namely those from Coche to Teierias anr fram V7alercia to
Elterto Cabello\. They are presentlv about W% cofrrReted and should be
finished in the spring of 1?$5\. -le -work is being carried\. out s tis-
factorily and at a cos-: loEwar than origi;nally estimtad\.
3\. The Second Pigwa Project ncr\. proposodi -for Bank financing
would zonsstt cff tne trunk hiz:huyays frn 2ar inss to La Pedrera ard thence
from La Fedrera to San C ristob2l, on which cons Lruction was started in
1963, and two expressways in and nround Caracas\. The two trunk highways
were already incluaded in the Banik mission report of 1959 as being of high
oDraoritv\. The need for tbie twlo express ni gheays has became particularly
acute in the last few years\. They are to helrp correct the severe traffic
congesticn th-t has developed in Caraca\.s dutring that nerind, as thle
country'1s highw,,ay network leading into Carocas irprovedf anr the nanber
of cars increased\.
L\. In Aovember of 1963, mermbers of the Bank's s-UafC visited
Vene2ueta to appraise the pronosed Project\. Negotiations took nlace
in U;ashington in July 1o64 '- T"he Venezielan Government iias repre-
sented by a delegation consisting of Dr\. Hector Alcala of the i4inistry
of F'ublic W\.Torks, Dr\. Jose de Luca of the dinnistry of Ptnance, Dr\. Perez
de la C-ova, 4inister Counselcr for Econcmic !¶ffafrs of tne C-bassy,
and ot-her members of the \.L-nisWo f FNibLio Works\.
5\. The pronosed loan together with the US Sl m;iillion loan to
CAD\.AFZ is also bein presented to the Executive Directors today,
woculd bring total Bank lending to Venezuela to US $174 million\. T'Ihe
Bank has already made the fclouiins loans in Venezuela:
-2-
Amount equivalent
Year Loan No\. Borrower Purpose to US` $ million
1961 306 VE Republic of Venezuela Express Highways 45\.0
1963 353 'a EDELCA Electric Power
(Guri) 85\.0
Total (net of cancellations and refundings) 130\.0
of ,which has been repaid -
Total now outstanding 130\.0
Amount sold 2\.2
of wjhich has been renaid - 2\.2
Net amomt now held by Bank 127\.8 *
* As of July 31, 1964, includes a total of US $96\.5 million
not yet disbursed\. Construction of the two prolects is
proceeding on schedule and there are no problems in
regard to disbursement\.
6\. In addition to the proposed loans for the Second Highway Project
and for CADAPE the Bank has undor consider,tion other projects in the
fields of telecommunications, Tater supoly, ag,riculture, electric power,
and transoortation thqt would' total about US $100 million\.
PART II - DESCRPTIHONI OF TE- PROPOSED LO0AN
7\. Borrower: Republic of Venezuela
Amount: EQuivalent of US A30\.0 million
Pitroose: To finance the foreign exchange
cost of the construction and
improve\.rent of two trunk highways
in southTwlestern Venezuela and the
construc-ion of two urban exoress-
ways in Caracas\.
Amortization: 20 years (including 4 years grace):
33 semi-annual installments from
February 1, 1969 through February 1,
1i95\.
Interest Rate: 5p, per cent per annimn
Conmitment Charge: 3/8 of 1% per annum
Payment Dates: February 1 2nd August 1
PART III - APPRAISAL OF TEE PROPOSED LQaN
a8\. A detailed anoiraisal (TO-h28a) of the Project is attached
(No\. 1)\.
Justification of the Project
9\. Venezuela's hig!hway systen constitutes by far tne mcst imsor-
tant transport fecility in the country, accounting for over 995; of
freight and over 90% of nassenver traffic volume\. The predominance of
the highway system has been groiw!ing throughout the last two decades,
and during the tperiod 1953-62 the total vehicle fleet increased by a%
ner year\. The ratio of ponulation to total motor vehicles registered
is now 20 to 1, comoarable to the ratio in Western Europe in the early
fifties\.
10\. The proposed Second Highway Project consists of (a) the con-
struction and improvement of high priority trunk highvways from Bar-i2nas
to La Pedrera (205 km) and from La Pedrera to San Oristobal (103 kmo)
and (b) the construction of urban exvirasswTays in Caracas from La Ararna
to uente Mohedano (3\.8 km) and from La Arana to Autopista del Valle
(U\.41 km)\.
11\. The two roads in (a) above will form nart of an alternate
trunk highway link serving a Substantial volume of inter-regional
traffic, in addition to aiding the develo-nment cf the region which
they traverse\. The Barinas - La Pedrera road along the eastern slope
of the Andes will open up for development a large area rich in agri-
cultural and forest Dotential\. 'Yiile it is difficult to quantify the
benefits to be exDected fromr, the net increase in agricultural develop-
ment on land made accessible by this road, there is little doubt that
development will take place rapidly in this region\. Rapid economic
development has already been witnessed in recent years in other parts
of southwestern Venezuela as the result of the const4ruction of a high-
way similar to that proposed for the Barinas - La Pedrera area\. Move-
ment of agricultural products from the region still would require
only an ell-w\.7eather gravel surface road, but since a substantial volume
of inter-regional traffic is expected even durina the first year of
oneraticn, paving of the Barinas road with asphalt is justified\. As
eypleined'in the detailed appraisal (TO-h8Ma) of the project, the
const4ruction of the road wviould produce substantial savings even if
account were taken only of the movement of the existing, limited pro-
duction in the area\. k sneciol study with regard to the incremental
cost of naving the road indicates that this additional investment
would oroduce a rate of return of about 20 per cent\.
12\. The last half of the road from La Fedrera to San Cristobal
traverses a mountainous region, but the first half serves a w/ell
developed agricultural area\. San Cristobal, the marketing and com-
murications center for southwrestern Venezuela, is growing in imnortance
duae to increased industrial activity and increased road traffic wyith
Colombia\. In addition to linking San Cristobal with the Barinas high-
way, the construction and imporovement of this asphalt paved road will
also serve traffic from the most important cattle producing area in
Venezuela via the Guasdualito - La Pedrera highway0 It is estimated
that the transportation cost savings would produce an annual ra,te of
return of about 15%\.
13\. The city of Caracas is situated in a narrow valley between
twio maountain ranges and the major part of the growing volume of the
city's motor traffic has to move between east and west over a small
number of cross-town streets\. These cross-tow-n streets serve not only
the intra-city traffic but also the transit traffic\. The traffic on
these cross-tow-n streets has reached the saturation point\. For example,
the Avenida Bolivar, the main thoroughfare of the city, carries a daily
traffic volume of over 60,000 vehicles\. The construction Ot the La Arana -
Puente Mohedano and La Arana - del Valle exnressways wrill resTpectively
relieve a substantial oortior\. of the east-west congestion and divert
most of the extra-city traffic that now passes through the cityts streets\.
It is estimpted that on the basis of reduced vehicle operating costs
alone, the construction of the two exores sways w\.,ill resu-lt in savings
in transportation costs equivalent to a 16 - 18% annual rate of return\.
Arrangements for Financingr
14\. Including -work already carried oat since JanuarT 1, 1963 on
the Barinas - La Pedrera highway, the estimated cost of the oronosed
Project is equivalent to US $65 million\. The pronosed Bank loan of US
$30 mil-lion would cover the foreign exchange comnonent of that total,
including provision for contingencies and consulting engineering
services\. The balance of the funds required to complete the Project
will be orovided through annual appronriations from the Governmentts
budget\. As stated below, the Venezuelan economy should be able to
provide the foreign exchange needed to service the nroposed loan as
well as the country's other external obligations\.
Execution of the Project
15\. The Project is technically sound, the cost estimates are
realistic, and the construction methods Droposed are satisfactory\.
Construction work wrould be carried out by contractors under unit price
contracts awarded on the basis of international comnetitive bidding\.
For assistance in enguineering end in sunervision during the construc-
- 5 -
tion, the Governmcnt has retained consulting engineers satisfactory
to the Bank\.
Economic Situntion
16\. A report on "Recent Economic Developnents in Venezuelalr
(WH-128a) was distributed to the Executive Directors on July 2k, 1963\.
This retort nointed out that subsequent to 1960 and 19q61 Venezuela's
economic situation had shown substantial improvement but that the
country still suffered from a crisis of confiCence ihic'h kept private
investment at a riinimuma and resulted in a substantial outflow\. of
capital\. The report stressed, however, that Venezuela's underlying
economic conditions were sound and that there were good prospects
fnr long-run economic growth\.
17\. Economic conditi ons have greatly improved since earl-y 1963\.
Ms,o, the nolitical situati on has stabilized after the orderly change
of administration which occurred in March of this year\.
18\. In 1963, the volcn\.e of netrolein exports increased only
moderately (2\.5%) - in contrast with 1962 when strong European demand
nermitted exports to increase byj nearly 9%\. 'Even so, the Venezuelan
economy naintained during 1963 a high level of activity - GOP in real
terms increasing nearly 6%, Manufacturing output - particularly in tne
durable goods field - expanded rapidly\. The building construction
industry experienced a very substantial recovery evidenced by the fact
that ce-ment factories are now operating at full capacity\.
19\. Fiscal and monetary policies have continued to further the
economic recovery of Venezuela by strengthening the confidence of the
orivate sector, maintaining monetary stability and protecting the
balance of payments\. During 1963, the national budget showed a cash
surpalus (nearly 10% of revenues) which w-as largely used to reduce
outstanding internal and external short-term debt obligations\.
20\. President Leoni has recently announced that the 1963-66
development plan, formulated uder President Betancourt, vould be
revised and converted into a new four year program\. As a first step,
he presented to Congress a supplementary exDenditure orogram for 1964
and an initial list of investment projects for the followT;ingr three
veers\. Investment exDenditures for the first sten of President Leoni's
four year program total about TIS 0730 million of which about US $180
mnillion would be financed from abroad\. The proposed loan for the
Second Highway Project, which is included in the transportation sector
of the program, would ccntribute US $30 million towtlard the program's
external reouirements\.
21\. The fiscal conservatism of the Government, together with the
fevorable development of the nolitical situation, has had a noticeable
-imrp,Tact on confidence in the nrivate sector\. The catital outflow that
- 6 -
bedevi-led the ec-unoro; in recent years has been slharnly redu\.cedl - even
though the or`ivate sector still enjcys a high de-ire 0 of' liquidity\.
The irnternal price level experienced an incre' se of 3\.0$ in t963\.
This increase is full-ly attributtable to the higher prices of -iLmported
commodities\. The level of prices for domestically produced g-oods di-d
not rise\.
22\. During 1963, exchanQe earnings increased slightly and imnorts
declined by about 11%\. Partly as a result of this and partly due to
the reduction in the outflow of capital, there wias an increase of -JS
$155 million in international reserves - which at the end of 1963
reached the record level of US $738 nmillion\.
23\. Venezuela's external debt as of June 30, 196l arounted to
US $361 million and its service (interest anc' amortization) for 126b
amounts to US $76 million or the equivalent of less than 5% of foreign
exchange receipts\. Since this debt is heavily wteighted by short-term
maturities, service on existinn obliaptions will decline rapidly\. In
brief, Venezuelats economic nrospects are favorable and it is credit-
worthy for additional long-tern loans\.
PART IV - LEPILL INSTRUMEITMTS AZD AUTHORITY
2h\. A draft Loan Agreement (Nlo\. 2) is attached\. It follows in
sulbstance the normal pattern of agreements for highway projects\. The
following provisions are of snecial interest:
As was found to be tne case in the first loan to Venezuela,
it is imnossible under Vlenezuelan law to make, in the
negative nledge clause of che Loen A\.greement (5\.o6), spe-
cific refcrence to the Central 3ank\.c of Venezuela\. In
order to protect the 3ank's interests, the same formula
used in Loans No\. 306 VE and 353 VU has been employed:
Section 6\.02 of the Loan Agreement cites as an event of
default any failure to enforce t1he Agreement between the
Government and the Central Bank under which the Central
Bank may not create any lien on its gold or foreig
exchange assets to guarantee obligations, excent liens
arising in the ordinarY course of business and securing
obligations of less than one year\.
25\. The report of the Committee orovided for in Article III,
Section L (iii) of the Articles of Agreement is -ttached (No\. 3)\.
- 7 -
PART V - COMPLIANCE WITH THE ARTTCLES OF AGRETENT
26\. I am satisfied that the proqosed loan -urold comTly with the
Articles of Agreement of' the Bank\.
PART VI - \.REICOMMEHDPTIONS
27\. I recommend that the fank make a loan to the Republic of
Venezuela in an amount equivalent to US $3000 million for a term of
twenty years, with interest of 51 per cent per annum and on such terms
as are sDecified in the attached Loan Agreement and that the Executive
Di-rectors adopt a Resolution to that effect in the form\. attached (Now )\.
George D\. Woods
President
By J\. Burkte Knapp
Vice President
Attachments
Washington, D\. C\.
August IL , 196L
BASIC DATA
k rea 352,00o sauare miles
Population 8\.1 million in 1963\. Increasing at
about 3\.5% per year\.
G T\.P\. in Real Terms
Annual Chang es 1959 + 7\.9%
1960 + 1\.2%
1961 + o\.04
1962 + 7\.2%
1963 + 5\.8% (Prei-i\.inary)
Per Capit,a IHT-tional The equivalent: of about c5>00 in terms
ITncome (1962) of anproximate nurchasinr power\.
Gross Fixed Investment
as Percentare of G\.D\.P\. 1960 12\.0k:
1961 16\. 3
1962 17\.2
CEUrTRAL G0,VRNAEtrlNT FINANCES - (Millions of Bs\.)
Preliminary 1964 Budget
196-2- 1963 Initial Supplemiientary Total
rTosed A7cecunts)
Current Revenues 5903 O581 6185 636 6821
Current Expenditures 2789 31ll 3031 272 3303
Transfers to States &
IL4luicirislitias 757 86h 880 - B8o
Investment T\.xpenditures 1731 1924 1595 614 2209
Surplus or deficit (-) 626 652 679 -250 429
Financed by:
Domestic borrowing or
recaymlents (-) -2°0 -396
External borrowing or
repayments (-) -7 -203
Changes in 'Treasury
deposits (-increase ) -361 -34
Other 72 -19
2\.
Monetary Survey - (Killions of Bs\.) End of
1962 1963 Anril 1964
Assets
Foreign Reserves (net) 1812 2286 3180
Credit to the Governrrient (net) 161 110 455
CloLms on the Private Sector 4265 h561 4628
Liabilities
Money 360\.9 3890 4095
Time and Saving Deposits i\.Bo6 2199 2154
Other 822 870 803
BALANCE CF PAYICNTS - (M1illions of US Dollars)
Preliminary
961 1962 1963
Petroleum Sector
Ixo orts 2275\.8 2369\.7 2384\.1
Imports - 57\.6 - 104L\.5 - 99\.6
Services, net 1/ - 559\.2 - 657\.9 - 6283b
Balance on current account 1659\.0 1607\.3 1556\.1
Balance on capital account - 75\.6 - 230\.3 - 130\.7
Other Sectors 2/
ExpDorts 176\.2 163\.4 170\.9
Imports 3/ -1051\.2 -1038\.0 - 917\.6
Services, net _- 339\.2 - 370\.0 - 3L5\.2
Balance on current account -121h\.2 -124b\.6 -10'1\.9
BalTnce on caoital account - 375\.3 - 326\.9 - 259\.1
of uihich: Private - 252\.6 - 240\.1 - 172\.9
Official - 122\.7 - 86\.8 - 86\.2
Monetary Sector 19\.3 2\.3 - 156\.4
Srrors and Omissions - 13\.2 192\.2 - 18\.0
1/ Includles unilateral private tro-nsfers
2/ Excluding Pmonetary sector
3/ Inclucling non-monetary gold
3\.
February
Prices 1962 1963 196L
(1956 = 00)
Hoome and Import Goods 110 11 115
Home Goods 104 103 104
Cost of Living 105 106 105
Taeole 1 - VENEZUELA - EXTERNAL PUBLIC DEBT OUTSTANDIING IlICLUDING
UNDIS3URSED AS OF JUNTE 30, 1964
Debot Repayable in Foreign Currerncy
(In thousands of 'U\.S\. dollar equivalents)
Debt outstanding
June 30, 196h
Item Net of Includinlg
uncisbursed undisbursed
TCTAL EXTU;U4AL PUBLIC fBT 161 225 361L1L8
Privately-placed debt 2,?E278 1h,278
IBRD loans 23,460 130,000
IDB loans 5,735 17 ?430
U\.S\. Government loans h4,7S1 17l,419
Export-Import Bank 71,021 U 7,739
AID 13,720 54,9 0
Loans front Italian Government 28pJ01 28,001
Table 2 - VENEZUELA - ESTIHMATED OONTM\.CTIJAL SEfVICEP AThO14ThS ON1%] EXTEQNAL PULiDCG DE1BT
OUTSTANDING INICLUDING UNDTSBUHSED AS OF JUN1L 30, 1964J1
Debt Repayable in Foreign Currency
(In thousands of U\.S\. dollar equivalents)
Page 1
Debt out- Debt out-
standing P wents during year standing _ Pj nents during year
Year plus un- Year plus un-
disbursed Anorti- In- Total disbursed Amorti- In- Total
January 1 zation terest _JanuyLl zatiorn terest
Total debt __rivately-placed debt
1964 361,1285 614055 12,316 76,371 19614 114,2785/ 37,177 3,326 40,503
1965 337,049 30,284 12,066 42,350 1965 12,198 3,392 1,262 4,654
1966 306,765 37,657 12,602 50,259 1966 8,&D6 3,092 757 3,M19
1267 269,108 25,515 11,624 37,139 1G67 5,714 2,882 371 3,253
1968 243,593 27,255 11,107 38,362 1968 2,232 1,542 1147 1,689
1969 216,338 11,626 9,821 21,L47 1969 1,250 1,031 54 1,085
1970 2004,712 11,262 9,2314 20,496 1970 259 259 8 267
1971 193,1450 11,569 8,657 20,226
1972 181,881 12,778 8\.,067 20,845
1973 169,103 12)291 7\.,449 19,77h0
1974 156 ,812 11-652 6\.o906 18,558
1975 145,160 12;204 6,373 18,577
19t6 132,956 12;\.376 5,815 18,191
1977 120,580 11,742 5,282 17,024
1978 108,838 12,268 4,,754 17,022
IBRD loans I 1DB loans
19614 1o,ooo 7 1,1421 1,0021 1964 7 14 j7661 175
1i95 130,000 -3257 37 1965 16,649 621 685 1,306
1966 130,0o 0 1,694 52369 7,063 1966 16,028 1,697 903 2;600
1967 128,306 1,793 6,338 8,131 1967 14,331 1,697 803 2,500
1968 126,513 4,127 7,005 11,132 1968 12,6314 1,697 707 2,404
1969 122,386 14,363 6,769 11,132 1969 10,937 1,697 609 2,306
1970 118,023 14,611 6,521 11,132 1970 9,2140 1,697 511 2,208
1971 113,412 4,873 6,259 11,132 1971 7,5143 1,697 410, 2,107
1972 108,539 5)151 5,981 11,132 1972 5-,846 1,697 312 2,009
See footnotes at end of table\.
P -ae 2
Debt out- Debt out-
standing Payments durinz year standing Payments durinRg year
Year plus un- Year plus un-
disbursed Amorti- In- Total disbursed Amorti- In- Tvtal
January 1 zation terest January 1 zation terest
1973 103,388 5,444 5,688 11,132 1973 41,149 1,349 215 1,564
1974 97,94h 5,754 5,378 11,132 1974 2,800 400 156 556
1975 92,190 6,081 5,051 11,132 1975 2,b00 400 132 532
lV76 86,109 6,428 4,704 11,132 1976 2,000 c00 110 510
1977 79,681 6,794 4,338 11,132 1977 1,600 hO4 86 486
1978 72,887 7,182 3,950 11,132 1978 1,200 hoc 6k 464
U\.S\. Govt\. loans - Total U\.S\. Govt\. loans - Export-Imnort Bank
1964 171hl9, 7 16,218 5,259 21,477 1964 n6J9z 16,158 4,738 20,596
1965 155,201 16,272 5,147 21,1419 1965 100,281 16,212 4L418 20,630
1966 138,929 18,172 4,838 23,010 1966 84,069 18,087 4,067 22,154
1967 120,757 19,143 4,112 23,255 1967 65,982 18,670 3,301 21,971
1968 101S614 19,889 3,248 23,137 1968 47,312 19,093 2,h19 21,512
1969 81,725 4k535 2,389 6,924 1969 28,219 3,589 1,549 5,138
1970 77,190 4,695 2,194 6,889 1970 24,630 3,5L9 1,351 4,900
1971 72,495 4,99s 1,988 69,937 1971 21,0o8 3,553 1,152 4,705
1972 67\.496 5;930 1,774 7,704 1972 17,528 3,416 957 4,373
1973 61,566 5,498 1,546 7,04 1973 14,112 1,916 784 2,7C0
1974 56,o68 5,498 1,372 6,870 1974 12,196 1,916 674 2,590
1975 50,570 5,723 1,190 6,913 1975 10,280 1,541 564 2,105
1976 44,847 5,545 1,C01 6,549 1976 8,739 1,166 485 1,651
\.1977 39,299 43548 858 5,406 1977 7,573 1,166 h19 1,585
1978 34,751 4,686 740 5,426 1978 6,4o7 1,166 351 1,517
See footnotes at end of table\.
Pmge 3
Debt out-Deto-
standing Payments durinc year standing Payments during Year
Year plus un- Year pluis un-
disbursed Amorti- In- Total disbursed Amorti- In- Total
January 1 zation tere st January 1 zation_ terest
UOS\. Govt\. loans - AID Loans rom Italian Government
1964 54,98o07 60 521 581 1906 2 ,uO - 9,999 2,135 12,134
1965 54,920 60 729 789 1965 23,001 9,999 1;h35 11,434
1966 54,860 85 771 856 1966 13,002 13,002 735 13,737
1967 54,775 473 811 1,284
1968 54,302 796 829 1,625
1969 53,506 946 840 1,786
1970 52,560 1,146 843 1,989
1971 51,414 1,446 836 2,282
1972 49,968 2,514 817 3,331
1973 47,454 3,582 762 4,344
1974 43,872 3,582 698 4,280
1975 1hO,290 4,182 626 4\.L,808
1976 36,108 4,382 516 4,,898
1977 31,726 3,382 439 3;821
1978 28,344 3,520 389 3,909
1/ Includes service on all debt listed in Table 1 prepared Auguist 4 1964
O/ Outstanding as of June 30, 1964; payments are for the entire year\. | APPROVAL |
P127134 |  PROJECT INFORMATION DOCUMENT (PID)
CONCEPT STAGE
Report No\.: PIDC289
Public Disclosure Copy
Project Name Solid Waste Management Improvement Project for Regional and Metropolitan Cities (P127134)
Region EAST ASIA AND PACIFIC
Country Indonesia
Sector(s) Solid waste management (100%)
Lending Instrument Specific Investment Loan
Project ID P127134
Borrower(s) Ministry of Finance
Implementing Agency Ministry of Public Works- Cipta Karya
Environmental Category A-Full Assessment
Date PID Prepared 02-Apr-2012
Estimated Date of Appraisal Completion 18-Mar-2013
Estimated Date of Board Approval 25-Jul-2013
Concept Review Decision Track II - The review did authorize the preparation to continue
I\. Introduction and Context
Country Context
1\. Over the past decade, Indonesia has sustained strong economic growth year on year\. Despite the global and domestic
economic challenges in recent times, such as the 2008-9 global recession, the current euro sovereign debt crisis, the effects of the
Japanese earthquake and tsunami, and the increases in international commodity prices and domestic food prices, Indonesia is on
course for 2011 to maintain its strong growth performance currently projected at 6\.4% , which is even higher than the 6\.1% growth
in GDP it achieved in 2010\. At the same time Indonesia has transformed this growth into substantial poverty reduction and has
already achieved the target MDG of halving the incidence of extreme poverty from 20\.6% of its population in 1990 to 5\.9% in 2008\.
2\. Notwithstanding such solid economic performance, Indonesia continues to face significant challenges in developing its
infrastructure for the 21st century and is now at a critical point where its relatively poor levels of infrastructure development are
holding back its growth potential and further poverty reduction efforts\. For example, Indonesia's quality of infrastructure in general
Public Disclosure Copy
and access to improved sanitation in particular, continuously rank at the lower end when compared to similar middle income
countries in the region\.
3\. Recognizing these issues and backed with its sustained strong economic performance, the Government of Indonesia is
committed to addressing its infrastructure challenges as one of its priorities\. This commitment is demonstrated in the current
medium term development plan (RPJMN) for 2010-2014 which sets a range of infrastructure development targets to be achieved by
2014 that include targets to improve access to higher quality sanitation to meet the MDG targets\. In addition, improving
infrastructure is also at the center of the Master Plan for the Acceleration and Expansion of Indonesia's Economic Development
2011-2025\.
4\. The prioritization of infrastructure spending is also seen in recent budget allocations\. For instance in 2011, the budget
allocation to capital expenditure was increased by 40% relative to the revised 2010 budget\. However, overall levels of investment in
infrastructure as a percentage of GDP have not risen to the pre- 1997/1998 crisis levels of 8% of GDP, but were around 4% of GDP
in the 2007-2009 period \.
Sectoral and Institutional Context
5\. The solid waste management sector in Indonesia today is under extreme stress mostly due to population pressure in
urban areas and is in a state of crisis\. For instance, there are approximately 110 million Indonesians (nearly half of the population)
living and working in urban centers today who collectively generate some 85,000 tonnes/day of solid waste, out of which only
34,000 tonnes/day are collected and disposed in landfills\. This means that 51,000 tonnes/day of solid waste remains uncollected in
urban areas in Indonesia today\. This uncollected waste ends up either on city sidewalks where it is openly burned contributing to
local air population problems, or in the storm drainage and sewer systems where it causes significant blockage and flooding\. These
poor sanitary conditions serve as ideal breeding grounds for disease vectors thereby creating additional public health challenges for
the cities to deal with, and further reduce quality of life for the urban population\.
6\. These issues have contributed to the urban populations demand for improved solid waste management services from
their municipal governments whose responsibility it is to provide these services\. However, service delivery and revenue generation
and collection have not kept pace with increasing quantities of waste that have resulted from large urban population and economic
growth\. As a result, cities are unable to cope and most landfills in Indonesia follow the practice of open dumping\. The poor design
and management practices of these open dump landfills result in unending leachate flows and uncontrolled emissions of methane ,
a greenhouse gas (GHG) that is generated through the anaerobic degradation of organic matter\.
7\. The demand for improved services has put significant political pressure on local elected officials which, in turn, has led to a
number of significant policy changes to help address these challenges\. For instance, the Ministry of Public Works (PU) in 2006
issued regulation (21/Prt/M/2006) outlining a number of policy and strategy measures for improving solid waste management
Public Disclosure Copy
systems during the planning period 2006-2015\. The 2006 regulation set out a number of measures which include a target for
increasing collection from 40% to 70% by 2015 and a five year time horizon for closing all open dump landfills or upgrading them to
more controlled conditions\.
8\. In 2008, a new Waste Management Act (No\.18/2008) was passed and signed into law outlining the responsibility of local
governments\. The 2006 regulation is completely aligned with the 2008 Act and is now the main regulation that outlines the
government's strategy to implement the 2008 act\. The 2008 act, inter alia, requires that all landfills be operated under sanitary
conditions\. Furthermore, the Ministry of Public Works (PU) maintains a budget line to provide block grants to the cities to help them
implement the requirements of the 2008 law\.
9\. The municipal governments are also fully engaged in a number of initiatives aimed at improving solid waste management
services in their cities, partly in an attempt to demonstrate that they are also leading this effort to improve quality of service ahead of
their respective municipal elections\. Most of these initiatives have included Clean Development Mechanism (CDM) projects and/or
other market mechanisms as part of a broader approach to privatize landfill operations and to increase operational revenues\.
10\. These regulatory, policy and budgetary reforms confirm the Government's commitment to a sustainable approach to help
resolve these challenges and have created the enabling environment and space for a sustainable program for which they have
requested World Bank support\.
11\. Despite these gains that Indonesia has made in the regulatory and policy front, most of the on the ground operational
responses in individual cities remains fragmented, unsustainable and not sufficiently large to adequately address the current crisis\.
12\. The private sector is keen to partner with the public institutions to address these challenges, but a lack of confidence in the
areas of public governance and management capacity are significant barriers for a broader and deeper involvement by the private
sector\. This has lead to the unavailability of much needed private capital inflows for investment in the sector\.
Relationship to CAS
13\. The proposed project is consistent and aligned with the current Indonesia Country Partnership Strategy (2009-2012),
investing in Indonesia's Institutions by continuing the core engagement in Environmental Sustainability and Disaster Risk
Mitigationwith Central Government Institutions (PU in this project) and implementing through Local Government Institutions (which
will be the participating municipalities)\.
Public Disclosure Copy
14\. The World Bank has also been actively and broadly supporting the urban sector in Indonesia for decades now\. More
recently, with respect to solid waste, in June 2001 the World Bank approved the West Java Environmental Management Project
(WJEMP) comprising a blended package of instruments, which were a loan, credit and GEF grant\. The loan was structured into a
three phase APL\. The rationale for the three phased APL approach was as follows, APL1 was to establish the Environmental
Framework and Preparation of designs; while APL2 was for Implementation of Environmental Programs; and APL3 was for
Consolidation of Service Delivery\. The WJEMP did prepare a number of relevant and useful studies and plans, including the
Provincial Environmental Strategies, National Environmental Strategy, a number of waste management plans and the Drainage
Master Plan for Jakarta
15\. In January 2012, the Bank approved the Jakarta Urgent Flood Mitigation Project (JUFMP) for FY12Q2 delivery, which inter
alia, will be dredging canals and drainage systems in the DKI Jakarta area that are in part blocked by solid waste deposits\. The
JUFMP project is benefiting from some of the studies done under the WJEMP\.
16\. Lastly, the Infrastructure Development Policy Lending (I-DPL) series that ended in 2010 included solid waste
management prior actions\.
II\. Proposed Development Objective(s)
Proposed Development Objective(s)
17\. The project development objective is to support improvements to solid waste management in participating municipalities
through selective interventions in waste minimization, collection, transfer, separation and disposal\.
Key Results
18\. The PDO will be measured by a combination of output and outcome indicators such as (i) completion of engineered
sanitary landfills and supporting infrastructure in participating municipalities, (ii) Operations and Maintenance contracts (O&M) in
place, (iii)adoption and implementation of operational and maintenance manuals and systems in participating municipalities, (iv)
increased collection and disposal rates and (v) adoption and implementation of pricing and collection strategies in each participating
municipality\.
III\. Preliminary Description
Concept Description
Public Disclosure Copy
19\. The PDO will be achieved through the implementation of these four components, namely,
Component A: Improvements in Solid Waste Management Systems ($122\.5m), these funds would be on-granted to the
participating municipalities and would finance the re-engineering and/or rehabilitation and/or closure of existing landfill/disposal
sites, construction of new state of the art sanitary landfills ( equipped with leachate treatment plants, heavy equipment such as
compactors and bulldozers, facilities for staff/operator), waste treatment systems (such as sorting and composting plants, landfill
gas to energy/flaring plants, and or other treatment systems as appropriate) and transfer stations\. The 3 R approach ( reduce, re-
cycle, re-use) will be incorporated in the design and infrastructure works to minimize waste generation rates at the household level
and local markets, and subsequently lowering collection, transfer and disposal costs, and extending the life of the landfills\. The
selection criteria for participating provinces and municipalities which will include financial and technical considerations, will be
agreed upon as part of project preparation and will also be aligned with Indonesia's Master Plan 2011-2025\.This component will be
rolled out in two phases\. Phase 1 investments will be ready for implementation soon after project effectiveness and Phase 2
investments will be prepared, appraised and implemented in subsequent years during project implementation\. The potential Phase
1 and 2 groups of municipalities under consideration are the Cities of Semarang, Yogyakarta, Medan, Bekasi and Tangerang\.The
proposed investments are presently subject to a feasibility study to ascertain their commercial, economic and technical viability\.
Both phases will be completed within the five year life cycle of the project as the proposed lending instrument will be a specific
investment loan (SIL)\. The proceeds of the loan would be on-granted to the participating municipalities depending on the
institutional and implementation arrangements agreed upon, the relevant national regulations and other considerations\.
Component B: Implementation Support ($10m)\. This component is expected to be co-financed or parallel financed as a donor
grant\. The source of financing will be confirmed during project preparation and will finance the technical assistance required to
support the institutional framework needed to sustainably operate and maintain the effective management of these systems\. The
government and potential participating municipalities, given the past experiences in the sector, have suggested a partnership
approach between the national and participating municipal governments as the institutional framework to manage each provincial
waste management system\. The BLU approach (Badan Layanan Usaha, as it is known under Indonesia regulations) involves
establishing service units (in the Dinas Kebersihan, which is the cleansing services department of the participating municipalities)\.
The established BLU's would be set up with a clear and pre- defined benchmarks\. These benchmarks could include the completion
of O&M contacts after a number of years to demonstrate how the improved systems are to be managed, as well as the cost
recovery measures and the allocation of operation budgets by the local parliament (DPRD)\. This component will also provide
support to establish a country wide carbon/climate finance activity for the solid waste management sector as a whole to coordinate
market based carbon revenue generation opportunities\. This component will also include funding for setting up publically
Public Disclosure Copy
accessible information based National Solid Waste Benchmarking System (NSWBS)\. Details of this system will be agreed upon
during project preparation but will include an incentive based mechanism to improve management of these operations\.
Component C: Social Development Component ($5m)\. The funding source for this component will be confirmed during project
preparation\. This component will address the social needs of waste pickers and affected host community members, particularly
owners of livestock\. Challenges related to resettlement/land acquisition and the potential loss of livelihood for waste pickers and
livestock owners will be comprehensively addressed to help improve their social development outcomes\. This component will not
finance any physical investmen ts or works associated with landfill workers or livestock, as these need to be integrated into the
landfill operations as a whole and are thus included in Component A\. This component will finance training, continuous consultations
with affected households, participation activities and potentially a fund to address major social concerns during preparation\.
Component D: Advisory Services ($5m) will finance high level strategic and analytical studies to underpin advice to GoI and
municipalities on potential sector policy reform options going forward\.
IV\. Safeguard Policies that might apply
Safeguard Policies Triggered by the Project Yes No TBD
Environmental Assessment OP/BP 4\.01 â
Natural Habitats OP/BP 4\.04 â
Forests OP/BP 4\.36 â
Pest Management OP 4\.09 â
Physical Cultural Resources OP/BP 4\.11 â
Indigenous Peoples OP/BP 4\.10 â
Involuntary Resettlement OP/BP 4\.12 â
Safety of Dams OP/BP 4\.37 â
Projects on International Waterways OP/BP 7\.50 â
Projects in Disputed Areas OP/BP 7\.60 â
V\. Tentative financing
Public Disclosure Copy
Financing Source Amount
Borrower 22\.50
International Bank for Reconstruction and Development 100\.00
Bilateral Agencies (unidentified) 20\.00
Financing Gap 0\.00
Total 142\.50
VI\. Contact point
World Bank
Contact: James Orehmie Monday
Title: Senior Environmental Engineer
Tel: 5778+8358
Email: jmonday@worldbank\.org
Borrower/Client/Recipient
Name: Ministry of Finance
Contact: Tor Tobing
Title:
Tel: +62 (0)81-285-19530
Email: tortobing 2011@gmail\.com
Implementing Agencies
Name: Ministry of Public Works- Cipta Karya
Contact: IR Budi Yuwono Prawirosudirjo
Title: Director General - Cipta Karya
Tel: 622172796158
Public Disclosure Copy
Email: budiyuwono@pu\.go\.id
VII\. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Web: http://www\.worldbank\.org/infoshop | APPROVAL |
P078458 | Document of
The World Bank
Report No: ICR00001512
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IDA-39850)
ON A
CREDIT
IN THE AMOUNT OF SDR 17\.1 MILLION
(US$25\.0 MILLION EQUIVALENT)
TO THE
FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA
FOR AN
INFORMATION AND COMMUNICATION TECHNOLOGY ASSISTED
DEVELOPMENT PROJECT (ICTAD)
February 11, 2010
Transport, Water and ICT Sector Department
Ethiopia Country Department
Africa Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective May 31, 2010)
Currency Unit = Ethiopian Birr (ETB)
1\.00 ETB = USD 0\.07397
USD 1\.00 = 13\.51856 ETB
1\.00 SDR = 1\.474330 USD
FISCAL YEAR: July 8 July 7
Vice President: Obiageli Ezekwesili
Country Director: Kenichi Ohashi
Sector Manager: Phillipe Dongier
Project Team Leader: Bobak Rezaian
ICR Team Leader: Bobak Rezaian
ICT Main Author: Eduardo Talero
ABBREVIATIONS AND ACRONYMS
BIC Business incubation program
CAS Country Assistance Strategy
CIDEV Community ICT development program
CR Community radio program
CRTC Computer Refurbishment and Training Center
CSC Civil service college
CTIT College of Telecommunication and Information Technology
DED German Development Service
DMF De-manufacturing facility
EBA Ethiopian Broadcasting Authority
EICTDA Ethiopian Information and Communication Technology Development Agency
ETA Ethiopian Telecommunications Authority
ETC Ethiopian Telecommunications Company
FMR Financial monitoring report
FEMSEDA Federal medium and small enterprise development agency
GoE Government of Ethiopia
International Bank for Reconstruction and Development\. Includes IDA as one
IBRD
of its component institutions\.
ICR Implementation Completion Report
ICT Information and communications technologies
ICTAD Information and Communication Technology Assisted Development Project\.
ISP Internet service provider
ISR Implementation Supervision Report (internal IDA report)
M&E Monitoring and evaluation
MIT Mekele Institute of Technology
MTR Mid-term review (April 2008)
PAD Project appraisal document
PASDEP Plan for Accelerated and Sustained Development to End Poverty
PDO Project Development Objective
PIC Productivity Improvement Center
PMU Project management unit
RF Results framework
SDPRP Sustainable Development and Poverty Reduction Program
TOT Training of trainer program
TVET Technical and Vocational and Educational Training Schools Program
Woreda District-level administrative unit managed by local government
COUNTRY
Project Name
Ethiopia: ICT Assisted Development - ICTAD
CONTENTS
Data Sheet
A\. Basic Information
B\. Key Dates
C\. Ratings Summary
D\. Sector and Theme Codes
E\. Bank Staff
F\. Results Framework Analysis
G\. Ratings of Project Performance in ISRs
H\. Restructuring
I\. Disbursement Graph
1\. Project Context, Development Objectives and Design\. 1
2\. Key Factors Affecting Implementation and Outcomes\. 5
3\. Assessment of Outcomes \. 13
4\. Assessment of Risk to Development Outcome:\. 19
5\. Assessment of Bank and Borrower Performance \. 21
6\. Lessons Learned\. 28
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners\. 30
Annex 1\. Project Costs and Financing\. 32
Annex 2\. Outputs by Component\. 35
Annex 3\. Economic and Financial Analysis \. 57
Annex 4\. Bank Lending and Implementation Support/Supervision Processes\. 63
Annex 5\. Beneficiary Survey Results \. 64
Annex 6\. Stakeholder Workshop Report and Results\. 64
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR \. 65
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \. 70
Annex 9\. List of Supporting Documents \. 71
Annex 10 - List of people met \. 74
Annex 11 - Developments in Ethiopia's Telecom Services 2006 2009 \. 76
MAP
A\. Basic Information
ET-ICT Assisted Dev
Country: Ethiopia Project Name:
SIM (FY05)
Project ID: P078458 L/C/TF Number(s): IDA-39850
ICR Date: 02/17/2011 ICR Type: Core ICR
FEDERAL
DEMOCRATIC
Lending Instrument: SIM Borrower:
REPUBLIC OF
ETHIOPIA
Original Total
XDR 17\.1M Disbursed Amount: XDR 10\.7M
Commitment:
Revised Amount: XDR 10\.7M
Environmental Category: C
Implementing Agencies:
Ethiopian ICT Development Agency
Cofinanciers and Other External Partners:
German Development Services
B\. Key Dates
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 06/12/2003 Effectiveness: 06/24/2005 06/24/2005
Appraisal: 03/23/2004 Restructuring(s): 12/10/2008
Approval: 09/16/2004 Mid-term Review: 03/24/2008 03/24/2008
Closing: 05/31/2010 05/31/2010
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes: Satisfactory
Risk to Development Outcome: High
Bank Performance: Moderately Satisfactory
Borrower Performance: Moderately Satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory
Implementing
Quality of Supervision: Moderately Satisfactory Moderately Satisfactory
Agency/Agencies:
Overall Bank Overall Borrower
Moderately Satisfactory Moderately Satisfactory
Performance: Performance:
i
C\.3 Quality at Entry and Implementation Performance Indicators
Implementation QAG Assessments
Indicators Rating
Performance (if any)
Potential Problem Project Quality at Entry
Yes Satisfactory
at any time (Yes/No): (QEA):
Problem Project at any Quality of
No None
time (Yes/No): Supervision (QSA):
DO rating before Moderately
Closing/Inactive status: Satisfactory
D\. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
General education sector 10 10
General industry and trade sector 10 10
General information and communications sector 60 60
General public administration sector 10 10
Health 10 10
Theme Code (as % of total Bank financing)
Decentralization 25 25
Education for the knowledge economy 24 30
Other human development 13 20
Rural services and infrastructure 25 10
Trade facilitation and market access 13 15
E\. Bank Staff
Positions At ICR At Approval
Vice President: Obiageli Katryn Ezekwesili Callisto E\. Madavo
Country Director: Kenichi Ohashi Ishac Diwan
Sector Manager: Philippe Dongier Nicolas M\. Gorjestani
Project Team Leader: Abdolreza B\. Rezaian Abdolreza B\. Rezaian
ICR Team Leader: Abdolreza B\. Rezaian
ICR Primary Author: Eduardo Talero
ii
F\. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document)
To assist communities to improve their livelihood through the use of appropriate
Information and Communication Technologies (ICT) that facilitate increased access to
markets, development information, and public services\. To achieve this objective the
project will enable public and private sector providers of information, goods and services
to improve the quality and quantity of their products through the efficient and effective
use of ICTs\.
Revised Project Development Objectives (as approved by original approving authority)
To increase the use of Information and Communication Technologies by Communities in
project Target Areas\.
(a) PDO Indicator(s)
Original Target Formally Actual Value
Values (from Revised Achieved at
Indicator Baseline Value
approval Target Completion or
documents) Values Target Years
1\. Aggregate number of private entities that offer ICT services - AFTER
Indicator 1 :
RESTRUCTURING
ICT businesses
countrywide: Total
baseline value of 5714
(aggregated from
Indicator No\. 10) ICT
Telecenters/Call centers: By 2009, 15% avg\. businesses
Value 184 annual growth in countrywide: ICT businesses
quantitative or Cyber cafes:159 project areas after 12089 countrywide: 12352
Qualitative) Tele service implementation of (aggregated (102% of target)\.
resellers:5026 policy reforms\. from Indicator
Computer No\. 10)
maintenance:159
Computer trg:141
SW development:45
Lic\. com\. Radio:0
Date achieved 03/31/2006 12/31/2007 12/10/2008 05/31/2010
Achieved 100%\. The combined effects of policy & standards framework,
Comments
extensive vocational training imparted, business incubators, community centers
(incl\. %
and radios created under the project contributed to the growth of the ICT services
achievement)
sector beyond targets\.
2\. Average monthly number of ICT users in project areas/communities - AFTER
Indicator 2 :
RESTRUCTURING
Value
quantitative or 57140 12059 10000 72542
Qualitative)
Date achieved 03/31/2006 05/31/2010 05/31/2010 05/31/2010
iii
Achieved 725%\. Achievement is particularly important bec\. it validates demand-
Comments
driven approach to formation of com\. centers & value of the centers to affected
(incl\. %
com\. country-wide\. Project also overachieved in # of com\. centers & com\. radios
achievement)
created\.
By 2009, in the areas covered by the project business transaction cost for users of
Indicator 3 : ICT assisted services reduced by 30% - ORIGINAL BEFORE
RESTRUCTURING
Service/Value
Service/Value
3-min local-
3-min local-
Fixed:0\.32
Service/Value Fixed:0\.10
3-min local-
3-min local-Fixed:0\.46 3-min local-
Mobile:3\.15
3-min local-Mobile:4\.50 Mobile:4\.50
3-min Intnl\.-
Value 3-min Intnl\.-Fixed:43\.94 3-min Intnl\.-
Fixed:30\.76
quantitative or 3-min Intnl\.- Fixed:30
3-min Intnl\.-
Qualitative) Mobile:32\.16 3-min Intnl\.-
Mobile:22\.51
Internet/minute:0\.32 Mobile:32\.16
Internet/minute:0\.2
Internet Internet/minute:0\.2
0
Subscription:436\.29 4
Internet
Internet
Subscription:305\.4
Subscription:101\.74
0
Date achieved 03/31/2006 12/31/2009 12/31/2009
Fully Achieved\. Except for local & int'l mob\. charges, general trend was tariff
Comments
cost reductions (-35\.47% AVE), particularly if accum\. inflation (80%+) is
(incl\. %
considered\. This Ind\. was dropped at restructuring as the project had no leverage
achievement)
to pursue it\.
By 2009, in the areas not covered initially by the project, at least 20% of the
Indicator 4 : initiatives supported by the project were mainstreamed, transferred or adapted to
other locations\. ORIGINAL BEFORE RESTRUCTURING
8 Community
center initiatives
were adopted by
ETA and 15
centers by EICTDA
Value in non-project
quantitative or 0 locations\. Rural
Qualitative) connectivity
initiatives were
taken up by ETC
and far exceeded
the original project
targets\.
Date achieved 03/31/2006 12/31/2009
Comments Fully Achieved\. Although indicator was rather imprecise, 4 of 5 critical project
(incl\. % initiatives (com\. centers, rural tel\. services, business incubation, & SME trg in
achievement) ICT) were expanded to areas not originally covered by the project\.
iv
(b) Intermediate Outcome Indicator(s)
Original Target Actual Value
Formally
Values (from Achieved at
Indicator Baseline Value Revised
approval Completion or
Target Values
documents) Target Years
Comp 1 Policy & Institutional Support
Indicator 1 :
National IT Policy developed
National ICT Policy
approved by
Council of
Ministers in July,
Value
2009\.
(quantitative 0 1
\.National ICT
or Qualitative)
Security policy and
guidelines were
also completed, not
yet adopted\.
Date achieved 09/16/2004 03/31/2006 12/31/2009
Comments
(incl\. % Achieved: 100%
achievement)
Comp 1 Policy & Institutional Support
Indicator 2 :
National ICT Standards and guidelines approved
Value 4 standards and 5 Indicator
(quantitative 0 guidelines adopted restated (see
or Qualitative) by 2007\. below)
Date achieved 09/16/2004 12/31/2009 05/31/2010
Comments
(incl\. %
achievement)
Comp 1 Policy & Institutional Support
Indicator 3 : EICTDA proposes standards for local language script; keyboard layout; data
exchange; and other ICT related standards and regulations
14 standards
14 ICT standards
and 3
and 3 ICT
guidelines
guidelines were
including
completed,
Value Standards for
including 6 local
(quantitative 0 script,
language standards,
or Qualitative) localization of
between May and
software
September 2008
applications,
(see Annex 2,
keyboard
Subcomponent 1\.2)\.
layout etc\.
Date achieved 09/16/2004 12/31/2009 05/31/2010
Comments
(incl\. % Achieved 100%
achievement)
v
Comp 1 Policy & Institutional Support
Indicator 4 : Ethiopian ICT Development Authority (EICTDA) effectively
Fulfills its mandate as stipulated in its 2003 proclamation\.
The EICTDA
emerged from the
Project with
strength and
Indicator capacity that can
Value dropped at hardly bear
(quantitative None defined restructuring\. comparison with
or Qualitative) Replaced by the situation at the
one above\. start of the Project
when the Agency
had just been
created (see Report
Section 3\.5 (b))\.
Date achieved 09/16/2004 12/31/2009 05/31/2010
Comments
(incl\. % Achieved 100%
achievement)
Comp 1 Policy & Institutional Support
Indicator 5 :
Reduced Import Tax for ICT equipment
100% tariff
Value reduction was
(quantitative 40% 10% 0% approved for
or Qualitative) investment-related
imports only\.
Date achieved 09/16/2004 12/31/2009 12/31/2009 05/31/2010
Comments
(incl\. % Partially achieved: 50%
achievement)
Comp 1 Policy & Institutional Support
Indicator 6 : Laws enacted by 2006, allowing competitive provision of connectivity and ICT
related goods and services
National Electronic
Transaction Law,
National Data
Protection Law, e-
Commerce Law, e-
Value End of 2006\. No Indicator Signature Law,
(quantitative 0 specific target dropped at Computer Misuse
or Qualitative) laws defined MTR\. and Cyber Crime
Law all drafted by
the end of the
project and
undergoing
legislative process\.
Date achieved 09/16/2004 12/31/2009 12/31/2009 05/31/2010
Comments Partially achieved # 40%\. No specific law drafted for competitive provision of
vi
(incl\. % connectivity\. Other laws drafted in 2007\.
achievement)
Comp 1 Policy & Institutional Support
Policies, laws and regulations adopted governing the protection and interests of
Indicator 7 :
copyrights and intellectual property rights of indigenous knowledge bearers and
providers\.
End of 2008\. No
Value Indicator
specific target
(quantitative 0 dropped at Not achieved # 0%
laws/policies
or Qualitative) MTR\.
defined
Date achieved 09/16/2004 12/31/2009 12/31/2009 05/31/2010
Comments
(incl\. % Not achieved # 0%
achievement)
Comp 1 Policy & Institutional Support
Indicator 8 : Ethiopian Telecommunications Corporation (ETC) effectively provides
backbone services at competitive rates,
#Backbone infrast\.:
10,000 Km\. of fiber
optics line\.
#Network capacity
in place: 15m
mobile; 4m fixed
Value Indicator line & 1\.2 m\.
(quantitative None defined dropped at internet\.
or Qualitative) restructuring #Subscribers:
8\.67m\. mobile;
1\.18m\. fixed line &
0\.1m\. internet\.
#Tariff reduction:
Avg of 35\.47% s on
tracked services
Date achieved 09/16/2004 12/31/2009 05/31/2010
Comments Partially Achieved: 50%\. Expansion of infrastructure is beyond all expectations\.
(incl\. % Actual service improvements by end of project are small\. Tariff reduction is
achievement) significant\.
Comp 1 Policy & Institutional Support
ITIT produces sufficient technicians & skilled workers concomitant wi/its own
Indicator 9 :
& private sector demand in area of Network design, mngt & op\. & mob\. phone
switching
164 TVET
Value Indicator Instructors
(quantitative 0 450 dropped at completed TOT on
or Qualitative) restructuring Basic PC
maintenance\.
Date achieved 09/16/2009 12/31/2009 12/31/2009 05/31/2010
Comments
(incl\. % Partially Achieved: 36%\.
achievement)
vii
Comp 1 Policy & Institutional Support
Indicator 10 : ETA effectively regulates and enforces national policy by 2007 (spectrum
management, licensing, new technologies etc\.)
ETA develops
ETA established a
a licensing
licensing scheme
At least 2 private scheme for
Value for ISPs and 5 ISPs
ISP licenses per ISPs
(quantitative 0 were licensed on 28
annum starting consistent with
or Qualitative) Feb 2007 after
2007 international
several date
good practice
extensions\.
(2007)\.
Date achieved 09/16/2009 12/31/2009 12/31/2009 05/31/2010
Comments
Partially achieved: 40%\. Licenses are only for dial-up service and none were
(incl\. %
operational by end of project\.
achievement)
Comp 1 Policy & Institutional Support
Indicator 11 : Ethiopian Broadcasting Agency (EBA) develops a radio licensing scheme by
2005, effectively supports applicants to meet license requirements\.
#Radio licensing
scheme completed
EBA develops in early 2006\.
an effective #New broadcasting
licensing proclamation No
scheme for 533/07 issued 23
Value Radio licensing community Jul 2007 addressing
(quantitative 0 scheme completed and the development of
or Qualitative) by end of 2005 commercial Community Radio\.
radios # 8 broadcasting
consistent with directives, 1
international broadcasting law
good practice\. completed between
July,2007 & end of
Project\.
Date achieved 09/16/2004 12/31/2009 12/31/2009 05/31/2010
Comments
(incl\. % Achieved 100%
achievement)
Comp 1 Policy & Institutional Support
PMU monitoring provides policymakers recomm\. regularly & on demand related
Indicator 12 :
to inst\., leg\. & pol\.env\. impact of pol\. ref\. ICT & other sect\. impact of ICTAD
supp\. measures impact analysis of trg skilled ICT work force
Value Indicator Strong M&E
No M&E existed at
(quantitative dropped at system was setup
project start
or Qualitative) restructuring\. under the project\.
Date achieved 09/16/2004 12/31/2009 12/31/2009
Comments
Partially Achieved: 70%\. See Section 2\.3 for assessment of strengths and
(incl\. %
weaknesses\.
achievement)
Indicator 13 : Comp 1 Policy & Institutional Support
viii
Effective outreach and communication structure in place by end 2005 provides
transparent, effective and efficient management of measures supported under
ICTAD\.
#Over 30 awareness
raising events for
over 3,000 people
organized\.
#Mid-term and
Project closing
workshops held to
Value Indicator
No outreach program at transparently
(quantitative dropped at
project start evaluate project
or Qualitative) restructuring\.
results with all
stakeholders\.
#General
information on
ICTAD project
disseminated:
www\.ictadethiop
Date achieved 09/16/2004 12/31/2009 12/31/2009
Comments
(incl\. % Achieved 100%
achievement)
Comp 1 Policy & Institutional Support
Indicator 14 : Effective and efficient management of ICTAD supported activities in place by
end 2005\.
Accomplishment of
most objectives is
best indicator of
Value Indicator overall project
PMU fully staffed
(quantitative PMU did not exist dropped at management
by end of 2005
or Qualitative) restructuring\. performance\.
Staffing was in
place by end of
2005\.
Date achieved 09/16/2004 12/31/2009 12/31/2009 12/31/2009
Comments
(incl\. % Achieved 100%
achievement)
Comp 2 Public and Private Sector Providers enabled to provide ICT assisted
Indicator 15 : services and users enabled to access and utilize them
Number of people trained by supported ICT training centers
3,283 people
Value
1,000 by end trained at CIDEV
(quantitative 0
of project centers and 50 by
or Qualitative)
CRTC\.
Date achieved 09/16/2004 12/31/2009 05/31/2010
Comments
Achieved 300%
(incl\. %
ix
achievement)
Comp 2 Public and Private Sector Providers enabled to provide ICT assisted
Indicator 16 : services and users enabled to access and utilize them
Trainers trained in selected TVET centers,
Value Indicator 382 trainers had
At least 400 by
(quantitative 0 restated\. See been trained by 9-
2009
or Qualitative) below 30-2009
Date achieved 09/16/2004 12/31/2009 12/31/2009 05/31/2010
Comments
(incl\. % Achieved 95\.5%
achievement)
Comp 2 Public and Private Sector Providers enabled to provide ICT assisted
Indicator 17 : services and users enabled to access and utilize them
TOT program participants getting an ICT trainer certificate
576 certified
Value trainers, additional
600 by end of
(quantitative 0 500 training sessions
project
or Qualitative) were on-going by
end of project\.
Date achieved 09/16/2009 12/31/2009 12/31/2009 05/31/2010
Comments
(incl\. % Achieved 96%
achievement)
Comp 2 Public and Private Sector Providers enabled to provide ICT assisted
Indicator 18 : services and users enabled to access and utilize them
Technician training labs established in existing TVET#s
15 labs were
established: 2 each
in TVET colleges
Value At least three labs in Tigray, Oromia,
(quantitative 0 established in in 3 SNNP and Amhara
or Qualitative) TVET colleges regions\. One
training lab in each
of the other 7
regions\.
Date achieved 09/16/2004 12/31/2009 05/31/2010
Comments
(incl\. % Achieved 500%
achievement)
Comp 2 Public and Private Sector Providers enabled to provide ICT assisted
Indicator 19 : services and users enabled to access and utilize them
ICT SMEs supported within the context of ReMSEDA (PIC added in Oct, 2006)
Value Indicator re- 287 operators
100 operator
(quantitative 0 stated\. See trained by 9-30-
trained by 2009\.
or Qualitative) below 2009\.
Date achieved 09/16/2004 12/31/2009 12/31/2009 05/31/2010
Comments
(incl\. % Achieved 287%
achievement)
x
Comp 2 Public and Private Sector Providers enabled to provide ICT assisted
Indicator 20 : services and users enabled to access and utilize them
Staff from s SMEs trained in use and maintenance of ICT equipment
645 operators
trained by end of
Value
200 by end of project, 363 by PIC
(quantitative 0
project and 282 by
or Qualitative)
FEMSEDA and
CTIT\.
Date achieved 09/16/2004 12/31/2009 05/31/2010
Comments
(incl\. % Achieved 322\.5%
achievement)
Comp 2 Public and Private Sector Providers enabled to provide ICT assisted
services and users enabled to access and utilize them
Indicator 21 :
ICT Incubators in place to provide a conducive environment for private ICT
startups\.
Four ICT business
incubators were
Value 2 incubators by
created and have
(quantitative 0 2007 with at least
started operations
or Qualitative) 20 startups
with 43 private ICT
start-ups\.
Date achieved 09/16/2004 12/31/2009 05/31/2010
Comments
(incl\. % Achieved 100%
achievement)
Comp 2 Public and Private Sector Providers enabled to provide ICT assisted
Indicator 22 : services and users enabled to access and utilize them
Operational rural community phones
ETC had installed
Value Indicator
At least 3,000 by 10696 wireless
(quantitative 0 dropped at
2009 village phones by
or Qualitative) restructuring
the end of 2009\.
Date achieved 09/16/2004 12/31/2009 12/31/2009 05/31/2010
Comments
(incl\. % Achieved 356% by the Government
achievement)
Comp 2 Public and Private Sector Providers enabled to provide ICT assisted
services and users enabled to access and utilize them
Indicator 23 :
Community ICT development projects funded, evaluated, and screened for
scaling up
65 community
Number of
centers (54 under
operational
Value CIDEV and 11
At least 40 centers CIDEV-
(quantitative 0 under the Ministry
by end of 2009, Centers with a
or Qualitative) of Youth and Sports
business plan
Affairs) were fully
in place
operational by the
xi
end of 2009\.
Date achieved 09/16/2004 12/31/2009 12/31/2009 05/31/2010
Comments
(incl\. % Achieved 162%
achievement)
Comp 2 Public and Private Sector Providers enabled to provide ICT assisted
Indicator 24 : services and users enabled to access and utilize them
Local facility for computer remanufacturing is established\.
Local facility The RTC facility at
for computer Akaki is completed,
refurbishment operational and
Value
One facility by and technician with reliable supply
(quantitative 0
2006 training is and sales
or Qualitative)
established arrangements to
and achieve self
operational sustainability\.
Date achieved 09/16/2004 12/31/2009 12/31/2009 05/31/2010
Comments
(incl\. % Achieved 100%
achievement)
Comp 2 Public and Private Sector Providers enabled to provide ICT assisted
Indicator 25 : services and users enabled to access and utilize them
Number of households using radio and TV as measured by ITU
6 million\.
Value
3,5 mil\. (2004 ITU data) (Estimated by ITU
(quantitative 6,000,000
as 4\.86% of 15\.1
or Qualitative)
mil\. households)\.
Date achieved 09/16/2004 12/31/2009 05/31/2010
Comments
(incl\. % Achieved 100%
achievement)
Comp 2 Public and Private Sector Providers enabled to provide ICT assisted
Indicator 26 : services and users enabled to access and utilize them
Number of mobile subscribers (post-paid + Pre-paid) as measured by ITU
4 million
subscribers
Value
according to ITU#s
(quantitative 155,534 (2004 ITU data) 1,300,000
2009 statistics\. (8
or Qualitative)
million according to
ETA)
Date achieved 09/16/2004 12/31/2009 05/31/2010
Comments
(incl\. % Achieved 307 %
achievement)
Comp 2 Public and Private Sector Providers enabled to provide ICT assisted
Indicator 27 : services and users enabled to access and utilize them
Number of internet users as measured by ITU
Value 113,000 400,000 according
300,000
(quantitative (2004 ITU data) to ITU#s 2009
xii
or Qualitative) statistics\.
Date achieved 09/16/2009 12/31/2009 05/31/2010
Comments
(incl\. % Achieved 133%
achievement)
Comp 2 Public and Private Sector Providers enabled to provide ICT assisted
Indicator 28 : services and users enabled to access and utilize them
Number of Community Radios operational
7 community radios
Value
established and
(quantitative 0 4
operational, one
or Qualitative)
more being set up\.
Date achieved 09/16/2009 12/31/2009 05/31/2010
Comments
(incl\. % Achieved 175 %
achievement)
G\. Ratings of Project Performance in ISRs
Actual
Date ISR
No\. DO IP Disbursements
Archived
(USD millions)
1 05/12/2005 Satisfactory Satisfactory 0\.00
2 07/13/2005 Satisfactory Satisfactory 0\.00
3 12/01/2005 Satisfactory 1\.63
4 04/25/2006 Satisfactory Satisfactory 1\.74
5 09/14/2006 Satisfactory Satisfactory 2\.24
6 02/16/2007 Satisfactory Satisfactory 2\.61
7 09/11/2007 Moderately Satisfactory Moderately Satisfactory 4\.56
8 01/28/2008 Moderately Satisfactory Moderately Satisfactory 5\.17
9 06/24/2008 Moderately Satisfactory Moderately Satisfactory 5\.68
10 12/30/2008 Moderately Satisfactory Moderately Satisfactory 8\.66
11 06/09/2009 Moderately Satisfactory Moderately Satisfactory 10\.47
12 12/18/2009 Moderately Satisfactory Moderately Satisfactory 13\.90
13 06/29/2010 Moderately Satisfactory Moderately Satisfactory 16\.43
H\. Restructuring (if any)
ISR Ratings at Amount
Board Restructuring Disbursed at
Restructuring Reason for Restructuring &
Approved Restructuring
Date(s) Key Changes Made
PDO Change DO IP in USD
millions
Rural connectivity component
12/10/2008 N MS MS 8\.66 was taken up directly by
government and cancelled from
xiii
ISR Ratings at Amount
Board Restructuring Disbursed at
Restructuring Reason for Restructuring &
Approved Restructuring
Date(s) Key Changes Made
PDO Change DO IP in USD
millions
the project\.
I\. Disbursement Profile
xiv
1\. Project Context, Development Objectives and Design1
1\.1 Context at Appraisal
Alignment with Country Development Objectives\.
1\. With per capita Gross National Income of USD 160 Ethiopia ranked 169 out of 177
countries in the United Nation's Human Development Index (HDI) for 2005\. Little
progress had been achieved since the turn of the century in terms of the percentage of
population living below the poverty line which stood at 44 per cent of the estimated 67
million population in 2005\. Ethiopia therefore ranked among the ten poorest countries of
the world\. In early 2002 85% of its estimated 65 million population lived in rural areas
and had some of the lowest levels of life expectancy, literacy rate and access to primary
health care\.
2\. The Project arose from explicit national strategy and coordinated Government
request to all developing partners for support in building up the capacity of the economy
to solve its poverty and inequality problems and to meet its development goals\. GoE saw
Information and Communication Technologies (ICT) as an enabler of efforts to achieve
sustainable development and poverty reduction through support of the capacity building
pillar of the country's sustainable development and poverty reduction program (SDPRP)
adopted in 2002\.
3\. The project was designed to support SDRP's National Capacity Building Sub
Program to: (i) strengthen the policy, regulatory and legal framework for use of ICT; (ii)
improve organizational effectiveness and develop human resources of core ICT sector
agencies; and (iii) "build capacity to build capacity" through a country-wide training of
trainers (TOT) program\. Furthermore, under the ICT Capacity Building objectives of the
sub program, the project included a component to expand community-based ICT services
and another to support the private ICT services industry\.
4\. In alignment with the SDRP, the project was also supportive of the Bank's 2003-
2005 Ethiopia Country Assistance Strategy (CAS) goals of (i) enhancing pro-poor growth
(ii) fostering economic growth by supporting the creation of a favorable environment for
more active participation of the private sector in all aspects of ICT sector development
and (iii) strengthening the key ICT sector agencies\.
Sector background
5\. At the time of appraisal (March, 2004) Ethiopia lacked a coherent policy, standards
or guidelines for use of ICT in the public sector\. The Government had prepared an ICT
Policy paper in line with the SDRP which was being reviewed by the Council of
Ministers\. Standards to display information in local languages were non-existent\. High
1
The ICR's length is due to the project's numerous implementation partnerships, institutional
outputs and previously untried activities\.
1
tariffs (40%) on ICT equipment powerfully constrained the growth of the sector and no
legislation was in place to enable electronic transactions in the economy\.
6\. The government had recently (2003) established the Ethiopian ICT Development
Agency (EICTDA) as the national policy advocacy and coordinating body for ICTs, and
it was in the process of strengthening the management teams of the other two core sector
agencies, the Ethiopian Telecommunications Authority (ETA) and the Ethiopian
Broadcasting Authority (EBA)\.
7\. Project baseline surveys taken in March 2006 indicated that the size of the ICT
services industry in Ethiopia was very small: Not counting telephone resellers, there
were only about 688 companies (45 in software development) of which approximately
95% had less than 20 employees and less than US$ 115,000 investment capital\. About
46% of the owners of these companies considered the weak domestic market their main
growth constraint and only 11% thought that poor ICT infrastructure was the culprit\.
8\. Telecommunication policy at project effectiveness (June 2005) was characterized
by monopolistic provision of all services and consequent limited independent regulatory
power over the monopoly operator\. However, plans were under consideration to license
private sector providers of rural connectivity, Internet access and community radio\.
9\. Ethiopia's teledensity (subscribers per 100 inhabitants) in 2004 was 0\.54, one of the
lowest in Sub-Saharan Africa\. There were only 340,000 fixed telephone lines in use,
90,000 mobile subscribers, 6,000 dial up Internet accounts and only a handful of
broadband subscribers\. All were concentrated in Addis Ababa\.
Rationale for Bank assistance
10\. The Bank was viewed to bring to the table, along with financial assistance: (i) a
cross-sector perspective to the use and growth of ICT, (ii) international experience and
knowledge sharing on the same and (iii) design advice and stakeholder convening
influence on innovative schemes to apply ICT at the grassroots level\.
1\.2 Original Project Development Objectives (PDO) and Key Indicators
11\. The original objective of the project was defined on page 3 of the PAD as: "to assist
communities to improve their livelihood through the use of appropriate Information and
Communication Technologies (ICT) that facilitate increased access to markets,
development information, and public services\." This objective, the PAD added in the
same breath, was to be achieved by "enabling the public and private sector providers of
information, goods and services to improve the quality and quantity of their products
through the efficient and effective use of ICTs\." This formulation including both "what"
and "how" aspects was somewhat ambivalent as a definition of a project objective\.
12\. Two of the three results indicators for the PDO referred to the "how" aspect and
only one attempted to measure improved livelihood outcomes more directly through
observable reductions in the cost of services\. Thus from the start project designers
realized that measuring project success directly through improvements in the livelihood
2
of ICT-using communities was not realistic or credible within the time span of the
project\. They chose to measure a proxy- the supply response of the ICT services industry
as the best indicator of accomplishment of project objective\. This decision is discussed
more extensively in Annex 3\. The important point here is to note that from the start the
project was focused on capacity building to bring about a powerful supply response in the
number and geographic spread of ICT service organizations\.
1\.3 Revised PDO and Key Indicators, and reasons/justification
13\. Taking the above (Section 1\.2) into account, since the official project
documentation and internal Bank Implementation Supervision Reporting (ISR) system
consistently recorded the original objective of assisting communities to improve their
livelihood, this contributed to a growing sense of mismatch between PDO and actual
project design and results framework\.
14\. Therefore during the April 2008 mid-term review (MTR) of the project it was
agreed to revise the PDO to make it "(i) directly relevant to PASDEP2 and CAS; (ii) more
focused and measurable; (iii) attainable project components and activities"\. The revised
objective "to increase the use of Information and Communication Technologies by
Communities in project Target Areas" was formalized through an amendment to the
Credit Agreement on January 29, 2009\.
15\. Strictly speaking, the increased use of ICT by targeted communities is still a proxy
as it does not by itself demonstrate improved livelihoods\. Nonetheless, it is a proxy that
PASDEP and CAS and, as will be seen in Annex 3, the entire international community
accept as valid and worth pursuing by itself\. The GoE and IDA then paired this proxy
with the one previously used in the PAD formulation of the PDO (supply response, see
above) creating a much stronger and realistic Results Framework (RF) for the project\.
16\. Along with the reworded PDO, the PMU and Bank teams started a process of
refinement of the results framework from MTR in April 2008 to the last ISR of the
Project written in June, 2010\. Several versions of the RF were produced\. The one
presented in the Data Sheet for this ICR corresponds with the manner in which the
Project was monitored since MTR\.
1\.4 Main Beneficiaries,
17\. The project targeted both individual citizens and organizational entities as
beneficiaries of its various program areas, as depicted in Table 1\.
Individual/Community No\. Institutional Beneficiaries No\.
Beneficiaries
Trained civil servants: 224 ICT Sector agencies: 6
Women: Women groups 2
Farmers & Pastoralist associations : 4
2
Plan for Accelerated and Sustained Development to End Poverty, September, 2006
3
Individual/Community No\. Institutional Beneficiaries No\.
Beneficiaries
Farmers and pastoralists 70,000+ Youth associations : 32 32
Youth /month Disabled assistance associations: 6 6
Disabled and at risk NGO's and other: 21
(HIV) individuals: Regional Capacity Building bureaus 11
Community members at
large
TVET teachers 596 TVET colleges: 15
SME employees: 645 Startup micro ICT businesses: 60
CIDEV/CR employees 350 Community radio associations 8
CIDEV / CRTC trainees 3,333 Training organizations 3
Awareness raising participants 2,752
EBA staff trainees 621
Table 1\. Direct beneficiaries of ICTAD
1\.5 Original and Revised Components
18\. The Project was structured into two components as shown in Box 1\. Canceling of
Subcomponent 2\.1 for Rural Connectivity upon project restructuring, discussed next, did
not change the Project component structure\.
Component Project Components
1 Component one: Policy and Institutional Support (USD 12\.6 m)
1\.1 Policy, regulatory and legal framework
1\.2 Development of ICT Standards
1\.3 Institutional Strengthening
1\.3\.1 Ethiopian ICT Development Agency-EICTDA
1\.3\.2 Ethiopian Telecommunication Agency (ETA)
1\.3\.3 Ethiopian Broadcasting Authority (EBA)
1\.3\.4 College of Telecommunication and Information Technology (CTIT)
1\.4 Project Management
2 Component Two: Application and Community Support (USD 17\.4 m)
2\.1 R C
2\.2 ICT Private Sector Development (Business Incubation) -BIC
2\.2\.1 Computer Refurbishment and Training Center (CRTC DMF)
2\.3 ICT Training of Trainers TVET-TOT
2\.4 Community ICT Development CIDEV and Community Radios -CR
Box 1\. ICTAD Project Component Structure
1\.6 Other significant changes
19\. Cancelling of Rural Connectivity subcomponent\. This subcomponent was
designed as a pilot test for provision of 3,000 rural telecommunication points of service
through partnerships between the monopoly operator, Ethiopian Telecommunications
Company (ETC), and private sector cooperatives in rural areas\. By May 2006 the GoE
4
had decided to install five times as many rural telephones in connection with a backbone
expansion contract signed with the Chinese company ZTE\. This led to agreement at mid-
term review (February, 2008) to cancel this part of the credit and waive the related dated
covenant for issuance of community telephone licenses\.
20\. Change in the role of DED\. The partnership with the German Development
Service (DED) was intended to provide field advisors for the various program areas and
for the PMU management, with a primary objective of knowledge transfer\. Due to
staffing shortages at the PMU and capacity gaps at the partner agencies, particularly the
EICTDA, DED advisors' role had a larger component of direct implementation work
than originally planned\. Section 5\.2 (b) discusses how this worked\.
21\. Decentralization of the Business Incubator Program\. The BIC program
originally targeted the creation of an incubator in Addis Ababa\. However, the municipal
government could not provide a building at reasonable cost, as required\. The program
was then successfully changed to four regional capitals were as many business incubators
were created\. In the final 15 months of project the BIC program turned back to Addis
under a virtual incubation model for 17 small companies\.
2\. Key Factors Affecting Implementation and Outcomes
22\. In its three broad areas of activity policy and institutional support, private sector
support, and community ICT support - the ICTAD Project achieved all its development
objectives and met and exceeded its project development indicators (see Data Sheet,
Section F)\. The project assisted poor, disabled, isolated and HIV-exposed people in
Ethiopia (see full list of beneficiaries in Table 1) to access and use ICT and for the first
time become part of the information economy\.
23\. The benefits provided by the project include access to ICT; general computer
literacy; specialized technical skills; access to information; capital, technology and
facilities; direct employment, and in some cases international exposure and academic
training\. The project also had extensive and somewhat unexpected social benefits of
community empowerment; volunteerism; gender equity; empowerment of the youth and
interest in access to technology by people in remote and poor areas of the country\.
24\. The project leaves behind 65 community ICT centers throughout the country
serving over 70,000 customers per month, 7 community radios, 4 regional ICT business
incubators with 55 startup company tenants, and one environmentally green, state of the
art computer refurbishment and de-manufacturing facility at par with the best in Africa\.
It provided training to over 9,000 people, strengthened the key ICT sector institutions and
developed the initial body of ICT policies and standards of an information economy\.
25\. Success factors\. The main factors accounting for project success were:
Consistency of support, leadership and commitment of the GoE to project
objectives, as discussed in Section 5\.2 (a)\.
5
Decisive intervention by EICTDA management to confront serious
implementation roadblocks encountered as a result of the innovative nature of
many project activities being tried for the first time in the country\.
Effective project management and outstanding performance of the PMU, as
discussed under Section 5\.2(b)\.
In-depth, long-term and field-based advisory support by DED as discussed under
Section 5\.2 (b)\.
High quality of project implementation support provided by IDA with a core staff
team that remained unchanged from the design to the completion of the project\.
Extraordinary enthusiasm and participation of project beneficiaries and high
demand for project interventions\.
Strong support by regional governments in particular by Capacity Building
Bureaus and TVET colleges\.
2\.1 Project Preparation, Design and Quality at Entry
26\. Project preparation involved spirited discussion within the Bank on whether to
support an operation to leverage ICT for economic development without centrally
addressing reform objectives in the telecommunication sector\. The concern was that
without competition the ICT sector would not be free to expand, services might not
improve and costs could remain high thus perpetuating a fundamental development
constraint for the economy and a threat to the impact and sustainability of project outputs\.
The alternate view held that there was a wide field of needs and opportunities for use of
ICT as an enabler of development which could be successfully pursued separately from
the central telecommunications sector policy reforms\. A constructive project could
concentrate on human resource and institutional capacity constraints in the sector, address
the policy, regulatory and legal framework directly related to those constraints and
directly bring ICT to poor communities and micro entrepreneurs\.
27\. Although by and large the latter view prevailed and was clearly reflected in the
Credit Agreement and later validated by project results3, the project was left with several
sector reform objectives that it either could not expect to accomplish or about which it
lacked appropriate leverage\. While inclusion of these results indicators may have served
to accommodate the differing views, it also created confusion on the degree to which
project success would be measured by progress on telecommunication sector reform\. All
but one of the telecom-related indicators were cancelled when the project was
restructured in December, 2008 (see Section 5\.1\.a, Table 5)\.
3
As shown in Annex 11, the sector did expand during the project period (725% in number of
users, 677% fiber optic broadband capacity, 125% growth in fixed line subscribers, 328% growth
in Internet subscribers, 461% mobile subscribers) and costs did go down (average of 35% before
inflation)\. However, services did not improve that much, mainly due to network operation
problems\.
6
28\. This ICR follows the letter of the Credit Agreement regarding the
telecommunications sector reform content of the project being limited to: (i)
strengthening of the regulatory agencies; (ii) licensing of community radios; (iii)
licensing of Internet service providers and (iv) licensing of rural connectivity providers in
partnership with ETC\. The ICR nonetheless examined in some detail (see Annex 11) the
progress made in telecommunications infrastructure, subscribers, services and tariffs
during the Project period\.
29\. Project design\. Project components and activities were logically consistent with
the Project's capacity building objectives and highly relevant to the needs of the intended
beneficiaries\. Five major features of project design account for the impressive and
expected lasting impact of project results, albeit also for much of the complexity, initial
slow pace of implementation and for the shortcomings that impeded a fully satisfactory
rating for the project, as discussed in Section 3:
Focus on cross-cutting policy and institutional factors\. Component 1 targeted the
enabling policy and institutional framework, not specific technology
implementation activities, and the strengthening of the coordination and
regulatory sector organizations EICTDA, ETA and EBA\.
Demand-driven, bottom up initiatives were required in beneficiary selection\.
Principally, community organizations of all kinds were to apply for project
support to establish CIDEV centers and Community Radios (CRs)\. This created
ownership of project outputs at the beneficiary level and revealed dramatically the
importance attached to ICT by rural, poor, and disadvantaged communities\.
However, it also increased manifold the complexity and scope of the work of the
PMU\.
Implementation through partnerships\. Institutional arrangements for
implementation envisioned, in addition to a ring-fenced PMU and an external
technical cooperation partnership with DED, multiple implementation
partnerships as depicted in Table 2\. Each partnership required comprehensive
design, negotiation, formalization through MOU, financial control, progress
reporting and monitoring, crisis intervention and often technical support\.
ICTAD Program areas Coordination Management Implementation
& Monitoring
Project management EICTDA PMU
Policy & standards PMU EICTDA EICTDA
Institutional strengthening PMU ETA, EBA, ETC,
CTIT, EICTDA, CSC
Rural Connectivity PMU ETC ETC
Private sector PMU EICTDA Local governments in
development: BIC, CRTC- Amhara, Oromia,
DMF SNNP, Tigray\.
Capacity Building: PMU EICTDA MoE, MIT, CTIT,
Training, TVET TOT FEMSEDA, PIC,
Adama university
CIDEV, CRs PMU EICTDA Regional CB bureaus,
7
ICTAD Program areas Coordination Management Implementation
& Monitoring
Community
organizations
Table 2\. ICTAD Implementation Partnerships and their intended responsibilities
Extensive institution building work\. Component 2 for Application and
Community Support required institution building work at a scale that far exceeded
initial projections of staff and time requirements\. Each CIDEV center,
community radio, business incubator, and the CRTC-DMF required development
of MOU, business plans, building renovation or construction, legal and
organizational design, financial procedures, operational manual, ICT systems
deployment, staff recruitment and staff training, among others\. Long and difficult
road travel throughout the country added substantially to the complexity of this
project component\.
Budgetary and implementation flexibility\. Project designers recognized the
difficulty to predict the detailed course of implementation of the multiple project
activities\. Thus they allocated project budget formally at the Component level
only (PAD Annex 4) thus providing flexibility to shift resources where most
needed (such as the unplanned cost of incubator buildings), yet also complicating
budgetary control which was sometimes substandard (see Annex 2, Section 1\.3\.4)\.
30\. The Quality at Entry for the project was very high in most aspects\. In particular,
the intensive policy dialogue on the capacity building potential of ICT and its relevance
to poor communities produced strong Government ownership of and commitment to
project objectives\. The Quality at Entry study of the Bank in November, 2005 (QAE7)
rated ICTAD's overall QAE as satisfactory and its implementation arrangements as
moderately satisfactory\.
31\. Risks\. Most risks envisioned in the PAD on the non-restructured areas of the
project were adequately assessed and mitigated through effective EICTDA, PMU and
IDA management (see Table 3 below)\. The possible underperformance of
implementation partnerships was not envisioned as a risk and in hindsight it was a major
issue for the project\.
Project Risks identified in the PAD MTR End of Project Assessment
Project Appraisal Document Aug/04 Apr/08 (May 31st, 2010)
Present political priorities will change M M H: The Project was restructured and
due to regional conflicts or repetitive $10 million cancelled due to the Food
and continuous severe droughts\. Crisis Response Program\.
The GoE restricts internationally S S S: The GoE continued to pursue a
competitive ICT solutions, access to monopoly policy\. Although 4 local
bandwidth, licensing of other ISPs were licensed, they could not start
regulatory provisions and service operating due to ETC's operational
levels\. shortcomings\.
In spite of its assurances the M S M: ETC has initiated several programs
Government does not increase that increased connectivity without
8
Project Risks identified in the PAD MTR End of Project Assessment
Project Appraisal Document Aug/04 Apr/08 (May 31st, 2010)
connectivity and access to following a PPP model\.
communication services through
public-private partnerships
The government does not agree on a S S S: GoE still restricts competition in the
formula that will guarantee telecom sector, yet it has reduced
competitive bandwidth charges and charges substantially\. Quality of
service levels based on industry service is deficient\. Protection of end
standards available in Sub-Saharan user interests by a strong regulator is
Africa still missing\.
ETC's national backbone- S S S: Despite considerably expanding the
infrastructure is not maintained backbone infrastructure, the ETC has
functional to an acceptable level difficulty maintaining the full network
because of lack of technical support, operational\. This may continue for the
spare parts, etc\. near term until the results of ETC's
current restructuring efforts bear fruit\.
A low salary scale leads to a high S S S: Lower than market PMU staff
fluctuation of PMU staff and triggers salaries caused staff attrition\.
delays in project implementation\. Absorption of PMU staff into the
EICTDA is more difficult by the larger
differential in compensation\.
Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N (Negligib1e or Low Risk)
Table 3\. Behavior of major risks identified at Project Inception
2\.2 Implementation
32\. Startup delays\. Board approval, credit signing and project effectiveness were all
delayed until GoE could fulfill the conditions for each\. Board Approval shifted from
7/27/2004 to 9/16/2004\. Project effectiveness was delayed nine months (from 9/30/2004
to 6/24/2005) due to change in procedures (requiring an additional approval of credit
agreement by the Council of Ministers) and to difficulty in recruiting the Project
manager\. Covenant for issuance of ISP licenses by ETA, starting September 30, 2005,
was partially fulfilled only by March, 2007 after two postponements requested by
Government\.
33\. Steep learning curve\. Major project activities (CRs, CIDEV, BIC and CRTC-
DMF) were being done for the first time in the country\. Neither the Agency, nor the PMU
or the implementation partners had relevant prior experience with them\. The learning
curve was therefore very long\.
34\. Difficult activation of partnerships\. The numerous institutional partners
responsible for project implementation (See Table 2 above) encountered restrictions,
changing priorities and contingencies that seriously affected their performance vis-à-vis
the project\. For example, the EICTDA agency had to embark in a protracted yet high
priority business process redesign exercise that absorbed large amounts of staff time\.
Local governments sponsoring business incubators, CIDEV and CR community
9
organizations were unable or late in providing the agreed upon buildings whose
construction then took one to two years\. In most cases the project had to step in with
financing, technical assistance and intensive progress monitoring to break the impasse\.
35\. Increased workload and understaffing of the PMU\. Under these circumstances,
the PMU was forced to fill the capacity gaps of various partners\. As shown in Table 2,
its planned role (and staffing) was only of coordination and monitoring\. However, it had
to take effective management responsibility and play a major implementation role in
CIDEV, CRs, TVET TOT, BIC and CRTC-DMF and Capacity Building program areas\.
As a result, the PMU was chronically understaffed for its increased responsibilities and
the burden fell primarily on the shoulders of the PMU manager and DED advisors\. The
Bank team had proposed a much larger PMU staffing plan early during project design
and this was rejected by the GoE\.
36\. Uneven implementation pace\. The above situation coupled with the complexity
of the project (See Section 2\.1 Project Design) resulted in initial slow implementation
and by MTR only 15\.5% of Project funds had been disbursed (after subtracting the
balance in the special account)\. It was very difficult for the PMU to obtain timely and
accurate progress reports from implementation partners and this jeopardized effective
progress monitoring and timely corrective action (see for example Annex 2,
Subcomponent 1\.5 on ETA)\.
37\. Staff compensation issues\. While project design envisioned compensation
packages for PMU and EICTDA consultant staff competitive with the private sector, in
practice a gap existed throughout the Project which made recruitment difficult and
increased staff turnover\. At MTR (March, 2008) the WB team confronted this issue and
proposed a minimum compensation schedule for PMU\. The EICTDA Director General
was able to obtain a performance-based salary bonus for PMU staff which increased
morale and possibly stemmed further staff turnover\.
38\. Effective Mid-Term Review of the Project\. The MTR was an in-depth review of
implementation issues resulting in reformulation of implementation plans, partnerships,
and project activities\. It took place 3 months into the second half of the project (March,
2008 instead of December 2007) at the request of the government\. The comprehensive
action plan agreed upon during the mission had decisive impact and made possible the
completion of most project activities by closing date on May 31st, 2010\.
39\. Shortened incubation time for project outputs\. Two key agreements during MTR
were (i) to reprogram the funds from the canceled Rural Connectivity subcomponent
towards strengthening of the CIDEV and TVET subprograms and (ii) to seek extension
of the Project by two years in order to give the new entities created by the project
(CIDEV, CRs, BICs, CRTC) time to solidify their operations and achieve self-
sufficiency\. This was in recognition that construction and other delays were already
bearing inevitably upon the project implementation schedule\. The first agreement was
reversed for an important humanitarian reason related to the subsequent food crisis in
Ethiopia (see next)\. The second fell victim to uncertainty about the project's ability to
achieve results and to IDA portfolio reorganization by GoE\. The parties decided not to
10
seek extension of the project and rather to consider a follow up operation once actual
project achievements became clear\. This left many of the key project outputs without
time to achieve self-sufficiency and dependent on finding a new source of financing
immediately after project completion\. This decision is at the root of the high risk to
development outcome rating given to the project (see Section 4)\.
40\. Major changes/Restructuring\. On December 10, 2008 the IDA Board approved
restructuring of ICTAD and eleven other projects in the Ethiopia country portfolio\. USD
10 million of ICTAD's funds were transferred to the Ethiopia Food Crisis Response
Program as of January 29, 2009 when the corresponding amendment to the Credit
Agreement was signed\.
2\.4 Safeguard and Fiduciary Compliance
41\. Financial management was exercised in general compliance with fiduciary
requirements and agreed upon procedures, yet with significant shortcomings\. The
financial accounts of the project were regularly audited and found correct\. The final audit
was still pending when this ICR was completed\.
42\. Accounting and financial reporting were barely able to keep up with the past and
contributed little to forward-looking financial management\. During the first three years
when financial activity was low, FM was rated satisfactory or higher by the Bank\. After
that, there were constant delays in posting of transactions and in production of complete
and accurate financial reports\.
43\. Although FM performance was affected by exogenous factors such as scarcity of
foreign exchange, staffing shortages and slow procurement, there were also numerous
internal shortcomings such as accounting for transactions outside the computerized
system, incorrectly formatted and incomplete financial reports to IDA and un-reconciled
balances that persisted until the end of the project and delayed considerably the
preparation of this ICR\. Annex 2, Section 1\.4 discusses FM performance in detail\.
44\. Procurement performance was substantially different from the first to the second
half of the project\. There was initial difficulty to recruit staff knowledgeable of World
Bank procedures and lack of familiarity with procurement of construction contracts
which had not been originally planned\. These issues led to one unsatisfactory rating by
IDA in October, 2009\. Corrective action from EICTDA's Director General on down was
energetic and effective\. Procurement had fully caught up by project closing and the
project ended with a well-deserved satisfactory rating in this area\. Annex 2, Section 1\.4
discusses procurement performance in more detail\.
45\. Monitoring and Evaluation\. The M&E system developed for the project was
generally well designed and consistently utilized\. It tracks information on the entire IT
services subsector, particularly in the rural areas, which is needed by EICTDA for its
mandate as sector oversight agency\. Unfortunately the system did not collect routine,
accurate service statistics from the CIDEV centers\. As a result, a major effort had to be
11
made for this ICR to collect the data necessary for the assessment of project outcomes\.
Annex 2, Section 1\.4 discusses M&E performance in detail\.
2\.5 Post-completion Operation/Next Phase
Transition and long-term Operation and Maintenance Arrangements
46\. All the entities created under the project (CIDEV centers, etc\.) started operations
two years later than originally planned and did not have time to become self-sustainable
from either the managerial or financial points of view:
23% of the 65 CIDEV centers reporting average monthly losses deserve financial
support for some time\. 15 centers have not yet graduated from their 1-year
subsidy period and therefore EICTDA has still a commitment to support them
financially\. Of those that have graduated, 9% have a low sustainability rating and
may need continued support\.
None of the CRs or the business incubators is financially sustainable yet\.
TVET TOT program needs public funding, either from the federal or the local
level, to continue, since the TVET college system is publicly funded\.
Even the CRTC-DMF is probably 1 year away from breakeven revenue and
requires continued staff salary support until then\.
The legal status of BIC, CRs and the CRTC, is still unclear\.
None of the entities have real autonomy to recruit qualified management and pay
accordingly\. Business incubators, for example, would need managers with far
more experience in marketing, production planning and IT\.
47\. The general approach being taken by the EICTA is to transfer responsibility to local
governments for sustaining the newly created entities and nurturing new ones:
CIDEV\. DED has extended one year the contract of their CIDEV advisor to
provide continued coordination of the program, transfer of knowledge to two
consultants presently employed by the PMU and to help set up a formal network
of centers\. The EICTDA is connecting some centers to WoredaNet but it is not
clear whether this will be done for all centers and at whose expense\. Neither has it
been clear whether EICTDA will continue fulfilling its financial commitments
with 51 centers not yet graduated from their subsidy period\.
CRs\. DED has extended one year the contract of their CR advisor to provide
ongoing coordination and support and help establish an association for peer
support, sharing of content and pursuit of common interests by existing CRs\.
There are no other formal arrangements for continued financial support needed by
the CRs both for staff salaries and for indispensable ongoing staff training\.
BICs\. EICTDA will continue supporting the program for one year through its
own staff and through the agreed extension of the DED TA contract and the PMU
will oversee the completion of ongoing building contracts\. The steering and
12
financial responsibility for all the BICs will be transferred to the respective local
government authorities\. However, MOUs with local governments had not been
signed at project closing and it is not clear that they will include firm, enforceable
commitments for managerial and financial support, which will be needed in
varying degrees for at least 2 years\. Also, MOUs should spell out assurances that
incubators can continue being run as a business, can pursue financial
independence and can select clients strictly according to their entrepreneurial
potential\.
TVET TOT\. There are no explicit plans to continue financing this program from
EICTDA\. It will fall to the TVET colleges and their supporting local
governments to incorporate ICT training into their curriculum and to finance the
continued operation of the computer maintenance and training labs created under
the project\. However, formal and reliable commitments for this did not exist at
project closing\.
CRTC-DMF\. The management contract with private partner was extended for 6
months beyond the project closing\. These facilities have very good prospects for
financial sustainability and as their owner, EICTDA will continue having overall
managerial and financial responsibility for them\.
Follow up Support and Scale up Program
48\. IDA has decided to conduct and in-depth sector study to determine its best strategic
position in the ICT sector in Ethiopia in view of the emerging new version of the
Government's ICT strategy\. IDA is not therefore planning an immediate follow-on
operation but neither has it ruled it out, pending the above study\. Assuming GoE's
interest, such operation has been recommended by past Quality Reviews and is strongly
recommended by this ICR in view of the positive results of the project\.
49\. The Government has offered to cooperate with IDA in the above sector study and
has not formally requested a follow-on operation\. However, the Government expressed
to the ICR mission a firm determination to maintain and scale up the results of ICTAD,
particularly the CIDEV and CR programs\.
3\. Assessment of Outcomes
Rating: Satisfactory
50\. Regular rating method being used in spite of revised project objectives\. IDA
guidelines provide for a special approach to rating projects with formally revised
objectives\. Although technically this was case with ICTAD, application of the special
rating approach was not deemed appropriate\. Measures of project results are equally valid
before and after restructuring\.
The cancellation of the Rural Connectivity component did not really change the
nature and course of the Project since (i) it only cancelled the dormant
subcomponent and reallocated its associated budget along with other largely
unused project funds and (ii) the expected benefit from access to telephones in
13
3,000 rural communities was still pursued, and over achieved, through installation
of over 11,000 rural telephones directly by the ETC\.
Neither the underlying development objective nor the fundamental activities of
the project were changed when the PDO was reformulated at project restructuring\.
The change of PDO removed ambiguities and strengthened the practicality and
credibility of the RF but did not change the fundamental development objective of
the project or its components\.
3\.1 Relevance of Objectives, Design and Implementation
Relevance of Objectives: Rating: Satisfactory4
51\. Country Development Strategy\. In September 2006 the GoE adopted a Plan for
Accelerated and Sustained Development to End Poverty (PASDEP) which is Ethiopia's
guiding strategic framework for the five-year period 2005/06-2009/10 and therefore
updates the SDPRP of 2002 according to which ICTAD was formulated\.
52\. Under PASDEP the project objectives and results are more directly linked to
economic development and are therefore more relevant to national priorities\. In
PASDEP the GoE states that exploiting ICT is central to promote growth and reduce
poverty, creating new jobs, new business opportunities, to modern education, and to
improving the effectiveness of government administration and service delivery\.
Therefore, a major priority is being attached in the coming five years to "leap-frog"
forward, by building a major ICT backbone and affordable local-level access to ICT5\.
53\. ICTAD contributes directly to two of the five elements of the ICT strategy in
PASDEP6 and indirectly to another two, as follows:
Direct contribution Indirect contribution
(i) "Promoting human resource development (ii) Mainstreaming the use of ICT in all sectors
in the ICT field" (through the CIDEV, TVET of the economy, in the administration of
and CRTC program areas) government, and in the education system
(through the CIDEV, CR, BIC and CRTC)
(v) "Creating the enabling legal and (iii) Developing the necessary
regulatory framework" (through the telecommunications infrastructure (through
namesake component of the project)\. strengthening of the ETA)
54\. World Bank Country Assistance Strategy 2008-2011\. The current Bank CAS
includes two core outcomes to which the ICTAD project contributes either directly or
indirectly as explained below\.
4
Please see Annex 2 for more detailed discussion and examples of the arguments made in
support of this rating\.
5
"Ethiopia: Building on Progress A Plan for Accelerated and Sustained Development to End
Poverty (PASDEP) (2005/06-2009/10)", Volume I, pg\. 141\.
6
Ibid\.
14
CAS Core Outcome/ Indicator Achievement
(2008 -2010)
9\. Reduce cost of Internet Service
"Cost of broadband and dial- The monthly cost of dial up internet connection
up Internet services to decline by (with 600 minutes free) went down 33% from 60 birr
40% and 20%, respectively, to 40 Birr\.
between 2008 and 2011\."
The broadband cost (2 Mbps ADSL connection)
went down from 47,479 birr to 10,747 birr (77%
reduction) - according to ETC data\.
These achievements are not attributable to ICTAD\.
However, they demonstrate that, with respect to the
telecommunications sector, GoE and the Bank agree on
sector objectives, if not fully on reform strategies\.
At least 5 private Internet Three ISPs were licensed under ICTAD but
service providers (ISPs) could not achieve operational status\.
operational
16\. Greater use of community radios for improved service delivery\.
At least 10 Woredas with Seven community radios have been set up and
community radio stations in made operational under ICTAD\.
operation\.
55\. The CIDEV centers and community radio program areas contribute directly
to the service delivery take-off envisioned by the CAS as one of the central development
challenges of the country7, as shown in below\. Properly enabled through capacity
building and revenue sources, CIDEV centers and CRs can also help in the
8
"decentralization of public services \.
CAS Core Outcome/ Indicator Achievement
(2008 -2010)
13\. Increase delivery of key services: malaria control, HIV/AIDS prevention\.
Five of the 65 CIDEV centers are run by
Percentage of young people (age 15-24)
HIV/AIDS prevention associations\. All centers
with understanding on how to prevent
can be used to disseminate related information\.
HIV/AIDS transmission increases from
67% of women and 54% of men in 2004-
2005 to 75% overall by 2009/10\.
23\. Improve performance of the public service
Woreda/City benchmarking surveys show By design the CIDEV and CR programs
improving perception of integrity and "mobilize the energies of \. civil society
7
Ethiopia 2008-2011 CAS, pg\. 11\.
8
Ditto, pg\. 13, par\. 40
15
CAS Core Outcome/ Indicator Achievement
(2008 -2010)
performance of public service\. organizations (CSOs) and therefore can help to
strengthen the voice of common citizens, as well
as supplement governmental capacity in service
delivery"\.
24\. Greater capacity of local government to engage with citizens for more responsive
services
Procedures and skills for citizen CIDEV centers can be used as collection
engagement mechanisms for citizen feedback on local
government performance\.
25\. Ethiopian citizens are empowered by and engaged in development processes
Increased voice of the poor and women Four of the CIDEV centers are run by women
within communities results in better associations and virtually all serve poor
targeting of local investments\. communities\. A majority of the CIDEV centers
(52%) directly enhance the "economic
empowerment of women and youth" through
access to ICT and ICT training\.
Relevance of Design: Satisfactory
56\. All project interventions were directly conducive to achievement of both original
and modified project development objectives\. Section 2\.1 (Project design) discusses
some of the innovative, forward-looking and poverty-oriented features of the design of
this project which made it highly relevant to Ethiopia and a likely example of
international good practice\.
3\.2 Achievement of Project Development Objectives: Satisfactory
57\. In its three broad areas of activity the Project achieved its development objectives
and met and exceeded its project development indicators as formulated both before and
after re-structuring (see Table 4)\. The benefits provided by the project to its multiple
direct beneficiaries (listed in Table 1) include access to ICT; general computer literacy;
specialized technical skills; access to information; access to capital, technology and
facilities; direct employment and in some cases international exposure and academic
training\. The project also had extensive and somewhat unexpected social benefits of
community empowerment; volunteerism; gender equity; inclusion of persons with
disabilities and at risk of HIV; empowerment of the youth and extraordinary awareness
and interest in access to technology by people in remote and poor areas of the country\.
58\. At the policy and institutional level the project developed a foundation of policies,
standards and guidelines for use of ICT in the economy (see Annex 2, Table 7)\. The
project did not do something equivalent for provision of telecommunication services in
the economy since this was not its agreed PDO (see Section 3\.4 below)\. At the
institutional level the project strengthened the key ICT sector agencies, notably the
EICTDA and the EBA\.
16
59\. The project also mobilized a supply response of the ICT industry through country-
wide technical training in computer maintenance and networking and by establishing ICT
business incubators in four regions\.
PDO Indicator Result
After Re-Structuring of Project
1\. Aggregate number of Achieved 100%\. The combined effects of the policy and
private entities that offer standards framework, the extensive vocational training imparted,
ICT services the business incubators, the community centers and the community
radios created under the project contributed to the growth of the
ICT services sector well beyond the targets set for the project\.
2\. Average monthly number Achieved 725%\. This achievement is particularly important
of ICT users in project because it validates the demand-driven approach to formation of
areas/communities community centers and the value of the centers to the affected
communities country-wide\. The project also overachieved in the
number of community centers and community radios created\.
Before re-structuring of Project
By 2009, in the areas covered by Fully Achieved\. With the exception of international, local
the project business transaction and mobile charges which did not change, the general trend
cost for users of ICT assisted was of tariff cost reductions (-35\.47 % average), more if
services reduced by 30%\. accumulated inflation during the period (80 %+) is
considered\. This indicator was dropped during
restructuring as the project had no leverage to pursue it\.
By 2009, in the areas not covered Fully Achieved\. Four of the five critical project initiatives
initially by the project, at least (community centers, rural telephone services, business
20% of the initiatives supported by incubation, and SME training) were expanded to areas not
the project were mainstreamed, originally covered by the project\.
transferred or adapted to other
locations\.
T ICTAD A P D I
60\. The "Satisfactory" rating differs from the "MS" rating given to the project during
the last 7 ISRs within the Bank\. However, five of those ISRs deemed that achievement
of PDO was "very likely", "highly likely", "on schedule", "as intended" and "likely"\. It
is not clear then why the "MS" rating was given\. The last ISR, after noting that "the
project has achieved or surpassed most of its targets" gives an "MS" rating presumably
because the results were delivered at the end of the project and their sustainability would
require additional time and support\. However, as Table 4 indicates, all the PDO
indicators were accomplished on the dates initially planned, and thus the correct rating
for accomplishment of PDO should be "Satisfactory"\.
3\.3 Efficiency: Satisfactory
61\. It is not possible within a 5 year period to develop policy, build institutions, create
human capacity and expect to measure impact of ICT on economic development\. ICTAD
accordingly aimed to create capacity for development, not development itself and set out
to measure results through (i) the supply response of the ICT services industry (PDO
Indicator 1 in Table 4) and (ii) the number of people using the ICT access facilities
created by the project (PDO Indicator 2)\. On the first indicator the project accomplished
17
100% of the target and on the second 725%\. Thus, using these proxies, there is no
question that the project succeeded in creating capacity for development\.
62\. Whether this was accomplished at reasonable cost, in the absence of quantifiable
benefits this must be discerned by examining unit costs against internal or external
norms, if they exist\. This is the approach taken in this ICR (see Annex 3) except that,
due to the novel nature of project activities, relevant internal or external norms were
difficult to find\. Using very conservative assumptions, the project unit costs were found
to be very reasonable\. They are shown below, but to be properly understood each must
be examined in detail as shown in Annex 3\.
Project Output Unit cost USD
Policy, Legal and regulatory Instrument $ 28,238
Trained EICTDA staff $ 2,684
Tenant Incubator companies $ 4,391
CRTC Refurbished Computers $ 77
Trained TVET teachers/SME Operators $ 434
Community Center users $ 0\.97
3\.4 Justification of Overall Outcome Rating
Rating: Satisfactory
63\. The project is rated satisfactory because it achieved and surpassed its development
objectives and indicators, whether as stated originally in the PAD or as sharpened after
restructuring in December 2008, as can be seen in the Data Sheet\. This rating is
grounded on the Credit Agreement and ICR rating guidelines of the Bank\. However, it
does not reflect the project's limited telecommunications reformrelated objectives (see
par\. 28)) that were not part of the PDO and on which project outcomes were not indeed
entirely satisfactory (see Section 5\.2(a), par\. 91, bullets 3 and 4)\. This merits pointing out
because making telecom reform the primary PDO (see Section 2\.1) was a design option
intensely discussed but finally discarded, as reflected in the Credit Agreement\.
64\. As discussed in Section 3\.1 the project is directly relevant to the human resource,
capacity building and policy reform objective of the country's Plan for Accelerated and
Sustained Development to End Poverty (PASDEP)\. It is also directly relevant to the
service delivery take-off envisioned by the Bank's CAS as one of the central
development challenges of the country, and to specific CAS priorities on citizen
empowerment, service delivery and local capacity building\.
65\. In terms of the efficiency in the use of Project resources, while there is no practical
way to strike a precise ERR, analysis of design features of the Project, of the unit costs of
its main outputs and of some of its poverty-oriented pricing practices supports a
satisfactory rating, as discussed under Section 3\.3\.
18
3\.5 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
66\. Access to ICT for the poorest communities in Ethiopia: ICTAD demonstrated
the relevance of ICT to the lives and aspirations of poor, rural and disadvantaged
communities in Ethiopia\. The direct and indirect beneficiaries of CIDEV centers, over
70,000 per month, are people at the bottom of the income scale, women, HIV-infected
and the disabled, all of whom invest their limited time and money to access information
and learn basic ICT skills\. At completion, the project faced a 1,000% repressed demand
(650 approved applications) for scaling up of the existing 65 centers across the country\.
67\. Building the capacity of the most disadvantaged communities and creating an
enabling business environment\. ICTAD has shown the vast demand for training and
growth potential of the ICT services industry through its successful Training of Trainer
(TOT), SME training and ICT business incubation (BIC) programs\. TOT, based on the
existing Training and Vocational (TVET) college network trained 576 teachers and set up
15 computer maintenance labs\. SME program trained 645 SME operators and BIC
created 4 regional business incubators that were nursing 43 new companies by project
completion\. ICT service industry indicators chosen to estimate the economic impact of
these activities showed uniform growth, in excess of expectations\.
68\. Innovation\. The project introduced to Ethiopia ICT-enabled areas of activity such
as ICT centers, community radios, computer refurbishment and ICT business incubation
that are being pursued successfully by leading countries like India, Brazil and the US and
can yield long-term benefits for Ethiopian development\.
(b) Other Unintended Outcomes and Impacts (positive or negative)
69\. CIDEV Centers as public/private service infrastructure\. ICTAD demonstrated
that community-based centers are not only successful models for ICT access, but also
promising institutional platforms for dissemination of knowledge, provision of
government services and community participation in governance\. Center activities
enabled through ICT include HIV education, women empowerment (Beza, Awi),
environmental cleanup (Tena Kebena, Felege), help for persons with disabilities (Cardos,
Alem Gena), distribution of government forms (Bahir Dar), youth education and
empowerment (Yirgalem, Mekele, Korem), community library (Shashamene Dawn of
Hope, Afar) orphan protection (Bollo, Robe), market/agriculture information (Kechema,
Gewane, Nebo Daletti)\.
4\. Assessment of Risk to Development Outcome:
Rating: High
70\. The risk to development outcome is rated high for the ICTAD project because, in
addition to the expected uncertainties of an innovative, community-based, demand-driven
project, the arrangements for continuation, sustainability and scaling up of project
activities are unfinished and consequently weak\.
19
71\. As pointed out in Section 2\.5 many of the organizational entities created under the
project started operations two years later than planned and consequently are still far from
being self-sustainable from either the managerial or financial points of view\.
72\. Taking the CIDEV program as an example, the income-generating activities of the
centers are seriously affected by frequent power supply failures, interruptions in
telephone and internet connections resulting in loss of patrons and income\. Up to 16 of
the 65 centers, or 25%, are not yet financially self-supporting, due to low demand for ICT
services that are not enabled by reliable Internet access, as expected by project designers\.
Most centers were established within the last 2 years and their management has not yet
matured for lack of handholding and technical support during a start-up phase\. Thus,
the Program as a whole merits continued monitoring and requires financial support from
the GoE lest it cannot be sustained\.
73\. The ICR Team was given to understand that responsibility for continuation of the
CIDEV, CR, BIC and TVET-TOT programs beyond 2010 will be transferred to regional
counterparts of the EICTDA agency\. This may well be the best long-time arrangement,
but without training, handholding, incentives, managed transition plan and certainty
about allocation of resources, local governments will encounter all the challenges to
continue the program that ICTAD PMU encountered to create it\. Thus this is considered
a weak arrangement to sustain the development outcome of ICTAD\.
74\. In hindsight the project extension recommended at MTR was probably correct and
should have been implemented in tandem with a reduction of about $3 million in the
amount re-allocated to the Food Crisis program\. This would have given the project the
time and funding necessary to fully prove sustainability and scalability of outcomes\.
75\. Compensating somewhat for the above risks, are the following positive factors:
GoE is committed to sustaining the results of CIDEV program\. This was
unequivocally affirmed by the Minister of Capacity Building, the Director
General of the EICTDA agency and the Director General of the Ethiopian
Broadcasting Authority during ICR interviews\.
Since many CIDEV centers are set up by existing community organizations that
can provide space, furniture, management, customers and sometimes subsidized
revenue, their sustainability following termination of ICTAD can be much higher
than if they were self-standing operations\.
EICTDA and PMU were very successful in eliciting interest and securing
cooperation by local governments\. BIC centers in particular are the pride of the
four regional governments who benefited from ICTAD support and this is an
auspicious condition as responsibility is transferred to them\.
20
5\. Assessment of Bank and Borrower Performance
5\.1 IDA Performance: Moderately Satisfactory
(a) IDA Performance in Ensuring Quality at Entry: Moderately Satisfactory
76\. IDA provided intensive support to GoE since early 2002 to help formulate an ICT
Capacity Building Program responsive to national development objectives articulated in
the July 2002 SDPRP (Ethiopia's PRSP) and in IBRD's 2003-2005 CAS\. For this
purpose it organized a series of high level CAS Workshops in March 2002 which clearly
connected the ICT objectives of SDPRP and CAS with specific policy/ regulatory
framework, capacity building, private sector development, community access and
institutional strengthening activities under the ICTAD project\. This not only provided a
strong development policy underpinning to the project, but also showed IDA at its best in
connecting development, poverty reduction and ICT\.
77\. During project preparation IDA helped effectively to coordinate external partners
most notably by (i) mobilizing a USD 0\.97 million PHRD grant from Government of
Japan to finance the bulk of project preparation activities and (ii) assisting in the design
of DED's cooperation with GOE for long-term advisory support in project
implementation, initially estimated in USD 1\.8 million and eventually reaching USD 2\.92
million\.
78\. IDA was also at its best in supporting and facilitating robust stakeholder input into
project design\. It worked together with GoE to convene numerous stakeholders in an
extensive serious of consultations (see 5\.2 below) that provided valuable external
perspectives into project design\.
79\. Thanks to the PHRP grant, project preparation and design were underpinned by
highly relevant technical studies on the application of ICT to various sectors and by
regional surveys on the state of ICT infrastructure\.
80\. There were also one moderate and one minor shortcoming which account for the
moderately satisfactory rating given to IDA:
Implementation partnerships (Table 2) were defined only, not really designed,
creating significant implementation risk\. The operational and administrative
manuals stated only in general terms that: "All partners and beneficiaries will be
responsible to implement sub-components and activities and regularly report on
the progress of the project to PMU\."\. MOUs with specific staffing and results
commitments were left to be done during project implementation\. The Bank, the
PMU and DED compensated later with effective efforts to energize those
partnerships or to work out alternatives\. The timely intervention of EICTDA
management was also critically important at times\. However, since performance
of the partnerships was a critical success factor for the project and since PMU
staffing was designed only for coordination and monitoring rather than
21
implementation, a significant risk was taken in not designing the partnerships
more precisely (see Section 6, bullet 3 for suggestions)\.
The Bank left in the original set of progress indicators three that were related to
broader telecommunications reforms (see Table 5) for which the project had no
leverage and no commensurate activities or resources\. These caused confusion
regarding project objectives that persisted in some cases through to the end of the
project\.
Indicator Comment
Laws enacted by 2006, allowing The competitive provision of connectivity was against
competitive provision of explicit government policy to keep the backbone
connectivity and ICT related infrastructure under sole control by ETC\. In truth the
goods and services parties expected only legal and regulatory clearance to
conduct a pilot program of public private partnerships for
3000 community phones\. Even this limited reform
objective proved unattainable and the rural connectivity
subcomponent of the project was consequently cancelled\.
Ethiopian Telecommunications The project design had no appropriate mechanisms to
Corporation (ETC) effectively accomplish this objective and strictly speaking
provides backbone services at "competitive" rates could never have appeared under a
competitive rates\. monopoly\.
Ethiopian Telecom Authority This was something of a circular indicator as national
(ETA) effectively regulates and policy was and continues being of monopoly provision by
enforces national policy by 2007 ETC of voice, data and multimedia communications
(spectrum management, licensing whether wire line or wireless, fixed or mobile\. Spectrum
new technologies, etc\.) and management and licensing of new technologies by a
licenses at least 2 private ISPs per regulator under these circumstances are rather pre-
annum\. determined\. As experience under this project would later
show, licensing of ISPs by a regulator, under conditions of
monopoly in service provision, is nominal in nature and the
effective value and result of the license is determined by the
monopolistic operator\.
Table 5\. Key Telecom-related result indicators dropped at project restructuring
(b) Quality of Supervision: Satisfactory
81\. The Bank provided full staff continuity as both the Task Team Leader and a senior
consultant (Messrs\. Bobak Rezaian and Michael Broemmel respectively) were involved
from early preparation to completion of the project\.
82\. The Bank team was flexible and creative in its analysis and corrective action when
various project activities stalled particularly in the year between June 2008 and June 2009
(See Section 2\.2 on Mid-Term Review)\. This happened for example with the BIC
program in early 2009 when an external consultant was brought in, a special workshop
was held and one on one meetings were organized between the EICTDA agency and the
local governments sponsoring incubators in their jurisdictions\. These efforts helped turn
22
around the pace of progress and enabled the BIC program to achieve its targets\.
Something similar happened with the TVET program which was scaled up at the same
time\. On the CRTC-DMF, the Bank assisted in the examination of the contract issues
with the consultant and helped the PMU to evaluate the choices and eventually decide to
outsource to the consultant, an NGO, the entire operation\. This decision led to a rapid
turnaround in performance, completion of the building and successful launching of the
facilities\.
83\. When insufficient familiarity with Bank procurement guidelines was determined to
be a cause of procurement delay the Bank responded proactively by (i) bringing one of its
most senior procurement experts in early 2008 to assist with analysis of the procurement
plan and impart formal training in works and consulting services consulting; (ii)
providing concentrated support from the Addis office for bi-weekly procurement reviews
after the project was restructured in the second half of 2008\. By project closing
procurement had fully caught up and the project ended with a well-deserved satisfactory
rating in this area\.
84\. In the financial management area there was a clear if minor shortcoming in IDA's
supervision of this project\. IDA changed four times its project FM specialist and provided
accurate but often ineffective follow up on issues that remained unresolved for long
periods of time\. It declared the Peachtree accounting software adequate for the needs of
the project and did not revisit this assessment in spite of repeated evidence that
transactions and reports were being processed outside the system\. Whether for lack of
software functionality or operator knowledge, the software could never tie procurement
plans, disbursement plans, budgets and financial accounts to alleviate the burden of
overworked PMU manager and staff\. This shortcoming is rated as minor, however,
because on the fundamentals IDA maintained accurate supervision of the financial
accounts of the project, which were regularly audited and found broadly correct\.
(c) Justification of Rating for Overall Bank Performance
Rating: Moderately Satisfactory
85\. On the whole, the performance of IDA in this project was fully satisfactory\.
However, IDA also had one minor shortcoming in supervision of the FM function, as
pointed out above, and one moderate shortcoming in ensuring quality at entry\. The lack
of specificity in commitments and implementation arrangements with the various
institutional partners of the project could have been serious had IDA and the Borrower
not rallied energetically at critical points during implementation (see 5\.1 (a) above)\. As a
consequence, the PMU manager became the critical path for resolution of every issue and
the DED advisors were forced into an enhanced implementation role additional to their
role as technical advisors\.
86\. Under these circumstances, IDA guidelines call for a moderately satisfactory rating
in spite of clearly satisfactory performance in the Bank's quality of supervision of the
project\.
23
5\.2 Borrower Performance: Moderately Satisfactory
(a) Government Performance: Moderately Satisfactory
87\. Government similarly met satisfactorily the majority of its commitments under the
project, albeit with some shortcomings explained below\. GoE provided timely
counterpart financing, and on the whole empowered the EICTDA agency and its PMU to
execute the project to successful conclusion and thereby meet its development objectives\.
88\. The degree of government support given to the EICTDA agency is noteworthy
since the agency was created less than two years before project effectiveness and its
mandate affects critically the functioning of government and the entire economy\.
Government gave the Agency adequate political support and autonomy to (i) convene the
rest of government, private sector, academia and other stakeholders to formulate a body
of policy, regulatory and legal instruments in the area of ICT; (ii) seek and engage local
government cooperation for all project components and (iii) select beneficiaries for
programs such as CIDEV and CRs through a bottom-up, objective and pre-defined
approach\.
89\. Government was also open and proactive in seeking extensive stakeholder input
into project design\. A total of eleven awareness raising workshops, initial needs
assessments, and stakeholder and beneficiary consultation workshops were held during
the design and preparation of the project\. These included representatives from federal,
regional and local government, NGOs, private sector stakeholders, community based
organizations (CBOs), academia, donors and other partners\.
90\. Through its telecommunications infrastructure program (see Annex 11),
Government also enabled the achievement of project objectives\. This happened directly
in the case of the CIDEV program that was able to establish 51 community centers with
access to Internet\. Indirectly, the powerful supply response of the ICT service sector
used as key indicator of PDO accomplishment (see 3\.2), could not have occurred unless
sufficient confidence existed in the economy on the viability of investments in ICT-based
enterprise\. This is not to say that telecommunication services in Ethiopia have yet caught
up with international standards (broadband Internet service, for example, is still very
unreliable and expensive) nor to imply that reforms should not be considered\. It is an
acknowledgement that the multiple capacity building achievements of the project were
not seriously jeopardized by lack of essential telecommunication services\.
24
Users of Telecommunication Services in Ethiopia (millions) Fixed Line Mobile Internet
Changes between 2006 and 2009
Subscribers 125\.52% 461\.52% 327\.64%
Subscribers per 100 inhabitants 116% 433% 300%
Internet Users 187%
Internet Users per 100 inhabitants 174%
9
T G T S E
91\. However, four policy issues detracted from a fully satisfactory government
performance rating on this project :
Unfinished Sustainability Plan\. The Government's firm determination to
maintain and scale up the results of ICTAD, particularly the CIDEV and CR
programs, was not reflected in commensurate institutional, human and financial
arrangements by the end of the project\. All the institutional entities created under
the project (CIDEV centers, etc\.) started operations two years later than originally
planned and did not have time to become self-sustainable\. Thus the nurturing that
should have happened within the project needs to happen outside it in order for
them to survive (See Section 2\.5\. This requires a strong transition plan including
training, handholding, incentives, financing, staffing (central and regional),
central coordination and local management\. Bits and pieces of this plan were
present (See Section 2\.5), yet a full, reliable plan was not there by the end of the
project\.
Below market staff compensation\. The compensation packages for high-skill
positions were not set competitively and resulted in (i) difficulty to hire
appropriately qualified staff in areas such as procurement, financial management,
BIC management; (ii) staff attrition at critical times (procurement, FM), and
filling of certain positions with individuals lacking the proper experience and
qualifications\. Acknowledging that this is a very complex problem for
governments everywhere, the fact remains that if the right people cannot be hired
and retained due to inability to compensate them competitively, then important,
ICT-intensive projects and initiatives cannot be successfully undertaken\.
Ineffective ISP licensing scheme\. Even though ISP licenses were issued and thus
the related dated covenant was technically met, the original intention of the
parties to spur the improvement of Internet services through limited competition
was not accomplished\. While technical difficulties with the infrastructure may
have prevented ETC from enabling the ISP licensees to operate, since ETC is a
government-owned monopoly these difficulties were ultimately under
government control\.
Failure to test rural connectivity partnerships\. Although GoE well surpassed the
objective of 3,000 rural telephone connections set for the cancelled Rural
Connectivity subcomponent of the project (see Section 1\.7), the Government-
9
Based on ITU's Statistics\. See actual figures in Table 26 in Annex 11\.
25
requested cancellation did prevent the pilot testing of partnerships between the
ETC and private sector cooperatives for provision of rural telecom services\.
Agreed upon and important opportunities were foregone to gain knowledge and
experience in real-world regulatory issues involving private providers,
competition, access rules, interconnection charges, etc\.
92\. Several delays were also minor shortcomings affecting government performance
rating, albeit with well understood justification, as pointed out in Section 2\.2\.
(b) Implementing Agency or Agencies Performance: Moderately Satisfactory
93\. EICTDA\. At the project leadership level the Agency performed superbly and
steered the project to clear success\. Advocacy with higher government, mediation with
local governments; consultation and coordination effectiveness with stakeholders were
exercised to great effect\. The overall level of delegation of responsibility and authority to
the PMU were conducive to project success\.
94\. However the Agency came up short in the following areas:
The Agency initiated a virtual incubation program in Addis for 17 private sector
companies at an average cost of USD 32,590 without any known design
document and without documented results of any kind\. The BIC assessment
report commissioned by the PMU did not offer any information on design or
outputs of this effort and was quite skeptical about its technical soundness\.
As an implementation partner institution for the project, while the Agency
performed very well in some areas like Policy/Standards and BIC (after re-
structuring), there was frequent tension and heightened project implementation
risk from (i) encroachment of project staff time for agency business (for example
for a protracted business process re-engineering exercise during 2007/2008) and
(ii) diffused accountability for results when tasks were under Agency rather than
PMU responsibility\.
The EICTDA was also frequently unable to maintain dedicated counterpart staff
for critical areas of ICTAD like CIDEV, BIC, TVET-TOT and CRs\. In some
cases counterparts were Agency managers who, while able to provide guidance,
were not suitable subjects of field-level knowledge transfer from DED advisors\.
In others (TVET and BIC counterparts during the first half of the project),
counterparts were consultants or agency staff who, for one reason or another,
could not dedicate the time necessary to become accountable for results\.
95\. The above challenges are to be expected from a new agency and therefore the
performance rating is satisfactory in view of project results (see Section 3)\. Project
design provided for formation of the PMU precisely to mitigate the risks posed by (i) the
relative inexperience of Agency staff in management of complex projects; (ii) the
daunting responsibilities placed on the Agency (Proclamation 360/2003 gives it 26
government-wide mandates); (iii) the mismatch between traditional civil service culture
26
and pay scales on one side, and the performance demands from an agency focused on
technology-enabled transformation of government and of the economy at large\.
96\. The PMU received unanimous praise from the numerous project stakeholders and
clearly was very effective in managing the project to successful completion\. This was
particularly notable in view of the large scope and complexity of institution building
responsibilities that the project was forced to take in order to meet its targets\.
97\. The PMU was highly effective in building the implementation partnerships on
which project implementation relied by design\. It conducted an extensive
communications and training program to raise the capacity of the partner organizations
and secure their commitment to project objectives\. When for one reason or another
partnerships did not make progress at the expected pace, as in the case of the Ministry of
Education for the TVET TOT program, the PMU negotiated successfully across layers of
government to get help from new partners\.
98\. The willingness and capacity of the main partners (the Agency, the PMU and IDA)
to confront crisis and change course were notable factors of project success\. Following
mid-term review in April 2008 it was clear that the pace of progress had to change
drastically for the project to meet its objectives\. Program areas such as BIC, CR, TVET
and RTC were seriously behind schedule\. Three main initiatives were implemented:
A "Project Charter" was defined for each major program area of ICTAD as part of
a rapid results exercise\. This raised awareness among project stakeholders about
the complexity, status, and challenges to complete the work before project
closing\. However, it did not change day to day management and in retrospect it
was not viewed as critical factor of success by any of the stakeholders interviewed
for the ICR\.
Direct, forceful involvement of EICTDA management to resolve strategic
bottlenecks\. This was decisive for: (i) TVET TOT program partnership was
reoriented towards regional education bureaus and away from central Ministry of
Education\. (ii) IBLF was given a full management contract to set up and run the
RTC and de-manufacturing facility\. (iii) BIC program reverted to the EICTDA
agency which mobilized authorities to speed the pace of implementation\.
Intensive follow up of procurement by the Bank and joint work with PMU staff
succeeded in eliminating the transaction backlog and complete the procurement
plan\.
99\. However, there were also shortcomings in the performance of the PMU, notably on
the financial management and M&E areas, as indicated in Section 2\.4 and discussed in
Annex 2, Section 1\.4\.
100\. DED performance\. The role and performance of DED advisors was a critical
factor of project success and is rated as highly satisfactory\. DED's role was envisioned
as advisory with a paramount emphasis on transfer of knowledge to Ethiopian
counterparts\. While knowledge was in fact effectively transferred to individual CIDEV
center boards, BIC managers, CR associations and TVET college administrators,
27
knowledge transfer from DED advisors to EICTDA staff was limited by discontinuity in
counterpart staff assignments\.
101\. In the absence of dedicated PMU or agency staff with the required skills and time,
several DED advisors (TVET, BIC, CIDEV, and CR) became effectively responsible for
program implementation in the field, acting on behalf of the PMU but not always with a
commensurate level of discretion and information on financial and procurement aspects\.
DED's agreement to this role change and its constructive handling of the resulting
inevitable tensions speak highly of their institutional commitment to the project\. The
integration of DED advisors into task implementation teams was ultimately productive
and successful yet required significant adjustments on both sides\. Its conditions can be
improved in future projects, as suggested in Section 6\.
(c) Justification of Rating for Overall Borrower Performance:
Rating: Moderately Satisfactory
102\. As was the case with rating of Bank performance, rating of Borrower's performance
as "moderately satisfactory" instead of satisfactory or higher is disappointing given the
Borrower's major accomplishments in this project\. However, the performance of
government was affected by four moderate and one minor shortcoming, as detailed under
Section 5\.2\.(a)\.
103\. Rating of the implementation agency (EICTDA) and the PMU as "Moderately
Satisfactory" instead of satisfactory or higher is equally disappointing given their major
accomplishments and effort on this project\. However, as explained in Section 5\.2 (b),
both had also some shortcomings that pulled the rating down towards the "MS level\.
6\. Lessons Learned
104\. The main lessons emerging from this Project are for the most part relevant to other
developing countries\.
ICT is relevant and effective enabler of grass root development\. Over 70,000
poor people in remote rural areas of Ethiopia, women, HIV-infected, the disabled
and especially the young invest their limited time and money every month in
community centers and other facilities created by the ICTAD project to access
information and learn basic ICT skills\. ICTAD demonstrated that adequate
institutional models, public sector support programs, grassroots demand and
technologies exist to enable development of people at the lowest end of the
income scale\. The project provides strong evidence that governments and
international development organizations should be "resolute to empower the poor,
particularly those living in remote, rural and marginalized urban areas, to access
information and to use ICTs as a tool to support their efforts to lift themselves out
of poverty"10\.
10
Geneva Declaration of the UN World Summit of the Information Society in 2003, par\. 8\.
28
Community-based ICT centers are a successful institutional model\. ICT
community centers created bottom up on the basis of demand by community
organizations are a sturdy and promising model for bridging the connectivity gap
in Ethiopia and probably in other countries\. None of the 65 centers created under
the ICTAD project have folded down, even those that have operated for over two
years\. This is an important lesson when considering that failure rates during this
same period exceed 15% in other countries\. Since this project did not have time
to determine unequivocally whether the business model used was financially
sustainable and therefore scalable in the long-run (see Annex 2, Subcomponent 4,
par\. 161), a clear lesson is also the need to test desirable modifications to the
business model and financial sustainability over a longer period\.
Implementation partnerships must be tightly designed at entry\. Agreements
between government agencies, particularly across levels of government, can go
wrong for many reasons\. When detailed commitments of staff, time, money,
authority, problem solving, monitoring, early termination, etc\. are not spelled out
at entry, as in the case of ICTAD, the risk of implementation failure can be
increased\. This is of course a dilemma for project preparation which would need
to be extended in time (and cost) to achieve this level of precision\. It is also a risk
in itself as best laid plans can be unraveled during implementation or unduly
constrain it\. However, if the partnerships are critical success factors for the
project, this problem has to be addressed either through extended project
preparation, more flexible results frameworks or more flexible staffing plans\.
ICT Projects requiring institution building must have long time horizons,
large TA inputs and phased implementation\. Institution building even at the
level of community organizations or small businesses is complex and time
consuming\. Mobilizing local support requires extensive managerial time and
new organizations require intensive training and technical support\. With
procurement and organizational work taking 4 years, measurable development
outcomes from new institutions during one investment project are often
unrealistic\. CIDEV, BIC, CRs, CRTC-DMF are all new institutions created under
ICTAD with extraordinary effort and five years were barely sufficient to get them
started\.
Long-term, field-based technical cooperation can be highly effective modality
of international assistance\. This was demonstrated by the key role played by
DED in project success\. DED's contribution to ICTAD far exceeds its monetary
cost in terms of the development potential of organizations (CIDEV community
centers, community radios, business incubators) and facilities (TVET college
training programs and computer labs, e-learning programs, etc\.) created with their
help\. This modality of international cooperation is only possible for organizations
like DED able to attract experts personally committed to the advancement of less
developed countries with all its complexities and challenges, and is therefore in
scarce supply\. When available, however, it can feature prominently in project
designs by governments and IDA\.
29
Local political support is essential and must be explicitly designed for\. This
was a critical success factor for all activities under Component 2\. The
establishment of CIDEV centers, community radios and business incubators was
possible only after the Agency mobilized local political support\. Project design
must envision what incentives budgetary transfers, competition, self-interest,
awards, political pressure or raw authority will be deployed to obtain and
maintain local support\. Awareness raising events only go so far\.
Bank project team continuity is important success factor that should be the
default Bank staffing policy\. When IDA proposed to change ICTAD's Task
Team Leader following MTR, GoE argued forcefully against it and IDA's
eventual agreement to keep the team intact from beginning to end of the project
proved to be decisively important\.
7\. Comments on Issues Raised by
Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies
105\. High level Government representatives interviewed for the ICR expressed strong
satisfaction with the work done by IDA in support of ICTAD design and implementation
and in particular with the dedication and knowledge of the task manager\. This is
mentioned here not only because it clearly went beyond the normal formalities, but also
because this level of satisfaction with IDA support was made possible in large measure
by the stability of the task manager and a senior consultant who steered the project from
conception to completion\.
106\. Conversely, in areas like financial management where IDA made repeated staffing
changes, Implementation Agency representatives expressed disappointment and
suggested closer and more stable involvement by IDA\. It seems clear that IDA could
have done a better job following up on FM issues and assisting the PMU with training
and technical advice in setting up a better computerized system\.
107\. Similarly, some Agency representatives expressed disappointment with occasional
inconsistency in IDA procurement technical reviews\. IDA sometimes needs to call in
consultants or staff for ad-hoc technical reviews whose comments may be inconsistent
with prior IDA clearances and advice followed by PMU in preparing procurement
documents\. Clearly IDA needs to ensure that its technical advisors have the duty and
time to take into account past interactions and agreements with the Borrower\.
108\. A final comment from Implementation Agency representatives was a suggestion
that in projects like ICTAD involving large capacity building activities, residential
workshops, overseas training and the like, it was important to design highly transparent
participant selection mechanisms and to strongly tie training with result commitments\.
(b) Other partners and stakeholders
30
109\. The DED expressed satisfaction from its participation in this project\. The
organization invested over 2\.1 million Euros to field 10 advisors who provided over 31
staff years of TA to the project\. The DED advisors, being members of implementation
teams, had recommendations which could have speeded up the project but could not be
implemented for various reasons\. They felt that review missions of the World Bank often
did not understand the real situation and sometimes sensed these missions negatively\. To
avail future projects from this extraordinary resource it would be important to define
careful communication guidelines among the Government, the DED and IDA\.
31
Annex 1\. Project Costs and Financing
32
(a) Project Cost by Component (in USD Million equivalent)
Appraisal Revised Actual % of
No\. Components Estimate Estimate Costs Appraisal
Component one: Policy and Institutional
1 Support 12\.60 13\.27 11\.88 94\.26%
1\.1 Policy, regulatory and legal framework 2\.50 2\.45 0\.65 25\.98%
1\.2 Development of ICT Standards 1\.70 1\.70 0\.96 56\.29%
1\.3 Institutional Strengthening
1\.3\.1 Ethiopian ICT Development Agency-EICTDA 1\.90 2\.62 4\.59 241\.35%
1\.3\.2 Ethiopian Telecommunication Agency (ETA) 2\.00 2\.00 1\.68 84\.18%
1\.3\.3 Ethiopian Broadcasting Authority (EBA) 1\.00 1\.00 0\.77 77\.24%
College of Telecommunication and Information
1\.3\.4 Technology (CTIT) 1\.00 1\.00 0\.35 35\.36%
1\.4 Project Management 2\.50 2\.50 2\.87 115\.00%
Component Two: Application and Community
2 Support: - 17\.40 8\.38 10\.78 61\.97%
2\.1 Connectivity and Access Rural Telephony 8\.30 0\.00%
ICT Private Sector Development (Business
2\.2 Incubation) -BIC 1\.90 1\.90 3\.51 184\.86%
Computer Refurbishment and Training Center
2\.2\.1 (CRTC DMF) 2\.20 2\.20 2\.94 133\.70%
2\.3 ICT Training of Trainers TVET-TOT 2\.00 1\.28 0\.53 26\.52%
Community ICT Development CIDEV and
2\.4 Community Radios -CR 3\.00 3\.00 3\.80 126\.62%
Gains from changes in XDR/USD conversion 1\.30
Unreconciled difference with closing IFR 0\.00 0\.63
Unreconciled difference with IDA's Disbursement
System 0\.29 0\.00
Total Baseline Cost 30\.00 23\.24 23\.29 77\.63%
Physical Contingencies 0\.00 0\.00 0\.00
Price Contingencies 1\.80 0\.00 0\.00
Total Project Costs 31\.80 23\.24 23\.29
Front-end fee PPF 0\.00 0\.00 0\.00
Front-end fee IBRD 0\.00 0\.00 0\.00
Total Financing Required 31\.80 23\.24
(b) Financing
Actual
Appraisal Revised Financin % of
Source of Funds Estimate Estimate g Appraisal
Borrower 5\.00 5\.00 5\.00 100\.00%
German Development Service (DED) 1\.80 1\.80 2\.92 162\.23%
International Development Association (IDA) 25\.00 16\.44 16\.44 65\.76%
Total 31\.80 23\.24 24\.36 76\.61%
33
Note: Data used for this report was provided directly by the PMU and does not match in all respects
with the last IFR of the project\. The differences are reflected as un-reconciled adjustments\.
34
Annex 2\. Outputs by Component
Component 1 Policy and Institutional Support
110\. The objective of this sub-component was to develop the core set of National
policies, laws, regulations and standards, and guidelines for use of IT in the Ethiopian
economy in general and in the public sector in particular\. This is therefore an essentially
"horizontal" governance foundation affecting utilization of technology across the entire
economy\.
111\. Specific target indicators were (i) the development of an overall ICT policy for
government; (ii) development of 14 national ICT standards, and 3 National ICT
guidelines; (iii) the reduction of import tax on ICT imports\. Other indicators that were
reformulated during program restructuring were the development of ICT-related
legislation and of intellectual property right legislation\.
112\. Against these objectives the EICTDA agency performed outstandingly well,
especially considering that it was a new agency and that this agenda is one of the most
complex ones that challenge mature counterpart agencies in other countries\. Table 7
summarizes the outputs from this subcomponent\. The data sheet shows how of the
indicators formulated after restructuring the only one not fully achieved was the reduction
in tariffs for ICT which was only made applicable to investment-oriented imports and
thus largely bypassed the ICT industry\.
113\. As indicated in Table 7, five laws were drafted and sent for comments to
government agencies prior to their submission to the legislature\. Thirteen ICT standards
and three ICT guidelines were developed and issued\. Additionally, four draft standards
were finalized, and eight were under development by project termination\. These outputs
required extensive stakeholder consultation and debate\. 14 consultative workshops and
discussion forums were conducted and about 528 stakeholders (181 women) participated
at different stages\.
35
Area of Document Name Status at Project
Impact Closing
e Society
e Commerce
e Government
T P R L O
114\. A large consultative effort is needed to develop policy regulation and standards and
the quality and extent of this effort determines compliance in large measure\. Thus
EICTDA held 14 consultative workshops and discussion forums in which about 528
stakeholders participated at different stages, with 181 women among them as shown in
Table 8\.
36
No Description Duration Participants Remark
in days M F Total
1 e-GIF interim & final report 2 30 8 38
2 e-GIF Training 3 20 4 24
3 Competency Certification 2 52 30 82
4 Consultative meeting on 3 above 1 10 4 14
5 Consultative on e-com law 0\.5 20 10 30
6 Review national-e transaction act 3 7 3 10
7 Review Draft Data protection act 3 7 3 10
8 Review Draft e-transaction act 3 7 3 10
9 Consultative workshop on Ethiopic 2 54 25 79
Keyboard layout Standard & review final
report
10 Discussions on ETHIOPIC TO Latin 2 64 35 99
Standard draft & final Document\.
11 Consultative workshop on Ethiopic Soundex 1 15 9 24
standard
12 Consultative workshop on National 1 28 20 48
Digitization standard
13 National Digitization standard Final 1 13 10 23
Document Review
14 Consultative Discussion on ICT Standards 1 20 17 37
Requirement study
Total 25\.5 347 181 528
T C ICT
Subcomponent 1\.3 Institutional Strengthening
1\.3 1 Institutional support to EICTDA
115\. This subcomponent was the flagship capacity building mechanism of the project\.
Its objective was to build the human organizational and technical capacity of the key
sector institutions namely the EICTDA, the ETA and the EBA\. In practice capacity
building efforts were extended to the Civil Service College, the College of
Telecommunications and Information Technology (CTIT), the Productivity Improvement
Center (PIC), the Federal Medium and Small Enterprise Development Agency
(FEMSEDA) and a small part the ETC\. This subcomponent absorbed the lion share of
project funds, 31\.8% or USD 7\.4 million to be precise\. In total over 765 staff members
participated in short and long term trainings (27 on BSc/BA programs, 79 professionals
participated in short term external trainings, and 82 persons participated in study tours\.
116\. As is the case with all training, impact can be seen only in results and over the
medium term\. From this perspective it is clear that the capacity of the Agency to
discharge its multiple mandates has been substantially strengthened, as evidence by late
project performance on programs such as the Policy and Regulatory Framework and the
Business Incubation program\.
37
Database IT
Security IT
No Region website and Continuity Total trainees
develop Cyber & Disaster
ment Crime Recovery C-Sharp
Trainees Trainees Trainees Trainees Male Female Total
Total
T L EICTDA C B
117\. Under this subcomponent the EICTDA agency also provided smaller support inputs
to the following agencies:
Ethiopian Civil Service College\. The project set out to help ECSC use modern
eLearning technologies for remote training of civil servants\. A DED advisor
dedicated to this effort designed an e-Learning SW platform and two courses
(Procurement Management and Human Resource Management)\. Staff were
trained (unfortunately one left) and a first pilot course was ongoing in Awassa
during the ICR mission, which unfortunately had already been halted several days
due to the poor quality of Internet connectivity\. Project results were therefore not
conclusive, however it is clear that e-Learning is a promising technology,
particularly in a country that has had the forethought to deploy a government-
wide data communications network like Woredanet\.
College of Telecommunications and Information Technology\. Project component
one was designed to provide extensive support to the College of
Telecommunications and Information Technology (CTIT) in the form of technical
assistance, hiring of academic consultants, short and long term training and IT
infrastructure\. The objective was to create capacity for research and learning
primarily in the Telecommunication subsector\. Unfortunately CTIT was
drastically reorganized and its mission re-oriented during the project\. It played a
38
rather modest role in ICTAD as the source of training for 173 TVET instructors\.
Nonetheless, the project provided support to the tune of USD 353,639 to CTIT\.
Productivity Improvement Center (PIC) and FEMSEDA\. These two institutions
support training of small and medium enterprise employees, the first mainly in
Addis Ababa and the second throughout the country\. The project strengthened
them with training, IT and training equipment, software and technical support\. In
total these organizations trained 645 SME operators (see Annex 2, Table 17)\.
No of trainees
Year
No Training Type by sex Institution Duration
Conducted
M F Total
Total
T O EICTDA C B P
Subcomponent 1\.3\.2\. Institutional support to ETA
118\. The project provided support at a cost of USD 1\.7 million (7\.2% of project funds) to
the ETA in the form of technical assistance, hiring of consultants, short and long term
39
training and IT infrastructure\. One DED Technical Advisor was posted to work with the
ETA for 2 years starting September, 2007 in the areas of telecommunication standards
and quality of service, on which ETA published new standards\.
119\. ETA issued the following regulatory instruments during the project:
Private Radio communications Directive issued in 2005;
New national numbering plan issued in 2006;
Quality of service standards for telecommunication services issued in 2008 ;
Standards for short range devices issued in 2008;
Directive on type approval of telecommunication equipment\.
Value added services directive
Standards for Terminal Equipment to be connected to Public Switched Telephone
Network (PSTN);
Standards for Integrated Services Digital Network Basic Access Devices (ISDN-
BA);
Standards for CDMA 800 MHz Fixed Wireless Phones and
Standards for Third-Generation (3G) Cellular Mobile Terminals
Standards for Asymmetric Digital Subscriber Line Modems (ADSL Modems)
VSAT licenses to investors and different institutions have been issued\.
Consumer complaint handling process was developed and ETA started processing
complaints\.
120\. On the other hand, over USD 1 million were disbursed for ETA's spectrum
management system in 2006 and the system did not reach full operational status by the
end of the project\. Design of ETA's Integrated Regulatory Information System was
contracted for in May, 2008 and the system was not operational by the end of the Project\.
121\. The performance of ETA's-related indicators in ICTAD's result framework
(reduced import tax for ICT equipment and effective regulation and enforcement of
national spectrum and quality of service policy) were deemed to have been accomplished
50% and 40% respectively (see Data Sheet, Section F), becoming the only progress
indicators that the project failed to substantially achieve or overachieve\.
Subcomponent 1\.3\.3 Institutional support to EBA
122\. Broadcasting allows people and communities to exercise their right to freedom of
expression and thus it is a powerful application of technology to human development\.
EBA's mission is promoting expansion of high quality broadcasting that contributes to
political, social and economic development\. ICTAD sought to improve EBA's capacity
to perform its mission through training of staff and financing of technology\. The
expected evidence of increased institutional strength was the development of
40
broadcasting legislation and radio licensing schemes, as well as the issuance of at least 5
community radio licenses within the period\.
123\. EBA overachieved in all output categories (see Table 11):
Policy and regulation\. The pre-existing Broadcasting proclamation no 178/1999
was replaced by proclamation no 533/2007 which addresses the development of
Community Radio in accordance with international best practice\.
The Board of EBA approved the Formulation of Community Broadcasting
licensing directives incorporating comments by NGOs, Government
representatives and other stakeholders\.
A complaint handling directive was formulated to help safeguard the quality and
safety of broadcast materials\.
Instrument Status Date
41
T E B A L R
Subcomponent 1\.4 - Project Management
124\. The overall performance of the PMU was evaluated already under Section 5\.2(b)\.
This section therefore focuses only on explaining the general comments made in Section
2\.4 on the FM, procurement and M&E functions\.
125\. Financial management\. As indicated in Section 2\.4, financial management was
exercised in general compliance with fiduciary requirements and agreed upon procedures,
yet with significant shortcomings\. The financial accounts of the project were regularly
audited and found correct\. The final audit was still pending when this ICR was
completed\.
126\. Accounting and financial reporting were barely able to keep up with the past and
contributed little to forward-looking financial management\. Ledger posting backlogs
prevailed and budgets were non-existent during most of the project\. Budgets were
declared nominally alive only seven months before project closing when all financial
planning discretion had evaporated\. While it could be argued that expenditure
forecasting and budget control had a very limited role in an environment dominated by
operational constraints as pointed out in Section 2\.2, in fact a consistent comment made
by leaders of the various program areas was that knowledge of funding envelopes would
have helped them to steer action and plan work more efficiently\.
127\. Some of the FM shortcomings that prevailed during the project despite repeated
flagging in IDA reports and corresponding "reform" agreements were: (i) incorrect
format and content of financial management reports (FMR); (ii) inconsistency between
IDA and project accounts (see Annex 1 for discrepancies remaining at the end of the
project), and (iii) unresolved issues with partially reimbursed withdrawal authorizations\.
128\. The following issues kept the project under frequent accounting backlog,
substandard level of internal control and unclear financial condition:
Under staffing of FM function\. Advertising for the assistant financial officer
position did not attract interest for over a year and then the new recruit left for
better pay after less than a year on the job\. This resulted in concentration of work
on the principal financial officer and consequent internal control issues for lack of
segregation of duties\.
Deficient accounting software\. The Peachtree Software-based accounting system
never reached the level of functionality required for agile and accurate financial
reporting under the project\. This was raised by the Bank since November, 2007
and even for this ICR the PMU prepared the expense breakdowns feeding into
Annex 1 using data processed in Excel outside the system\.
Irregularity in IDA vs\. Counterpart funds utilization\. Funds contributed by the
government should normally be used to pay an agreed fraction of categories of
42
payments specified in the Credit Agreement\. The Bank pointed out since
November 2007 that this was not always being done under ICTAD\. Although
GoE counterpart contributions were timely made over the five years, 79% of fund
withdrawals were made during the last 5 months of the project, even though
during the same time disbursements from the IDA account were less than 10% of
project funds\. Furthermore, during review of the last FMR, IDA found a balance
of USD 621,174\.33 that did not correspond with its own project accounts as
affected by withdrawal authorizations submitted by the PMU\. To preserve
foreign exchange the PMU had apparently made the corresponding payments out
of the Counterpart, not the IDA account\. It must be noted that inconsistencies
were always eventually resolved in a satisfactory manner\.
129\. It must also be acknowledged that the numerous institutional partnerships required a
large volume of accounting transactions that would have been challenging to keep up to
date even with a superior computer system and adequate staffing\.
Procurement
130\. Procurement performance was substantially different from the first to the second
half of the project\. There was initial difficulty to recruit staff knowledgeable of World
Bank procedures and lack of familiarity with procurement of construction contracts
which had not been originally planned\. These issues led to one unsatisfactory rating by
IDA in October, 2009\. Corrective action from EICTDA's Director General on down was
energetic and effective\. By project closing procurement had fully caught up and the
project ended with a well-deserved satisfactory rating in this area\.
Issue Comment
Difficulty in recruitment and This problem is common in new projects\. Special
retention of qualified compensation is needed to attract and retain expert staff\.
procurement staff
Insufficient familiarity with The Bank brought one of its most senior procurement experts
Bank procurement guidelines, in early 2008 to revise the procurement plan train PMU staff
particularly on ICT on works and consulting services procurement\. It also
procurement\.; intensified support from the Addis office after the MTR with
bi-weekly reviews\. In the future, ICT procurement capacity
should perhaps be a required condition for project appraisal\.
Similarly, IDA needs to have ICT procurement capacity in
place for supervision of projects of this kind\.
Difficulty in access to foreign The project benefited from direct intervention by EICTDA's
exchange and approval of LC by Director General to deal with foreign exchange restrictions
the central bank\. and speed up transactions\.
Slow clearance processes at the The Bank increased procurement staff time for the project\.
World Bank However, sometimes delays were triggered by incorrectly
prepared documents\.
Large number of small This added to the complexity of project and procurement
procurements management\. However, it also probably helped the local
industry\. Packaging for the sake of expedience in
procurement can result in diminished quality and
competition\.
43
Issue Comment
Lack of capacity of local private These were addressed in part by direct intervention from the
sector to handle larger contracts EICTDA Director General and by an intensified supervision
in a timely manner and disbursement schedule in FY10 (ISR June 2009)\.
Inconsistency in Bank technical See Section 7\.(a)
advice\.
T P ICTAD I
131\. Monitoring and Evaluation (M&E) Design, Implementation and Utilization\.
The M&E system built under the project caters to the needs of both the ICT sector in
general, to assist the EICTDA in its mandate as sector oversight agency, and of the
ICTAD project in particular\. With respect to its sector-wide objective the system worked
well by meeting the requirements of the National ICT CB Program (2002)\.
132\. With respect to ICTAD's M&E requirements, the system design and operation for
the most part met the requirements of the results framework post-restructuring, albeit
with some shortcomings noted below\. On the whole, however, the methodology and
process for data collection were well designed and consistent across the years\. They are
therefore a data and methodological platform of much value both to the sector and to any
potential follow-on operation\. Specifically, the system developed survey methods and
consistent 4-year data series on (i) ICT industry across the country and (ii) access to
services in rural areas\.
133\. An effective M&E program and a robust learning system were considered key
activities under this project because of the expected asynchronous implementation of its
multiple activities\. The requirements of the M&E system were formulated in the PAD
perhaps too ambitiously and were properly scaled down during project restructuring\.
Below is an assessment based on original requirements in the PAD:
PAD Requirement Assessment
1- Develop an empirical basis The system unsurprisingly fell short on this score\. Given the
for evaluation of the impact breadth and general purpose of ICT's economic role, strictly
of ICT investments on urban endogenous variables to measure impact at the level of the
and rural development and entire society are few and meaningful only over periods of time
poverty alleviation\. that far exceed the project cycle\.
2- Assess the role of ICTs in This requirement went one step beyond No\. 1 above and
poverty alleviation, with consequently its related indicator was dropped when project
particular focus on gender was re-structured\. Valuable and consistent data series were
equity\. gathered however for sector policy analysis on language use,
gender equity, and time and cost of access to markets and
services\.
3- Measure the level of This was fully accomplished through consistent tracking of
increased beneficiary access both public and private access facilities\.
to public and private services\.
4- Measure the increase in Separate surveys were done for CIDEV, TVET and BIC
effective use of such services starting in late 2009 which provided much of the results data
through a final, carefully used in this report\. Response to CIDEV center survey was low
44
PAD Requirement Assessment
designed survey (Operational at 55% of the centers\.
manual, pg\. 131);
5- Measure the impact of the Impact was measured indirectly through the supply response of
CIDEV sub-component the ICT service industry (see Annex 3)\. A small, 5-center
survey of employment outcomes was conducted for the ICR
and its results are reported in Annex 3 (see Table 24 on pg\. 60)\.
6- Identify a set of monitoring This was a clear shortcoming of the system post-restructuring\.
indicators for ICT-assisted The M&E reports provide no data on financial or service
community oriented performance of CIDEV and CR interventions\. Although grant
interventions\. agreements required periodic reporting of such data, this proved
to be very difficult and project staff and time were under-
dimensioned to supervise and enforce the reporting system\.
Table 13\. Assessment of ICTAD's M&E System
134\. A useful service suggested for ICTAD's M&E system was that of tracking progress
in telecom services against the government's own established benchmarks\. The system
did track the critical network infrastructure, user base, tariff and quality of service
variables but could not draw comparisons with targets that are largely not publicized\.
Component 2 Application and Community Support
Subcomponent 1 Connectivity and Access\.
135\. As explained previously this subcomponent was cancelled but its community
objectives were accomplished through installation of over 11\.000 rural telephones
directly by ETC,
Subcomponent 2 ICT Private Sector Development (Business incubator)
136\. The objective of the Business Incubation (BIC) program of ICTAD is to create
opportunities for technology micro entrepreneurs to test their business ideas and develop
viable businesses\. Each incubator would provide technology, space, technical and
entrepreneurial support to private companies, usually start-ups\.
137\. The project set out to create one central incubator in Addis Ababa where demand
was presumed to be largest\. It actually over achieved its objective by creating four
regional business incubators in four regional capitals between February, 2008 and July,
2009\. The business tenant profile of these centers is shown below in Table 14\.
No Incubation No of No of Owners Business Type
Center Tenants
M F Total
1 Mekele 11 16 16 32 ICT Services, software development, promotion,
repair and maintenance, training, networking\.
2 Bahirdar 13 26 6 32 Maintenance, website & sw development, multimedia,
networking, digitization, and training\.
3 Hawassa 12 30 1 31 Maintenance, website & sw development, networking,
graphics, and training\.
45
No Incubation No of No of Owners Business Type
Center Tenants
M F Total
4 Adama 7 17 2 19 Maintenance and refurbishment, website & software
development, database management, and training\.
Total 43 89 25 114
Table 14\. Tenant Profile of Incubation Centers
138\. Each incubator required developing a government-owned yet business-oriented
organization from the ground up and coordination of this on both the central and local
sides was time consuming\. All jurisdictions had difficulty fulfilling their commitment to
provide a suitable building as a condition for program support, and it was ultimately
necessary to relax this requirement and provide construction financing in order to
proceed\.
139\. ICTAD PMU provided effective coordination of the program until after MTR of the
project in March, 2008\. After that, responsibility for the program was transferred to a
different manager within EICTDA who did take matters into his hands and helped to
remove major roadblocks then existing\. A DED advisor was dedicated to the BIC
program at great personal effort and was therefore instrumental in making it a success\.
140\. Total program costs were in the order of USD 3,512,426\. Of these, almost 16%
were spent on grants for seventeen (17) so called virtual incubators in Addis Ababa\.
These grants were considerable in terms of the usual capital structure of software
companies in Ethiopia, and ranged from USD 11,000 to USD 48,000\. This part of the
program had very doubtful results as the grantees, apart from receiving the money and
access to space in a local government facility did not receive discernible technical advice,
supervision or monitoring\. Under these circumstances grants operate only as public
subsidies to private business that may distort more than help their long term competitive
viability and discriminate against competitors\. It is understood that this "virtual
incubation" program in reality is preparing a tenant base for the IT Park being developed
by EICTDA and therefore it may well be a sound long-term investment in private sector
support\. With the information available to the ICR, however, no tangible benefit can be
discerned from the Project investment in this program\.
Computer Refurbishment and Training Center/De-manufacturing facility
141\. As planned, one computer refurbishment and training centre (CRTC) was built from
the ground up, fully equipped and started operations in Akakai (Oromiya region)\. The
CRTC refurbishes donated computers and sells them at affordable prices ($105 per
computer) to schools, health centers and community organizations (not to the public)\. In
addition the center provides advanced, hands-on training to 75 TVET graduates every
year using for this purpose superb classrooms and computer workshop facilities\.
Graduates achieve mastery of computer repair, maintenance and networking\.
142\. The CRTC is a world class facility and Microsoft Authorized Refurbisher (MAR)
adhering the EU's Waste Electrical and Electronic Equipment (WEEE) directive\.
Computers are professionally tested, cleaned and loaded with licensed software in a high-
46
tech environment\. They are then deployed on a cost recovery basis, with the CRTC
offering support and ensuring that eligible recipients are able to provide a secure
environment for the safe and sustainable use of ICT\.
Cost USD (estimate) * Local Market CRTC
(June, 2010)
Pre-used Pentium IV computer with 17" CRT monitor 350 851
De-manufacturing fee 10
Software: 10
Microsoft XP Professional 250
Microsoft Office 2003 150
Norton 2008 Anti-Virus 75
Total per PC 825 105
* 1 USD = 12\.5 ETB
1
The USD 85 cost includes overseas and inland shipping, new peripherals (cables, mouse,
keyboard), data-wiping, external/internal cleaning, testing, maintenance (if required),
software installation, and packaging for distribution\.
Table 15\. Value Proposition of ICTAD's CRTC
143\. Protracted preparations (for financial autonomy, building construction, power
connection, access to foreign exchange and recruitment of skilled staff) and fragmented
management responsibilities (between EICTDA, PMU and the consultant company),
seriously delayed the start of CRTC operations\. Following the project's mid-term review
in April 2008 the EIICTDA outsourced to the consultant, an NGO, management of the
CRTC under a form of PPP arrangement until November 2010\. The business partner
provides knowledge transfer, technical support and management\. Under this PPP the
center was able to start operations in June 2009 and by the end of the project it had sold
3,300 out of planned 15,000 computers\.
144\. The CRTC is now poised for sustained operation and rapid growth\. While ICTAD
provided the needed investment financing as a grant, the CRTC is expected to be
operationally self-sustainable going forward\. It is on track to firm up supply
arrangements with overseas donor corporations and domestically to reach a steady stream
of orders from eligible recipients\. Its breakeven quantity is around 9,500 computers per
year, at $105 per computer, therefore it is not a small scale operation and requires
professional and accountable management to avoid insolvency and prosper\.
145\. Although clearly an outstanding achievement so far, the CRTC needs continued
support from the EICTDA during the initial phase of operations to establish itself firmly
as an independent entity\. In particular it needs: (i) autonomy to hire competent
management and technical staff and to compensate them competitively; (ii) access to
foreign exchange for its international supply operations; (iii) clarification of its legal
status and (iv) reliable demand from public schools and other qualified clients to ensure a
breakeven flow of computers through its impressive facilities\.
47
De-manufacturing (DMF)
146\. Before ICTAD, there was no process in place to collect and process electronic
equipment at the end of its life cycle\. This is a major environmental risk and immediate
actions are required to prevent the dumping of toxic electronic waste to landfills\. Thus
the project established a computer de-manufacturing facility next to the CRTC which is
already operating in a temporary building pending completion of its own\.
147\. Planning and management of the DMF is also the responsibility of the CRTC
business partner\. Experts from the partner work closely with the Ethiopian Environmental
Protection Agency (EPA) to establish environmentally safe processes in the entire supply
and de-manufacturing chain of toxic electronic waste\.
Subcomponent 3\. TVET Training of Trainers (TVET - TOT
148\. The Ethiopian Technical and Vocational Education and Training system (TVET)
offers training in 25 fields including ICT at more than 200 locations to over 200,000
students, of whom 51% are women\. Ethiopia ranked 72 out of 93 countries rated in 2007
by the UN with respect to the Women Empowerment Index11\.
149\. The overall objective of the TVET TOT program is to improve the quality of ICT
training for students at TVET colleges in key ICT subjects including initially PC
maintenance and trouble shooting, networking, and Database management basics\.
Specifically ICTAD aimed to train at least 600 TVET teachers (increased from initial
400) and to improve the IT infrastructure and training labs in at least three TVET
colleges\. The project fully achieved and surpassed these objectives (see Table 16)\. It
graduated 576 certified trainers and additional training sessions were on-going by end of
project\. It also established 15 computer training labs, two each in TVET colleges in
Tigray, Oromia, SNNP and Amhara regions, and one lab in each of the other 7 regions\.
150\. ICT services are needed by all sectors today\. Many private, government and non-
government offices in the regions suffer from non-functioning ICT equipment as the
required maintenance expertise mostly available in the large cities\. Although not
explicitly tracked, TVET-TOT trainees are believed to be behind the major expansion of
computer training facilities and services measured as one of the PDO indicators\.
151\. The HRD-department of EICTDA managed the program in partnership with the
Ministry of Education, the Regional Education Bureaus, and TVET colleges\. ICTAD
supported the program with one experienced DED TA\. Three institutions provided the
actual training: Mekelle Institute of Technology (MIT), Adama University and the
College of Telecommunication and Information Technology (CTIT)\.
Region MIT CTIT Total
11
See http://hdr\.undp\.org/en/media/HDR_20072008_EN_Complete\.pdf, pg\. 333\.
48
Adama Male Female Total
University
Federal 4 4 - 4
Addis Ababa City 5 42 37 10 47
Amhara 80 19 90 9 99
Oromia 108 39 128 19 147
Tigray 101 13 84 30 114
SNNRS 23 33 45 11 56
Somali 8 6 10 4 14
Gambela 16 2 15 3 18
Benshagul Gumuz 3 3 - 3
Afar 18 3 18 3 21
Dire Dawa 14 1 11 4 15
Hrerie 35 3 23 15 38
Total 250 158 168 468 108 576
T T TVET TOT P
152\. Separately, the project supported also the initiation of TOT courses for Small and
Medium Enterprise (SME) operators, mainly in Addis Ababa but also in other regions\.
The project partnered with the Productivity Improvement Center (PIC), a training outfit
mainly oriented towards the Addis Ababa region and the Federal Medium and Small
Enterprise Development Agency (FEMSEDA) for this purpose\. Table 17 below shows
the training results from these partnerships:
Region Male Female Total
Total
T SME O ICTAD
153\. The project ended with extraordinary interest from the regional education bureaus
in expanding the TVET-TOT program both in geographic and in curriculum coverage\.
However, as pointed out in Section 2\.5, there are no specific plans to continue funding
the program other than transferring responsibility for it to the local governments but
without explicit technical support or funding from the center\.
Subcomponent 4 Community ICT Development (CIDEV)
154\. CIDEV provides competitive access to grants for eligible community organizations
and assists successful applicants to setup community ICT centers\. The centers are
49
located in buildings provided free of charge by local sponsors (the community
organization itself or local government) and are managed on a voluntary basis by a
committee\. They have been established mainly in remote and inaccessible parts of the
country (see Table 18) and focus on community development activities (see Table 19)\.
Full profile is in Table 23\.
Amhara Oromia SNNP Afar Somali Gambela Tigray Diredewa Harari Benshangul G\. Addis
Ababa Total
10 15 9 4 2 2 7 2 2 3 9 65
Table 18: CIDEV centers created under the project
155\. The appraisal process for CIDEV program proposals was carefully defined and
documented in the ICTAD Operating Manual\. Eligible entities include local civic
organizations already working on development issues, government agencies, licensed
businesses, registered associations, NGO's or kebeles\. Proposals are evaluated on well-
defined criteria such as (i) scalability; (ii) alignment with national priorities in health,
agriculture, education, good governance and ICTAD development objectives; (iii) a
demand-driven business model; (iv) physical and financial feasibility; and (v)
sponsorship by community or local government through provision of rent-free space\.
Investment grant proposals cannot exceed USD 50,000 equivalent (the actual average
grant was USD 33,803), and they must meet defined documentation standards (rational
objectives, anticipated impact, costs/risks, etc\.) The PMU performs the technical
appraisal process, and then recommends proposals for selection by an advisory board
composed of representatives from government, private sector, civil society and the
UNDP\. The final grant decision is made by the EICTDA Director General on the
Board's recommendation\.
156\. Outputs\. The project target of 40 "community-based" centers was exceeded\. A
total of sixty-five (65) CIDEV centers were set up of which 54 meet the "community
based" requirement and 11 (created top-down by the Ministry of Youth affairs) do not\.
Repressed demand for new CIDEV centers was over 600 proposals by Project closing\.
157\. Formation of each center requires considerable travel and extensive work on
awareness raising, planning, negotiation, contracting, community mobilization,
organization, recruitment, training, building preparation, procurement, installation of
equipment, financial administration and technical support\. The results, however, go far
beyond mere provision of ICT\. CIDEV centers are also institutional platforms for
dissemination of knowledge, provision of government services and community
participation in governance\.
158\. Services\. All centers provide basic computer training, telephone use, and secretarial
services such as scanning, fax, and photocopying\. Many centers diversify into other
services such as passport photographs, cafeteria, recreational TV, showers, etc\. to
increase revenue\. Most centers are the first and only ICT service providers in their area
50
and many even introduce electricity to the community they serve\. A profile of service
statistics is shown in Table 19\.
Service Statistics Areas of Activity12
Capacity-Building
Total number of centers 65 (Computer Literacy) 41
% of centers reporting service statistics 55% Market/Agriculture Information 7
Avg Monthly Users (sample 44 centers) 1,116 Health 5
Estimated Monthly users (all centers) 72,542 Environment 4
Target for the project 10,000 Persons with disabilities 4
% Achievement 725% Gender 4
Total 65
Table 19: CIDEV Center Service Statistics
159\. Training is by far the most important service of CIDEV centers\. Table 20 shows
how a total of 3,524 people (female, youth, government employees and others) have
received training, particularly in basic computer literacy\.
No Description Male Female Total Remark
1 Training on Management, Finance and Procurement 85 31 116 Participants
for ICT Center Committee members from 39
centers
3 CIDEV Network-Hub founding Conference 45 20 65
4 Computer Maintenance, Networking & website 35 12 47 Drawn from
development training for Center staff 23 CIDEV
centers
5 Basic computer literacy for community at large 1677 1619 3296 All centers
Total 1842 1682 3524
Table 20: Short Term Trainings for CIDEV center staff and volunteers
160\. Financial performance\. The not-for-profit principle of the program results in
below-market service fees which are still calculated to cover operating costs after ICTAD
support terminates at the end of one year of operation\. Average operating cost and
revenue data were available only for 44 (68%) of the centers (see Table 21)\. Of these, 34
centers (77%) show monthly profits\. Some centers incurring monthly losses
(predominantly youth centers) waive the fees due to customer's inability to pay\. Eight of
them now have independent sources of revenue\. Twenty-nine centers were founded in
the last year and still face the expenses and frequent revenue shortfall associated with
startups\. Although more systematic data collection is clearly needed, it seems reasonable
to expect that a majority of the centers can be financially sustainable\.
Financial Performance No\. %
12
PMU Project Completion Report V\.1-4 July 5, 2010 p\.26\.
51
Financial Performance No\. %
Centers reporting financial information 44 68%
Of which, centers reporting avg\. net monthly profits 34 77%
Of which, reporting average net monthly losses 10 24%
Graduated Center Analysis
Centers graduated from subsidy period 45 69%
Graduated centers reporting avg\. net monthly profits 26 58%
Graduated centers with strong sustainability rating 8 18%
Graduated centers with medium sustainability ratings 33 73%
Graduated centers with low sustainability ratings 4 9%
Table 21: Financial Performance of CIDEV centers
161\. Sustainability\. Sixty-one out of 65 centers are rated to have medium to strong
sustainability, as shown in Table 22\. These ratings were assigned by program managers
through qualitative assessment of factors such as service statistics, availability of rent-
free facilities, income, and the strength of the governing board and of
community/government sponsorship\. Even though 45 centers (69%) have already
graduated from the one-year operational subsidy period, at project completion no center
had yet closed for business\. This is likely to change, and a percentage of the centers will
probably close\. However, the failure rate of centers in Ethiopia is expected to be lower
than in India (15%), mostly on account of the CIDEV partnerships with existing
community organizations13\.
Sustainability Ratings # of centers % of total
Strong 12 18%
Medium 49 75%
Weak 4 6%
# Centers Assessed 65 100%
Table 22: Sustainability Ratings of CIDEV Centers
162\. Scalability\. The question of whether CIDEV centers with the present business
model could be scaled up as country-wide solution to the connectivity gap was not
answered conclusively by ICTAD due mainly to lack of time to observe the financial
performance of the centers\. ICTAD's average cost per CIDEV/CR was USD 52,760\.
For 15,000 Kebeles, this would cost USD 791\.4 million, an amount presently
unaffordable\. However, ICTAD's average investment cost per center is an unlikely
parameter for estimation of scaling up costs because:
Close to one half of investment costs were used to help sponsoring community
organizations refurbish and furnish the center premises\. This would be done only
exceptionally under a scaling up scheme\.
13
In India, the Citizen Service Center (CSC) program is based on local entrepreneurship, most of it ad-hoc\.
See http://www\.csc-india\.org/Default\.aspx?tabid=490&EntryID=4\.
52
Training costs for employee training are likely to decrease significantly given the
much higher supply of instructors which the project generated primarily through
the TVET program\.
Financial performance of the centers over a longer period of time may be
sufficiently strong to justify a loan component for investment costs, thus reducing
the average amount of grant financing\.
163\. Challenges Encountered\. The main limiting factor was the small number of staff
to run the CIDEV program both at the PMU and in the regional capitals\. For more than a
year, the DED advisor traveled mostly alone throughout Ethiopia as the only staff person
responsible for implementation of centers, and the ICTAD Project Manager had to
intervene personally to remove obstacles and negotiate every grant award\. Thus,
extraordinary individual dedication was in large part responsible for the eventual results
exceeding project targets\.
164\. Centers also faced high turnover of committee members and generally low
managerial skills within the responsible community organizations\. Some ICT centers are
not yet financially self-supporting due to low demand for ICT services\. Frequent power
supply failures and interruptions in telephone and internet connections also disrupt
income-generating activities\. Failure of some sponsoring communities to provide rent-
free space also imperils sustainability\. Administration and control systems were not
developed enough to provide the full service statistics and revenue data needed for the
ICR\.
Community Radio (CR) Program
165\. The project set out to establish 4 community radios, three (Kore, Bonga, Durame)
in the SNNP region and one (Sude) in Oromia region\. It actually established seven
community radios in the above targeted locations plus one each in Kombolcha, Sekota &
Jimma\. The Jimma CR had been started before the project launched so ICTAD provided
ICT equipment and training to make it operational\. An 8th CR in Argoba was being
established at project closing\.
166\. ICTAD provided all coordination, technical assistance, procurement of equipment
and funding for the CR program\. A DED advisor was dedicated to these tasks and was
therefore instrumental in making these community radios a reality\. The EBA supported
the project effectively through new legislation on CRs and by expediting issuance of
licenses\.
167\. Establishment of each CR requires licensing, technical installation, training, content
development, organizational development and networking / establishment of a
Community Radio Association, hiring of staff (including the station manager),
administrative and financial control systems and of course money (over USD $50,00o for
each CR)\.
168\. Each CR requires studio Equipment (broadcast mixer, CD-Players, etc\.), Field
Recording Equipment (recording sets for interviews, external Microphones, etc\.),
Transmission Equipment (antenna masts, FM Transmitter, etc\., IT Equipment (10
53
refurbished computers and special software for every site, etc\.), power generator, backup
equipment and of course furniture\.
169\. CRs go through a process at the community level akin to that of a child learning to
speak at the personal level\. To give effective voice to a community and learn to inform
members on common issues, concerns, culture and activities is a long-term learning
process that requires extensive training and mentoring by experienced practitioners\. In
addition, CRs under ICTAD need to become at least partially self-sufficient and this
involves business planning and collegial management by a board of community leaders\.
More fundamentally, CRs need at all costs to be grounded and led by communities and
therefore they cannot thrive well under external direction\.
170\. Thus CRs are both an extraordinary resource for community development and a low
volume, long gestation-type of activity not easily scaled up but demanding of
experienced, professional support by governments, at least at the beginning\. The
EICTDA has extended the contract with the DED advisor who is focusing on setting up
the Community Radio Association as a mechanism for networking, technical support and
possibly training of the existing CRs\.
54
Subsidy Avg\. Monthly Independent
Type of Community
Site and Starting months Sustainability Profit (Loss) source of Avg\. monthly organization
No\. Distance from AA in Km (inception) Date remaining 0 % - 100 % in Birr*** revenue? service Users
1 Gewane (360) November 2007 0 75 0 Pastoralists
2 Asayita (670) December 2009 6 65 33 1496 Local NGO
3 Semera Youth (588) March 2008 0 30 -3,925 1630 Youth & Women Ass\.
4 Shashemene (255) March 2008 0 75 517 3200 Local NGO
5 Derra (125) November 2007 0 50 0 892 Urban Admin\.
6 Kechema (88) September 2008 4 50 0 120 Farmers Ass\.
7 Gohatsion (186) May 2008 0 45 0 1480 Local NGO
8 Jimma (346) October 2009 4 60 -888 241 Youth Ass\.
9 Enango Kali (480) June 2009 0 50 -1,430 Farmers Ass\.
10 Nebo Daletti (480) June 2009 0 60 -240 Farmers Ass\.
11 Tullu Bollo (80) Oct 2009 4 50 -1,480 300 Youth Ass\.
12 Alem Gena (20) September 2009 3 65 0 YES Disability
13 Bako (251) October 2009 4 50 0 YES Disability
14 Gursum (590) September 2009 3 70 2,267 250 Youth Ass\.
15 Kemba (630) October 2007 0 55 803 5534 Cooperative
16 Gunchire (200) November 2007 0 65 -945 250 Youth Ass\.
17 Yirgalem Youth Center (313) June 2009 0 70 17 1432 Youth Ass\.
18 Wonago (370) July 2009 0 45 -1,583 520 Youth Ass\.
19 Dasenech (840) March 2009 0 55 474 Youth Ass\.
20 Jinka (733) November 2009 5 75 1,730 400 Youth Ass\.
21 Shone (330) June 2009 0 80 2,722 1430 Youth Ass\.
22 Korem (619) July 2008 0 80 425 2400 Youth Ass\.
23 Mekele (783) July 2008 0 75 3,000 1320 Youth Ass\.
24 Adigrat (898) July 2008 0 65 -200 1680 Youth Ass\.
25 Shire (1087) July 2008 0 60 3,000 1440 Youth Ass\.
26 Axum (1024) April 2009 0 60 -1,500 2400 Youth Ass\.
27 Dansha (844) October 2009 4 70 500 960 Cooperative
28 Muja (670) May 2009 0 65 -990 180 Youth Ass\.
29 Shoa Robbit (222) June 2009 0 65 154 400 Youth Ass\.
30 Dejen (229) April 2009 0 55 -1,449 1320 Youth Ass\.
31 Kamise (325) June 2009 0 65 320 400 Youth Ass\.
32 Nefas Mewcha (740) May 2009 0 65 1,350 480 Local NGO
33 Bahir Dar Youth (560) March 2008 0 60 -640 Youth Ass\.
34 Enjibara (452) May 2007 0 60 2,000 2100 Youth & Women Ass\.
35 Cardos (AA) June, 2007 0 50 0 YES Disability
36 Tena Kebena (AA) March 2009 0 70 145 300 Local NGO
37 Negat Ethiopia (AA) March 2009 0 45 -1,450 YES Disability
38 Tiwledihin Agelgil (AA) May 2009 0 50 0 840 Local NGO
39 Felege Ethiopia (AA) March 2009 0 60 -2,600 YES 344 Disability
40 IDPDA (AA) January 2009 0 65 0 YES Disability
41 (AA) October 2009 4 65 400 263 Local NGO
42 Beza (AA) October 2008 0 60 0 YES 140 Local NGO
43 Dire Dawa (515) June 2008 0 65 -2,000 YES 2240 Local NGO
44 Jijiga (628) August 2008 0 60 300 235 Local NGO
45 Gambella (766) October 2009 4 70 3,800 1200 Youth Ass\.
46 Harar (526) July 2008 0 70 17,947 360 Local NGO
47 Wombera (590) March 2010 8 55 0 Youth Ass\.
48 Hawassa (271) March 2010 8 65 0 Local NGO
49 Robe (442) April 2010 9 50 0 Local NGO
Adonay Women & Children
50 (Kibremengist) (471) April 2010 9 50 0 Local NGO
51 Qillenso Mokonssa (480) March 2010 8 50 0 Youth Ass\.
52 Gilgel Beles (544) March 2010 8 60 0 Local NGO
53 Delgi (830) March 2010 8 55 0 Local NGO
54 Debark (841) April 2010 9 50 0 Local NGO
55 Tigray (abiadi) YC (878km) 2009 0 65 -2,715 3600 Model Youth Center
56 Afar(Semera) YC (610 km) 2009 0 65 -1,500 1200 Model Youth Center
57 Amhara(Dessie) YC (401km) 2009 0 65 0 Model Youth Center
58 Oromia (Adama) YC (100km) 2007 0 65 Model Youth Center
Southern region (Awassa) YC
59 (275km) 2008 0 65 -4,158 Model Youth Center
Beneshangul (Assosa) YC
60 (678km) 2009 0 65 300 300 Model Youth Center
61 Gambella YC (777km) 2009 0 65 3,800 Model Youth Center
62 Hareri (Harer) YC (525km) 2007 0 65 336 Model Youth Center
63 Dire Dawa YC (515km) 2009 0 65 23,796 2350 Model Youth Center
64 Addis Abbaba Youth Center 2007 0 65 -1,500 Model Youth Center
65 Somali (Jijiga) YC (620km) April 2010 9 65 Model Youth Center
55
T P C CIDEV P
56
Annex 3\. Economic and Financial Analysis
Economic Premise and benefits
171\. As pointed out in Section 3\.3, to analyze ICTAD's economic benefits it is
indispensable to acknowledge fully that the project's objective was fundamentally
capacity building\.
172\. The project aimed to create capacity for well-known economic benefits to
materialize, not to achieve those benefits directly\. The project's fundamental economic
premise was that "use of appropriate ICT can facilitate access to markets, development
information, and public services, all ways to improve the livelihood of the affected
communities\." The design took the link between project outputs and ultimate economic
benefits as a premise, not as an objective to be validated through the results framework\.
The project did not set out to actually provide access to markets, or to deliver
development information or public services through ICT-based facilities\. In fact, none of
the original or restructured project components and none of the project development
indicators directly targeted any of these economic benefits\.
173\. This approach resulted in a project designed to create human, institutional and
regulatory capacity to jump start the ICT sector in areas where it was practically non-
existing and for the benefit of communities previously without access to technology\. The
five years of the project were spent in creating these capacities and launching them
operationally with reasonable prospects of continuation\. The benefits to be expected
such as increase employment and incomes, increased economic activity, lifting of some
very poor people out of complete poverty, giving development opportunities to
disadvantaged groups like women and HIV-infected youths, etc\. were shown to be
possible and likely through beneficiary surveys mainly for CIDEV and BIC programs\.
However, actual impact measurement has to wait until a representative group of
graduates from these programs can be followed during a meaningful time\.
174\. In the meantime it is worth noting that a strong consensus exists both locally and
internationally on the value of a project like ICTAD and the urgency of scaling up its
results\. To wit: `
In stakeholder consultations during project preparation all respondents to a country
wide sample stated their belief that ICT improved internal and external
communications, reduced costs, empowered people and improved service delivery\.14
In another preparatory study to assess the potential socio-economic impact of ICT
"Stakeholders from six regions of the country all pointed to one major theme: current
information communication technology [manual collection, fragmented paper reports,
limited and late dissemination], is impeding community and individual economic
development\. \.ICT will mitigate situations such as described above by enabling
14
See ICT Report, pg\. 53\.
57
citizens, agencies and others access information resources through public information
centers\. It can play a major role in improving quality of life by providing citizens a
much wider access to markets, services and opportunities to acquire skills, businesses
and employment\."15
During negotiations, both sides agreed that "CIDEV program is a public good
program"16 to recognize explicitly that community centers would provide ICT access
to people who could not otherwise get it through market forces alone and thus that
public assistance was justified\.
Internationally, recognition of the potential value of ICT for development has been
for some time a worldwide consensus\. Figure 1, for example, shows the strong
correlation (0\.8), across countries, between an index of human development and one
of ICT readiness, access and use in 2003\.
Figure 1\. Human Development Index and Networked Economy Index, 200317
At the World Summit of the Information Society (Geneva, 2003) leaders from all
over the world committed to an agenda virtually identical to the objectives of the
ICTAD project, and for the same reasons, as shown in Box 2 below\.
ICTs should be regarded as tools and not as an end in themselves\. Under
favorable conditions, these technologies can be a powerful instrument,
increasing productivity, generating economic growth, job creation and
employability and improving the quality of life of all\.
We must focus especially on young people who have not yet been able to
benefit fully from the opportunities provided by ICTs\.
We affirm that development of ICTs provides enormous opportunities for
women, who should be an integral part of, and key actors, in the
15
"Assessment of Potential Socio-economic impacts of ICTs on Poverty Reduction and Service
Delivery in Ethiopia"\. ICTAD Preparatory Study
16
ICTAD Minutes of Negotiation, Pg\. 1
17
From ICT and MDG's A World Bank Group Perspective, December, 2003, pg\. 10\.
58
Information Society\.
We shall pay particular attention to the special needs of marginalized and
vulnerable groups of society, including \. persons with disabilities\.
We are resolute to empower the poor, particularly those living in remote,
rural and marginalized urban areas, to access information and to use ICTs
as a tool to support their efforts to lift themselves out of poverty\.
We pay special attention to the particular needs of people of Least
Developed Countries, \.Landlocked Developing Countries, \. countries with
conditions that pose severe threats to development, such as natural
disasters\.
Box 2\. Extract from Geneva Declaration of the 2003UN World Summit of the Information
Society18\.
175\. Under these circumstances it seems appropriate for project designers to have chosen
the growth of the ICT service industry as the most practical proxy to measure
achievement of the project development objective\. A supply response from this industry,
whether directly or indirectly spurred by the project, is best possible evidence that
capacity for economic use of ICT has increased across the economy\.
176\. So for example, if there were 15 computer maintenance companies in Amhara
region in 2006 and 42 in 2009, as was measured by beginning and ending surveys, the
project design asserts that its development objective has been advanced (and even
accomplished, had there been a specific indicator agreed upon for Amhara, which there
was not) regardless of whether or not this change can be traced to project outputs\.
177\. The basis for this assertion is that the project facilitated the creation of one business
incubator in Amhara (Bahir Dar) with 13 client companies; helped train 99 teachers from
TVET colleges and 23 employees from SMEs; and helped set up 10 community centers
in the region\. In addition the project assisted ETA to become a better regulator of the
services offered by ETC, which contributed to the expansion of fixed and mobile
telephone subscribers in the region\. The project also assisted EICTDA to issue a critical
localization standard and transliteration engine for Amharic to allow rendering of
software and names in local language\. Finally the project mobilized local government to
support all these initiatives and convened people from industry, government, NGOs to
discuss them and support their creation\.
178\. All these actions in Amhara and similar ones across the 11 regions of the country
contributed and spurred the growth of the ICT services industry and will continue to do
so in the future\. This is the closest that ICTAD design can get to a true impact indicator
for the time being and therefore the accomplishment of indicators to this effect under the
results framework merit a satisfactory rating for PDO\.
18
Geneva Declaration of the UN World Summit of the Information Society in 2003, par\. 8\. The
declaration was endorsed by 50 Heads of state/government and Vice-Presidents, 82 Ministers,
and 26 Vice-Ministers from 175 countries as well as high-level representatives from international
organizations, private sector, and civil society\.
59
179\. A small, five-center survey of employment outcomes was nonetheless done for the
ICR (see Table 24) which showed an encouraging 27% result among formerly
unemployed trainees\. In addition, it is worth noting that administration of each center
generates direct employment for about 5 people\.
No\.
No\. Une Employed
Employment
Center Trai- Employed % mplo % after
outcome Remarks
nees yed training
M F
Dire Over 60% of trainees are
Dawa 140 84 60 56 40 8 12 36% GoE employees
Over 40% of trainees are
Korem 150 90 60 60 40 1 9 17% GoE employees
Trainees all women, 12
Beza 102 0 0 102 100 17 17% are organized as SME
Over 70% of trainees are
employees (GO or NGO
Dera 141 85 60 56 40 3 12 27% Staffs, Teachers \.)
Shashe Over 40% of trainees are
mene 93 56 60 37 40 7 15 59% GoE employees
626 314 50 312 50 19 65 Avg\. 27%
Table 24: Graduates employed from a sample of five CIDEV centers
180\. Two consultant field studies were also conducted to assess the CIDEV Program in
July and December, 2009\. The first19 profiled 26 centers and the second20 evaluated the
program based on visits to 27 centers\. Results show strong benefits for over 70,000
people a month throughout the country in terms of skills development, convenience
gains, access to information, access to telecommunications, equity gains (increased ICT
access for the very poor, women, persons with disabilities and HIV/AIDS)\. Also visible
are increased volunteerism, administrative and financial skills and ICT center
stewardship within the community21\.
Costs
181\. It is not possible within a 5 year period to develop policy, build institutions, create
human capacity and expect to measure impact of ICT on economic development\. ICTAD
accordingly focused on creating capacity for development, not development itself, and it
fully met and exceeded its targets in this respect\.
182\. Whether this was accomplished at reasonable cost, in the absence of quantifiable
benefits, must be discerned by examining unit costs against internal or external norms\.
Table 25 below shows unit costs for the key outputs of ICTAD\. Most of the actual costs
were incurred under competitive procurement (except for virtual incubator grants) and
19
Community ICT Centers in Ethiopia, by Elias Berta, July, 2009
20
Community ICT Centers - An Evaluation Assessment, by Esther Scharf, December, 2009
21
"Community ICT Centers in Ethiopia" p\.15 and Project Summary of ICT Centers\. Esther Scharf, 2009
60
can thus be assumed to be the lowest possible\. The useful life of outputs is conservatively
assumed to be that of the main assets acquired (4 years for technology and 10 years for
buildings) and the number of outputs is that achieved under the project without any
growth projection22\.
183\. Under these assumptions project unit costs appear very reasonable, even though
meaningful country comparators were not readily found since project activities were new
to Ethiopia\. US$ 28,238 for each of the 23 policy, legal, regulatory and standards
instruments developed (see Annex 2, Table 7) seems reasonable given the national
consultation and government-wide impact of these instruments\. Unit costs of $ 77 per
refurbished computer (against USD 825 in the market see Table 15), $ 434 per trained
TVET teacher/SME opeator and $4,391 per incubating startup company similarly appear
very reasonable\. US$ 2,684 unit cost per trained EICTDA staff member seems high but
it is skewed by the high cost of 48 people trained abroad\.
Unit Name of Output Units/year Years Unit cost USD
Policy, Legal and regulatory Instruments 23 1 $ 28,238
Trained EICTDA staff 708 1 $ 2,684
Tenant Incubator companies 80 10 $ 4,391
CRTC Refurbished Computers 9,500 4 $ 77
Trained TVET teachers & SME Operators 1,221 1 $ 434
Community Center users 928,727 4 $ 0\.97
T U C K ICTAD O
184\. The unit cost for each CIDEV center user (USD 0\.9723) seems moderate since it
encompasses both simple services (sending a fax) and complex ones such as a computer
literacy course\. In assessing the reasonableness of these costs one should have in mind
that the Centers play a social role by giving access to people who would not otherwise
have it and by heavily subsidizing the prices\. In effect:
Most centers charge about half the price of privately-run businesses in their areas\.
Some centers scale their training fees based on people's ability to pay and offer
even free training for members in need (orphans, people with disabilities etc\.)\. To
give an example, the Yirgalem Youth Community ICT Center offers basic
computer training at a cost 50 ETB/month, while commercial providers charge
100 ETB/ month\. Two people with disabilities from each of the six kebeles of
Yirgalem receive training free of charge\.
In many cases Centers are the only ICT access facility in their area\. For example,
the Wonago center in the Gedeo Zone of the SNNP region (365 km from Addis),
22
For BIC, an average of 15 tenant companies (currently 11) per year per incubator and 20 virtual
incubation companies in Addis (currently 17)\. For the CRTC, 9,500 refurbished computers per
year, and for CIDEV, 77,394 users per month\.
23
This already factors in average US$ 0\.05 recovered through user fees\.
61
is the only ICT facility in its area and the nearest facility is 30 km away in the
town of Dilla\. An average of 520 people uses the Wonago center every month\.
185\. Overall, all the unit costs of ICTAD outputs appear very reasonable\. However, this
is still a qualitative assessment and opinions may vary until in a follow on project a full
ERR can be calculated on the basis of quantifiable economic benefits\.
186\. It must be noted that PMU staff contribution to the project came at costs below
market value\. As noted, PMU staff salaries were below market and yet a core team
stayed for the duration and saw the project through\. In the case of DED advisors, in
addition to their contribution being a grant and having been increased 61% over original
plans (from USD 1\.8 to USD 2\.9 million), the market costs of similar skills for similar
length of time would have been a multiple of this sum\.
62
Annex 4\. Bank Lending and Implementation
Support/Supervision Processes
(a) Task Team members
Names Title Unit Responsibility/
Lending
Abdoleza (Bobak) Rezaian Task Manager 2003-2010 AFT Task Team Leader
Project design,
Michael Broemmel Consultant 2003-2010 AFTEG
supervision
Jalal Abdel-Latif Consultant WBIRC
Tafesse Freminatos Abrham Consultant AFTFM Fin, Mgmt\.
Abebaw Alemayehu Sr\. Urban Dev\. Specialist AFTUW
Tesfaye Ayele Procurement Specialist AFTPC Procurement
Edward Felix Dwumfour Sr\. Environmental Spec\. AFTEN
Supervision/ICR
Wuleta Giday Program Assistant AFCE3 Local supervision
Maria F\. Kail Operations Analyst SECPO MTR Support
Gareth Locksley Sr Telecom\. Spec\. CITPO Telecommunications
Eduardo Talero Consultant ECSPE E-Governance, ICR
Mulat Negash Tegegn ET Consultant AFTFM Fin\. Mgmt\.
Abiy Admassu Temechew Procurement Analyst AFTPC Procurement
Sr\. Private Sector
Menbere Taye Tesfa AFTFE
Development Specialist
Yetemwork Wolde Information Analyst AFRIT IT Procurement
Reinhard Woytek Sr\. Operations Officer AFTRL
Eshetu Yimer Sr Fin\. Mgmt\. Specialist AFTFM Fin\. Management
(b) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle USD Thousands (including
No\. of staff weeks
travel and consultant costs)
Lending
FY03 25\.68 147\.71
FY04 31\.32 207\.47
FY05 2\.38 9\.91
Total: 365\.09
Supervision/ICR
FY05 9\.10 56\.40
FY06 18\.43 112\.03
FY07 20\.06 117\.76
FY08 23\.49 155\.74
FY09 20\.40 109\.03
FY10 12\.52 151\.81
Total: 702\.77
63
Annex 5\. Beneficiary Survey Results
N/A
Annex 6\. Stakeholder Workshop Report and Results
187\. The project's closing workshop was an enthusiastic gathering of all the stakeholders
that made evident their widespread satisfaction with the work done and accomplishments,
their expectation for a follow-on operation, and their clear awareness of the difficulties to
sustain the project's results in the absence of further government help\.
188\. Beyond that, the workshop was filled with moving testimony from project
beneficiaries about the impact of the project on their lives\. This is something difficult to
convey in a formal report like this but is nonetheless important for all who think that
development is ultimately defined by how the most vulnerable members of society are
given opportunities to grow and exercise their rights\.
64
Annex 7\. Summary of Borrower's ICR and/or Comments
on Draft ICR
T E S B ICR
Information and Communication Technology (ICT) is a powerful tool to support social
and economic development\. It is widely accepted that Information and Communication
Technologies (ICT) play an important role in national development and is instrumental
for alleviating poverty, accelerating development and promoting good governance\. It is
the indispensable factor to intervene the multi-faceted problems the country faces\.
The Ethiopian Government realizes that the application of ICT technology would best
accelerate and enhance the rate of economic growth and alleviation of poverty\. It is with
this understanding that the government developed new ICT policies and strategies to
increase productivity, improve infrastructure, reduce costs\. Several ICT oriented
initiatives have been started, involving various government and non-government
institutions and the private sector\.
Major steps have been taken by the government to develop and promote the ICT sector
with high priority\. These initiatives integrate major institutions and government bodies
like the Ethiopian ICT Development Agency\. EICTDA was established as a new agency
in July 2003 to be the responsible to promote the use of ICT\.
The ICTAD project was launched under this newly established Ethiopian ICT
Development Agency (EICTDA) in cooperation with the World Bank and German
Development Service (DED)\.
The overall objective of ICT Assisted Development Project was to assist communities to
improve their livelihood through the use of appropriate Information and Communication
Technologies (ICT) that facilitate increased access to markets, development information,
and delivery of public services\. After the mid-term review the objectives were changed
to: Increase the use of information and communication technology by communities in
project target areas\.
As a long term impact, ICTAD was designed to support the government's efforts in
reducing/eliminating the pertaining poverty situation in the country\.
The project was organized in two major components:
P I S C
A C S C
Since effectiveness of the DCA in June 24, 2005, the ICTAD project has been executed
with undisrupted and full support from the government, the World Bank's task team
leader (TTL) and country office, the German Development Service (DED), partner
65
institutions, the stakeholders and the community at large\. Along its major developmental
objectives the project has increased capacities for the key regulatory and policy making
institutions in constructing an enabling legal and policy environment for ICT
development\.
The Information and Communication Technology Assisted Development Project
(ICTAD) unlike many other development projects ended within the stipulated time frame
of the project plan\.
Although there was a delay at the start of the project, after the mid-term review major
objectives of the project and targets are attained and often over achieved\.
Policy and Institutional Support Component One
Laws are enacted which allow competitive provision of ICT related goods and
services\. New Policies, standards, laws, directives and regulations are adopted to
create a better environment for the ICT sector development\.
Currently, EICTDA is in a position to fully accomplish its mandate as stipulated
in its 2003 Proclamation\. The institutional and professional capacity of the
Agency has been upgraded with the support of the ICTAD project\.
All stakeholders and project partners (EICTDA, EBA, ETC, PIC, ECSC, CTIT,
universities and regional and federal government offices) have actively
participated in implementing the projects components in line with their respective
mandates\. Many of these project partners benefited from the project by support of
strengthen their working capacity\. With regard to capacity building of the staff of
the partner institutions, a total of 765 staff members participated in short and long
term trainings (27 are BSc/BA and above) the remaining are short term training
participants, 79 professionals participated in short term external trainings, and 82
persons participated in study tours\.
Ethiopian Broadcast Authority (EBA) developed a radio licensing scheme\. The
proclamation of EBA has been amended so as to include the community radios\.
This helped the Authority to issue community radio licenses\.
As the performance report shows, most of the project targets have been accomplished or
some have been delivered more than 100%\. Some of the achievements are listed below\.
The national ICT policy and ICT security policy has been developed and
approved by the council of ministers,
Thirteen ICT standards developed (93%),
Three national ICT guidelines have been approved (100%),
The amendment of the radio proclamation and licensing has been effected by
EBA (100%),
Eight community radios are licensed (160%)
66
The ICT security policy has been developed
Five ISPs are licensed
Application and Community Support Component two
It was initially planned that in selected TVET training centers at least 500 ICT
trainers have to be trained\. The achievement at the time of this report (training is
ongoing) is: 576 TVET teachers are trained (115%)\.
With regard to the SMEs, the target set was 10024 selected ICT SMEs supported
within the context of FeMSEDA, however 645 SMEs operators have been trained
(645%)\.
Although it was planned to establish two business incubators in selected Regional
Governments, the actual business incubation centers established were 4 (200%)\.
In addition, 18 virtual incubates are established in Addis Ababa\.
One fully equipped and networked Computer Refurbishment and Training Center
(CRTC) is established and operational\. Computers deployment plan was 15,000;
however, the number of CRTC computers deployed until end of June 2010 is over
5,000 (performance level is about 33%)\.
It was also planned to establish 40 ICT Community Centers under the CIDEV
component, but today 54 centers are established; hence the performance is 135%\.
In addition 11 youth focused ICT service centers are established in collaboration
with the Ministry of Youth and Sports\. These community ICT centers are able to
conduct several Basic computer trainings, and provide other ICT services in very
remote areas of the country\.
It was planned to train 1000 persons in Community ICT centers\. Actually 3,283
people have been trained until today (training is ongoing), the performance is
328\.3%,
It was planned to establish five community radios, however, the achievement is
seven (175%), and the 8th one is approaching to start operation\.
The PMU has been able to manage and follow up all project components, sub-
components and ICT promotions\. Several workshops, seminars, community level
trainings have been organized and implemented by the project\. With this effort
many project partner staff members have got the chance to upgrade their
professional skills\. This also increased the efficiency and effectiveness of the
partner institutions\.
24
The document "Emergency Food crisis response program of the federal democratic republic of
Ethiopia" from November 25, 2008 talks about a target of 200 SMEs trained\. This target was not
communicated to the project team and never made it to the planning documents\. With a target of
200, the performance would reduce to 322%\. Subsequent review missions (09/02, 09/06, 09/10,
10/02, 10/04) did not correct this difference\.
67
Fund Utilization
The project has fully utilized the allocated budget both from the Government and IDA\.
The amount utilized for all project components from the Government/ counterpart fund is
Birr 43,880,562\.73, whereas the estimated budget was Birr 46,253,700\.00, overall
counter fund performance level is 94\.87%\.
The utilized amount from IDA's fund is USD 16,148,394\.77, whereas the IDA's
estimated budget was USD 16,148,369\.00 this shows IDA's fund utilization level 100%\.
In general, ICTAD project has adequately implemented the project's objectives and
evidenced that ICT can better support the government's effort in providing ICT services
to improve the access to information in marginalized areas of the country and alleviating
poverty\.
I B
4\.2\.2 World Bank
The World Bank has sufficiently supported the project since the inception time and has
contributed significantly to its completion\. A regular deployment of the Bank's
supervision mission has given the project to enhance its performance level, mainly after
the Mid-term Review of 2008\. The Bank's country office also supported the project in
providing advices and technical support in expediting procurement of goods &
equipment, consultancies, and M&E activities\.
ICTAD project has worked under one Task Team Leader (TTL) since the commencement
of the project, which enabled the project and the Bank read each other and move forward
without interruption and information gap\.
Major challenges with the WB were delays in clearance of "No objection", which
actually improved after the Mid-term review of the project\. The Bank's mission and
EICTDA have agreed to meticulously monitor most delayed procurement activities of the
project\. Measures taken in this regard are interventions made by EICTDA through
arrangement of fortnightly meetings to evaluate progresses made by PMU and each
project partner at the federal level\. Such measures helped in giving timely appropriate
directions to enhance procurement performances (local and international procurements)\.
4\.2\.3 The German Development Services/DED
The German Development Service (DED) was one of the major partners of the ICTAD
project\. DED actively supported the project in providing technical assistance by
deploying 10 technical experts during the period of ICTAD\. The total contribution of the
DED has a value of 2\.1 Mio EUR ~ 2\.8 Mio USD\.
68
The DED's main intervention areas were private sector development, e-learning
development in colleges, community ICT centers and radios, and capacity building for
several partner institutions\.
The integration of the advisors was good in most cases; their experience in their fields of
specialization was helpful for the progress of ICTAD\.
Many of the achievements are related to the hard working ICTAD teams and to the
experience and dedication of the technical advisors\.
In a few cases the experience and knowledge of the TAs could not be fully absorbed
because of the low capacity of the project teams (number of team members, skills and
experience, staff turnover)\.
Whenever possible, the ICTAD project management tried to strengthen the teams to
make more use of the TAs by knowledge transfer to counterparts and project teams\.
The ICTAD program officially ended on May 31st, 2010 but the German Development
Service (DED) has signed an agreement with EICTDA to extend the contracts of three
technical Advisors\. This should help to sustain the community projects (ICT centres and
radios) and the ICT-Incubation component of ICTAD\.
69
Annex 8\. Comments of Cofinanciers and Other
Partners/Stakeholders
German Development Service (DED): Comments by Guenter Ozdyk, DED coordinator
and TA to PMU, EICTDA and other partner institutions\.
The DED congratulates all project partners for the successful implementation of this
complex ICTAD program\.
Honor is due to team members of ICTAD, EICTDA and all partner institutions\. Special
gratitude goes to the Director General of EICTDA, today Minister of Communication and
Information Technology and to the Project Manager ICTAD\. Also the involvement of the
World Bank teams contributed to the successful completion of the program\. Special
thanks are given to the team leader of the World Bank for his commitment\.
Although many review missions were dissatisfied with the performance of the ICTAD
program, especially in the first 2-3 years, it was very obvious that under the given
situation the PMU performed extremely well and the team delivered outstanding outputs\.
The gap between the expectations of the donors and the results were induced by planning
issues\. The planning of the project targets did not sufficiently take into consideration the
pre-conditions and the capacity gaps of the partner institutions\. Documents of gap
analysis or resource estimation are not available\. Especially the time needed for CIDEV
and CR awareness creation and training of volunteers was not considered\.
Many of the DED experts had a long experience in project management and they
complained about the absence of communication guidelines among the main players
GoE, the DED and IDA\. This created a lot of conflicts and was obstructive to better
results\. Also the absence of project charters at project start and clear roles and
authorization of the various team members was reason for complaints\. It would also have
been helpful if the project had more flexibility in reducing targets because of the resource
situation in favor of quality and sustainability of results\.
Today many projects are implemented in stages with a gateway approval process from
one stage to the next stage\. This is very useful to avoid failures in early stages and to
mitigate the risk of program blowup\. Mid Term Reviews could be used as one of these
gateways for project components with clear rules for dropping non-performers or with
clear assignment for solid restructuring a project towards better results\.
The DED agrees with the report, ICTAD was successful at the end\. This success was
possible because of "Heroic Effort" of many team members\. ICTAD has produced a lot
of lessons learned which hopefully will be used for similar projects\.
70
Annex 9\. List of Supporting Documents
Ethiopia - National ICT Capacity Building Program 2002-2007, Updated Version,
March 2002, Ministry of Capacity Building\.
Bridging the Digital Divide and Paving the Way for Development Community
ICT Centers in Ethiopia\. EICTDA with support from DED, July, 2009
Community ICT Centers - An Evaluation Assessment Views from Ethiopia, By
Esther Scharf, December 2009\.
Ethiopia: Sustainable Development and Poverty Reduction Program, Federal
Democratic Republic of Ethiopia (FDRE), Ministry of Finance and Economic
Development (MOFED), July, 2002, Addis Ababa
An Independent Review of World Bank Support to Capacity Building in Africa:
The Case of Ethiopia, Corporate Evaluation and Methods, Operations Evaluation
Department, The World Bank, March 11, 2005\.
The National ICT for Development (ICT4D) Five Years - Action Plan for
Ethiopia [2006 2010]\. Draft (Version 4\.02), the Federal Republic of Ethiopia,
Ministry of Capacity Building\. May, 2006
Country Assistance Strategy for the Federal Democratic Republic of Ethiopia,
Country Department 6, Africa Region, International Development Association,
March 24, 2003\.
Country Assistance Strategy for the Federal Democratic Republic of Ethiopia,
International Development Association, Ethiopia Country Management Unit,
Africa Region, April 2, 2008\.
Ethiopia: Building on Progress - A Plan for Accelerated and Sustained
Development to End Poverty (PASDEP), (2005/06-2009/10), Volume I: Main
Text, Ministry of Finance and Economic Development (MoFED), September,
2006, Addis Ababa
Project Appraisal Document on a Proposed Credit in the Amount of SDR 17\.1
million (US$ 25\.0 million equivalent) to the Federal Democratic Republic of
Ethiopia for an Information and Communication Technology Assisted
Development Project, The World Bank, August 18, 2004
Development Credit Agreement, (Information and Communication Technology
Assisted Development Project) between Federal Democratic Republic of Ethiopia
and International Development Association, Credit Number 3985 ET, dated
January 4, 2005\.
Emergency Food Crisis Response Program of the Federal Democratic Republic
Of Ethiopia under The Global Food Crisis Response Program - Emergency
Program Paper for a Proposed Additional Financing IDA Grant in the Amount Of
SDR 16\.75 Million (US$ 25 Million Equivalent) for the Productive Safety Net
APL II Project and Proposed IDA Grant in the Amount Of SDR 85\.5 Million
(Us$127\.5 Million Equivalent) and IDA Credit in the Amount Of Sdr82\.1 Million
71
(Us$122\.5 Million Equivalent) for a Fertilizer Support Project, November 25,
2008, Agriculture and Rural Development, Human Development 3, Country
Department 3, Africa Region, The World Bank\.
Ethiopian Information and Communication Technology Development Agency
(EICTDA), Information and Communication Technology Assisted Development
Project (ICTAD), Status Report Six Month EFY 2001, (July-December 2008),
Submitted to: Director General EICTDA, the World Bank, MoFED, Reporting
Period: 8th July2008- 8th January 2009, Prepared By: ICTAD PMU, January
2009, Addis Ababa
Final Report on Application of ICTs for Improved Health Service Deliveries in
Ethiopia, By Mohammed Mussa (Dr\.), Consultant, Ministry of Capacity Building,
ICT Capacity Building Program, Addis Ababa, Ethiopia, November 2003\.
Telecommunication Sector Cost Analysis Methods and Pricing, Revised Final
Report, Federal Democratic Republic of Ethiopia, Ethiopian ICT Development
Authority, Martin Taschdjian, PhD, Addis Ababa July 2008
Environment, Key Assumptions, Market Trends, Information Base and
Requirements, Inception Report (Revised-2), Ethiopian Telecommunication
Agency (ETA), Version: July 2003\.
Report on Assessment of Socio-Economic Impact of Information Communication
Technology, (Zero Draft), Ethiopian Information and Communication
Technology Development Agency (EICTDA), Getachew Demeke, Ph\.D\., October
30, 2003\.
Federal Democratic Republic of Ethiopia, Report on 15 ICT Indicators, Final,
Ethiopian ICT Development Agency, Selam Development Consultants, Addis
Ababa, October, 2007\.
ICT Assisted Development Project, Monitoring and Evaluation Report on
Information Need of Farmers and Pastoralists, Ethiopian ICT Development
Agency, Revised Final Report, November, 2007\.
ICT Assisted Development Project, Monitoring and Evaluation Report on ICT
Laws Enacted and ICT Business Status in Major Towns of Ethiopia, Ethiopian
ICT Development Authority, Revised Final Report, November, 2007\.
Federal Democratic Republic of Ethiopia, Report on 15 ICT Indicators, Final,
Ethiopian ICT Development Agency, Selam Development Consultants, Addis
Ababa, February, 2010\.
ICT Assisted Development Project, Monitoring and Evaluation Report on
Information Need of Farmers and Pastoralists, Ethiopian ICT Development
Agency, Revised Final Report, February, 2010\.
ICT Assisted Development Project, Monitoring and Evaluation Report on ICT
Laws Enacted and ICT Business Status in Major Towns of Ethiopia, Ethiopian
ICT Development Authority, Revised Final Report, February, 2010\.
72
Ethiopian Information and Communication Technology Development Agency,
EICTDA, Information and Communication Technology Assisted Development
Project, ICTAD, Mid Term Evaluation Report, (June 2005-March 2008)
Information Society Statistical Profiles 2009, Africa, ITU-D
Development Study for the sustainability of the ICT Business Incubation Projects
in Ethiopia: December 2009 March 2010, Leon Lourens (RSA) in collaboration
with Rajeev Aggarwal (Rwanda) and Teshome Mergia (Ethiopia), For EICTDA,
ICT Assisted Development Project, ICTAD, Final Report, March, 2010\.
EICTDA - Information and Communication Technology Assisted Development
(ICTAD) Project, Performance Report (Terminal), (June 2005-May 2010), Addis
Ababa, Ethiopia, May 2010
EICTDA - ICTAD Project, Performance Report (Terminal), (June 2005-May
2010), Version 1\.3\. Addis Ababa, Ethiopia, June 23, 2010\.
Ethiopian Information and Communication Technology Development Agency
(EICTDA), Information and Communication Technology Assisted Development
(ICTAD) Project, Implementation Completion and Results Report, Version 1\.4,
(June 2005-May 2010), Addis Ababa, Ethiopia, August 2010\.
73
Annex 10 - List of people met
Name E-Mail
Ato Tefera Walluwa, Minister of Capacity Building,
Government of Ethiopia
Ato Debretsion G/Michael, Director General,
EICTDA
Ato Tessema Geda, Project manager, ICTAD PMU P
Ato Eskinder Birhane, PMU Financial Officer
A B D ICTAD P O
A W A ICTAD P O
A S M PMU M E O
A J H PMU M E O
M H T DED C D E
M H R DED A ICTAD I
M D M DED T A CIDEV D M
Mr\. Gunter Ozdyk, DED Technical Advisor to
ICTAD's PMU
Mr\. Michael Broemmel, DED Cooperation and M B
World Bank Consultant
M C S DED A ICTAD C S
C R
M J W DED A ICTAD
L ECSC
A T K EICTDA D S
R
A L A D HRD EICTDA
A G S M PIC
Mr\. Haddis Estifanos Fenta, PIC
Ms\. Bridget Cochrane, Manager, CRTC\.
A T K Y ICT C K ICT
W A A ICT O H P
D HPD O C C
A O G O G Y ICT
R C
A T T SICT B I M
A
A M N B D T BIC M
E B A
A D T
A B R D G ETA
74
Name E-Mail
A T E P D ETA
A M A F M ETA
M E S G M P P P U
I A A E
M D L P E I
T P A
M J A L C S C S
P C G P A
D U
M K O W B C D K
E S
M A B R ICTAD T T L B R
W B
M R C A C D E
L S P H D
S E W B
M T A WB P O ICTAD T A
M W G WB P A ICTAD W G P
M T F WB F M T F
O ICTAD A P W
M Y W W B
75
Annex 11 - Developments in Ethiopia's Telecom Services
2006 2009
Telecom Sector
Sector expansion underpins sustainability of project outcomes\. ICTAD's objectives
with respect to the telecommunications sector were deliberately limited to (i)
strengthening the regulatory agencies; (ii) issuing a first set of ISP licenses to private
providers; (iii) issuing community radio licenses, and (iv) pilot-testing the expansion of
telephone services to rural areas through public private partnerships\. To determine
whether sector expansion adequately underpins the sustainability of project outcomes, an
examination was made, as shown below, of important developments in the sector during
the project period\.
The findings are that major expansion of the telecom infrastructure indeed adequately
underpins sustainability and possible scaling up of Project results\. However, poor quality
of mobile and Internet service and high cost of broadband Internet service can still
jeopardize project achievements\. In the absence of competitive forces, improvements in
quality and reduction in costs depend directly on GoE's management of the sector\.
While overwhelming international experience would indicate that sector growth in terms
of access, quality and affordability of services could have been stronger under a
competitive sector structure, the significant accomplishments of the GoE in the
telecommunication sector, as evidenced by the figures below, must necessarily be
recognized\.
Subscriber Base
Ethiopia: Growth leader in mobile telephony\. According to ITU Africa remains the
region with the highest mobile growth during the period 2003-2008\. Within Africa,
Ethiopia was the fastest growing country in mobile cellular telephony with a compound
growth rate of 128% (see Figure 2 below)\.
76
Figure 2\. Ethiopia: Growth leader in Mobile Cellular Growth in Africa25
During the period 2006-2009 mobile subscribers grew 461\.52% from 0\.87 to 4 million\.
By 2010 the number of mobile users may have further increased to 8\.6 million according
to ETA (see Table 26 below)\.
Rapid Growth in fixed telephony and Internet\. As illustrated in Table 26 there are
discrepancies between various estimates of the subscriber base for telecommunications
services in Ethiopia\. However, ITU data will be used for comparison since this was
agreed for ICTAD's result framework\. According to ITU therefore, there were 910,000
fixed line subscribers in Ethiopia and 71,000 Internet subscribers in 2009\. This
represents 125% growth in fixed line subscribers and 328% growth in Internet
subscribers during the project period\. ITU's 2009 estimate of Internet users (as opposed
to subscribers) is 0\.45 million, which represents 0\.54 Internet density (users per 100
people) in the country, up from 0\.31 in 2006\.
Users of Telecommunication Services in Ethiopia (millions) Fixed Line Mobile Internet
2006
Subscribers 2006 (per ITU stats) 0\.73 0\.87 0\.02
Subscribers per 100 inhabitants in 2006 (per ITU statistics) 0\.95% 1\.13% 0\.03%
Internet Users 0\.24
Internet Users per 100 inhabitants 0\.31%
2009
Subscribers per ITU statistics 2009 0\.91 4 0\.07
Subscribers per ETA's 5/2010 ICTAD closing report 1\.18 8\.67 0\.1
25
ITU Information Society Statistical Profiles 2009 Africa, pg\. 14\.
77
Users of Telecommunication Services in Ethiopia (millions) Fixed Line Mobile Internet
Subscribers per ETC's web page on 6-12-2010 0\.91 2\.6 0\.04
Subscribers per 100 inhabitants in 2009 (per ITU stats) 1\.10% 4\.89% 0\.09%
Internet Users 0\.45
Internet Users per 100 inhabitants 0\.54%
Changes between 2006 and 2009
Subscribers 125\.52% 461\.52% 327\.64%
Subscribers per 100 inhabitants 116% 433% 300%
Internet Users 187%
Internet Users per 100 inhabitants 174%
26
T G E T S E
Persistent low performance in Africa\. While progress is significant, particularly in
mobile telephony, on a comparative basis the current figures still place Ethiopia among
the lowest five countries in Africa in all the three services\. According to ITU's ICT
Development Index 2009 Ethiopia's rank is 147th out of 154 countries and this ranking
did not changed in the 5 years covered by the index (2002-2007)\.
Infrastructure
Backbone
Countrywide fiber optic backbone deployed\. A 10,000 Km\. fiber optics line has been
laid throughout the country which can deliver state-of-the-art voice, data, video and text
services to 90% of the territory27\. This puts Ethiopia among at the top in Africa in terms
of broadband capacity and creates leapfrogging opportunities of strategic importance, for
example to convert the whole country to Voice over IP (VOIP) telephony bypassing
further expansion of the old, copper wire-based plain old telephone service (POTS)\. It
also means that Ethiopia now has infrastructure to provide triple-play (voice, internet,
telephone) service throughout the country\. Utilization of this infrastructure in a regular
and reliable manner is still in the future and is discussed below under Quality of Service\.
GSM is the global standard being used in Ethiopia for mobile cellular telephony and
SMS services\. It is deployed across the whole nation\. Actual availability, however, is
"to be checked the respective zonal/Regional and Dealers" as per ETC's web page
instructions, due to network management issues\. General Packet Radio Service (GPRS)
is a technology to provide Internet access over the GSM network which requires
connecting the GSM to the fiber optic backbone\. The connections have been completed
in Ethiopia but usage is minimal mainly due to high pricing (Birr 40 cents per megabyte
transmitted) and to network management issues discussed below under Quality of
Service\.
26
ITU Statistics downloaded from http://www\.itu\.int/ITU-D/ICTEYE/Reports\.aspx# on 6-15-
2010\.
27
According to data supplied in ETA's project closing report\.
78
CDMA is a wireless technology that can be used for voice, internet and fax services\. It is
being used in Ethiopia mainly for internet access in areas beyond the reach of the fiber
optic backbone\. Presently the technology has been deployed in 90% of the country, but
actual service is still lacking in most of the country28 due to network management issues
discussed below under Quality of Service\.
Rural Connectivity has expanded beyond original project targets\. At the start of the
project ETA had recognized clearly the problem and framed the objectives to which
ICTAD would be pointed:
\.the existing strategy of the government, Agricultural Development Led Industrialization
(ADLI), requires the telecom sector to focus on universal access of telecom services at the
regional, woreda, other towns and kebele level\. \. However\. the telecom services are still highly
skewed in the big towns like Addis Ababa, Nazreth, Bahirdar, Diredawa and Others\.29
ICTAD therefore set out to provide funding and technical assistance for private sector
operators and communities to connect to ETC's points of presence (PoP) primarily
through phone lines\. Its objective was to provide access to about 3000 community
phones over the project period, covering communities in an area of about 100,000 square
kilometers\.
During project implementation, however, the government gradually shifted its thinking
on the business model for community phone operators and eventually decided to pursue
the same objective in a larger scale but with a different business model\. This was the
subject of considerable concern in all supervision missions during the first half of the
project and eventually resulted in formal agreement to restructure the project and cancel
this subcomponent along with US $10 million of credit funds\. In essence therefore,
restructuring after the MTR increased the share of counterpart financing and raised the
bar on the original rural connectivity objectives of the project\.
Results wise ETC far exceeded project objectives by connecting between 10,000 and
14,000 kebeles30 under its Rural Connectivity Program (RCP) by the end of the project\.
Six-fold expansion of international bandwidth\. The bandwidth of Ethiopia's
international broadband gateway has constrained so far improvement of Internet service,
quality and cost of international voice service and supply of third-party Internet service
access31\. The gateway has been operating with a total of 897\.4 Mbps capacity, of which
28
ETC's web page warns that: "Currently, the network is deployed in: Addis Ababa, Fiche,
Wolkite, Woliso and Jimma, but availability has to be checked in the respective telecom sales
office\.
29
ETA's 2004/2005 Annual Statistical Bulletin, pg\. 5\. Downloaded from
http://www\.eta\.gov\.et/Publication\.html on 6-16-2010\.
30
The higher number is according to ETA's closing report\. Survey under ICTAD's own final
M&E Report counted only 10,696 fixed line resellers (see pg\. 88)\.
31
According to ETA, four ISP licenses issued to private companies could not be made
operational because of this constraint\.
79
537 Mbps are through optical fiber, 342\.4 Mbps through satellite and 18 Mbps through
microwave\.
On March 30, 2010 ETC announced having signed a contract with SEACOM Telecom
company for the provision of international bandwidth connectivity through submarine
fiber optic cable system via Djibouti, with a total cost of USD $47 million\. The
agreement will provide capacity of 20 STM-132 for a total of 3,100 Megabits per second,
thus raising the capacity of the gateway by 445\.44 %\. It will also raise the current 537
Mbps capacity of fiber communication system of the country to 3,637 Mbps, or
677\.28%\.33
Out of this total leased capacity, 16 STM-1 or 2,480 Mbps capacity will be utilized for
commercial purposes while the remaining 4 STM-1 620Mbps capacity will be used for
EICTDA-Government development program\. This segregation of bandwidth is
indicative of the priority that the government gives to the expansion of e-services to the
entire population\.
SEACOM is a company that has a total capacity of 1\.28 Tbps /17,000 Km/ undersea fiber
optic cable system connecting eastern and southern African countries with the rest of the
world\. African countries which are connected to the SEACOM system to date include
South Africa, Mozambique, Tanzania, Kenya, Rwanda, Uganda, Djibouti and Ethiopia\.
Tariffs
Generally high ICT Price Index in Africa\. According to ITU, "Compared to the world,
the 2008 ICT Price Basket is on average significantly more expensive in Africa\. Whereas
at the global level it represents 15 per cent of the monthly GNI per capita, in Africa it
represents 41 per cent 34"\. ITU goes on to explain that this situation is largely due to high
fixed Internet broadband prices as well as to the shortage of international connectivity in
the region\.
Considering that Ethiopia in 2008 had the lowest GNI per capita in Africa, its 14th place
ranking in the continent's ICT Price basket35 (at 41 % of GNI) indicates that its pricing
structure is not out of line with that of the continent\. To illustrate this Figure 3 from ITU
shows how in the Internet component of the price index Ethiopia is very close to the
average for the continent\.
32
Synchronous Transport Module level-1 is the transmission standard on a fiber optic network\.
Each STM-1 has a rate of 155\.52 Mbit/s\.
33
Information from ETC's web page (http://www\.ethionet\.et/news/news\.php?id=37, accessed 5-6-2010), was
confirmed with Director General of EICTDA\.
34
ITU Information Society, Statistical Profiles 2009 Africa, pg\. 36
35
Idem, Table 3\.3 ICT Price Basket, Africa 2008, pg\. 37
80
Figure 3\. Africa: Cost of mobile service, as a % of GNI per capita36
Unfortunately, due its low GNP Ethiopia ranks as the second most expensive country in
the world for fixed line broadband tariffs as proportion of monthly income (2085%),
according to ITU's 2009 statistics\.
Against this backdrop, the changes in tariffs costs have not been uniform, except that if
one takes into consideration the 80% accumulated inflation during the project period37 an
argument can be made that they have all declined in real terms\. In nominal terms there
have been both increases and decreases as shown in Table 2738 \. Neither can be readily
explained in terms of related cost variations to the operator\.
Increases
Internet dial up usage charges have increased the most (42\.86%)\.
Fixed to mobile regional and international calls and mobile to mobile calls
have increased around 11%\. This contradicts targeted 30% decrease in
fixed to mobile call cost, at least in nominal terms\.
Decreases
Fixed to fixed local calls and Internet dial up subscription charges have
decreased the most (78\.02% and 76\.68% respectively)\.
Fixed to fixed international call charges have decreased 31\.73%%\.
Internet usage charges at cafes has decreased 18\.77%
ADSL 2mb broadband Internet monthly charge has decreased 77\.36%\.
36
ITU Information Society, Statistical Profiles 2009 Africa, pg\. 16\.
37
From http://www\.indexmundi\.com/ethiopia/inflation_rate_%28consumer_prices%29\.html
38
The Project's 2010 Closing- M&E report has more detailed data on tariff changes\.
81
Service Unit 20061 20102 % Change
Cost of Fix ed to Mobile telephone call*
- Local Birr/min 1\.15 1\.11 -3\.20%
- Regional Birr/min 1 1\.11 11\.37%
- National Birr/min 1\.11 1\.11 0\.30%
- International Birr/min 9\.66 10\.72 10\.99%
Cost of Fix ed to Fixed telephone call*
- Local Birr/min 0\.15 0\.03 -78\.02%
- Regional Birr/min 0\.41 0\.4 -2\.44%
- National Birr/min 1\.13 1\.2 6\.67%
- International Birr/min 14\.65 10 -31\.73%
Cost of mobile to mobile telephone call
- National Birr/min 1\.5 1\.5 0\.00%
- International Birr/min 10\.72 10\.72 0\.00%
Internet rates
- Average at Internet cafes Birr/min 0\.29 0\.24 -18\.77%
- Dial-up usage charge Birr/min 0\.07 0\.1 42\.86%
Birr/free
- Dial-up Monthly charge minute 0\.07 0\.07 0\.00%
- Dial-up Subscription charge Birr 436\.29 101\.74 -76\.68%
- ADSL 2mb broadband charge Birr/month 47,479 10,747 -77\.36%
1 2
* Average of peak and non-peak rates\. From M&E Reports\. From ETC's web page
Table 27\. Selected average changes in telecommunication tariffs from 2006-200939
Quality of Service
It is readily observable in Ethiopia that mobile and Internet service, despite being
relatively expensive, are affected by serious quality of service (QoS) problems and
ETA's own QoS measurements tell this story (see Table 28 below)\. Broadband Internet
service availability, which ETA measured at 99\.3% appears much lower to the casual
observer40\. To give an example of the situation in the field, a Procurement course being
dictated under the CSC pilot e-Learning program in Awassa in early 2010 had to be
suspended for 3 weeks for lack of Internet access at BOFID (Bureau for Finance and
Economic Development)\.
39
Data for 2006 are from the Project's Baseline M&E report conducted in 2007, except when
noted and data for 2010 are from ITC's web page\. Percentage differences due to rounding\.
40
For example the ICR mission consultant used Internet service extensively in hotels in four
cities in Ethiopia (Addis, Adama, Hawasa and Bahir Dar) with frequent line drops, service
unavailability and low speed\. Similar cases were reported by Martin Taschdjian's study in July,
2008, pg\. 7\.
82
Measured
Selected QoS Indicators - May, 2010 Target
value
Fixed line call setup success rate >90% 70\.33%
Fixed line call setup time <25 seconds for 95% of national calls 90\.25%
<35 seconds for 95% of international calls 52\.69%
Dial up Internet Service
Number of login attempts before
Max\. of 3 with 1 minute interval 70\.00%
successful connection
Login success 95% within 40 seconds 55\.00%
Service restoration performance 100% within 7 days 85\.00%
Broadband Internet Service
> 75% of subscribed level for 95% of the time
Throughput 18\.75%
during busy hours
Network availability >99% 99\.23%
GSM Cellular Mobile
Call setup success rate >98% 96\.09%
Dropped call rate <2% 0\.33%
Handover success rate >95% 94\.65%
Table 28\. Selected QoS Indicators for Telecommunications in Ethiopia - May, 201041
The major factors contributing to low QoS are being addressed by the government as
follows:
Power shortages and limited electrification\. This fundamental constraint causes
many interruptions in telecommunications service\. The Chinese company ZTE
that has been installing the fiber optic network claims that "there are 320 base
stations across Ethiopia which cannot be used commercially because of a lack of
power supply"42\. Since this affects economic development across all sectors the
GoE is addressing this constraint through major initiatives\. The Gilegel Gibe II
Hydro Power Project 250 kms\. south west of the capital was inaugurated in
January, 2010 and 14 other projects are expected to complete within two years\.
The GoE has launched a large scale rural electrification program called the
Universal Electrification Access Program (UEAP) for electrification of over 6,000
rural towns and villages in all regions of the country affecting some 24 million
people\. Electricity access projects with The World bank for over US$ 400 million
are active and likely to be expanded\.
Limited infrastructure\. Fiber optic backbone, wireless internet, fixed line and
international gateway are being drastically expanded as explained earlier in this
note\.
41
ETA 2002 3rd Qtr\. QOS Report\.
42
Advertisement in "The Capital", local newspaper, May 9, 2010, pg\. 29\.
83
Vandalism\. Fiber optic infrastructure seems to be maliciously cut with
considerable frequency and repairing it is often difficult and time consuming\.
ETC is reportedly attacking this problem through redundant connections\.
Technical complexity\. The multiplicity of technologies (GSM, CDMA,
WCDMA, fixed PSTN and the multiplicity of equipment brands (Ericksson,
Nokia, Cisco) complicate the management of the networks in Ethiopia\. ETC is
reportedly pursuing a gradual strategy of geographic segregation on compatible
equipment to reduce complexity and failure incidence\.
Shortage of engineering and network maintenance capacity\. A complex network
such as Ethiopia's requires easily up to 3,000 trained engineers and technicians
deployed across the country\. Training must be hands on for the particular
equipment involved and can take up to three years in stages\. This is an area
where uncertainty seems to exist as to the best way to organize delivery of this
training, given the primarily academic orientation of the CTIT\. At present ETC
has over 12,000 employees but only a minority are trained engineers and
technicians\.
Network management capacity gaps\. This has been recognized by the GoE and a
contract has been signed with France Telecom for management of the
telecommunication network\.
Sector Policy
According to PASDEP 2006: "Ethiopia's broad policy framework is that the
backbone infrastructure will remain in the public domain, under the auspices
of ETC, while the private sector will be encouraged to become increasingly
involved in downstream activities and services\. At the same time, the
Government and the regulatory authority (the Ethiopian Telecommunications
Agency) will keep up sustained pressure to ensure that ETC meets the highest
standards, attains roll-out targets and delivers world class network and
service quality standards\."43
While there have been major advances in backbone infrastructure, as
explained above, the growth in the subscriber base for telecommunications
service cannot really be attributed to significant liberalization occurring
during the project period\. All major services are still provided exclusively by
ETC and even at the Kebele level resellers are really subcontractors of ETC\.
Internet service is provided exclusively by ETC despite the fact that nominal
VISP licenses have been issued but never really operationally enabled\.
Provision of mobile Subscriber Identity Module (SIM) cards still occurs only
at ETC offices and there is no competition yet for provision of any other value
added service\.
43
"Ethiopia: Building on Progress A Plan for Accelerated and Sustained Development to End
Poverty (PASDEP) (2005/06-2009/10)", Volume I, pg\. 140\.
84
Conclusions
From this brief overview of the Telecommunications sector, grounded primarily on third
party information, a few tentative conclusions can be drawn:
Even if ETC were to make order-of-magnitude reductions in tariffs, Ethiopia is
likely to remain a country where broadband Internet access will be beyond the
reach by the average citizen, and certainly by the poor\.
Consequently, in Ethiopia more so than in most other developing countries, the
need to create an infrastructure of Internet access centers throughout the country
is a development imperative\. ICTAD has demonstrated that CIDEV is a viable
institutional model based on partnerships between the government and
community organizations\.
Since Internet access is the critical factor for the spread of e-government services,
such access will need to be subsidized in one form or another if these services are
to reach the average citizen and particularly the poor\. CIDEV centers cannot be
financially sustainable if they are expected to charge Internet access fees that
represent 2000+ percent of per capita GNP\.
The case for using the mobile phone infrastructure for access to e-Government
services is compelling\. As in the rest of the developing world, mobile telephony
is spreading in Ethiopia much faster than Internet access (based on personal
computers)\. According to ITU, in 2009 there were in Ethiopia 4\.89% mobile
subscribers increasing 433% per year against 0\.09% Internet subscribers growing
at 300%\.
The pace of expansion of the network infrastructure in Ethiopia can sustain a
major scaling up of CIDEV centers and the spread of e-services throughout the
country\. Systems and services can be now planned and deployed based on the
expectation that Internet, fixed and mobile telephony will be available throughout
the country\.
Although network management is a major challenge at present, the government is
committed to professionalizing this function to achieve international service
standards, even if this requires tapping foreign expertise\. High profile and ideally
independent monitoring mechanisms will be necessary, however, to compensate
for the reduced accountability inherent in the monopolistic structure of the sector\.
85
32°E 36°E 40°E 42°E 44°E
ERIT REA
ERITREA
To
Keren R
REP\.
ET H IOP IA
e
OF SELECTED CITIES AND TOWNS
d
ETHIOPIA To
Humera
Adigrat YEMEN REGION CAPITALS
S
Gedaref ek
T
14°N eze Axum 14°N NATIONAL CAPITAL
D
D
e
T I G R AY
en
a
RIVERS
Mekele
ak
Ras Dashen
Terara (4620 m) MAIN ROADS
ki
Atb
il
ara RAILROADS
Gonder
De
De
REGION BOUNDARIES
AMHARA A FA R
Lake INTERNATIONAL BOUNDARIES
se
Dinder Tana
12°N Debra 12°N
Tabor
r
rt
Weldiya
Bahir Dar
DJIBOUTI
DJIB
Asayita 46°E 48°E
ue
Bl
Nile n
Dese
o f A d e
Abay
G u l f
b
UD
S UD AN
Awa
Debre
BENSHANGUL
w sh
er
Markos
ng
Asosa
Ethiopian
Ha
10°N 10°N
Plateau DIRE DAWA
Dire Dawa
Didesa
To
Harer Hargeysa
Gimbi Nekemte ADDIS ABABA ADDIS HARARI Jijiga
ABABA Awash OMAL
S OM AL I A
Nazret R
Baro Aware
am
a
Welkite Degeh Bur
O R O M I YA
is
Gore
Gambela
8°N Domo 8°N
GAMBELA
y
Asela
e
Ak
abe Shebele
l l
o Jima Hosaina
W
Oga d e n
bo
a
Bonga
V
Shashemene
Goba
SOMALI Warder
Sodo Awasa Dodola
Kebri Dehar
f t
Wendo
SOUTHERN NATIONS,
W
Imi
R i
NATIONALITES ab
e Ge
t
6°N
AND PEOPLES e
sr
Wa 6°N
ro be
t
Shebe
le
e a
0 50 100 150 200 Kilometers
Genale
G r
Negele
0 50 100 150 Miles Ferfer
To
Yavello Dawa Mogadishu
Dolo
Odo This map was produced by the Map Design Unit of The World Bank\.
IBRD 33405 R1
4°N
Lake Mega The boundaries, colors, denominations and any other information
4°N
shown on this map do not imply, on the part of The World Bank
Turkana Group, any judgment on the legal status of any territory, or any
IN DIAN
JUNE 2007
endorsement or acceptance of such boundaries\.
Moyale
UGANDA KENYA To
To
To
O CE AN
32°E 34°E 36°E 38°E 40°E Wajir 42°E 44°E 46°E 48°E
Marsabit Mogadishu | APPROVAL |
P001248 | FILE COPY 'CIRCULTING
TO BE REiTURNED TO REPORTS DESK
CIRCULATING COPY
TO BE RETURNED TO REPORTS DE\.''
DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
Not For Public Use
Report Nopr\.1611aKE
REPORT AND RECOMMENDATION
OF THE
PRESIDNET
TO THE
EXECUTIVE DIRECTORS
ON A
PROPOSED LOAN
TO THE
INDUSTRIAL DEVELOPMENT BANK
WITH THE GUARANTEE
OF THE
REPUBLIC OF KENYA
June 23,\. 1975
This report was prepared for official use only by the Bank Group\. It may not be published, quoted
or cited without, Bank Group authorization\. The Bank Group does not accept responsibility for, the
accuracy or completeness\.of\.the report\.
CURRENCY UNIT = Kenya Shilling (K Sh)
us $ 2 K Sh 7\.14
K 1 = US $ 2\.80
K Sh 1 = US $ 0\.1h
K Sh 1,000 = US $ 140\.00
K Sh 1,000,000 = US $ 140,000\.00
FISCAL YEAR - JULY 1 to JUiE 30
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
REPORT AND RECOMMENDTION OF THE PRESIDENT
TO THE EXECUTIVE DIRECTORS
ON A PROPOSED LOAN TO THE
INDUSTRIAL DEVELOPMENT BANK
WITH THE GUARANTEE OF THE
REPUBLIC OF KENYA
1\. I submit the following report and recommendation on a proposed loan
to the Industrial Development Bank with the guarantee of the Republic of
Kenya for the equivalent of US$10 million to help finance the foreign exchange
component of investments of this development finance company in large and
medium-scale industrial projects in Kenya\. The interest on the loan would
be 8-1/2 percent per annum\. Amortization will conform substantially to the
aggregate of the amortization schedules applicable to the specific investment
projects financed out of the proceeds of the loan\.
PART I - THE ECONOMY
2\. A report entitled "The Second Decade: Basic Economic Report on
Kenya" (Report No\. 201-KE, dated January 15, 1974) was distributed to the
Executive Directors on February 20, 1974\. It was followed by an agricultural
sector survey on Kenya (Report No\. 254a-KE, dated December 20, 1973) dis-
tributed on March 13, 1974\. A special mission visited Kenya in February
1974 to review the economy's prospects and aid requirements in the light of
the changes in international prices\. The mission reported to the Consultative
Group meeting held in Paris in April, 1974\. The dialogue on economic and
social development strategy has been further intensified since\. The ac-
celerated world inflation, including the increase in oil prices, had a ser-
ious impact on the Kenyan economy\. In response, the Government formulated
an action program to restructure the economy\. We have had extensive dis-
cussions with the Government about this action program in the context of our
program loan negotiations and in coordination with the IMF staff\. Country
Data Sheets are attached in Annex 1\.
3\. Kenya's remarkable economic performance during the first decade of
independence was fully acknowledged in the Bank's 1974 Basic Economic Report\.
Between 1964 and 1972, GDP grew by about 7 percent in real terms, which al-
lowed significant gains in per capita income despite a 3\.5 percent population
growth rate\. Less satisfactory aspects of development in this period were
lack of progress in distributing the benefits of development more equitably
and, in particular, growing unemployment and persistent poverty at the lower
end of the income scale\. The dualistic nature of the economy at independence
in 1963, with its concentration of wealth in the European and Asian communities
and serious poverty in the rural areas where 90 percent of the population
lived, was at the root of this unequal development, since it proved difficult
to change rapidly\.
- 2 -
4\. In looking ahead into the second decade of Independence, the Basic
Economic Report concluded that Kenya did not really have the option to con-
tinue the past pattern of growth and that in order to maintain the momentum
of growth an essential restructuring of the growth process would be necessary\.
The past growth rate has been supported by a high and growing investment rate
both in the public and the private sectors (with fixed capital formation
reaching as much as 25 percent of monetary GDP in the early 70s)\. Kenya's
domestic savings rate, about 20 percent, is also one of the highest in the
developing world\. There were some signs, however, that savings were level-
ling off, which raised doubts whether resource mobilization would be able
to keep up with the pace of investment\. Moreover, there were some indications
of a falling efficiency of resource use (in terms of rising capital output
ratios as well as the disappointing growth of employment)\.
5\. The most critical constraint, however, is the external resource
gap\. Although Kenya's export performance, including the growth of tourism,
has been very satisfactory, the pattern of past development has made the
economy heavily dependent on imported raw materials and capital goods\. With
increasing production and investments, imports have grown rapidly\. Rising
import prices exacerbated the problem and a resource gap emerged which
could not be filled by available capital inflows from abroad\.
6\. Thus even before the upsurge in world inflation experienced
during 1974, it had become clear that the Kenya economy would eventually
run into an unmanageable balance of payments problem, unless growth were
to be based on greater use of domestic factors of production, and more
efficient use of available resources\. The Basic Economic Report advocated
first a restructured pattern of growth in favor of the directly productive
sectors, most immediately to agriculture but also to resource-based industry\.
Second, it recommended factor price adjustments to move market prices closer
to real scarcity values and thus increase the efficiency of resource use
throughout the economy\. This would hopefully permit to continue rapid
growth in the long run, a first prerequisite for an effective attack on
unemployment and rural poverty\. At the same time, it would directly
promote growth of income in the rural areas\.
7\. The Third Development Plan, 1974-1978, published in early 1974,
contains a development strategy which is broadly consistent with the Bank
recommendations; the Plan also reflects the findings of the major UNDP/ILO
mission which visited Kenya at the Government's request in 1972 and pub-
lished an innovative report on employment, incomes and equality\. By re-
structuring the economic growth pattern, the Government hoped to achieve a
7\.4 percent growth rate, which would exceed previous performance; employment,
rural development and more equitable distribution of income were to receive
more attention than in previous years\. Employment would grow by 3\.2 percent
per year\. However, in 1974 the Kenyan economy was hit by unprecedented up-
surge in world inflation and a sharp deterioration in the terms of trade,
which precipitated a balance of payments crisis\.
-3-
8\. The terms of trade deteriorated by about 9 percent in 1974
(preliminary figures) as a result of soaring import prices which were
only partly offset by higher export prices especially during the earlier
months of the year\. The volume of imports rose owing to stock buildup
while the volume of agricultural exports was depressed by drought\. An
extraordinary trade deficit of nearly $450 million and current account
deficit of about $325 million (1973: $75 million) resulted\.
9\. Although Kenya was one of the most seriously affected counLries,
it managed to absorb the balance of payments effects of world price changes
without too much disruption during 1974\. This was in part due to the
facts that initial foreign exchange reserves were at a comfortable level
and there was no shortage of the major staple food, maize\. Net capital
inflows increased considerably and, moreover, the country got a favorable
response to its application for special financial assistance, especially
from the IMF, which provided $38 million under its oil facility\. The
drawdown of reserves could thus be limited to $84 million\. However,
the world inflation strongly affected the domestic price level through
the upsurge of prices of imported products\. Serious domestic inflation
had occurred for the first time in 1973 when the cost of living went
up by 13 percent after a long period of average annual increases of
just over 2 percent\. In 1974, the imported inflation reinforced the
internal pressure on the price level which resulted from reductions
in Kenya's crop and livestock production following prolonged drought;
the overall price increase may well reach 15 percent in 1975\. GDP
growth in real terms slowed down to about 5 percent\. The country's
external position is expected to worsen considerably during 1975, owing
to a steeper decline in the terms of trade than in 1974, which would
result from a levelling off or a fall of export prices and a continued
increase of import prices\. Under these assumptions, the current account
deficit in 1975 will exceed that of 1974, probably by about $40 million\.
10\. The basic objective of the Government's action program is to
restructure the economy as fast as possible, so as to achieve maximum
economic development in the future under much more stringent balance of
payments conditions\. The aim is to restrain imports in a way that has
a minimum impact on production in the next few years and to direct more
production into exports\. It will therefore be necessary to compress
public and private consumption and to channel investments into the most
productive and quickly yielding uses, in particular into appropriate
import substitution and export promotion\. In both activities the agr-
icultural sector will have a major role to play; by further improve-
ments to its already good performance in previous years it will also
have to absorb more labor and maintain incomes in a period of possible
slowdown of urban employment\. Manufacturing, which will possibly become
the most dynamic sector in the long run, faces a difficult adjustment
process in the next few years\. It will have to improve its resource
utilization and reduce its heavy import dependence in favor of a more
domestic resource based production\.
- 4 -
11\. A crucial component of the Government's strategy is the attempt
to hold down the domestic rate of inflation to well below world inflation
so as to help bring about import substitution and export promotion by
price differentials\. This decision implies that real incomes have to
fall; this hardship will be distributed between income groups in such
a way that the lowest income groups receive full compensation for cost
of living increases, while better-off members of society are made to
bear a proportionately larger share of the burden by partial compensa-
tion or no compensation at all\.
12\. In addition to the income policy, the action program relies
mainly on global monetary and fiscal policies reinforced by agricultural
pricing policies and some specific administrative measures\. Not only is
the overall money supply limited by increases in interest rates and
direct restrictions on credit expansion, but the Government is also
directing credit into agriculture, manufacturing, export business and
tourism\. On the fiscal policy side, Kenya's already good tax perform-
ance as well as the measures introduced in 1973 and 1974 to make the
system more progressive does not leave much room for substantial tax
increases\. The Government nevertheless intends to raise some taxes
on non-essential domestic and imported products and to further improve
tax administration and revenue collection\. Some other envisaged tax
measures (capital gains tax, improved inheritance tax and increased
urban property tax) seek to promote equity as well as revenue increases\.
The discussion continues with the other Partner States in the East African
Community about a modification of the common external tariff towards more
uniform rates for consumer goods and capital goods\.
13\. A revised three-year budget for FY76 to FY78 has been adopted,
which aims at reducing the growth of government consumption, promoting
exports, increasing production of agricultural commodities for import
substitution and use of more labor-intensive techniques\. Recurrent
expenditure growth in real terms has been reduced to 6 percent from
11 percent projected in the 1974-1978 Development Plan, and expenditure
growth included in the Development Budget is set at 7\.8 percent (as
against 12 percent)\. This required the politically difficult decision
to bring the rapidly accelerating recurrent expenditure for education
under control; the Government has now decided to allow only a 6 percent
annual increase, freezing education's share of recurrent expenditure at
32 percent\. In the Development Budget, the share of agricultural and
water development was increased from 22 to 35 percent while that of
road and building construction was brought down from 22 percent to 18
percent; moreover, a significant shift away from trunk roads to second-
ary and rural access roads was incorporated within the road construction
program\.
14\. In addition to these domestic measures, the Government is seek-
ing to accelerate disbursements under existing foreign financing commit-
ments and to obtain additional commitments, including quickly disbursing
assistance, in order to maintain some momentum of growth while the restruc-
turing policy is taking effect\. Thanks to generally positive reactions
- 5 -
from donors, the external financing plan for 1975 is anticipating that
the larger part of the overall deficit can be covered through higher
inflows of conventional financing plus additional special inflows from
several bilateral sources as well as the IBRD; Kenya will also use sub-
stantial drawings on various IMF facilities\. A similar effort would
have to be made for 1976 and following years to close the residual
balance of payments gap\.
15\. In the past the Kenya Government has followed a conservative
policy with regard to external borrowing\. Since Independence, Kenya has
accumulated new commitments at a rate of about 8\.5 percent per year, or
somewhat less than the rate of growth of the economy as a whole in current
prices\. As a result, Kenya's debt service burden is still comparatively
light (4 percent of exports in 1974, excluding Kenya's share of East
African Community debt), and the country could if necessary resort to
moderate borrowing on commercial terms during the next few difficult
years, without impairing long-term creditworthiness\. At the end of 1974
total debt outstanding amounted to $722 million, of which $455 million had
been disbursed\. About 36 percent of total external debt is now held by
the Bank Group (IBRD: 18\.4 percent, IDA 17\.7 percent), but because Bank
Group lending has only recently become a significant proportion of Kenya's
debt, debt service to the Bank Group in 1974 was still only about 13 per-
cent of all debt service payments (IBRD: 11\.7 percent, IDA: 1\.4 percent)\.
In addition to its own external public debt, Kenya is also jointly respon-
sible together with the other two Partner States for debts incurred by
the East African Community and its institutions, which amounted to some
$300 million (including undisbursed) at the end of 1974\. Allowing for
a nominal one third of service payments on these debts, Kenya's total
debt service ratio is about 6 percent\.
16\. In spite of the much greater need for external capital now
facing the country, Kenya is still following a cautious policy in her
external debt management, although the Government is making greater
use of suppliers' or export credits on favorable terms to finance some
of the larger projects now ready for implementation\. Under the assump-
tions made by the Bank staff about balance of payments developments,
Kenya's external debt will have to increase considerably over the next
decade if the expected balance of payments gap is to be filled\. While
Kenya's economic performance certainly justifies substantial amounts
of concessionary financing, including IDA credits, these are available
in limited amounts only\. It can therefore be expected that the terms of
borrowing would be on the average less favorable than Kenya has enjoyed
in the past\. However, since export earnings will increase during the
period as well, barring major unforeseen developments in Kenya's terms
of trade, the debt service ratio would probably not exceed 11 percent
by the end of the 1970s\. By that time it is estimated that the Bank
Group might hold about 35-40 percent of total disbursed debt and receive
over 20 percent of debt service payments\. Beyond 1980, creditworthiness
will depend on Government ability to take action in the near future to
increase the productivity of investments, to reduce the import propensity
and to increase exports\. The revised public investment program of Kenya
- 6 -
for the next few years represents a major step in this direction\. Tem-
porary higher debt service payments in the early 1980's may be followed
by a fall in debt service ratio in the latter part of the decade if the
Government's action program is successful\. However, in spite of the
considerable-! efforts of the Government to improve domestic resource
mobilization, limitations orn domestic resources are such that a sub-
stantial part of the costs of the program, including limited amounts
of local costs in the case of projects with a low foreign exchange com-
ponent may have to be financed from external sources\.
17\. Kenya is one of the three Partner States belonging to the East
African Community\. The 1967 Treaty for East African Cooperation is one
of the most far-reaching and comprehensive economic cooperation agreements
in existence among sovereign states in the developing world\. However, in
practice the degree of economic integration and cooperation among the
Partner States is much less than what was envisaged in the Treaty\. Poli-
tical developments in the Partner States have created tension within the
Community and impaired the growth of interstate trade\. These difficul-
ties have been compounded by the balance of payments crisis which currently
faces all three Partner States\.
PART II - BANK GROUP LENDING TO KENYA
18\. Kenya has to date received thirteen Bank loans and seventeen
IDA credits amounting to $214\.7 million and $145\.7 million, respectively\.
In addition, Kenya has been one of the beneficiaries of nine loans total-
ling $229\.8 million which have been extended for the development of common
services (railways, ports, telecommunications and finance for industry)
operated regionallY for the three Partner States of the East African
Community -- Kenya, Tanzania and Uganda\. Annex II contains summary
stater\.ents of Bank loans and IDA credits to Kenya anid the East African
Community Corporations, a summary of IFC investments in Kenya, and
notes on the execution of ongoing projects\.
19\. Ongoing projects in Kenya are on the whole progressing satis-
factorily, but manpower constraints in engineering and other technical
fields continue to present problems and have slowed down progress on
some projects\. Because of the difficulties in attracting qualified
expertise, no immediate remedy can be expected\. However, the gradual
increase in suitably trained Kenyans to fill such positions should
eventually alleviate these problems\.
20\. While our past lending to Kenya has been dominated by support
for infrastructure, our lending in recent years marks a departure\. Last
year Kenya was the first country in sub-Saharan Africa to obtain Bank Group
support for a population project\. Recently, as a first step in providing
low-income dwellers in Nairobi with suitable housing, a site and service
project was presented to the Executive Directors\. In support of the action
program adopted by the Government to restructure the economy and maintain
the momentum of growth in a period of serious balance of payments con-
straints, a Program Loan was recently presented to the Executive Direc-
tors\. Our agricultural lending has been stepped up mainly as a result
of an expanded program of technical assistance both through our Regional
Mission in Eastern Africa and direct technical assistance to the Ministry
of Agriculture\. The Government has now launched with assistance from
the Association, Canada, United Kingdom and United States, a five year
beef development program utilizing the grasslands in the Northeast of
Kenya\. This project is exp=cted to benefit some 170,000 people many
of whom are nomads\. A tea factories project to ensure adequate process-
ing facilities for Kenya's high quality tea is under construction and a
project aimed at rehabilitation of some 130 group-owned farms is about to
start\. A broadly conceived integrated crop production project, designed
to benefit a large number of small farmers, is now being appraised and
preparation is under way for an irrigation project in the Lower Tana
River Basin and for expansion of sugar production\.
21\. Concurrently with efforts to support agricultural production,
we foresee a need for complementary development of rural infrastructure
and hope to assist rural access roads and rural water supply schemes in
the near future\. We shall also shortly appraise a wildlife and tourism
project which will help provide infrastructure for new tourist circuits
and help spread benefits to rural communities and a third education
project aimed at improving primary school education is under considera-
tion\.
22\. While the major emphasis will continue to be on agriculLure and
the development of the rural economy, Lhere is also a need for continued
support to infrastructure and services necessary for continued growth of the
economy\. A highly economic oil products pipeline project was recently pre-
sented to the Executive Directors and a hydroelectric power project has been
submitted to the Executive Directors\. In addition, a loan for a water supply
scheme to provide Mombasa and surrounding rural area with safe water has been
negotiated\.
23\. The difficulties facing the East African Community Corpora-
Lions referred to in paragraph 17 have affected the Bank's lending pro-
gram for the Community\. The East African Railways Corporation (EARC)
has been the most severely affected\. As a result of long delays by
the Partner States in approving increases in tariffs and restrictions
placed on the interstate transfer of corporate funds, the Corporation
has been unable to order essential spare parts and supplies with the
result that its operational capacity has deteriorated drastically\. In
July 1974 the Partner States agreed on a package of financial measures
designed to rehabilitate the EARC including transfers of funds and in-
jection of additional capital\. I{owever, this agreement has been only
partially implemented\. Restrictions have continued to be placed on the
interstate transfer of EARC and other Community Corporations funds, and
EARC's position has deteriorated further\. Since EARC corporate funds are
not being transferred in accordance with the formula agreed, and Sh 60
million out of a total of Sh 150 million Lhe Partner States agreed to
-8-
inject into EARC have not been paid, the EARC's right to make withdraw-
als from the Loan Account (from Loan No\. 674-EA) has been suspended pend-
ing action on both these issues\. Furthermore, in the current state of
uncertainty regarding the future structure of the Community Corporations,
appraisal of further proposed community projects for Corporations which
may have structural changes has been postponed until the issues mentioned
above have been clarified\.
24\. IFC has committed a total of $25\.9 million for three companies
in Kenya (Pan African Paper Mills, Ltd\.; Kenya Hotel Properties, Ltd\.;
and Tourism Promotion Services (Kenya Ltd\.))\. As of May 31, 1975, IFC
held for its own accouIt $17\.9 million comprising $13\.3 million of loans
and $4\.6 million of equity\. IFC is discussing with the technical partner,
SEDITEX, and the Industrial and Commercial Development Corporation a pro-
posal to set up a new textile mill and is also considering support for
a sugar processing plant\.
PART III - INDUSTRIAL AND FINIANCIAL ENVIRONMENT
The Industrial Sector
25\. The industrial sector, which now contributes about 12% of GDP,
has grown rapidly and become the single largest contributor to GDP within
the monetary economy\. While the agricultural sector will continue to
dominate the economy over the next few years, the industrial sector will
assume an increasingly important role in its contribution to overall GDP and
employment\. Therefore, there is an urgent need for the Government to follow
itidust-ial policies that would enable the sector to become a more efficient
user of resources than it has been in the past, focussing principally on
trade policies and adjustment of factor prices\.
26\. The primary incentive offered for industrial investment has been
tariff protection from competing imports\. Although the impact is not entirely
clear, it appears that this had led to excessive import-substitution of con-
sLnner goods and has discouraged export-oriented production\. To redress the
imbalance, Government seeks to end this excessive protection, to encourage
diversification into manufacturing of intermediate and capital goods and to
encourage domestic resource-based export industries\. To these ends, Kenya
is attemptinlg, in concert with its partners in the East African Community,
to revise the coumion external tariff structure so as to realign the inicentives\.
Moreover, it has imposed a sales tax on imported manufactured goods for luxury
consumption to discourage demand for these goods\. An export incentive scheme,
providing a 10% bonus for exports outside the East African Community, coupled
with measures being developed to encourage the use of local raw materials,
should give strong encouragement to processing of agricultural products for
export, generating new foreign exchange revenues and employmtent in rural and
-rban areas\.
27\. Past factor price policies sought to keep interest rates low while
wages were rising rapidly\. The results appear to be excessive capital inten-
sity in industrial investment\. Recent policy shifts should tend to alleviate
this problem\. The wage policy now attempts to keep real wages constant under
inflationary conditions for lower paid workers while restricting higher level
salary increases to less than actual cost of living rises\. Interest rates
have been raised, hopefully mobilizing additional savings for investments
while making capital relatively more expensive\. Moreover, credit allocations
should redirect credit to higher priority sectors\.
28\. The past policies and their implementation has not served to
optimize the contribution of the industrial sector to Kenya's development\.
The adjustments noted above are fundamental and should be reinforced further\.
Moreover, as the Government becomes more active as a promoter and co-investor
in industrial projects, directly or through institutions such as IDB, insti-
tutional changes are necessary\. The project evaluation capabilities of Govern-
ment and its related institutions need to be strengthened to enhance the impact
of industrial investment; in this task, the Industrial Development Bank should
play an important role in identifying, promoting and financing new industrial
projects on a sound economic basis to make the best use of limited Kenyan
financial and management resources\. The Bank offered and the Government
accepted, durinz the Program Loan negotiations in March, 1975, to assist
Government in reviewing the priorities and appropriate policies for future
industrial development, including assistance to small businesses\.
Small-Scale Enterprises
29\. Although the bulk of manufacturing output is expected to continue
to come from large and medium-scale enterprises during the current plan period,
the Government plans to continue to develop the small-scale industries,
especially in the rural areas\. Small-scale enterprises are currently supported
by bilateral assistance, primarily through a program of industrial estates
and rural industrialization centers\. The Government will review general
industrial and commercial policies and regulations with reference to their
impact on small business, examine which subsectors of manufacturing are suit-
able for small enterprises, and improve the quantity, quality, and coordina-
tion of services to small business through a new corporation, the Small
Business Development Corporation, to be established in the future\. IFC is
currently cosidering a joint financing scheme to supplement commercial banks'
own resources in Kenya to enable enterpreneurs to start or expand promising
small or medium-size productive private enterprises, including agro-industries,
construction, and service industries but excludihg activities ofta strictly
trading, real estate, or speculative nature\. In general, IFC's funds would
be provided for productive private enterprises of economic benefit to the
country with an adequate prospect of earning a profit\.
Kenyanization
30\. The Government has proceeded rapidly in its drive for Kenyanization
of ownership and employment\. In the five-year period between 1967-1972, it
- 10 -
has been able to expand the percentage of high and middle level posts held
by Kenyan citizens from 59% to 74%\. Transportation and retail trade, pre-
viously dominated by Asian enterprises, have been increasingly licensed to
Kenyans through withdrawing and re-issuing commercial permits\. Where initia-
tive from the Kenyan private sector is not sufficiently forthcoming for new
ventures of significant economic importance, the Government has expressed
willingness to participate in new investments with foreign investors\.
Employment Effects
31\. Government considers unemployment the major concern of its develop-
ment planning\. Employment in the industrial sector, having grown more than
one and a half times as fast as all modern sector employment, stood at 97,500
in 1973 which represented about 13% of total Kenyan wage employment\. The
current Development Plan (1974-78) projects an average annual increase in
industrial employment of 7\.3% compared to a growth target in industrial output
of 10%\. To enable industry to make a greater contribution to the solution of
the unemployment problem, the Government is seeking to encourage labor-intensive
industry through the price and wage policies described above and the small
business development program, while simultaneously dispersing industry from
the urban centers in which it has been concentrated\.
Financial Institutions
32\. Kenya has fairly well developed financial institutions in comparison
with other developing countries at a similiar stage of development\. In addi-
tion to a small stock exchange and 14 commercial banks providing mainly short-
term loans for working capital, there are four development finance companies;
the Industrial and Commercial Development Corporation (ICDC), the Development
Finance Company of Kenya (DFCK), the East African Development Bank (EADB) and
the Industrial Development Bank (IDB)\. There is also the Kenya Industrial
Estates Limited (KIE), wholly owned by ICDC, and charged with developing
industrial estates to promote small and medium-scale enterprises by erecting
the required infrastructure, leasing them to entrepreneurs, and providing
finance for machinery and equipment\.
33\. The Stock Exchange in Nairobi has 69 companies registered, half of
whose securities are traded regularly\. The registered Kenyan firms are mostly
those with reputable backgrounds who have maintained a policy of steady divi-
dend payments\. However, the Nairobi Stock Exchange has not been a major
source of long-term financing of new industrial investments as brokers and
investors prefer to see a history of profitable performance before accepting
a particular stock\.
34\. Among the 14 commercial banks operating in Kenya, two are owned by
the Kenyan Government and the rest by foreign institutions\. Kenya Commercial
Bank (60% owned by the Government, and 40% by Grindlay's International of
U\.K\.) is the largest with over 20% of total assets of the banking system\.
While commercial banks occasionally make medium-term loans and equity
investments, they are primarily engaged in providing short-term finance of
less than one year to manufacturing, agriculture, domestic commerce and
import-export\. Current commercial bank lending rates on term loans range
from 10 to 13%\.
35\. The Government, faced with serious balance of payment deficits,
has recently instructed the Central Bank of Kenya to adopt new policies
aiming at conserving foreign exchange and encouraging more efficient credit
allocation\. These new policies affect commercial banks in that (i) local
lending to foreign-controlled firms is limited to those companies primarily
operating in the priority areas of agricultural production, manufacturing,
tourism or export business, (ii) no limit on credit extension is set for
agriculture, small enterprises, and important industrial raw materials, and
(iii) annual interest ceiling on foreign borrowing was raised from 9% to 11%
with flexibility for higher rates in the case of enterprises operating in
the priority areas mentioned in (i) above\.
36\. The Industrial and Commercial Development Corporation (ICDC), a
statutory corporation established in 1955 to promote industrialization with
emphasis on transferring businesses owned by non-Kenyans to Kenyans and
providing financial assistance to them, has grown rapidly in recent years,
and now holds assets exceeding Kb 18 million\. ICDC has equity holdings in
38 companies, controls 13 subsidiaries and owns wholly seven of its subsi-
diaries\. About 90% of ICDC's loan portfolio is related to small loan schemes\.
The largest scheme is one concerned with the transfer of non-Kenyan businesses
to Kenyans\. Another scheme assists Kenyans in property purchases for business
purposes\.
37\. Development Finance Company of Kenya (DFCK) was established in 1963
to promote and finance medium- to large-scale industrial enterprises in Kenya\.
Development agencies of Britain, Germany, Holland and Kenya (ICDC) own equally
DFCK's share capital\. As of December 31, 1973, DFCK had total resources of
KI, 4\.2 million comprised of Kb 2\.2 million in equity and Kb 2\.0 million in
8% income notes from its shareholders\. Its loans and equity portfolio amounted
to KS 3\.9 million with diversified investments in tourism, textiles and agri-
cultural processing\. DFCK is currently negotiating with its four shareholders
for new resources\. It charges 9-1/2 to 11% per annum on its loans\. DFCK
anticipates increasing joint appraisal and financing activities with IDB,
with whom it has good relations\.
38\. The East African Development Bank (EADB), established in 1968 by
the three member Governments of the East African Community for financing
industrial projects in the three countries, has a share capital of Kb 6\.5
million which is held in equal portions of 31% by the three Governments, with
the remainder distributed among several foreign institutions\. EADB's charter
favors the less developed industrial sectors of Uganda and Tanzania over
that of Kenya and consequently limits its operations in Kenya to 22\.5% of its
total operations, the rest being equally divided between the other two coun-
tries\. By September 1974, EADB had total assets of KS 12\.8 million and had
- 12 -
approved 14 projects in Kenya totaling Kh 3\.1 million\. EADB has also made
two lines of credit totaling KS 1\.2 million to ICDC for financing of small
enterprises projects in Kenya\. EADB charges 10% per annum on its loans and
is currently discussing new lines of credits with IBRD and Swedish International
Development Authority (SIDA)\.
PART IV - THE PROJECT
39\. A report entitled "Kenya - Appraisal of the Industrial Development
Bank" (No\. 709-KE, dated May 19, 1975) is being circulated to the Executive
Directors separately\. The project was appraised in December 1974\. A Loan
and Project summary is provided in Annex III\. Negotiations were held in
Washington in May, 1975\. The Kenyan Delegation was led by Mr\. L\. M\. Kabetu,
Permanent Secretary, Ministry of Commerce and Industry and included represent-
atives from IDB and the Ministry of Finance and Planning\.
Background
40\. The Industrial Development Bank (IDB) was formed in 1973, with the
cooperation of the Bank, Government of Kenya, and the Industrial and
Commercial Development Corporation (ICDC), to finance medium to large-scale
industrial projects\. One of the main issues at that time was whether Kenya
needed another development finance institution or whether institutitons then
in existence could be restructured to meet new needs\. The Government decided
to establish IDB for the following reasons: East African Development Bank
(EADB) has been limited by its charter in its operations in Kenya by the
differential formula requiring it to distribute its investments among the
Community Partner States; thus, in Kenya it is constrained by its ability to
generate projects in Tanzania and Uganda\. Development Finance Company of
Kenya (DFCK), although an extremely valuable source of foreign contacts and
finance, is subject to the direct control of three external agencies; hence,
Government felt it was not sufficiently responsive to Kenya's national plans
and priorities\. Finally, ICDC, whose charter requires that all of its
decisions are subject to the approval of the Minister of Commerce and Industry
and whose main operations involve the transfer of small business from non-
citizens to Kenyans, does not have sufficient operational autonomy from the
Government and inevitably involves itself in sensitive social and political
policies and issues\. IDB has a share capital of KS 2 million\. The Govern-
ment of Kenya has directly subscribed 49% of the share capital, and provides
funds for ICDC to subscribe the remaining 51%\.
41\. The proposed loan to IDB would be the Bank's second for industrial
financing\. The first loan (No\. 946-KE) of US$5\.0 million was made in 1973,
and had been fully committed as of May 31, 1975\.
- 13 -
Relationship with ICDC
42\. The division of responsibilities between IDB and its parent, ICDC,
are spelled out in a Promotion Agreement which provides that ICDC will not
finance any industrial project with a capital cost of more than KS 50,000
unless IDB has decided not to invest in such projects or has decided to invest
jointly with ICDC\. Five of the eleven projects approved by IDB so far have
been joint investments with ICDC\. As the size of IDB's investments are some-
what constrained by its Policy Statement, joint operations permit a larger
national participation in significant industrial projects\. It is expected,
however, that with the current revision of the Development Plan and increased
activities of IDB in medium to large-scale industrial financing, ICDC will
be increasingly re-emphasizing small-scale enterprises in response to increas-
ing interest on the part of the Government and external lenders in small-
scale industrial programs\.
Existing Lending Policy
43\. IDB's operations are guided by its Policy Statement which was drafted
in consultation with the Bank and adopted by IDB's Board of Directors in
February 1973\. It conforms to policy statements adopted by other development
finance companies\. The Policy Statement permits IDB to finance industrial
enterprises including mining, agro-industries and engineering enterprises,
but excludes financing purely trading, real estate and farming activities\.
While the policy statement does not preclude IDB from financing tourist
projects, it is expected that this field will be left primarily to the Govern-
ment-owned Kenya Tourist Development Corporation\. IDB's minimum investment
is KS 20,000 in projects whose total cost exceeds KS 50,000; any smaller
investments will be made by ICDC directly\. Conversely, the Policy Statement
sets a maximum total investment in an enterprise of 20% of IDB's subscribed
share capital and reserves, equivalent to Kb 400,000 at present, not to
exceed 50% of a project's total cost\. IDB will not acquire controlling equity
interests, holding no more than 49% of an enterprises's share capital; moreover,
any single equity investment will be limited to 10% of IDB's subscribed share
capital and reserves\. In total, IDB expects equity holdings will comprise
25% of its portfolio, not to exceed the sum of its own subscribed share
capital and reserves\.
Economic and Financial Analysis of Sub-projects
44\. IDB will continue as agreed under the first Bank loan to carry out
a thorough economic/financial analysis of each project it considers\. Although
IDB has been in existence for only about two years, it has made significant
accomplishments in building up its own expertise in project identification
and appraisal\. IDB's sub-project analyses in terms of the expected profit-
ability of a project at world prices and the project's relative capital/
labor-intensities and employment effects, should help to correct some of the
structural distortions in Kenya's industrial sector and to maximize the contri-
bution of its projects to the economy\.
- 14 -
45\. IDB's appraisal work has been satisfactory\. The staff recruited
brought with them relevant experience and, with the advisory support provided,
have adequately appraised the sub-projects presented\. The recent introduction
of an "issues paper" procedure early in the evaluation process, coupled with
a new operations manual and a standard loan agreement, both drafted with Bank
assistance, should enhance both the quality and speed of appraisals\. Although
there is still room for improvement in its operations procedures, IDB has made
useful contributions to financial, economic and technical aspects of sub-
projects design\.
Projects Promotion
46\. IDB's role in project promotion has been limited by its resources
and staff constraints\. But there exist other agencies whose functions
include project identification, promotion and evaluation: the New Project
Committee is an informal forum for the evaluation and approval of industrial
projects\. It is chaired by the Permanent Secretary of Commerce and Industry
and composed of representatives from the Ministry of Finance and Planning,
ICDC, IDB, DFCK and interested Government agencies; and the Industrial Survey
and Promotion Center (ISPC), an agency under the Ministry of Commerce and
Industry has responsibilities, inter alia, to identify, promote and evaluate
industrial projects\. The Government expects to bolster ISPC's future role
and impact in projects promotion\. IDB has maintained close contact with these
agencies in their project identification and evaluation\. This coupled with
IDB's own sub-project analysis has in the past enabled IDB to select sub-
projects that are consistent with Government's industrial policies\. As IDB's
staff, resources and operations grow, it expects to play an increasing role
in project identification and promotion\.
Mobilization of Local Capital
47\. IDB is currently considering increasing its share capital of about
KS 2\.0 million with participation from local commercial banks and an insurance
company, which have expressed support for the proposal\. The Government and
IDB have reached an agreement and confirmed during the negotiations that they
will take all necessary measures to ensure that the agreed increase in IDB's
share capital will be fully allotted and subscribed by a date not later than
September 30, 1975, and that the schedule of payment under such subscriptions
will meet the requirements of IDB's lending operations\. To date, IDB has
not borrowed in the local market, but in order to channel scarce local
resources into priority projects, IDB is planning to borrow locally to supple-
ment its foreign borrowing and equity capital in the future\.
On-lending Terms
48\. IDB charged an interest rate of 9-1/2% per annum on most of its
approved loans and has recently raised it to 11%\. This is in line with the
rates charged by other financial institutions in Kenya\. Furthermore, IDB has
agreed that it will at all times charge a rate of interest on its sub-loans
which is commensurate with rates for comparable medium to long-term loans
- 15 -
prevailing in Kenya at the time individual sub-loans are authorized, and IDB
will consult with the Bank on future changes in its interest rate charged on
sub-loans\. In addition, IDB charges 1% commitment fee on undrawn balances and
is currently considering the introduction of a 1/2% project examination fee,
payable at the time of application\.
49\. The Bank agreed in the first loan (no\. 946-KE) that in the case
where IDB was not able to pass the entire exchange risk to its clients, the
foreign exchange risk on the Bank's loan to IDB could be shared between the
Government and IDB's borrowers by having its borrowers assume the risk of
exchange fluctuations between the Kenya shilling and the US dollar and having
the Government accept the risk on any fluctuation between US dollars and the
currencies in which the Bank loan was actually disbursed\. However, the
provision has been seldom used, and as all lendable funds are scarce at present,
IDB has agreed that under the present loan it will follow normal DFC practice
and pass the full foreign exchange risk to sub-borrowers\.
IDB's Managing Government's Investments
50\. IDB expects to increase its impact on industrial financing by serv-
ing as agent for investment for Government account, and has agreed during the
negotiations to manage such investments in accordance with the following
criteria (i) such investments to be managed will be limited to a scale reason-
ably related to IDB 's own operations and its staffing constraints; (ii) such
investments to be managed will be in projects of significant national develop-
mental interest and at the risk of and for the account of Government; (iii) in
managing such investments IDB will receive an appropriate fee for its services;
and (iv) such investments to be managed will be consistent with IDB's own
investment criteria\. Furthermore, IDB has agreed that the number of projects
for which it will undertake to manage investments for the account of Govern-
ment in any one year will not exceed one-third of the total number of projects
for which IDB will undertake to make a loan or investment solely for its own
account\.
Board of Directors
51\. IDB's Board includes the Permanent Secretaries of the Ministries
of Finance and Planning and of Commerce and Industry, as well as the Executive
Director of ICDC, as ex-officio Directors, and four Directors appointed for a
three-year term from outside the Government of Kenya having extensive know-
ledge of and proven ability in industry\. ICDC's Executive Director, an
experienced Kenyan, has been appointed Chairman of the Board of IDB\.
Management and Staff
52\. IDB has a competent management and staff\. The Managing Director,
former Chief of Operations and at one time Deputy Secretary in the Ministry
of Finance, has succeeded in assembling a competent staff and has made a
good start in processing projects\. He has built an initial reputation for
- 16 -
IDB as an aggressive, responsive and independent financier\. The Chief of
Operation, former Under Secretary in the Ministry of Finance, assisted by
an investment adviser on secondment from IBRD, has succeeded in developing
operating procedures for project preparation and appraisal\. Among IDB's
professional staff are a senior projects officer who had several years of
development banking and commercial experience before joining IDB, and three
projects officers with backgrounds in Government or finance\. Furthermore,
three senior staff have participated in training programs in Germany, Japan
and at the Bank's Economic Development Institute\. A chief accountant and
an accountant were engaged in 1974 and recruitment of an engineer and a
lawyer is underway\.
53\. A management advisor and an investment advisor, financed respectively
by an ODA (UK) grant and UNDP, are currently assisting IDB's management and
operations\. The management advisor, former General Manager of the Tanganyika
Development Finance Company, has responsibilities primarily in assisting IDB's
external relations and promotional works, while the investment advisor is
charged with responsibilities in the development of project appraisal and
supervision procedures\. The service of the management advisor will end
September 1975, and be replaced by an investment officer (ODA financed) with
responsibilities for overseeing the implementation and monitoring of approved
projects; it is expected that UNDP will extend its support for the position
of investment advisor to December 1977\.
Current Operations
54\. As of December 31, 1974, IDB had approved 11 loans totaling Kb 2\.3
million (US$6\.4 million) and eight equity investments for Kb 0\.8 million
(US$2\.2 million) in such areas as agro-industries, textiles, mining, tourism,
and transportation\. In line with the Government's policy of industrial decen-
tralization, only four projects were located in Nairobi or Mombasa, the rest
being in small cities and rural areas\. The project were about evenly divided
in number betweeen export-oriented and import-substitution\. All projects
financed were Kenyan-controlled companies\.
Forecast Operations
55\. The total volume of operations from 1975 to 1979 is expected to
average over Kb 3\.5 million (US$9\.8 million) per annum\. The sectoral emphases
remain agricultural processing, including food and industrial raw materials
as well as forestry products, and textiles\. Through 1977, IDB expects almost
all of its loans to finance imports, with local expenditures being financed
from promoters' equity and the local banks\.
56\. Lending at 10-11% per annum and paying an average of 8% per annum
on debt, IDB is not expected to show a net profit until 1977, when it will
return 1\.1% on its average equity, but expects to improve its net profit to
6\.9%Z by 1979\. This is primarily due to (i) phased paid-in of share subscrip-
tions by Government and ICDC, thereby limiting short-term interest bearing
- 17 -
investments; (ii) high administrative costs as a proportion of total assets
in the initial years for staffing up, (iii) relatively conservative provision
policy, (iv) low projected divident incomes (0% for the first two years from
date of investment, 2% the third, 5% the fourth and 6% thereafter), and
(v) growth rate of only about 10% per annum in overall operations\.
Resource Requirements
57\. IDB is expected to commit by the end of 1977, in foreign currency,
about US$24\.9 million in loans and US$7\.3 million in equity investment, and
also to commit about US$0\.7 milion in local currency loans from its share
capital and local borrowings\.
58\. The foreign exchange requirements would come from several sources:
In December 1974, IDB signed a loan agreement with Deutsche Gessellshaft fur
Wirtschaftliche Zusammenarbeit (DEG) of Germany for DM 4 million (KL 570,000
or US$1\.6 million) at 8% for 12 years including five years of grace; IDB
expects to obtain a line of credit of Pound Sterling 1\.0 million from the
Export Credit Guarantee Department (ECGD) of UK for procurement of British
equipment and a line of credit of FM 10 million (US$2\.7 million) from the
Finnish Government; the African Development Bank is currently considering
a loan of US$2\.4 million in 1975-1976 to IDB; and the proposed second IDB
loan of US$10 million, combined with the first Bank loan (No\. 946-KE) of
US$5 million and the external sources mentioned above is expected to meet the
foreign exchange loan requirements through the end of 1977\.
Proposed Loan
59\. IDB has made a good start in supporting large and medium-scale
industry in Kenya\. Having assembled a competent staff, it has usefully
contributed to sub-project designs by recognizing the need for the
economic appraisal of projects and it has well utilized the first
Bank loan\. It has also begun to undertake the important role of a
financial intermediary of mobilizing local savings\. The IDB is, there-
fore suitable for further financial assistance and institutional support
from the Bank with the proposed loan of US$10 million equivalent\.
60\. It is recommended that the proposed loan be made on substantially
the same terms as the first, with two changes\. First, in recognition of
IDB's progress in appraisal, it is recommended that the individual project
free limit be raised from US$200,000 equivalent to US$400,000 equivalent;
the aggregate free limit would be US$2\.0 million, or 20% of the proposed
loan\. Second, it is proposed that IDB pay the normal commitment charge on
the Bank Loan\. Under the first loan, as it had not yet started operations,
IDB was granted concessional treatment, not paying commitment charges until
authiorization to withdraw funds was given on individual sub-projects\.
61\. The proposed loan would be disbursed against 100% of the foreign
exchange cost of imports, 65% of the invoice price of goods previously
imported into Kenya and 40% of the cost of civil works\.
- 18 -
PART V - LEGAL INSTRUMENTS AND AUTHORITY
62\. The draft Loan Agreement between the Bank and the Industrial
Development Bank, the Draft Guarantee Agreement between the Republic of Kenya
and the Bank, the Report of the Committee provided for in Article III, Section
4 (iii) of the Articles of Agreement and the text of a resolution approving
the proposed loan are being distributed to the Executive Directors separately\.
The draft Agreements conform to the normal pattern for loans to development
finance companies\.
63\. I am satisfied that the proposed loan would comply with the Articles
of Agreement of the Bank\.
PART VI - RECOMMENDATION
64\. I recommend that the Executive Directors approve the proposed loan\.
Robert S\. McNamara
President
Attachments
Washington, D\.C\.
June 23, 1975
Paeg f--
ODt8ThT 0096 - ONYA
~~6_2,Nd, ko2 (aid-1972) ft~~~~~~~~~~~~Pr btor areble land
S;CIAL INDICATORS
K\.ny\. mou Raeeen Cunrte
08? PNR cAfl?A oS$ (ATLAS BSIS) \. 170 La 120 /a~ 310 /a 300A~
C-ded birth rate (per thoxusan) 50 1\.8 gd\.7 Li 28 ?' AL\.t
Crd\. death rate (par thou,ad) O0c 1 2
Infnt mortality rate (per thouand lir\. birth\.) \.55 16o-16 Oi ~\.L\.S
Lifa cpopctancy at birth (years) 1\.0-15 / 1\. 65 63
Oroas repeoductia~~~~~~~~~ rat\. /2 \. ~~~~~3\.1 3\.2 2\.5 2\.3
PO-uaingowhrt \. 3\.2 If 3 \.0/ 2\.2 /f 2\.L
Population grouth rate - urban\. 7Zj,h 5% 6ZE 2
Age structure (percent)
0-li\. 1\.~~~~~~~~~~~~~6/n\.j\. 1\. o 11LeO\.
51 1\.8 53 57 5
65 and ov\.r 7ol-o\. 1 0 O \.
Egame nce, ny rMio 1\.4\. 12 10 \.
Urban populXation as percent of total 8&,a 10& ~ 7Lt \. i 11
Fasdly Plaxoningt go\. of acoePtors c\. t\.thul-
go\. of wears (1 of married wn) \.
YTotlLbor fooo (thouadond) 3,300 Li 5,l00L49, 5\.60 Li~ 10\.500 /a 250
Poroenagge aetployed in aogitcakr\. \.90 4o 911 i 4\.8 30
Plaromatage, ,mOWcimly\. \. \. 5 17
ftie lit of on lIcoe\. reosivd by hig,\.st 5% \. 31\.1
P\.,rwot of naational Incom received by h1gh* t 20% \. 60 37
Percet of natina Iincom reomived by lowest 209 \. 5 10
P_eroent of ntioal Iancome recaivod by lowest 1\. O \. 11\. 21\.
MSMIWJrMN OF LASDO 0E0IJ=N2
% eO ysala % o \.,r \. \.2
R!A\.LTR ANiD NIJrITTON
Pop,laEMosper phyoician 11, 000 In\. 7,80/ 21,8570 / 2,210 /A 1,0910
PopuletiOo per ,ouraing person 1,610 ~tt1,7\.7 L ,9 LI 1,760 Z\.: 8O3
PopulAtion per hoopital bad 810 [ 770 70 i3 1,920 250
Per copito caloric supply an % of requiromenota / ~ 103 ~ 101 73 103 lot\.
For capita protein supply, total (grass per d\.ayY6 75 ~ 71 h33 \. 65 50
Of skich, animal and pulse 32 ~ 29 23 19 lo\., 19
Death rate 1-i\. yearn /7 \. \. \. 1\.5 Lr
BORCATIORA
Jd3-td /8pimr adchl enrorlleent rOtio 1\.~ 67 37 ~ 104\. 105
Aduat\.d escoedary school anrolleent ratio 3Li 9L\. 3 w 41 \.1Z
Terso scholing provided, first and secnd level 1313 1312ii
Vocatinal1 nofllesnt ae S of sec\. school enroUneot 12 2 1\. 15 1
dlt literacy rate J1 \. 30 & \. 81 inb
A"rarge No\. of persona par roo (urban) 2\.5 In\. \. \.2\.7
Percent of occupied units without piped water\., \. \. \. 80 h
Accoss t oelectricity Cas 5g of total populatlon) \. \.50
Percent of fural peplatio onnected to eleotri\.ity \. \.30
Radio rciesper ID Population 9he8An 16 / ~ 128 ft 128
Oa\.n\. aepr1000 pepulatiso 8 lcd 9 ad 3 s\.d 2 17 16
lcrcp\.rcon,sumption (knd \. 5047 31 L 392L 30
N,sprint consueption p\.c\. kg per Fear 0\.1\.05a01 37 \.8L
Notes\.,Piue refs ei1ther to the letest periods or to account oferrsetl eprtr,bo7Wih\.
the latest eac \. Ltcet periods refe- In principle t distribution by age and sex of national pepulatione\.
the yeas' 1956-60 or 1966-70; the latest yea\.- in, pm-t Potei\. atandard\. (roqui-aete) for all counti\.io as -atab-
ciple to 1960 and 1970\. - lished by USDA econmic Researcb S\.-ei\.e provide for a cimium
/a The Per Capita OfP esUtiat Is Ct market prices for allconcen of 60 graes of total protein per day, wM 20 grams of
years other than 1960, col\.ulated by t-he me\. con\.eraion anItsa and pIca\. protein, of \.hich 10 grase should be animal
tachiqu Z o lanho 1972 Worid Bank Atlas\. plotein\. Th= a, OtJ\.ods era somechat l0wer than those of 75
/2 Averge noahr of daughter\. per women of rpeodudotive grans of total protein and 23 Cree of animal protein as an
ago a~~~~~~~~~~~~~arerge for the world, prepo\.d by FLO In the Third World Pod
Zj Ibpul\.tion (moth rates ace for the d \. dO3 ending in surecY\.
1960 and 1970\. So\. atudiee have suggested that crud ds'ath rtate of children
P\.otio of poplationfunder\.15\.and 65 ewd ovor to pnuia- "ane 1 throu,gh 4\. eamy he asd as O first approoteotion inde of
tion of ages 15-61\. fr AP~ drpr,ency ratio and to :labor mal-teHtion\.
force of age- 15-61\. f\.r economic d\.p-\.d-cOy ratio\. L/\. Prce-tego enrolled of correspn\.ding popauicU of school ag\.
LZ FoO reoeo -st,iar'i rpueo pW\.yolioogO1l s- as defined for each country\.
qoirecoote for nrormA\. ativity and health, taklng
la 19721 /b Pajoland Tansanlia /c UN estinate for Afrir,an population, based on enatlyrie of datea f\.cp 1962 poat-
C'nsel nampl\. our-ny; Id ONl etinate orw 1965-70; Li* 19671 /r 1960-72; LJ l6?-\.69; A 2,000-or mor
Inhabitants; /I TonCanyiks only; /1 15 p-rttnd tow,no6iptt, 1957\.67; A seoul city and evUniipalitlen of
50 or core; /I Procl\.aiad township', *ccor\.inc to enlarged limits as of Auguct 1963, plus the town of MAkehurg;
19t2; Ln 8\.od on coop2\.t eV eusrotion of non-Atrira population and of urben African popolation and on a 10 per-
c-nt saAple or ror\.1 AfricOn population; /\. 1969; Ig Labor forco in age bracket 15-59; ~R 16 gasetted toenehips;
~g1971; Xuabo r on the regitotr, not all working in the country; 4Lt looluding mIdwves, \.oeietant oldin-e and
*noren /u 1973; E\.Leima?t\.; /v 1968; /x bcduding teacher training at the third level; L& Hou\.eheldv;
,Ls -55 yrO\." and overn\. aa1961; /ob Dfifnition of l1teracy unkno-s\. -\./c Water piped inoide I/ad Including vhce
operated by police or other lp-rOoeet oecurit owgaoin\.atlon and light co\.marCia vehClcls; a\.e RogIstered only'\.
Mauritius hao bren selected aa an roxmplo of a predominantely xpricultoral rocnoomy\. which ia follmutog anne enlightened
polirloe designe\.d to diversify production and prcoote aerrlermtrd ind-strielizotion-\.
86 Ap\.ril 21, 1975
8320883!C INVROPMENT DATA Pg
(Azsouimta in miiliona or u\.s\. dollars)
Actual Polectd 19064 - 1\.973 - 193 19 75 19 78
NATIONAL ACCOUNTS ~T97~ 1974 1975 97 6 1,1 1972 1978 17
NATIONAl ACCOImTS ~~~~~At 1973 Prices anLd- Exchange Rstes Average Annual Growth Rates As Percent of GDY
Gross Domestic Product 2\.o337 2,442 2,\.575 2,703 2,981 6\.7 5\.0 100\.0 106\.1 107\.6
Gains from Terms of Trade (+) - - 66 '-148 4162 -211 \.___
Gross Domestic Income 2,337 2,376 2, 4-27 -23z -2,7-70 65- 3\.5s roo-o 100\.0 -100\.0-
Imports 'incl\. NES) 728 780 804 814 835 6\.1 2\.5 31\.2 33\.1 30\.1
Exports (import capacity) 6\.75 \.586§j\. 601 633 710 2\.8 1\.0 28\.9 24\.8 25\.6
Resource Gap 53 194 203 181 125 -2\.3 -8\.4 4\. 5
Consumption Expenditures 1,797 1,905 1,962 2,030 2,156 6\.6 3\.7 76\.9 80\.8 77\.8
Investment '\. (cine\. stocks) 593 665 668 692 739 11\.6 4\.5 25\.4 27\.5 26\.7
Domestic Savings 540 471 465 511 614 5\.9 2\.6 23\.1 19\.2 22\.2
National Savings 518 441 445 491 594 5\.0 2\.8 22\.2 18\.3 21\.4
MERCHANDISE TRADE Annual Data at Current Prices As Percent of Total
1U 197-1 1973 15P/3
Imports
Capital goods 122\.4 170\.5 175\.2 27\.7
Tntermediate goods (mi\.f'ue1s) 173\.2 214\.2 272\.6 43\.1
Fuels and related materials 41\.3 47\.4 67\.0 10\.6
of which: Petroleum (41\.3) (47\.4) (67\.0) (10\.6)
Consumpt, ion good 105\.8 128\.1 117\.6 1\.
Total Merch \. Tprts kcif) 442\.7 560\.2 632\.4 100\.0
Exports
Flrim~arY Prodtucts (eXrl\. f'uels) 144\.7 135\.8 256\.2 54\.7
Fuiels and related materials 40\.3 51\.4 61\.7 13\.2
of which: Petroleum (40\.3) (51\.4) (61\.7) (13\.2)
MAanufactured goodls 103\.6 112\.6 150\.1 32\.1
Total M4erch\. Exports (fob) j/ -n\.-_W_ 487iWTO~
Tourism and Border\. Trane 25 76 70
Merchandise Trade indices 1973 - 100
Export Price Index ioo 142 140 153 169
import Price index too 156 178 194 222
Terms of Trade index 100 91 79 79 76
Exports volume index 1oo 92 110 117 137
vAL;uE ADDED BY SECTOR Annual Data at 1964 Prices and Exchange Rates Average Annual Growth Rates As Percent of Total
tMonetary sector onsy) 1964 1972 1973 1964-1973 19b4 197\.i 19/3
AgricuItuire 156 2~45 264 5\.8 23 20 20
industry and Mining 132 254 282 852 1 2
Services (incl\. Govt\.) 387 708 750 78\. 20 21 22
Total Monetary Sector 675 1,207 1,296 7\. 0 0
PUBLIC FINANCE In current prices and exchange rates sPreto D
(CEentral G-overnment)646 717 727 734 745 756 778
Current Receipts 3T 39 M 56 65 71 4197
Current Expenditures 159 337 374 444 440 511 647 17\.5
Badgetary Savings-2 61 45 92 16242\.
Expenditures in
Development Budget 38 145 173 165 247 322 420 8\.1
US $ million
CURRENT FYPENDITURE DETAILS _- - ctual Prelim\. Est\. Pro\. DTIONAc\.d17/ ?YdE,
As % Total Curren Expnd\. 194/65 1972/73 1973/74 1974/76 19/7/70 PRtDLIC SETCO%R o
Education 11 28 27 28 27 INVESTMET PROGRAM4 (1974 /75 - 1977 /78)
Other Social Serv-ices 8 10 9 9 9 Social Sectors 199 16
Agriculture 9 8 8 7 7 Agriculture & Water Development 445 35
Other Economic Services 3 11 10 17 15 industry and Mining 42 3
Administration and Defense 30 27 26 26 21 Power and C;mmuications 78 6
(Other 39 16 20 13 21 Transport and construction 232 18
Total Current Expenditures 100 100 100T 1-00- -f- Ohr2022~
Total Expenditures US$ 1,27G million 100%
SELEC~T_D IN4DICATORS 1965- 1973- FINANCING
(Calculated from 3-year averaged data) 1970 1978
Av\.erage ICOOM7351 ulcS~trSvns393
Irrport Elasticity1\.0 0\.50 Domestic Borrowing 347 27
Marginal Domestic Savings Nate 0\.29 0\.17 Foreign Project Aid 54
Marginial National Savings Rate 0\.22 0\.18 Total Financing US$ 1,276 million 100%
IABOR FORCE AND Total Labor Force Value Added Per Worker (1971 -- Prices& Exe\. Rates)
OUTPrJT PER WORKER In Millions 7\. of Total In U\.S\. Dollars Percent of Average
1971 1971 1971 1971
Agriculture 4,647 86 109 36
Industry 141 3 1,426 475
Service 301 6 1,286 429
Total 5 ,377 100- 300 100
-not applicabl - i rnegligiblie p - preliminary
sot avafIlable -- less than\. halflU' 1h / including unspecified exports and re-exports EACPIC
smallest unit showni 2/ Non-oil April 23, 1975
8LAIM OF PO MEL ArSITag aeANDPaAJ D I
soint\. in eSniots of U\.S\. dolla at urret prices
Avg\. Aaeuaal Ang\. Annmat
Actual hIlmiS Prolse edhrot Rate 0rtbh Rt
1970 1971 1972 1973 1974\. 1975 1976 1977 1\.78 1S73 - 1 1974-1978
suMMARY OAtANCE OF PAYWINTS
Ezparte CO-c\. 873) 473\.2 508\.9 557\.6 675\.0 8194\.3 1055\.1 1177\.7 1352\.5 1505\.7 17\.4 13\.9
Loepertu (bncl\.NFS) 524\.9 654\.8 631\.2 728\.1 190\.6 1367\.5 1508\.8 1640 17560\.0 30\.3\.
9i~~Thce\.neiflI-?4) ~~~~~-rr -urrr irrr r r -r 3w" 33f -1IB0 -254\.3 3 7\.0 -3\.8
Interest (net) 4\.8 2\.1 4\.5 -2\.6 ) ) ) )
3ireat I-reaflent Innosa -27\.7 -26\.9 -28\.9 -43\.4 )-56\.8 )-53\.2 )-56\.0 )-58\.8 )-61\.6 )8\.5 )2\.0
Werker, Re-tt-ance - - - --
2-r-nt Tronfere (nat) 5\.6 59\.3 27\.4 24\.2 \.J\.!i 25\.2 \. 2 J 2\.n L 3\.1
b lance on Currat Accout;fA -7112\.4 -7\. ZL -3 \.624 ;4 ;A is\.R 35
_____________ *LL -Wa\. \.ZLA ~~~~~~~~~LZ\. \.J*W \.zMW ~~~~~flLZ JL& j\.W -3\.
Private Direct T-tasant 56\.4 58\.8 59 9 47 5 56\.u 60\.0 65\.0 70\.0 75\.0 9\.5 6\.0
Official Capital Granta 4/
'jble )ItT Leans
DMsbarns,e-,tO 30\.3 48\.1 66\.5 60\.9 62\.0 104\.0 136\.0 143\.0 147\.0 19\.2 24\.0
-Repa5r-ntS 7\.3 7\.8 10\.7 12\.7 18\.0 t6\.0 22\.0 27\.0 20 naR0 20\.0
Net Di\.b-rneente 23\.0 40\.3 55\.8 48\.2 88\.0 114\.0 116\.0 118\.0 19\.7 25\.2
Other \.ALT Ians 1/
Dinhurerecnto 214\.4 182\.9 140\.6 112\.7
-Re aceuntone - 5 0
Net Dirbut3ea 214\.4 135\.7 c tu l
COp4tal Transaahaecs n\.a\.i\. 2/ 20\.3 -52\.1 -10\.2 9\.4 137\.5 3&t r97 1572 t IS74 o
Change in Net Reeatrve 3/ \.50\.7 65\.4 -34\.9 -30\.2 84\.0 1auAND J
_17 rc lt vur\. S Ih&EFU R atbreed 283\.7 311\.8 366\.6 401\.3 445\.8
G\.RANT AND LOAN OD IIIIITS
ar ictia Orants & Grant-lie 7tertat S P8b6i1 Debt 11\.5 12\.3 14\.8 16\.1 10\.2
T-Ibli~~~~~~~~ MLT L\. ~~~~~~~~~~Rqayuntra On Public Debt 7 \.5 7\.8 10\.7 12\.7 10\.3
InbRic 8\.3 23\.0 29\.0 34\.0 10\.4 Total PUblic Debt Service 18\. a 20\.1 2535 280, 36\. 6
iDA 18\.7 - 28\.0 - 33 5 Otl Debt Se3-e (nt) \. \. \.
Otaerceects 10 5 40\.4 20\.0 55\.2 95\.7
S5ppliera 1\.1 7\.3 _ _ Public Dcbt S3noe 4\.0 3\.9 4\.6 4\.3 4\.1
Financial Ittutieom - 2\.5 17\.3 1\.6 T Total Debt Servic \. \.
Pl:blic Lc\." -e\. 2\.1 PDSaDirect Devet\. 7bc\. 9\.8 9\.2 9\.8 10\.7 10\.4
P:b1ie Loans n\.e\.i\. 2\.1 - --
tai m±- sT f- 7T Avage Tee of Public Debt
Actual Debt outetuding or Se\. 31, 0974 e/ Ct\. as % Prior Year D&D 4\.3 4\.3 4\.7 4\.4 4\.5
I1TOR,AL 781r- fltb'\.o OnAwc irot\. 8a S Prior TYa 155D 2\.7 2\.8 3\.4 3\.5 4\.6
hanrd Bank 62\.2 i4\.0
Otr 74\.6 16\.7 r\.RD Debt Ort\. & Diebureed
\. ther &LltiSateral 4\.9 1\.1 u Pblbc Debt G6D 1\.9 3\.8 8\.9 12\.4 14\.0
Cpovpr ranta 247\.4 33\.5 a 55 Public Debt Sreeice 7\.6 2\.1 5\.4 10\.0 11\.7
Suappliers \.99 2\.2
?Cnaccial Insthtuttane 19\.4 4\.4 7DA Debt Out\. & Dabured
Panda 27\.4 6\.1 a S Public Debt o0D 11\.2 11\.2 12\.0 15\.8 16\.7
publ b C Dbte n\.e\. - _- so S Prblic Debt Ssowu 0\.8 1\.2 1\.3 1\.7 1\.4
Total Publc 9MhLS Debt 445\.8 100\.0
Ot\.hcr YT Debts
Sh-rt-tre Dobt (diub\. cn7l)
cat applicablo aetaff stints
\. net val-able - nil or nugl7ible
vaot avaddablo ieprsidy -- leoo than half the
but inclade-q in total fi- aset rnit ehoen
1/ 1-Edstced roqaired copita Idafd t\. 4/ ludd to urret traof\.ra (not)\.
2/ IClados ollunofIMc of -Dit\. ot errors sd P\.setoca\. j/ Na\.lIicary ftgra\. EACPIC
3/ lacliadon uce of 7MF credit\. April 23\. 1975
ANNEX II
Page 1
THE STATUS OF BANK GROUP OPERATIONS IN KENYA
A\. Statement of Bank Loans and IDA Credits as at May 31, 1975
Loan or (US$ million)
Credit # Year Borrower Purpose Amount (less Cancellations)
Bank IDA 1/ Undisbursed
Three (3) loans and nine (9) credits,
fully disbursed 32\.1 40\.0
641 1969 Kenya Forest Plantations 2\.6 0\.2
185 1970 Kenya Education 6\.1 2\.4
714 1970 NCC Water Supply 8\.3 2\.4
224 1970 Kenya Road Maintenance 12\.6 2\.5
745 1971 TRDC Hydroelectric Develop\. 23\.0 1\.1
276 1972 Kenya Highways 22\.0 9\.5
826 1972 Kenya Nairobi Airport 29\.0 13\.4
344 1972 Kenya Agricultural Credit 6\.0 4\.2
932 1973 Kenya Highways 29\.0 29\.0
946 1973 IDB DFC 5\.0 3\.5
468 1974 Kenya Population 12\.0 12\.0
477 1974 Kenya Livestock 21\.5 21\.2
993 1974 Kenya Tea Factories 10\.4 9\.4
1093 1975 Kenya Group Farm Credit 7\.5 7\.5
537 1975 Kenya Group Farm Credit 7\.5 7\.5
1105 1975 Kenya Site and Service 8\.0 8\.0
543 1975 Kenya Site and Service 8\.0 8\.0
1117 1975 Kenya Program Loan 30\.0 30\.0
TOTAL 184\.9 135\.7 170\.8
of which has been repaid 7\.0 0\.1
Total now outstanding 177\.9 135\.6
Amount sold 5\.1
of which has
been repaid 4\.3 \.8
Total now held by
Bank and IDA 177\.1 135\.6
Total undisbursed 103\.5 67\.3 170\.8
1/ Prior to exchange adjustment\.
ANNEX II
Page 2
B\. Statement of IFC Investments in Kenya as at May 31, 1975
Year Obligor Type of Business Amount in US$ Million
Loan Equity Total
1968 & 1973 Kenya Hotel Properties Hotels 5\.2 0\.7 5\.9
1970 & 1974 Pan African Paper Mills Pulp & Paper 11\.9 5\.7 17\.6
1972 Tourism Promotion
Services Hotels 2\.4 - 2\.4
Total Gross Commitments 19\.5 6\.4 25\.9
less cancellations, terminations,
repayments and sales 6\.2 1\.8 8\.0
Total Commitments now held by IFC 13\.3 4\.6 17\.9
Total Undisbursed 3\.0 0\.0 3\.0
C\. Projects in Execution 1/
Loan 639 - Highways: $23\.5 million Loan of October 10, 1969;
Closing Date: June 30, 1975\. Construction is substantially completed\.
There has been a 45 percent increase above original cost estimates due
mainly to design changes\.
Loan 641 - Forest Plantation: $2\.6 million Loan of
November 7, 1969; Closing Date: December 31, 1975\. Progress is
satisfactory and disbursements proceeded faster than envisaged, and
the Loan was almost fully drawn down a year before Closing Date\.
Planting and technical aspects are satisfactory\.
Credit 185 - Education: $6\.1 million Credit of May 20, 1970;
Closing Date: December 31, 1975\. Construction is proceeding at a
slower rate than anticipated\. As remedial action has been taken, it
is expected that all project institutions, except two, will be com-
pleted prior to the Closing Date\. An extension of the Closing Date
of about 12 months is likely to be required in order to complete the
two project items lagging behind\.
1/ These notes are designed to inform the Executive Directors regarding
the progress of projects in execution, and in particular to report
any problems which are being encountered, and the action being taken
to remedy them\. They should be read in this sense, and with the
understanding that they do not purport to present a balanced eval-
uation of strengths and weaknesses in project execution\.
ANNEX II
Page 3
Loan 714 - Water Supply: $8\.4 million Loan of November 7,
1969; Closing Date: March 31, 1976\. Good progress has been made
on the main project items, and water was delivered to Nairobi on
schedule in March 1974\. A twelve-month postponement of the Closing
Date, however, was required to enable completion of ancillary items\.
The Water and Sewerage Department is still experiencing staffing
shortages in its engineering and commercial sections due to inability
to attract and retain staff\. The financial results of water operations
are generally satisfactory and water tariffs have now been increased\.
Cost overruns, which are mainly due to local cost increases, are
about 31 percent over the appraisal estimates\.
Credit 224 - Road Maintenance: $12\.6 million Credit of
December 28 1970; Closing Date: June 30, 1975\. This project is
progressing well, although its final completion is now expected to
be delayed till December, 1976 - eighteen months behind the original
schedule\. The delay is due to some unforeseen difficulties experienced
in acquisition of land and procurement of steel required for construc-
tion of the workshops\. Most of the equipment has been received and
installed, and the Highway Training Center is in operation\. While the
majority of the senior posts in the Roads Branch have been filled,
a few are still vacant due to difficulties in finding suitably qual-
ified specialists\.
Loan 745 - Kamburu Hydroelectric: $23\.0 million Loan of
June 7, 1971; Closing Date: December 31, 1975\. The project was com-
missioned in August 1974 and there are only a few minor details
outstanding\. Cost escalation was 7 percent, principally the result
of currency fluctuations, the imposition of a sales tax in 1973 and
an increase in engineering costs\. The closing date has been post-
poned from June 30, 1975 to December 31, 1975 because some retention
moves are not due till then\.
Credit 276 - Highways: $22\.0 million Credit of June 5, 1972;
Closing Date: March 31, 1976\. This project, which is jointly financed
by a Swedish Credit of $6\.0 million, made a slow start due to a review
of paving standards undertaken by Government and consequent delays in
obtaining governmental approvals to issue tenders\. Because of high
bid prices and specification changes, total estimated \.cost of the proj-
ect may exceed the appraisal estimates by over 25 percent\.
Loan 826 - Nairobi Airport: $29 million Loan of June 2, 1972;
Closing Date: December 31, 1975\. The major contracts have been awarded,
and work has commenced\. Inadequate supervision by the key contractor
and administrative delays by the Government have led to delays in the
physical execution of the project\. Financial and organizational prob-
lems persist\. There is likely to be a cost overrun of about $10\.5
million\. Some key\. positions, including that of the Airport Manager,
still remain unfilled\. The project is now expected to be completed
by December 31, 1976 rather than by December, 1975 as originally anti-
cipated\. The Closing Date of this Loan may have to be extended to
December 31, 1977\.
ANNEX II
Page 4
Credit 344 - Agricultural Credit: $6\.0 million Credit of
November 29, 1972; Closing Date: June 30, 1976\. The Agricultural
Finance Corporation has started a second phase of lending operations,
following the completion of the first under Credit 105\. Progress is
satisfactory, and disbursements are ahead of schedule\.
Loan 932 - Highways: $29\.0 million Loan of September 6,
1973; Closing Date: December 31, 1977\. This Loan was made effective
on November 9, 1973\. Owing to a review of paving standards, bids
have yet to be invited for about 30 percent of the works\. Cost
overruns are likely to be substantial\.
Loan 946 - Industrial Development Bank: $5\.0 million Loan
of November 29, 1973; Closing Date: March 31, 1976\. The Loan has been
fully committed and negotiations for a second tranche have been sub-
stantially completed\. So far about $1\.5 million has been disbursed\.
Credit 468 - Population: $12\.0 million Credit of April 1,
1974; Closing Date: June 30, 1980\. This Credit became effective on
July 31, 1974\. The construction for this project is estimated to be
about 6-8 months behind schedule\. There have also been some delays in
the employment of technical experts\.
Credit 477 - Livestock: $21\.5 million Credit of June 5,
1974; Closing Date: December 21, 1980\. This credit was declared
effective on December 2, 1974\. Work on the ranching component is now
proceeding, but the project is behind schedule\.
Loan 993 - Tea Factories: $10\.4 million Loan of June 5, 1974;
Closing Date: June 30, 1980\. This Loan became effective September 23,
1974\. Contracts for the first four tea factories have been let but the
tendering for remaining tea factories is behind schedule\.
Credit 537/Loan 1093 - Group Farms Rehabilitation Credit and
Loan of March 27, 1975; Closing Date: December 31, 1981\. This Credit
and Loan is not yet effective\.
Credit 543/Loan 1105 - Site and Service Project of May 6, 1975;
Closing Date: June 30, 1980\. This Credit and Loan is not yet effective\.
ANNEX II
Page 5
D\. Statement of Bank Loans for Common Services Guaranteed
by Kenya, Tanzania and Uganda as at May 31, 1975
(US$ million)
Amount less cancellations
Loan # Year Borrower Purpose Bank Undisbursed
Three loans fully disbursed 75\.0
638 EA 1969 EAHC Harbours 35\.0 5\.3
674 EA 1970 EARC Railways 42\.4 17\.3
675 EA 1970 EAPTC Telecommunications 10\.4 0\.2
843 EA 1972 EADB Development Finance 8\.0 7\.2
865 EA 1972 EAHC Harbours 26\.5 17\.8
914 EA 1973 EAPTC Telecommunications 32\.5 18\.5
Total 229\.8 66\.3
of which has been
repaid 29\.8
Total now outstanding 200\.
Amount sold: 24\.4
of which has
been repaid 24\.4 0
Total now held
by Bank 200\.0
Total Undisbursed 66\.3
ANNEX II
Page 6
E\. East African Community
Loan No\. 674 EA - Third Railways Project: $42\.4 million Loan of
May 25, 1970; Closing Date - June 30, 1976
This Loan was suspended on February 13, 1975\. The reasons
for suspension and conditions for lifting the suspension are discussed
in para\. 23 of this President's Report\.
Loan No\. 638 EA - Second Harbours Project: $35\.0 million Loan of
August 25, 1969; Closing Date - December 31, 1975
The Harbours Corporation is in a healthy cash position
although there have been problems in transferring funds from regional
offices to headquarters\. Damage to a partially completed pier has
delayed project implementation\. It is now expected that the construc-
tion will finish in mid-1975\. Legal questions resulting from the dam-
age are under study by the Government\.
Loan No\. 865 EA - Third Harbours Project: $26\.5 million Loan of
December 18, 1972; Closing Date - June 30, 1976
A delay of six months is expected in completing civil works
under this project\. CosL overruns have been experienced in some project
items\. The situation is under study by the Corporation, which will
shortly issue a plan for speeding implementation\.
Loan No\. 843 EA - East African Development Bank Project: $8\.0 million
Loan of June 28,1972; Closing Date - May 31, 1976
Operations of the Bank have been decentralized with a resulting
strengthening of the Bank's supervisory capability\. Management problems
associated with decentralization have largely been rectified so that the
pace of bank operations is expected to quicken in FY76\. Nearly $6\.5 mil-
lion of the Loan has been committed\.
Loan No\. 675 EA - Second Telecommunications Project: $10\.4 million Loan
of May 25, 1970; Closing Date - June 30, 1975
Problems within the EAC have only marginally affected the Posts
and Telecommtnications Corporation due to the considerable existing decen-
tralization of operation authority\. Deterioration of the corporate cash
position and rate of return has been slight in comparison to other Com-
munity Corporations; the situation will be improved by a pending rate
increase\.
ANNEX II
Page 7
Loan No\. 914 EA - Third Telecommunications Project: $32\. 5 million
Loan of June 22, 1973; Closing Date - December 31, 1976
Procurement is generally on schedule with $20 million committed
and the balance near tender stage\. All major items are expected to be
completed by mid-1975, except two microwave links which, due to long
lead time for delivery, will be delayed by 18 months\.
ANNEX III
Page 1 of 2
K1l YA
LOAN AND PROJECT SUMKARY
Borrower: Industrial Development Bank
Guarantor: Republic of Kenya
Amount: US$10\.0 million equivalent
Terms: Repayable substantially in conformity with the
Aggregate of the amortization schedules for
sub-loans and investments for which withdrawals
from the loan account are approved or requested;
interest at 8-1/2 percent per annum\.
Relending Terms: IDB would relend at an interest rate prevailing
in Kenya at the time of sub-project authorization
for up to 15 years\. The exchange risk would be
assumed fully by sub-borrowers\. IDB is currently
charging an interest rate of 11%\.
Purpose: To meet IDB's financial requirements for the
financing of the foreign exchange component of
large- and medium-scale industrial projects
through 1978\.
Final Date for
Project Submissions: June 30, 1979
Free Limit: $400,000 for individual sub-projects; $2\.0 million
aggregate limit\.
Debt Covenants: Maximum debt/equity ratio of 3:1\.
Estimated
Disbursements: Calendar year 1975 1976 1977 1978
US$ million 0\.25 6\.05 3\.1 0\.6
Procurement: Through normal commercial channels\.
Appraisal Report: Report No\. 709-KE, dated May l9t 1975\.
DFC Department, Africa Division
ANNEX IIT
°Pat z of 2
Year ending December 31 1974 1975 1976 1977 1978
(iZn -000) - -
Projected Commitments:
Loans 600 3,121 2,610 2,787 2,917
Equity 349 95 675 \.650 650
Total 949 4-OL6 32285 3,437 3 567
Projected Income Statements8
Total revenue 64 198 390 674 965
Financial and admninis-
trative expenses 74 191 353 560 754
Provisions 15 47 84 85 87
Income Tax (Assumed Tax
Exempt) - -
Net income ( 25) 40) 47)9 124
As a % of net worth ( 2\.1) ( 2\.4) ( 2\.2) 1\.1 4\.2
Projected Balance Sheets:
Current assets 1,273 1,131 954 1,040 864
Portfolio 583 2,432 5,662 8,842 11,871
Fixed assets (net) 23 24 28 \.24 21
Total assets l, 79 3,58761 9,906 12,756
Current liabilities 4 4 4 4 169 429
Long-term debt 400 1,648 14,212 6,820 9,286
Net worth 13475 1,935 2,388 2,917 3,041
Total liabili-ties
and new worth 1,879 3,587 6,6b4 9906 12,756
Debt/equity ratio 01l:1 0\.9:1 1-8:1 2o\.4:1 3\.2:1 | APPROVAL |
P126742 |  INTEGRATED SAFEGUARDS DATASHEET
APPRAISAL STAGE
I\. Basic Information
Date prepared/updated: 05/10/2012 Report No\.: 68865
1\. Basic Project Data
Country: Burundi Project ID: P126742
Project Name: Health Sector Development Support - Additional Financing
Task Team Leader: Andrew Sunil Rajkumar
Estimated Appraisal Date: May 2, 2012 Estimated Board Date: May 24, 2012
Managing Unit: AFTHE Lending Instrument: Specific Investment
Loan
Sector: Health (79%);Public administration- Health (21%)
Theme: Health system performance (29%);Child health (21%);Population and
reproductive health (21%);Malaria (21%);Public expenditure, financial management and
procurement (8%)
SPF Amount (US$m): 0
GEF Amount (US$m\.): 0
PCF Amount (US$m\.): 0
Other financing amounts by source:
Borrower 0\.00
Results-Based Financing 14\.80
14\.80
Environmental Category: B - Partial Assessment
Simplified Processing Simple [] Repeater []
Is this project processed under OP 8\.50 (Emergency Recovery)
Yes [ ] No [X]
or OP 8\.00 (Rapid Response to Crises and Emergencies)
2\. Project Objectives
The Additional Financing will keep the original projectâs development objective which
is: âto increase the use of a defined pack health services by pregnant women and children
under the age of five\. In that regard, the proposed project is fully consistent with both the
Country Assistance Strategy (CAS) and the Poverty Reduction Strategy Paper (PRSP) as
it aims to increase the access of the population, especially the most vulnerable ones, to
basic health services\.â?
3\. Project Description
The proposed project will be closely integrated with the ongoing decentralization policies
and strongly district focused\. It will achieve its development objectives of increasing the
use of a defined free package of health services by pregnant women and children under-
five\.
The proposed Additional Financing (AF) would go mostly towards Result-Based
Financing (RBF) payments for the health sector in Burundi, with a particular emphasis on
free basic health care for pregnant women and under-five children, in line with the
health-related MDGs\. The remainder of the AF funds would go towards verification
activities for the RBF payments\.
The ASF will consist of:
⢠Component 1 (US$11\.9) â Transfer of Resources to Health Facilities to Pay for
Health Services on Basis of RBF: The proposed A will support the same activities as
Subcomponent 1A of the parent project, and will be administered using the same
implementation, fiduciary and safeguards arrangements\. The transfers will reimburse
health facilities for the provision of the specified services, which will comprise
preventative and curative services that are a part of the national RBF program and are
specified in the Programâs Manual\. As in the parent project, these will include, in
particular, primary health care and preventative services for pregnant women, delivery of
babies and post-partum care, care for under-five children, family planning services, and
malaria treatment\. The activities under this component will follow the implementation
details specified in the national RBF Program Manual, and changes to this Manual will
have to be approved by the Bank\.
⢠Health facilities will be paid a pre-agreed tariff for each of the services specified
under the program, in accordance with contracts to be signed by the health facilities\. The
tariff will reflect an estimate of the incremental recurrent cost of providing the service
and other indirect costs\. Because health facilities in many remote and disadvantaged
areas have a harder time attracting staff, these facilities will receive additional equity
payments\. In addition, payments given to health facilities will be adjusted according to a
quarterly quality score\. Health facilities will have substantial autonomy to spend the RBF
payments but based on pre-agreed guidelines\. There will be strict controls and a solid
verification structure for the reported levels of services and of quality (see below), to
minimize the risk of falsification or errors\. All of this is in line with what was agreed
under the original parent project and what is now happening on the ground\.
⢠Additional Financing for Component 2 (US$2\.9 million) â Supporting
Verification Activities for Results Based Financing Payment This component of the
proposed Additional Financing will support a subset of the activities already supported by
Component 2 of the existing parent project â namely verification activities for the
reported levels of services and for the quality score\. This includes: (i) internal
verifications â conducted by verification teams under the newly created Provincial
Verification and Validation Committees (PVVCs) â and validation activities on the part
of the PVVCs, as well as associated activities supporting these units and strengthening
their capacity to perform their functions; and (ii) third-party external verifications
conducted quarterly by an external agency, on a randomly selected sample of health
facilities, and on patients selected randomly from the registers of these health facilities\.
This external agency will, among others, verify whether invoices from the facilities
correspond with the amounts that appear in the registers, and visit the homes of the
selected patients to verify if they exist and if they received the reported services\. As in
the case of Component 1, this is all ongoing and was agreed under the parent project, and
the same ongoing arrangements will be used for implementation as well as fiduciary and
safeguards aspects\.
The proposed Additional Financing will not cover the activities under Component 2 of
the parent project that are not related to verification for the RBF-supported services\.
These activities are not eligible for financing under the HRITF Trust Fund\. Similarly, the
Additional Financing will not cover the activities of Subcomponent 1B of the parent
project, which are also ineligible for HRITF financing\.
4\. Project Location and salient physical characteristics relevant to the safeguard
analysis
The Project activities will be implemented throughout the whole country, targeting, in
particular, the most vulnerable groupsâ neighborhoods\.
5\. Environmental and Social Safeguards Specialists
Mr Hocine Chalal (AFTEN)
Mr Cheikh A\. T\. Sagna (AFTCS)
6\. Safeguard Policies Triggered Yes No
Environmental Assessment (OP/BP 4\.01) X
Natural Habitats (OP/BP 4\.04) X
Forests (OP/BP 4\.36) X
Pest Management (OP 4\.09) X
Physical Cultural Resources (OP/BP 4\.11) X
Indigenous Peoples (OP/BP 4\.10) X
Involuntary Resettlement (OP/BP 4\.12) X
Safety of Dams (OP/BP 4\.37) X
Projects on International Waterways (OP/BP 7\.50) X
Projects in Disputed Areas (OP/BP 7\.60) X
II\. Key Safeguard Policy Issues and Their Management
A\. Summary of Key Safeguard Issues
1\. Describe any safeguard issues and impacts associated with the proposed project\.
Identify and describe any potential large scale, significant and/or irreversible impacts:
Describe any safeguard issues and impacts associated with the proposed project\. Identify
and describe any potential large scale, significant and/or irreversible impacts:
The parent Project had triggered two safeguards policies, namely OP/BP 4\.01
(environmental Assessment) due to the generation of biomedical waste at designated
health centers, and OP/BP 4\.10 (Indigenous Peoples) due to the potential impacts and
span of coverage of the project which includes the poor and most vulnerable groups
among whom Indigenous Peoples such as the Batwa population\. Consequently, the
project has been assigned the environmental and social safeguards category B\. The
parent project and this AF operation are not financing any civil works, including the
rehabilitation or construction of medical waste plants or incinerators; however,
incinerators will be financed under the new Burundi: East Africa Public Health
Laboratory Networking Project (P129551) Additional Financing project\. Since the issue
of medical waste is still relevant to the proposed AF, the Medical Waste Management
Plan prepared for the parent project has been revised and updated in compliance with
O\.P\. 4\.01 requirements\. During supervision of this project proper attention will be given
to the implementation of health care waste management measures prescribed in the
MWMP\.
Also, in compliance with O\.P\. 4\.10, the Indigenous Peoples Plan (IPP) developed under
the parent project has been updated to take account of the specific circumstances of this
AF project\. When the IPP of the original parent project was formulated, indigenous
peoples such as the Batwa population had very low levels of utilization of health services,
and they were largely excluded from health committees and local associations\. The focus
of the original IPP was thus mainly on: (i) sensitizing the indigenous peoples as to the
benefits they could gain from using health services more; and (ii) including them in the
health committees and local organizations\. Now, utilization levels among the indigenous
peoples are much higher and they are much more integrated in the health committees and
local organizations\. Thus the focus of the updated IPP under the AF is now more on
awareness raising of the indigenous peoplesâ rights regarding health care (e\.g\. the right
for pregnant women and under-five children to have health care fo free under the Free
Health Care policy, and knowing how to use redress mechanisms)\. Proper attention will
be given to the implementation of core measures, such as ensuring free provision to
indigenous peoples of identity cards and birth certificates which are needed to prove that
a child is aged under five (to be able to benefit from the Free Health Care policy), and
ensuring that the indigenous peoples are aware of their rights (e\.g\. for under-five children
and pregnant women to have access to the Free Health Care policy), prescribed in the IPP
during supervision missions\.
2\. Describe any potential indirect and/or long term impacts due to anticipated future
activities in the project area:
Future activities at health centersâ facilities to be supported under the project are not
expected to have long term detrimental effects, especially as waste management and
environmental and social concerns are being addressed through the MWMP, the IPP and
related documents such as the ESMF developed for the East Africa Public Health
Laboratory Project (parent and AF) that includes rehabilitation /construction of healthcare
waste incinerators\.
3\. Describe any project alternatives (if relevant) considered to help avoid or minimize
adverse impacts\.
N/A
4\. Describe measures taken by the borrower to address safeguard policy issues\. Provide
an assessment of borrower capacity to plan and implement the measures described\.
As stated earlier, the Government of Burundi has updated its existing MWMP and IPP
prepared under the existing Bank-financed Health Sector Development Support Project
(PADSS- the parent-project) which is being implemented satisfactorily\. Together with
the ESMF from the East Africa Public Health Laboratory Network Project, the MWMP
and IPP have been disclosed prior to Appraisal\. There is already a dedicated team of
staff in the Ministry of Health (MoH) working on social and environmental safeguards
issues for the PADSS\. The same team will be entrusted to further implement
satisfactorily the safeguards for this AF Project\. As already is the case, the Social &
Environmental Team (SET) will be guided by and work closely with the World Bank
safeguards team during supervision and throughout the project life cycle\. Moreover, as
already agreed upon during the mid-term review mission (MTR), the SET will work in
tandem with âUnion pour la promotion des Batwaâ? (UNIPROBA), a well established
national civil society organizat specialized in working with the Batwa to successfully
implement the IPP, as per the terms of the new memorandum of understanding (MOU)
signed between UNIPROBA and the PADSS\. The team and UNIPROBA will further
benefit from additional technical capacity building provided by the Bank team through
series of workshop and in-field training\.
5\. Identify the key stakeholders and describe the mechanisms for consultation and
disclosure on safeguard policies, with an emphasis on potentially affected people\.
The primary beneficiaries are medical practitioners and local communities benefiting
from and using medical facilities, including the poor and most vulnerable groups such as
the Batwa\. The update of the two safeguards instruments, namely the MWMP and the
IPP (in additional to the ESMF/ESMP for the East Africa Public Health Laboratory
Network Project) involved series of participatory public consultations to raise awareness,
build ownership to foster more social accountability throughout the life of the project\.
The primary beneficiaries are medical practitioners and local communities benefiting
from and using medical facilities, including the poor and most vulnerable groups such as
the Batwa\. More specifically, discussions were held with a number of key stakeholders
starting with members of the project implementation units of the other member countries
and their Burundian counterparts, staff of the World Bank Resident Mission responsible
for the project, staff of the National Institute of Health and the staff of the University
Hospital in Bujumbura\. These meetings provided detailed information on the project
design, proposed implementation plan and the safeguards documents prepared for the
Burundi Health Sector Project (IPP &MWMP) and the Environmental and Social
Management Framework (ESMF) of the East Africa Laboratory Network Project (that
includes Burundi) plus other important project related information afferent to this AF
project\. Additional important discussions were also held at the University Hospital and
INSP (Institut National de la Santé Publique) on the effective and responsive planning
and management of medical waste and the sustainable implementation of the existing
MWMP under the ongoing Burundi Health Sector Development Project and the new AF\.
Discussions were also held on the IPP and the continued implementation of the IPP plan
under the proposed project with the effective support from UNIPROBA (Union pour la
Promotion des Batwa, one of the leading national civil society organizations on the
Batwa) recently procured to streamline the sustainable inclusion of BATWA\.
Field investigations comprised visits to some of the selected sites in Bujumbura,
Kayanza and Muyinga in the north, and Rumonge and Makamba in the south of the
country\. Discussions were held with hospital and laboratory staff at the National Health
Institute in Bujumbura, the National Tuberculosis and Centre for Disease Control also in
Bujumbura and all hospitals visited in the different parts of the country\. The team then
had detailed discussions with the staff of the Burundi Health Sector Development Project,
(i\.e\. the TTL and resident Health Specialist) and Bank experts in Maputo and Washington
on the safeguard documents and their revision and implementation\.
Hence, as stated above, the update of the two safeguards instruments, namely the
MWMP and the IPP involved series of participatory public consultations to raise
awareness (to gain familiarization with the project and with the existing health
establishments, laboratory facilities and their operations), build ownership to foster more
social accountability throughout the life of the project\.
As consultation and participation is rather an iterative process, thus there will be more
consultation with contractors and implementation units at subproject level, precisely
during implementation of each of the sub projects\.
Finally, under the Additional Financing, the safeguards mechanisms to be used for
consultation and disclosure on safeguard policies will be those already existing in
Burundi which will be updated as needed to ensure the new activities and populations are
covered\.
B\. Disclosure Requirements Date
Environmental Assessment/Audit/Management Plan/Other:
Was the document disclosed prior to appraisal? Yes
Date of receipt by the Bank 04/03/2012
Date of "in-country" disclosure 04/05/2012
Date of submission to InfoShop 04/16/2012
For category A projects, date of distributing the Executive
Summary of the EA to the Executive Directors
Resettlement Action Plan/Framework/Policy Process:
Was the document disclosed prior to appraisal? N/A
Date of receipt by the Bank
Date of "in-country" disclosure
Date of submission to InfoShop
Indigenous Peoples Plan/Planning Framework:
Was the document disclosed prior to appraisal? Yes
Date of receipt by the Bank 04/03/2012
Date of "in-country" disclosure 04/05/2012
Date of submission to InfoShop 04/16/2012
Pest Management Plan:
Was the document disclosed prior to appraisal? N/A
Date of receipt by the Bank
Date of "in-country" disclosure
Date of submission to InfoShop
* If the project triggers the Pest Management and/or Physical Cultural Resources,
the respective issues are to be addressed and disclosed as part of the Environmental
Assessment/Audit/or EMP\.
If in-country disclosure of any of the above documents is not expected, please
explain why:
C\. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the
ISDS is finalized by the project decision meeting)
OP/BP/GP 4\.01 - Environment Assessment
Does the project require a stand-alone EA (including EMP) report? Yes
If yes, then did the Regional Environment Unit or Sector Manager (SM) Yes
review and approve the EA report?
Are the cost and the accountabilities for the EMP incorporated in the Yes
credit/loan?
OP/BP 4\.10 - Indigenous Peoples
Has a separate Indigenous Peoples Plan/Planning Framework (as Yes
appropriate) been prepared in consultation with affected Indigenous Peoples?
If yes, then did the Regional unit responsible for safeguards or Sector Yes
Manager review the plan?
If the whole project is designed to benefit IP, has the design been reviewed N/A
and approved by the Regional Social Development Unit or Sector Manager?
The World Bank Policy on Disclosure of Information
Have relevant safeguard policies documents been sent to the World Bank's Yes
Infoshop?
Have relevant documents been disclosed in-country in a public place in a Yes
form and language that are understandable and accessible to project-affected
groups and local NGOs?
All Safeguard Policies
Have satisfactory calendar, budget and clear institutional responsibilities Yes
been prepared for the implementation of measures related to safeguard
policies?
Have costs related to safeguard policy measures been included in the project Yes
cost?
Does the Monitoring and Evaluation system of the project include the Yes
monitoring of safeguard impacts and measures related to safeguard policies?
Have satisfactory implementation arrangements been agreed with the Yes
borrower and the same been adequately reflected in the project legal
documents?
D\. Approvals
Signed and submitted by: Name Date
Task Team Leader: Mr Andrew Sunil Rajkumar 03/08/2012
Environmental Specialist: Mr Hocine Chalal 03/18/2012
Social Development Specialist Mr Cheikh A\. T\. Sagna 03/16/2012
Additional Environmental and/or Mr Alain-Desire Karibwami 03/08/2012
Social Development Specialist(s):
Approved by:
Regional Safeguards Coordinator: Ms Alexandra C\. Bezeredi 05/10/2012
Comments:
Sector Manager: Mr Jean J\. De St Antoine 05/10/2012
Comments: | APPROVAL |
P005652 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No\. 15713
PERFORMANCE AUDIT REPORT
TUNISIA
THIRD URBAN DEVELOPMENT PROJECT
(LOAN 2223-TUN)
June 10, 1996
Operations Evaluation Department
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
Currency Equivalents
Currency Unit = Tunisian Dinar (TD/US$)
Appraisal Estimate (1982) $1\.00 = \.5907 TD
Actual: Average 1984 = \.7768 TD
Average 1985 \.8345
Average 1986 \.7940
Average 1987 \.8287
Average 1988 \.8578
Average 1989 \.9493
Average 1990 \.8783
Average 1991 \.9246
Average 1992 \.8844
Average 1993 1\.0037
Acronyms and Abbreviations
AFH Agence Fonci&re d'Habitation (Land Development Agency)
ARRU Agence pour la Rhabilitation et la R6novation Urbaine (Urban Upgrading
and Renewal Agency)
ASM Association pour la Sauvegarde de la M6dina (Association for the
Safeguard of Medina)
BDET Banque pour le D6veloppement Economique de Tunisie
HB Housing Bank
CNEL Caisse Nationale d'Epargne-Logement (National Housing and Savings
Fund)
CPSCL Caisse de Pr6ts et de Soutien des Collectivit6s Locales (Local
Communities Support Fund)
FNAH Fonds National pour l'Am6lioration de l'Habitat (Housing Improvement Fund)
FOPROLOS Fonds pour la Promotion des Logements Sociaux (Social Housing Fund)
LA Loan Agreement
LCB Local Competitive Bidding
MEH Ministere de l'Equipement et de l'Habitat (Ministry of Equipment and
Housing)
ONAS National Sewerage Authority
PAR Performance Audit Report
PCR Project Completion Report
SAR Staff Appraisal Report
SNIT Societ6 Nationale Immobili&re de Tunisie
TA Technical Assistance
VAT Value Added Tax
Fiscal Year: January 1 - December 31
FOR OFFICIAL USE ONLY
The World Bank
Washington, D\.C\. 20433
U\.S\.A\.
Office of the Director-General
Operations Evaluation
June 10, 1996
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Performance Audit Report on Tunisia
Third Urban Development Project (Loan 2223-TUN)
Attached is the Performance Audit Report (PAR) on the Tunisia Third Urban Development
Project (Loan 2223-TUN, approved in FY82 ), prepared by the Operations Evaluation Department
(OED)\.
This was the third Bank-financed urban project in Tunisia\. The first dealt mostly with urban
transport; the second with sites-and-services development and housing rehabilitation\. Once the
Government decided to shift its housing policy away from demolishing the existing housing stock to
renovating and rehabilitating valuable assets, a third project was prepared to implement the new policy
on a major scale\. The Agence pour la R6habilitation et la Rdnovation Urbaine (ARRU) was especially
created for the same purpose\. Among the project sites, there was also a pilot experience to rehabilitate
an area (Hafsia) of the old Medina of Tunis while preserving its cultural heritage\.
The project did help to expand the supply of housing and infrastructure for lower income urban
households\. Except for the Hafsia component, which attracted some middle-class professionals, all the
other sites essentially housed the targeted population (below the median urban income)\. The
appreciation of the US dollar in the mid-1980s allowed to extend the scope with additional sites and a
special program to bring sewerage to low-income areas in many secondary cities\. This second phase was
innovative because the Bank accepted to refinance the additional subprojects under a more flexible credit
line approach\. This helped the project to achieve most objectives, both physical and institutional, except
for the strengthening of the municipal finance agency, Caisse de Pr8ts et de Soutien des Collectivit6s
Locales (CPSCL)\. The recovery performance was disappointing since the frontage tax was introduced
late and in only one municipality\. The collection on mortgage loans by Caisse Nationale d'Epargne-
Logement (CNEL)/Housing Bank (HB) was also excessively low (30 percent, except in Hafsia where it
was 50 percent)\.
This project confirmed on a large scale the benefits of the renovation and rehabilitation approach
to the low-income housing problem in cities\. The Hafsia rehabilitation pilot was so successful that it was
extended to a larger area of the Medina\. The project also showed that design complexity is not a
constraint if the implementing agency is adequate and given sufficient autonomy to carry out its mission\.
The Audit rates the project outcome as satisfactory, its institutional development as moderate,
and its sustainability as uncertain\. Bank performance is rated as satisfactory\.
Attachment
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.

FOR OFFICIAL USE ONLY
Contents
P reface \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 3
B asic D ata Sheet \. \. 5
Evaluation Sum m ary \. \. 9
1\. Background \. 15
2\. Project Description \. 17
Objectives \. 17
Components and Financing Arrangements \. 17
Implementing Agencies \. 18
Project Design Issues \. 19
3\. Project Implementation and Physical Results \. 21
Time Overruns and Use of Savings \. 21
Procurement and Disbursements \. 21
Beneficiary Targeting \. 22
Rehabilitation of the Tunis Medina (Hafsia Component) \. 23
Economic Rate of Return \. 24
4\. Institutional Development \. 25
Technical Assistance and Training \. 25
Cost Recovery \. 25
5\. Conclusions and Lessons Learned \. \. 29
Borrower Performance \. 29
Bank Performance \. \. 29
Ratings \. \. 30
Lessons Learned \. 30
Annex
Impact of the Hafsia Component \. 31
This report was prepared by Mr\. Jean-Francois Landeau, Senior Evaluation Officer, who audited
the project in June 1995\. Mrs\. Maryvonne Mauprivez provided administrative assistance\. The
report was issued by the Infrastructure and Energy Division (Mr\. Yves Albouy, Chief) of the
Operations Evaluation Department (Mr\. Francisco Aguirre-Sacasa, Director)\.
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.

3
Preface
1\. This is a Performance Audit Report (PAR) on the third World Bank loan to the urban
sector in Tunisia\. The loan for US$25 million equivalent was approved on December 21,
1982\. After three amendments, the unused balance of US$0\.45 million equivalent was
cancelled and the loan closed on January 28, 1994\.
2\. The Audit is based on the Project Completion Report (PCR, Report No\. 13514, dated
September 12, 1994) prepared by the Middle East and North Africa Regional Office, the Staff
Appraisal Report (SAR) and President's Report (PR), the loan documents, and a study of the
project files\. An Operations Evaluation Department (OED) mission visited Tunisia in June
1995\. The excellent cooperation and valuable assistance provided by the authorities in the
preparation of this report are gratefully acknowledged\.
3\. The PCR provides a comprehensive account of the project experience\. The PAR
reassesses the Project's achievements, in particular the Hafsia component which rehabilitated
an area of old Medina in Tunis and the cost recovery performance\. A social impact survey of
beneficiaries in the Hafsia area carried out by the Association de la Sauvegarde de la Medina
(ASM) is summarized in the Annex to give this preliminary impact evaluation a broader
dissemination\.
4\. Following standard OED procedures, copies of the draft PAR were sent to the
Borrower for comments\. However, no comments were received\.

5
Basic Data Sheet
THIRD URBAN DEVELOPMENT (LOAN 2223-TU)
Key Project Data (amounts in US$ million)
Appraisal Actual or Actual as % of
estimate current estimate appraisal estimate
Total project costs 60,485 45,239
Loan amount 25 24\.55
Cancellation \.45
Date physical components completed 12/31/1989 12/31/1992
Economic rate of return 18-24% n\.a\.
Cumulative Estimated and Actual Disbursements
(end of calendar year) FY83 FY84 FY85 FY86 FY87 FY88 FY89 FY90 FY91 FY92 FY93
Appraisal estimate (US$M) \.94 5\.40 10\.92 15\.68 19\.36 22\.35 24\.00 25\.00 - - -
Actual (US$M) \.37 \.70 2\.38 4\.22 5\.80 8\.21 10\.31 16\.95 20\.03 22\.24 24\.55
Actual as % of appraisal 39\.4 13\.0 21\.8 38\.6 30\.0 36\.7 43\.0 67\.8 - - -
Date of final disbursement: October 30, 1993
Project Dates
Original Actual
Initiating memorandum 06/1981
Negotiations 05/07/1982 10/21/1982
Board approval 06/29/1982 12/21/1982
Signing 01/11/1983
Effectiveness 04/1983 09/08/1983
Closing date 06/30/1990 06/30/1993
6
Staff Inputs (staff-weeks)
1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
Preappraisal 45\.7
Appraisal 59\.4 13\.6
Negotiations 7\.2
Supervision 5\.3 14\.7 9\.0 10\.8 6\.9 7\.1 10\.3 10\.0 8\.0 5\.6 9\.0
Other 8\.0
Mission Data
Date No\. of Staff days infield Specializations Types of problems
(month/year) persons represented
Identification/Preparation 11/1981 3 Arch\.
Appraisal 10/1981 1 Arch\.
Supervision 1 04/1983 1 20 Arch
Supervision 2 08/1983 3 Arch\., FA
Supervision 3 11/1983 2 30 Arch\., Eng\.
Supervision 4 03/1985 1 Arch\.
Supervision 5 11/1985 2 20 Arch\.
Supervision 6 10/1986 1 11 Eng\.
Supervision 7 05/1987 2 14 Arch\., Eng\.
Supervision 8 09/1987 3 10 Urban\., Eng\.
Supervision 9 03/1988 2 15 Urban\., Eng\. Project Management
Supervision 10 12/1988 2 20 Urban\., Eng\.
Supervision 11 02/1989 1 18 Eng\.
Supervision 12 96/1989 I 10 Eng\. Procurement Status
Supervision 13 10/1989 I 13 Eng\.
Supervision 14 12/1989 I 5 Eng\.
Supervisionl5 02/1990 2 10 Eng\., FA Procurement Status
Supervision 16 07/1990 1 10 Eng\.
Supevision 17 01/1991 1 17 Eng\.
Supervision 18 03/1991 1 Transpr\. Eng\. Technical
Supervision 19 08/1992 1 Eng\. Assistance status
Technical
Supervision 20 12/1992 2 15 Eng\. FA Assistance status
Supervision 21 04/1993 2 Eng\., FA Project Management
Completion 12/31/1992
7
Other Project Data
Borrower: Government of Tunisia
Executing Agency: Agence pour la R6habilitation et la R6novation Urbaine
FOLLOW-ON OPERATIONS
Operation Loan Nos\. Amount Board Date
(US$ million)
Fourth Urban Development Project 2736 30\.2 07/03/1986
Fifth Urban Devlopment Project 3064 58\.0 05/18/1986
Municipal Development Project 3507 75\.0 07/02/1992

9
Evaluation Summary
Project Description
1\. This PAR covers the Third Urban Project (Urban III) carried out by the Bank in
Tunisia, which in effect was the first project attempting to introduce a new approach to low-
income housing on a large scale\. The urbanization pace had been rapid with the urban
population reaching 55 percent of the 6\.6 million inhabitants by 1980\. The rural-urban
migration was flowing to Tunis and the large coastal cities such as Sfax, the two cities where
pilot upgrading components were implemented under the Second Urban Project (Urban II)\.
The high rate of urban population growth resulted in a great demand for urban housing,
densification, over-crowding, scattering, and generally led to the deterioration of the urban
environment in the outskirts of cities and within their crowded and cramped traditional
quarters (Medinas) (PAR, para\. 1\.1)\.
2\. This situation provided the rationale for expanding Bank assistance to large scale sites
and services/rehabilitation projects in the cities most affected by the migrations\. Partly as a
result of Urban II then being implemented, the Government had accepted the concept of
upgrading instead of demolishing squatter settlements, of developing low-cost sites and
services projects, and of recovering infrastructure costs\. A public sector agency, the Agence
pour la Rehabilitation et la R6novation Urbaine (ARRU), had been created in August 1981 to
implement such policies\.
3\. Project Objective and Components\. The project was to satisfy multiple objectives, as
it was the practice with many urban projects designed in that timeframe\. The SAR
characterized the main goal as essentially to increase the supply of low-cost housing affordable
to low-income urban dwellers\. This broad goal was divided into four complex objectives vs\.
the provision of housing, the redressing of inequities in the housing policy, the strengthening
of the sector's agencies, and the housing policy formulation (PAR, paras\. 2\.1-2\.2)\. Five sites
were chosen, three in the greater Tunis and two in the Northwest region that were
representative of the three varieties of sub-housing conditions in Tunisia (PAR, para\. 2\.3)\.
4\. There were three physical components (PAR, para\. 2\.4)\. The upgrading component
on four sites consisted of improvement and extension of infrastructure networks, provision of
community facilities, and self-construction loans on about 400 infill plots\. The sites and
services component consisted of subloans to purchase about 1,600 developed plots and to
construct dwellings on them\. The revitalization of Hafsia was a pilot program which
comprised the improvement of infrastructure (street pavement, water supply, sewerage,
electricity and gas network), construction of commercial buildings and housing on part of
vacant municipal land, and sale of the remaining serviced land to private developers (including
hotels) with the profits funding the upgrading of about 47,000 m2 of housing in low-income
areas\. A technical assistance (TA) component was added to strengthen the project institutions,
mainly ministries, since bilateral aid was used to assist the implementing agencies\.
10
5\. Project Cost and Financing Plan\. The project cost was estimated at US$60\.1 million,
one third greater than Urban II\. Although the foreign exchange component was estimated at
42 percent, the Bank's share in the total funding was 25 percent, still making it the largest
single financier, followed by the Government (22\.7 percent)\. The beneficiaries and private
developers shared the remainder through cost recovery\. The Bank loan was onlent through the
Government (the Borrower) to: (i) various ministries for further onlendingand to public
agencies (ARRU and utilities: 54 percent); (ii) the municipal fund, Caisse de PrEts et de
Soutien des Collectivites Locales (CPSCL: 25\.5 percent); and (iii) the housing finance
institution, Caisse Nationale d'Epargne-Logement (CNEL: 19 percent) (PAR, para\. 2\.4)\.
6\. On-Lending Rates\. The on-lending interest rates to the various intermediaries used in
the project were lower than the Bank rate (11\.6 percent at loan signature) because the
Government used a weighted average between its funds and the Bank's to lower the cost to
beneficiaries, either households or municipalities\. Of concern to the Bank at the outset was
that lending rates were negative in real terms (PAR, para\. 2\.11)\.
Implementing Agencies
7\. ARRU was the main project executing agency and its statutes gave it broad powers to
intervene in subprojects rapidly, including the right to expropriate the necessary land (PAR,
para\. 2\. 7)\. The municipalities, including Tunis for the Hafsia component, delegated
responsibility for implementing the project to ARRU\.
8\. The residential land development agency, Agence Foncibre d'Habitation (AFH), was
responsible for the physical implementation of the sites-and-services components\. A division
was created in 1986 to implement the project, but the organization was not ready to adapt its
procedures to the new type of subprojects promoted by ARRU, resulting in delays (PAR, para\.
2\.8)\.
9\. CPSCL was merely an account managed by the oldest industrial development bank and
it had no staff\. It was chosen as the intermediary for a quarter of the Bank's funds because it
was the official lending agency for the municipalities (PAR, para\. 2\.9)\.
10\. CNEL was the major housing finance institution and although it did not need external
funding since it relied mainly on contractual savers, its cooperation was needed to bundle the
purchase of a serviced plot and the financing of construction into a single package, which was
a new concept in Tunisia (PAR, para\. 2\.10)\. CNEL received limited incentives for its
contribution as financial intermediary and this was reflected in the poor mortgage loan
recovery\.
11\. Project Design and Risks\. The main design problem was to finalize the Hafsia scheme
which, by Board presentation, was not fully funded\. This was solved with a dated covenant to
establish a Special Account budget of the in the Municipality of Tunis (PAR, para\. 2\.11)\. The
negative on-lending interest rates were seen as impairing project sustainability and efforts were
multiplied to resolve the issue early on\. Two implementation risks identified were the
newness of the Housing Ministry and ARRU (PAR, para\. 2\.12)\. Securing the large tracks of
land to start the project was also a concern\. No mention was made, however, of possible
II
slippage in beneficiary targeting, of difficulties with cost recovery through the yet-to-be
enacted frontage tax, and of the resistance to the new housing policy by the experienced
agencies of the sector (AFH and CNEL)\.
Project Implementation
12\. It took ten years to implement the project, three more than estimated\. Most original
components were slow to start and to execute (two years delay on average)\. But the delay
was mainly to accommodate three amendments aimed to use the surplus created by the US
dollar appreciation around 1985\. The first amendment allowed three additional sites covering
74 hectares to be serviced\. Then the ARRU-led rehabilitation experience was successfully
extended through a credit line approach to two governorates\. Last, a US$7 million component
allowed National Sewerage Authority (ONAS) to provide sewerage service to 19,000 dwellings
on 72 sites which had failed to get priority before under the "Projet Sp6cial d'Assainissement
des Quartiers Populaires" (PAR, para\. 3\.2)\. This second phase of the project showed a step-up
in the degree of Bank delegation in the implementation process\. This increased "wholeselling"
reflected the Bank's confidence in the agencies' technical implementation capabilities\.
13\. The PCR noted a few limited procurement irregularities, but there were no major
difficulties (PAR, para\. 3\.3)\. Although disbursements lagged the (optimistic) projections by
31 percent every year, disbursements picked up significantly in 1990 with 25 percent of the
loan disbursed compared to 40 percent for the six previous years\. The eventual disbursement
profile was close to the standard for Tunisia (PAR, para\. 3\.4)\.
14\. Because the purchase of land for sites-and-services components is often a cause of
delay, the authorities thought of circumventing the difficulty by giving ARRU the power to
expropriate the land necessary to carry out its mission (PAR, para\. 3\.5)\. To avoid long court
battles over compensation, however, ARRU tried to purchase the land through direct
negotiation with the owners\. It was not successful in all cases and delays ensued, especially at
Ettadhamen where the area involved was very large\.
15\. External Audits\. Except for Agence Fonciere d'Habitation (AFH), whose 1983-85
accounts were heavily qualified, the external audits of the various participants, including each
municipality, did not raise special issues except for the usual delays (PAR, para\. 4\.3)\.
16\. Targeting\. The project was designed to satisfy the housing needs of the urban poor\.
For serviced sites, priority was given to residents whose houses were demolished by the
project\. A 20 percent quota was reserved to CNEL savers and to members of a small Social
Housing Fund (FOPROLOS)\. Targeted non-priority households, which were the majority of
beneficiaries, had to have a monthly income of TD50-1 10 in 1981 Dinars (indexed on the
guaranteed minimum wage), which was around the Bank-defined absolute urban poverty
threshold (TD60)\. Beneficiaries were required to start construction within one year of plot
delivery and resale, after 5 years, required municipality approval (PAR, para\. 3\.6)\. At
appraisal, tests showed both upgrading and sites-and-services components to be affordable to
between 85 and 92 percent of 39,500 targeted beneficiaries which made the loan mortgage
recovery so much more likely (PAR, para\. 3\. 7)\. The PCR does not provide data on the results
of this targeting, but ARRU is completing an evaluation which will shed light on the profile of
beneficiaries\.
12
Results
17\. Hafsia Component\. The Hafsia component had an uncertain start because the local
cost funding was not identified until over a year after loan effectiveness\. The Hafsia Special
Account was eventually cofinanced by the Fonds National pour I'Am6lioration de l'Habitat
(FNAH), the municipality of Tunis, the sale of land to developers, and cost recovery from the
beneficiaries\. Implementation was not without difficulties, however, mainly because civil
work firms were initially reluctant to bid for contracts given the conditions (impossibility to
bring heavy equipment into the narrow streets)\. Yet, five years after the project had been
launched, the Hafsia component was extended to the entire Medina of Tunis based on the
renovation success\. Bank staff described the improvements to the area as having "completely
transformed the social life in what was before a decayed place" (PAR, para\. 3\.12)\. While the
renovation of the old city quarter was intended to provide better living conditions to the
existing (poor) population, it attracted a non-negligible number of middle-class residents\. Less
than 250 tenants, however, were forced to resettle on other project sites\.
18\. Technical Assistance and Training\. Not crucial to the project's success, the TA
component was revised several times to meet the changing needs over the long implementation
period\. Assistance was provided to the Ministry of Housing for a study of urban planning in
mid-size cities, for preparation studies for the Urban IV project, for a future transport project,
and for the Municipal Development Project (Urban V), which aimed, inter alia, to give
CPSCL greater administrative autonomy\. Overall, training benefitted a large number of public
servants (PAR, para\. 4\. 1)
19\. The economic rate of return (ERR) is likely to be satisfactory\. The estimated ERR
ranged from 1 8 percent for the sites-and-services and the Hafsia components and 24 percent
for the less costly upgrading component\. The PCR did not provide the recomputed ERR\.
OED estimates that the actual rates are in this vicinity or better based on the rental values for
housing, which are visibly higher than projected at the outset\.
Cost Recovery Performance
20\. The cost recovery record of this project is not exemplary\. The stated objective was to
recover about 73 percent of total costs directly from beneficiaries with the balance also
partially from them but indirectly through existing utility tariffs and local taxes that were to be
introduced\. While there was no problem with the utilities charging fees (notably for
connections), taxing the beneficiaries for infrastructure improvements remains essentially to be
done\. This is one of the few (but key) project features which did not elicit "ownership" by the
Borrower\. The target date for introducing the "taxe de contribution des riverains" (herein the
frontage tax), a property tax based on the street side length of each lot, was June 1986\. The
decrees allowing municipalities to levy this tax were not promulgated except for one of the six
sites\. The Bank did not push the issue for several years partly because it was aware of the
political resistance to tax recovery from the beneficiaries\. The Bank took a firm stance for the
first time in 1991 when it asked both the Ministry of Interior to take measures to collect the
frontage tax from the beneficiaries and the Housing Bank to start enforcing recovery
procedures on default subloans, but with little success (PAR, paras\. 4\.4-4\.6)\.
13
21\. As of December 1992, none of the municipalities had started to reimburse CPSCL
mainly because the latter had not prepared the loan repayment schedules\. This hindered
CPSCL's necessary move toward autonomy\. On the mortgage lending side, the
CNEL/Housing Bank (BH) eventually improved its loan collection, but it was still no more
than 25 percent in 1990\. At the time of this Audit, it was only 30 percent overall, but 50
percent for loans in Hafsia (PAR, para\. 4\.7)\.
22\. Sustainability\. The PCR listed four reasons in favor of the project's sustainability: (i)
many components had been duplicated in the follow-up projects, with evidence of continuity;
(ii) ARRU's experience also ensured the likely continuity of the rehabilitation programs; (iii)
AFH and BH have started working together; and (iv) private developers could replicate some
of the components\. This is not disputable\. Yet, project sustainability means that the project is
capable of generating the current flow of benefits and to recover the recurrent expenditures
and the cost of servicing the debt so that it does not affect public finances, and if desirable,
funds can be recycled to finance other similar projects; in that sense, for Urban III, it is
unlikely as long as cost recovery through loan repayments and frontage tax is low or non-
existent (PAR, para\. 4\.10)\. The PCR acknowledged that reality\.
Conclusions and Lessons
Borrower Performance
23\. The Government took a series of decisions which provided a conducive environment
to implement the project (PAR, para\. 5\.1)\. The Ministry of Housing was created to give more
prominence to the new housing policy orientation\. A specialized agency (ARRU) was created
within one year of project identification which showed that the Government was serious about
implementing the new policy of housing rehabilitation, demonstrated under Urban II\. The
appointment of a very competent staff to head ARRU was also a key decision in the success
of the project\. This gave an invaluable impetus to the launching of a large scale upgrading
component\.
24\. The performance of other public agencies was not impressive (PAR, para\. 5\.2)\. AFH
did not give priority to the low-cost plot development for a long time because it implied a
radical change of its strategy\. CNEL was also not keen to support an exception to mortgage
application with prior savings\. Its loan collection performance was, and still is, much worse
than for its own portfolio\. CPSCL was merely an account in a local financial institution
without ties to the housing sector during the implementation period\.
Bank Performance
25\. The Bank read correctly the Government's interest in promoting housing for the low-
income population as a way to mitigate the adverse effect of urbanization\. The Bank took the
correct decision to go from a pilot program still under implementation (Urban II) to a full
scale country-wide program to be carried out by a dedicated institution to be set up\. The
complexity of a project involving: two ministries,Ministry of Transport (MOT), Ministry of
the Equipment (MOE); two financial institutions (CPSCL and Housing Bank); three
agencies,(ARRU, AFH, ONAS); and indirectly the Ministry of Interior, Regional Planning,
14
and the District of Tunis should not be forgotten\. It was a challenging task in terms of
coordination and the delays that ensued are hardly surprising (PAR, paras\. 5\.4-5\.5)\. The
project took an innovative turn when the Bank accepted the Government's request to modify
the upgrading component into a line of credit\. Although originally a minor component, the
solution to deal with the intricate problems of the old Medina of Tunis was also innovative\.
26\. A clear failure of the Bank was in enforcing the recovery through the frontage tax\.
Since this mode of recovery accounted for almost 30 percent of the project cost, an early
firmer stance was warranted\. The Bank was also unsuccessful in strengthening CPSCL\. As
the lending window to the municipalities, CPSCL remained what it was throughout the project,
a lending window (PAR, para\. 5\.6)\.
Project Ratings
27\. The Audit assesses the outcome of the project as satisfactory\. It delivered more
serviced plots, more rehabilitation housing and more sewerage connections than planned, and
the Medina renovation was an unexpected success\. The sustainability of the projet is rated,
however, as uncertain because of the poor recovery record, and the institutional development is
rated as moderate because of the slow pace of reform at CPSCL\. Bank and Borrower
performance is rated as satisfactory (PAR, para\. 5\. 7)\. The PCR-based ratings were the same
except for sustainability,which was rated as likely\.
Lessons Learned
28\. An important lesson is that complex projects can work if the implementation agency's
management and staff are given sufficient autonomy to take the actions needed to launch a
new activity\. Tackling many urban issues in parallel is tempting\. On balance, however, the
transaction cost and risks of multicomponent projects (delays, supervision) suggest that simpler
projects have merits\. Even more so that urban projects are generally processed in series and a
component with a lower chance of success can be postponed to a follow-up project\. OED
concurs with the PCR and the Borrower's recommendation of making a single agency
responsible for coordinating all the operators (PCR, para\. 5\.04 (a) and PAR, para\. 5\.9)\.
29\. When a great number of civil work contracts are expected in a project, administrative
ways to alleviate the procurement management burden on both the Borrower and the Bank
should be found\. This could be achieved by bundling small contracts into coherent sets and
delegating the process on the model of the SOEs on the disbursement side (PAR, para\. 5\.10)\.
30\. The PCR recommended that to avoid bottlenecks at project launch, the necessary land
be purchased prior to start\. This is also a sensible recommendation although the Government's
commitment to the project is often firmed up not before, but at about the same time the Bank
loan is submitted to the Board\. Rather than making the process more rigid, it is more realistic
to require a better risk analysis to identify the likely causes of implementation delays (PAR,
para\. 5\.11)\.
15
1\. Background
1\.1 Despite its small size in terms of total population (6\.6 million according to the 1980
census prior to project appraisal), Tunisia had to deal with the same problems as larger
countries faced with rapid urbanization\. With 55 percent of urban population in 1980, the
urbanization rate was high and expected to increase\. The rural-to-urban migratory flows put
"great pressures on urban housing and led to a deterioration of the urban environment in the
outskirts of cities and within the crowded traditional quarters (Medinas) of many cities\." (SAR,
para\. 1\.01)\. Tunis had the most serious housing and upgrading problems, both in terms of
quantity and importance\. Although the total urban housing stock had increased by 30 percent
between 1975 and 1980 to reach 605,000 units, the demand out-paced the public sector's
ability to control urbanization\. This situation provided the rationale for expanding Bank
assistance in the sector from the pilot Urban II project to a large scale sites and services
project in and around Tunis and in several cities\.
1\.2 The urban policy formulation and implementation responsibility was shared between
the Ministries of Housing, Equipment, Interior, and National Economy (the first two were later
merged)\. The Government's response to the shelter needs was to create its own real estate
agency, Societe Nationale Immobili&e de Tunisie (SNIT), whose programs where heavily
subsidized followed by a land development agency\. Agence Fonci&re d'Habitation (AFH), and
a housing savings fund, Caisse Nationale d'Epargne-Logement (CNEL)\. More recently, partly
as a result of the Urban 11 project, the Government had accepted the concepts of (i) upgrading
instead of demolishing squatter settlements, (ii) developing low-cost sites and services projects,
and (iii) recovering infrastructure costs although the latter consensus proved less solid\.
Another agency, Agence pour la Rehabilitation et la Renovation Urbaine (ARRU), was created
in August 1981 to be the spearhead in implementing the new policy\.

17
2\. Project Description
Objectives
2\.1 The objectives were complex and interpretations varied over time\. According to the
SAR, the project objective was essentially to increase the supply of low-cost housing
affordable to low-income urban dwellers\. The "Objectives" section in the SAR stated four
distinct, though connected, objectives, however\. They were: (i) "to design and implement
projects providing better shelter and improved urban services for low-income populations; (ii)
to redress inequities in housing policy by reaching low-income families which currently cannot
afford housing with adequate urban services as provided by the formal sector; (iii) to
strengthen the institutional framework of agencies involved in the urban and housing sector,
and to ensure better coordination between them; and (iv) to encourage a national approach to
housing planning and policy formulation\."
2\.2 As an alternative to these broad objectives, the PCR suggested a list of practical sub-
objectives for the housing component (against which the project's performance was evaluated
(PCR, para\. 3\.1): "(i) To concentrate low-income housing activities of local authorities on the
supply of serviced land; (ii) to introduce private sector financing for low-income housing
through existing private sector financial intermediaries: (iii) to establish new procedures for
financing and construction of low-income housing; (iv) to maintain standards for low-income
housing to ensure continuity of the reformed process; and (v) to strengthen urban management
capacities of local governments\."
2\.3 Five sites were initially retained, three in greater Tunis and two in the Northwest
region\. In Tunis\. they were Hafsia in the Medina, Kram Ouest and Ettadhamen (the later two
sites being in the then distant suburbs); outside Tunis they were Zghadia in Jendouba and
Chrichri in Le Kef (both West of Tunis)\. They were representative of the variety of sub-
housing conditions met in Tunisia: low density, illegal land tenure and inadequate
infrastructure (Ettadhamen), squatter settlements with deteriorated living conditions (Kram
Ouest); over-crowding in an old Arab city (Hafsia)\. The choice was dictated by the intent
both to cover the country better and to further test the efficiency of the upgrading approach
launched under Urban II, but in more varied conditions\.
Components and Financing Arrangements
2\.4 There were as many physical components as Bank approaches to low-income
settlements (e\.g\., rehabilitation of existing but deteriorating housing stock, sites and services on
scattered land, and upgrading of infrastructure in fast-growing urban areas)\. The upgrading
component on four sites consisted of improvement and extension of infrastructure networks, of
providing community facilities, and of self-construction loans on about 400 infill plots\. The
sites and services component consisted of subloans to purchase about 1,600 developed plots
and to construct dwellings on them\. The revitalization of Hafsia was a pilot program which
comprised the improvement of infrastructure (street pavement, water supply, sewerage,
electricity and gas network), construction of commercial buildings and housing on part of
vacant municipal land\. sale of the remaining serviced land to private developers (including
hotels) with the profits funding the upgrading of about 47,000 n2 of housing in the low-
18
income areas\.' A technical assistance component was added to strengthen the project
institutions, mainly ministries since, for cost reasons, bilateral aid was used to assist the
implementing agencies\.
2\.5 The project cost was originally estimated at US$60\.1 million with a foreign exchange
component estimated at 42 percent and local taxes accounting for 20 percent\. Physical
contingencies were set at 7\.6 percent and price contingencies at a substantial 20\.5 per cent to
cover the 7 years of planned implementation\. The financing plan gave the Bank the largest
share with 25 percent, followed by the Government (22\.7 percent); the beneficiaries and
private developers shared the remainder, mostly through cost recovery\.
2\.6 The Bank loan was to be onlent through the Government to the municipal fund, Caisse
de Prts et de Soutien des Collectivites Locales (CPSCL) (25\.5 percent), to the housing
finance institution, Caisse Nationale d'Epargne-Logement (CNEL) (19 percent), and 54 percent
to various ministries for further onlending to subborrowers and to public agencies (ARRU and
utilities)\. The onlending interest rate to the various intermediaries used in the project was
lower than the Bank rate (1 1\.6 percent at loan signature) because the Government, in an effort
to lower costs to beneficiaries, used a weighted average cost between the Bank rate and the
agencies' rates\. The resulting rates were 7 percent through CNEL and 7\.9 percent through
CPSCL\. These rates were negative in real terms when compared to inflation (8\.9 percent in
1981)\. Still they were much greater than the rates normally charged by the two institutions
(4\.5 and 2\.0 percent, respectively) although well below rates for medium-term lending by
commercial banks\. The Government had agreed at negotiations to review, soon after loan
effectiveness, the rate structure in the housing sector with a view to make the rates positive by
the end of 1987 (SAR, para\. 3\.10)\. However, this did not happen mainly because the
authorities did not want too much of a gap between the normal activities and the Bank-
supported subprojects\.
Implementing Agencies
2\.7 ARRU was the main project executing agency and its statutes gave it broad powers to
intervene in subprojects rapidly\. It was created in 1981 under private law, with the attributes
of a land bank (i\.e\., right to expropriate and to develop land)\.2 The new head of ARRU was
very effective in creating a favorable momentum right at project launch\. Its financial
autonomy was helped in great part by its access to commercial bank credits\. Four months
before loan effectiveness, ARRU was fully staffed, partly due to its ability to pay competitive
salaries, which is a rare enough occurrence among project units for it to be mentioned\. ARRU
was given broad responsibilities for a new institution\. All five municipalities, including Tunis
for the Hafsia component, delegated responsibility for implementing the project at each site to
ARRU\. This greatly simplified the administration of this complex project\. Coordination with
the various other agencies was achieved through a Technical Committee, but this proved to be
insufficient to ensure total cooperation\.
1\. A detailed description of the physical components is available in the SAR, Annex 1\.
2\. Respectively Unite Centrale de Projet and Socit6 d'Economie Mixte pour I'Am6nagement de Tunis\. It absorbed the project unit set up to
implement Urban II and an agency for developing Tunis
19
2\.8 Agence Fonci&re d'Habitation (AFH), the residential land development agency, was
responsible for the physical implementation for the sites and services components\. A division
was created in 1986 to implement the project, but the organization was not ready to adapt its
procedures to the new type of subprojects promoted by ARRU\. Treasury-type difficulties
forced AFH to focus on its core business rather than its contribution to the Project, and the
lack of coordination between AFH and CNEL more than eight years into project
implementation was a constant impediment\.' Some improvements were obtained when a new
head was appointed in 1989, the same who launched ARRU at the beginning of the project\. It
is significant that one of the first changes implemented was the introduction of cost accounting
for each subproject\. This was made necessary by the changing operation conditions from a
quasi-subsidized situation' to more complex upgrading projects\.
2\.9 CPSCL, the municipal fund, was to be strengthened under Urban II, but little progress
had been achieved\. It was still merely an account managed by the most experienced
development bank, Banque pour le D6veloppement Economique de Tunisie (BDET), and it
had no staff\. There was little progress during project preparation on the municipal issues
(local taxation, financing municipal operations, and strengthening municipal administration)\.
Still CPSCL was chosen as the intermediary to onlend a quarter of the Bank funds\.
2\.10 CNELI, with its attractive contractual savings scheme which guaranteed a low interest
mortgage loan after a saving period, CNEL became the major housing finance institution in
the space of a few years\. This gave CNEL a monopoly position in the sector and little
incentive to try an approach where mortgage loans could be obtained without prior savings\.
Yet, it was a key agency of the Government and the recent evolution of the housing policy
required a diversification of the financial instruments offered to dwelling buyers\. The
bundling of the purchase of a serviced plot and the financing of construction into a single
package was new in Tunisia and it required the cooperation of AFH and CNEL\. The
incentives for CNEL were to receive one percent on disbursements and two percent on
recoveries which was substantial for the sole function of transferring funds\. The penalty was
to absorb five percent of the unrecovered loan amounts (SAR, para\. 3\.08 (iii)), which was an
adequate incentive, if applied\.
Project Design Issues
2\.11 The main design problem was to finalize the Hafsia scheme which, by Board
presentation, was not fully funded because all the counterpart funds had not been identified
(SAR, para\. 4\.05)\. The establishment of a Special Account in the Municipality of Tunis for
the upgrading of Hafsia was made into a dated covenant\. The fact that the on-lending interest
rates were negative in real terms was viewed by the Bank as impairing project sustainability
and efforts were multiplied to resolve the issue early on\.
2\.12 Two implementation risks identified were the newness of both the Housing Ministry
and of ARRU (SAR, paras\. 6\.06-6\.07)\. Trusting most of the project execution to an unproven
3\. Back-to-Office Report, August 20, 1991\.
4\. For most of its land development operations\. AFH had been relying on medium-term advances from its buyers\.
5\. CNEL was transformed into the Housing Bank in 1989 and the two names are used interchangeably in the report\.
20
agency (ARRU) was a substantial risk to take even with the quality of sector dialogue found in
Tunisia\. The concerns were not founded, however\. The securing of the large tracks of land
involved in the project was also a concern during preparation (para\. 3\.9)\. No mention was
made, however, of possible slippages in beneficiary targeting, of difficulties with cost
recovery, and of the half-hearted ownership by the experienced agencies (AFH and CNEL) of
the sector, which proved to be real risks\.
21
3\. Project Implementation and Physical Results
Time Overruns and Use of Savings
3\.1 For a time the new Ministry of Housing did not have the administrative capacity to
implement adequately its plans\. Given the great number of ministries and agencies involved,
coordination was a practical issue\. While ARRU was the lead implementing agency, the
coordination among ministries was achieved through the same Inter-Ministerial Committee set
up under Urban II\. For some agencies, in particular AFH and CNEL, the project was a
marginal activity which elicited limited "ownership"\. Monitoring relied on semi-annual
progress reports prepared by ARRU and on frequent supervision missions\. In the end, the
physical targets were met, some of them even exceeded, because of loan savings, but the
project required three more years to be completed than scheduled (43 percent time overrun)\.
Time overruns were partly due to the use of savings as explained below but the PCR
acknowledged that most original components were slow to start and to execute, by two years
on average\.
3\.2 Three amendments aimed at using the surplus created by the appreciation of the US
dollar around 1985 instead of facing the likely cancellation of US$8\.6 million\. Three
additional sites covering 74 hectares were serviced\. Taking note of the earlier success of
ARRU, the rehabilitation experience was extended through a credit line approach to the Bja
and Gafsa Governorates\. Last, a new US$7 million component implemented by ONAS (the
"Projet Sp6cial d'Assainissement des Quartiers Populaires"), provided sewerage system in 72
sites (which had low priority before), with 190 kms of pipes to service 19,000 dwellings (or
about 100,000 persons)\. The Audit agrees that this use of savings was consistent with project
objectives\.
Procurement and Disbursements
3\.3 The Project attracted a large number of contracts because upgrading and rehabilitation
involved many small tasks, which justified procurement on the basis of local competitive
bidding (LCB) or force account (Hafsia component)\. The PCR noted a few limited
procurement irregularities, but overall there were no major difficulties\. ARRU, which was a
new institution at project launch, handled the complex procedures efficiently\. The PCR
suggested correctly that a consolidation of the multitude of small contracts into homogeneous
sets would have simplified project management for both the Borrower and Bank supervision
missions\.
3\.4 The Loan disbursement percentages for each category reflected the estimated foreign
exchange component of each eligible item\. They were originally 45 percent for civil works
and self-construction loans, 30 percent for sites and services, and 80 percent for technical
assistance\. As shown in the statistical introduction to this report, actual disbursements lagged
projections by 31 percent every year\. Eventually the actual disbursement profile was close to
the standard for Tunisia\. Although the Loan Agreement onto categories in demand, Bank staff
complained in a 1988 Aide-Memoire that only 25 percent of the Loan had been disbursed
despite two amendments\. Partly to boost disbursement, Bank staff had recommended the
unusual approval of a second amendment request when only US$4\.1 million had been
disbursed\. At one point in 1990, the sewage component was 60 percent committed, but only
15 percent disbursed\. Disbursements picked up significantly in 1990 with 25 percent of the
22
Loan disbursed compared to 40 percent for the six previous years\. There were payment delays
to the enterprises partly due to the municipalities' cumbersome approval process\. CPSCL also
contributed to slowing disbursements by taking no less than three months to pass on the Loan
funds\. As late as 1989, funds forwarded through CPSCL did not reach ARRU before six
months,6 which compounded ARRU's problem of working capital shortages to launch its
ongoing program\.
3\.5 Land Acquisition\. The land required by the project was a concern during preparation
because it was known from experience that land often produced bottlenecks in implementing
urban housing projects according to schedule\. The major difference with the past was the
power given to ARRU to expropriate land to carry out its mission (SAR, para\. 3\.18)\. Because
compensation for expropriations can be challenged by the owners for many years in Tunisian
courts, ARRU tried to purchase all the needed land through direct negotiation with the owners\.
Yet, this "expropriation A l'amiable"' approach was not successful in all cases and court
actions, by unwilling owners, created delays, especially at Ettadhamen where the area involved
was very large\.
Beneficiary Targeting
3\.6 The project was designed to satisfy the housing needs of the urban poor and the
selection of beneficiaries was given particular attention\. For serviced sites, which would house
the largest number of beneficiaries targeted by the project, a Selection Committee chaired by
the municipality and including AFH and CNEL, prepared initial lists\. Priority was given to
residents whose houses were demolished by the project (upgrading component)\. A quota of 20
percent was reserved to CNEL savers and the members of a small social fund (FOPROLOS)\.
Non-priority beneficiaries had to have monthly incomes of TD50-1 10 in 1981 Dinars (indexed
on the guaranteed minimum wage), which was very close to the Bank-defined absolute urban
poverty threshold (TD60, SAR, para\. 1\.07)\. Beneficiaries were required to start construction
within one year of plot delivery and its resale before 5 years was constrained\.
3\.7 Through its several amendments, the project continued to focus on lower than middle
income (TD50-150 per month or 1-2\.5 times the minimum guaranteed salary)\.' Of the
originally estimated 10,700 beneficiaries to occupy the sites and services, 62 percent were
expected to be urban poor; for the 28,800 beneficiaries of upgrading, the target was 31 percent
(SAR, para\. 4\.09)\.
3\.8 Mortgage Granting\. CNEL was reluctant to lend outside its contractual savings
scheme which makes accumulating savings a prerequisite for obtaining a mortgage loan\.
Eventually CNEL granted 2,444 loans to eligible households\. Relative to the number of
beneficiaries this is, however, a small figure\. In 1990, ARRU asked the Bank to revise the
ceiling for self-construction loans which had not been revised since 1987 while inflation
measured by consumer prices had increased by 23 percent\. However, the move was late in the
implementation cycle and was followed by less than 500 new loans to be granted by CNEL\.
6\. Supervision Report, December 7, 1989\.
7\. The expression is quoted from the PCR, para\. 5\.07\.
8\. SMIG (Salaire Minimum Garanti)
23
3\.9 Affordability\. Given the target population, affordability was a key consideration\. The
estimates were made assuming a relatively high down payment (20 percent) and a debt-
servicing burden no greater than 15 percent for upgrading and 25 percent for sites and
services\. The tests showed both upgrading and sites and services components to be affordable
to between 85 and 92 percent of the 39,500 targeted beneficiaries (SAR, para\. 4\.08)\. Given
the thoroughness of this exercise, it is difficult to comprehend the extremely low mortgage
loan recovery rates achieved by CNEL (PAR, para\. 4\.5)\.
3\.10 The PCR does not provide actual figures, but ARRU is currently completing a detailed
self-evaluation of Urban III which should shed light, inter alia, on the profile of beneficiaries
after project completion\. However, the summary of the impact in Hafsia (see Annex) showed
that beneficiaries were reluctant to answer questions about their income, a reality which makes
ex post analysis more difficult\.
3\.11 Legalization of Ownership\. A socially significant by-product of the project was to
provide security of land tenure to the squatters whose dwellings were rehabilitated\. This was
achieved by issuing new titles to plot holders after they paid for the infrastructure
improvements (e\.g\., connection fees)\.
Rehabilitation of the Tunis Medina (Hafsia Component)
3\.12 The Hafsia component was a very successful pilot rehabilitation scheme\. It had an
uncertain start\. The financial sources for the local costs of the component had not been
identified during loan negotiations\. Over a year after effectiveness, it was agreed that the
Hafsia Special Account would be funded on the Tunisian side by the housing improvement
fund, Fond National pour I'Amelioration de l'Habitat (FNAH), the Municipality of Tunis, the
sale of land to developers, and eventual cost recovery from the housing beneficiaries (through
down payments and mortgage loan servicing)\. The Hafsia rehabilitation component was such
a success only five years after the project had been launched that it was extended to the entire
Medina of Tunis\. A 1990 supervision report described the improvements to the area as having
"completely transformed the social life in what was before a decayed place"\. Middle-class
professionals were returning without displacing poor people\. Less than 250 tenants living in
precarious houses were resettled, most in Ettadhamen, the largest project site\. A recent study
measured the medium-term impact of this successful component (see Annex)\.
3\.13 There were some difficulties in closing the Hafsia Special Account as it involved some
clearing of debts by the various participants\. For instance, ARRU made a profit out of the
Hafsia subproject, but it delayed a TDI80,000 payment to the Tunis Municipality\. In 1989, a
Bank supervision report admitted that the account was "not performing normally, blocking the
rehabilitation process"\.' The following year, there was an argument between the Housing
Bank and ARRU on the funding of the Hafsia account\. In 1992 the Bank requested an
amendment to the Hafsia contract to replace the Fond National pour I'Am6lioration de
l'Habitat (FNAH) with a Planning Ministry contribution (TDI50,000) while keeping co-
financing from ARRU at TD400,000 and from the project at TD450,000\. All these incidents
are understandable given the pilot nature of the financial and administrative set-up\.
9\. Supervision Report, March 13\. 1989\.
24
Economic Rate of Return
3\.14 The economic rate of return (ERR) is likely to be satisfactory\. At appraisal the ERR
estimates ranged from 18 percent for the sites and services and the Hafsia components and 24
percent for the less costly upgrading component\. The PCR did not provide the recomputed
ERRs\. OED estimates that the actual rates are in this vicinity or better, based on the rental
values for housing, which are visibly higher than projected at the outset\.
25
4\. Institutional Development
Technical Assistance and Training
4\.1 Technical Assistance\. TA was originally a marginal component mainly because the
Government was reluctant to use foreign borrowed funds for that purpose\. During project
preparation, TA was included in the project cost to ensure its last resort financing by the Bank\.
Eventually, the funds earmarked for TA were extensively used which was a new trend, at least
in urban lending\. The TA component was reallocated several times to meet the changing
needs of various sector ministries over the ten-year implementation period\. Some assistance
was provided to the Ministry of Housing for a study of urban planning in mid-size cities
(1990)\. Pre-investment funds for preparing studies for Urban IV project and a future transport
project were also included\. In 1992, TD400,000 were allocated for a study to be carried out
by the Ministry of Interior to prepare the Municipal Development Project (Urban V) which
aimed, among other goals, to give CPSCL greater administrative autonomy\. In 1993, Ministry
of Transport requested the transfer of funds earmarked for studies to the acquisition of
computer equipim-ent\.
4\.2 Training\. ARRU also made a concerted use of the loan funds earmarked for training\.
Overall, training benefitted a large number of public servants\. The PCR does not comment on
the success or failure of this component\.
4\.3 Accounting and External Audit\. Accounting, or lack of it, at two agencies revealed
deep institutional problems\. The accounts for each component were kept by each municipality
under the Tunisian public accounting plan, then audited by the Contr6leur G6n6ral des
Finances\. The accounts for AFH, ARRU, and CPSCL were kept under the commercial
accounting plan\. Although CPSCL was merely an account managed by an experienced
development bank (BDET), its accounts for 1985-87 were still not prepared as of end 1988, let
alone the external audit of these accounts\. The Bank requested these audits to be prepared
before the end of 1989 and agreed that the Contr6leur G6n6ral des Finances in the Ministry of
Finance would carry out the task\. The audit for the period 1975-91 was very good with only
TD2,300 of discrepancy over the entire period, but it was nonetheless qualified because the
debt-service tables of the municipality subloans were still not ready\. AFH's 1985-87 accounts
were heavily qualified and this led to a management shake-up (para\. 2\.8)\. The accounting
system had to be changed retroactively to 1982\. CNEL's accounts were not audited since its
intermediation was a minor activity\.
Cost Recovery
4\.4 Housing projects such as Urban III are normally sustainable either directly (through
mortgage loan repayments) or indirectly (through taxes)\. From either view point, the cost
recovery record of this project is not exemplary and the PCR acknowledged the failure without
elaborating on it as the Audit does here (PCR, para\. 8\.01)\. It was expected that net cash
flows would stay positive after all project funds had been disbursed (1990) and would reach
US$5\.2 million by 1992: "This surplus would allow the replicability of the project on future
sites\." (SAR, para\. 3\.11)\. The stated objective (Issues Paper, March 1983) was to recover
about 73 percent of total costs directly from beneficiaries and the balance also partially from
them but indirectly through existing utility tariffs and local taxes to be introduced\. While
there was no problem with the utilities charging fees (notably for connections), as both they
and their clients were used to the practice, the concept of taxing the beneficiaries of
infrastructure improvements remained essentially an untested concept\.
26
4\.5\. The negotiations had targeted June 30, 1984 as the date for introducing the frontage
tax, a property tax based on the street side length of each lot which was supposed to help
repay half of the CPSCL loans (SAR, para\. 4\.04)\. This is one of the few (yet, unfortunately
key) project features which did not elicit "ownership" by the Borrower\. In 1987, the Ministry
of Housing informed the Bank that the municipalities of Le Kef, Jendouba and Ettadhamen
had decided to apply the frontage tax\. Yet, the decrees allowing municipalities to levy this tax
were not promulgated\. A 1989 supervision report acknowledged that cost recovery was "still
on hold", but the Bank did not push the issue for the next two years partly because it was
aware of the political resistance to this tax\."o
4\.6 The Bank took a firm stance for the first time in 1991 when it asked both the Ministry
of Interior to take measures to collect the frontage tax from the beneficiaries and the Housing
Bank to start enforcing recovery procedures on defaulting subloans\. In 1992 ARRU launched
an effort to mobilize the concerned municipalities into accelerating the introduction of the
frontage tax \. To this date, little progress (Part II of the PCR mentions "one decree"
introducing the tax on one site) has been made on this issue partly because of its political
nature and of the known resistance of many Tunisians to any form of property tax\. In the
meantime, the ONAS amendment has allowed partial recovery by charging the beneficiaries a
connection fee for sewerage\."
4\.7 As of December 1992, no municipality had yet started to reimburse CPSCL mainly
because the latter had not prepared the loan repayment schedules\. This hindered CPSCL's
necessary move toward autonomy\. On the mortgage lending side, the Housing Bank
(formerly CNEL) eventually improved its loan collection, but it was still no more than 25
percent in 1990\. In June 1995, it was still 30 percent overall, but 50 percent for loans in
Hafsia\. By any standard, this outcome is dismal\. Bank projects in housing finance in various
countries have shown that arrears over 5 percent are rare and that collection is usually
successful when the threat of repossessing the house is raised\. The performance of
CNEL/Housing Bank is all the less defensible in that collection on its own mortgage portfolio
meet acceptable standards\.
4\.8 The SAR displayed a Recovery Table (p\. 17) broken down as follows: loan
repayments (10\.7 percent), direct sales (26 percent), utilities charges and tariffs (11\.2 percent),
frontage tax (29\.6 percent), and not recovered (22\.5 percent)\. The PCR did not update this
table\. OED estimates that the "not recovered" category has increased to over 50 percent
because the loan recovery has been poor and the frontage tax has been introduced in only one
of the six sites according to Part II of the PCR drafted by the Borrower (PCR, para\. 5\.03 (a))\.
This shortfall had to be compensated by an added fiscal burden\. The PCR claims that Urban
III behaved the same as Urban II on this score, and that the lessons of the past were not taken
into account in its design (PCR, para\. 12\.04); in fact, Urban 11 was still being implemented
and not yet at the cost recovery stage when Urban III was appraised and negotiated\. The
problem was more the reluctance to enforce Bank remedies than a faulty design\. Indeed, the
loan recovery rate has been poor despite planning for up to five percent of the credit risk to be
absorbed by CNEL (SAR, para\. 3\.07)\. It is not clear whether the Government, which was
bearing the credit risk remainder, enforced this clause\. The CNEL officials met during the
Audit were not concerned by their weak performance and its contrast with the much better
recovery rate obtained on their own mortgage loan portfolio\.
10\. The January 1990 Supervision Report is, for example, typical of the absence of the issue\.
I1\. Letter to the Ministry of Planning, June 26, 1989\.
27
4\.9 The project involved other limited subsidies\. The Bank loan was onlent at rates below
the Bank rate\. For example, ARRU received TDI million in 1991 as an operational subsidy
which contributed to make it profitable\. It has also been exempted of the value added tax
(VAT) since its creation while most recently it was competing with AFH, Socit6 Nationale
Immobili6re de Tunisie (SNIT) and private developers, all burdened with VAT\. The defaults
on the subloans by the Housing Bank have been also absorbed by the Government and the five
percent penalty has not been enforced\.
4\.10 Sustainability\. The PCR listed four reasons in favor of project sustainability: (i) many
components had been duplicated in the follow-up projects, with evidence of continuity; (ii)
ARRU's experience ensured the likely continuity of the rehabilitation programs; (iii) AFH and
BH have started working together; and (iv) private developers could replicate some of the
components\. This is not disputable\. Yet, project sustainability means that the project is
capable of generating the current flow of benefits and to recover the recurrent expenditures
and the cost of servicing the debt so that it does not affect public finances, and if desirable,
funds can be recycled to finance other similar projects; in that sense, for Urban III, it is
unlikely as long as cost recovery through loan repayments and frontage tax is low or non-
existent\. The PCR acknowledged that reality\.

29
5\. Conclusions and Lessons Learned
Borrower Performance
5\.1 In spite of its poor record on cost recovery, the performance of the Borrower is rated
as satisfactory\. The Government took a series of decisions which provided a conducive
environment to implement the project\. The Ministry of Housing was created to give more
prominence to the new housing policy orientation\. A specialized agency (ARRU) was created
within one year of project identification, a step which showed that the Government was serious
about implementing the new policy of housing rehabilitation then being demonstrated under
Urban II\. The appointment of a very competent staffl2 to head ARRU was also a key
decision in the project's success\. This gave an invaluable impetus to the launching of a large
scale upgrading component\.
5\.2 The performance of other public agencies was not impressive\. To date, the collection
of improvement and self-help construction loans granted under the project by CNEL is much
worse than for its own loans\. AFH was not interested in changing its modus operandi
although it created a special division to handle the project\. This risk was known in advance,
but little could be done short of carrying out a major reorganization, which eventually took
place during the preparation of the Urban V project (1987)\. Although less than 10 years
separate the creation of AFH (1973) and ARRU (1981), the contrast in efficiency is dramatic\.
It reflects and indicates to some extent the rapid change in Government policy in the late
1970s and early 1980s which gave sector agencies broader means to carry out their mandate\.
5\.3 ARRU must also be commended for the unusual initiative among implementing
agencies to carry out a combined audit and impact study of its performance under the Urban
III project\. Four local consulting firms (one for two sites) are soon to complete their analyses\.
Bank Performance
5\.4 Bank performance is rated as satisfactory\. The Bank was heavily involved in a
developmental strategy in housing in Tunisia since the late 1970s involving processing a series
of projects to deal with all the key aspects of urban policy\. The project followed along the
lines of Urban II and built on the institutional framework developed thus far\. It maintained
the two main orientations: to continue the upgrading work in Tunisia and to introduce both
upgrading and sites and services in secondary cities\. The project involved two ministries
(MOT, MOE), two financial institutions (CPSCL, Housing Bank), three agencies (ARRU,
AFH, ONAS) and indirectly the Ministry of Interior, the Ministry of Transport, Regional
Planning, and the District of Tunis\. It also had all kinds of components, each one representing
a different approach\. This complexity made coordination a challenging task and the ensuing
delays are not surprising\.
5\.5 The project took an innovative turn when the Bank accepted the Government's request
to make the upgrading component into a line of credit\. Although by then the Bank had
processed several housing finance projects worldwide, it was one of the first times it had
shifted from pre-identified subprojects to a credit line approach for upgrading activities\.
5\.6 A clear failure of the Bank was in enforcing subloan recovery through the frontage
tax\. Since this mode of recovery accounted for almost 30 percent of the project cost, an early
firmer stance, was warranted\. The Bank was also unsuccessful at strengthening CPSCL-a
12\. He is now the current Minister of Public Works and Housing\.
30
lending window to the municipalities-it remained a lending window throughout the project\.
Given the political sensitivity of financing municipalities, there was reluctance among the
Tunisian authorities to allow greater autonomy to CPSCL\. Eventually the consensus shifted
and another Bank project helped transform CPSCL into a municipal bank\.
Ratings
5\.7 The Audit assesses the outcome of the project as satisfactory\. It delivered more
serviced plots, more rehabilitation housing and more sewerage connections than planned, and
the Medina renovation was an unexpected success\. The sustainability of the projet is rated as
uncertain because of the poor recovery record, and institutional development as moderate
because of the slow pace of reform at CPSCL\. Bank performance and Borrower performance
are judged satisfactory\. The PCR-based ratings were the same, except for sustainability which
was rated as likely on the basis of incomplete financial data\.
5\.8 The Hafsia component is deemed as highly satisfactory because it exceeded the
expectations that were placed in this pilot operation\. A preliminary study (see Annex) and a
site visit by the Audit have confirmed its benefits both in improving the housing stock and in
reviving the social status of an historic area\. Especially encouraging, ARRU succeeded in
doing rehabilitation works below cost despite the difficult conditions encountered in the old
city\.14 With hindsight, it is tempting to portray it as the obvious thing to do\. But is worth
recalling that some participants were skeptical-and accordingly less than cooperative-at the
start and even during implementation of the project\.
Lessons Learned
5\.9 An important lesson is that complex projects can work if the apex implementation
agency is capable and is given sufficient autonomy to take the actions needed to launch a new
activity\. The Borrower, in Part II of the PCR, made a similar observation (para\. 5\.04 (a))\.
Tackling many urban issues in parallel is tempting\. On balance, however, the transaction costs
and risks generated by multi-component projects, such as Urban III, suggest that a simpler
approach has merits; this is even more so because projects are generally part of a program
approach and a component with a lower chance of success can be postponed to a follow-up
project\. The PCR recommended that less complex projects be designed in the future (para\.
12\.02)\. OED concurs with this recommendation\.
5\.10 When a large number of civil work contracts are expected, administrative ways to
alleviate the management burden both on the implementing agencies and on the Bank should
be found, e\.g\. by bundling small contracts into coherent sets and delegating the process on the
model of the SOEs on the disbursement side\.
5\.11 The PCR recommended that to avoid bottlenecks at project launch, the necessary land
be purchased beforehand\. This is also a sensible recommendation, although, often the
Government's commitment to the project is firmed up at about the same time that the Bank
loan is submitted to the Board\. Rather than making the process more rigid, it would be more
realistic to require a better risk analysis to identify the likely causes of delay in
implementation\.
13\. Although operations indicated that reforming the CPSCL was not a specific objective of the Project, it was implicitly covered under the
third objective listed in the SAR (para\. 2\.01) of "strengthening the institutional framework of agencies involved in the urban and housing sectors"\.
14\. The narrow streets deterred contractors from bidding for the works\.
31
Annex
Impact of the Hafsia Component
1\. A recent study" shows the medium-term economic and social benefits and drawbacks
of the pilot rehabilitation component of the historical Medina district in Tunis\. As the
execution of this component was considered a success by both the professionals and the
general public, it was useful to take stock of the experience several years later\. Progress, or
lack of it, was measured against the objectives\. The social objectives included the
identification of the housing with the relocation of displaced people in the same area as much
as possible, minimum equipment of each dwelling with running water, kitchen and lavatory,
creation of community facilities (clinics, public baths, kindergartens, etc), upgrading of street
and infrastructure networks\. The objectives economic included: increased welfare reflected in
higher rents for the rehabilitated dwellings, increased employment through commercial and
handicraft activities, and civil works to be carried out as much as possible with local labor,
construction of new housing for middle-income households able to support the costs\.
2\. The purchasers of new housing in Hafsia were highly educated high level professionals
mostly between 36 and 50 years of age, in large part because of the Housing Bank's selecting
process\. The beneficiaries had themselves selected Hafsia because 62 percent could walk to
their place of work and because they were familiar with the area, with 56 percent having
rented in Hafsia or surroundings for 1-7 years prior to buying\. The revenues of this group, the
majority civil servants, has not changed significantly since the project\. The monthly debt
repayment averaged TD 137 or 29 percent of the average income\.
3\. The new tenants of rehabilitated housing in Hafsia were mostly under 50, had
secondary education, and were either mid-level professionals or heads of small handicraft
firms\. Thirty percent moved from Tunis suburbs and another 30 percent from other cities
(Kairouan and Sfax)\. The location was selected for the proximity to work\. The monthly rent
was between TD 120 and 250, but without income data the relative burden was not assessed\.
4\. The group of Hafsia residents who borrowed to rehabilitate their dwellings comprised
older household heads (54 percent over 50 of which half of them retirees), who are less
educated than the first two groups\. Their main reasons for carrying out the rehabilitation were
the availability of low-interest loans and the encouragement from ARRU and ASM\. The
prospect of adding value to their assets came next\. An unknown percentage of them
rehabilitated without loans; most of them were above 50 and with either primary education or
none; 55 percent did not work; and 40 percent of those working received daily wages thus
explaining their ineligibility for bank loans\. The greatest proportion (80 percent) of all the
groups (with or without) interviewed walked to their work place\. The improvements (assessed
at TD3,000-12,000) were financed with savings, contributions from the extended family, and
rental of the extensions\.
5\. Twelve households were moved out and relocated in the area\. Household heads were
educated (60 percent secondary schooling, 20 percent university), mostly below 50 years of
15\. "Etude de l'mpact Social et Economique du Projet Hafsia" by Association Sauvegarde de la Medina de Tunis and Harvard
University, Graduate School of Design, March 1994\.
32
Annex
age and all working in the service sector\. They paid between TD70-120 per month toward
debt service which is lower than the lowest rents paid by the above tenants mentioned in
para\.3 above\.
6\. Some dwellers were temporarily relocated to municipality-owned dwellings for later
relocation on the Urban III site of Ettadhamen, but they refused to move out when offered
serviced plots\. They had little education, and held low-level jobs in the administration or the
service sector in the area\.
7\. The households who accepted to buy plots in the Douar Hicher settlement in
Ettadhamen, a suburb of Tunis, were slow to move on the site since only 2 of a sample of 12
were residing in their constructions\. Although former tenants, they have not been motivated to
move because the loans for self-construction were too small (TD2,000) and they have to take
public transportation to their unchanged work places near Hafsia\. The sampling revealed that
most of the housing offered by private developers was transformed into commercial outlets
(mostly cloth making boutiques)\.



rut
D>
(DO 00-
(J0
>0 | APPROVAL |
P175567 |  The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
Combined Project Information Documents /
Integrated Safeguards Datasheet (PID/ISDS)
Appraisal Stage | Date Prepared/Updated: 26-Nov-2020 | Report No: PIDISDSA30675
Oct 29, 2020 Page 1 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
BASIC INFORMATION
OPS_TABLE_BASIC_DATA
A\. Basic Project Data
Country Project ID Project Name Parent Project ID (if any)
Myanmar P175567 Additional Financing for P163389
the Inclusive Access and
Quality Education Project
Parent Project Name Region Estimated Appraisal Date Estimated Board Date
Inclusive Access and Quality EAST ASIA AND PACIFIC 24-Nov-2020 18-Feb-2021
Education project
Practice Area (Lead) Financing Instrument Borrower(s) Implementing Agency
Education Investment Project Republic of the Union of Ministry of Education
Financing Myanmar
Proposed Development Objective(s) Parent
To improve equitable access to, and quality of, basic education delivered through formal, alternative and
complementary institutions and providers\.
Components
Component 5: Supporting continued learning, recovery, and resilience in the education sector in conflict-affected
states in the context of the COVID-19 pandemic
Component 1: Improving quality and increasing inclusion in formal basic education schools
Component 2: Improving access to quality education for children at risk of being excluded
Component 3: Strengthening systems
Component 4: Operational Support
PROJECT FINANCING DATA (US$, Millions)
SUMMARY -NewFin1
Total Project Cost 14\.00
Total Financing 14\.00
of which IBRD/IDA 0\.00
Financing Gap 0\.00
DETAILS -NewFinEnh1
Non-World Bank Group Financing
Oct 29, 2020 Page 2 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
Trust Funds 14\.00
Education for All - Fast Track Initiative 14\.00
Environmental Assessment Category
B-Partial Assessment
Decision
The review did authorize the team to appraise and negotiate
Other Decision (as needed)
B\. Introduction and Context
Country Context
Although resource rich, Myanmar is one of the poorest countries in Southeast Asia\. It has a population
of approximately 54 million and a per capita gross domestic product (GDP) of US$1,275 (2016)\.1 The
poverty headcount was estimated at 25 percent in 2017, a reduction from 48 percent in 2005, and
concentrated particularly in rural and conflict-affected areas (Ministry of Planning and Finance [MOPF]
and World Bank [WB] 2019)\. In 2011, the country embarked on multiple transitions: from a planned to an
open market economy, from military to civilian rule, and from conflict to peace\. The country held
democratic national elections in 2015 and 2020, with the National League for Democracy achieving
landslide victories in both years\. It experienced strong economic growth (prior to the COVID-19 pandemic,
economic growth in Myanmar was projected to reach 6\.3 percent in FY2019/20 and 6\.4 percent in
FY2020/21), a substantial reduction in poverty, and other significant changes in all sectors of society, and
progressâalbeit somewhat limitedâon the nationwide peace process, which led to the signing in October
2015 of a national ceasefire agreement (NCA) between the government and many, but not all, ethnic
armed organizations (EAOs)\.2
Despite the progress made in the past decade, significant challenges remain regarding conflict, income,
location and ethnic disparities, as well as social inclusion\. The country has around two dozen major
EAOs,3 many of which have been engaged over decades in a struggle to preserve their languages and
cultures while retaining control over political and economic life in their areas\. About 273,000 displaced
people remain in camps or camp-like situations after fleeing violence in Kachin, Kayin, Shan and Rakhine
1 See World Bank Open Data\. http://data\.worldbank\.org\.
2 Eight of 20 EAOs around the country initially signed the NCA, and two others did so in 2018\.
3 Myanmar is thought to be one of the most ethnically diverse countries in the region\. The precise breakdown of ethnic groups
is contested\. The government officially recognizes 135 distinct ethnic groups, which are referred to in the constitution as
ânational races\.â? The country has more than 100 living languages\. The majority Bamar population is widely believed to account
for approximately 65 percent of the national population\.
Oct 29, 2020 Page 3 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
states\.4 People all over Myanmar, particularly poor people, have limited access to basic services and
infrastructure, including clean water, education, health care, and electricity\. Lack of access to markets and
services correlates with location, ethnicity, religion, and citizenship status\. Gender equality indicators
have slowly improved in recent years, but social norms continue to delineate spaces available to men and
to women to a large extent, significantly affecting, among other things, access to the labor market (MOPF
and WB 2017)\.
Humanitarian needs in Myanmar are driven by multiple factors including armed conflict, inter-
communal violence, and vulnerability to natural hazards\. The situation is aggravated by chronic poverty,
protracted displacement, food insecurity, limited social support networks, and underlying inequalities
including statelessness, segregation, discrimination, and gender disparities that exacerbate the needs,
vulnerabilities and marginalization of people in many parts of the country\. Civilian populations in Chin,
Kachin, Kayin, Rakhine and Shan statesâthe conflict-states identified by Myanmarâs Humanitarian
Response Plan 2020 (HRP 2020)âare particularly exposed to significant protection risks that threaten
their dignity, physical and mental wellbeing, and living standards\. More than 985,000 people in Myanmar
need humanitarian assistance\. Of these, some 864,000 people are experiencing critical problems related
to physical and mental wellbeing, and approximately 973,000 are suffering from critical problems related
to living standards\.
Townships in Rakhine state, which hosts most of the people in need (76 per cent of the total), are the
most severely affected among conflict-affected states (although all locations have pockets of extreme
need)\. Rakhine suffers from underdevelopment, intercommunal conflict, and lingering grievances toward
the central government\. The humanitarian situation in Rakhine State has deteriorated significantly since
August 2017, when security operations by the Myanmar Armed Forces, in response to armed attacks by
the Arakan Rohingya Salvation Army, caused an exodus of more than 740,000 refugees â mostly Muslims
who self-identify as Rohingya5 â to Bangladesh\. Such violence has exacerbated communal tensions and
deepened social fractures\. An estimated 600,000 Muslims currently remain in Rakhine\. In addition, there
are other particularly vulnerable people who continue to require special attention or support because of
different factors including, inter alia, armed conflict, statelessness, movement restrictions, malnutrition
and severe psychological distress\. The impact of this protracted displacement is compounded by
movement restrictions, especially in Rakhine, that continue to limit access to livelihoods and essential
services such as education and healthcare, deepening vulnerability and dependence on humanitarian aid\.6
The COVID-19 pandemic has dealt a severe blow to Myanmarâs economy and society\. Starting from
an initial very low number of confirmed COVID19 cases,7 the number of infected people is now rising fast,
with more than a 1,000 confirmed cases per day in late September 2020\. Economic growth in a baseline
scenario is projected to drop from 6\.8 percent in FY18/19 to just 0\.5 percent in FY2019/20, according to
the World Bankâs Myanmar Economic Monitor\. If the pandemic is protracted, the economy could contract
by as much as 2\.5 percent in FY2019/20, with the expected recovery in 2020/21 subject to further
4 For the remaining of the documents we will use the term IDP camps for the official camps in central Rakhine State and IDP
sites for camp-like situations elsewhere\.
7In accordance with the Kofi Annan Advisory Commission report on Rakhine State (2017) and with the United Nations, we do
not use the terms âBengaliâ? or âRohingyaâ? but refer to this population as âMuslimsâ? or âthe Muslim community in Rakhine\.â?
This does not include the Kaman Muslims in Rakhine or other Muslims in the country\.
6 Humanitarian Needs Overview Myanmar; issue December 2019
7 350 confirmed cases and 6 deaths as of 28 July 2020
Oct 29, 2020 Page 4 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
downside risks\. The governmentâs COVID19 response has highlighted deep fragmentation across
Myanmar society, in particular along ethnic lines\. Large parts of the population, especially in rural and
ceasefire areas, have not had similar access to government health services and support, and have instead
been relying on civil society or ethnic armed groups\. Rakhine is one of the worst affected states in the
country\.8
Sectoral and Institutional Context
The education sector in Myanmar is a complex web of systems and providers that cater to over 9\.1
million school students and 830,000 university students\. The Ministry of Education (MOE) is the largest
provider of education services in Myanmar\. Accounting for 83 percent of public spending in the sector, it
manages more than 47,000 public schools and oversees 134 higher education institutions\. MoE also runs
school-based early childhood education (ECD) programs in about 4,000 schools with some support from
UNICEF and different NGOs, and some local faith-based organizations have been implementing ECD
programs using the community-based approach9\. In addition, more than 1,500 monastic schools
registered with the Ministry of Religious Affairs (MORA) deliver the MOE curriculum while providing food
and board for almost 297,000 children from the poorest communities and households\. Ethnic basic
education providers (some affiliated with ethnic armed organizations) provide education services of
varying quality to more than 300,000 children, with well-established systems operating in Kachin, Kayah,
Kayin and Mon states\.
Public spending on education has increased significantly in recent years reflecting the priority given by
the government to the education sector\. Public spending on education rose from US$230 million in 2011-
12 to more than US$1\.4 billion equivalent in 2018â19\. This increase in the growth of the education budget
is greater that the budget in increase in most other sectors\. Nevertheless, at approximately 7\.7 percent
of government expenditures and 2\.5 percent of GDP in 2018-19, public education spending is considerably
lower than in neighboring and comparator countries\.
The country has made remarkable gains during the past decade in ensuring access to school education
(kindergarten to grade 11) and has achieved gender equity in access\. The average net enrollment rate in
the country increased from 88 percent in 2009-10 to 97 percent in 2016-17 in primary schools, from 52
percent to 71 percent in middle schools, and from 26 percent to 44 percent in high schools\. The school
education sector in Myanmar is characterized by a high degree of gender equality in access, especially at
the primary level\. Some gender gaps open as children progress through the education system, with boys
dropping out of school at greater rates than girls in middle and high school\.
Some progress has also been made in recent years in initiating reforms focused on enhancing the quality
of school education\. For example, multiple rounds of early grade reading and mathematics assessments
(EGRA and EGMA) have been implemented by MOE, with technical support from the World Bank, for the
8The Asia Foundation\. 2020\. COVID19 and Conflict in Myanmar\. Briefing Paper Series No\.1
9The Ministry of Social Welfare, Resettlement and Rehabilitation is the focal/lead ministry for early childhood care and
development, but has limited budget and manpower\.
Oct 29, 2020 Page 5 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
purpose of informing quality reforms\. A teacher mentoring program has been implemented to enhance
the pedagogical skills and content knowledge of teachers\. A major curriculum reform, including revision
of the content and pedagogical strategies and the move to a kindergarten-to-12th grade structure have
been initiated\. New classrooms have been added and many more have been renovated to reduce
overcrowding and improve the quality of school infrastructure\. And many new teachers and teaching
assistants (assigned to classrooms to help non-Myanmar-speaking students) have been recruited\.
The government has in place the National Education Strategic Plan (NESP) 2016-21 to guide education
reforms in the country\. The NESP 2016-21 provides the government, education stakeholders and citizens
with a 'roadmap' for sector-wide education reform, in order to improve access to, and quality of education
for students at all levels of the national education system\. It is the first of its kind in Myanmar\. The MoE,
with the support of the Global Partnership for Education (GPE) and development partners, has begun the
work of drafting the next NESP, which is expected to be a 10 year strategy (2021 â 2030) aligned with the
Myanmar Sustainable Development Plan (MSDP) and the Global Sustainable Development Goals\.
Despite these achievements, however, major challenges remain in the school education sector,
especially in the areas of quality and equity\. The coverage of ECD is estimated at 25%, which is the lowest
among the countries in the region\. At the national level, it is estimated that less than 30 percent of grade
3 students in government schools achieve fluency in reading grade-appropriate text in the Myanmar
language, and less than 40 percent achieve proficiency in solving basic mathematical problems\. According
to the Human Capital Index, a child who starts school at age 4 can expect to complete 9\.8 years of
schooling by his or her 18th birthday (expected years of school), but only 6\.7 years when factoring in what
children actually learn\.
The problem of equity spans multiple dimensions\. There are significant disparities in access and learning
outcomes across children from different income groups, geographical areas, and language groups\.
Dropout rates are especially high for children and youth from poorer households, as is the prevalence of
out-of-school children\.10 Students from poorer households also perform significantly worse on EGRA\. The
gap in nonattendance rates for youth between the state with the highest prevalence of nonattendance
(Shan East) and the region with the lowest (Chin) is 38 percentage points\. Students who predominantly
use the Myanmar language at home perform significantly better on EGRA\. There is also an urgent need to
ensure equitable and unbroken access to quality education in conflict-affected areas, and among
internally displaced population groups\.
Children in conflict-affected areas face multiple challenges in accessing education\. In Kachin, Shan and
Chin states, while girls and boys in government-controlled areas are able to enroll in government schools,
challenges including overcrowding, limited availability of teaching and learning materials, and the lack of
multi-lingual education using childrenâs first language remain\. These first two challenges are even more
pronounced in EAO-controlled areas\. In Rakhine, the security situation affects access to quality and
inclusive education for children in IDP camps (because of the protracted crisis since 2012), children
affected by the escalation of conflict in 2017 in northern Rakhine as well as children displaced by the
ongoing conflict between the Myanmar Armed Forces and the Arakan Army\. Further, ongoing movement
10According to the 2014 census, approximately 23 percent of children aged 5 to 16 were out of school in 2015â16, having
dropped out or never attended school\. Some are working and over-age and are highly unlikely to ever enroll in formal schools\.
Others are from displaced or migrant households and face difficulties accessing schools because of their mobility and, when
they do, generally receive lower quality services
Oct 29, 2020 Page 6 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
restrictions mean that many stateless children are only able to access primary education within NGO-
supported temporary learning classrooms (TLCs) in camps or in community schools\.
The COVID-19 pandemic has added further challenges to the education system\. Because of COVID-19,
schools are currently closed, and it is unclear when they will reopen as the number of confirmed COVID19
cases in Myanmar is increasing\. Since schools were closed for holidays during the months of March, April
and May, disruptions in schooling due to lost school days are not as high as in many other countries; but
this could change as the situation evolves and if the spread is not brought under control in the foreseeable
future\. The COVID-19 pandemic has compounded the risks and challenges, especially in conflict-affected
areas, and highlighted the need for strengthening system-level preparedness and response mechanisms
for education, with greater collaboration between the Ministry of Education and education sector
partners\. MOE has prepared a comprehensive COVID19 response planâthe Myanmar COVID-19 National
Response and Recovery Plan for the Education Sector (COVID-19 RRP)--that identifies the major potential
impacts of COVID-19 on education access, equity, quality and management, and outlines a set of
recommended measures for tackling these problems\. While MOE has started implementing a number of
these measures to tackle the problems arising from the pandemic, partly through a GPE financed project
specifically for responding to COVID-19 (being managed by UNICEF), more needs to be done\. GPE has
further resources available to countries experiencing conflict, and MOE has requested the Bank to manage
these resources to also support its COVID19 response efforts\.
The Bank is supporting Myanmar to meet many of the above challenges in the basic education sector
through two operationsâthe Decentralizing Funding to Schools Project (DFSP) and the Inclusive Access
and Quality Education Project (IAQE)\. DFSP is the first lending project supported by the Bank in
Myanmarâs education sector\. Started in 2014 with a focus on helping the government to improve its
school grants and student stipend programs, it was extended in 2018 with additional financing and added
programmatic priorities to improve the inclusiveness of school funding management and enhance support
to teachersâ professional development\. IAQE, the parent project for this AF, aims to improve equitable
access to, and quality of, basic education\. However, there is a need for increased investment to support
key activities in MOEâs response plan with a specific focus on conflict-affected areas in the context of the
COVID-19 pandemic\.
C\. Proposed Development Objective(s)
Original PDO
To improve equitable access to, and quality of, basic education delivered through formal, alternative and
complementary institutions and providers\.
Current PDO
To improve equitable access to, and quality of, basic education delivered through formal, alternative and
complementary institutions and providers\.
Oct 29, 2020 Page 7 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
Key Results
⢠Improving planning and funding of basic education schools
⢠Enhancing skills and practices of teachers and head teachers
⢠Expanding access to quality education services for marginalized children
⢠Moving toward partnerships with ethnic basic education providers (EBEPs)
⢠Strengthening public financial management (PFM) systems
⢠Strengthening human resources management (HRM) systems
⢠Improving access to and quality of formal basic education in conflict areas
⢠Improving access to, and quality of, alternative education in conflict-affected areas
⢠Strengthening management support and school-based planning for education delivery
D\. Project Description
The proposed AF will add a fifth DLI-based component and some activities to the existing fourth
component (Operational Support) of the Inclusive Access and Quality Education (IAQE) project, the
parent project\. Building upon and complementing the activities in Components 1, 2 and 3 of the parent
project, the activities under Component 5 will continue to support improvements in the quality of and
equitable access to both formal basic education and non-formal or alternative education (AE), specifically
targeting the most vulnerable children in selected townships within the conflict-affected states of Chin,
Kachin, Rakhine, and Shan North\. These activities will respond to the educational needs brought about by
escalating conflict and intensified by the COVID-19 pandemic\. In addition, the AF will also finance technical
assistance and goods to support effective implementation and monitoring of Component 5\. These goods
and services will be added to Component 4 of the parent project\.
1\. Additions to Component 4 (Operational Support) of IAQE (US$5\.65 million): The additions to
this component include AF financed goods, consultancy services, and non-consultancy services aimed at
supporting effective implementation and monitoring of activities under component 5\. These goods and
services will be procured centrally at the Union level by MOE\.
a\. Teaching-learning material and other supplies for students and schools to improve the quality of
the learning environment\. These materials will be provided to children and schools in both formal
basic education and Alternative Education (AE), giving priority to townships with greater number of
children directly affected by conflict and other emergencies, prioritizing townships affected by
COVID19\.11 The specific goods to be financed are as follows:
⢠Learning kits (including ethnic language textbooks for grades 1-3) for all primary level students in
the targeted schools for use both in school and at home\.
⢠Student kitsâwhich include school bags, uniforms, sandals, stationery, and raincoats/umbrellasâ
for all primary level students in the targeted schools and for all learners in AE centers in the targeted
townships\.
⢠Teacher kitsâwhich include uniforms, T-shirts with logo, bags, stationary, umbrellas and id cardsâ
for all facilitators in AE centers and TLCs in the targeted townships\.
11The locations and timing for provision of these materials will be discussed with EiE partners at the sub-national level to
ensure planned distributions of similar materials by EiE partners are complementary\.
Oct 29, 2020 Page 8 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
⢠School kitsâwhich include, inter alia, blackboards, chalk, dusters, ledger books, student register
books, office supplies, and sanitation and hygiene materials for COVID19 preventionâfor all
targeted schools12 and all AE centers in the targeted townships\.
⢠Classroom book corners with age-appropriate childrenâs books for independent reading (in multiple
languages) in all the primary education classrooms in the targeted schools\.13
⢠Materials and supplies to support pre-vocational activities in targeted NFME centers\.
b\. ICT equipment and technical assistance to support self-learning and distance-learning by teachers
(through digital versions of continuous professional development [CPD] modules) and students
(through MOEâs Digital Teaching & Learning Toolkit [DTLT])\. The AF will finance the provision of
MP3-4 players or tabletsâpreloaded with the CPD modules and instructions for self-learning for
primary school teachers, AE facilitators, and AE Township Monitors (TMs) and Regional Monitors
(RMs)\. Providing ready access to digital versions of the CPD modules will enable teachers to continue
with their learning activities even when face-to-face CPD delivery is disrupted due to conflict and other
emergencies, thereby enhancing system resilience\. It will also finance the development of videos
lessons in selected subjects and grades, the distribution of locally accessible MOE DBE Boxes14
containing digital content to a number of schools, TLCs and AE centers to support alternative means
of delivering instruction for student learning , and the provision of laptops, LCD projectors, and
projection screens in a subset of these institutions to support the delivery of video lessons and other
digital content in the classroom\.
c\. Technical assistance to enhance MOE monitoring and evaluation capacity\. There is a need to
strengthen the capacity of MOE to collect timely monitoring data and conduct more rigorous applied
research on conflict-affected areas\. To address this need, the AF will finance technical assistance in
the form of consultancy services to undertake the following tasks:
⢠Update existing smart-phone based (Open Data Kit [ODK] based) online/offline data collection
instruments to capture key information related to the impact of COVID19, violent conflict, and
other emergencies, and update the dashboard for the ODK based application to include more
analytical tools and provisions for generating standard summary reports\. Taking into account
potential connectivity issues in conflict-affected areas, these applications will have provisions for
offline data collection and delayed batch upload of saved data\.
⢠Upgrade MOEâs web-based Communication for Management (C4M) application and the EMIS
system to enable the integration of data from the ODK applications\.
⢠Expand/scale up the use of the ODK based smart-phone based applications by school heads in
conflict-areas for timely data collection and dispatch\.
⢠Conduct a census or a representative survey of children (both in-school and out of school) in
conflict-affected areas to collect updated information on the number of out-of-school children,
12 Adequate number of school kits will be provided to cover all primary education classrooms in the targeted schools\.
13 Note: To ensure the effecting use of these book corners, teachers and school heads will receive orientation on appropriate
strategies for nurturing the reading habit among children and promoting reading for fun\.
14 A DBE Box is built on the Raspberry Pi mini-computers, and includes routers that enable mobile phones to access the content
of the Box\. Hence, it can provide access to digital content even in conflict-affected areas and rural areas where the internet is
not available\.
Oct 29, 2020 Page 9 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
challenges facing these children, and reasons for their dropping out of school or not attending
school regularly\.
⢠Support DBEâs Planning and Statistics unit in triangulating data from different sources, and
producing research notes to inform interventions targeted at conflict areas, including notes on
barrier analysis of out of school children and analysis of the impact of COVID19\.
As part of its efforts to enhance system capacity to effectively monitor implementation progress and
outcomes in conflict-affected areas, especially in times of emergencies, MOE will also strengthen its
collaboration and interactions with the EiE sector to collect, discuss and validate data/information
gathered from hard to reach areas, and inform interventions\.
d\. Support for teacher training in contested conflict-affected areas not reached by government
institutions and services\. The AF also seeks to enhance access to quality education for students
affected by conflict and other emergencies in areas where it is not possible to deliver educational
services through government institutions\. The AF will support the training of primary level community
teachers, focusing mainly on early grade teaching, TCSF beginner competencies and psycho-social
support\. The training will be conducted in three batches either by MOE trainers (if training venues
outside the contested areas can be utilized) or through partnerships with ethnic basic education
providers (EBEPs) or non-consultancy service contracts with non-government education providers
which can operate in these areas\. This training can be viewed as a possible pilot intervention, in-line
with component 2\.2 of the IAQE, possible only if all parties agree\.
2\. Component 5: Supporting continued learning, recovery, and resilience in the education sector
in conflict-affected states in the context of the COVID19 pandemic (US$8\.50 million)\. The activities
proposed financed under this component are organized into three sub-componentsâone focused on
Formal Basic Education, another focused on Alternative Education (AE), and the third focuses on
management and planning\.
3\. Formal basic education includes basic education services that schools sanctioned by or falling
under the purview of the government deliver, following the official MOE curriculum, within the regular
school grade structure and hours\. Government schools managed by MOE and monastic schools registered
with the Ministry of Religious Affairs (MORA) fall under this category\. Facilities of these schools are
generally permanent but can also be in the form of temporary learning centers (TLCs)\. On the other hand,
AE is provided in accelerated and flexible learning programs following an integrated curriculum that allows
students to achieve critical end-of-cycle competencies in fewer years than in formal schools and delivered
at a time and place that suits the learners better\. Currently MOE is operating AE centers in 92 Townships
across Myanmar\. The centers are classrooms in schools, community centers, religious venues such as
monasteries, etc\., with classes often held outside regular school hours\. While AE is currently limited to
non-formal primary education (NFPE), a small pilot on non-formal middle school education (NFME) has
been implemented with the support of UNICEF in a limited number of townships\.
4\. The three subcomponents are described below\. The first and second subcomponents focus on
improving access to and quality of basic education in the targeted areas\. The third subcomponent focuses
on strengthening management and planning for dealing with emergencies\.
Oct 29, 2020 Page 10 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
5\. Subcomponent 5\.1: Improving access to and quality of formal basic education in conflict-
affected areas for continued learning (US$5\.62 million)\. This subcomponent will finance activities that
seek to improve the quality of the classroom learning environment through the enhancement of teacher
capacity, address the problem of teacher shortage, provide academic support to children at risk of
repetition and dropping out, and provide additional classroom space in schools facing space constraints
in the targeted conflict-affected areas in Kachin, Chin, Rakhine and Shan (North)\.15 While improving
teacher capacity and teacher availability are primarily quality-focused interventions, providing support to
children at risk of repetition and drop out and expanding classroom space help to address both quality
and access issues\.16 Unless stated otherwise, the Department of Basic Education (DBE) at MOE will be
responsible for leading the implementation of activities under this subcomponent\.
a\. Strengthen the capacity of primary level teachers in formal schools and TLCs operating in camps for
internally displaced people (IDP)\. The capacity building of teachers, in both schools and TLCs, will
focus on training teachers to provide special support to students who are lagging behind in literacy
and numeracy, address disparities in learning levels of students, and provide psycho-social support to
students affected by conflict and other emergencies, particularly the COVID19 pandemic\.
The specific activities to be financed to support capacity building of primary level teachers in schools
include a rapid needs assessment of teachers and schools to determine what should be included in
the in the training package and also identify the schools most in need; the development of a
comprehensive teacher training package for delivering remedial education; and the delivery of a five
day training using this package\. The training package will cover, inter alia, approaches to
⢠assessing the learning levels of students and identifying students needing remedial education
in literacy and numeracy,
⢠classroom organization and management for dealing with disparities in learning levels and
responding to the needs of different students with different learning levels,
⢠delivering dedicated remedial classes to children lagging behind, and
⢠providing psycho-social support to children affected by conflict and other emergencies\.
When developing this training package, existing teacher training modules with necessary updates will
be utilized as relevant\. The above activities will be implemented jointly by DBE and DEPRT\. The
training will be delivered by DERPT and DBE core trainersâ team in small batches in each of the
targeted states to ensure adequate social distancing\.
15The following eighteen townships with high need are being targeted in these states: Waingmaw, Myitkyina, Hpakant, Shwegu
in Kachin; Paletwa in Chin, Buthidaung, Kyauktaw, Rathaedaung, Myaybon, Ponnakyun, Kyaukphyu, Sittwe and Ann in Rakhine;
and Laukkai, Kutkai, Muse, Hseni, Namkhan in Shan (North)\.
16To further support MOEâs efforts at improving the quality of the classroom learning environment, the AF will also finance the
provision of student kits, school kits, and classroom book corners in the targeted schools through Component 4 of the project\.
Details are provided in the description of Component 4\.
Oct 29, 2020 Page 11 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
The capacity building of TLC teachers/facilitators in IDP camps17 will utilize a modified version of the
above training package, which will give special attention to approaches to early grade reading and
math teaching, teaching to children with disabilities, peace and inclusion, and providing psychosocial
support to students directly affected by conflict and other emergencies\. The early grade reading and
math teaching module will be based on the Early Grade Teaching (EGT) manuals developed under
IAQE\. TLCs targeted for receiving this training package will be identified through a rapid phone survey
of needs and interests\.18 The training will cater to existing volunteer teachers and newly recruited
volunteer teachers19 associated with these TLCs\. As there are restrictions on the movement of
individuals working in camps, these teachers will be trained in three batches in small groups for a 20-
day residential training program conducted within their respective states/regions using Teacher
Educator Trainers from Education Colleges and Core Trainers from State/District Education Offices\.
These activities will be implemented jointly by Department of Education Research, Planning and
Training (DERPT) and DBE in collaboration with Department of Higher Education (DHE) and EiE sector
partners, under the leadership of DERPT\.
The capacity building of both primary school teachers and AE facilitators will also include training in
the effective use of DTLT, which MOE plans to develop and implement in schools and AE centers\. The
core element of the DTLT will be its digital curriculum content, which will include professionally
produced videos of expert teachers teaching lessons for different grades and subjects, and in different
languages\. This content will be made available to schools, teachers and students through MOEâs DBE
Boxes, which are stand-alone offline units (containing digital content) distributed to individual
schools\. The AF will also finance, through Component 4, the distribution of DBE boxes to schools, TLCs
and AE centers in the targeted townships implementing DTLT; the provision of laptops, LCD
projectors, and projection screens to a subset of these schools and TLCs and AE centers; and the
development of videos of lessons in selected subjects and grades\. This will help contribute to
increasing the resilience of the education system in conflict affected areas to deal with future
emergencies and unexpected school closures, and help -bridge the digital divide for the most
disadvantaged populations\.
In addition to the above activities, the AF will support the development/updating and distribution
of CPD modules to enhance system resilience in the longer term\. More specifically, the following CPD
modules will be updated or added: beginner level module on pedagogy, assessment, classroom
management, and communication in alignment with the Teacher Competency Standards Framework
(TCSF); teaching to children with disabilities module; peace and inclusion module; remedial education
module; and, module on providing psycho-social support to children affected by conflict or other
emergencies\. Digital versions of these CPD modules will be developed and made accessible to all
17 These include camps established before 2017 (excluding camps declared closed by the government) and not covered by the
parent IAQE project\.
18 When implementing this survey and other needs assessments, MOE will work in collaboration with the EiE sector partners to
triangulate the information obtained from the surveys with information available to the EiE sector\.
19 As volunteer Teachers are recruited from the communities residing in the camps, they speak the same language as the
children studying in the TLCs\.
Oct 29, 2020 Page 12 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
teachers through the ministryâs Myanmar Digital Education Platform (MDEP), a dedicated web-based
training platform for teachers\.20 The AF will also finance, through component 4, the provision of MP3-
4 players or tablets --preloaded with the CPD modules and instructions for self-learning--to primary
school teachers in the targeted beneficiary schools and TLCs\.
b\. Increase the number of teachers in schools with teacher shortage\. This activity aims to enable
adequate social distancing in classrooms and improve the quality of the classroom learning
environment in the targeted schools by reducing the teacher-student ratio in each classroom\. To
achieve this goal, the AF will finance the implementation of a rapid needs assessment to identify
institutions with a teacher shortage, and the recruitment, training and deployment of volunteer
teachers, language teachers and teaching assistants in these schools\. Given that most children in the
target states use ethnic languages other than Myanmar, efforts will be made to address language
issues by ensuring that these teachers are from the local communities\.
c\. Provide extra academic support to children at risk of repetition and dropping out of school\. This
activity aims to address the disparity in learning levels among students, enable lagging students to
catch up, and motivate them to remain in school\. Special support will be provided to early grade
students who are lagging behind in literacy and numeracy, particularly due to school closures resulting
from conflict and the COVID19 pandemic\. The specific sub-activities to be financed include the
development (by MOE) of classroom-based assessment instruments to enable teachers to identify
students lagging behind significantly in literacy and numeracy, and areas/topics where special support
is needed; assessment of the learning levels of students in primary grades to identify students needing
remedial education as well as to track studentsâ progress; and the delivery of remedial education to
the identified students to help them catch up with other students\. Remedial education classes will
be held either during or outside regular school hours, and will be conducted using the remedial
education package developed under the MOE GPE COVID19 Project\. Procedures and mechanisms to
enable teachers to remain connected to students remotely will be implemented more systematically
to ensure that all students, including the most at-risk children, are adequately supported even during
potential extended school closures in the future\.
d\. Provide additional temporary classroom space in existing schools and in TLCs in IDP camps with
inadequate classroom space\. This activity aims to ensure that schools in the beneficiary townships
and TLCs in the targeted open camps for IDPs have the necessary classroom space and furniture to
enable students to maintain adequate physical distance from each other and prevent overcrowding\.
The specific sub-activities to be financed include the implementation of a needs assessment to identify
and prioritize existing schools and TLCs in IDP camps that are most in need of additional classroom
space; provision of additional temporary classroom space in existing schools and TLCs in IDP camps
according to the priority list; provision of individual moveable desks in these classroom spaces with
seating appropriately organized to maximize physical distances between students; and infrastructure
enhancements to ensure that classrooms and WASH areas are accessible to differently abled children\.
These additional temporary structures21 and infrastructure enhancements in schools will be financed
20 These modules can also be accessed through DBE Boxes, which contain teacher training content and teaching aids for
teachers in the form of video, short stories, poems, and illustrated materials for learners\.
21 These addition temporary structures can be established either through new construction or by refurbishing existing rooms
currently used for other purposes\.
Oct 29, 2020 Page 13 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
by funds transferred to beneficiary schools as supplements to the SIF\.22 The SISP OGs will be updated
to include this new funding stream\. In the case of TLCs, funds for expanding these temporary
structures will be transferred as block grants through the township education offices to committees
comprised of a majority of PTA members, and these committees will undertake the construction using
locally hired workers\. TEO offices are responsible for quality assurance of TLC construction\.
6\. Subcomponent 5\.2: Improving access to, and quality of, AE23 in conflict-affected areas for
continued learning (US$2\.53 million)\. Aligned with NESP chapter 10, strategies 2 and 3 (components 1,
2, and 3 of each strategy), and chapter 6, strategy 2 (component 1), this subcomponent will expand AE
services for over-age out-of-school children in the targeted conflict affected areas\. The component will
finance activities that seek to enhance access to quality AE (NFPE and NFME) for children who are affected
by conflict and emergencies (including COVID19), and are unable to join formal schools, by offering an
alternate pathway towards educational attainment and accreditation\. The current NFPE and NFME classes
are run in âAE centersâ? â which are ordinary schools, community centers, and religious venues such as
monasteries, but with most classes often conducted outside of regular formal school hours\. The activities
to be implemented include (a) enhancing access to quality AE through MOE and other AE providers, (b)
7\. improving the quality of the learning environment for children attending non-formal/AE
programs, and (c) strengthening the capacity of facilitators to deliver quality instruction in institutions
offering AE in conflict affected areas\.
a\. Expand access to quality AE for children who are affected by conflict and emergencies and are
unable to join formal schools\. DAE will increase the provision of quality non-formal primary education
(NFPE) and non-formal middle school education (NFME) through AE centers\.24 Priority will be given to
10 townships in Chin, Kachin, Rakhine and Shan states25 where there are large numbers of children
directly affected by conflict and other emergencies, including COVID19\. Around fifty percent of the
targeted NFME students, including students in Rakhine, will also be provided access to pre-vocational
education, which will be integrated in the NFME curriculum as additional modules relevant to the
conflict-affected context for the purpose of giving the children exposure to certain relevant vocational
subjects\.26 The specific activities to be financed include a needs assessment to determine the number
and locations of additional NFPE and NFME classes that need be established in conflict affected areas,
along with the required number of facilitators, TMs and RMs; the establishment of NFPE and NFME
classes in learning centers along with the necessary teaching learning kits and facilities, in accordance
with the current modalities; design of pre-vocational modules integrated in the broader NFME
curriculum; and delivery of the NFPE and NFME curriculum, including pre-vocational modules
22Note that schools in townships covered by the IAQE parent project will be eligible to receive up to $15,000 in SIF funding to
undertake major repairs\. Hence under the AF, only schools in townships not covered by the IAQE parent project will be eligible
to get funds for additional temporary classroom space\.
23 Currently MOE uses the term Alternative Education (AE) to cover a range of education initiatives delivered through
alternative means, this includes Non-Formal Primary Education (NFPE), Non-Formal Middle School Education (NFME);
Accelerated Learning Programs and adult literacy programs\.
24 AE centers are in the vast majority of xxx in the MoE DBE schools xxx
25 Paletwa (Chin); Mansi, Shwegu, Waingmaw (Kachin); Sittwe, Mrauk-U, Buthidaung (Rakhine); Muse, Namkhan, Namtu (Shan)
26Provisions can be made to provide these NFME graduates with certificates indicating that they have also taken pre-vocational
courses\.
Oct 29, 2020 Page 14 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
integrated in the NFME package\.27 The flow of funds will be channeled through the Township
Education Offices28, as the DAE does not have a decentralized presence in the Townships\.
b\. To improve the quality of the learning environment for children attending AE in conflict-affected
areas, the AF will support the recruitment of facilitators,29 TMs, and RMs and their deployment in the
newly established NFPE and NFME centers\. The facilitators will primarily be recruited from the local
communities and schools to address language issues\. In addition, the AF will support the provision of
additional WASH facilities in the learning centers, ensuring that they are accessible to differently abled
learners and are gender sensitive\. These improvements in the quality of the learning environment will
be reinforced by the provision of student kits to all targeted students in the selected townships
through Component 4 of the project\.
c\. To strengthen the capacity of facilitators to deliver quality instruction in institutions offering AE in
conflict affected areas, the AF will finance a rapid needs assessment of facilitators and centers to
determine what should be included in the updated AE Facilitator Training Package (FTP), the updating
of the FTP based on this assessment, and the delivery of facilitator training using the updated FTP\.
Preliminary analyses of the existing training package, feedback from the facilitators, and the need to
adjust the training content towards children in conflict affected areas, suggest that the training should
emphasize, inter alia, i) pedagogy, assessment, classroom management, communication; ii)
diagnostic assessments of students; iii) understanding the needs of and teaching to children with
disabilities module; iv) peace and inclusion education modules; and v) psycho-social support to the
most vulnerable children affected by conflict and/or other emergencies\. The updated FTP package
will also include training on teaching pre-vocational subjects\. Digital versions of these modules will
be made accessible to all facilitators through the MOE website\. The availability of these modules will
enhance system resilience and have longer-term benefits\. The training using the updated FTP will be
conducted in small batches to ensure adequate social distancing\. Complementing the training of
facilitators, including those working in the temporary learning centers (TLCs) and camps for IDPs, a
peer networking and mentoring system for facilitators will also be developed and implemented\. The
AF will also finance, through component 4, the provision of MP3-4 players or tablets to facilitators in
the beneficiary AE centers\.
8\. DAE will lead the subcomponent, and will be responsible for the implementation of the AEP and
the preparation of related OGs and training modules\.30 It will also oversee consultations with state and
regional authorities and other stakeholders; design of OGs and training modules; and monitoring of
overall implementation and progress\. At the state, regional, and township levels, state and region
education offices (SREOs) and township education offices (TEOs) will be tasked with coordinating and
overseeing implementation of the AEP in accordance with the relevant OGs\.
9\. Subcomponent 5\.3: Strengthening management support and school-based planning for
education delivery during conflicts and other emergencies (US$0\.2 million)\. This subcomponent aims to
build the capacity of MOE officials to deal with conflicts and emergencies and support schools to
27 In addition, materials and supplies to support pre-vocational activities will be provided to NFME centers through Component
4\.
28 These offices are under DBE\.
29 Facilitators is the term used by MOE for teachers working in the NFPE and the NFME centers\.
30 Currently the DAE trainings are conducted by the Myanmar Literacy and Resource Center (MLRC)\.
Oct 29, 2020 Page 15 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
effectively plan for potential emergencies and subsequent recovery\. To build the capacity of officials, it
will finance the training and sensitization of key MOE staff, district and township education officers, and
Teacher Educator Trainers on challenges faced by schools, parents, students and local officials in the face
of emergencies and conflict, including challenges in ensuring the inclusion of children with disabilities, and
on approaches to responding to such crises\. The strengthening of school-based planning for emergency
response will focus on enabling schools to plan effectively for the COVID recovery phase\. More specifically,
it will support preparation of school-based plans to resume face-to-face classes safely and to prepare
responses to potential future COVID19 outbreaks and other emergencies through the provision of funding
and standardized planning templates\. The plans will also be aligned with MOE's Emergency Preparedness
Response Framework (EPRF)\. The AF will also finance the provision of psycho-social support to teachers
and students affected by conflict and other emergencies (including, inter alia, counseling services,
preparation and distribution of materials, and establishment of appropriate mechanisms for monitoring
the status of the affected individuals)\.
E\. Implementation
Institutional and Implementation Arrangements
The implementation arrangements, including those for financial management, procurement,
environmental and social risk management, and monitoring, will largely remain the same as in the
parent project\. The overall responsibility for implementation will continue to rest with MOE departments
at the central level and MOE officers and teachers at the decentralized levels\. The relevant MOE
departments will include the IAQE-AF supported activities in their department budgets, following the
regular MOE budget preparation and approval cycles\. Once the budgets are approved and effective,
funding will be available to the departments for implementation\. MOE will then make funding available
to states/regions, districts, townships, schools, and AE service providers in accordance with Government
Financial Rules and Regulations and OGs to be agreed upon with the World Bank\. The implementation of
procurement under the AF will continue to follow the parent project procedures and protocols for
Component 4\. As in the parent project, MOE will be allowed to request disbursements from the World
Bank twice a year (typically in October and April), except for the initial disbursement which can take place
immediately after project effectiveness\.
The governance arrangements also remain unchanged\. The governance structure consists of four key
committees: (a) Monitoring and Evaluation Working Group (MEWG) with representation at the deputy
director general (DG) level from each department, and chaired by one of the deputy DGs, (b) DG level
Technical Working Group (TWG), chaired by the DG of one of the lead departments, (c) Project Steering
Committee (PSC) chaired by the MOE deputy minister, and (d) Capacity Development Management
Committee (CDMC), chaired by the MOE union minister\. These committees also include representation
from the DPs, including the World Bank\. The MEWG, TWG, and PSC meet every six months\. The MEWG
reviews implementation progress, identifies issues and challenges, and provides recommendations for
future action\. The TWG reviews these recommendations, along with project progress, and makes
decisions on the recommended actions\. The PSC, which is accountable for overall funding,
implementation, and achievement of results, decides on higher-level recommendations from the TWG\.
The CDMC ensures coordination of project activities with other capacity development efforts in the sector\.
Oct 29, 2020 Page 16 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
Given the special focus of the AF on conflict areas and education in emergencies, it is being proposed that
representation in the MEWG, TWG and PSC be expanded to also include the EiE sector coordinator\.
Furthermore, meetings with the EiE sector representatives and the World Bank will be organized every
two months by the DBE EiE focal point to jointly discuss project implementation progress in the
geographical areas targeted by the AF\.
The implementation of the AF financed activities will be led by DBE and DAE\. The two departments will
work in close collaboration with other contributing departments, including DERPT, Department of
Monitoring and Evaluation-Research (DM&E-R), Department of Myanmar National Languages (DMNL) and
DHE\. While DBE will have overall responsibility for subcomponents 5\.1 and 5\.3, DERPT will lead the
development of training packages and modules, and the central level training of trainers contributing to
the Subcomponent 5\.1\. Similarly, DBE will implement subcomponent 5\.3 in collaboration with DAE and
DM&E-R\. DAE will lead the implementation of subcomponent 5\.2, working in close collaboration with DBE,
DM&E-R, DMNL\. The AF supported activities under Component 4 will be implemented by the relevant
lead and contributing departments, which will be responsible for procuring the financed goods and
services\. The MOE finance department under the Ministerâs office will be responsible for coordinating
overall financial management and financial reporting\.
\.
F\. Project location and Salient physical characteristics relevant to the safeguard analysis (if known)
The AF activities for school improvement support, in-service training, and alternative or non-formal
education will target selected townships within the conflict-affected states of Chin, Kachin, Rakhine and
Shan North, as well as IDP camps located in these states\. Selection of townships is based on education,
health, hardship and deprivation indicators\. The project scope reflects that basic education in Myanmar
faces identifiable social exclusion issues, intensified by the COVID-19 pandemic\. Evidence points to conflict
and remoteness, ethnicity, language, religion, disability, and poverty being important factors affecting
access, completion, and learning\. The project will also support needs-driven small scale infrastructure
investments by MOE into schools in the selected townships, in response to the COVID-19 context and the
need for additional space to allow social distancing\. These may include renovations and upgrades, and
construction of additional temporary classrooms and complementary facilities such as latrines within
existing footprints of the school\. The parent project already operates in and provides funding to all four
states covered in the AF\. The focus on the project on disadvantaged groups will include those likely to be
more remote, closer to the border of the country, more ethnically diverse, and more likely to be affected by
conflict than the average\. Types of schools to be supported are equally representative of the diversity
present in Myanmar: public, ethnic, monastic and non-formal schools\. Risks related to working with in this
complex social context are detailed in the social assessment as well as risk sections of this document\.
Oct 29, 2020 Page 17 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
G\. Environmental and Social Safeguards Specialists on the Team
Martin Fodor, Environmental Specialist
Marcel Robert Frederik, Social Specialist
Alkadevi Morarji Patel, Social Specialist
Khine Thwe Wynn, Environmental Specialist
Thiha Ko Ko, Social Specialist
SAFEGUARD POLICIES THAT MIGHT APPLY
SAFEGUARD _TBL
Safeguard Policies Triggered? Explanation (Optional)
Given the small scale of school construction works,
the environmental category is âBâ\. Proposed school
civil works sub-projects will involve the need-based
upgrading, rehabilitation and upgrading and
expansion of schools in selected townwhips and will
be confined to existing school premises\. There are
likely to be some concerns relating to
inconveniences or nuisances (e\.g\., dust, noise, and
construction waste) to surrounding areas during
construction, as well as potential labor and working
conditions and community health and safety issues\.
These potential human health and environmental
impacts are regarded as minor, site specific, and
reversible in nature, and for which mitigation
measures can be readily identified\. School civil works
Environmental Assessment OP/BP 4\.01 Yes
is not specifically covered by the Myanmar
Environmental Impact Assessment (EIA) Procedure,
and sub-projects are therefore not subject to an EIA
or initial environmental assessment (IEE) or required
to prepare an environmental management plan
(EMP)\.
Instead, the Environmental and Social Management
Framework (ESMF) of the parent project has been
revised to reflect Additional Financing activities and
risks, and now includes a revised Environmental
Code of Practice (ECoP), Labor Management
Procedures (LMP), Codes of Conduct of gender-
based violence and violence against children, and
COVID-19 specific measures\.
Oct 29, 2020 Page 18 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
Social risks related to the project are considered
high, and have been described in more detail, in the
Summary of Key Safeguards Issues section below
They include risks related to community and worker
health and safety during civil works, land acquisition,
exclusion of ethnic groups or vulnerable groups, and
conflict\.
The Social Assessment (SA) prepared for the parent
project was revised to cover additional financing
activities and risks, as well as COVID-19 risks, as
identified through free, prior and informed
consultations held during project preparation in
October 2020\. In addition to the ECOP and to many
processes integrated into project design for
inclusion, the ESMF includes a Community
Participatory Planning Framework (CPPF) and a
Resettlement Policy Framework (RPF) to manage
these risks and describes how the existing MOE
grievance system will be strengthened across all
activities\. There are also additional measures and
eligibility criteria for Rakhine in the ESMF\.
Performance Standards for Private Sector The project does not finance any private sector
No
Activities OP/BP 4\.03 activities\.
Within selected townships, interested schools will
submit a request to implement a civil works
subproject\. Schools will be selected on the basis of
the quality of their request, alignment with their
school improvement plan and arrangements to
Natural Habitats OP/BP 4\.04 No
respect the ESMF\. Being limited to existing school
premises, sub-project locations are likely to be
located in or near to towns\. The project will
therefore not cause any degradation of natural
habitats as defined under the safeguard policy\.
The project will not degrade critical forest areas as
Forests OP/BP 4\.36 No
defined under the safeguard policy\.
The project will not involve any procurement of
Pest Management OP 4\.09 No
pesticides nor cause any increased use of pesticides\.
No significant impacts on physical cultural resources
are anticipated\. The ESMF includes information
about the procedure for obtaining government
Physical Cultural Resources OP/BP 4\.11 No
clearance if physical cultural resources are affected\.
Moreover, the ESMF includes provisions for
addressing chance finds should they occur\.
Oct 29, 2020 Page 19 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
The project will be implemented in townships where
ethnic minorities are present\. The government has
developed the CPPF to ensure that ethnic groups, as
well as other vulnerable or hard-to-reach groups,
have equal opportunities to participate in and
benefit from the project\. The principles and
procedures of CPPF are being integrated in the
governmentâs Operational Guidelines for the
different programs\. Local social/vulnerability
assessments will be conducted in all schools and
non-formal education centers and school or center
level Community Participation Plans (CPP) will be
prepared in line with the CPPF\. CPPs will incorporate
all elements of Indigenous Peoples Plan (IPP) as
defined under OP 4\.10, and ensure that there is
Indigenous Peoples OP/BP 4\.10 Yes broad community support for activities through free,
prior and informed consultations\. The CPPF also
includes adapted requirements and eligibility criteria
for schools in the three northern townships of
Rakhine (Buthidaung, Maungdaw, and Yatedaung)
including the added requirement that the Bank
conducts a prior review and provides no objections
to CPPs before program implementation and
disbursement\. It also stipulates that if prior review of
CPPs and/or monitoring identifies areas where the
right of displaced persons to the restitution of the
housing, land, and/or property they were forced to
abandon (Pinheiro principles) is in question, the non-
compliance with the CPPF allows for expenditures
channeled to education providers in these areas to
be declared ineligible for WB support\.
The rehabilitation, upgrading, and expansion of
existing schools may require minor land acquisition\.
This presents a risk of involuntary land acquisition\.
The RPF describes (i) activities supported by IAQE
and IAQE AF that can have land acquisition impacts;
(ii) the objectives and principles of the RPF, the
Myanmar national legal framework, and the gaps
Involuntary Resettlement OP/BP 4\.12 Yes between Myanmar law and Bank policy; (iii)
eligibility criteria, noting that any activity requiring
involuntary land acquisition will be ineligible for
project financing and prescribing specific eligibility
criteria for any potential voluntary land donation;
(iv) procedures to be followed for voluntary land
donation; and (v) institutional arrangements,
monitoring arrangements and the grievance
Oct 29, 2020 Page 20 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
mechanism\. The RPF is not relevant for the schools
in the three northern townships in Rakhine
(Buthidaung, Maungdaw and Yathedaung) given that
these schools will not be eligible for civil works
subprojects\. Other project activities involve no risk
related to land acquisition\.
Safety of Dams OP/BP 4\.37 No The project does not involve any dams\.
Projects on International Waterways The project does not involve international
No
OP/BP 7\.50 waterways\.
The project will not be located in any known
Projects in Disputed Areas OP/BP 7\.60 No
disputed areas as defined in the policy\.
KEY SAFEGUARD POLICY ISSUES AND THEIR MANAGEMENT
OPS_SAFEGUARD_SUMMARY_TBL
A\. Summary of Key Safeguard Issues
1\. Describe any safeguard issues and impacts associated with the proposed project\. Identify and describe any potential
large scale, significant and/or irreversible impacts:
Environmental
The project is not expected to have any major environmental impacts and is therefore classified as âCategory Bâ\. OP/BP
4\.01 is triggered and only partial environmental assessment is required\. An ESMF including detailed ECOP was
prepered for the parent project\. The ESMF was revised to reflect the AF activities, as well as COVID-19 specific risks
and now includes additional sections on Labor Management Procedures (LMP_and COVID-19 specific labor
management and stakeholder engagement guidelines\. The project will involve civil works in selected townships and in
schools to be identified during implementation\. The expected civil works will involve upgrading, rehabilitation and
expansion of existing schools\. Potential construction impacts are expected to be minor, site-specific, and reversible in
nature, and for which mitigation measures can be readily identified\. Potential adverse impacts associated with school
civil works may include community and construction worker health and safety arising from air pollution caused by dust
generated by excavation, inappropriate storage of construction materials and site waste management practices, noise
and vibration generated by construction equipment and trucks, solid waste generation and disposal, communicable
disease, traffic safety, and lack of and inconsistent use of personal protective equipment\. In addition, due to COVID-
19, there may be risks for increased transmission among workers and communities\. These risks are managed through
the embedding of the ECOP, the LMP and related aspects of the ESMF in the program operational guidelines and good
construction practices\. The LMP also covers policies against child labor and and the use of child labor during
construction will be closely monitored\. Other risks are associated with hazardous building materials such as asbestos
containing materials, and paints used on the school buildings\. Such risks will be addressed through application of good
international practice relating to handling and disposal of hazardous materials\.
Social
The main potential social risks of the rehabilitation, renovation, and expansion of existing schools relate to possible
minor land acquisition, health and safety risks, labor and working conditions risks, and violence against children and
gender-based violence risks during construction\. Impacts are expected to be minor, not significant and reversible\.
Risks related to land acquisition are dealt with through project design, ineligibility criteria, screening, and clear
guidelines on what is eligible\. Furthermore, the Resettlement Policy Framework (RPF) makes clear that any involuntary
Oct 29, 2020 Page 21 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
land acquisition will not be eligible for project funding, includes screening procedures to exclude any involuntary land
acquisition from project funding, and includes clear guidelines and eligibility criteria for voluntary land donation of
minor strips of land\. , all of which will need to be monitored\. Risks related to labor and working conditions and health
and safety will be managed through effective implementation and monitoring of standardized ECOP and LMP across
civil works with support through training\. The ESMF includes Codes of Conduct to manage gender-based violence and
violence against children risks, and the grievance redress system includes separate procedures and trained designated
staff to deal with serious grievances on these issues\.
Other social risks relate to working with ethnic minorities and marginalized populations, the need for free, prior and
informed consultations, and possible impact of the programs on conflict dynamics and local tensions in ethnic areas\.
The government has revised the Community Participatory Planning Framework (CPPF) prepared for the parent project
to ensure that ethnic groups, as well as other vulnerable or hard-to-reach groups, have equal opportunities to
participate in and benefit from the project\. Local social/vulnerability assessments will be conducted and Community
Participation Plans (CPPs) will be prepared in line with the CPPF\. Measures include the preparation of detailed
operational guidelines, which integrates principles and procedures from the CPPF, for all programs, including relevant
guidelines on localized conflict risk mitigation as well as commitment to non-discrimination and implementation of
inclusive consultations and outreach, to be regularly updated and disseminated with support from the fragility,
conflict, and violence anchor of the Bank and building on the extensive stakeholder engagement conducted with
relevant ethnic stakeholders across the country during project preparation\. The social assessment report has
documented the engagement process\. There will also be training and monitoring, at various levels, on assessment of
conflict sensitivity risks and on how to mitigate those risks, and opportunities to promote social inclusion and
cohesion\.
To ensure that benefits of the project also serve children educated by Ethnic Basic Education Providers (EBEPs), as part
of project preparation, an assessment of the state of ethnic education across Myanmar and the degree and
circumstances under which the EBEPs will be willing and able to collaborate and engage was undertaken\. This
assessment has formed the basis project subcomponent 2\.2 which includes intrinsic risk management through the
planned engagement and facilitated dialogue with EBEPs, piloting of joint technical initiatives, and participatory
approach to development of a partnership framework, partnership agreements, and roadmaps\.
In Rakhine, supporting of Temporary Learning Spaces (TLSs) serving Internally Displaced Peoples (IDPs) include risk of
support to policies and/or practices of segregation, exclusion, and lack of freedom of movement and access to
inclusive education services and potential mis-alignment with engagement of other partners with IDPs\. Mitigations
include: discussions and agreements during preparation and implementation on the best translation of the
humanitarian position on engagement of partners in the IDP camps into concrete processes and criteria; stringent
eligibility criteria based on the consultative preparation of a plan for inclusive service delivery reviewed on a site-by-
site basis, requiring alignment with humanitarian partners and safeguards policies as well as endorsement by
members (government; development partners, CSOs) of the education, technical and vocation training sector
coordination group (ETV SCG) and yearly confirmation of the satisfactory implementation of that plan through
rigorous monitoring and evaluation including site visits; ineligibility of expenditures to build permanent structures to
serve IDPs; and, M&E strategies that include visits to all schools/TLSs for which plans are prepared or approved\. Key
M&E and supervision objectives in these schools/TLSs will focus on confirming that eligibility criteria are met
(including holding appropriate consultations) and proposed strategies for promoting non-segregation are as ambitious
as they can be\.
Outside of the camps, risks relate to supporting discriminations and impact conflict dynamic and local tensions\.
Oct 29, 2020 Page 22 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
Support to schools/centers in Buthidaung, Maungdaw, Yathedaung potentially risk reinforcing the divide between
communities and/or maintain/reinforce patterns of exclusion or bias toward marginalized groups\. This could happen
if, for example, activities are perceived as favoring one community over the other, funding is disbursed to
schools/providers discriminating against certain students, or schools do not immediately receive the needed support
(when trying to reopen upon refugee return\.)\. Measures include ring-fencing of investment in Buthidaung, Maungdaw
and Yatehdaug through specific set of disbursement-linked indicators (DLIs), M&E including WB-financed parallel
M&E work through regular supervision mission and recruited external agent(s), as well as portfolio-level third party
monitoring\. In the state in general, M&E work will emphasize documenting and understanding access to education for
different populations, the composition of parent-teacher associations and other school committees, impact of
segregation of the student population within schools in mixed communities, and inclusiveness of the consultations
embedded in programsâ design\. All the information gathered will be analyzed and discussed on a bi-yearly basis at a
minimum and will feed in improvement of processes and procedures to promote social cohesion and minimize
potential negative impacts on the peace process\. Legal covenants will be in place on access for implementation and
monitoring to allow for remedy\.
There is potential preferential treatment and exclusion from the benefits of some groups, including, but not limited to,
ethnic minorities\. These risks are addressed through project design including operational guidelines, capacity building,
training, targeting and eligibility criteria\. Indicators and participation by staff in at different level of selection on
townships, schools, groups to be supported will further ensure inclusion\.
Finally, during civil works, stakeholder engagement or other project activities, there is an increased risk of COVID-19
transmission and outbreaks\. The revised ESMF for the AF factors in such risks and provides additional guidelines to
manage COVID-19 risks in the ECOP, the LMP, in stakeholder engagement activities and the grievance redress
mechanism (GRM)\.
The sections above on the social policies provide further detail as does the PAD which details how these risks will be
managed through project design\. A strengthened grievance redress mechanism (GRM) was also developed under the
revised ESMF, and will need to be communicated and operationalized to ensure numerous channels to submit
feedback and complaints and resolution in a timely manner, and which are documented, and reported\. The
strengthened GRM includes policies and procedures for routine grievances, serious grievances (involving violence
against children and gender-based violence), worker grievances and COVID-19 related grievances\.
2\. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area:
Due to the projectâs nature, sub-project civil works will be limited to small scale construction and repairs of which do
not pose significant environmental or safety risks\. Potential environmental impacts are minor, temporary, localized,
and reversible and can be avoided, minimized or mitigated through appropriate measures set out in the ECOP and the
LMP\. Potential adverse indirect, induced or long term impacts are not anticipated as a result of project activities\.
The project expects to benefit the most disadvantaged communities and expects positive longer terms impacts for
those communities and children that will benefit from the project\. The context of working in remote areas, diverse
communities and through different education systems, presents both challenges and opportunities\. The project will
have to address exclusion and potential for discrimination\. These risks are mitigated through a parallel support to
ethnic basic education providers, support to non-formal education services being delivered by non-state partners
(CSOs, NGOs), use and monitoring of service delivery standards including non-discrimination, continued dialogue with
MOE on the use of ethnic languages as medium of instruction including in the context of, for example, designing of the
in-service training for teachers on early grade teaching and reforming human resource management, and continuous
Oct 29, 2020 Page 23 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
monitoring and evaluation\. Potential adverse indirect, induced or long term impacts are not anticipated as a result of
project activities\.
3\. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts\.
Not applicable\.
4\. Describe measures taken by the borrower to address safeguard policy issues\. Provide an assessment of borrower
capacity to plan and implement the measures described\.
Environmental
Given the nature and small scale of proposed civil works under the project, a formal EIA or IEE report or EMP is not
required\. For the purpose of enhancing environmentally-friendly measures and mitigating any adverse impacts caused
by construction activities, the parent projectâs ESMF was revised, including a detailed ECOP and a newly added LMP\.
Once a sub-project is identified, the ESMF,ECOP and the LMP will be applied\. The ECOP serves as checklist for
construction and rehabilitation activities, and covers standard avoidance, minimization and mitigation measures\. The
LMP described basic policies and procedures for labor and working conditions\. Specifications to address
environmental issues, including construction dust and noise control, waste management and disposal, site
management, and occupational and community health and safety measures are addressed in the ESMF\. The ECOP and
the LMP (as well as the Codes of Conduct to manage gender-based violence and violence against children risks) will be
included in bidding documents and contracts\.
The institutional capacity to supervise school civil works varies depending on the nature of civil works being
undertaken\. Standard design guidance is already available for new school buildings, but guidelines for building
rehabilitation remain to be prepared\. Recommended measures to ensure satisfactory project environmental
performance include: (i) development and consistent application of school rehabilitation and construction guidelines,
(ii) building capacity at the township level on monitoring of good construction practice and safeguards
implementation, and (iii) regular monitoring of construction work and quality assurance\. Additionally, capacity
building of township authorities to apply environmental avoidance, minimization and mitigation measures is
considered necessary to ensure adherence with the ESMF and overall satisfactory safeguard performance\. Capacity
building, monitoring and quality assurance of school civil works, and application of environmental avoidance,
minimization and mitigation measures will benefit from the support of professional engineers specially recruited for
this purpose by MOE and deployed to all selected townships\.
In order to efficiently address identified environmental safeguard capacity gaps, implementation of the ESMF will be
integrated into overall project implementation and the operational guidelines of subcomponent 1\.1 and in the
standard annual training curriculum delivered by MOE to all TEOs, and by TEOs to school principals and committees\.
MOE will incorporate ESMF, RPF, CPPF, ECOP, LMP, Codes of Conduct and grievance requirements into the operational
procedures and training curriculum and will have these ready before the next school year, starting in May 2021\.
Social
The project had drafted a Social Assessment (SA) report, a Community Participatory Planning Framework (CPPF), and a
Resettlement Policy Framework (RPF)for the parent project\. These were revised to reflect the AF activities and the
COVID-19 context, as well as to include policies and procedures for labor management, for management of risks
relateting gender-based violence and violence against children, enhanced stakeholder engagement and grievance
redress\. These social documents and the ECOP have been grouped together under an umbrella Environmental and
Social Management Framework (ESMF) for easier operationalization by MOE\.
Oct 29, 2020 Page 24 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
These documents build on the lessons learned in the current Myanmar decentralizing funding to school project (DFSP)
and the parent project , summarize extensive stakeholder engagement in project preparation with ethnic groups,
donors and civil society, expand the scope of social risk management measures, include measures to strengthen the
existing grievance system, and include enhanced monitoring measures\. The safeguards instruments can be
summarized as follows:
(a) SA report\. (i) Describes activities supported by IAQE and the AF, (ii) reviews legal and institutional framework
applicable to project, (iii) summarizes baseline information on social, cultural and political characteristics of ethnic
groups and vulnerable groups, (iv) describes consultations had with ethnic groups and vulnerable groups during
project preparation, (v) based on these free, prior and informed consultations, identifies potential adverse and
positive effects of the project, and (vi) identifies measures necessary to avoid negative impacts or ensure that positive
benefits are culturally appropriate\. It includes a BMY-specific annex on recent developments and related social risks
and the MOEâs current and anticipated challenges to ensure quality education services to all communities in the three
townships\.
(b) CPPF\. (i) Describes activities supported by the IAQE and the AF, (ii) presents relevant lessons learned from
other project implementations, (iii) identifies potential positive and adverse impacts, (iv) proposes a framework for
conducting local social/vulnerability assessments; (v) describes the CPPF processes to be carried out at the different
levels, to identify ethnic minorities and marginalized populations, ensure free, prior and informed consultations and
formulate Community Participation Plans (CPPs) during project implementation (vi) describes the grievance
mechanism and monitoring mechanism, and (vi) explains the institutional arrangements for the implementation of the
CPPF\. It also includes BMY-specific requirements and eligibility criteria for schools in the three townships, including the
non-eligibility of BMY schools for SIF 2\.0B (major repairs) and added requirement that the Bank conducts a prior
review and provides no objections to CPPs in BMY before program implementation and disbursement\.
(c) RPF\. (i) Describes activities supported by IAQE and the AF that can have land acquisition impacts, (ii) describes
briefly the objectives and principles of the RPF, the Myanmar national legal framework, and the gaps between
Myanmar law and Bank policy, (iii) defines eligibility criteria, noting that any activity requiring involuntary land
acquisition will be ineligible for project financing and prescribing specific eligibility criteria for any potential voluntary
land donation, (iv) describes procedures to be followed for voluntary land donation, (v) describes institutional
arrangements, monitoring arrangements and the grievance mechanism\. The RPF is not relevant for BMY given that
schools in these three townships will not be eligible for SIF2\.0B funding\.
(d) LMP\. The LMP provides policies and procedures applicable to project workers, contractors and civil servants
based on Myanmar national legislation, WB standards and guidance on COVID-19 risk at construction sites\. The LMP
also includes provisions for a worker grievance redress mechanism, which should be response to routine worker
grievances, COVID-19 related grievances, and more serious grievances on sexual exploitation, abuse or harassment\.
(e) Child Protection and Gender-Based Violence Codes of Conduct\. The Codes of Conduct aim to minimize the risk
of child abuse and gender-based violence that may occur at schools or near construction sites by providing basic
principles and guidance\. The Code of Conduct applies to all project staff, contractors, teachers\.
(f) COVID-19 Specific Stakeholder Engagement Measures\. This section of the ESMF offers guidelines for
managing public consultations and stakeholder engagement, when due to the outbreak and spread of COVID-19,
people have been advised or mandated by national law to exercise social distancing and specifically to avoid public
gatherings to prevent and reduce the risk of the virus transmission
Oct 29, 2020 Page 25 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
(g) GRM\. MOE has an existing grievance mechanism, which is largely limited in scope to grievances on financial
management and is not systematic in response to, resolution of or documentation of other types of feedback\. The
ESMF, CPPF and RPF propose measures to strengthen this grievance system in an integrated manner\. Such measures
include (a) communication leaflets in local languages to be hung in all schools/centers indicating that people can
submit grievances/questions through multiple channels; (b) grievance boxes in all schools/communities; (c) detailed
process for submitting, reviewing, resolving, escalating, documenting, and reporting grievances/feedbacks so that this
is part of the regular reporting as described in the OGs, and including this process in the training material for all
township education officers and school heads; (d) assigning a union focal point for collecting and documenting
grievances received and producing a quarterly report; (e) installing specific procedures for serious grievances on
gender-based violence and violence against children; and (f) designating and training grievance counsellors to
specifically work on serious grievances\. Furthermore, a call center approach will be put in place and piloted in the
2019â2020 school year (with BETF funding)\. The approach will include both upstream (hotline that individual can call)
and downstream (systematic calling and texting to request feedback) options\. Provision will be made for anonymous
reporting\. The LMP has provisions for a worker grievance mechanism, including steps to ensure that COVID-19 related
grievances will be responded to swiftly\.
MOE knowledge of specific World Bank policies is not extensive\. However, MOE has demonstrated its capacity to
effectively implement elaborated safeguards arrangements in the context of the stipends program since 2014-15 and
by expanding the local social assessment process and development of CPPs to all schools in 2019-20\. MOE also has
extensive capacity in conducting cascading training on its Operational Guidelines on an annual basis, reaching all
township officers and school heads\.
Building on this success of the DFSP and the IAQE, measures in the ESMF will be operationalized through this system,
incorporated directly into the MOEâs Operational Guidelines for the different WB-supported programs and training of
all townships officers and schools heads\. Once integrated into its own system, it is assessed that MOE also has good
capacity to monitor application of these safeguards arrangements and report on these through aggregating school-
level reporting at the township, state/region and union level\.
5\. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies,
with an emphasis on potentially affected people\.
In preparation for the parent project, consultation meetings and other stakeholder activities were conducted in 2018,
covering project beneficiaries, parents and students, school teachers and committees, union, state/region and
township level MOE staff, ethnic basic education providers, civil society organizations, alternative education providers,
donors and development partners across the country\. The Social Assessment summarizes these extensive
consultations and includes a map of all the townships covered under consultations\. Overall, stakeholders expressed
strong support for measures that aim to ensure that the project will benefit vulnerable and ethnic groups, and
measures that aim to increase dialogue and cooperation between MOE and ethnic basic education providers\.
The AF activities are based on Myanmar COVID-19 National Response and Recovery Plan for the Education Sector,
which the MOE developed on consultation with development partners working in the Education Sector Coordination
Group in Myanmar and with education stakeholders in states and regions\. The AF will fund a subset of activities in line
with the Myanmar COVID-19 National Response and Recovery Plan for the Education Sector, and activities were
selected in close consultations with all stakeholders to ensure that there is no duplication of efforts and funding is
used most effectively\.
For the AF, the drafts of the revised SA report and the ESMF, comprising the CPPF, RPF,ECOP, LMP, Codes of Conduct
and COVID measures, were disclosed for consultations by MOE on October 2, 2020\. Consultations on all safeguards
Oct 29, 2020 Page 26 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
documents were organized as virtual meetings in Yangon on October 9, in Chin and Kachin States on October 27, and
Rakhine and Shan North States on October 28\. Feedback from consultations were integrated into relevant safeguards
documents for appraisal and finalized versions will be disclosed by the government and by the Bank after clearance
from the Bank and before project appraisal\.
OPS_SAFEGUARD_DISCLOSURE_TBL
B\. Disclosure Requirements (N\.B\. The sections below appear only if corresponding safeguard policy is triggered)
OPS_EA_DISCLOSURE_TABLE
Environmental Assessment/Audit/Management Plan/Other
For category A projects, date of
Date of receipt by the Bank Date of submission for disclosure distributing the Executive Summary of
the EA to the Executive Directors
28-Sep-2020 18-Nov-2020
"In country" Disclosure
Myanmar
02-Oct-2020
Comments
OPS_RA_D ISCLOSURE_T ABLE
Resettlement Action Plan/Framework/Policy Process
Date of receipt by the Bank Date of submission for disclosure
28-Sep-2020 18-Nov-2020
"In country" Disclosure
Myanmar
02-Oct-2020
Comments
OPS_I P_DIS CLOSURE_TAB LE
Indigenous Peoples Development Plan/Framework
Date of receipt by the Bank Date of submission for disclosure
28-Sep-2020 18-Nov-2020
"In country" Disclosure
Myanmar
02-Oct-2020
Comments
Oct 29, 2020 Page 27 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
OPS_PM_ PCR_TABLE
If the project triggers the Pest Management and/or Physical Cultural Resources policies, the respective issues are to
be addressed and disclosed as part of the Environmental Assessment/Audit/or EMP\.
If in-country disclosure of any of the above documents is not expected, please explain why:
OPS_COMPLIANCE_INDICATOR_TBL
C\. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the ISDS is finalized by the project
decision meeting) (N\.B\. The sections below appear only if corresponding safeguard policy is triggered)
OPS_EA_COMP_TABLE
OP/BP/GP 4\.01 - Environment Assessment
Does the project require a stand-alone EA (including EMP) report?
No
OPS_I P_COM P_TABLE
OP/BP 4\.10 - Indigenous Peoples
Has a separate Indigenous Peoples Plan/Planning Framework (as appropriate) been prepared in consultation with
affected Indigenous Peoples?
Yes
If yes, then did the Regional unit responsible for safeguards or Practice Manager review the plan?
Yes
If the whole project is designed to benefit IP, has the design been reviewed and approved by the Regional Social
Development Unit or Practice Manager?
NA
OPS_IR_ COMP_TAB LE
OP/BP 4\.12 - Involuntary Resettlement
Has a resettlement plan/abbreviated plan/policy framework/process framework (as appropriate) been prepared?
Yes
If yes, then did the Regional unit responsible for safeguards or Practice Manager review the plan?
Yes
Is physical displacement/relocation expected?
No
Is economic displacement expected? (loss of assets or access to assets that leads to loss of income sources or other
means of livelihoods)
No
OPS_ PDI_ COMP_TAB LE
The World Bank Policy on Disclosure of Information
Oct 29, 2020 Page 28 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
Have relevant safeguard policies documents been sent to the World Bank for disclosure?
Yes
Have relevant documents been disclosed in-country in a public place in a form and language that are understandable
and accessible to project-affected groups and local NGOs?
Yes
OPS_ALL_COMP_TABLE
All Safeguard Policies
Have satisfactory calendar, budget and clear institutional responsibilities been prepared for the implementation of
measures related to safeguard policies?
Yes
Have costs related to safeguard policy measures been included in the project cost?
Yes
Does the Monitoring and Evaluation system of the project include the monitoring of safeguard impacts and measures
related to safeguard policies?
Yes
Have satisfactory implementation arrangements been agreed with the borrower and the same been adequately
reflected in the project legal documents?
Yes
CONTACT POINT
World Bank
Saurav Dev Bhatta
Senior Economist
Borrower/Client/Recipient
Republic of the Union of Myanmar
U Soe Win
Minister of Planning and Finance
mofinance\.ird@gmail\.com
Implementing Agencies
Ministry of Education
Myo Thein Gyi
Minister of Education
profmyotheingyi@gmail\.com
Oct 29, 2020 Page 29 of 30
The World Bank
Additional Financing for the Inclusive Access and Quality Education Project (P175567)
FOR MORE INFORMATION CONTACT
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 473-1000
Web: http://www\.worldbank\.org/projects
APPROVAL
Task Team Leader(s): Saurav Dev Bhatta
Approved By
Safeguards Advisor: Nina Chee 23-Nov-2020
Practice Manager/Manager: Tobias Linden 24-Nov-2020
Country Director: Mariam J\. Sherman 26-Nov-2020
Oct 29, 2020 Page 30 of 30 | APPROVAL |
P153111 | PROJECT INFORMATION DOCUMENT (PID)
ADDITIONAL FINANCING
Report No\.: PIDA29612
Project Name Africa Higher Education Centers of Excellence Project Add\. Fin\.
(P153111)
Parent Project Name Africa Higher Education Centers of Excellence Project (P126974)
Region AFRICA
Country Western Africa
Sector(s) Tertiary education (70%), Central government administration
(10%), Vocational training (10%), Other Mining and Extractive
Industries (10%)
Theme(s) Education for the knowledge economy (75%), Regional integration
(15%), Technology diffusion (10%)
Lending Instrument Investment Project Financing
Project ID P153111
Parent Project ID P126974
Borrower(s) Ministry of Finance
Implementing Agency Ministry of Higher Education
Environmental Category B-Partial Assessment
Date PID Prepared/Updated 27-Aug-2015
Date PID Approved/Disclosed 27-Aug-2015
Estimated Date of Appraisal 04-Sep-2015
Completion
Estimated Date of Board 14-Oct-2015
Approval
Appraisal Review Decision The review did authorize the team to appraise and negotiate
(from Decision Note)
I\. Project Context
Country Context
1\. Sub-Saharan Africa has an unprecedented opportunity for transformation and sustained growth\.
To maintain rapid economic growth, thus further reduce extreme poverty and increase shared
prosperity, Sub-Saharan African countries need to carry out an economic transformation\. Among
other factors, this requires an increase in science and technology capacity, skilled workforce, and
applied research to accelerate technology absorption, raise productivity and generate new
competitive sectors\. Demand for specialized human capital from rapidly growing sectors relying
upon Science, Technology, Engineering and Mathematics (STEM), such as the extractive
industries, energy, water, infrastructure, and in service sectors has been rising\. Current and future
students, private companies and governments would gain substantially from building African
training capacity to fill these skills gap\.
Page 1 of 6
2\. The regional initiative of Africa Higher Education Centers of Excellence (ACE) was launched in
2013 to support change and improvement in human capital development within the region\. The
ACE project was successfully introduced in eight West and Central Africa countries with a US$150
million investment approved by IDA in April 2014\. 19 ACEs were competitively selected in Benin,
Burkina Faso, Cameroon, Ghana, Nigeria, Senegal, The Gambia, and Togo\. In STEM, the fields
covered include applied mathematics, environment and water engineering, application of
information technology, material sciences and petroleum engineering\. Projects were also selected in
Health and Agriculture\. The maximum grant awarded to each Center of Excellence is US$ 8
million\.
3\. Following the post-electoral crisis in 2011 Cote dâIvoire was not in a position to participate in the
first phase of ACE project in 2013\. Higher education institutions were closed for long periods of
time, leadership was absent and the infrastructure and equipment underwent serious damage from
the conflict\. The higher education sector suffered for years from a lack of central control and the
articulation of a clear vision as well as a lack of reliable and systematic information including on
students, teaching, and budget parameters\. Furthermore, lack of relevance remains a significant
concern for higher education institutions, which need to achieve a better balance between
humanities and STEM fields, which are undersubscribed at the tertiary level\.
4\. However, Cote dâIvoire has been transitioning away from a country characterized by a post-
conflict context to one in which political and economic stability are increasing\. The country is
embarking on an ambitious and comprehensive reform program aimed at leveraging its
considerable endowments of human capital, natural resources and infrastructure to spur robust,
broad-based and sustainable economic growth with the active engagement of the international
donor community (including, among others, Agence Française de Development (AFD), the African
Development Bank (AfDB), the World Bank, UNICEF, and UNESCO)\. Public investment in
infrastructure (transport, energy, health, and education) and private investment in mining, energy
and housing have boosted domestic demand\. GDP growth was 9\.5 percent in 2012 and 8\.7 percent
in 2013\. Continued revitalization of the Ivorian economy and the provision of opportunities for
young people are critical for sustained economic development and inclusive growth\. Improving
quality and relevance of higher education is part of the solution to youth employment and continued
economic revitalization\. With World Bank support and political forces in place which foster a more
stable environment, participation in the ACE project will contribute to the reduction of the impact
of the crisis on poverty\.
Sectoral and institutional Context
5\. As part of the comprehensive reform program, higher education has been made a priority by the
Government of Cote dâIvoire\. The government aims to make significant improvements in
employability of the graduates, governance of institutions and quality of education\. Ivorian higher
education institutions used to be leaders in the region before the conflict, and are beginning to show
signs of being able to resume a regional role in higher education\. In June 2015 with World Bank
support the Ministry of Higher Education and Science organized a policy workshop on higher
education reform\. The objective of the workshop was to support the development of the tertiary
education strategy including identifying improvements and system reforms that can help higher
education meet the growing needs of the economy\. The Government aims to finalize a higher
education strategy in 2016 and implement further reforms to the higher education system in 2017\.
Page 2 of 6
The strategy will address challenges to quality and governance, some of which include:
a\. Increasing demand for higher education\. Following the end of the conflict and the return to
school Côte dâIvoire has witnessed an increasing number of students enrolled in higher education as
more students graduate from secondary education\. In 2013, 170,000 were enrolled in higher
education of which 52 percent attended public institutions\. This corresponds to 796 enrolled per
100,000 inhabitants, a decline from the pre-crisis enrollment in 2006 of 826 per 100,000
inhabitants\. The number of qualified graduates for secondary education is expected to rapidely
increase in the coming decade\. In 2015, the annual increase was 31 percent (from 63,000 qualified
graduates in 2014 to 83,000 in 2015)\. Although potentially very beneficial for higher income and
economic growth, this pace of expansion, puts the public purse under heavy stress and risks
deteriorating further the quality and relevance of higher education\.
b\. Quality and relevance: low employability of graduates due to insufficient quality and poor
relevance of courses with employersâ demand is a key challenge\. Notably, only 22 percent of
students attend STEM fields, while 70 percent are enrolled in low-cost social sciences or
humanities studies\.
c\. Governance: Sector reports have found irregularities and lack of transparency around
student admissions, budgeting and personnel management in universities\. A key next step would be
to implement on-going reform efforts to re-write the statues of the institutions and institute
management boards with substantial private sector and civil society representations\.
6\. The proposed AF will scale-up successful activities undertaken in the original project,
incorporating lessons learned during project design and early implementation\. The AF, under
Component 1: Strengthening Africa Centers of Excellence will finance the strengthening of three
additional Centers of Excellence within Cote dâIvoire in the amount of US$15 million USD
including: (i) climate change; (ii) statistics; and (iii) construction and mining by drawing on
specialized departments and faculty in higher education institutions in these priority areas\. The
project will retain the same PDO and components as well as indicators, however the targets will
modified to reflect the scale-up of the Project (addition of 3 centers, additional beneficiaries, etc\.)\.
7\. The project is designed to support capacity-building for the Africa Centers of Excellence in
Participating Universities, in particular to:
(a) Enhance capacity to deliver regional high quality training to address the development
challenge, including, inter alia, update curricula of existing programs or create new education
programs to meet the development challenge; meet international benchmarks for quality education
(e\.g\. international accreditation); deliver short-term courses for professionals; attract regional
students; training of faculty to introduce new approaches to teaching and learning; enhance work-
place learning such as internships; encourage entrepreneurship among students, upgrading of
qualifications of faculty; improve learning resources, including lab equipment, and minor
rehabilitation or extension of existing facilities\.
(b) Enhance capacity to deliver applied research to address the regional development
challenge, including, inter alia, faculty development and staff training, minor rehabilitation works
or extension of existing facilities, scholarships and post-doctoral studies, networking activities with
national and international partners, hosting and participating in conferences, research equipment
and materials and laboratory refurbishment, research dissemination, knowledge and technology
transfer, and patenting or other intellectual property rights-related costs\.
(c) Build and use industry/sector partnerships to enhance impact of the Africa Centers of
Excellence on development and increase relevance of said centers education and research,
Page 3 of 6
including, inter alia, industry advisory boards, internships, industry lectures, training of trainers for
sector training institutions (such as polytechnics, nursing, teacher or agricultural colleges), joint
research, training, and other activities to communicate, interact and reach out to civil society, the
private sector, and grassroots communities\.
(d) Build and strengthen regional and international academic partnerships to raise quality of
education, raise the capacity of Network Partners and to raise the Africa Centers of Excellenceâs
capacity, including, inter alia, joint delivery of education programs, professional courses for
regional faculty, faculty exchanges/visiting faculty, joint research, joint conferences, sharing of
specialized equipment and library resources
(e) Enhance governance and management of the Africa Centers of Excellence and the
Participating Universities to improve monitoring and evaluation, including monitoring of labor
market outcomes of graduates, administration, fiduciary management (including financial
management, procurement, oversight and capacity), transparency, ability to generate resources, and
project implementation\.
8\. The merit based competitive selection process used in the initial round of the project was
maintained for the selection of the centers from Cote dâIvoire\. This process entailed an open call
for proposals to public and private institutions; (ii) submission of Center of Excellence proposals
through the Ministry of Higher Education and Scientific Research to the regional facilitation unit
for the project at the Association of African Universities, of which seven proposals were submitted;
(iii) a systematic and detailed evaluation of proposals by independent and international experts
according to predefined criteria through a desk review and a site and leadership assessment\. Eighty
percent of reviewers also served as reviewers for the first round of ACEs\. The additional reviewers
were added to accommodate the additional sectors and consisted of three different and discrete sets
of assessments, meaning that each proposal was reviewed and scored by at least five independent
evaluators\.
9\. The selected Ivorian proposals meet the same high minimum standards as the existing 19 selected
ACEs\. The regional steering committee for the project required that all selected Ivorian proposals
should be evaluated above 62\.6 points out of 100, as this was the lowest score for the existing
ACEs\. Two ACE proposals (climate change and statistics) were evaluated above the regional
minimum level, while a third proposal (skills for mining and construction) was exceptionally given
a second change to meet the quality threshold\. This exception was authorized by the Regional
Steering Committee given the skill shortage for, and importance of the mining and construction
sector in the region\. Through the second chance, the proposal was substantially improved and met
the regional threshold and therefore included in the project\.
II\. Proposed Development Objectives
A\. Current Project Development Objectives â Parent
The Project Development Objective is to support the Recipients to promote regional specialization
among participating universities in areas that address regional challenges by strengthening the
capacities of these universities to deliver quality training and applied research\.
III\. Project Description
Component Name
Page 4 of 6
Strengthening Africa Centers of Excellence
Comments (optional)
This Additional Financing will scale-up Component 1 of the parent project by financing additional
Africa Higher Education Centers of Excellence located in Cote d'Ivoire\. The Centers were
competitively selected\. These ACEs will deliver regional, demanded, quality training and applied
research in partnerships with regional and international academic institutions and in partnership with
relevant employers and industry\.
IV\. Financing (in USD Million)
Total Project Cost: 30\.00 Total Bank Financing: 15\.00
Financing Gap: 0\.00
For Loans/Credits/Others Amount
BORROWER/RECIPIENT 15\.00
International Development Association (IDA) 15\.00
Total 30\.00
V\. Implementation
10\. Institutional and implementation arrangements will remain the same as the parent project\. Each
selected institution will implement its own ACE sub-project\. An ACE implementation team will be
established to run the day-to-day management of the project and provide secretariat services to the
National Review Committee\. It will be led by a Center Leader (CL) who is a recognized educator/
researcher within the primary discipline of the ACE and supported by senior faculty from the
relevant engaged departments\. As before, each new ACE will sign a partnership agreement with
selected partners laying out partner activities for the project, and an annual workplan\. Each ACE
will prepare an implementation plan including the FM Manual and Procurement Manual\. The
implementation plan will include: (i) the terms of reference, functions and responsibilities for
members of the Implementation teams or the personnel of the ACEs working on the Project ; (ii) the
Procurement Procedures Manual; (iii) the FInancial Management Procedures manual; (iv) the
indicators to be used in the monitoring and evaluation of the Project; (v) the criteria, detailed rules
and procedures for the EEPs; (vi) the detailed content of the EEP Spending Report, the customized
statements of expenditures, the interim financial reports, the Procurement Plan Progress Report and
the Project Reports; (vii) flow and disbursement of Project funds; and (viii) the Disbursement
Linked Indicators\. This Implementation Plan can be amended during the project life-time provided
the ACE obtains approval from the World Bank\.
11\. As under the parent project, in addition to institutional management the government of Cote
d'Ivoire will constitute a National Review Committee through the Ministry of Higher Education\.
The committee is tasked with a semi-annual review of performance, withdrawal applications, and
implementation planning and support, but no day-to-day implementation or approvals\. The Ministry
of Higher Education will chair and convene the committee, and the committee will include members
from the Ministry of Finance as well as line ministries\.
12\. The role of the Regional Facilitation Unit (RFU) will be continue to be played by the
Association of African Universities (AAU)\. A grant agreement between the World Bank and the
AAU lays out to key activities of the RFU, and an annual workplan between the World Bank, the
Page 5 of 6
ACEs, and the AAU, which details the AAU's expected work on capacity building, M&E, and
convening ACE meetings, including steering committee meetings\.
VI\. Safeguard Policies (including public consultation)
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment OP/BP 4\.01 â
Natural Habitats OP/BP 4\.04 â
Forests OP/BP 4\.36 â
Pest Management OP 4\.09 â
Physical Cultural Resources OP/BP 4\.11 â
Indigenous Peoples OP/BP 4\.10 â
Involuntary Resettlement OP/BP 4\.12 â
Safety of Dams OP/BP 4\.37 â
Projects on International Waterways OP/BP 7\.50 â
Projects in Disputed Areas OP/BP 7\.60 â
Comments (optional)
VII\. Contact point
World Bank
Contact: Andreas Blom
Title: Lead Economist
Tel: 458-7351
Email: ablom@worldbank\.org
Borrower/Client/Recipient
Name: Ministry of Finance
Contact: Ad Coulibaly
Title: Director of Cabinet
Tel: 022520200838
Email: adcoulibaly@hotmail\.com
Implementing Agencies
Name: Ministry of Higher Education
Contact: Prof\. Nindjin Aka Fulgence
Title: Director of Higher Education
Tel: 22503099903
Email: Nindjinaka_fulgence@hotmail\.com
VIII\. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Web: http://www\.worldbank\.org/infoshop
Page 6 of 6 | APPROVAL |
P008431 | Do_ment of
The World Bank
FOR OFCIL USE ONLY
Report No\. 6285
PROJECT COMPLETION REPORT
THE HELLENIC STATE
SALONICA AND VOLOS SEWERAGE PROJECT
LOAN 1345-GR
June 19, 1986
Water Supply *and Sewerage Division
Europe, Middle East and North Africa Regional Office
This document has a restricted distribution and may be used by recipients only in the performance
of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
COUNTRY EXCHANGE RATES AND CONSUMER PRICE INDEX
Name of Currency (Abbreviation) Drachma (Dr) Consumer Price Index
Appraisal Year Average 1976 US$1 = 36\.52 53\.3
1977 US$1 = 36\.84 59\.8
1978 US$1 = 36\.75 67\.3
1979 US$1 = 37\.04 80\.1
1980 US$1 = 42\.62 100\.0
1981 US$1 = 55\.41 124\.5
1982 US$1 = 66\.80 150\.6
1983 US$1 = 88\.06 181\.5
1984 US$1 = 112\.72 214\.5
Source: International Financial Sta istics\. IMF
GLOSSARY OF ACRONYMS
TOKAE Institute of Oceanograph and Fishing Research
MOI Ministry of Interior
MNA Ministry of National Economy
MPW Ministry of Public Works
SSA Salonica Sewerage Authority
SWA Salonica Water Authority
UNDP United Nations Development Program
VWSA Volos Water Supply and Sewerage Authority
WHO World Health Organization
TME WORLD BANK 701FOR OMCL4 USE ONLY
Washington\. D\.C\. 20433
U\.S\.A\.
Office of Dvearc~0CMte
0w4stx lvatmt"
June 19, 1986
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Completion Report on the Hellenic State - Salonica
and Volos Sewerage Project (Loan 1345-GR)
Attached, for information, is a copy of a report entitled "Project
Completion Report on the Hellenic State - Salonica and Volos Sewerage Project
(Loan 1345-rR)" prepared by the Europe, Middle East and North Africa Regional
Office\. Further evaluation of this project' by the Operations Evaluation
Department has not been made\.
Yves Rovsni
by Otto Maiss
Attachment
This document has a restricted distribution and may be used by recipients only in the performance
of their official duties\. Its contents may not otherise be disclksed without World Bank authorization\.
THE HELLENIC STATE FOR OFFICIAL USE ONLY
SALONICA AND VOLOS SEWERAGE PROJECT
LICAN 1345-GR
PROJECT COMPLETION REPORT
Table of Contents
Page No\.
PREFACE DAT\.SHET\. \. i
BASIC DATA SHEET \.ii
HIGHLIGHTS \.**\.
I\. INTRODUCTION \. 1
Background \.1
The Project \.**\.*****\. *********\. * \. \.* 1
Borrower and Executing Agency \. 1
P roject Financing \.*\. I\. 1
Bank Role in the Sector \. 2
II\. PROJECT PREPARATION AND APPRAISAL \. 2
Project Origin \. \. \. \. \.2
Project Preparation and Appraisal \. 2
Project Objective \. \. 2
Project Description \. *\. \. 3
Negotiations \. \. \. 5
Loan Covenants \. \. 5
tIII\. PROJECT IMPLEMENTATION \.**\.-* \. 6
Conditions of Effectiveness and Disbursement \. 6
Revisions \. 6
Project Implementation \. \. \. \. \. \. \. 7
Reporting \. 7
Procurement \. 7
Project Cost \. 8
Performance of Consultants, Contractors
and the Executing Agency \. \. 8
This documen\. has a restricted distribution and may be used by recipients only in the performance
of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
Table of Contents (continued)
Page No\.
IV\. INSTITUTIONAL AND OPERATING PERFORMANCE \. 9
Institutional Reform \. ****** * \. 9
Ministry of Public Works \.s*****ts*t\. \. 9
Salonica Sewerage Authority \.0\. 9
Volos Water Supply and Sewerage Authority \. 9
Accounts and Audits \. \. \. \. 10
V\. FINANCIAL PERFORMANCE \. \. \. \. 10
VI\. BANK PERFORMANCE \. \. \. \.*\. 11
VII\. PROJECT JUSTIFICATION \. \. 11
Least Cost Solution \. 11
Project Benefits \. 11
'JIII\. CONCLUSIONS \. \.# \. 12
Lessons Learned \.*\. \. 12
LIST OF ANNEXES
Annex 1 Forecast and Actual Construction Schedule 13
Annex 2 Actual and Estimated Project Cost 14
Annex 3 SSA's Organization Charts 17
Annex 4 VWSA's Organizational Chart 19
Annex 5 SSA's and VWSA's Financial Statements o\. 20
-1-
THE HELLENIC STATE
SALONICA AND VOLOS SEWERAGE PROJECT
(LOAN 1345-GR)
PROJECT COMPLETION REPORT
PREFACE
This report reviews the preparation, implementation and
achievements of the Salonica and Volos Sewerage Project for which
Loan 1345-GR of US$ 36\.0 million was made to the Hellenic State\.
The loan was signed on February 3, 1977, became effective November
30, 1978, and the final disbursement was made in December 1984\. The
project was implemented by the Ministry of Public Works\.
The Project Completion Report wes prepared by the Europe,
Middle East and North Africa Regional Office on the basis of the
findings of a project completion mission which visited Greece in
April/May 1985 and of a review of the Staff Appraisal and
President's reports, the Loan Agreement and supervision, progress
and other reports related to project implementation\.
In accordance with revised procedures for project performance
audit reporting, this PCR was read by the Operations Evaluation Depart-
ment (OED), but the project was not audited by OED staff\.
Following standard procedures, OED sent copies of the draft
PCR to the Government/Borrower and Executing Agency\. However, no com-
ments were received\.
- ii -
BASIC DATA SHEET
KEY PROJECT DATA
Actual
Appraisal or new
Item Estimate Estimates
Total Project Cost (US$ million) 113\.5 101\.3
Underrun () - 11
Loan Amount (US$ million) 36\.0 15\.1
Disbursed - 15\.1
Cancelled 20\.9
Date Physical Components Completed
A - Volos Sewerage System 1984 1985
B -\.Salonica Sewerage System 1984 1987
Proportion completed by Above Date (%)
Volos - 95
Salonica 50
Proportion of Time Overrun (%) 110
Economic Rate of Return (2) N/A N/A
Financial Performance mixed
Institutional Performance - weak during preparation
steadily improving during
implementation
CUMULATIVE DISBURSEMENTS
US$ (Nillions)
Fiscal Appraisal
Year Estimate Actual
1977 0\.08
1978 1\.82
1979 5\.83
1980 13\.52 0\.27
1981 25\.33 0\.40
1982 36\.00 1\.40
1983 - 6\.30
1984 12\.04
1985 (12/31/84) 15\.12
- iii -
BASIC DATA SHEET (Contd\.)
OTHER PROJECT DATA
Original
Item Plan Revisions Actual
First Mention in Files - - 10/24/72
Negotiations - - 10/21/76
Board Approval - - 12/07/76
Loan Agreement Date - - C ,03/77
Effectiveness Date 06/03/77 6 Extensions 11/30/78
Closing Date 06/30/82 06/30/83 06/29/84
Borrower Government of Greece
Executing Agency Ministry of Public Works
Fiscal Year of Borrower January 1 - December 31
MISSION DATA
Month/ No\.of No\. of Date of
Item Year Weeks People Manweeks Report
Reconnaissance 05173 1\.0 2 2 06/12/73
Identification 11/74 1\.0 1 1 12131/74
Preparation 1 01/75 2 2 4 02/24/75
Preparation 2 07/75 2 1 2 08/07/75
Preparation 3 09/75 2 2 4 10/31/75
Appraisal 02/76 4 2 8 11/12/76
Pre-negotiations 08/76 0\.4 2 0\.8 09/07/76
Supervision 1 01/77 0\.6 2 1\.2 02/03/77
Supervision 2 04/77 1\.2 3 3\.6 04/25/77
Supervision 3 08/77 0\.8 1 0\.8 09/06/77
Supervision- 4 04/78 0\.8 1 0\.8 04/28/77
Supervision 5 10/78 0\.6 1 0\.6 10/24/78
Supervision 6 02/79 1\.6 1 1\.6 03/23/79
Supervision 7 05/79 2\.0 2 4\.0 06/22/79
Supervision 8 10/79 1\.4 3 4\.2 11/09/79
Supervision 9 04/80 0\.8 2 1\.6 04/29/80
Supervision 10 06/80 0\.3 1 0\.3 07/10/80
Supervision 11 08/80 1 2 2 09/25/80
Supervision 12 02/81 1\.2 3 3\.6 03/23/81
Supervision 13 06/81 1 3 3 07/29/81
Supervision 14 09/81 1\.6 1 1\.6 10/15/81
Supervision 15 04/82 2\.4 2 4\.8 05/17/82
Supervision 16 09/82 1\.0 1 1\.0 11/01/82
Supervision 17 05/83 1\.8 2 3\.6 07/13/83
Supervision 18 12/83 2\.4 2 4\.8 01/20/84
Completion 04/85 3 3 7 05/31/85
- iv -
THE HELLENIC STATE
3NALONICA AND VOLOS SEWERAGE PROJECT
LOAN 1345-GR
PROJECT COMPLETION REPORT
HIGHLIGHTS
1\. Loan 1345-GR was made to the Greek Government on December 7, 1976 for an
amount of US$36 million to help finance a sewerage project with national and
local objectives\.
2\. The project included technical assistance to the MiniRtry of Public
Works, measures to strengthen the Salonica Sewerage Authority, the creation of
the Volos Water and Sewerage Authority and the provision of sewerage
infrastructure in Salonica and Volos, as well as a number of related studies
and training (para\. 2\.04)\.
3\. Modifications in the legal status of SSA and the creation of VWSA
required conditions of effectiveness\. These took longer than originally
envisaged and the loan only became effective in November 1978, almost two
years after Bank approval (para\. 3\.01)\. Delays also resulted from the
prevailing protracted bid evaluation/contract award process\. Construction was
also slow because of\. inexperienced contractors and the occurrence of
archeological finds\. The Volos component of the project was completed in
1985\. That for Salonica is expected to be finalized in mid-1987\. Overall,
the project would be completed about five and one half year later than
expected (paras\. 3\.02 and 3\.03)\.
4\. The Loan was closed on June 29, 1984, while withdrawals continued until
the end of 1984\. By then, US$15\.1 million had been disbursed\. Of the
remainder, US$1\.9 milliod was cancelled upon closing, US$4\.5 million was
cancelled in connection with two contracts awarded on a basis which did not
* follow Bank guidelines, and US$14\.5 million was cancelled at the request of
the Greek Government in April 1984 (paras\. 3\.04 and 3\.05)\.
5\. Project costs at completion are currently projected at Dr\. 10\.8 billion,
equivalent to a 172Z overrun\. However, in terms of US dollars, total costs
are expected to be 11% less than estimated at appraised (para\. 3\.08)\.
- V\. -
6\. As a result of the project, the Directorate of tie Ministry of Public
Works responsible for the design, appraisal and construction of water supply
and sewerage projects have been considerably strextgthened\. So has the
Supervision Directorate of the same Ministry (para\. 4\.02)\.
7\. Both SSA and VWSA have grown into capable organizations\. However, while
the latter adopted an accruals accounting system effective January 1985, the
former decided, contrary to appraisal assumptions, t;\. continue to follow the
accounting procedures of the public sector and not to use external auditors
(para\. 4\.05 and 4\.06)\. SSA met its revenue covenant only after 1980, VWSA
after 1981 (para\. 5\.04)\.
8\. The project as executed is well-conceived and represents the least cost
solution (para\. 7\.01) The main objective of the project which was co carry
out a comprehensive reform of the sewerage sub-sector has been achieved (para\.
7\.03)\.
9\. The project confirms the importance of adequate project preparation and
consideration during appraisal of local implementation procedures and possible
measures to reduce delays (para\. 8\.02)\.
THE HELLENIC STATE
SALONICA A1iD VOLOS SEWERAGE PROJECT
(LOAN 1345-GR)
PROJECT CONPLETION REPORT
Background
1\.01 In municipal areas other than Athens and Salonica, large sewerage
systems had been designed and constructed by the Ministry of Public Works
(MPW) assisted by private consulting engineers and financed by central
Government grants\. Small systems had been constructed by the Ministry of the
Interior or the municipalities\. The operation and maintenance of these
systems had been the responsibility of the municipalities\. The development of
the sewerage subsector had failed to keep pace with the requirements of rapid
urbanization and industrialization because of inadequate technical standards
and pollution control policies, weak local and national institutions and
unsatisfactory financial policies and practices\. The Government was aware of
these shortcomings and had requested Bank assistance to reorga1lize the
sewerage subsector, build up a national capability in the planming
construction and supervision of sewerage systems and establish viable local
institutions able to ensure the efficient financial and technical management
of the subsector\. The Bank project was considered a -ood vehicle for carrying
out these reforms\.
The Project
1\.02 The project comprised the final design and construction of priority
sewerage infrastructure works in Salonica and Volos, the strengthening of a
sewerage peoject planning department and a sewerage works supervision
department in the Ministry of Works, the establishment of a water and sewerage
authority in Volos, project-related studies and staff training\. Although the
Salonica Sewerage Authority (SSA) had been created by law in December 1970, it
only became operational in early 1976 in the framework of the project\.
Borrower and Executing Agency
1\.03 The borrower was the Greek Government and the executing agency was
the Ministry of Public Works\. The new facilities, which are still under
construction (para\. 3\.03) will be taken over by the local severage authorities
who will be responsible for their operation and maintenance as well as for
future developments\.
Project Financing
1\.04 The Bank loan of US$ 36 million was intended to finance the total
foreign exchange requirement of the project\. However, as US$19\.9 million was
cancelled (para\. 3\.05), the amount disbursed is expected to finance only about
46% of the foreign exchange requirement or 15% of the project cost\. The
remainder is being financed by loans from the Greek Government\.
Bank Role in the Sector
1\.05 The irvolvement of the Bank in the wate3r supply and sewerage sector
has been limited to this project\. However, because of its pilot nature the
project has been a good vehicle to address broad sector reforms\. To date,
some forty municipalities have established autonomous entities similar to the
one created in Volos under the project\. More are expected to follow\.
[I\. PROJECT PREPARATION AND APPRAISAL
Project Origin
2\.01 Ia 1972 the Greek government called upon the Bank for assistance in
carrying out a reform of the sewerage sector\. In response to this request the
Bank agreed to finance two out of six priority projects, one in Salonica and
one in Volos\. These would serve as vehicles for this reform\.
Project Preparation and Appraisal
2\.02 The Bank and WHO assi\.ted the Government in the preparation of the
project\. Feasibility studies were carried out by Komis & Watson for the
Salonica sewerage system, OTME/Balfours for the Salonica treatment plant, and
Macheras Balasha-Jalon for the Volos sewerage system\. Oceanic surveys were
carried out by the Greek Institute of Oceanographic and Fishing Research
(IOKAE) of Athens\. Financial and institutional studies and industrial waste
water surveys were conducted by the Hellenic Industrial Development Bank
(ETVA) assisted by Arthur Anderson and Company\. A Bank mission appraised the
project in February/March 1976\.
Project Objective
2\.03 The main objective o\. the project was to help Greece to reorganize
the sewerage sector\. This would be acLomplished through:
(a) creation of a Wastewater Department within the MPW to serve as an
advisory and regulatory agency for the sector;
(b) creation of a Project Appraisal Department within the MPW to review
the technical, economic and financial feasibility of water supply and
sewerage projects;
(c) creation of semi-autonomous water supply and sewerage authorities
with responsibility for design, eonstruction and operation of their
systems;
(d) financirg of new water supply and sewerage projects by the central or
provincial governments through commercial type loans together with
the introduction of cost-relaced tariff policies; and
- 3 -
(e) strengthening of the capabilities of the Institute of Oceanographic
and Fishing Research (1OKAE) for surveying and monitoring fresh and
ocean waters\.
This objective has been largely met (Chapter IV)\.
Project Description
2\.04 The project consisted of two sub-projects, studies and training, as
follows:
(a) Greater Salonica Sewerage Sub-Project
This sub-project was to be constructed during the period 1977-1981\.
It i'cluded partial rehabilitation of the existing sewer network and
extensions of the network to the low-income residential areas, plus
the structures needed to intercept, treat and discharge into the
Axios River the waste waters flowing into Salonica Bay\. A
physicochemical system of treatment of waste waters was adopted
because biological trpatment, including stabilization ponds would not
be viable until the Government had established an effective program
for controlling the discharge of industrial liquid wastes and toxic
substances likely to inhibit biological processes\. Specifically, the
sub-project included:
(i) installation of about 65 km of secondary sewers, 17 km of
trunk and force mains, and three pumping stations to serve
the coastal area and the Lagadas and Esso industrial zones;
(ii) installation of about 8 km of gravity interceptors, 1 km of
force mains, and three pumping stations to intercept the
trunk mains discharging into Salonica Bay;
(iii) construction of about 25 km of the main interceptor between
White Tower and the Axios River;
(iv) construction of a physicochemical primary treatment plant
with an initial capacity of about 3\.9 m3/second; and
(v) purchase or equipment for sewer inspection and maintenance\.
(b) Greater Volos Sewerage Sub-Project
The proposed sub-project was to be constructed during the period
1977-1981\. It included the infrastructure to serve the population
projected up to 1995, pre-treatment of the wastewater and all the
secondary sewer networks which could logistically be installed during
that five-year span\. Specifically, the sub-project included:
(i) installation of about 113 km of secondary sewers, 18 km of
trunk and force mains and five pumping stations;
- 4 -
(ii) construction of a pre-treatment plant with an initial
capacity-of about 0\.44 m3/second;
(iii) installation of a collector of about 4 km, to carry
wastewater from industrial estate to the pre-treatment plant;
and
(iv) construction of a temporary effluent pumping station, an 8\.1
km final interceptor and a 0\.7 km ocean outfall to discharge
the pre-treated wastewater into the Pagasitikos Gulf\.
(C) Studies
At the request of Government studies and surveys were designed to
provide not only the data required for the Salonica and Volos
sewerage projects but also to develop guidelines and techniques to be
employed in other cities\. These studies and surveys consisted of:
*i) feasibility studies for the Mega Emvolon sewerage system,
which would serve the southeastern part of the Salonica
metropolitan area and would be constructed by SSA as part of
its future investment program\. These studies aimed to
establish the first pilot project in Greece on the use of
wastewater effluents for irrigation;
(ii) industrial wastewater surveys in Salonica and Volos aimed at
establishing country-wide procedures on industrial wastewater
management;
(iii) oceanographic studies of the Thermaikos and Pagasitikos Gulfs
designed to establish country-wide procedures for monitoring
and evaluation of ocean water quality, including:
- monitoring of the receiving waters once the proposed
sewerage projects enter operation; and
- establishment of L mathematical model to forecast the cost
of treatment for different types of industrial
ilevelopments and for various criteria of water quality;
(iv) a review of accounting, financial control and tariff systems
of the Salonica Water Authority (SWA), Salonica Sewerage
Authority (SSA), and Volos Water and Sewerage Authority
(VWSA), with a view to implementing systems more appropriate
to the operations of autonomous water and sewerage
authorities throughout the country\.
(d) Trai
The project also included provisions for training of senior staff of
the Wastewater and Project Appraisal Departments of MPW and selected
- 5 -
senior staff of the Ministry of Interior (MOI) through short visits
to sewerage organizations and systems abroad\.
Negotiations
2\.05 Negotiations took place in Washington from October 21 through 24,
1976\. Because of changes in project scheduling and design, at the request of
the Government, the loan was increased from $33 to $36 million\. Also at the
request of the Government, the application of the tariff covenant was changed
from 1978 and 1979 for Salonica and Volos respectively to no later than three
months following the signing of their subsidiary agreements with the
Government, in the event October 1976 and June 1979 respectively\. The
Government also requested that the consultants for the accounting and
financial control studies also review the tariff structures of the various
authorities to assist in making recommendations on improvements thereto, and
this provision was added to the project\.
Loan Covenants
2\.06 A loan agreement was entered into between the Bank and the Hellenic
State on February 3, 1977\. The major covenants covered (i) the organization
and administration of the Wastewater Department and Project Appraisal
Department of the Water and Wastewater Directorate of MPW's Hydraulics
Division (Loan Agreement, Section 3\.01(a) and Schedule 5); (ii) subsidiary
agreements between the borrower and SSA and VWSA (Loan Agreement, Section
3\.01(c); (iii) the provision of funds by the Government to SSA and VWSA to
finance consumers' connection charges and contributions to construction costs
(Loan Agreement, Section 3\.01(d); (iv) the staffing of SSA and VWSA (Loan
Agreement, Section 3\.03(a); (v) the employment of engineering consultants
satisfactory to the Bank for the further preparation of the Salonica and Volos
sub-projects (Loan Agreement, Section 3\.03(b); (vi) the employment\. of
consultants to carry out the sub-projects and the studies (Loan Agreement,
Section 3\.04); (vii) the audit of SSA's and VWSA's accounts and financial
statements (Loan Agreement, Section 4\.03(b); (viii) the introduction of
appropriate accounting systems in SSA and VWSA as recommended by the studies
included in the project (Loan Agreement, Section 4\.03(c); (ix) the transfer of
the new facilities and related assets and liabilities to SSA and VWSA (Loan
Agreement, Section 4\.05); (x) cash flow covenants (Loan Agreement, Section
4\.08 through 4\.10); and (xi) debt service coverage covenants (Loan Agreement,
Section 4\.11)\.
2\.07 A special condition of effectiveness in addition to the ratification
of the loan by the Greek Government was the provision of evidence satisfactory
to the Bank that eitier of the following sets of events had occurred:
(a) with respect to SSA: (i) SSA's jurisdiction, responsibilities and
powers had been extended and modified in a manner satisfactory to the
Borrower and the Bank; and (ii) the Salonica Agreement had been duly
authorized, executed and delivered and was legally binding upon the
Borrower and SSA, or
-6-
(b) with respect to VWSO: (i) VWSO had been established in a manner
satisfactory to the Borrower and the Bank; and (ii) the Volos
Agreement had been duly authorized, executed and delivered, and was
legally binding upon the Borrower and VWSO\.
2\.08 The loan covenants were comprehensive and adequately covered the
requirements for project implementation\. Most major covenants were complied
with, albeit some with substantial delays\. However, contrary to appraisal
assumptions, SSA has decided to continue to follow the accounting procedures
of the public sector, i\.e\. on a cash receipt and disbursement basis, and not
to use external auditors (para\. 4\.05)\.
III\. PROJECT IMPLEMENTATION
Conditions of Effectiveness and Disbursement
3\.01 In Greece all loan agreements with the Bank must be approved by
Parliamant\. At appraisal it was expected that Parliamentary approval would be
rapidly secured\. However, general elections and complex bureaucratic
procedures caused the loan agreement to be ratified only in April 1978, almost
15 months after loan signature\. The condition of effectiveness relating to
SSA's and VWSO's establishment and subsidiary agreements (para 2\.07) was first
satisfied by SSA and the loan declared effective on November 30, 1978\. The
execution of the Volos agreement remained a condition of disbursement, which
was satisfied on June 30, 1979\.
Revisions
3\.02 At the time of appraisal, in February 1976, only preliminary designs
and feasibility studies had been available, and the project had had to include
the preparation of final designs\. Consultants were thus commissioned to
prepare the final designs for the sewer systems of Volos and Salonica in April
and May 1977 respectively\. The final design for Volos followed approximately
the preliminary design, and no revisions of importance were necessary\. It was
substantially completed by mid-1979\. However, major revisions became
necessary for Salonica because (i) the site of the treatment plant proved to
be unsuitable as a seismic analysis indicated the likelihood of soil
lique:action in the event of earthquakes; a new site was found only after
extensive soil investigations; and (ii) the construction method for the main
collector, which was to be constructed in an open trench, was changed to a
tunnel to avoid insurmountable problems in streets already crowded with all
types of conduits\. The greater depth of the tunnel, however, allowed a
larger area of the town to be connected by gravity\. Other revisions concerned
the lining of the upper part of the sewers with PVC -- which is resistant to
sewer gases - rather than brick which, however, was retained for the lower
part\. These changes caused a delay of about two years in the bidding
process\. The construction of secondary sewers and the purchase of maintenance
equipment were dropped from the project\. These are to be undertaken with
local financing after completion of the other elements of the project\.
-7-
Proect Implementation
3\.03 The Project was executed by the Ministry of Public Works\.
Implementation was slow from the start, and completion is currently estimated
around mid-0987, five and a half years later than originally foreseen\. The
forecast and actual construction schedules are shown in Annex 1\. The original
schedule was overly optimistic particularly with regards to the preparation of
the final design and the bidding procedures\. The preparation of the final
designs took much longer than anticipated because of lack of basic key
information and changes in project description (para 3\.02)\. The final design
for the Salonica treatment plant was only available in May 1982 and related
bid documents agreed upon in early 1983\. These delays were compounded by
lengthy approval processes in several committees, and the Greek procurement
regulations which mandate that no contract be awardei if the lowest evaluated
bid is higher than the government estimate\. As a result, construction started
only in 1981\. Construction progress was also slow because of inexperienced
contractors, the purchase and importation of specialized tunnel construction
equipment and the occurrence of archaeological finds during excavation\.
3\.04 By the time of the original closing date, June 30, 1982, the project
construction had barely started\. Two extensions were granted up to June 29,
1984, for contracts awarded prior January 1, 1984\. At the same time the
disbursement percentage for civil works was increased from 242 to 36% to
reflect the latest estimate of the foreign exchange component, which had
increased due to devaluation of the drachma from the time of appraisal at a
rate exceeding the difference between Greek and world inflation rates\.
3\.05 The loan was closed on June 29, 1984, while withdrawals continued
until the end of 1984\. By then US$15\.1 million had been disbursed out of the
original loan of US$36 million\. Of the remainder, US$4\.5 million was
cancelled because procurement methods did not follow the Bank's guidelines
(para\. 3\.07), US$14\.5 million was cancelled at the request of the Government
in April 1984, and a further US$1\.9 million was cancelled upon closing of the
loan\.
Reportin
3\.06 In April 1981, the Ministry of Public Works (MPW) began to submit
quarterly progress reports which covered the physical aspects of project
progress and associated financial commitments\.
Procurement
3\.07 All contracts, except five, were procured on the basis of international
competitive bidding in accordance with the Bank's guidelines\. Of these five,
cwo small civil works contracts for the preparation and protection of the new
treatment plant site were procured locally; two were not procured in
conformity with the Bank guidelines (one contract was awarded to the second
lowest evaluated bidder, and the other was procured on the basis of bid
documents in the Greek language which were not cleared by the Bank); and the
last was awarded after the cutoff date agreed between Government and the Bank
- 8 -
for Bank financing\. All contracts were won by Greek contractors except one
equipment contract valued at about US$700,000, which was awarded to a French
company\.
Prolect Cost
3\.08 The total project cost at completion is currently projected at Dr
10\.8 billion\. This includes Dr 5\.2 billion of actual expenditures as of
December 31, 1984, and an estimated Dr 5\.6 billion required to complete the
project\. This represents a potential cost overrun of 1721 compared with
appraisal estimates\. Expressed in US dollars, however, total costs are
expected to reach US$101\.3 million as compared with US$113 million at
appraisal, or a cost underrun of 11%\. Details are given in Annex 2\. The cost
overrun in local currency is mainly due to longer project implementation and
higher inflation than anticipated\.
Appraisal and Projected Costs
(in Million Drachmas)
Appraisal Proiected1'
Local Foreign Total Local Foreign Total
Salonica
Component 1132 609 1741 5628 3028 8656
Volos Component 381 124 505 1586 528 2114
Miscellaneous 14 11 25 16 12 28
Physical Contingencies 157 88 245 -- -- --
Price Contingencies 1030 425 1455 -- -- --
TOTAL 2714 1257 3971 7250 3568 10798
Performance of Consultant\. Contractors and the Executing Agency
3\.09 The performance of the consultants and contractors was satisfactory\.
That of the executing agency was also satisfactory with regards to project
supervision\. However, because of staff constraints, lack of clear allocation
of responsibilities, and complicated administrative procedures, the agency's
performance fell short of expectations with regards to project preparation\.
-' Estimated Comoletion: Mid-1987\.
IV\. INSTITUTIONAL AND OPERATING PERFORMANCE
Institutional Reform
4\.01 The main objective of the project was to help Greece to reorganize
the sewerage sector (para\. 2\.03)\. As explained in this Chapter, this
objective was broadly met\.
Ministry of Public Works (MPW)
4\.02 The reorganization of MPW discussed during project preparation, was
approved by Parliament on August 16, 1977, and implemented soon afterwards\.
The Directorates responsible for sewerage project design and project
appraisal, and for the construction of water supply and sewerage works were
strengthened\. Although still understaffed the Project Design Directorate now
routinely prepares sewerage projects designs\. The Project Supervision
Directorate currently supervises all sewerage projects and needs the
assistance of consultants only in the case of very complex structures such as
treatment plants\.
Salonica Sewerae Authorty
4\.03Although created in December 1970, SSA did not start its operation until
January 1976, in the framework of the Bank project\. It operates under the
tutelage of MPW\. After almost ten years of operation, the authority has grown
into a capable institution with a dedicated staff of 30 engineers and higher
level personnel, 60 support staff and 150 laborers\. SSA's Organization Chart
appears in Annex 3\. The recommendations of the management consultants (Price
Waterhouse) published in 1980 (para 2\.04c(iv) on accounting and financial
matters, have been implemented with the exception of an accruals system of
accounts\. The prevailing Government accounting system has been maintained\.
In the technical area, SSA is performing well, house connections and
extensions to the sewage collection system are being constructed by its own
labor force and the institution is preparing to take over the project
facilities\. For this purpose, five of its engineers are receiving on-the-job
training with the MPW Supervis\.on Unit\.
Volos Water Supply and Sewerage Authority
4\.04 VWSA's enabling legislation was passed in March 1979, its internal
regulations were approved in May 1981, and its first General Manager was
appointed in January 1982\. VWSA operates under the tutelage of the Ministry
of Interior\. Its Organization Chart appears in Annex 4\. Until 1985 VWSA was
responsible only for water supply, although it had already launched a campaign
to connect all city buildings to the new sewerage system\. In the short span
of its existence, VWSA has developed into a capable organization\.
4\.05 The creation of VWSA was part of a pilot program for the development
of regional water and sewerage authorities\. That the experiment has been
judged successful can be seen by the fact that some forty authorities
patterned after VWSA have already been created\.
- 10 -
Accounts and Audits
4\.05 SSA is governed by the Accounting Procedure for legal entities\. This
procedure calls for the Ministry of Finance to exercise financial control over
the administration of the Authority's capital and property\. The Authority
prepares an analytical statement of cash receipts and disbursements and
forwards it with supporting documents and vouchers to an audit office of the
Ministry of Finance\. The Salonica local authorities are satisfied iith this
arrangement and do not intend to hire independent auditors as agreed in the
Loan Agreement\.
4\.06 In Volos, the accourting system was changed effective January 1,
1985, to provide the essential features of accruals accounting\. Acc unts for
1979 through 1984 have been audited by independent auditors\.
V\. FINANCIAL PERFORMANCE
5\.01 The appraisal assumption that SSA and VWSA would adopt accruals
accounting was not realized during the 1976-84 period (paras\. 4\.05 and 4\.06)\.
Neither were the assumptions that debt would be assumed as incurred by SSA and
VWSA or that depreciation would be booked\. The actual Income Statements and
Balance Sheets given in Annex 5 were developed from existing cash receipt-
disbursement records\. However, it has not been possible to construct
meaningful cash flows\.
5\.02 At appraisal, internal inflation was projected at 10% for 1976, 9%
for 1977 and 8% thereafter, which is the equivalent of slightly over 8% per
year in the 1976-84 period\. Actual inflation as measured by the consumer
price index was more than twice the appraisal figure, at an average of 19% per
year\.
5\.03 At Salonica, revenues grew at an average of 34% and expenses at 28%
in the 1976-84 period (appraisal 38% and 25% respectively)\. Comparable
figures for Volos show average annual growth of revenues and expenses
(adjusted for depreciation) of 22% and 19% respectively (appraisal 11%\. and 12%
respectively)\. In \.1984, SSA's working ratio reached 74% and VWSA'S 82%
(appraisal 66% and 73% respectively)\.
5\.04 The Loan Agreement called for SSA and VWSA to generate net revenues
after covering operation and maintenance costs, depreciation and interest
expense equivalent to 4% of net fixed assets in operations plus
work-in-progress up until 1981, and 2% and 1\.5% respectively afterwards\. SAA
met this covenant only after 1980, VWSA after 1981\.
5\.05 At the end of 1984, Salonica had a ratio of debt to debt plus equity
of 49% (appraisal 41%) while Volos had a ratio of 27% (appraisal 45%)\. Much
of the debt incurred for the Volos project was assumed only upon completion of
the project in 1985\.
- 11 -
VI\. BANK PERFORMANCE
6\.01 A good rapport has existed between the Bank and the various project
implementation agencies, including the Ministry of National Economy (formerly
Ministry of Coordination), the Ministry of Public Works, the Volos Water and
Sewerage Authority, the Salonica Sewerage Authority and the Ministry of Works
Supervision Units in Volos and Salonica\. The Bank actively assisted project
preparation, and was instrumental in the creation of VWSA as well as in the
general reorganization of the sewerage subsector\.
6\.02 The Bank's supervision efforts were considerable, with 18 missions
carried out in a seven-year period\. These missions were well balanced and
provided continuity and necessary expertise and guidance\. In addition, two
country project implementation reviews, organized between high level
governmental staff and Bank management, discussed project-related issues\. The
Bank was flexible in agreeing to modification in the project description, in
extending the closing date from June 1982, to June 1984, and in increasing the
disbursement percentage for civil works from 24% to 36% to bring it in line
with updated assessment of foreign exchange requirements\. Nevertheless, it
would appear that Bank appraisal of the project was premature and should have
been postponed (as required under current policies) until final designs were
available\.
VW\. PROJECT JUSTIFICATION
Least Cost Solutions
7\.01 The quality of project related studies has been good\. The project as
executed is well conceived and represents the least cost solution\. Actual
project costs could have been lower by a more expeditious project
implementation\.
Project Benefits
7\.02 At appraisal it was held that the minimum estimate of the benefits of
sewage collection and disposal could not be derived from customers' observed
willingness to pay since (a) for reasons of public health, financial viability
and orderly development, consumers will be required to convert to the sewerage
systems, thus interfering with the free expression of the value which they
place upon the systems, and (b) the surcharge on water which consumers
currently pay for sewerage services may reflect the additional amount (i\.e\.,
the consumers surplus) which they are willing to pay for water\. The same
conditions prevail at present\.
7\.03 The main objective of the project, which was to carry out a
comprehensive reform of the sewerage subsector, has been achieved\. At th\.-
central government level, capability in sewerage project design, appraisal and
supervision has been developed in the reorganized Ministry of Public Works\.
In Salonica, the sewerage authority that existed at the time of appraisal has
been strengthened in the framework of the project and is now managing the
sewerage system of greater Salonica in a satisfactory manner\. A new
- 12 -
financially viable Water and Sewerage Authority has been created in Volos and
is now ready to take on its new responsibilities in managing, planning and
expanding the sewerage system in the Greater Volos urban area\. Furthermore,
this authority has been used as a model to establish similar institut:ons in
other urban areas\. Both institutions are also responsible for industrial
wastewater collection and pollution control\. The implementation of the
physical components of the project in the two cities has been delayed (para\.
3\.03), but all benefits inherent to a well planned sewage collection and
disposal system based on modern technology is well on the way to be realized\.
Vrff\. CONCLUSIONS
8\.01 In conclusion, the project has been successful in accomplishing its
main objectives, namely: to serve as a pilot for the institutional development
of regional water and sewerage authorities as well as a vehicle for improving
national expertise in industrial wastewater management, operations of
wastewater treatment facilities and water pollution control\.
Lessons Learned
8\.02 The project confirms the importance of adequate project preparation
(para\. 3\.02) and the need for a realistic assessment of the time involved in
the use of local procedures and consideration as to whether any measures could
be taken to expedite these procedures (para\. 3\.03)\.
- 13 -
-~~~~~ 1
I: _ __ ---- __
i- 2 - - -S - _~ - 4 - f-I---T----
£ - -- _ - -
2 2 t___ _ j --- _-4- i
g U~ a t \. == at _ a :=t < s _ , _' I3FFF Q
z~ i 'I ^I = I hI ^0 I I I I n
THE HELLENIC STATE
SALONICA AND VOLOS SEWERAGE PROJECT (LOAN 1345-GR)
PROJECT COMPLETION REPORT
Appraisal stimated and New Estimated Proiect Costs
Appraisal Estimates New Estimates Appraisal Estimates New Estimates
Lc_at Foreign Total Local Foreign Total Local Foreign Total Local Foretgn Total
------------------Milions of Orachuas - -- -
---l-------------tons--------------------
Salonica Component 1132 609 1741 56?2 3028 8656 32\.34 17\.41 49\.7S 49\.88 26\.83 76\.71 4-
volos Component 381 124 505 t586 528 2114 10\.89 3\.54 14\.43 17\.89 5\.96 23\.85
miscellaneous* 14 11 25 16 12 28 0\.40 0\.31 0\.71 0\.41 0\.31 0\.72
Physical Contingencies 157 8a 245 -- -- -- 4\.49 2\.51 7\.00 -- -- --
Piice Contingencies 1030 425 1455 -- -- -- 29\.43 12\.14 14\.5? -- -- --
Total 2714 1257 3971 7230 3566 10798 77\.55 35\.91 113\.46 68\.18 33\.10 101\.28
'See Annex 2, page 3\.
THE HELLENIC STAH
SALONICA AND VOLOS SEWERAGE PROJECT (LOAN 1345-GR
PROJECT COMPLETION REPORT
Forecast and Actual Protect Cost
Drachmas million
Contract
NR Subproject 1975 1976 1222 f978 1979 1I9 l1E1 1982 1983 1I98 1985 19M 19t ITota
SALONICA
Studies 9 27 16 16 16 14 5 103
Si Tunnel HH79-98 30 223 383 750 1386
S2 Tunnel HH52-79 416 511 878 400 220S
S3 Collector MH39-52 82 2b6 242 235 825
S4 Coastal Collectors 134 350 220 704
SS Treatment Plant 37 700 1000 700 2437
S6 Pressure Main 109 480 145 734
S7a Consultants Network 11 20 8 19 23 1S 96
S7b Consultants Treatment 4 S 1S 1S 10 49
58a Gallikos Dam 1 19 4 23
S8b Gallikos Dam II 12 11 23 1
Other Expenses 1 30 5 9 24 2 1 72
Total ' lonica 9 27 16 28 591 1050 1837 2988 1397 711 8656
VOLOS
Studies 1 8 7 S 1 4 1 27
VI Hain Network 180 290 283 255 142 1150
V2 Alykes Network 63 17 4 64
V3 Treatment Plant 32 200 232
V4 Collectors 89 205 66 SS 41S
V5 Sea Outfall 27 32 2S 84
V6 Equipment P\.S\. 6 2 SS 63
V7 Civil Works P\.S\. 7 20 27
Other Expenses 4 10 7 11 32
Total Volos 1 8 7 5 181 393 590 417 S12 2114
Miscellaneous Studies 6 8 2 S 3 1 1 1 1 28 1 0
002
Total Project 6 8 3 22 37 22 210 987 1641 2254 3500 139, 711 10798X
Expressed in USS 0\.2 0\.2 0\.; 0\.6 0\.9 0\.5 3\.8 14\.8 18\.6 20\.0 25\.9 10\.4 5\.3 101\.3
THE HELLENIC STATE
SALONICA AND VOLOS SEWERAGE PROJECT (LOAN 1345-GR
COMPLETION REPORT
MiscellanQus Studies - Actual Costs
Drachmas Thousands
197 L9276 197 i97 i97 198 12& 122 2| Total
Industrial Survey, Volos s5O 700 600 18SO
Industrial Survey\. Salonica 360 330 S90 270 270 1800
Oceanographic Study 6200 7600 1800 4700 400 20700 1
Mega Emvolon Feasibility Study 1SO 350 SOO
Accounting Study 1700 1150 2850
Total 6200 7600 1800 5250 3160 1630 570 870 520 27600
Exchange Rate $ 36\.30 36\.52 36\.84 36\.75 37\.04 42\.62 55\.41 66\.80 88\.06
Expressed in $ 000 171\.00 208\.00 49\.00 143;00 85\.00 38\.00 10\.00 13\.00 6\.00 723\.00
(Dm
- 17 -
ANNEX 3
Page 1
GREECE
SALONICA AND VOLOS SEWERAGE PROJECT (Loan 1345 GR)
Completion Report
Orgonization Chart of Salonica Sewerage Authoriy
ADMINISIRATIVE
COUNCIL
GENEIAL
MANAGER
TECHNICAL LEGAL
ADVISR _DEPARTMENT
DMSION I DMl0ON 11 DMSION III
ADMhISTRATION FINANCE TECHNICAL SERCES
PERSONNEL ACCOUNTING STUDIES &
FERSONNfL l 1 DEPARTMENT j CONSTRUCTIONS
REVENUES FROM SEWERAGE
GENERAL AEFAJRS CONNECTIONS WITH EXPLOITATION
BEUILDINGS
REVENUES FROM
MAIL RECORDS SEWERAGE MAINTENANCE
DEPARTMENT
C TOPOGRAPHIC
COLLECTION & fOPERTY
OF BILLS l DEPARTMENT
SUPPLIES & MECHANICAL
MATERLALU ENGINEERING
May 1985 LABORATORY
Wold BEank-27446
i/
ANNEX 3
-18 - Page 2
GREECE
SALONICA AND VOLOS SEWERAGE PROJECT (Loan 1345 GR)
Completion Report
Organization Chart of Volos Water Supply and Sewerage Authority
BOAr Of DIRECTORS
RNANCE TECHNICAL
DEPARTIMENT DEPARIMNM
CAS OFCE |AB AOR
__I
PERSONNEL & WAE
PENSIONRIND|
May 1985
Woadd EanIC-27447
- 19 -
ANNEX 4
GREECE
SALONICA AND VOLOS SEWERAGE PROJECT (Loan 1345 GR)
CompletNon Report
Organizaffon Chart of Volos Water Supplv and Sewes ge Authorly
| BOARD OF DIRECTORS
GENERAL MANAGER
rINaCE |CHNICAL
DEPARTMENT lN
PERSONNEL & WATER
PENSION lUND J __ WATER_ l
CTER ] SERAGE
ACCOUNTING MCAIA
& BUDGET
CASH OFRCE ORATORY
SUPPLIES &
H ~~STORES|
May 1985
World Bank-27447
THE HELLENIC STATE
SALONICA AND VOLOS SEWERAGE PROJECT (LOAN 1345-GR)
PROJECT COMPLETION REPORT
SALONICA SEWERAG-E AUTHORITY
Incom Statements
(in Million Drachmas)
lilA 19i? 19fl 1222 12Ak 1981 121f2 122 1984
Ar\. AG\. Au\. BG AC =A\. A"\. AR\. A\. U\. A"\. M\. A\. AU\. &\. A\. A\. -r a
t(yenues
Service Charges 50\.0 50\.4 84\.9 58\.2 168\.9 58\.5 233\.1 106\.6 319\.5 161\.1 518\.4 316\.9 666\.9 340\.8 728\.0 402\.6 774\.8 513\.8
Connection Charges 10\.0 2\.7 11\.1 7\.6 12\.1 6\.3 13\.0 8\.5 14\.1 13\.3 15\.2 24\.7 24\.6 36\.5 26\.6 28\.7 28\.7 30\.3
Total Revenues 60\.0 53\.1 96\.0 65\.8 181\.0 64\.8 246\.1 115\.1 333\.6 174\.4 533\.6 341\.6 691\.5 377\.3 754\.6 431\.3 803\.5 544\.1
L,penses
Salaries 34\.3 23\.3 64\.9 35\.8 81\.0 50\.4 95\.6 70\.2 112\.1 91\.9 145\.9 133\.5 176\.4 178\.3 208\.9 212\.6 241\.5 256\.6 °
materials 5\.2 \.9 16\.2 1\.0 18\.7 1\.6 21\.4 2\.3 24\.6 2\.5 29\.6 1\.9 21\.5 2\.9 25\.5 4\.5 29\.6 6\.7
Administration 6\.3 3\.2 7\.6 7\.5 9\.1 8\.7 10\.6 9\.4 12\.2 11\.6 16\.0 14\.4 20\.5 18\.7 24\.3 19\.1 27\.9 20\.5
Fuel & Power 1\.0 1\.2 1\.7 1\.8 2\.4 1\.9 2\.6 2\.9 5\.9 3\.9 7\.7 6\.1 9\.1 7\.9 10\.0 10\.1 11\.2 12\.2
Treatment Works - - - - - - - - - - 45\.6 - 51\.5 - 58\.3 - 65\.6 -
Connection Costs 10\.1 \.8 12\.5 7\.4 13\.7 6\.6 14\.7 10\.0 16\.0 18\.4 17\.2 25\.8 23\.1 25\.8 24\.3 33\.3 26\.2 30\.1
Depreciation 31\.0 30\.1 33\.4 30\.6 36\.6 31\.1 41\.2 32\.6 46\.4 34\.2 84\.0 36\.3 121\.2 47\.3 126\.3 63\.9 131\.9 93\.1
Total Expenses 87\.9 59\.5 136\.3 84\.1 161\.5 100\.3 186\.1 127\.4 217\.2 162\.5 34C\.0 218\.5 423\.3 280\.9 477\.6 343\.5 533\.9 419\.2
uperating Income (27\.9) (6\.4) (40\.3) (18\.3) 19\.5 (35\.5) 60\.0 (12\.3) 116\.4 11\.9 187\.6 123\.1 268\.2 96\.4 277\.0 87\.8 269\.6 124\.9
i1tterest Expenses - - 5\.5 1\.2 17\.7 \.1 39\.2 - 89\.8 - 155\.7 - 191\.7 - 184\.3 - 177\.1 \.2
t4ut Income (27\.9) (6\.4) (45\.8) (19\.S) 1\.8 (35\.6) 20\.8 (12\.3) 26\.6 11\.9 31\.9 123\.1 76\.5 96\.4 92\.7 87\.8 92\.5 124\.7
uoerating Ratio 1\.47 1\.12 1\.42 1\.28 \.89 1\.55 \.76 1\.11 \.65 \.93 \.65 \.64 \.61 \.74 \.63 \.80 \.66 \.74
Net Income as X of
Net Plant in
operation plus
Work-in-Progress (2\.2) (0\.5) (3\.2) (1\.6) 0\.1 (3\.0) 0\.9 (1\.0) 0\.8 0\.9 0\.7 8\.3 1\.6 4\.5 1\.9 2\.6 1\.7 2\.3
I-\.
Li
THE HELLENIC STATE
SALOMICA AND VOLOS SEWERAGE PROJECT (LOAN 1245 -GI
P803=C COMLETTON REMOR
SALOKICA SB4RAG;E AU"IRTY
Balance Sheets as of December 31
(in Million Drachoas)
Ant\. A-\. Ant\. A" Ant\. Ank\. An\. Ac\. An\. Ai\. A\. \. Ant\. A\. Ant\. A" An-\. Ask\.
Fixed Assets
Plant in
Operation 1290\.0 1207\.6 1380\.0 1238\.0 1550\.0 1246\.9 1749\.S 1338\.9 1965\.0 1378\.1 4752\.8 1565\.3 4943\.4 2214\.3 5157\.5 2900\.0 5391\.2 4564\.0
Less:
Oepreciation 31\.1 30\.1 64\.5 60\.7 10',1 91\.7 142\.3 124\.3 188\.8 158\.5 272\.7 195\.3 394\.0 242\.5 320\.2 306\.5 652\.1 199\.6 1
Net Plant in 1258\.9 1177\.5 1315\.5 1177\.3 1448\.9 1155\.2 1607\.2 1234\.6 1776\.2 1219\.6 4480\.1 1370\.0 4549\.4 1971\.6 437\.3 2593\.5 4739\.1 416\.4
Operation
Work in Progress - - 109\.9 7\.6 312\.1 38\.0 771\.7 39\.3 1692\.2 113\.4 - 113\.2 179\.7 187\.0 361\.7 722\.8 561\.9 1221\.5
LOng-Term
Investments 175\.5 271\.2 140\.5 373\.6 105\.5 463\.2 70\.5 534\.2 35\.5 669\.5 - 890\.1 - 1201\.1 - 1631\.9 - 1949\.2
Total Fixed 1434\.4 1448\.7 1565\.9 1558\.5 1866\.5 1656\.4 2449\.4 1808\.1 3503\.9 2002\.5 4480\.1 2373\.3 4729\.1 3360\.1 4999\.0 4948\.2 5301\.0 7335\.1
Assets
Current Assets
Cash & Banks 16\.3 9\.5 16\.6 11\.3 19\.2 10\.8 21\.6 9\.8 24\.7 17\.5 31\.3 5\.0 35\.0 8\.0 40\.3 9\.1 45\.7 10\.5
Accounts
Receivable 12\.0 4\.8 19\.2 6\.7 36\.2 7\.1 49\.2 7\.9 66\.7 20\.0 106\.7 6\.3 138\.3 5\.3 150\.9 7\.2 160\.7 8\.7
Inventories 1\.7 \.4 5\.4 \.5 6\.2 \.5 \. 7\.1 \.7 8\.2 \.9 12\.4 \.9 12\.4 \.7 12\.4 \.7 14\.2 \.8
30\.0 14\.7 41\.2 18\.5 61\.6 18\.4 77\.9 18\.4 99\.6 38\.4 150\.4 12\.2 185\.7 14\.0 203\.6 17\.0 220\.6 20\.0
TOTAL ASSETS 1464\.4 1463\.4 1607\.1 1577\.0 1928\.1 1674\.8 2527\.3 1826\.5 3603\.5 2040\.9 4630\.5 2385\.5 4914\.8 3374\.1 5202\.6 4965\.2 5521\.6 7355\.1
m a
0
usI
12Th 1222 I2= 1222 12M 1981 1211 1 1J
AR - AQC- - ARr AU \. Mr BA\. M- BQC- A=- a- \.K act- Mr- MC L- M-
EOUIITY ANSD LIABILITIES:
Eat
Capital 1385\.2 1385\.2 1385\.2 1385\.2 1385\.2 1385\.2 1385\.2 1385\.2 1385\.2 1385\.2 1385\.2 1385\.2 1385\.2 1385\.2 1385\.2 1385\.2 1385\.2 1385\.2
Retained
Earnings (27\.9) (6\.4) (73\.7) (25\.9) (71\.9) (61\.4) (S1\.1) (73\.8) (24\.6) (61\.9) 7\.4 61\.2 83\.8 187\.6 176\.6 245\.4 269\.1 370\.1
Property Tax 97\.0 73\.3 207\.0 164\.6 331\.0 273\.5 468\.0 399\.3 621\.0 543\.4 790\.0 697\.9 975\.0 980\.7 1182\.0 1387\.2 1410\.0 1758\.9
1454\.3 1452\.1 1518\.5 1523\.9 1644\.3 1597\.3 1802\.1 1710\.7 1981\.6 1866\.7 2182\.6 2144\.3 2444\.0 2523\.5 2743\.8 3017\.8 3064\.3 3S14\.2
Long-Term Debt - 52\.8 - 207\.5 - 603\.1 - 1446\.8 - 2211\.3 6\.7 2195\.4 553\.7 2138\.5 1S8S\.7 2088\.4 3401\.7
Current
Liabilities 2\.6 5\.3 - 6\.3 - 7\.2 - 8\.9 - 13\.0 10\.3 12\.8 20\.1 14\.9 23\.0 17\.0 44\.0
Consumer
Contributions 7\.S 11\.3 30\.5 53\.1 70\.0 77\.5 114\.9 115\.8 166\.2 174\.2 223\.6 224\.2 262\.6 276\.8 30S\.4 338\.7 351\.9 395\.2
TOTAL EQUITY
4ND LIABILITIES 1464\.4 1463\.4 1607\.1 1577\.0 1928\.1 1674\.8 2527\.3 1826\.5 3603\.5 2040\.9 4630\.5 2385\.5 4914\.8 3374\.1 5202\.6 4965\.2 S521\.6 7355\.1 t\.
Debt/Oebt
Plus Equity (%) - - 3 - 12 - 25 * 42 - 50 - 47 to 44 34 41 49
Is
0
Fh
THE HELLENIC STATE
SALONICA AND VOLOS SEWERAGE PROJECT tLOAN 134S-GR)
PRQoECT Cm4PLETIoN REP4Rt
VOLOS WATER AND SEUERAGE AUTHORITY
tnKXal Statements
(in "illon Orachmas)
1979 ~ ~ in JLsl 1982 !9sa
Appraisal Actual Appraisal Actual Appraisal Acual Appraisal Acal Appraisal Actual An raisa1 Actual
water Supply and Sewerage
Service 62\.8 - 104\.1 71\.2 127\.2 92\.0 137\.5 109\.6 146\.6 144\.3 157\.4 1S9\.4
a w%ection Charges 8\.0 32\.3 11\.6 14\.9 5\.7 21\.4 7\.7 20\.0 7\.6 20\.8 8\.0 14\.8
b"t2d ELtate Tax - - - - - 17\.0 - 28\.5 - 35\.0 - 68\.5
(\.ther 4\.6 20\.7 4\.3 11\.3 3\.9 3\.1 4\.0 17\.6 4\.1 27\.1 4\.2 24\.8
75\.6 53\.0 120\.0 97\.4 136\.8 133\.5 149\.2 17S\.7 158\.3 227\.2 169\.6 267\.5
AdMinistrative, Salaries
s Wages 19\.2 18\.6 30\.5 43\.2 36\.0 SS\.4 40\.2 72\.1 44\.5 64\.9 49\.5 109\.2
operation & Haintenance 12\.2 4\.7 18\.0 15\.4 20\.5 19\.3 23\.1 4*\.3 25\.6 46\.6 28\.3 39\.4
Other 11\.4\. 2\.2 14\.5 4\.8 7\.1 10\.1 9\.7 14\.4 9\.5 13\.7 10\.0 11\.3
Depreciation 8\.1 - 1S\.0 - 27\.3 - 33\.7 - 3S\.0 - 36\.5 -
50\.9 25\.S 78\.0 63\.4 90\.9 84\.8 106\.7 128\.8 114\.6 145\.2 124\.3 1S9\.9
wet Operating Income 24\.7 27\.5 42\.0 34\.0 45\.9 4U\.7 42\.5 46\.9 43\.7 U2\.0 45\.3 107\.6
Interest 1\.7 - 1\.7 - 1\.6 - 38\.5 - 38\.0 - 38\.8 -
net Income 23\.0 27\.5 40\.3 34\.0 44\.3 48\.7 4\.0 46\.9 5\.7 82\.0 6\.5 107\.6
Operating Ratio \.67 1\.02 I/ \.65 \.95 A/ \.66 \.86 WIL \.72 \.97 1/ \.72 \.88 \.73 \.62 A/
met Income as t of Net Plant
in Operation Plan Work-in-
Progress 3\.3 2\.0 4\.1 2\.4 3\.4 3\.4 0\.3 2\.4 0\.5 3\.2 0\.5 4\.0
A/ Expenses adjusted by equivalent of fl of Gross Fixed Assets in lieu of Depreciation\.
0
IUq
THE HELLENIC STATE
SALONICA AND VOLQS SEWERAGE PROJECT (LOAN 1345-GRI
PROJECT COMPLETION REPORT
VOLOS WATER AND SEWERAGE AUTHORITY
Balance Sheets as of December 31
(in Million Orachmas)
Appraisal Actual Anpraiaal Acal Aparaisal Actual Apnraisal Actual Anraisa Actual Appraisal Actual
ASSET
Fixed Assets
Plant in Operation 282\.7 802\.7 1263\.8 1305\.4 1361\.0 1421\.1
Less: Depreciation 53\.7 68\.7 96\.0 129\.6 164\.6 201\.1
229\.0 734\.0 1167\.8 1175\.8 1196\.4 1220\.0
viork-in-Progress 467\.3 244\.3 - - - 20\.0
rotal Fixed Assets 696\.3 1422\.6 978\.3 1481\.8 1167\.8 1517\.7 1175\.8 2124\.5 1196\.4 2777\.5 1240\.0 2955\.3
Current Assets
Cash & Banks 5\.5 20\.0 7\.6 3\.4 7\.6 2\.6 8\.8 5\.9 9\.4 4\.4 10\.5 56\.8
Receivables 15\.1 2\.2 24\.0 3\.7 27\.4 4\.2 29\.8 S\.S 31\.7 18\.4 33\.9 13\.2
Inventory 1\.7 2\.0 2\.3 2\.4 2\.6 3\.8 2\.9 4\.6 3\.2 8\.2 3\.5 8\.8
22\.3 24\.2 33\.9 9\.S 37\.6 10\.6 41\.5 16\.0 44\.3 31\.0 47\.9 78\.8
TOTAL ASSETS 718\.6 1446\.8 1012\.2 1491\.3 1205\.4 1528\.3 1217\.3 2140\.5 1240\.7 2808\.5 1287\.9 3034\.1
L UITY AND LIABILITIES
Capital 182\.3 1345\.0 182\.3 1345\.0 182\.3 1345\.0 182\.3 1345\.0 182\.3 1345\.0 182\.3 1345\.0
Retained Earnings 51\.2 27\.6 91\.5 ;1\.5 135\.8 109\.2 139\.9 157\.1 145\.6 239\.1 152\.1 346\.7
Grants 135\.7 - 222\.8 - 276\.8 - 276\.8 224\.9 276\.8 398\.8 276\.8 S20\.9
369\.2 1372\.6 496\.6 1406\.5 594\.9 1455\.2 599\.0 1727\.0 604\.7 1982\.9 611\.2 2212\.6
Debts 252\.8 74\.2 388\.1 84\.8 473\.3 73\.1 470\.3 413\.5 473\.8 825\.6 498\.7 821\.5
Lonbumer Contribution 96\.6 - 127\.5 - 137\.2 - 148\.0 - 162\.2 - 178\.0 -
rOTAL EQUITY & LIABILITIES 718\.6 1446\.8 1012\.2 1491\.3 1205\.4 1528\.3 1217\.3 2140\.5 1240\.7 2808\.5 1287\.9 3034\.1
Debt/Debt Plus Equity (%) 41 5 44 6 44 5 44 19 44 29 4S 27 °° >c
0
US i | APPROVAL |
P176943 | FOR OFFICIAL USE ONLY
Report No: PAD4578
INTERNATIONAL DEVELOPMENT ASSOCIATION
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED CREDIT
IN THE AMOUNT OF US$40 MILLION
AND A TRUST FUND GRANT FROM THE EUROPEAN UNION CARIBBEAN REGIONAL RESILIENCE
BUILDING FACILITY MANAGED BY THE GLOBAL FACILITY FOR DISASTER REDUCTION AND
RECOVERY
IN THE AMOUNT OF US$2 MILLION
TO
SAINT VINCENT AND THE GRENADINES
FOR A
VOLCANIC ERUPTION EMERGENCY PROJECT
November 14, 2021
Urban, Resilience and Land Global Practice
Latin America and the Caribbean Region
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective September 30, 2021)
Currency Unit = East Caribbean Dollar (EC$)
US$1\.00 = EC$2\.71
FISCAL YEAR
January 1 â December 31
Regional Vice President: Carlos Felipe Jaramillo
Country Director: Lilia Burunciuc
Regional Director: Anna Wellenstein
Practice Manager: David N\. Sislen
Task Team Leaders: Elad Shenfeld and Jared Mercadante
ABBREVIATIONS AND ACRONYMS
BRAGSA Roads, Buildings, and General Services Authority
BOSVG Bank of Saint Vincent and the Grenadines
CCA Climate Change Adaptation
CDEMA Caribbean Disaster Emergency Management Agency
CDRP Country Disaster Risk Profile
CPA Country Poverty Assessment
CWSA Central Water and Sewerage Authority
DDSA Detailed Damage Sectoral Analysis
DFIL Disbursement and Financial Information Letter
DPRCA Disaster Preparedness and Response Capacity Assessment
DRM Disaster Risk Management
DRR Disaster Risk Reduction
E&S Environmental and Social
EP&R Emergency Preparedness and Response
ESCP Environmental and Social Commitment Plan
ESF Environmental and Social Framework
ESIA Environmental and Social Impact Assessment
ESMF Environmental and Social Management Framework
ESMP Environmental and Social Management Plan
EU European Union
FAA Finance Administration Act
FM Financial Management
GDP Gross Domestic Product
GFDRR Global Facility for Disaster Reduction and Recovery
GoSVG Government of Saint Vincent and the Grenadines
GRADE Global Rapid Post-Disaster Damage Estimation
GRID Green, Resilient, and Inclusive Development
GRM Grievance Redress Mechanism
GRS Grievance Redress Service
ICR Implementation Completion and Results Report
ICT Information and Communication Technology
IDP Internally Displaced Person
IFR Interim Financial Report
IMF International Monetary Fund
IPF Investment Project Financing
LITE Labor-Intensive Temporary Employment
M&E Monitoring and Evaluation
MoA Ministry of Agriculture, Forestry, Fisheries, Rural Transformation, Industry and Labour
MoFEP Ministry of Finance, Economic Planning, and Information Technology
MoNM Ministry of National Mobilization, Social Development, Family, Gender Affairs,
Youth, Housing, and Informal Human Settlement
MoTW Ministry of Transport, Works, Lands, and Physical Planning
MTR Midterm Review
NEDM National Emergency and Disaster Management
NEMO National Emergency Management Organization/Office
OECS Organisation of Eastern Caribbean States
PDO Project Development Objective
POM Project Operations Manual
PPE Personal Protective Equipment
PPSD Project Procurement Strategy for Development
PSC Project Steering Committee
RAP Resettlement Action Plan
RDVRP Regional Disaster Vulnerability Reduction Project
RPF Resettlement Policy Framework
RPS Regional Partnership Strategy
SEA/SH Sexual Exploitation and Abuse and Sexual Harassment
SEP Stakeholder Engagement Plan
SIDS Small Island Developing States
SRD Systematic Regional Diagnostic
SPN Specific Procurement Notices
STEP Systematic Tracking of Exchanges in Procurement
UN United Nations
WBG World Bank Group
TABLE OF CONTENTS
I\. STRATEGIC CONTEXT \. 7
A\. Country Context \. 7
B\. Sectoral and Institutional Context \. 10
C\. Relevance to Higher Level Objectives\. 13
II\. PROJECT DESCRIPTION\. 15
A\. Project Development Objective\. 15
B\. Project Components \. 15
C\. Project Beneficiaries \. 22
D\. Results Chain\. 23
E\. Rationale for Bank Involvement and Role of Partners \. 24
F\. Lessons Learned and Reflected in the Project Design \. 25
III\. IMPLEMENTATION ARRANGEMENTS\. 27
A\. Institutional and Implementation Arrangements\. 27
B\. Results Monitoring and Evaluation Arrangements\. 28
C\. Sustainability\. 29
IV\. PROJECT APPRAISAL SUMMARY\. 30
A\. Technical, Economic and Financial Analysis \. 30
B\. Fiduciary\. 32
C\. Legal Operational Policies \. 36
D\. Environmental and Social \. 36
V\. GRIEVANCE REDRESS SERVICES \. 41
VI\. KEY RISKS \. 41
VII\. RESULTS FRAMEWORK AND MONITORING\. 43
ANNEX 1: Implementation Arrangements and Support Plan \. 54
ANNEX 2: Candidate Activities \. 64
ANNEX 3: Global Rapid Post-Disaster Damage Estimation (GRADE) \. 70
ANNEX 4: Country Map \. 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
DATASHEET
BASIC INFORMATION
BASIC_INFO_TABLE
Country(ies) Project Name
St\. Vincent and the
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project
Grenadines
Environmental and Social Risk
Project ID Financing Instrument Process
Classification
Urgent Need or
Investment Project
P176943 Substantial Capacity Constraints
Financing
(FCC)
Financing & Implementation Modalities
[ ] Multiphase Programmatic Approach (MPA) [ ] Contingent Emergency Response Component (CERC)
[ ] Series of Projects (SOP) [ ] Fragile State(s)
[ ] Performance-Based Conditions (PBCs) [â] Small State(s)
[ ] Financial Intermediaries (FI) [ ] Fragile within a non-fragile Country
[ ] Project-Based Guarantee [ ] Conflict
[ ] Deferred Drawdown [â] Responding to Natural or Man-made Disaster
[ ] Alternate Procurement Arrangements (APA) [ ] Hands-on Enhanced Implementation Support (HEIS)
Expected Approval Date Expected Closing Date
30-Nov-2021 30-Dec-2026
Bank/IFC Collaboration
No
Proposed Development Objective(s)
The Project Development Objective (PDO) is to support Saint Vincent and the Grenadines to (i) provide short-term
income support, (ii) improve the capacity of the government to prepare for and respond to emergencies, and (iii)
build back better critical services in the wake of the La Soufriere volcano eruption\.
Page 1 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
Components
Component Name Cost (US$, millions)
Component 1: Early recovery income support 7,500,000\.00
Component 2: Restoration and âBuilding Back Betterâ of critical services, and
29,000,000\.00
strengthening of emergency preparedness and response capacity
Component 3: Project Management 3,500,000\.00
Organizations
Borrower: St\. Vincent and the Grenadines
Implementing Agency: Ministry of Finance, Economic Planning, and Information Technology
PROJECT FINANCING DATA (US$, Millions)
SUMMARY -NewFin1
Total Project Cost 42\.00
Total Financing 42\.00
of which IBRD/IDA 40\.00
Financing Gap 0\.00
DETAILS -NewFinEnh1
World Bank Group Financing
International Development Association (IDA) 40\.00
IDA Credit 40\.00
Non-World Bank Group Financing
Trust Funds 2\.00
Global Facility for Disaster Reduction and Recovery 2\.00
IDA Resources (in US$, Millions)
Credit Amount Grant Amount Guarantee Amount Total Amount
Page 2 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
St\. Vincent and the
40\.00 0\.00 0\.00 40\.00
Grenadines
National PBA 40\.00 0\.00 0\.00 40\.00
Total 40\.00 0\.00 0\.00 40\.00
Expected Disbursements (in US$, Millions)
WB Fiscal Year 2022 2023 2024 2025 2026 2027
Annual 5\.00 13\.19 5\.73 5\.36 5\.26 5\.46
Cumulative 5\.00 18\.19 23\.92 29\.28 34\.54 40\.00
INSTITUTIONAL DATA
Practice Area (Lead) Contributing Practice Areas
Agriculture and Food, Social Protection & Jobs, Transport,
Urban, Resilience and Land
Water
Climate Change and Disaster Screening
This operation has been screened for short and long-term climate change and disaster risks
SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT)
Risk Category Rating
1\. Political and Governance â« Moderate
2\. Macroeconomic â« Moderate
3\. Sector Strategies and Policies â« Moderate
4\. Technical Design of Project or Program â« Moderate
5\. Institutional Capacity for Implementation and Sustainability â« Moderate
6\. Fiduciary â« Substantial
7\. Environment and Social â« Substantial
8\. Stakeholders â« Moderate
9\. Other â« Moderate
Page 3 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
10\. Overall â« Moderate
COMPLIANCE
Policy
Does the project depart from the CPF in content or in other significant respects?
[ ] Yes [â] No
Does the project require any waivers of Bank policies?
[ ] Yes [â] No
Environmental and Social Standards Relevance Given its Context at the Time of Appraisal
E & S Standards Relevance
Assessment and Management of Environmental and Social Risks and Impacts Relevant
Stakeholder Engagement and Information Disclosure Relevant
Labor and Working Conditions Relevant
Resource Efficiency and Pollution Prevention and Management Relevant
Community Health and Safety Relevant
Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Relevant
Biodiversity Conservation and Sustainable Management of Living Natural Relevant
Resources
Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Not Currently Relevant
Local Communities
Cultural Heritage Relevant
Financial Intermediaries Not Currently Relevant
NOTE: For further information regarding the World Bankâs due diligence assessment of the Projectâs potential
environmental and social risks and impacts, please refer to the Projectâs Appraisal Environmental and Social
Review Summary (ESRS)\.
Page 4 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
Legal Covenants
Sections and Description
Legal Covenants
⢠Schedule 2, Section I(A)(1)(b): The Recipient, through MoFEP, shall engage and hire an environmental
specialist and a social specialist no later than ninety (90) days as of the Financing Agreementâs Effective Date\.
⢠Schedule 2, Section I(A)(1)(c): The Recipient, through MoFEP, shall develop and adopt a POM, satisfactory to
IDA, no later than thirty (30) days as of the Effective Date\.
⢠Schedule 2, Section I(A)(1)(e): The Recipient, through MoFEP, shall contract an external, independent private
audit firm, acceptable to IDA, with terms of reference acceptable to IDA, no later than six (6) months after the
Effective Date, who will be mandated to conduct an audit of the Project on an annual basis\.
⢠Schedule 2, Section I(C)(1): The Procurement Plan shall set forth which contracts shall be financed with
resources from the Financing Agreement and which contracts shall be financed with resources from the Co-
Financing (Grant) Agreement\.
⢠Schedule 2, Section I(C)(2): To facilitate the carrying out of Parts 1\.1(a) and 1\.2(a) of the Project, the
Recipient shall make part of the proceeds of the Credit available to Beneficiaries by entering into an agreement
with the Financial Institution\.
Conditions
Type Financing source Description
Disbursement IBRD/IDA Disbursement conditions
⢠Schedule 2, Section B(1): No withdrawal shall be made with
regard to the withdrawal table of the Financing Agreement:
(a) for payments made prior to the Signature Date, except that
withdrawals up to an aggregate amount not to exceed $16,000,000
may be made for payments made prior to this date but on or after
April 9, 2021, for Eligible Expenditures under Category (2)\.
(b) under Category 1 until the Recipient, through MoFEP, has
entered into the Implementation Agreement with the Financial
Institution and that the Implementation Agreement has become
effective\.
(c) under Category 2 until the Co-Financing Agreement has been
Page 5 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
executed and all conditions precedent to its effectiveness have
been fulfilled\.
⢠Legal Opinion\. With respect to the provisions of Section
10\.02 of the General Conditions under the Financing Agreement,
the Recipient has confirmed that no additional actions will be
required to be undertaken after the signing of the Financing
Agreements for it to be considered legally binding\. Unless in the
Associationâs opinion the circumstances that justified its decision
change, the Association will rely on the Recipientâs representation
and warranty described in Section 9\.02 (b) of the General
Conditions\.
⢠Acceptance of the Negotiated Documents\. The Recipient
Delegation confirms its agreement with the negotiated legal
agreement(s) and that these Minutes constitute the full and final
agreement of the Recipient with the aforementioned documents,
and that no additional confirmation or evidence of approval of
these documents is required prior to the submission of the
proposed financing for the consideration by IDAâs Executive
Directors\.
Page 6 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
I\. STRATEGIC CONTEXT
A\. Country Context
1\. Between December 28, 2020, and April 8, 2021, the La Soufrière Volcano in St\. Vincent and the
Grenadines experienced effusive eruptions, culminating in explosive eruptions on April 9, 12, and 13\.
Preliminary assessments suggest that, although the explosive eruptions have paused, episodic volcanic
activity may continue for another three to nine months, following the pattern of the 1902 eruptions, which
lasted for 11 months from May 1902 to March 1903\. The recent series of eruptions covered the entire
country in layers of ash, with the heaviest concentrations occurring in the northwestern part of the island
closest to the volcano\. The eruptions also generated massive amounts of gas and superheated pyroclastic
flows, which destroyed virtually everything in their path, including trees and structures\. They left behind
significant tephra (volcanic debris) deposits\. Heavy rains following the explosive eruptions mobilized ash
concentrations on the volcanoâs slopes, resulting in lahar flows1 which, according to the University of the
West Indies Seismic Research Center, remain a threat during the rainy/hurricane season\.
2\. Although there was no loss of life, due to an effective monitoring system and successful
evacuations, the eruptions have directly affected the entire population, further compounding the
effects of COVID-19 and generating estimated gross financing needs of US$175 million (23 percent of
gross domestic product [GDP])2 in 2021\. Approximately 22,400 persons were evacuated from the red and
orange3 zones\. Approximately half of the evacuees (around 11,000) remained in public shelters, and
private residences through the end of July\.4 Of the total displaced persons, about 37 percent were
considered vulnerable: 12 percent were children, 10 percent were elderly, and 15 percent were vulnerable
for medical or other reasons\.5 About 60 percent of the displaced persons identified as women or girls\. The
Government of St\. Vincent and the Grenadines (GoSVG) reduced the volcano alert level from red to orange
on May 6, 2021, and further to yellow on September 15, 2021, allowing evacuated residents from the red
and orange zones to return to their homes\. However, as of October 15, 2021, there were still 127 persons
in nine public shelters and 323 in private residences\. The GoSVG is still providing food, water, sanitary,
and safety supplies for persons in the shelters, those who have returned home, and most displaced
persons remaining in private residences, including their hosts\.6
3\. Though all areas in the red zone are now fully accessible, the volcano continues to be active,
and future eruptive activity cannot be discounted at this time\. In addition, large accumulations of tephra
remain perched in the upper watersheds, particularly in the islandâs northern reaches\. The steep
topography of the island, coupled with rainfall events, has the potential to promote the movement of the
1 Lahar is an Indonesian term that describes a hot or cold mixture of water and rock fragments that flows down the slopes of a
volcano and typically enters a river valley\. This hazard is heightened by rain\.
2 International Monetary Fund: IMF Country Report No\. 21/157\.
3 Red Zone â very high hazard zone and Orange Zone â high hazard zone, 2014 update of the La Soufrière Volcanic Hazard
Management map for St\. Vincent Island, University of West Indies, Seismic Research Centre\.
4 Caribbean Disaster Emergency Management Agency (CDEMA) Situation Report, May 18, 2021\. https://www\.cdema\.org/\.
5 National Emergency Management Organization (NEMO) and United Nations (UN) World Food Programme\. May 6, 2021\.
National Evacuation Report\.
6 This facility whereby all displaced persons receive assistance is scheduled to end by December 31, 2021
Page 7 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
accumulated material to downstream inhabited areas, further threatening lives, livelihoods, and
infrastructure\.
4\. St\. Vincent and the Grenadines is highly vulnerable to geophysical and hydrometeorological
events\. Volcanic eruptions, earthquakes, and climate change-related events such as hurricanes, floods,
drought, and landslides threaten economic stability, and the populationâs safety and well-being\.7 The
Organisation of Eastern Caribbean States (OECS) Systematic Regional Diagnostic (SRD), completed in
20188, found that the vulnerability of St\. Vincent and the Grenadines to climate change and natural
hazards is a key constraint to development\. The most recent 2018 ranking of the Global Climate Risk Index
places St\. Vincent and the Grenadines at 135 out of 140+ countries, alongside other countries including
The Bahamas, Liberia, and The Gambia\.9 Between 1997 and 2016, disasters in St\. Vincent and the
Grenadines were associated with annual damage and losses of US$11\.3 million per year, equivalent to an
annual loss of 1\.2 percent of its GDP\.10 Recent emergencies, including Hurricane Ivan (2004), Hurricane
Tomas (2010), and the Christmas Trough (2013), produced major flooding throughout the island\. In 2016,
additional flooding from a slow-moving trough system caused widespread damage\. Forecasting models
predict that the Atlantic hurricane season, which runs from June to November 2021 and coincides with
the rainy season, will be more active than the regular season\.11 This will likely lead to further damages
due to the volcanic ash deposits until the landscape is stabilized\.
5\. As a Small Island Developing State (SIDS), St\. Vincent and the Grenadines is also particularly
vulnerable to climate change impacts\. The most common threat to St\. Vincent and the Grenadines is the
potential for hurricanes, tropical storms, and weather-induced floods due to its location in the path of the
Atlantic hurricane belt\. This has accounted for 81 percent of the countryâs natural hazard events between
1900 and 2018\.12 High winds and rainfall, coupled with the mountainous terrain, are the principal risk
factors\. Landslides are also significant hazards, and the risk is elevated during the seasonal rains\. Coastal
flooding is also a major concern, particularly relating to storm surges and high wave action, as well as sea-
level rise\. The Grenadines have no rivers, and rainwater harvesting is their primary source of water; hence,
they are more susceptible to drought\.13 These climate change impacts have created vulnerabilities in
agricultural production and critical infrastructure for basic services, including water, communications, and
transport\. St\. Vincent and the Grenadines has been proactive in addressing these issues\. It has conducted
two National Communications on Climate Change (2000 and 2015) under the United Nations Framework
Convention on Climate Change and prepared its Strategy for Climate Resilience (2011) under the Pilot
Program for Climate Resilience (PPCR) under the Regional Disaster Vulnerability Reduction Project (RDVRP
â P117871)\. The RDVRP has advanced several activities specifically designed to address climate
7 Water security indicators for St\. Vincent and the Grenadines show that the country faces water scarcity with less than 1,000
m3 of renewable water resources per capita per year\. http://www\.fao\.org/aquastat/en/\.
8 Report Number: 127046-LAC
9 GLOBAL CLIMATE RISK INDEX 2020: Who Suffers Most from Extreme Weather Events? Weather-Related Loss Events in 2018
and 1999 to 2018, David Eckstein, Vera Künzel, Laura Schäfer, Maik Winges, Briefing Paper, Germanwatch, Bonn\.
10 OECS average computed using data from: Eckstein, David, Vera Künzel, and Laura Schäfer\. 2017\. âGermanwatch 2018 Climate
Risk Index: Who Suffers Most from Extreme Weather Events? Weather-Related Loss Events in 2016 and 1997 to 2016\.â Briefing
Paper, Germanwatch, Bonn\.
11 National Oceanic and Atmospheric Administration(NOAA) Climate Prediction Center, May 20, 202: NOAA predicts another
active Atlantic hurricane season | National Oceanic and Atmospheric Administration
12 https://climateknowledgeportal\.worldbank\.org/country/st-vincent-and-grenadines/vulnerability\.
13 World Bank Climate Change Knowledge Portal\. St\. Vincent and the Grenadines\. Accessed June 2021\.
https://climateknowledgeportal\.worldbank\.org/country/st-vincent-and-grenadines\.
Page 8 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
vulnerability, including resilient infrastructure, data collection for climate adaptation, policy reforms, and
education and awareness-building activities\.
6\. In addition to the climate change impacts, the COVID-19 pandemic also had long-term impacts
on productivity, income growth, and social cohesion\. The pandemic has contributed to the further loss
of jobs and an increase in poverty which may, in turn, affect the indicators in the tourism, transportation,
and logistics sectors of St\. Vincent and the Grenadines\. Official statistics put COVID-19 cases at 5,204 (as
of November 11, 2021), with 71 deaths (the number of COVID cases is 4\.7 percent of the population)\. The
number of COVID-19 cases represents approximately 2 percent of the population\. Actual cases are likely
significantly higher\. The volcanic eruptions came when the Government was managing its COVID-19
impacts and seeing reductions in the number of cases and increased vaccine distribution\. However, the
COVID-19 outlook is expected to worsen due to the number of evacuated persons in emergency shelters
where social distancing is more challenging\. To date, 79 cases of COVID-19 have been attributed to
evacuees in shelters, and two shelters were locked down following the discovery of the virus\.
7\. The poor and vulnerable communities of St\. Vincent and the Grenadines have been the most
affected by and susceptible to the recent volcanic eruptions and previous disaster-related events\. The
last Country Poverty Assessment (CPA) (2007â2008) found that the highest ratios of the population
classified as âpoorâ were concentrated in Georgetown and Sandy Bay (55\.6 percent)14 and Chateaubelair
(43\.1 percent) census divisions\. These census divisions are located mostly within the âredâ volcanic hazard
zone, representing about 15,381 people, equivalent to approximately 3,800 households\. This suggests
that many displaced households are at risk of falling further into poverty and, in some cases, indigence,
particularly with the impact on their livelihoods stemming from the destruction of crops, livestock, and
fisheries\. Although national poverty decreased from 37\.5 percent in 1995/96 to just over 30 percent in
2008,15 frequent shocks like these to the economy and households continue to be a barrier to poverty
reduction\.
8\. The countryâs economy is expected to contract by 6\.116 percent in 2021 due to the volcanic
eruption and the ongoing COVID-19 shock, following a 3 percent contraction in 2020 and flat growth of
0\.5 percent in 2019\.17 As a consequence, the fiscal deficit may approach 9\.5 â 10 percent of GDP in 2021,
resulting in increased public debt levels\. St\. Vincent and the Grenadines currently benefit from a stable
and sound macroeconomic outlook supported by recently approved fiscal measures and a strong
commitment to further economic and fiscal reforms\. This assessment is reflected in improving growth
prospects, consistently low and stable inflation of 2 percent or less, and a forecasted decline in debt
following the port investment through the maintenance of primary budget surpluses and the
enshrinement of such targets in a Cabinet-approved Fiscal Responsibility Framework\. As noted in the July
2021 joint World Bank-International Monetary Fund (IMF) Debt Sustainability Analysis, conducted in
14 http://stats\.gov\.vc/stats/wp-content/uploads/2018/05/SVG-CPA-REPORT-_Vol-1\.pdf\. In the 2007/2008 CPA, the census
divisions of Sandy Bay and Georgetown were combined\.
15 Poverty rates are based on headcount rates in percentage in 2008 (latest data), as measured against the nationally
established poverty line\. Extreme poverty rates fell more substantially to 2\.9 percent in 2008 from 25\.7 percent in 1995\. The
next household survey and poverty assessment was completed in 2019, but the analysis of the information has not been
completed\.
16 St\. Vincent and the Grenadines: Request for Disbursement Under the Rapid Credit FacilityâPress Release; Staff Report; And
Statement by The Executive Director for St\. Vincent and the Grenadines: July 2021\. IMF Country Report No\. 21/157\.
17 https://www\.eccb-centralbank\.org/statistics/gdp-datas/comparative-report/2\. Accessed August 2021\.
Page 9 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
conjunction with the IMFâs Rapid Credit Facility financing, debt is considered sustainable, although St\.
Vincent and the Grenadines remain at high risk of debt distress\. The Government is committed to
achieving primary balances of no less than 2\.5 percent of GDP by 2025, putting the debt-to-GDP ratio on
a solid downward trajectory after 2021\.
9\. Early response measures taken by the GoSVG, including the timely activation of government
institutions, allowed for a rapid response to the volcanic eruptions and prevented the loss of lives due
to the explosive eruptions\. However, this has nearly depleted sectoral institutional resources and
severely strained Emergency Preparedness and Response (EP&R) systems\. On April 8, 2021, the Prime
Minister, in accordance with the National Emergency and Disaster Management (NEDM) Act, issued a
Notice of Declaration of Disaster as a result of the imminent explosive eruption of the volcano\. This Notice
of Declaration of Disaster activated sectoral and territorial institutions, allowing for the activation of
departmental, regional, and sectoral contingency plans to respond to the volcano\. This was followed by
the issuing of an evacuation order for high-risk northern communities (red and orange zones) to the
southern parts of the island\. The GoSVG also triggered the drawdown of US$20 million from the World
Bankâs Development Policy Loan with a Catastrophe Deferred Drawdown Option (P169956) to be used as
budget support and procured critical emergency goods, COVID-19 lab testing supplies, personal protective
equipment (PPE), and medical equipment through the World Bankâs RDVRP and OECS Regional Health
Project (P168539)\.
10\. Furthermore, the GoSVG mobilized US$50 million through the Supplemental Financing to the
Fiscal Reform and Resilience DPC Series (P176822), approved in June 2021, which provided financial
liquidity for large and unanticipated expenditure needs, including immediate humanitarian needs in the
wake of the volcano\. However, significant resources were already consumed to support some 22,40018
evacuees displaced in shelters and private homes and to implement public works interventions to clean
up ash and debris and protect infrastructure\. Financial resources and technical support are still needed to
address the damages caused to critical sectors across the country and support the GoSVG in building back
more resiliently\.
B\. Sectoral and Institutional Context
11\. A preliminary damage assessment (as of April 20, 2021) suggests that the estimated direct
damage to infrastructure, buildings, and crops total US$82 million (10\.4 percent of 2020 GDP)\.19
Potential continued eruption activity under a more prolonged volcanic scenario could bring damages to a
total as high as US$210 million (26\.6 percent of 2020 GDP)\. On top of the damage estimates, economic
losses are yet to be fully identified but are expected to be significant given the loss of jobs and livelihoods\.
It is also expected that there will be health impacts, especially on the most vulnerable, as a result of
extended exposure to ash, as well as persons who were/are congregated in shelters during the COVID-19
pandemic, and psychological impacts of the eruptions and displacement\.
12\. Through the Detailed Damage Sectoral Analysis (DDSA), coordinated by the Caribbean Disaster
Emergency Management Agency (CDEMA), the GoSVG assessed the impacts across key sectors,
including social, agriculture, health, water, electricity, and infrastructure\. As the volcanic eruption event
18 Detailed Damage Sectoral Analysis (DDSA)\.
19 Based on the World Bank Global Rapid Post-Disaster Damage Estimation (GRADE)\.
Page 10 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
is ongoing, the DDSA also provided projected costs for immediate to long-term support to affected
persons, infrastructure, and services\. The costs for delivering temporary to long-term support to the
displaced persons are estimated at over US$26 million, while projected costs for the development of a
vulnerability program, including temporary grants, amount to over US$6 million\.20
13\. The agriculture and fishery sectors have reported disproportionate damages amounting to
approximately US$64 million and total losses for agriculture in the red and orange zones affecting
approximately 3,151 farmers and fisherfolk from these areas\.21 According to the DDSA, 33 percent of the
displaced population are poor, and poor and vulnerable groups among the displaced people rely heavily
on agriculture as their primary source of employment and income\. Impacts within the agriculture and
fishing sectors have disproportionate effects on men and women, due to defined gender roles and
inequities\. For example, in fisherfolk households, men are responsible for repairing physical equipment
such as boats and nets and then can quickly return to the sea to earn an income\. By contrast, women tend
to manage household responsibilities, including any injuries or health-related concerns, care for the
children and the elderly, and reestablish household processes before resuming fishing\.
14\. Furthermore, while women are the managers at the household level, they may not be included in
decision-making processes or consulted on their needs and the cascading risks created when these needs
are not met\. Compounded with income loss and unemployment, the affected population also deals with
a sense of loss of community, self-agency, stress, and anxiety, increasing the demand for socioemotional
support\. While St\. Vincent and the Grenadines has limited social protection programs with established
links to disaster management, it implemented different response measures to preserve food security,
physical and mental integrity, and smooth consumption for the affected population\. These measures
comprised in-kind assistance such as support services which include life skills, psychosocial support, and
cash assistance such as emergency cash relief to selected households\. St\. Vincent and the Grenadines has
requested support to ensure the continuation of this assistance and to create a Labor-Intensive
Temporary Employment (LITE) program to support the recovery of basic community infrastructure\.
15\. The volcano also generated negative impacts and the ensuing destruction and damage of critical
public infrastructure may push back the economic recovery of key economic sectors (tourism and
agriculture)\. Critical sectors such as water, electricity, transport, and housing were greatly affected, and
the estimated cost of damage, including the cost of ash cleanup, is approximately US$27\.6 million\. The
impacts of the volcano and compounded impacts associated with climate change, including the
rainy/hurricane season, are particularly detrimental given their geographic concentration in the north of
the country, which has the highest percentage of poor and vulnerable communities\. While the central and
southern portions of the island were spared the impact of pyroclastic flows, accumulations of ashfall
damaged water, energy, and transport infrastructure assets;22 the latter might suffer further structural
damage due to the accumulated weight of the ash deposits\. Ash and debris have also reduced the depths
of river basins, thereby increasing the risk of floods\. Fine ash deposits, which present a continued
respiratory health issue, may also damage water and electricity infrastructure\. COVID-19 has already
20 Supplementary Estimates 2021\.
21 Food and Agriculture Organization of the UN Regional Office for Latin America and the Caribbean,
http://www\.fao\.org/americas/noticias/ver/en/c/1397638/\.
22 Including roadways, retaining walls, and bridges\.
Page 11 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
created a fragile economic situation in the country for the tourism and hospitality sectors\. The damage to
critical infrastructure is likely to affect these sectors further\.
16\. The impacts of the volcanic eruption also stretch across St\. Vincent and the Grenadinesâ
transport infrastructure network\. Based on reports from the GoSVG, in St\. Vincent and the Grenadines,
there are about 704\.2 km of road comprising 128\.1 km major roads, 118\.1 km secondary roads, and 458\.03
km minor roads or footpaths\. There are also many road crossings (fords and bridges) due to the many
rivers and streams in St\. Vincent and the Grenadines; and in the red and orange zones alone, there are 61
road crossings\. There are also about 366 public buildings in the country spanning education, health,
security, and administration\. As a consequence of the eruptions, preliminary damage to fords, bridges,
and buildings is estimated to be US$15\.8 million in the red zone and US$7\.6 million in the orange zone\.
Several significant buildings in these sectors have been rendered inoperable, including a medical
diagnostic facility, health centers that serve rural communities, schools, satellite emergency warehouses,
police stations, community centers, and an agriculture tissue culture facility\. As of August 18, 2021, the
damage to roadways has not yet been calculated as they are still being cleaned\.
17\. St\. Vincent and the Grenadines has taken important steps in the last decade to incorporate
disaster risk management (DRM) and climate change adaptation (CCA) into its sectoral development
policies and has also implemented numerous policies for emergency and disaster response and disaster
risk reduction (DRR)\. Disaster preparedness and emergency response in St\. Vincent and the Grenadines
is implemented under the NEDM Act No\. 15 of 2006, the Emergency Powers Act No\. 45 of 1970, and the
Natural Disaster (Relief) Act of 1947\. The NEDM Act establishes the disaster planning and response
framework for St\. Vincent and the Grenadines, and disaster management activities are conducted in
accordance with the National Disaster Response Plan (2005)\. This plan assigns planning, preparedness,
and response activities to the various agencies and representatives and assigns specific responsibilities to
agencies during disaster response\. The GoSVG plans to update its National Disaster Response Plan and
started working on this before the volcanoâs explosive eruption stage\.
18\. St\. Vincent and the Grenadines DRM system includes participatory institutional structures,
which have proven essential for effective disaster response\. The NEDM Act is executed through the
National Emergency Management Organization (NEMO), which consists of the National Emergency
Council, the National Emergency Executive Committee, and the District Disaster Management
Committees\. With the declaration of an emergency, NEMO leads the Emergency Operations Center and
the coordination of national agencies under the authority of the NEDM Act and the guidance of the
National Disaster Response Plan\. NEMO also spearheads communication with development partners in
coordination with CDEMA\. The National Emergency Council is chaired by the Prime Minister and is
composed of ministers; permanent secretaries; district representatives; and key ex officio members from
government agencies, corporations, businesses, and nongovernmental organizations\. District Disaster
Committees function at the local level and operate to implement planning and disaster response
operations in their respective districts\.
19\. The GoSVG is also scaling up and establishing programs to protect livelihoods\. At present, it
focuses on emergency response and relief operations; however, the GoSVG is committed to several short-
and medium-term efforts to support livelihoods and economic recovery\. This includes an emergency
employment program for ash cleanup and debris removal, a Continuity of Learning Program for school-
age children, a Return to Happiness program for psychosocial support, a preschool program (Growing
Page 12 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
Through the Ashes), and a grant program (Soufrière Relief Grant) for Internally Displaced Persons (IDPs),
among others\. The socioeconomic response plan highlights that the GoSVG is focusing on addressing
gender issues and meeting the needs of the most vulnerable IDPs\. The GoSVG has set aside US$7\.9 million
to scale up its social assistance program\.23
20\. The Government has focused its emergency response efforts on addressing urgent and critical
needs\. This included support for shelters, relief packages, and budgetary support to cover anticipated
expenditures for an extended period due to the expected compounded impacts of future eruptions and
the hurricane/rainy season\. Similarly, recurrent disruptions in water supply and power systems are
expected due to the volcano eruption and rainy/hurricane season, which will also affect the agriculture
and infrastructure sectors\. Damage to the agricultural sector is island-wide and will not recover until a
new crop cycle can be completed\. Infrastructure, also, will face continued threats until the landscape is
stabilized\. Therefore, in response to the volcano event, the GoSVG has requested a multipronged, flexible
financing package from the World Bank and other multilaterals\.
21\. The extent of the catastrophe has eclipsed the GoSVGâs capacity to mitigate its consequences\.
The economic costs of the volcanic eruption and related humanitarian efforts are significant and
compounded by the effects of COVID-19\. Government resources are insufficient to conduct a systemic
ash cleanup, restore basic services, and rehabilitate basic infrastructure, with gross financing needs
estimated at US$175 million (23 percent of 2020 GDP)24 in 2021\. Moreover, on top of the damages
estimated, economic losses are yet to be fully quantified but are expected to be significant given the loss
of jobs and livelihoods\. On May 6, 2021, the GoSVG sent an official letter to the World Bank expressing its
interest in accessing IDA 19 funds through (a) a budget support operation and (b) an emergency volcano
response project\. The proposed Project has the potential to mobilize additional parallel financing to help
St\. Vincent and the Grenadines build back better by integrating climate adaptation and mitigation
elements into the Project activities\. This will support a greener economy and deal with the intensifying
catastrophes caused by climate change and the worsening consequences of sea-level rise, heat-waves,
and other effects of global warming\.
C\. Relevance to Higher Level Objectives
22\. The World Bank Groupâs (WBG) engagement in St\. Vincent and the Grenadines is guided by the
WBG Regional Partnership Strategy (RPS) for the OECS, which was discussed by the Board of Executive
Directors on November 13, 2014 (Report No\. 85156-LAC)\. The RPS is structured around two pillars: (a)
fostering conditions for growth and competitiveness and (b) enhancing resilience\. The Performance and
Learning Review, discussed by the Board on May 23, 2018 (Report No\. 118511-LAC), reaffirmed the RPS
strategic objectives and extended it to end-FY20\. The SRD for the OECS completed in FY19 identified the
following priorities for inclusive and sustainable growth: (a) build cross-cutting resilience to external
shocks, (b) embed growth in the blue economy, (c) strengthen and harness human capital, (d) embrace
new technologies, and (e) strengthen regional integration\. A new Regional Partnership Framework for the
OECS is under preparation for delivery in mid-2022\.
23 St\. Vincent and the Grenadines\. Ministry of Finance, Economic Planning, and Information Technology (MoFEP)\. May 2021\.
Supplemental Budget\.
24 International Monetary Fund: IMF Country Report No\. 21/157\.
Page 13 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
23\. The proposed Project will also contribute to the World Bankâs twin goals, as w ell as its Climate
Change Action Plan (2016â2020) and its Gender Equality Strategy (2016â2023)\. The proposed Project
will contribute to reducing extreme poverty and will boost shared prosperity by supporting the recovery
and rehabilitation of communities affected by the current disaster and strengthening the resilience of St\.
Vincent and the Grenadines to climate change and future events\. This exogenous shock has rolled back
development gains and has disproportionately pushed vulnerable communities into poverty\. In this
regard, a âBuilding Back Betterâ 25 approach will focus on how both immediate-term activities and more
long-term support can incorporate resilience, adaptation, and mitigation interventions to improve
development outcomes\. The proposed Project is aligned with Objective 4 of the World Bankâs Gender
Strategy by supporting recovery strategies that address and reduce gender-based violence (GBV) and
increasing womenâs voice and decision-making processes in DRM and rehabilitation activities\.
24\. The proposed Project will be guided by the principles of the World Bank Green, Resilient, and
Inclusive Development (GRID) initiative to ensure that interventions target the most vulnerable while
also advancing longer-term resilience and sustainability to St\. Vincent and the Grenadines\. The Project
will particularly support the GRID Pillar 2 - Protecting Poor and Vulnerable Peoples and Pillar 4 -
Strengthening Policies, Institutions and Investments for Rebuilding Better\. The proposed Project will aim
for the social inclusion of disadvantaged or vulnerable individuals and groups by including them in
stakeholder engagement processes and Project benefits\. In this regard, those individuals or groups who
by virtue of, for example, their age, gender, religion, physical, mental, or other disability; social status;
economic disadvantages; and/or dependence on unique natural resources, may be more limited than
others in their ability to take advantage of the Projectâs benefits\. The Project understands that such
individuals/groups are also more likely to be excluded from or may be unable to participate fully in the
mainstream consultation process and may require specific measures and/or assistance to do so\. Measures
to ensure social inclusion are cross-cutting in all Project activities\. Measures will also be reflected in the
Stakeholder Engagement Plan (SEP), Environmental and Social Management Framework (ESMF), and
other Environmental and Social Standards (ESS) instruments relevant to the Project\.
25\. The proposed Project is aligned with the WBGâs COVID-19 pandemic Response Approach Paper
âSaving Lives, Scaling up Impact, and Getting Back on Trackâ\. The proposed Project aims to structure its
support around the principle of âBuilding Back Betterâ and to address the critical needs of reconstruction
while making investments that allow St\. Vincent and the Grenadines to be better prepared for the impacts
of climate change\. This includes, where possible, rebuilding in a manner that considers location of
structures, incorporates resilience planning, and utilizes more climate- and disaster-resistant materials\.
The proposed Project also aims to invest in lower carbon technologies and infrastructure which is more
inclusive\. Under these objectives, activities will be applied against Pillar 1 - Saving Lives and Pillar 4 -
Strengthening Policies, Institutions and Investments for Rebuilding Better of the WBGâs COVID-19
response paper\. They will also include considerations for how good practice in disaster management can
25âBuilding Back Betterâ approaches look to use of the recovery, rehabilitation, and reconstruction phases after a disaster to
increase the resilience of nations and communities through integrating climate change and disaster risk reduction measures,
into the restoration of physical infrastructure and societal systems and look into the revitalization of livelihoods, economies,
and the environment\. Such approaches ensure that interventions are inclusive of the most vulnerable while also advancing
longer-term resilience and sustainability to not only be better prepared for the impacts of climate change in the future but also
invest in lower carbon technologies and infrastructure which is more inclusive\.
Page 14 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
accommodate compounding pandemic and disaster risk and mitigate the exposure and spread of COVID-
19 in emergency shelters\.
26\. Relevance to climate change impacts, including climate-induced events such as hurricanes\. The
Project aims to support the GoSVG to restore livelihoods and critical services following the eruptions of
the La Soufrière Volcano\. Further, there is the opportunity to make transformative investments that will
allow St\. Vincent and the Grenadines to directly address future climate change impacts and disasters, in
addition to major seismic events, in accordance with climate adaptation and disaster-resilient standards\.
For example, Projectâs investments in recovery activities related to volcanic ash and debris removal from
roads and public buildings will reduce the risk of further damage imposed by potential disaster events\.
Water systems rehabilitation and repair of public buildings will support efforts to build back better by
ensuring activities are done with climate- and disaster-resilient considerations to reduce the risk to the
people and communities to future disasters and shocks, such as hurricanes, floods, or landslides\. The core
capacity-building activities under the Project for example, developing plans and training exercises and
drills, can also be applied to climate-related disasters through a multi-hazard approach that incorporates
climate change-induced aspects in integrated emergency response and incident management structures,
both strategically and operationally\. Guided by the GoSVGâs climate change initiatives and operating
under the GRID principles, the Project will seek to ensure that interventions protect poor and vulnerable
peoples and strengthen policies, institutions, and investments for building back better\.
II\. PROJECT DESCRIPTION
A\. Project Development Objective
PDO Statement
27\. The Project Development Objective (PDO) is to support St\. Vincent and the Grenadines to (i)
provide short-term income support, (ii) improve the capacity of the government to prepare for and
respond to emergencies, and (iii) build back better critical services in the wake of the La Soufrière Volcano
eruption\.
PDO Level Indicators
28\. The PDO will be measured by the following outcome-level indicators:
(a) Number of households impacted by the volcanic eruption and climate-related events,
benefiting from short-term income support program (number; disaggregated by gender)
(b) Number of people benefiting from restored utility/infrastructure services (number;
disaggregated by gender)
(c) The GoSVG has improved command and control systems in place (Yes/No)\.
B\. Project Components
Page 15 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
29\. The PDO will be achieved through three components that align with the initial findings of the
World Bankâs Global Rapid Post-Disaster Damage Estimation (GRADE), and the DDSA coordinated by
CDEMA, and support the Governmentâs overall recovery program\. These components are: (a) Early
recovery income support; (b) Restoration and âBuilding Back Betterâ of critical services, and strengthening
of emergency preparedness and response capacity; and (c) Project management\.
30\. Component 1\. Early recovery income support (US$7\.5 million)\. The objective of this component
is to provide temporary grants to help smooth consumption of selected poor or vulnerable populations
affected by the La Soufrière volcanic eruption\. It will also provide cash-for-work to support a labor-
intensive work and maintenance program focused on cleaning activities associated with ex-ante disaster
mitigation or ex-post emergency response or infrastructure recovery\. The activities under Component 1
are embedded within the broader Government social protection strategy, which focuses on shock-
responsive social assistance\. This component comprises three subcomponents\.
31\. Subcomponent 1\.1\. Temporary grants and support services program (US$4\.5 million)\. The
objective of this subcomponent is to support the continuation, expansion, and strengthening of the
ongoing temporary grants and complementary support services\.
32\. Temporary Grants (US$4\.3 million)\. Through the Ministry of National Mobilization, Social
Development, Family, Gender Affairs, Youth, Housing, and Informal Human Settlement (MoNM), the
Government is currently providing unconditional temporary grants to approximately 4,000 displaced
households affected by the volcanic eruption of La Soufrière\. This program targets selected poor or
vulnerable households from the red, orange, and yellow zones displaced by the volcanic eruptions of La
Soufrière, who will be provided with income support for a period of six months\. The benefit amount is
determined according to the number of household members and based on the MoNMâs current benefit
amounts\. The benefit amount ranges between a minimum of EC$ 300 and a maximum of EC$ 600 per
month based on the number of household members according to the cap set forth in the Financing
Agreement and agreed by the Bank in the Project Operations Manual (POM)\. The MoNM has targeting
methods aligned with international good practice\. The entry point of registration for beneficiaries is
NEMOâs National Evacuation Registry (NER), which is coordinated by the MoNM\. Once they are registered,
applicants are assessed and prioritized based on (a) eligibility criteria including geographic zones (for
example, red, orange, and yellow), (b) income-based poverty and vulnerability thresholds (estimated from
the official poverty line and the Consumer Price Index as established by the MoNM and agreed with the
Bank and established in the POM), and (c) categorical criteria including households headed by women
and/or with elderly, disabled members and/or with an unemployed head of household\. A community
validation takes place through the emergency community councils that support potential beneficiariesâ
validation process in their communities\. Given that the budget may be limited, beneficiary selection will
prioritize households from the selected geographic areas in the lowest income levels based on the
established poverty line\. Beneficiaries will be registered in the MoNM beneficiary registry\. More detailed
eligibility criteria will be specified in the POM, along with the framework governing intake, registration,
enrollment, and selection processes\.
33\. Support services (US$0\.20 million)\. This activity will strengthen the capacity of the MoNM to
provide existing support services, such as a family life education program and a farming program, to
enhance beneficiary householdsâ self-agency to support a resilient recovery\. Based on an assessment, the
family life education program will be provided to 750 selected beneficiaries with special support needs,
Page 16 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
while the farming program will be provided to 200 selected beneficiaries\. All beneficiaries will be selected
based on more detailed eligibility criteria established in the POM\. The family life education program will
be delivered by facilitators, providing follow-up support, and coordinating with the community in the
program\. It will include educational sessions on psychosocial support, life skills including health and
hygiene, and financial education, including home budget management and education on the use of the
temporary grants\. The farming program aims at providing theoretical and practical agricultural skills to
selected beneficiaries\. An existing Memorandum of Understanding (MOU) between the MoNM and the
Ministry of Agriculture, Forestry, Fisheries, Rural Transformation, Industry and Labour (MoA) ensures that
beneficiaries receive practical and theoretical knowledge on crop production\. The MoNM, through Project
funds, will finance the farming toolkit to ensure access by the beneficiaries of the program\. The family life
education program will consider the specific needs of women, men, and vulnerable populations\. Such
needs will include aspects related to childcare arrangements\.
34\. This subcomponent will finance temporary grants, goods and consulting services, including
financing consultancies and services related to communications, training of beneficiaries, hiring of
facilitators, and procurement of material and basic equipment to deliver the support services\. A Project
Officer will also be hired through the PSIPMU to support the MONM in executing subcomponent 1\.1\.
35\. Subcomponent 1\.2\. Labor Intensive Temporary Employment (LITE) Program (US$3 million)\. The
subcomponent will support, on an as-needed basis, the implementation of a LITE Program to provide cash-
for-work in the event of natural and/or climate-related disasters (including risks associated with heavy
rains mobilizing ashfall and volcanic debris)\. It will also support the longer-term resilient recovery of
community infrastructure\. This subcomponent will respond to the Governmentâs request to support
cleaning activities associated with ex-ante disaster mitigation or ex-post emergency response or
infrastructure recovery and protect transportation routes from the accumulation of volcanic ash, flood
water and debris following the volcanic eruptions of La Soufrière and other climate-related events\.
36\. The LITE Program will build on the existing experience of the Roads, Buildings, and General
Services Authority (BRAGSA) in implementing the Road Clean-Up Program, which is a cash-for-work
seasonal program aimed at basic public infrastructure maintenance and the creation of short-term
employment benefiting unemployed working-age people\. The LITE Program will target individuals over 18
years of age, potentially from poor households, including households that are female-headed and other
criteria further established in the POM\. The beneficiaries will be paid based on the number of days
worked\. Unless otherwise stated in the POM, a maximum of 10 days will be paid per beneficiary at a daily
range between EC$ 50 â EC$ 75 for a maximum total of EC$ 750 per Governmentâs request to support
cleaning activities associated with ex-ante disaster mitigation or ex-post emergency response or
infrastructure recovery, unless otherwise specified in the POM\. BRAGSA will identify and select the cash-
for-work beneficiaries\. The eligibility criteria and the selection process of the LITE beneficiaries is
established in the POM\. LITE activities will include income-earning opportunities targeted at women, not
only as site workers but also in supervision and monitoring of the implementation of the work, and/or will
include gender-specific needs mentioned above\.
37\. The works will support the recovery of basic community infrastructure and focus on critical public
works to provide longer-term benefits and mitigate risk, especially related to the resilience of
Page 17 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
infrastructure assets to future climate change impacts and natural hazards\.26 The beneficiaries will be
provided with tools and safety gear to conduct the works\. BRAGSA will prepare, plan, and select the
subprojects, as needed, to help ensure an inclusive recovery that supports âBuilding Back Betterâ
processes\. The menu of eligible activities will include works with a labor content of 60 percent or more
and which can be classified as (a) feeder road rehabilitation and maintenance, including cleanup of
volcanic debris and improving water drainage and (b) cleanup of public buildings from volcanic debris and
other climate-related disasters\. BRAGSA will organize the works to be performed and will also control and
supervise their implementation\.
38\. This subcomponent will finance cash-for-work; goods (including tools and safety gear needed to
undertake the small infrastructure works of the LITE Program); trainings for beneficiaries; consultant
services needed to support the planning, preparation, and supervision of the execution of the small
infrastructure works (required for effective implementation of the subcomponent); communications, and
administrative fees of the payment services\.
39\. The payment of the temporary grants and the cash-for work will be made through the existing
payment mechanisms, including a digital e-wallet payment mechanism to deliver temporary grants and
cash-for-work transfers through the banking system and per procedures documented in the POM\. The
Ministry of Finance, Economic Planning, and Information Technology (MoFEP) will enter into an
implementation agreement with the Bank of St\. Vincent and the Grenadines (BOSVG) to conduct such
payments\. The MoNM has subscribed to an agreement with the majority state owned27 BOSVG to pilot a
payment system based on e-wallets which will be scaled up\. This component will strengthen said payment
by financing the education of beneficiaries on the use of the systems and providing financial education to
selected beneficiaries as described above\. The MoNM will also conduct a rapid assessment of the ongoing
pilot, and the Project will build on the lessons learned to further strengthen its payment mechanism and
sustainability\.
40\. Under Component 1, and per section 10\.2 of the Environmental and Social Commitment Plan
(ESCP) and paragraph 99 below, the MoFEP will establish no later than 30 days after Project effectiveness
a grievance and redress mechanism to receive, review, and address complaints and grievances submitted
by beneficiaries and other people affected by the temporary grants and the LITE Program\. The programs
will publish information on the rules, eligibility criteria, amount of benefit, services provided, and other
relevant information on the MoNM and the Public Sector Investment Programme Management Unit
(PSIPMU) websites and on other widely known, relevant, community information sites\.
41\. Component 2: Restoration and âBuilding Back Betterâ of critical services and strengthening of
emergency preparedness and response capacity (US$29 million)\. During disasters, the continued
26 Climate vulnerabilities that agricultural and infrastructure assets face include flooding, drought, heavy rainfall, tropical
storms/hurricanes, sea level rise, and landslides\. Works under the project will seek to improve resilience, particularly with
respect to improved water drainage and landscape restoration\. For example, restoration and replanting of affected areas would
reduce erosion and mitigate impacts from flooding\. These and similar activities will contribute to climate resilience and
adaptation by reducing impacts from climate-related hazards, promoting improved resilience over the medium and long terms\.
27 The Bank of Saint Vincent & the Grenadines, formerly the National Commercial Bank (SVG) Ltd\. was founded in June 1977\.
The Government of St\. Vincent and the Grenadines share holds of 43\.13 percent, and the National Insurance Services 20
percent, the remaining holders are private\. https://www\.bosvg\.com/about-us/shareholding
Page 18 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
operation of critical public infrastructure is key to efficient response and recovery\. This component will
support the rapid restoration and âBuilding Back Betterâ of critical infrastructure damaged by the volcanic
eruptions and subsequent debris flows and lahars while also ensuring that investments incorporate
transformative measures that increase climate resilience\. Investments under this component will focus
on three main areas: (a) support for reconstruction planning that incorporates climate change
considerations, (b) restoration and reconstruction of critical infrastructure services, and (c) strengthening
of EP&R systems and capacity\.
42\. Maintenance of project flexibility to accommodate compounding disaster events\. It is important
to recognize that the Project is designed to respond to an ongoing event and in a context where areas in
the red zone have still not been fully assessed\. The volcano continues to be in an active stage, and future
eruptions cannot be discounted at this time\. Furthermore, compounding disaster events are highly likely
as rainfall will certainly promote the movement of the accumulated material to downstream inhabited
areas, which will present a risk to lives, livelihoods, and infrastructure\. Given this context, the Project has
been designed with flexibility to adapt to future risks and needs and is described below through a
framework approach\. Candidate activities and financing for the first 18 months across sectors are
described in annex 2\.
43\. Subcomponent 2\.1\. Support to reconstruction planning that incorporates climate change
considerations\. This will support the integration of necessary climate and disaster considerations into
technical studies, feasibility studies, and detailed engineering designs of infrastructure interventions and
operations mainly in public facilities, transport infrastructure, water supply systems, agricultural centers,
and slope stabilization\. These studies will address the critical needs of reconstruction while helping St\.
Vincent and the Grenadines to be better prepared for the impacts of climate change and build resilience
into physical and operational infrastructure, including the resilient operation of systems during disasters,
in a more inclusive manner\. Such studies will be informed by standards of universal design and address
the needs of vulnerable populations, including women, the elderly, and disabled persons\. Participatory
processes will be key to ensuring community needs are voiced, and reconstruction is inclusive to all\. This
will particularly help strengthen the self-agency of women in reconstruction and decision-making
processes\. Furthermore, restoration and reconstruction activities for critical transport infrastructure will
need to be informed by studies that also assess compounded disaster and climate change risks, including
floods, debris and mud flows, and landslide risks\. Reconstruction activities will integrate considerations
for longer-term climate risks and resilient design, construction, and operation and management principles
(including beyond the physical structures)\. These planning efforts will directly guide investment selection
and will be structured to ensure that all investments under the Project contribute to âBuilding Back Betterâ
efforts\. To the extent possible, the studies will also explore the possibility of improving resilience and
promoting decarbonization through new technologies for energy efficiency\.
44\. Subcomponent 2\.2\. The restoration and reconstruction of critical infrastructure services\.
Activities will be assessed against the context of changing climate patterns and the integration of
mitigation and adaptation interventions in restoration and reconstruction\.28 Given that St\. Vincent and
28 Climate change concerns will be integrated with the restoration and reconstruction of critical services\. This will guide the
design of specific interventions associated with restoration and reconstruction activities\. These can include considerations for
river defense designs incorporating anticipated sea level rise, bridge designs that minimize trapping debris flows from intense
rains, agricultural drought response improvements, and similar activities\.
Page 19 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
the Grenadines is already highly susceptible to hydrometeorological risks, climate change will further
exacerbate existing disaster impacts that affect water scarcity, floods, and landslides\. Using the
emergency operation to support âBuilding Back Betterâ will help the GoSVG adapt to and increase
resilience to disasters and climate change\. Reconstruction and rehabilitation works will be complemented
by functional upgrades and climate-resistant designs, including energy efficiency features where relevant,
through the enforcement of building code legislation to increase the resilience of buildings to climate-
related risks\.
45\. Immediate restoration of services\. The Project will support physical response activities, including
materials and construction services; equipment rental; design and construction supervision for works
contracts under the Ministry of Transport, Works, Lands, and Physical Planning (MOTW), NEMO Central
Water and Sewerage Authority (CWSA); and other expenditures relating to restoration and rehabilitation
operations\. The POM, subject to the World Bank review, will articulate the approach for executing such
response measures and define the positive list of measures eligible for financing under this component\.
The potential response and immediate restoration activities will include: (a) cleanup of volcanic ash and
debris; (b) restoration/augmentation of affected water supply systems; (c) river cleaning; (d) purchase
and/or rental of machinery and equipment (including agricultural equipment and supplies for restoration
of agriculture productivity); (e) reconstruction of schools, roads, drains, culverts, bridges, and emergency
warehouses; and (f) restoration of transport infrastructure\.29 Retroactive financing will be considered for
activities started in the aftermath of the disaster and prior to Project effectiveness\.
46\. A prioritized list of public infrastructure in need of restoration or reconstruction will be included
under the POM, with a focus on identifying measures to increase climate and disaster resilience\.
Prioritization will be carried out using participatory approaches in line with the Projectâs environmental
and social (E&S) instruments\. This will ensure E&S risks are duly considered in finalizing investments to
enhance resilience to climate change impacts and to mitigate potential negative environmental or social
impacts\. Given the vulnerability of St\. Vincent and the Grenadines to climate and natural hazards, the
reconstruction of all infrastructure supported by this component will be assessed against future climate
patterns, and opportunities to integrate mitigation and adaptation measures will be included\.30 For
example, reconstruction of the water supply systems will incorporate the use of higher-quality, more
disaster-resilient materials; and reconstruction of schools and other public buildings will utilize data and
findings from climate, hazard, engineering, and EP&R assessments to inform appropriate location,
redesign, and reconstruction in a climate- and disaster-resilient manner\. Likewise, repair and
reconstruction of roads, drains, culverts, and bridges will incorporate climate change considerations in
designs and choice of materials to ensure more resilient structures; and the repair and upgrade of critical
agricultural fishing centers and facilities will incorporate climate change considerations related to
29 The equipment for transport and connectivity restoration as well as communication will enhance climate resilience by
enabling the GoSVG to clear roads, restore thoroughfares, and remove debris (key emergency response activities following
hurricanes, floods, or landslides) and to command and control its operational teams on the ground\. Restoration of water
supplies and river cleaning will also be done in a way that will enhance resilience in the future by complementing
reconstruction referenced earlier\.
30 Examples of climate mitigation and adaptation reconstruction include energy-efficient equipment and lighting, renewable
energy, and solar panels; siting of infrastructure considering flood and hurricane maps and projections; flood-resistant building,
road, drain, culvert, and bridge design; improved drainage systems including vegetation surrounding buildings; water supply
provisioning considering changing precipitation and drought patterns; and hurricane-resistant buildings, roads, drains, culverts,
and bridges to reduce losses, among others\.
Page 20 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
locations\. Construction of emergency warehouses will also be informed by climate and hazard
assessments and will incorporate energy-efficient systems to improve sustainability and reduce long-term
costs\. In addition, the proposed Project will finance design and construction supervision for works
contracts under MOTW, NEMO, CWSA, as well as training and technical assistance (TA) on the asset
management system (including roads, water, and bridges) to ensure that Project interventions are
appropriately executed and systematically maintained so investments would be sustainable in the long
term\. Efforts are also being made through stakeholder meetings, dialogues with World Bank trust fund
programs, and bilateral donor discussions about accessing parallel grant financing to further strengthen
âBuilding Back Betterâ processes that ensure inclusive recovery and the greater integration of climate and
disaster resilience in Project investments\.
47\. Subcomponent 2\.3\. Strengthening of EP&R systems and capacity\. This activity aims to improve
the capability of the GoSVG to systematically prepare for and respond to potential compounding
emergencies and the impacts of a changing climate, particularly in line with its mandate under the national
emergency response plans for multiple hazards (recurrent annual events as well as low-frequency, high-
impact disasters)\. It builds on the Disaster Preparedness and Response Capacity Assessment (DPRCA)
conducted by the World Bank, NEMO, and CDEMA and financed by the ACP-EU Natural Disaster Risk
Reduction Program of the European Union (EU) that identified 13 areas of urgent or high priority that are
critical impediments to the effective functioning of the countryâs overall EP&R systems\.
48\. Activities under this component will address the critical impediments and, in so doing, improve
capacities and capabilities to prepare for and respond to emergencies such as volcanic eruptions,
earthquakes, and climate change-induced disasters such as hurricanes and floods\.31 Based on the La
Soufrière response operation, aspects related to evacuation and early warning systems were quite strong
and safeguarded lives very effectively\. However, gaps related to command and control systems such as
gathering and distributing information, making informed decisions, and developing situational awareness;
logistics; and command and control support structure and multi-agency coordination were identified and
reported back by the Government\. Coordination efforts for EP&R activities require a structural presence,
be it for command and control, emergency aid movement, or the response teamsâ staging and equipment\.
These capabilities act as a core element in establishing a culture of preparedness, ensuring a dependable
common operating picture and resilient services when most other critical infrastructure and government
services are disrupted\. This subcomponent will look at the nexus of information, personnel, and
equipment with an eye for pragmatic operational effectiveness around integrated emergency
management systems, including an exploration of legislative roles and responsibilities, mechanisms for
multi-agency coordination, and the use of emergency response plans and protocols to support emergency
incident command and management\.
49\. Activities under this subcomponent may include (a) conducting assessments on legal and
institutional frameworks, human resources capacity, operational facilities (such as emergency shelters)
and equipment, and information management system, (b) providing technical assistance (including
training) and purchasing goods to enhance capacities, (c) updating and harmonizing disaster preparedness
and contingency plans at the national and local levels, (d) improving response, monitoring and data
31Institutional arrangements, updating of Emergency Operation Center operations, contingency plans, coordination and
response protocols, and strengthening of the GoSVGâs continuity of operations\.
Page 21 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
collection systems, and (e) enhancing multi-agency coordination, command and control, and
communication capabilities\.
50\. Parallel Co-financing32 under the EU-Caribbean Regional Resilience Building Facility managed by
the Global Facility for Disaster Reduction and Recovery (GFDRR) is being arranged to support activities
to strengthen the multi-hazard EP&R systems in St\. Vincent and the Grenadines\. In this regard, US$2
million through the EU-Caribbean Regional Resilience Building Facility trust fund will complement Project
funding to strengthen NEMOâs EP&R capacity in the key areas as described under paragraph 49 above\.
51\. Project stakeholders\. Participating line agencies, identified thus far, are those with direct
responsibility in their respective areas relating to emergency and infrastructure management, as follows:
(a) Ministry of National Security /NEMO
(b) MoNM
(c) CWSA
(d) MoTW
(e) BRAGSA
(f) MoA\.
52\. Component 3: Project Management (US$3\.5 million)\. This component will support the
administrative management of the Project by the PSIPMU and implementing partners through, but not
limited to, (a) a project coordinator; (b) financial management (FM) and procurement specialists to carry
out the fiduciary aspects of the Project, including audits; (c) monitoring and evaluation (M&E) specialists;
(d) technical experts needed for Project preparation and implementation (including E&S management and
social protection specialists); and (e) technical focal points in the MoA, CWSA, MoNM, ,MoTW and
BRAGSA\. The PSIPMU will coordinate the provision of training and workshops33 and manage the financing
of necessary goods, equipment, and operating costs, including costs associated with convening and
reporting to the Project Steering Committee (PSC)\.
C\. Project Beneficiaries
53\. The proposed Project will target the communities affected by the La Soufrière Volcano
eruptions, especially the population in the northern part of the island in the âredâ, âorangeâ, and âyellowâ
volcanic hazard zones\. Direct beneficiaries from Components 1 and 2 are estimated at 21,227 (19\.2
percent)34 of the total population, of which 14,141 (66\.6 percent) are women; 4,065 (19\.2 percent) are
32 âParallel Co-financingâ means an amount of one million six hundred and fifty thousand Euro (USD$ 2 million) included under
the Co-Financing Agreement (as defined under the Financing Agreement) of the Project, which will assist in financing part sub-
component 2\.3\. This component will be jointly financed by the Project (IDA) and EU-Caribbean Regional Resilience Building
Facility managed by the GFDRR\. The specific activities to be financed across funding sources will identified in the Project
procurement plan\.
33 Workshops will include technical discussions and capacity-building activities around the utilization of climate and disaster risk
information and the prioritization of reconstruction and rehabilitation activities to strengthen climate and disaster resilience\.
34 Government of Saint Vincent and the Grenadines\. This represents persons from the North Windward, North Leeward, and
North Central Windward constituencies\.
Page 22 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
vulnerable; 6,831 (32\.2 percent) are children;35 2,622 (12\.4 percent) are elderly; and 10,203 (48\.1 percent)
could be classified as dependent\. Indirect beneficiaries from Components 1 and 2 include the entire
population of St\. Vincent and the Grenadines of 110,696 persons36 who were affected by the explosive
eruptions phase of the La Soufrière Volcano\. Further, heavy ashfall, ash accumulation, and extensive
mudflow directly affected 2,594 persons (2\.3 percent of the total population) of which 1,250 (48\.2
percent) are women\. The total population of the island will also benefit indirectly from the increased
capacity of the authorities to build back better infrastructure\. Also, under Component 2, the EP&R
investment areas will enhance the GoSVGâs capacity to respond to and support early recovery from
volcanic eruptions, addressing gaps and needs in the GoSVGâs ability to execute its mandate as defined
under the different multi-hazard emergency response plans\. The core capacities and capabilities needed
to organize a response operation and coordinate resources on the ground can also be applied to any type
of emergencyâincluding hurricanes, floods, and pandemicsâthrough a multi-hazard, multi-sectoral
approach to integrated emergency response and incident management structures and frameworks\.
Building this capacity will benefit the total population of St\. Vincent and the Grenadines\. Criteria for the
selection of investments and beneficiaries will be further detailed in the POM\.
D\. Results Chain
54\. To develop the results chain for the proposed Project, a theory of change approach was adopted
and is illustrated in Figure 1\.
35 This represents the 0â17 years age group\.
36 http://www\.gov\.vc\. This represents all persons (not limited to any age group)\.
Page 23 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
Figure 1\. Theory of Change
55\. Critical assumptions are the following: (a) the current eruption sequence of the La Soufrière
Volcano stops within six months of Project approval; (b) the local suppliers of goods, works, and services
can meet the demands of the emergency response and early recovery activities; (c) transportation
to/from the affected areas has been reestablished at a minimum, and remote communities are reachable;
(d) adequate coordination mechanisms are in place among the implementing agency, specialized
agencies, regional governments, and local communities; (e) alternative methods for participatory
approaches and data collection are available to ensure effective implementation and monitoring; (f)
procurement processes advance smoothly and have an adequate market response; and (g) no other
emergencies causing significant damages (that is, heavy rains, landslides, floods, and hurricanes) occur
during implementation\.
E\. Rationale for Bank Involvement and Role of Partners
56\. The proposed Project will be critical to support the GoSVG in its emergency recovery and
restoration of services\. First, it provides the much-needed financing to critical sectors and economic
activities in areas affected by the La Soufrière Volcano eruptions\. Second, the proposed Project builds on
the World Bankâs decades of experience in regional disaster recovery and resilience\. This includes the
emergency recovery assistance provided after Hurricane Tomas in 2010, which caused significant impacts
on people, livelihoods, and infrastructure in St\. Vincent and the Grenadines, as well as the World Bankâs
Page 24 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
support in the region following Hurricane Sandy in 2012, Hurricane Joaquin in 2015, and, most recently,
Hurricanes Irma and Maria in 2017\.
57\. The proposed Projectâs design is also fundamentally underpinned by the World Bankâs global
experience in financing and supporting the implementation of EP&R projects or projects with EP&R
components\. This includes projects such as the Istanbul Seismic Risk Mitigation Project (P078359), the
Bangladesh Urban Resilience Project (P149493), and more recent engagements such as the development
of EP&R investment plans in Cabo Verde (P160628), Western Balkans (P165377), Sierra Leone (P166075),
and Seychelles (P148861)\. Experiences from such projects suggest that an integrated approach is desirable
to drive a systematic, ongoing approach to EP&R\. The World Bankâs comparative advantage is in building
countriesâ EP&R systems ex-ante, with comprehensive financing and policy dialogues, as well as its
convening power in delivering systemic value for clients\.
58\. The proposed Project will support the GoSVGâs response to the disaster and has the potential
to mobilize additional resources for TA from the EU (in addition to the EU US$2 million grant under
Component 2) and be supported by the Canada-Caribbean Resilience Facility\. Development partners
have also committed to supporting St\. Vincent and the Grenadines, including TA, provision of supplies,
and support in conducting damage assessments\. CDEMA is leading the coordination of donor assistance,
and the UN has initiated a US$29 million flash appeal\. The IMF provided US$11\.6 million in concessional
financing and the Caribbean Development Bank will be providing US$5 million in loans and US$0\.5 million
in temporary grants\.
F\. Lessons Learned and Reflected in the Project Design
59\. The Project design has been informed by the World Bankâs involvement in multi-sector post-
disaster recovery and reconstruction, its longstanding experience and operational program in the
Caribbean region, evaluations from previous operations (including Implementation Completion and
Results Reports [ICRs] and Independent Evaluation Group assessments) and international good practice\.
Key lessons incorporated into Project design include the following:
(a) Implementation of emergency projects is improved by building on existing systems and
capacities, with specific adaptations to enhance the delivery of programs\. Project activities
under Component 1 are designed to scale existing payment mechanisms and utilize
programs already established and employed by the GoSVG\. This will ensure Project activities
align to institutional strengths and enhance implementation and operational efficiencies\.
However, the Project will also strengthen existing systems by developing information
systems to monitor and administer the program, engagement of the community to enhance
program communication and transparency, and implementation of accompanying measures
such as life skills workshops to enhance beneficiary recovery and resilience\. This approach
draws on lessons from the St\. Maarten Emergency Income Support and Training Project
(P167368); St\. Vincent and the Grenadines Human Development Service Delivery Project
(P154253); Arab Republic of Egyptâs Emergency Employment Investment Project (P146143);
Chad Safety Nets Project (P156479); and the recent COVID-19 emergency operation Brazil:
Income Support for the Poor Affected by COVID-19 (P174197)\.
Page 25 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
(b) Simplified objectives and limited scope improve the efficiency of emergency recovery
operations\. A key lesson from similar operations is that in low-capacity contexts, such as
SIDS, emergency operations should prioritize recovery activities and set realistic recovery
goals\. A simple project design, such as with the Grenada Hurricane Ivan Emergency Project
(P092692), is particularly important when activities to be implemented are urgent\. While
recovery needs in Saint Vincent and the Grenadines are significant, the proposed Project
was designed to have a limited scope for improving its efficiency by focusing on (i) providing
short-term income support, (ii) improving the capacity of the government to prepare for and
respond to emergencies, and (iii) supporting the âBuilding Back Betterâ critical services in
the wake of the La Soufrière Volcano eruption\.
(c) Building sustainable institutional capacity in EP&R requires engagement with both
decision-makers and technical practitioners\. The experience from many EP&R projects
focusing on command and control structures suggests that, while it is important to establish
strong dialogue with senior officials of the implementing agencies, it is equally important to
work closely with counterparts at the technical level to ensure continuity and build
institutional capacity\. The regional DPRCA TA suggests that deep knowledge and familiarity
with government policies, processes, and procedures, as well as roles and responsibilities of
various departments and teams, will reduce institutional fragmentation and enable timely
support and advisory services to the counterpart agencies\.
(d) Utilizing existing implementation arrangements facilitates effective emergency response\.
Implementation arrangements for emergency operations should be straightforward and
pragmatic while remaining responsive to country circumstances\. In emergency response
operations, simplicity in project design and sustained implementation support are key to
achieving the development objectives on time\. This lesson was drawn from the Hurricane
Tomas Emergency Recovery Loan (P124939)\. The implementation arrangements for the
proposed Project build on those of the Regional Disaster Vulnerability Reduction APL1 -
Grenada and St\. Vincent and the Grenadines (P117871)\. As part of these arrangements, the
MoFEP, through its PSIPMU, will oversee Project activities and establish and manage the PSC
to ensure the participation of relevant sector ministries and government entities in Project
implementation\.
(e) Partnership and community-based approaches in identifying priority investments increase
ownership and accountability\. Promoting community-based approaches and participation
is essential for an effective and sustainable reconstruction process\. The proposed Project
will offer communities the opportunity to identify priorities among local interventions that
will directly affect the lives of affected populations\. Through participatory processes, the
proposed Project will also ensure that women, people with disabilities, and other vulnerable
groups are included throughout implementation\. The approach builds off lessons from
projects such as the Housing Recovery Project (P166537) in Dominica, which uses
communityâbased approaches to support monitoring and enhance transparency, and
experiences defined within the GRID, which show how participatory processes enhance the
social inclusion of disadvantaged or vulnerable individuals and groups by including them in
stakeholder engagement processes and project benefits\.
(f) Effective M&E in emergency operations is key to ensure the achievement of goals set in
the recovery plan\. Typically, emergency operations include economic variables as part of
Page 26 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
the key outcome indicators, complementing the focus on reconstruction and rehabilitation
indicators, which requires additional effort and resources to ensure that related activities
are completed and evaluated\. The proposed Project will ensure that M&E guidelines are
agreed to and included in the POM\. Training for the implementing agency should also focus
on mainstreaming M&E into the day-to-day Project administration\.
III\. IMPLEMENTATION ARRANGEMENTS
A\. Institutional and Implementation Arrangements
60\. The MoFEP will be responsible for the overall Project implementation through the PSIPMU\. The
PSIPMU will be responsible for fiduciary, procurement, E&S risk management, and M&E aspects\. Given
the multi-sectoral nature of the Project, an intergovernmental PSC comprising permanent secretaries of
relevant ministries including the MoA; the MoNM; Ministry of Health, Wellness, and the Environment; the
CWSA; Ministry of Foreign Affairs, National Security, Legal Affairs, and Information; the MoTW; the heads
of NEMO and BRAGSA; and heads of technical agencies or their designated representatives will be
established and always maintained throughout Project implementation\. The PSC will be the principal
coordinating body for the Project; however, it will not be a decision-making body\. The PSC will be chaired
by the Director of Economic Planning of the MoFEP\. This committee will provide oversight for Project
implementation as well as central policy guidance as required periodically\. The frequency of the PSC
meetings will be determined in the POM\. Memorandums of Understanding are not required across
government ministries\. Also, at least one focal point for the Project will be appointed in each
implementing agency who will work closely with the project coordinator in the MoFEP\.
61\. The Project team will be under the leadership of a project coordinator and will also include, as
core staff, three Project officers and specialists in procurement, FM, M&E, social protection, E&S
management, and engineering\. The project coordinator will report to the Director of Economic Planning
and will have the overall responsibility to supervise the staff in planning, organizing, and executing the
projectâs day-to-day administrative, technical, and legal activities\. The POM will include the Project teamâs
organizational structure and describe the duties and responsibilities of staff on the Projectâs technical,
administrative, FM, procurement, E&S management, and M&E procedures\. The PSIPMU will also
supplement existing capacities by hiring two accounts clerks, a procurement assistant, a quantity
surveyor, and a communications officer\. Two of the project officers will work closely with NEMO and
MoNM, the project coordinator and the communications specialist, to coordinate and support
communications activities across project components and ensure transparency for activities under
Component 1\.
62\. Implementation arrangements for Component 1\. Under Subcomponent 1\.1, Temporary grants
and support services program, the line entity involved in implementing this subcomponent is the MoNM\.
It will provide temporary grants and support services to selected affected households\. The MoFEP will
conduct fiduciary tasks and oversee the implementation through its PSIPMU\. All responsibilities in line
with this support will be detailed in the POM\.
Page 27 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
63\. Under Subcomponent 1\.2, the LITE Program will be implemented by BRAGSA and the MoFEP,
which will conduct fiduciary tasks and provide oversight of the implementation through its PSIPMU\. All
responsibilities in line with this support will be detailed in the POM\.
64\. Under subcomponent 2\.2, the restoration and reconstruction of critical infrastructure services
will be implemented by MOTW, NEMO, CWSA, and the MoFEP, which will conduct fiduciary tasks and
provide oversight of the implementation through its PSIPMU\. The Project will support the technical
assistance to finance design and construction supervision for works contracts and engineer support under
MOTW, NEMO, and CWSA\. All responsibilities in line with this support will be detailed in the POM\.
B\. Results Monitoring and Evaluation Arrangements
65\. M&E will be carried out by the PSIPMU, based on the indicators included in the Projectâs Results
Framework\. Accordingly, the PSIPMU will (a) collect, consolidate, and report on Project performance data,
including physical and financial progress and E&S monitoring and (b) provide periodic information on
intermediate Project results and progress toward higher-level outcomes (according to the Results
Framework)\. The reports will also include data on grievances and resolutions to enable timely corrective
action\. Throughout Project implementation, the implementing agency will prepare biannual progress
reports\. The Project will finance the baseline data gathering to assess social, environmental, and economic
impacts of key activities\. Project outcomes and outputs will be evaluated through outcomes and
intermediate-level indicators defined in the Projectâs Results Framework\. The PSIPMU will contract
independent consultant(s) to prepare the Project ICR\.
66\. The Project will support interventions to strengthen the M&E capacity of the implementing
agencies, and the MoFEP will coordinate regular reporting\. The Project will finance M&E-related training
as part of capacity-building exercises, including data analysis capacity-building to improve monitoring and
reporting\. Development of the Management Information System (MIS) for the implementing agencies will
also facilitate improved monitoring of service delivery to the Project beneficiaries\. At the project level,
each implementing agency will be required to submit a progress report on the project activities to the
MoFEP, which will then be consolidates and submitted to the World Bank\. This will be done monthly
during the first two years of the Project and quarterly during the final three years\. This support for the
line ministries will help strengthen institutional capacity in analytics\.
Page 28 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
Figure 2\. Implementation Arrangements
Note: PS = Permanent Secretary\.
C\. Sustainability
67\. Resilient infrastructure\. The proposed Project will adopt a âBuilding Back Betterâ approach to the
rehabilitation and reconstruction of damaged infrastructure, ensuring that investments also allow St\.
Vincent and the Grenadines to be better prepared for the impacts of climate change\. The sustainability of
infrastructure investments will be ensured by using hazard and climate assessment maps and data to
inform construction locations and standards, improved engineering standardsâfollowing the national
building code, engineering norms and construction regulations, operation and management, and
international best practicesâand expert engineering TA, technical audits, and on-site construction
monitoring support to improve the long-term climate resilience of public infrastructure\. In addition, in
coordination with a World Bank ongoing TA (Resilient Transport in Small Island Developing States (RTSIDS)
funded by GFDRR Japan Program), the proposed Project will work on improving the asset management
system to ensure that Project interventions are properly maintained systematically to sustain investments
in the long term\.
68\. Temporary Grants, support services, and LITE\. The Early Recovery Income Support (ERIS) under
Component 1 of this Project provides temporary grants, access to support services to help smooth
consumption, enhance householdsâ self-agency to support a resilient recovery, and protect households
from negative coping strategies on a sustained basis to ensure that resilience to future events is improved
(for example, food insecurity)\. Moreover, the ERIS will respond to the Governmentâs request to support
cleaning activities associated with ex-ante disaster mitigation, ex-post emergency response, or
infrastructure recovery\.
Page 29 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
69\. Institutional and financial sustainability\. The operationalization of a coordination mechanism
and the technical experience with planning and implementing rehabilitation and reconstruction
investments, combined with Project management, are expected to improve the capacity of the GoSVG to
plan and scale rehabilitation and reconstruction efforts\. The fiscal effects of disasters require significant
capital expenditures for repairing and reconstructing damaged infrastructure\. By making the Project-
supported investments more resilient to adverse natural events and putting in place a more systematic,
coordinated approach to rehabilitation and recovery, the proposed Project will also help reduce the
Governmentâs contingent liabilities and improve its ability to respond to future disasters from natural
hazards\.
70\. Community-responsive designs with traditional and preferably locally available materials\. The
rehabilitation and reconstruction of community-level infrastructure will follow a community-based
process, using culturally appropriate designs and local workers and contractors to the extent possible\.
Efforts will be made to ensure that women and other potentially vulnerable groups, including people with
disabilities, are included and that by experienced forepersons and other skilled professionals guide their
work\. This will be particularly relevant to agriculture rehabilitation activities, which have had
disproportionate impacts on women\. Training will be provided to skilled laborers and communities to
ensure compliance with recommended building practices and technical requirements\. It is expected that
this process will be replicated across other affected regions\. Intense local involvement in the rehabilitation
and reconstruction process should help ensure the sustainability of the improved hazard-resistant
techniques promoted under the proposed Project\.
IV\. PROJECT APPRAISAL SUMMARY
A\. Technical, Economic and Financial Analysis
Technical Analysis
71\. During implementation, a prioritization process will be undertaken, based on criteria to be
defined in the POM\. Potential investments will be screened for eligibility based on (a) the level of damage;
sector relevance; and the likely economic, financial, and E&S impacts of restoration and (b) the results of
a participatory and inclusive process which will involve relevant development partners and
representatives of vulnerable communities, among others\. In addition, technical designs for the
prioritized investments will include climate-smart investments and measures such as energy efficiency
and adaptation to climate-related hazards such as flooding and landslides\. The proposed Project aims to
provide the GoSVG with the necessary resources and TA to prepare and implement an efficient
recovery/rehabilitation plan\. Hence, it was designed in an expedited manner to allow for immediate
response, with significant flexibility\. The procedures for the selection of investments and necessary World
Bank no-objections will be further detailed in the POM\.
72\. Reconstruction versus replacement\. The technical approach will consider rehabilitation of
structures whenever technically and financially feasible, while incorporating climate change
considerations in works\. Where the condition of the existing building does not allow for structural
strengthening, the proposed Project will consider demolition and reconstruction, which will be
undertaken when the cost of strengthening the infrastructure approaches its replacement cost\. The
Page 30 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
evaluation of the replacement value will include all costs associated with reconstruction in line with the
current standards and codes, including the costs of demolition of existing buildings\.
73\. Non-eligible investments\. There will be no involuntary resettlement, in the form of physical
displacement under the proposed Project\. All buildings and infrastructure will be reconstructed within the
bounds of existing building footprints or on available publicly owned land while incorporating climate
change and âBuilding Back Betterâ considerations\. Furthermore, the proposed Project will not support
activities that are located on environmentally sensitive or culturally significant lands or pose a high
negative impact to ecosystems, cultural heritage, or socioeconomic structure\. The identification of such
situations will be defined by E&S safeguard procedures\.
74\. Disaster and climate change resilience\. The proposed Project will promote the âBuilding Back
Betterâ approach, which comprises improvements in design standards, construction quality, and
functionality and the incorporation of climate change mitigation and adaptation measures, as
appropriate\. The integration of disaster risk and climate change considerations into the design of
infrastructure investments will enhance the resilience of infrastructure to future disaster and climate risks
and help protect peopleâs lives, livelihoods, and assets, thereby contributing to the GoSVGâs CCA efforts\.
Economic and Financial Analysis
75\. The economic assessment indicates that the proposed interventions are economically viable
and beneficial\. The results of the economic analysis37 conducted during Project preparation are
summarized in Table 1, focusing on Component 2 of the proposed Project\. Several options have been
considered, including different discount rates, from a 4 percent discount rate, as recommended for IDA
countries38 and up to 8 percent\. The analysis shows an internal rate of return of 13\.92 percent and a net
present value of approximately US$31\.32 million, indicating that with valuations at 6 percent and 8
percent discount rates, the project would still be economically viable\. Due to the urgent nature of the
operation, the estimations are based on a simplified and preliminary economic analysis of the proposed
Project\.
37 Investment cost is equal to US$27 million, which comprises Component 2 of the proposed project, and is distributed during
the five years of the proposed project with proportions of 10 percent for the first year; 15 percent for the second year; and 25
percent each for the third, fourth, and fifth years\. Benefits are calculated as the (avoided) losses corresponding to the social
and infrastructure sectors and 90 percent of the total damages to these sectors to reflect the potential gain from rehabilitation
and reconstruction of transport infrastructure and building assets\.
38 RiskâAdjusted Discount Rates in Economic Analysis of Investment Projects\. World Bank\. 2017\.
Page 31 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
Table 1\. Summary of Economic Analysis
B\. Fiduciary
(i) Financial Management and Disbursement Arrangements
76\. FM assessment was carried out during Project Appraisal on September 20, 2021, by the World
Bank to evaluate the adequacy of the FM arrangements for the implementation of the Project\. The
objective of the assessment was to determine whether the PSIPMU will have acceptable FM and
disbursement arrangements in place for this Project\. The assessment concluded that with the mitigating
measures described in the risks section (paragraph 87), the Project will have adequate FM arrangements
in place that can provide, with reasonable assurance, accurate and timely information on the use of
Project funds\. The PSIPMU has performed moderately satisfactorily to date on FM\.
77\. The Projectâs FM and disbursement arrangements will be streamlined to facilitate execution,
avoid unnecessary incremental operational arrangements, and rely as much as possible on existing
country systems\. The accounts for this Project will be executed through the Standard Integrated
Government Financial Information System (SIGFIS - SmartStream)\. The projectâs activities will be mapped
against the Governmentâs Treasury Department existing chart of accounts, and if necessary, new accounts
would be added\. The Accountant General will provide the PSIPMU with access to SmartStream, which
would allow for oversight and review of Project expenditures and generation of expenditure statements\.
78\. FM staffing/personnel\. The PSIPMU has four project accountants whose responsibilities are
project assigned, and one accountant is assigned to this Project\. Overall, each accountant is responsible
for ensuring that appropriate and satisfactory FM arrangements are maintained for their respective
projects\. The Project accountant prepares the financial reports and bank reconciliations and assists in the
preparation and monitoring of the budget\. The Project accountant reports directly to the project
coordinator\. Given the expected increase in workload, the PSIPMU is recommended to hire an additional
accountant to be assigned to this Project\.
79\. Budgeting\. An annual budget will be prepared by the project coordinator, in collaboration with
the technical personnel from the PSIPMU and relevant line ministries\. The Projectâs budget will be
approved by the Director of Economic Planning and then submitted to the MoFEP for approval, and upon
approval, the budget is included in the GoSVGâs Estimates of Revenue and Expenditure\. The annual budget
is revisited quarterly and updated as needed\.
Page 32 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
80\. Internal control\. The POM will describe the internal control mechanisms to be put in place by the
implementing agency to properly manage, control, and conduct oversight of the implementation
arrangements, including financial and technical reporting\. Though the Project funds will be advanced to
the MoFEP, the Project has to be registered in the National Budget in accordance with national laws\. The
MoFEP must abide by the Constitution and the Finance Administration Act (FAA) to ensure that the funds
are adequately executed, managed, controlled, and incorporated in the GoSVGâs institutional accounting
and budget systems\. The PSIPMU has established accounting policies and internal control procedures over
the review and approval of transactions and payments\. The POM has been reviewed by the World Bank
and found acceptable, but an update will be required to reflect the Project-specific arrangements\.
81\. Accounting and financial reporting\. The Project will follow cash basis accounting, and all Project
transactions will be recorded in the SIGFIS (SmartStream)\. The PSIPMU will work with the Treasury
Department to include the Projectâs activities in SmartStream using the appropriate coding designed for
external funds in accordance with the Project design (components and activities)\. Project implementation
will rely on the SIGFIS, and execution will rest with the PSIPMU\. The PSIPMU will be responsible for
producing and submitting interim financial reports (IFRs) to the World Bank on a quarterly basis, along
with the accounting records from which they are prepared\. These reports would provide the required
monitoring information and would be used for disbursement\. The format and content of the quarterly
IFRs were discussed during project appraisal and will be agreed upon and included in the POM and the
Project Disbursement and Financial Information Letter (DFIL)\. The IFRs would include a short narrative
outlining the major Project achievements for the quarter, the Project sources and uses of funds, bank
reconciliation statements, and necessary procurement tables\. These reports would be submitted to the
World Bank no later than 45 days after the end of each reporting period\. Upon completion of all Project
activities and payments and as part of the final deliverable (Final Progress Report), the MoFEP will submit
to the World Bank a consolidated report on the use of funds for deliverables, showing offsets for any paid
advances and any uncommitted balance to be refunded\.
82\. Disbursement and flow of funds\. Disbursement of project funds will be processed in accordance
with the World Bank procedures as will be stipulated in the DFIL and the Disbursement Guidelines for
Investment Project Financing, dated February 2017\. Advances will be processed to a segregated
Designated Account (DA) denominated in U\.S\. dollars, held at the BOSVG and pooled for IDA and EU funds
under the Project\. Advances to the DA would be made based on the forecast of the projectâs eligible
expenditures for a period of six months, based on Interim Financial Reports (IFRs)\. Supporting
documentation for expenditures made from the DA would also be based on the IFRs\. As eligible
expenditures are incurred, the PSIPMU would withdraw the amount to be financed by the World Bank
from the DA (US$ or EC$) in accordance with the financing agreement\. The PSIPMU would operate a local
currency account, to finance project expenditures in local currency\. These accounts would operate in
accordance with the procedures and guidelines set forth in the World Bankâs Disbursement Guidelines\.
Disbursement methods that may be used to withdraw funds are reimbursements, advances, direct
payments, and special commitments\.
83\. Special Provision\. Projects in situations of urgent need of assistance or capacity constraints:
Disbursements under contracts for goods, works, non-consulting services and consulting services
procured or selected through international open or limited competition or Direct Selection, as set out in
the procurement plan, must be made only through Direct Payment and/or Special Commitment
disbursement methods\. Please note that the special provision applies only to the IDA Credit\.
Page 33 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
84\. All payments will be made by the PSIPMU through the Treasury Department once payment
obligations have been incurred, verified, and properly documented\. To make payments, the system
requires that funds be committed by source, allowing the tracking of credit disbursements to Project
expenditures\. Further details are included in the POM and PSIPMU Accounting Manual\.
85\. Retroactive financing will be allowed, up to an amount of US$16 million equivalent, to cover
payments made for eligible project expenditures, including works, goods, consulting services, and non-
consulting services between April 9, 2021 and the signing of the Financing Agreement\.
86\. The flow of funds established for the temporary grants and cash-for-work transfers under
subcomponents 1\.1 and 1\.2 will proceed as follows: The MoFEP will enter into an agreement with the
BOSVG which will be required to open a separate bank account for temporary grants and the cash-for-
work transfers\. The MoNM and BRAGSA will approve the master list of eligible beneficiaries of the cash
transfers under subcomponent 1\.1, and LITE cash-for-work activities under subcomponent 1\.2,
respectively\. The master lists will be reviewed by the PSIPMU and processed for payment from the
Projectâs DA\. The BOSVG will open the e-wallets and issue the electronic cards of the beneficiaries
according to a list approved by the MoNM and BRAGSA provided through the PSIPMU\. The BOSVG will
then proceed to make payments to the beneficiaries' e-wallets\. Monthly financial reconciliations of
payments will be made by the BOSVG and sent to the PSIPMU, the MoNM and BRAGSA within a
reasonable time upon completion of payments\. Outstanding balances will be refunded back to the
Projectâs DA\. Further detailed payment procedures are established in the POM\.
87\. If beneficiaries under subcomponent 1\.2 cannot access digital payments deployed by the BOSVG
by virtue of their geographical location, the PSIPMU will agree with the Bank on special procedures for
processing payments in cash which will be documented in the POM\.
88\. External auditing\. The external audit of the Project will be conducted annually by an external,
independent, private audit firm, acceptable to the World Bank, to be contracted under the Project no
later than six months after the Projectâs effectiveness\. The PSIPMU will ensure the Project Procurement
Plan includes the hiring of the audit firm and will prepare the auditorâs terms of reference, which will
include all Projectâs sources of funds and would be reviewed by the World Bank before engaging the audit
firm\. The annual audit reports would include an opinion on the Project financial statements, including
cumulative figures, for the year and as of the end of the fiscal year, DA reconciliation, review of the internal
controls, review of the Recipientâs compliance with the terms of the Financing and Grant Agreements, and
a Management Letter\. The Projectâs annual audit report would need to be submitted to the World Bank
for review no later than six months following the end of the fiscal year\. In accordance with the World
Bankâs disclosure of information, the audited financial statement would be published and made available
to the public\. The financial audit will include an extended scope to: (i) conduct a review of a sample of the
beneficiaries under subcomponents 1\.1 and 1\.2 to verify compliance of the operational procedures of the
programs from the eligibility of beneficiaries up to payment and receipt of benefits; and (ii) conduct spot
checks at the payment sites during the payment dates to ensure compliance of payment procedures on
the ground and transparency\.
89\. Supervision plan\. FM supervision and implementation support will include on- and off-site visits\.
If circumstances permit, on-site visits will be carried out at least twice a year and calibrated based on
assessed risks and Project performance\. In case of lack of physical access to the Project facilities once
Page 34 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
implementation begins, virtual FM implementation support and supervision will be conducted using
information and communication technology (ICT) tools\. Off-site implementation support will comprise
desk reviews of IFRs and audited financial statements and continuous monitoring of funds flow and
budget execution progress\.
90\. The residual FM risk is assessed as Substantial\. Overall FM arrangements related to staffing,
budgeting, financial reporting, internal control and internal auditing, flow of funds, and audits are deemed
adequate to provide reasonable assurance on the proper use of the Project funds for the achievement of
the PDO\. The main FM risks are as follows: (a) lack of institutional and fiduciary capacity to implement a
multi-sector project; (b) limited capacity of the public financial management system; and (c) emergency
nature of the Project including temporary grants activities\. To mitigate and manage these risks, the
following measures will be implemented: (a) leveraging a well-established fiduciary infrastructure at the
PSIPMU of the MoFEP; the PSIPMU is familiar with World Bank-financed operations and is acquainted
with the World Bankâs policies and guidelines and maintains an adequate FM system; (b) developing a
detailed POM including internal controls, flow of funds, and payment mechanisms; (c) ex ante audit of all
payments by internal auditors of the Treasury Department; and (d) independent ex post audits of Project-
related expenditures by an independent firm\.
(ii) Procurement
91\. Procurement procedures\. The recipient will carry out procurement under the proposed Project
in accordance with âThe World Bank Procurement Regulations for Investment Project Financing (IPF)
Borrowers (Procurement Regulations)â dated July 2016 and revised in November 2020 under the New
Procurement Framework; the âGuidelines on Preventing and Combating Fraud and Corruption in Projects
Financed by IBRD Loans and IDA Credits and Grantsâ, dated July 2016; and other provisions stipulated in
the Financing Agreements\.
92\. Procurement will be carried out by the PSIPMU within the MoFEP\.
93\. Procurement approaches will utilize the flexibility provided by the World Bankâs Procurement
Framework for fast-track emergency procurement by the countries\. Key measures to fast-track
procurement include: (a) use of simple and fast procurement and selection methods fit for an emergency
situation including direct contracting, as appropriate; (b) streamlined competitive procedures with shorter
bidding time; (c) use of framework agreements including existing ones; (d) procurement from UN agencies
enabled and expedited by World Bank procedures and templates; (e) force account and community-
driven development as needed; and (f) increased thresholds for Requests for Quotations and national
procurement, among others\.
94\. Advance procurement and retroactive financing\. The recipient may advance with the
procurement under the above procurement arrangements and may seek the World Bankâs approval for
advance contracting and the recognition of retroactive financing within the parameters set forth in the
Loan/Financing Agreement\. For the contract (advance contracting) to be eligible, the procurement
procedures followed by the recipient shall be consistent with Sections I, II, and III of the Procurement
Regulations, and all vendors/suppliers/contractors/consultants should have signed the Letter of
Acceptance of the World Bankâs Anticorruption Guidelines and Sanctions Framework\. The
Implementation Agreement with the recipient will include management of procurement and contracting
Page 35 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
processes\. The Procurement Plan will be limited to procurement by the MoFEP, which has the local
capacity to coordinate with the GoSVG on procurement activities, including works, and the expertise to
handle large-scale procurement of goods, works, and services at the global level\.
95\. A Project Procurement Strategy for Development (PPSD) is required, in accordance with the
World Bankâs Procurement Framework A simplified PPSD was finalized and cleared by the Bank before
negotiations phase\.
96\. The major planned procurements include: (a) procurement of materials and services required for
the reconstruction of damaged critical infrastructure, including consulting services, as needed, for design
and supervision; (b) detailed engineering assessments of damaged critical infrastructure; (c) immediate
recovery activities; and (d) supplies and equipment to reestablish the livelihoods of affected populations\.
97\. The residual risks related to procurement are Substantial, resulting from potential delays due
to the pandemic and mobility restrictions, including blockages in roads due to the impact of natural
hazards\. Risks related to overall price increases, transport prices increases and poor response from the
markets, are also present\. Other potential risks are PSIPMU being overwhelmed with other projects, poor
designs, and terms of reference which may result in delays in the procurement processes\.
98\. To mitigate this risk, the following measures are proposed: (a) using the support of UN agencies
where possible; (b) strengthening the procurement capacity of the PSIPMU through an international
procurement consultant to support at key stages of the procurement process, particularly during activity
prioritization, preparation of bidding documents and evaluation of bids; (c) appointing a procurement
assistant to provide administrative support; (d) strengthening the technical team which will prepare
critical inputs to procurement, including technical specifications for equipment, terms of reference, and
bills of quantities; and (d) training the procurement officer and technical experts on the World Bank
Procurement Regulations and on contract management\.
\. C\. Legal Operational Policies
\.
Triggered?
Projects on International Waterways OP 7\.50 No
Projects in Disputed Areas OP 7\.60 No
\.
D\. Environmental and Social
99\. The overall E&S risk classification rating for this proposed Project is considered Substantial due
to the potential environmental, social, health, and safety implications inherent to the potential scale of
the emergency recovery works to be financed under the proposed Project, as well as the challenges for
effective institutional coordination to adequately manage risks under the backdrop of the ongoing COVID-
19\. The Projectâs key environmental risks are associated with project activities to stabilize slopes and
riverbeds, and the rehabilitation and reconstruction of high-priority public and community-level
infrastructure\. These investments carry the potential for significant impacts, in a context of uncertainty
around the details of civil works to be supported, the sensitive health and safety aspects derived from the
Page 36 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
disaster context as well as the COVID-19 pandemic, and the context of strained implementation capacity
in a disaster setting to effectively manage environmental, health and safety risks and impacts\. In addition,
there is a potential challenge with the removal and disposal of debris and ash from the volcanic eruption\.
The government is now storing the ash in some central places and exploring options for its commercial
use\. The Project will follow the government guidelines and international best practices for safe use and
disposal options of volcanic ash\. Some of the Projectâs cross-cutting social risks relate to the exclusion of
vulnerable groups, sexual exploitation and abuse and sexual harassment (SEA/SH), labor influx,
involuntary resettlement, crime and violence, and the potential for social discontent, if people feel that
their needs are purposely ignored (this usually happens in a context where there is ineffective stakeholder
engagement and a lack of proper feedback and complaints mechanism)\. The Bank will review and update,
if necessary, the Environmental and Social Risk Classification (ESRC) regularly throughout the life of the
project\.
100\. The core Project instruments to assess and manage E&S risks and impacts will be prepared by
the MoFEP, through the PSIPMU\. These instruments, which will be developed, consulted, and disclosed
within the time frames indicated below, will consist of: (a) an Environmental and Social Management
Framework (ESMF) within 90 days of Project effectiveness; (b) a Stakeholder Engagement Plan (SEP)
within 90 days of Project effectiveness (a draft of which has already been developed during preparation
and disclosed by the implementing agency on September 24, 202139; (c) Labor Management Procedures
(LMP) within 90 days of Project effectiveness; and (d) a Resettlement Policy Framework (RPF) within 90
days of Project effectiveness\. The Project will initially focus on the Early Recovery Income Support Program
(ERISP)\. No physical works are expected before finalizing, disclosing, and adopting the E&S instruments\.
Until the completion of these instruments, the Project will use the existing Environmental Management
Framework and Rapid Assessment Framework of the RDVRP (P117871) as the basis for developing
(including consultations) of the ESMF and RPF of this project and submit the screening report,
Environmental and Social Management Plan (ESMPs), and Resettlement Action Plan (RAPs) to the World
Bank for review and approval before carrying out the relevant Project activities\. The MoFEP will not start
any physical activities before the ESMPs and RAPs have been prepared, consulted, and disclosed by the
MoFEP and approved in advance by the World Bank40\.
101\. The ESMF will include E&S screening checklists for the risk classification of site-specific Project
activities and scoping of site-specific-level Environmental and Social Impact Assessments (ESIAs) and
ESMPs\. It will also include generic E&S management procedures/codes of practice, in line with the World
Bankâs Environmental and Social Framework (ESF) and the Environmental Health and Safety Guidelines\.
These tools can be quickly and easily adapted and tailored to site-specific Project activities and
incorporated into site-specific ESMPs and bid documents, covering, among other aspects, management
of diverse construction impacts, occupational and community health and safety, COVID-19 transmission
prevention and response, debris and hazardous materials management, worker camp management,
SEA/SH risk management procedures, workersâ Code of Conduct, guidelines for universal access design in
line with the Environmental and Social Standard on Community Health and Safety (ESS4), and measures
to avoid/mitigate potential impacts on natural habitats\. The ESMF will explain the requirements of safe
storage, transportation, commercial use (if any) and disposal of ash including assessment of existing sites
39 http://www\.gov\.vc/index\.php/volcanic-eruption-emergency-project-veep\. The SEP also been disclosed by the Bank\.
40 http://www\.gov\.vc/images/pdf_documents/VEEP_ESCP_Negotiated-Version\.pdf
Page 37 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
for disposal\. The ESMF will further include detailed institutional roles and responsibilities, monitoring and
reporting requirements, an estimated E&S budget, and capacity-building measures\. Full implementation
of E&S instruments, including site-specific ESIAs and ESMPs, and monitoring and reporting on the same,
is specified in the Environmental and Social Commitment Plan (ESCP) prepared for the proposed Project
and the draft version disclosed by the implementing agency on September 24, 202141\. The ESMF will also
spell out the provision to be followed to carry out the environmental and social due diligence for
retroactive financing of any activity under Category 2, as defined under the Financing Agreement\. The
ESMF shall include terms of reference for the E&S audit, to be carried out within a timeframe acceptable
to the Bank, and before a decision on retroactive financing is made\.
102\. Site-specific ESIAs and ESMPs will be consulted and disclosed locally before proceeding with
site-specific Project activities\. Those developed for higher-risk site-specific Project activities (according to
criteria to be specified in the ESMF) will require prior review and approval by the World Bank\. The Project
will focus on existing damaged structures\. The RPF will be used for cases that lead to economic
displacement, including temporary land use for contractorsâ camps and storage of equipment, but that
would not cause physical displacement but could cause interruption and/or restriction of access to any
business adjacent to site-specific project activities causing loss of income\. Any RAPs will be consulted,
submitted to the World Bank for prior approval, and disclosed\.
103\. Effective and demonstrable citizen engagement will be central to the Project implementation\.
Given the communication and engagement limitations posed by the post-disaster scenario and the COVID-
19 pandemic, careful planning is needed to reduce any risk of exclusion of vulnerable groups\. An indicator
has been included in the Results Framework to measure beneficiary satisfaction with the Projectâs
stakeholder engagement process\. The indicator measures the level of satisfaction with the process of
consulting people living in the targeted Project area during preparation and implementation\. The
proposed Project considers citizen engagement as a cross-cutting issue for all subcomponents and
activities\. These will follow, when possible, a community-based and owner-driven resilient approach and
will engage communities early in Project implementation\. This is important for vulnerable communities,
which have been substantially affected by the La Soufrière volcanic eruptions\. During implementation,
peopleâs feedback will be sought on communication activities regarding the Projectâs progress and about
feedback channels, including the grievance redress mechanism (GRM)\. The SEP will ensure the
participation of all stakeholders to understand the needs of the affected populations; ensure transparency
and coordination between government entities, the PSIPMU, and communities; and receive feedback and
grievances\. The SEP will set out the nature and periodicity of stakeholder consultations and require regular
beneficiary feedback surveys, which will be used to measure and improve citizen engagement\. As part of
the post-disaster response, informing and receiving real-time feedback from citizens can provide insight
into how the crisis affects vulnerable women and other vulnerable populations, enabling timely course
correction\. A communications strategy will be embedded as part of the consultative and accountability
processes, including the GRM\.
41 http://www\.gov\.vc/index\.php/volcanic-eruption-emergency-project-veep\. The negotiated version of the ESCP was
disclosed by the client on November 03, 2021 http://www\.gov\.vc/images/pdf_documents/VEEP_ESCP_Negotiated-Version\.pdf\.
The World Bank also disclosed both draft and negotiated ESCP\.
Page 38 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
104\. A robust GRM will be put in place by the MoFEP to address concerns and complaints promptly
and transparently with no cost or discrimination toward Project-affected communities\. Implementing
staff and local-level coordination structures will be oriented on their roles and responsibilities to address
grievances, particularly around exclusion and manipulation of targeting and entitlements\. Channels will
be developed to allow for community M&E of site-specific Project activities such as through social audits
or citizen feedback platforms\. All these measures are expected to help deepen citizen engagement and
reinforce community cohesion\. The GRM will have channels to address Grievances related to
subcomponent 1\.1(a) and 1\.2(a) Temporary grants and Gender Based-Violence\. The GRM also is expected
to provide early warnings on emerging environmental, social, and health and safety risks\.
105\. The strengthening of technical and institutional capacity is an E&S priority\. The MoFEP will be
responsible for the implementation and compliance of the ESF\. The Project officer and the Environmental
Resource Analyst of the PSIPMU within MoFEP have been assigned as the social focal point and the
environmental focal point, respectively, for the Project\. In addition to the focal points, the PSIPMU will
recruit an environmental specialist and a social specialist as early as possible but no later than ninety (90)
days after the effective date of the project\. The environmental and social focal points are familiar with
the World Bank safeguards policy and the ESF\. They are involved in the projects supported by the World
Bank and have participated in training/workshop on ESF\. The focal points will be responsible for the
preparation of the E&S instruments for the project\. If required, the MoFEP will hire additional consultants
to support the focal points in the timely preparation of the E&S Instruments\. The focal points will continue
their support during project implementation through coordinating the E&S issues among different
implementing agencies; reviewing the subproject-specific E&S screening, assessment, and ESMPs; and
periodically monitoring the project work\. The environmental and social specialists will support the
management of E&S risks, including environmental, health, safety, and labor; physical and/or economic
displacement due to land acquisition (resettlement); cultural heritage; and stakeholder engagement,
among other relevant aspects\. They will be responsible for day-to-day work on project E&S issues\. Other
key tasks are associated with support, supervision, enforcement, contractor management, monitoring
and reporting, training, participation, gender, citizen engagement and feedback, and information
disclosure related to the ESS of the World Bank\.
106\. Climate change\. As one of the SIDS, St\. Vincent and the Grenadines is highly vulnerable to climate
change due to its geographic location and size\. Its production systems are heavily dependent on natural
resources\. The country is also susceptible to natural hazards, including floods, landslides, and hurricanes
which are becoming more severe and frequent\. The proposed Project will contribute to the GoSVGâs
climate change objectives and World Bank climate targets by generating climate co-benefits related to
mitigation and adaptation\. The proposed Project supports investments that maximize climate co-benefits
with all investments designed to be resilient to climate-induced events using best practice climate-
resilient approaches and standards\. Where relevant, these co-benefits will be achieved by: (a) providing
energy-efficient equipment; (b) incorporating climate adaptation and resilience measures in the design of
the works financed under the proposed Project, considering hydrometeorological and climate risks, such
as flooding and other extreme weather events; and (c) applying and implementing building and
construction codes for climate-resilient infrastructure\.
Page 39 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
107\. Gender\. The World Bank Gender Strategy for 2016â202342 and the GFDRR Gender Action Plan for
2016â202143 identify climate change and DRM as emerging areas that require a gender lens\. They also
highlight the importance of analyzing gender equality and women and girlsâ empowerment as the key to
strengthening resilience\. Both the strategy and the plan are aligned with the UN Sendai Framework for
Disaster Risk Reduction 2015â2030,44 which states among its principles that DRR requires gender, age,
disability, and cultural perspectives in all policies\. In the case of St\. Vincent and the Grenadines, early
indications are that the La Soufrière volcanic eruptions have disproportionately affected women and girls\.
108\. Gender gap\. The National Evacuation Report (June 5, 2021)45 estimates that 60 percent of
displaced individuals are female, of which 62 percent are older than 18 years\. The report further shows
that the women of working age (older than 18 years) have been affected and displaced by a ratio of 2:1
compared to men of the same age group\. In St\. Vincent and the Grenadines, there are approximately
13,327 farmers (64\.6 percent males and 35\.4 percent females), of which 28\.2 percent are in the red and
orange zones\.46 In terms of the fishing sector, there are 1,748 registered fishers throughout St\. Vincent
and the Grenadines, with 469 in the affected area; 75\.9 percent of fishers in the red and orange zones are
males, while females represent 24\.1 percent\. Meanwhile, 76\.6 percent of âTri Triâ fishers in the red and
orange zones are women\. Given that the fishing grounds for this national delicacy have been adversely
affected by lava flows and lahars, women and their dependents will be disproportionately affected in the
short to medium term\. While specific data are not available, the combination of displacement and the
destruction of agriculture and fishery infrastructures in the disaster zone means that the eruptions could
negatively affect womenâs employment opportunities\.
109\. Gender actions\. To close the gender gap, the Project will support the restoration or
reconstruction of critical agricultural infrastructure, including repairing and upgrading agricultural and
fishery centers and facilities, which serve as important hubs of commerce and employment for disaster-
affected women\. The selection and development of these interventions will ensure the inclusive
participation of displaced women beneficiaries and help address the disproportionate impacts of women
and close the gap in gender participation and decision-making in recovery and reconstruction processes\.
In addition, under Component 1, the Project will target LITE program activities for females affected in the
agriculture and fisheries sectors, support temporary grants to females or female-headed households,
and/or ensure that grant program activities consider gender-specific needs, such as daycare
arrangements, as needed\.
110\. Gender indicator\. The proposed Project will assess results against specific indicators included in
the Results Framework, including: (a) women beneficiaries receiving temporary grants as income support
and cash-for-work payments for temporary employment (percentage of the women displaced); (b)
women beneficiaries provided with support services to enhance householdsâ self-agency (percentage of
42 GFDRR\. 2016\. World Bank Group Gender Strategy\.
http://documents1\.worldbank\.org/curated/en/820851467992505410/pdf/102114-REVISED-PUBLIC-WBG-Gender-Strategy\.pdf\.
43 GFDRR\. 2016\. Gender Action Plan\. https://www\.gfdrr\.org/en/gfdrr-gender-action-plan-2016-2021\.
44 The Sendai Framework for Disaster Risk Reduction 2015â2030 (Sendai Framework) was the first major agreement of the UNâs
post-2015 development agenda, with seven targets and four priorities for action\. It was endorsed by the UN General Assembly
following the 2015 Third UN World Conference on Disaster Risk Reduction\. https://www\.undrr\.org/publication/sendai-
framework-disaster-risk-reduction-2015-2030\.
45 Private residence and rented accommodation - MoNM (NEMO Call and Data Centre)\. Report produced by the UN World Food
Programme\.
46 Ministry of Agriculture; it is assumed that the sex disaggregation in the red and orange zones follows the national average\.
Page 40 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
the women displaced); and (c) women economically benefiting from project investments in agriculture in
affected areas (percentage increase of the women employed through agriculture investments)\.
111\. Additionally, the proposed Project will include mechanisms to promote equal access and feedback
from diverse population groups and improve data collection and awareness of gender reconstruction,
household, and livelihood needs\. The selected consultative and feedback mechanisms will be detailed in
the POM and E&S documentation\. The Project will collect and use gender-disaggregated data to design
and enhance social benefits and, where required, mitigate negative gender impacts\. Throughout the
consultation and implementation phases, the proposed Project will ensure that the needs of women,
particularly heads of households, in terms of safety, hygiene, and employment opportunities are
specifically addressed\.
V\. GRIEVANCE REDRESS SERVICES
112\. Communities and individuals who believe that they are adversely affected by a World Bank (WB)
supported project may submit complaints to existing Project-level grievance redress mechanisms or the
WBâs Grievance Redress Service (GRS)\. The GRS ensures that complaints received are promptly reviewed
in order to address Project-related concerns\. Project-affected communities and individuals may submit
their complaint to the WBâs independent Inspection Panel which determines whether harm occurred, or
could occur, as a result of WB non-compliance with its policies and procedures\. Complaints may be
submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank
Management has been given an opportunity to respond\. For information on how to submit complaints to
the World Bankâs corporate Grievance Redress Service (GRS), please visit
http://www\.worldbank\.org/en/projects-operations/products-and-services/grievance-redress-service
and for information on how to submit complaints to the World Bank Inspection Panel, please visit
www\.inspectionpanel\.org\.
VI\. KEY RISKS
113\. The proposed Projectâs overall risk is assessed as Moderate\. With respect to the World Bankâs
Systematic Operations Risk-Rating Tool (SORT) categories, only two risk categories are assessed as
âSubstantialâ, as outlined below\.
114\. The E&S risk rating is considered Substantial\. Potentially significant environmental risks and
impacts may include, among others: (a) diverse impacts on lands and land use, including on natural
habitats or other sensitive landscapes, from debris clearing and disposal, earthworks, and works; (b)
generation, management, and disposal of non-hazardous and hazardous solid wastes; (c) generation and
discharge of wastewater; (d) sludge generation and disposal from potential water and sanitation works;
(e) traffic risks; (f) risks from unsustainable fisheries practices and other unsustainable food security-
related practices; and (g) various health and safety risks to the Project workers and local communities,
including from exposure to hazardous materials and wastes, worksites involving physically unstable
settings such as landslide-prone areas or collapsing buildings, the risks of spread of COVID-19 and
outbreaks of other infectious diseases, and natural hazards such as hurricanes, landslides, and floods\.
Page 41 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
115\. The Projectâs E&S risks will be mitigated through: (a) the development, consultation, and
application of a range of the Projectâs E&S instruments, as detailed in Section IV, Part D of this document;
(b) strengthening of E&S technical and institutional capacity by the MoFEP maintaining one full-time
environmental specialist and one full-time social specialist, including regular reporting to the World Bank
and ensuring the timely preparation of the Projectâs E&S instruments; (c) assurance that works that have
physical impacts do not begin without the Projectâs required E&S instruments in place and disclosed and
the necessary E&S clauses in contract documents; and (d) the implementation of robust citizen
engagement, GRM, and SEP to ensure the participation of all stakeholders, understand the needs of the
affected populations, ensure transparency and coordination between government entities, and receive
and address feedback and grievances\.
116\. Fiduciary risks\. The inherent fiduciary risk is Substantial due to FM and Procurement risks \. FM
risks include: (a) lack of institutional and fiduciary capacity to implement a multi-sector project; (b) limited
capacity of the public financial management system; and (c) emergency nature of the Project, including
temporary grants activities\. To mitigate and manage these risks, the following measures will be
implemented: (a) leveraging a well-established fiduciary infrastructure at the PSIPMU of the MoFEP; the
PSIPMU is familiar with World Bank-financed operations and is acquainted with the World Bankâs policies
and guidelines and maintains an adequate FM system; (b) development of a detailed POM including
internal controls, flow of funds, and payment mechanisms; (c) ex-ante audit of all payments by internal
auditors of the Treasury Department; and (d) independent ex-post audits of Project-related expenditures
by an independent firm\.
117\. Procurement risks and mitigation measures: the main risk identified is a delay in the
implementation of procurement due to the current workload of PSIPMU, the complexity of the contracts
to be financed under the Project, and the poor market response\. To mitigate this risk, the following
measures are proposed: (a) hire an experienced procurement consultant to support PSIPMU at key stages
of the procurement process, particularly the preparation of bidding documents and evaluation of bids; (b)
strengthen the technical team, which will prepare critical inputs to procurement, including technical
specifications for equipment, Terms of Reference and Bills of Quantities; (c) train procurement specialists
and technical experts on the World Bank Procurement Regulations and contract management; and (d)
engage with other agencies to identify potential vendors/contractors qualified for the project\.
\.
Page 42 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
VII\. RESULTS FRAMEWORK AND MONITORING
Results Framework
COUNTRY: St\. Vincent and the Grenadines
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project
Project Development Objectives(s)
The Project Development Objective (PDO) is to support Saint Vincent and the Grenadines to (i) provide short-term income support, (ii) improve the
capacity of the government to prepare for and respond to emergencies, and (iii) build back better critical services in the wake of the La Soufriere volcano
eruption\.
Project Development Objective Indicators
RESULT_FRAME_TBL_ PD O
Indicator Name PBC Baseline End Target
Support SVG to provide short-term income support and restore critical services\.
Number of households impacted by the volcanic eruption and
climate-related events, benefiting from short-term income 0\.00 4,000\.00
support program (number; disaggregated by gender) (Number)
of which are women (Percentage) (Number) 0\.00 55\.00
Number of people benefiting from restored utility/infrastructure
0\.00 15,000\.00
services (number; disaggregated by gender) (Number)
of which are women (Percentage) (Number) 0\.00 40\.00
The GoSVG has improved command and control systems in place
No Yes
(Yes/No)
PDO Table SPACE
Page 43 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
Intermediate Results Indicators by Components
RESULT_FRAME_TBL_ IO
Indicator Name PBC Baseline End Target
Early recovery income support
Households provided with support services to enhance
householdâs self-agency (Number) 0\.00 750\.00
Of which are women (Percentage) (Number) 0\.00 55\.00
Households receiving temporary grants (Number) 0\.00 4,000\.00
Of which are women (Percentage) (Number) 0\.00 55\.00
Volcanic ash, debris and floodwater cleared following the
volcanic eruption and/or climate-related events (in critical 0\.00 30\.00
spots/segments, houses, and public buildings) (Number)
Restoration of critical services, resilient reconstruction, and strengthening emergency preparedness
Water systems rehabilitation and/or augmented, in accordance
with climate and disaster resilient improvements and practices 0\.00 1\.00
with operational capacity restored\. (Number)
Government has improved command and control systems in
place to better prepare for and respond to emergencies such as
No Yes
volcanic eruption, as well as climate change-related disasters
such as hurricanes (Yes/No)
Public buildings repaired in accordance with volcanic eruption
risk and climate and disaster-resilient improvements (Number) 0\.00 5\.00
Women economically benefiting from project investments in
agriculture in impacted areas (% increase of the women
economically benefiting from agriculture investments)\. 0\.00 55\.00
(Number)
Implement project activities at the community level, with women
No Yes
included in decision making processes\. (Yes/No)
Number of bridges rehabilitated or protected (Number) 0\.00 1\.00
Number of critical spots/segments built or rehabilitated
0\.00 25\.00
(Number)
Page 44 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
RESULT_FRAME_TBL_ IO
Indicator Name PBC Baseline End Target
Project Management
Grievances responded to in the stipulated time (Percentage) 0\.00 60\.00
Beneficiary satisfaction with projectâs stakeholder engagement
0\.00 60\.00
process (Percentage)
of which are women (Percentage) (Percentage) 0\.00 50\.00
IO Table SPACE
UL Table SPACE
Monitoring & Evaluation Plan: PDO Indicators
Methodology for Data Responsibility for Data
Indicator Name Definition/Description Frequency Datasource
Collection Collection
This indicator will measure
the number of households
impacted by the volcanic Progress
Number of households impacted by the
eruption and climate Reports
volcanic eruption and climate-related Progress Reports
change-related events, Monthly (MoNM, PSIPMU M&E section
events, benefiting from short-term prepared by PSIPMU
benefitting from a MoTW, BRAG
income support program (number;
temporary income support SA)
disaggregated by gender)
program (CT)\.
This indicator will measure Progress
the proportion of women Reports Progress Reports
Monthly PSIPMU M&E section
of which are women (Percentage) impacted by the volcanic (MoNM, prepared by PSIPMU
eruption, and climate MoTW,
change-induced events, BRAGSA)
Page 45 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
benefitting from temporary
income support as a share
of the total beneficiaries
benefitting from the short-
term income support
program
This indicator will measure
the number of people Progress
Number of people benefiting from Progress Reports
benefiting from restored Semi-annual Report PSIPMU M&E section
restored utility/infrastructure services prepared by PSIPMU
public services in a resilient (PSIPMU)
(number; disaggregated by gender)
manner financed by this
Project\.
This indicator will measure Progress
the proportion of women Report
Progress Reports
benefiting from restored Semi-annual (MoTW, PSIPMU M&E section
of which are women (Percentage) prepared by PSIPMU
public services in a resilient CWSA,
manner financed by this BRAGSA)
Project\.
This indicator measures the
capacity and capability of
the GoSVG to systematically
prepare for and respond to
emergencies\. The basic
Progress
elements of command and Progress Reports
The GoSVG has improved command and Semi-annual Reports PSIPMU M&E section
control system are people prepared by PSIPMU
control systems in place (NEMO)
(gather information, make
decisions, take action,
communicate, and
cooperate with one another
in the accomplishment of a
common goal), information
Page 46 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
management, and the
command and control
support structure (ICS)\.
ME PDO Table SPACE
Monitoring & Evaluation Plan: Intermediate Results Indicators
Methodology for Data Responsibility for Data
Indicator Name Definition/Description Frequency Datasource
Collection Collection
This indicator will measure
the number of households Progress
Households provided with support Progress Reports
provided with support Monthly Reports PSIPMU M&E section
services to enhance householdâs self- prepared by PSIPMU
services to enhance (MoNM)
agency
householdâs self-agency to
support a resilient recovery\.
This indicator will measure
the proportion of women
provided with support Progress
Progress Reports
services to enhance self- Monthly Reports PSIPMU M&E section
Of which are women (Percentage) prepared by PSIPMU
agency as a share of the (MoNM)
total households provided
with said services\.
This indicator will measure
the number of Households Progress
Progress Reports
receiving grants to support Monthly Reports PSIPMU M&E section
Households receiving temporary grants prepared by PSIPMU
the extension of the (MoNM)
temporary grants program
This indicator will measure Progress Progress Reports
Montly PSIPMU M&E section
Of which are women (Percentage) the proportion of Women Reports prepared by PSIPMU
Beneficiaries receiving (MoNM)
Page 47 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
grants to support the
extension of the temporary
grants as a share of the total
beneficiaries\.
This indicator will measure
temporary employment
provided under component
1 to support labor-intensive
work and maintenance
program which focuses on
clearing and protecting
transportation routes from
the accommodation of
Volcanic ash, debris and floodwater
floodwater, volcanic ash, Progress
cleared following the volcanic eruption Semi- Progress Reports
and debris following the Reports PSIPMU M&E section
and/or climate-related events (in critical annual prepared by PSIPMU
volcanic eruptions of La (BRAGSA)
spots/segments, houses, and public
Soufrière and other climate-
buildings)
related events\.
The type of interventions
includes, inter alia, clearing
of roads, drainage
structures (culverts, small
bridges), houses, and public
buildings\.
Water systems rehabilitation and/or This indicator will measure
Progress Progress Reports
augmented, in accordance with climate the number of water semi-
Reports prepared by the PSIPMU M&E section
and disaster resilient improvements and systems rehabilitated annual
(CWSA) PSIPMU
practices with operational capacity and/or augmented by the
restored\. project which could include
Page 48 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
rehabilitation or
replacement of all damaged
systems components
(intakes, transmission,
distribution, storage) and/or
augmentation (e\.g new
wells, desalination, storage,
transmission, distribution) in
accordance with climate and
disaster-resilient standards
and practices\.
This indicator will measure
the GoSVG's capacity and
capability to systematically
prepare for and respond to
emergencies such as
volcanic eruption and
earthquakes, as well as
climate change-induced
Government has improved command and
disasters such as hurricanes\.
control systems in place to better prepare Progress Progress Reports
The basic elements of Semi-
for and respond to emergencies such as Report prepared by the PSIPMU M&E section
command and control annual
volcanic eruption, as well as climate (NEMO) PSIPMU
system are people (gather
change-related disasters such as
information, make
hurricanes
decisions, take action,
communicate, and
cooperate with one another
in the accomplishment of a
common goal), information
management, and the
command and control
support structure (ICS)\.
Page 49 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
This indicator will measure
the number of public
buildings and critical
agricultural and fishing
centers and facilities,
Progress
repaired by the project in
Reports
Public buildings repaired in accordance accordance with the climate Semi- Progress Reports
(MoTW, PSIPMU M&E section
with volcanic eruption risk and climate and disaster-resilient annual prepared by PSIPMU
BRAGSA,
and disaster-resilient improvements standards (for example
NEMO, MoA)
expansion of NEMO building
/ EOC, strengthening
shelters for multi-hazards
use)
This indicator will measure
Women economically benefiting from
the percentage of women Progres
project investments in agriculture in Progress Reports
economically benefiting Monthly Report PSIPMU M&E section
impacted areas (% increase of the prepared by PSIPMU
from project investments in (MoA)
women economically benefiting from
agriculture in impacted
agriculture investments)\.
areas
This indicator will measure
the inclusion of women in Progress
Implement project activities at the Progress Reports
decision-making processes Annually Reports PSIPMU M&E section
community level, with women included in prepared by PSIPMU
related to project activities (PSIPMU)
decision making processes\.
implemented at the
community level\.
Progress
Semi- Reports PSIPMU Progress
Number of bridges rehabilitated or Number of bridges PSIPMU M&E section
annual (MoTW, Reports
protected rehabilitated or protected
BRAGSA)
Page 50 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
The type of interventions
includes, inter alia: (a)
repairing roads with
improvements to bases and
or surfaces; (b) constructing
Progress
drainage structures Semi- PSIPMU Progress
Number of critical spots/segments built or Reports (Mo PSIPMU M&E section
(culverts, small bridges, and annual Reports
rehabilitated TW, BRAGSA)
on steep gradients,
removing landslides); and (c)
constructing retaining walls
and erosion control
structures within the
existing right of way\.
Progress
The indicator will measure Reports
the proportion of grievances (PSIPMU)\.
responded to in the Measuremen Progress Reports
Semi-
Grievances responded to in the stipulated stipulated time, as defined t prepared by the PSIPMU M&E section
annual
time by the safeguards methodology PSIPMU
document, related to will be
component 1 & 2 defined in
the POM\.
This indicator will measure
Annually
the average citizen
(PSIPMU
satisfaction rate with the Perception survey\.
will start Perception
projectâs stakeholder Measurement
Beneficiary satisfaction with projectâs reporting survey PSIPMU M&E section
engagement process\. methodology will be
stakeholder engagement process from year (PSIPMU)
This indicator aims to report defined in the POM\.
3 of the
on the effectiveness of
project)
citizen engagement
processes in the project\. The
Page 51 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
planned project surveys will
be extended to obtain
feedback from community
members on their
satisfaction with: (i) access
to project information and
awareness of decisions
taken, (ii) their
opportunities to provide
feedback and participate in
the dialogue; and (iii) the
responsiveness of the
implementing entity to
feedback provided\. These
criteria will be rated on a 1-
5 scale and will be equally
weighted\. In addition,
qualitative feedback will be
collected as well to improve
the stakeholder
engagement processes, if
needed\. For example, what
is working well? How can
the project improve its
information dissemination
strategy? etc\. The PSIPMU
will oversee this survey and
report annually (PSIPMU will
start reporting from year 3
of the project)\. Results will
be gender-disaggregated\.
Detailed mechanisms for
Page 52 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
collecting this data will be
developed by the PSIPMU
M&E section, with the
support of the Bank, and
included in the Project
Operations Manual\.
Annually
(PSIPMU
This indicator will measure Perception survey\.
will start Perception
the number of women's Measurement
reporting survey PSIPMU M&E section
of which are women (Percentage) satisfaction rate with methodology will be
from year (PSIPMU)
investment activities under defined in the POM\.
3 of the
the project\.
project)
ME IO Table SPACE
Page 53 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
ANNEX 1: Implementation Arrangements and Support Plan
COUNTRY: St\. Vincent and the Grenadines
St\. Vincent and the Grenadines Volcanic Eruption Emergency Project
A\. Implementation Arrangements
1\. The GoSVG will be responsible for the overall Project implementation through the PSIPMU
within the MoFEP, while a PSC will provide overall policy direction and guidance for Project
implementation\. The MoFEP, as the implementing agency, will build on the RDVRP activities and the
experience from implementing a World Bank project\. A PSC, chaired by the MoFEP and including
representatives from the MoA; the MoNM; the CWSA; Ministry of Foreign Affairs, National Security, Legal
Affairs and Information; the NEMO; the MoTW; and BRAGSA, as well as other relevant government
agencies, will be responsible for coordinating among government agencies during the implementation of
the Project\.
2\. A dedicated Project team is being established within the PSIPMU under the strategic oversight of
the MoFEP, to perform the day-to-day implementation activities including contract management,
procurement, FM, E&S safeguards, project officer to support component 1\.1, citizen engagement, and
M&E\. The PSIPMU will be staffed with a mixture of MoFEP civil servants and external specialists to be
engaged by the Project, as needed\. If needed, following existing operational policies, and based on
contract amount, a field office can be established for field oversight of civil works and construction
supervision contracts and for reporting implementation progress and other implementation issues to the
PSIPMU\.
3\. The PSIPMU will implement the Project in accordance with a POM, which will be prepared in
consultation with the World Bank and will set forth the guidelines and specific procedures for carrying out
the Project\. The POM will include (a) the detailed description of all Project activities supported under the
Financing Agreement, (b) eligibility of beneficiaries under Subcomponents 1\.1 and 1\.2, (c) Implementation
Agreement model, (c) the sequencing of activities and a planned timetable for the activities, (d) the
prioritization framework, (e) the ESMF, (f) the procurement and FM arrangements for the Project, (g) the
coordination arrangements governing the day-to-day execution of the Project, and (h) the M&E data
collection and reporting arrangements\. The PSIPMU currently does not have a communications team, but
the provision of TA and/or staff to increase capacities through the Project or additional trust fund
resources will be explored, given the importance of communication in an emergency project\.
Procurement
4\. The MoFEP, through the PSIPMU, will be responsible for the Project procurement activities\. The
recipient will carry out procurement under the proposed Project in accordance with the World Bankâs
Procurement Regulations; the âGuidelines on Preventing and Combating Fraud and Corruption in Projects
Financed by IBRD Loans and IDA Credits and Grantsâ, dated July 2016; and other provisions stipulated in
the Financing Agreements\. The Project will use the Systematic Tracking of Exchanges in Procurement
(STEP) to plan, record, and track procurement transactions\. The general description of various items under
Page 54 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
different expenditure categories, as assessed in the PPSD and to be financed by the World Bank, will be
described in the POM\.
5\. The applicable method of procurement for each specific contract and the World Bankâs review
requirements (prior or post review) will depend on the nature, value, and risk of each contract and are
specified in the Procurement Plan approved by the World Bank\.
6\. POM\. The procurement arrangements and procedures will be detailed and fully documented in
the procurement section of the POM, based on the provisions of the Financing Agreement, and as agreed
between the MoFEP and the World Bank\. The manual will also detail the processing timelines and the
hierarchy of approval within the MoFEP\.
7\. Procurement Plan\. Contracts eligible for financing shall be procured in accordance with the
Procurement Plan, which defines the applicable procurement methods, estimated costs, prior review
requirements, and time frame\. The Procurement Plan will also identify the contracts to be purchased
under the Financing Agreement and under the Co-Financing (Grant) Agreement\. A draft Procurement Plan
for the first 18 months of the Project will be prepared by the MoFEP, to be finalized for the World Bankâs
approval and published through STEP\. The Procurement Plan will be updated annually, or as required, to
reflect Project implementation needs and improvements in institutional capacity and procurement risk\.
Financial Management (FM)
8\. The FM assessment for the Project was carried out in accordance with OP/BP on Investment
Project Financing (IPF), and the Financial Management Manual for World Bank IPF Operations (OPCS5\.05-
DIR\.01 issued February 10, 2017)\. Under the World Bankâs OP/BP on IPF with respect to projects financed
by the World Bank, the recipient and the Project implementing agency are required to maintain FM
systemsâincluding staffing, budgeting, internal control, accounting, financial reporting, and auditing
systemsâadequate to provide the World Bank with assurance that funds will be used in an efficient and
economical way to enable PDOs to be met\. The conclusion of the assessment is that the FM systems at
the MoFEP meet the World Bankâs requirements\.
9\. The MoFEP has been implementing World Bank-assisted projects through the PSIPMU and is
familiar with World Bank requirements on the maintenance of acceptable FM arrangements\. The FM risk
of the Project before mitigating measures is assessed as High, mainly due to (a) the lack of institutional
and fiduciary capacity to implement a multi-sector project, (b) the weaknesses in the public financial
management system, and (c) the emergency nature of the Project including temporary grants activities\.
However, FM risk can be reduced to Substantial after the following proposed mitigating measures are
implemented within the current FM system which will be reassessed during implementation: (a)
leveraging a well-established fiduciary infrastructure at the PSIPMU of the Economic Planning Division
within the MoFEP and maintaining separate books of accounts for the Project; (b) developing a detailed
POM including internal controls, flow of funds, and payment mechanisms; (c) conducting ex ante audit of
all payments by internal auditors of the Treasury Department; and (d) conducting independent ex post
audits of Project-related expenditures by an independent audit firm\. Extended scope for oversight of the
implementation of selected activities (e\.g\., temporary grants) through third-party verification
mechanisms will be included in the terms of reference for the auditors and included in the POM\.
Page 55 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
10\. FM implementation arrangements\. The Projectâs FM and disbursement arrangements will be
streamlined to facilitate execution, avoid unnecessary incremental operational arrangements, and rely as
much as possible on existing country systems\. The accounts for this Project will be executed through the
Standard Integrated Government Financial Information System (SIGFIS - SmartStream)\. The existing FM
arrangements at the PSIPMU of the MoFEP will be used for the implementation of the Project\. It includes
acceptable staffing, budgeting, accounting, financial reporting, internal controls and audit\. The MoFEP will
have a robust information system that will regularly report the progress of Project implementation\. The
MoFEP shall designate an FM focal person who will (a) facilitate the FM processes within the MoFEP and
(b) coordinate the FM requirements of the Project with the PSIPMU\.
11\. Budgeting arrangements\. The Project shall prepare an Annual Work and Financial Plan together
with disbursement projection to be submitted to the World Bank before the start of each fiscal year\.
12\. Accounting arrangements\. The accounting records of the Project shall be maintained by the
MoFEP\. Processing and accounting of Project transactions shall be mainstreamed\. Hence, adequate staff
resources at the PSIPMU shall be made available to ensure timely completion of the financial reports,
monitoring of the DA, and preparation of withdrawal applications\. Separate books of account will be
maintained for the Project\. There shall also be separate DA for the Project which will be pooled for both
IDA and EU Grant\. FM staff complement will be hired for the Project to support day-to-day operations and
specifically SmartStream\. The PSIPMU will work with the Treasury Department to include the Projectâs
activities in SmartStream using the appropriate coding designed for external funds in accordance with the
Project design (components and activities)\. Project implementation will rely on the SIGFIS, and execution
will rest within the PSIPMU\.
13\. Internal controls\. The POM will describe the internal control mechanisms to be put in place by
the MoFEP to properly manage, control, and oversee the Implementation Agreement, including financial
and technical reporting\. Though Project funds will be advanced to the MoFEP, the Project is nonetheless
registered in the National Budget\. The MoFEP follows the Constitution and the FAA to ensure that those
funds are adequately executed, managed, controlled, and incorporated in the GoSVGâs institutional
accounting and budget systems\. The PSIPMU has established accounting policies and internal control
procedures over the review and approval of transactions and payments\. The POM has been reviewed by
the World Bank and found acceptable, but an update will be required to reflect Project-specific
arrangements\.
14\. Disbursement and Funds flow arrangements\. Disbursement of project funds will be processed in
accordance with the World Bank procedures as will be stipulated in the DFIL and the Disbursement
Guidelines for Investment Project Financing, dated February 2017\. Advances will be processed to a
segregated DA denominated in U\.S\. dollars, held at the BOSVG and pooled for IDA and EU funds under
the Project\. Advances to the DA would be made based on the forecast of the project's eligible
expenditures for a period of six months, based on Interim Financial Reports (IFRs)\. Supporting
documentation for expenditures made from the DA would also be based on the IFRs\. As eligible
expenditures are incurred, the PSIPMU would withdraw the amount to be financed by the World Bank
from the DA (US$ or EC$) in accordance with the financing agreement\. The PSIPMU would operate a local
currency account, to finance project expenditures in local currency\. These accounts would operate in
accordance with the procedures and guidelines set forth in the World Bank's Disbursement Guidelines\.
Page 56 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
Disbursement methods that may be used to withdraw funds are reimbursements, advances, direct
payments, and special commitments\.
15\. Retroactive financing will be allowed up to an amount of US$16 million equivalent to cover
payments made for eligible project expenditures including goods, non-consulting services, consulting
services, and works, under Category 2 of the Financing Agreement withdrawal table between, April 9,
2021 and the signing of the Financing Agreement\.
16\. The proceeds of the loan will be disbursed against eligible expenditures in accordance with the
financial plan of the Project\. All payments will be made by the PSIPMU through the Treasury Department
once payment obligations have been incurred, verified, and properly documented\. To make payments,
the system requires that funds be committed by source, allowing the tracking of credit disbursements to
Project expenditures\. Detailed flow of funds arrangements is described in the POM\.
17\. The flow of funds established for the temporary grants and cash-for-work transfers under
subcomponents 1\.1 and 1\.2 will proceed as follows: The MoFEP will enter into an agreement with the
BOSVG which will be required to open a separate bank account for temporary grants and the cash-for-
work transfers\. The MoNM and BRAGSA will approve the master list of eligible beneficiaries of the cash
transfers under subcomponent 1\.1, and LITE cash-for-work activities under subcomponent 1\.2,
respectively\. The master lists will be reviewed by the PSIPMU and processed for payment from the
Projectâs DA\. The BOSVG will open the e-wallets and issue the electronic cards of the beneficiaries
according to a list approved by the MoNM and BRAGSA provided through the PSIPMU\. The BOSVG will
then proceed to make payments to the beneficiaries' e-wallets\. Monthly financial reconciliations of
payments will be made by the BOSVG and sent to the PSIPMU, the MoNM and BRAGSA with a reasonable
time upon completion of payments\. Outstanding balances will be refunded back to the Projectâs DA\.
Further detailed payment procedures are established in the POM\.
18\. If beneficiaries under subcomponent 1\.2 cannot access digital payments deployed by the BOSVG
by virtue of their geographical location, the PSIPMU will agree with the Bank on special procedures for
processing payments in cash which will be documented in the POM\.
19\. Financial reporting arrangements\. The PSIPMU will be responsible for producing and submitting
IFRs to the World Bank on a quarterly basis, along with the accounting records from which they are
prepared\. These reports would provide the required monitoring information and would be used for
disbursement purposes\. The format and content of the quarterly IFRs will be agreed upon and included in
the POM and Project DFIL\. The IFRs would include a short narrative outlining the major Project
achievements for the quarter, the Project sources and uses of funds, bank reconciliation statements, and
necessary procurement tables\. These reports would be submitted to the World Bank no later than 45 days
after the end of each reporting period\. Upon completion of all Project activities and payments and as part
of the final deliverable (Final Progress Report), the MoFEP will submit to the World Bank a consolidated
report on the use of funds for deliverables, showing offsets for any paid advances and any uncommitted
balance to be refunded\.
20\. External audit arrangements\. The external audit of the Project will be conducted annually by an
external, independent, private audit firm, acceptable to the World Bank, to be contracted under the
Page 57 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
Project no later than six months after the Projectâs effectiveness which will cover the Grant and Credit\.
The PSIPMU will ensure the Project Procurement Plan includes the hiring of an audit firm and will prepare
the auditorsâ terms of reference, which would be reviewed by the World Bank before engaging the audit
firm\. The annual audit reports would include an opinion on the Projectâs financial statements, including
cumulative figures, for the year and as of the end of the fiscal year, DA reconciliation, review of the internal
controls, review of the Recipientâs compliance with the terms of the Financing Agreement, and a
Management Letter\. The financial audit will include an extended scope to (i) conduct a review of a sample
of the beneficiaries under subcomponents 1\.1 and 1\.2 to verify compliance of the operational procedures
of the programs from the eligibility of beneficiaries up to payment and receipt of benefits, and (ii) conduct
spot checks at the payment sites during the payment dates to ensure compliance of payment procedures
on the ground and transparency\.
21\. The Projectâs annual audit report would need to be submitted to the World Bank for review no
later than six months following the end of the fiscal year\. In accordance with the World Bankâs disclosure
of information, the audited financial statements would be made publicly available\. Extended scope for
oversight of the implementation of selected activities (e\.g\., temporary grants) through third-party
verification mechanisms will be included in the terms of reference for the auditors\.
22\. Supervision plan\. FM implementation support missions will be conducted twice a year focusing
on the adequacy of the FM system to ensure that funds are used for the intended purposes with due
regard to economy and efficiency\. Based on the level of FM risks at the time of FM supervision, the reviews
may include any or all of the following: (a) review and verification of specific transactions, (b) review of
bank reconciliations, (c) analysis of the financial statements in relation to the funds disbursed by the World
Bank, and (d) physical verification of existence of structures\. In case of lack of physical access to Project
facilities once implementation begins, virtual FM implementation support and supervision will be
conducted using ICT tools\. Desk reviews will also be conducted on a regular basis and upon submission of
the annual external audit of the Project and the IFR\. Issues arising from these reports will be used to
review and adjust the scope of the planned FM implementation support\.
Safeguards
23\. The implementation of the ESMF will be consistent and aligned with the Project implementation
arrangements to ensure that identification and mitigation of risks are incorporated efficiently during
subproject implementation\. This includes programming the safeguards screening and assessments
according to contract packages\. A dedicated Safeguards Monitoring Section will be established in the
PSIPMU to ensure the strict and proper implementation of the ESMF throughout the Project cycle\. The
Safeguards Monitoring Section will be staffed by designated MoFEP safeguards specialists\. The
institutional arrangements for safeguards implementation are reflected in the Environmental and Social
Commitment Plan\.
B\. Implementation Support Plan (ISP) and Resource Requirements
24\. The World Bank will provide implementation support to the PSIPMU and the implementing
agency\. This support will include (a) monthly virtual implementation support missions, (b) periodic
technical discussions and field visits by the World Bank, (c) monitoring of the PSIPMU reporting on
Page 58 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
implementation progress and achievement of results, (d) review of the quarterly FM reporting, and (e)
review of the periodic updates of the Procurement Plan\.
25\. Overall approach to implementation support\. Implementation support will be provided by the
World Bank task team, consisting of staff with relevant competencies in project operations, procurement,
finance, M&E, safeguards, DRM, and EP&R\. The task team will conduct implementation support missions
every six months (at a minimum) throughout the Projectâs implementation period\. Implementation
support missions will include field visits to verify physical implementation and compliance with the
processes as stated in the POM\. Additional support will include frequent coordination with the PSIPMU
for updates on implementation performance and progress\. The task team will monitor progress of the
following: (a) achievement of results indicators, (b) overall and component-specific Project
implementation progress, (c) proper fiduciary management of all activities carried out by the PSIPMU, (d)
safeguards compliance, (e) reconciliation of payments with contracts, and (f) monitoring compliance of
key legal obligations\. The task team will also mobilize staff and consultants who will directly support
Project implementation with specialized TA, as needed\.
26\. The task team will work closely with the PSIPMU to ensure the Recipientâs compliance with the
World Bankâs fiduciary and safeguards policies and to monitor progress in achieving Project outcomes\.
The PSIPMU will prepare and transmit to the World Bank progress reports, work plans, and financial
reports, as well as reports on implementation issues, among others\.
Financial Management
27\. The World Bankâs FM specialist will provide timely and effective support to the PSIPMU\. The
Project will be monitored through (a) desk reviews of audit reports, IFRs, and status of action plans agreed
with the counterparts following visits or audit findings, if any, and (b) on-site reviews of the continuous
adequacy of the Project FM arrangements\. These will include monitoring and reviewing the status of
implementation of any agreed actions and issues identified by the auditors, including other issues related
to Project accounting, reporting, budgeting, internal controls, and flow of funds\. A review of a sample of
transactions will also be conducted during supervision missions or on-site monitoring reviews\.
Procurement
28\. Procurement procedures\. The Borrowers will carry out procurement under the proposed Project
in accordance with the World Bankâs âProcurement Regulations for IPF Borrowersâ (Procurement
Regulations), dated July 2016 and revised in November 2020, under the âNew Procurement Frameworkâ
(NPF), and the âGuidelines on Preventing and Combating Fraud and Corruption in Projects Financed by
IBRD Loans and IDA Credits and Grants,â dated July 1, 2016, and other provisions stipulated in the
Financing Agreements\. Further, the âGuidelines on Preventing and Combating Fraud and Corruption in
Projects Financed by IBRD Loans and IDA Credits and Grants,â dated October 15, 2006, and revised in
January 2011, will apply\.
29\. Procurement arrangements\. The Project will be implemented by the PSIPMU within the Ministry
of Finance\. PSIPMSU will have the responsibility of managing the process of implementing the Project
consistent with World Bank Policies, the financing agreements, procedures and practices for environment
and social safeguards (including resettlement, if needed), procurement, disbursement, accounting, and
Page 59 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
financial management\. PSIPMSU will establish a Project Implementation Unit (PIU) dedicated to the
project, with functions, staffing, and sufficient resources to manage all aspects of Project implementation\.
Given the current workload of the PSIPMU, additional procurement support may be needed\. An
international procurement consultant will be hired under the Bank team to offer day to day procurement
support and customized training\.
30\. PPSD Summary: A simplified PPSD has been prepared to define the applicable procurement
arrangements, appropriate selection methods, including market approach, and the type and frequency of
reviews to be conducted by the World Bank\. The PPSD will be approved by the Bank before negotiations\.
31\. Procurement Plan\. A procurement plan for the first 18 months of the Project has been developed
as part of the PPSD preparation\. The Project will be executed in accordance with the World Bank
Procurement Regulations and the provisions stipulated in the Procurement Plan and the OM\.
32\. The World Bankâs Standard Procurement Documents shall be used for all contracts subject to
international competitive procurement\. In the limited number of cases where local procurement
procedures are used, the Borrower will be required to use procurement documents and forms of contract
acceptable to the Bank\. Wherever national market approach will be applied, the Letter of Acceptance of
the World Bankâs Anticorruption Guidelines and Sanctions Framework will be required\.
33\. For open, international competitive procurement, the Recipient shall publish the Specific
Procurement Notices (SPN) for all goods, works, non-consulting services, and the Requests for Expressions
of Interest on its free-access website, if available, and in at least one newspaper of national circulation in
the Recipientâs country, and in the official gazette\. For open international procurement selection of
consultants using an international shortlist, the Recipient shall also publish the SPN in UNDB online,
through STEP, and, if possible, in an international newspaper of wide circulation\.
34\. Procurement under the project will comprise approximately 60 contracts with a total estimated
cost of USD 31,200,000 million, broken down into works, goods and consultancy contracts, mostly of low
value, low risk nature\.
35\. The procurement to be financed under the project constitutes a considerable challenge, not only
in terms of the number and value of the contracts to be procured but also in terms of the technical input
that PSIPMU will procure\. It will, therefore, require a considerable investment of both procurement and
technical expertise if these contracts are to be procured in a timely manner so as to meet the development
objectives of the project\.
36\. The phasing of the commencement of procurement processing for all of these contracts will be
carefully integrated into the PSIPMUâs overall project management plan, so as to spread the procurement
workload over time and also synchronize the delivery of works and services and the completion of civil
works with the needs of the project and with the operational limitations that apply in the SVG context,
such as restrictions on civil works during the hurricane season\. Given the low value, most contracts will
have to be procured nationally or regionally, which impose a greater risk of lack of responsiveness from
the current markets hit by the pandemic\.
Page 60 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
37\. Procurement Prior Review: The prior review thresholds applicable to Substantial risk projects,
listed in the table below, will apply to the project\. All Bank-financed contracts estimated to cost at or
above the thresholds stated in the below table shall be subject to the Bankâs procurement prior review\.
Even below the prior review thresholds, the project team will provide extensive procurement support and
handholding to the Borrowerâs staff in order to support them in conducting procurement\.
Table1\. Procurement Prior Review Thresholds for Substantial Risk Projects (US$ millions)
Type of Procurement Prior Review Threshold (US$m)
Works (including turnkey, supply & installation of 10\.0
plant and equipment, and PPP)
Goods, information technology, and non- 2\.0
consulting services
Consulting services: firms 1\.0
Consulting services: individuals 0\.3
38\. Procurement Risk Rating\. The project procurement risk subsequent to the mitigation measures
is Substantial\. The risks and mitigation measures are listed in below: the main risk identified is delay in the
implementation of procurement due to the current workload of PSIPMU, the complexity of the contracts
to be financed under the project and the poor market response\. To mitigate this risk, the following
measures are proposed: (i) hire an experienced procurement consultant to support PSIPMU at key stages
of the procurement process, particularly preparation of bidding documents and evaluation of bids; (ii)
strengthen the technical team which will prepare critical inputs to procurement, including technical
specifications for equipment, Terms of Reference and Bills of Quantities; (iii) train procurement specialists
and technical experts on the World Bank Procurement Regulations and on contract management, and (iv)
engage with other agencies to identify potential vendors/contractors qualified for the project\.
Environment and Social Safeguards
39\. The World Bankâs E&S safeguards specialists will provide technical support and oversight
throughout Project implementation, including guidance in the preparation of required safeguards
instruments (ESMF, ESMPs, and Environmental Codes of Practice)\. Semiannual assessments on safeguards
compliance from the E&S specialists will be conducted through the implementation support missions and
field visits\. The PSIPMU will receive support from the World Bank to prepare relevant E&S documents and
instruments, conduct due diligence processes, and monitor the timely preparation of E&S assessments
and management instruments, which must be completed before any physical activity can commence\.
During Project implementation, the World Bank will monitor the Projectâs ESF performance, provide
timely advice, and work closely with the PSIPMU on areas for improvement on a continuing basis\. The
World Bank will also provide capacity-building support to the PSIPMU, recipient institutions, and partner
agencies\. The PSIPMU will ensure that a functioning GRM is in place\.
Page 61 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
Midterm Review
40\. A Midterm Review (MTR) will be carried out halfway through Project implementation to review
the Results Framework and achievement of targets, Systematic Operations Risk-Rating Tool ratings, FM
reports, procurement activities, safeguards compliance, disbursement status, and other relevant items\.
In preparation for the MTR, an independent review of implementation progress will be carried out,
including beneficiary assessments, as appropriate\. The MTR will provide recommendations as to any
potential changes or restructuring necessary to improve the Projectâs relevance, efficacy, or efficiency\.
Implementation Completion and Results Report
41\. To evaluate Project outcomes, an ICR will be drafted by the recipient and the World Bank within
six months of Project completion\. Impact evaluations and beneficiary assessments may be conducted as
part of the ICR process\. ICRs are tailored to enhance development effectiveness through a continuous
process of self-evaluation, lesson learning and application, knowledge sharing, and accountability for
results\. The lessons learned from ICRs improve the quality and effectiveness of World Bank operations,
while recipient/stakeholder participation in the ICR process informs the design, preparation, and
implementation of potential follow-on projects\.
42\. Table 1\.1 and Table 1\.2 indicate the level of inputs and staffing needed to provide
implementation support for the proposed Project\.
Implementation Support Plan and Resource Requirements
43\. The following Implementation Support Plan (ISP) is based on the preliminary estimates of the skill
requirements, timing, and resource requirements throughout the Project implementation period\. As the
needs of the PSIPMU evolve over time, the ISP will be reviewed annually to ensure that it provides the
required support\. Table 1\.1 and Table 1\.2 indicate the level of inputs that will be needed from the World
Bank to provide implementation support for the Project\.
Table 1\.1\. ISP
Time Focus Skills Needed Partner Role
First 18 ⢠Support to PSIPMU All skills ⢠Task team to support smooth
months ⢠Successful start of the Project across start-up
all components ⢠Ensure the implementation of
⢠Technical designs and prioritization ESS are on track
⢠FM systems functioning ⢠Support PSIPMU
⢠Procurement
⢠Establishment of M&E system
⢠Monitoring of implementation of
Project activities
18â50 months ⢠Ensure adequate implementation All skills ⢠Ensure safeguards are on track
support of all aspects of the Project ⢠Support PSIPMU
⢠Monitor implementation of Project ⢠Provide TA
activities, including site visits
⢠Support final evaluation and ICR
Page 62 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
Table 1\.2\. Skills Mix Required
Number of
Skills Needed Number of Trips Comments
Staff Weeks
Task team leaders 40 10 International or field-based staff
Technical specialist (DRM) 40 20 International or field-based staff
Technical specialist (transport) 35 5 International or field-based staff
Technical specialist (water 35 5 International or field-based staff
infrastructure)
Technical specialist (fisheries) 20 5 International or field-based staff
Technical specialist (community 20 4 International or field-based staff
engagement and gender aspects)
Environmental specialist 20 5 International or field-based staff
Economist (M&E) 10 5 International or field-based staff
Social specialist 20 Local travel as needed STC field-based staff
Procurement specialist 50 Local travel as needed STC field-based staff
FM specialist 20 Local travel as needed STC field-based staff
Country office operational support 75 Local travel as needed STC field-based staff
Consultants for infrastructure 50 Local travel as needed STC field-based staff
Consultant for safeguards 75 Local travel as needed STC field-based staff
Consultant for communications 75 Local travel as needed STC field-based staff
Note: STC = Short-term consultant\.
Page 63 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
ANNEX 2: Candidate Activities
Table 2\.1 Summary Costs Proposed Activities Components 1 and 2
First 18 Greater than 18 Component
Months Months Total (USD)
Component 1 $4,500,000 $3,000,000 $7,500,000
Component 2 $15,795,000 $15,205,000 $31,000,000
Total $38,500,000
Components 1
and 2
Table 2\.2 Candidate Activities First 18 Months
Component 1
Agency Activity Short Description Estimated
Cost (USD)
MONM Support services Psycho/social support councilors $200,000
MONM Temporary grants Direct payment support to qualified individuals $4,300,000
MONM LITE Program Reserved for labor Intensive Employment Program $3,000,000
Subtotal MONM $7,500,000
Component 2
Agency Activity Short Description Estimated
Cost (USD)
MOA Assessment of Assessment of the impact on the bee population $50,000
Apiculture Industry and honey production
MOA Repair and upgrade of Improve animal genetic stock (including importing $295,000
livestock centers new animals), purchase of laboratory and on-farm
equipment and supplies for testing\.
Repair and upgrade of Reconstruction and repairs of livestock centers in $370,000
livestock Belmont and Owia
infrastructure
MOA Repair of Purchase of laboratory equipment and supplies, $200,000
biotechnology Centre greenhouses and irrigation systems
MOA Procurement of Purchasing of equipment, safety gears and other $100,000
Apiculture materials supplies\.
Page 64 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
MOA Procurement of Purchasing of equipment and supplies $150,000
Forestry Supplies
MOA Procurement of To facilitate the clearing of logs and other debris in $250,000
specialized vehicles watershed areas
and equipment
MOA Reconstruction of Upgrading of rearing facility and acquisition and $250,000
apiculture production of new colonies
infrastructure and
replacement of
colonies
MOA Repairs to Fisheries Cleaning and repairs to Calliaqua, Owia and $1,150,000
Centers Chateaubelair Fisheries Centers
MOA Fisheries Equipment Purchase and installation of fish aggregating $500,000
devices
Subtotal MOA $3,315,000
MOTW Engineer support sustainable assessments/responses - technical $430,000
services (3 no\. yrs\.) â assistant engineers &
technicians
MOTW PPE PPE Equipment for Workers, Hard hats, goggles, $40,000
respirators, water boots, cover all
MOTW Asset management asset management - equipment â hardware, $210,000
software & training
MOTW Baily Bridge equipment â bailey bridges, 3 No\. 40m x 7m, $666,666
MOTW Baily Bridge equipment â bailey bridges, 3No\. 30m x 7m $333,333
MOTW Heavy Equipment backhoes - 2 $300,000
MOTW Heavy Equipment Compressors, trailer mounted - 2 $115,000
MOTW Heavy Equipment trucks 4 ton - 4 $340,000
MOTW Heavy Equipment Backhoe mounted rock hammer - 2 $120,000
MOTW Heavy Equipment Rock drill with hammer - 2 $4,000
MOTW Road Restoration Clearing Boulders & Debris, roadway, drains, under $1,000,000
bridges (TBD)
Road Repairs and To repair damage roads and reconstruct roads $5,800,000
Reconstruction including Jennings and Perseverance roads (TBD)
Design and Design and supervision construction of road repairs $650,000
Supervision of Roads and reconstruction
Subtotal MOTW $10,010,999
(TBD)
NEMO Design and Procure consultancy service to design and $50,000
supervision for supervise upgrade to accommodate research
upgrading Belmont centre, sleeping quarters and additional storage\.
Observatory
Page 65 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
NEMO Design and Additional space for the Soufriere monitoring unit, $150,000
construction expand the national emergency operation centre,
supervision for create storage space and conference facility\.
upgrading NEMO
headquarters
NEMO Assessment of Procure service to conduct an assessment of $50,000
management NEMO's information management and decision-
information system making tools
NEMO Media consultancy Assess NEMO communication needs and develop a $50,000
crisis communication framework and strategy\.
NEMO Development of Procure services to develop a suite of $50,000
communication communication products including public service
materials announcements (PSAs), videos, etc\.
NEMO Seismologist Establish methodologies for monitoring and $120,000
consultancy develop in-house capacity to perform seismic
duties\.
NEMO Purchase specialized Mountainous terrain 4WD vehicles $60,000
vehicles
NEMO Purchase of IT Tablets, computers and accessories, servers, $150,000
equipment drones, office equipment etc\.
NEMO Seismic equipment Gas sampling, ground deformation, seismometers, $300,000
digitizers, accessories etc\.
NEMO Warehouse Forklifts, trolley jacks, platform ladders, hand carts $185,000
equipment etc\.
NEMO Generators Purchase and installation of generators at $250,000
warehouses\.
NEMO Security systems Procure and install security systems at NEMO $75,000
Headquarters, satellite warehouses and Belmont
Observatory
NEMO Warehouse Install extractor fans, roof repair, etc\. $200,000
retrofitting
NEMO Water tanks and To construct platforms at the Campden Park $10,000
generator platforms warehouse\.
NEMO River defense River embankment protection at the Campden $450,000
construction Park warehouse\.
Subtotal NEMO $2,150,000
CWSA Investigation and Investigation of groundwater and spring sources at $320,000
designs of the higher elevations in the red zone
groundwater source
to be connected to
Sandy Bay and Owia
systems
Page 66 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
Total All Activities $15,795,000
Table 2\.3 Component 2 Candidate Activities Greater Than 18 Months
Agency Activity Short Description Estimated Cost
(Usd)
CWSA Installation of new Construction and installation of a) groundwater $2,650,000
groundwater well, well, b) force mains, c) storage tank, and d) any
force mains and rehabilitation or expansion of hydraulic structure to
storage tank to be guarantee the functionality of the Sandy Bay and
connected to Sandy Owia systems\. This activity includes all
Bay and Owia electromechanical equipment to guarantee the
systems functionality of the groundwater production
system\.
CWSA Construction of new Design and construction of new intake and pipeline $350,000
intake and pipeline at at Fancy system\. This activity includes all
Fancy electromechanical equipment to guarantee the
interconnection and functionality of the new intake
and pipeline with the exiting Fancy production
system\.
CWSA Repair and install Design and construction of rehabilitation works and $1,200,000
Perseverance ancillary equipment to repair the Perseverance
treatment facility treatment facility\. This activity includes all
electromechanical and hydraulic equipment to
guarantee the interconnection and functionality of
the new rehabilitate treatment facility with the
exiting Perseverance production system
CWSA Repair and install Design and construction of rehabilitation works, $650,000
storage and pipeline pipelines, and equipment to the Perseverance
at Waterloo area, system at Waterloo area\. This activity includes all
part of Perseverance electromechanical and hydraulic equipment to
system guarantee the interconnection and functionality of
the new rehabilitate storage and pipelines with the
exiting Perseverance production system at the
Waterloo area\.
Subtotal CWSA $4,770,000
MOA Training in livestock Training in laboratory testing and disease detection $50,000
production
MOA Assessment of Forest Species surveys, forest mapping and inventory $250,000
Biodiversity
MOA Fisheries Sector Assessment of the impact of ash fall and mud $100,000
Page 67 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
Assessment flows/lahars on coastal areas, fishing grounds and
fish population
MOA Restoration and Cutting and clearing of fallen trees and logs in upper $450,000
rehabilitation of and middle watershed areas (including riverbanks)
watershed areas and slope stabilization
MOA Reconstruction of Repair and Upgrade of Laboratory, Propagation and $205,000
Biotechnology Centre Hardening facilities for tissue culture plants and
seedlings
MOA Fishing fleet Construction and deployment of FADs $500,000
replacement and
expansion
Subtotal MOA $1,555,000
MOTW Bridge replacement crossings in north windward, Bridge Replacement $1,200,000
design and
supervision
MOTW Vehicles sustainable assessments - equipment - vehicular $300,000
MOTW Bridge Replacement works construction-crossings in north windward, $2,000,000
including New Bridge Replacement, fords conversion to bridges
Bridges
MOTW New Bridge works consultancies-crossings in north windward, â design $1,200,000
design and & supervision New bridge construction
supervision
Subtotal MOTW $4,700,000
NEMO Design and Construct an energy efficient warehouse $100,000
construction
supervision for the
new warehouse
NEMO Equipment for the To procure warehouse equipment $1,700,000
new warehouse
NEMO Procurement of Procure and install information management and $300,000
management decision-making tools, including assessment
information system management system- bar code scanner, asset tags
and software
NEMO Upgrading of the Upgrade to accommodate research centre, sleeping $250,000
Belmont Observatory quarters and additional storage\.
NEMO Retrofit existing Retrofit existing warehouse to improve energy $650,000
warehouse efficiency
NEMO Design for Design for Construction additional warehouse $180,000
Construction energy efficient warehouse
additional warehouse
NEMO Upgrade of NEMO Create additional space to accommodate the $1,000,000
headquarters Soufriere Monitoring Unit, expand the National
Page 68 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
Emergency Operation Centre, create storage space
and conference facility\.
Subtotal NEMO $4,180,000
Total All Activities $15,205,000
Page 69 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
ANNEX 3: Global Rapid Post-Disaster Damage Estimation (GRADE)
1\. Responding to the ongoing La Soufrière volcanic eruption in St\. Vincent and the Grenadines, a
rapid post-disaster damage assessment, deploying the GRADE methodology,47 was undertaken\. The
objective was to estimate the potential direct damage48 that may be caused by the ongoing event and
understand the spatial distribution of current and potential future damages to support the development
of a road map for recovery and reconstruction\. As the event is ongoing, there is significant uncertainty
over the final impacts of the entire current eruption sequence\. Therefore, two different scenarios, as
detailed below, were assessed\. This assessment also builds on the data and analytics of the World Bankâs
Country Disaster Risk Profile (CDRP49) for St\. Vincent and the Grenadines\. This report is valid as of April
20, 2021\.
Direct Damage Impact
2\. This report does not consider economic losses which are likely to significantly increase the
overall economic impact\. This analysis looks at the direct damage only\.
⢠Two scenarios have been developed to estimate potential direct damage and not
economic losses50 related to buildings (residential and nonresidential), infrastructure
(including roads and other infrastructure), and agriculture:
o Scenario 1 - the current situation (as of April 26)\. Currently, reported impacts and
ashfall accumulation indicate direct damage of US$82 million\.51 These damages are
expected to increase as the current eruption sequence continues\.
o Scenario 2 - a customized âworst credibleâ scenario using a combination52 of the
historical May 1902 and April 1979 eruptions\. Were this scenario to occur with current
asset values,53 the cost of direct damage would be in the region of US$210 million\. This
may be considered a first-order estimation of the potential future total direct damage
due to the still-evolving 2021 eruption sequence over the coming weeks and months\.
47 The GRADE approach developed at the World Bank and conducted by the Urban, Disaster Risk Management, Resilience and
Land Global Practice (GPURL) Disaster-Resilience Analytics & Solutions (D-RAS) Knowledge Silo Breaker\. The methodology aims
to address specific damage information needs in the first weeks after a major disaster\. For details of the methodology, see
here\.
48 Direct damage is quantified using the gross capital stock, which is the replacement cost of an asset rebuilt newly to the same
pre-damaged typology and standard\. This is not to be confused with book value (depreciated assets)/net capital stock\.
49 The CDRP is a methodology that quantifies a portion of direct damage of the building stock as a result of different natural
hazards\.
50 This report does not consider economic losses which are likely to significantly increase the overall economic impact\.
51 Note that the cannabis plant damage is not included as part of the US$72 million or US$210 million estimates from the two
scenarios and has been estimated separately\. All damage estimates, unless indicated, refer to the damages excluding the
cannabis plant sector\.
52 See section II(b) for more details on how the historical events were combined to create a hybrid scenario\.
53 Using capital replacement costs which is the actual cost to replace an asset at its pre-damage condition\. This may not be the
âmarket valueâ of the asset and is typically distinguished from the âactual cash valueâ payment which includes a deduction fo r
depreciation, and so on\.
Page 70 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
o The results for each sector and scenario are summarized in Table 3\.1 (absolute values)
and Table 3\.2 (values relative to the capital stock for each sector)\.
⢠Of St\. Vincentâs 11 census divisions, Georgetown is the most affected, accounting for 27
percent of the current estimated direct damage (Scenario 1)\. This is followed by
Chateaubelair (24 percent) and Sandy Bay (8 percent), currently the second and third worst-
affected census divisions\.
Table 3\.1\. Best Estimate of Direct Damage for the Two Scenarios Defined Above
Direct Damage (US$, millions)
Buildings
Infrastructure Agriculturea Total
Residential Nonresidential
Scenario 1 11 4 37 31 82
Scenario 2 50 39 68 52 210
Note: a\. Agriculture damages shown in Table 3\.1 and Table 3\.2 do not include legal cannabis plantations for which
there is a high amount of uncertainty on the crop value, with loss estimates ranging from US$16 million to US$60
million (best estimate US$25 million), for both scenarios, in addition to the agriculture loss shown\. The agricultural
exposure is only represented at the national level\.
Table 3\.2\. Best Estimate of Direct Damage for the Two Defined Scenarios (as Percentage of the Capital Stock)
Direct Damage (as Percentage of Sectoral Capital Stock)
Buildings
Infrastructure Agriculture Total
Residential Nonresidential
Scenario 1 0\.9 0\.2 2\.6 29\.6 1\.9
Scenario 2 4\.2 2\.3 4\.9 49\.6 4\.8
Assets at Risk
⢠The economic value of key assets at risk was also evaluated\. In the âredâ and âorangeâ
volcanic hazard zones, the total built assets at risk are evaluated to be approximately US$383
million (Table 3\.3)\.
⢠From a social vulnerability point of view, a higher proportion of the population living in
the âredâ and âorangeâ zones is classified as socioeconomically âpoorâ\. The population
classified as âpoorâ occupy smaller and less-expensive housesâhouses which are more
vulnerable to natural hazards\. This would affect potential disaster recovery planning in the
future\.
Page 71 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
Table 3\.3\. Residential and Nonresidential Buildings and Infrastructure Capital Stock Currently at Risk within Each
Volcanic Hazard Zone in St\. Vincent Island (US$, millions)
Exposure Type Red Zone Orange Zone Yellow Zone Green Zone
Residential 63\.6 42\.1 107\.4 991\.3
Nonresidential 106\.4 48\.1 96\.8 1,421\.5
Infrastructure 74\.1 49\.2 125\.6 1,158\.9
Total 243\.5 139\.5 329\.9 3,571\.7
Note: The agricultural exposure is represented only at the national level\.
Page 72 of 73
The World Bank
Saint Vincent and the Grenadines Volcanic Eruption Emergency Project (P176943)
ANNEX 4: Country Map
Page 73 of 73 | APPROVAL |
P168259 | The World Bank
Sierra Leone - Second Productivity and Transparency Support Credit (P168259)
Program Information Document
(PID)
Concept Stage | Date Prepared/Updated: 30-Oct-2018| Report No: PIDC25578
Page 1 of 6
The World Bank
Sierra Leone - Second Productivity and Transparency Support Credit (P168259)
BASIC INFORMATION
A\. Basic Project Data OPS TABLE
Country Project ID Project Name Parent Project ID (if any)
Sierra Leone P168259 Sierra Leone - Second P156651
Productivity and
Transparency Support
Credit (P168259)
Region Estimated Board Date Practice Area (Lead) Financing Instrument
AFRICA Dec 07, 2018 Macroeconomics, Trade Development Policy
and Investment Financing
Borrower(s) Implementing Agency
Republic of Sierra Leone Ministry of Agriculture Forestry and Food Security, Ministry of Energy, Ministry of Basic
and Secondary Education, Ministry of Fisheries, Anti-corruption Commision
Proposed Development Objective(s)
The main objective of the DPO is to achieve sustainable and inclusive economic development by: (i) increasing
productivity in selected economic sectors and (ii) improving transparency in selected government decision making
processes\.
Financing (in US$, Millions)
FIN_SUMM_PUB_TBL
SUMMARY
Total Financing 30\.00
DETAILS -NewFin3
Total World Bank Group Financing 30\.00
World Bank Lending 30\.00
Decision
The review did authorize the preparation to continue
B\. Introduction and Context
Country Context
1\. After recovering in 2016 from the twin shocks of the Ebola Virus Disease (EVD) epidemic and collapse of iron
exports, Sierra Leoneâs economy witnessed a sharp moderation in growth in 2017\. Economic growth remains volatile
due to a lack of economic diversification and a dependence on the mining sector\. Macroeconomic imbalances also
worsened in 2017 with elevated levels of fiscal deficit and rising debt, inflationary pressure, a fragile banking system, and
Page 2 of 6
The World Bank
Sierra Leone - Second Productivity and Transparency Support Credit (P168259)
widening current account deficits\. Economic growth moderated to 3\.8 percent in 2017 from 6\.3 percent in 2016 reflecting
a weak recovery of mineral production, particularly iron ore\. Industry, dominated by iron ore mining, was subdued,
reflecting low commodity prices, higher domestic prices of energy (fuel and electricity), and lower investment\. Excluding
iron ore, the economy grew by only 3\.6 percent in 2017, compared to 4\.3 percent in 2016, due largely to a slowdown in
construction\. Weak aggregate demand continued to weigh on non-iron ore growth as private consumption contracted in
2017 reflecting high consumer prices and exchange rate depreciation\. Inflationary pressures eased in 2017 although the
rate remained high, declining from 17\.4 percent in 2016 to 15\.3 percent due partly to the tight monetary policy stance of
the Bank of Sierra Leone (BSL)\. The overall budget deficit, including grants, widened to 8\.6 percent of Gross Domestic
Product (GDP), compared to the target of 5\.9 percent of GDP, reflecting a shortfall in revenue mobilization and spending
overruns in major expenditure categories\. The external position remained weak as the trade accounts worsened and
current account deficit widened from 3\.5 percent in 2016 to 10\.9 percent of GDP in 2017\.
2\. The macroeconomic policy framework is considered adequate\. The new Government elected in March 2018 has
implemented robust macroeconomic policies that have facilitated gradual adjustments towards stabilizing the economy
and strengthening economic resilience and growth\. To correct the fiscal slippages that occurred in the last two years (2016
and 2017) and rebuild credibility, the new Government upon assuming office immediately issued Executive Orders to
enhance revenue mobilization and rationalize expenditures\. Monetary policy has been tightened to reduce high inflation,
maintain financial stability and contain external imbalance\. The Government has negotiated a new program with the
International Monetary Fund (IMF) to improve debt sustainability, reduce inflation, and strengthen accumulation of
international reserves\. Beyond macroeconomic stabilization, the authorities launched free quality education programme
to rebuild human capital, declared war on corruption and appointed a new anti-corruption Commissioner and rolled out
pro-poor growth reforms in agriculture and fisheries with the aim of diversifying the economy\. At the same time, the
Government was focused on efficient management of public funds and reducing fiscal leakages through increased
transparency and accountability\.
Relationship to CPF
3\. The proposed PTSC series is fully consistent with the Joint Assistance Strategy (JAS) prepared in collaboration
with the AfDB and the International Finance Corporation and discussed by the Board on April 6, 2010\. A Country
Assistance Strategy (CAS) Progress Report prepared in 2012 emphasizes the importance of Development Policy Financing
(DPF) to the World Bankâs continued engagement in Sierra Leone and introduces a third pillar on Natural Resources
Management in addition to the JAS two pillars on Human Development and Promoting Inclusive Growth\. Other World
Bank operations in agriculture, fisheries, minerals sector, and governance are linked to the proposed series and provide
valuable support through Technical Assistance\. A new Country Partnership Framework (FY18-21) is under preparation to
support the proposed new national development plan (PRSP-IV)\. The Systematic Country Diagnostic (SCD) (2018)
emphasized the criticality of addressing the fiscal challenges as well as boosting productivity in agriculture, manufacturing,
and services to promote inclusive growth and poverty reduction\. It also emphasizes the need to improve overall
governance to build resilience and improve overall service delivery\.
C\. Proposed Development Objective(s)
4\. The main objective of the DPO is to achieve sustainable and inclusive economic development by: (i) increasing
productivity in selected economic sectors and (ii) improving transparency in selected government decision making
processes\.
Page 3 of 6
The World Bank
Sierra Leone - Second Productivity and Transparency Support Credit (P168259)
Key Results
5\. The aim goal of the operation is to achieve sustainable and inclusive economic growth\. In the agriculture sector,
transformative interventions driven by greater private sector participation combined with improved agricultural extension
services are expected to introduce productivity enhancing crop technologies to increase crop yields and improve
household incomes\. In the fisheries sector, the overall goal is to generate value addition and jobs, ensure food security,
and increase exports, while maintaining sustainability\. In addition, increased access to and improved quality of electricity
as well as skills development will boost productivity growth\. At the same time, efficient management of public funds and
reduced fiscal leakages through increased transparency and accountability are expected to improve public service delivery
and promote economic growth
D\. Concept Description
6\. The proposed operation is the second in a programmatic series of three operations to support the
implementation of the Governmentâs priorities articulated in the âNew Direction Manifestoâ? and the forthcoming
PRSPIV (2019 â 2023)\. The proposed operation covers six policy areas namely: agriculture (including fisheries and land),
energy, education, extractives, public financial management (TSA and e-procurement), and asset disclosure\. These areas
are consistent with the Governmentâs âNew Direction Manifestoâ?, the forthcoming PRSPIV (2019 â 2023) as well as the
findings of the SCD (2018)\. The design of the series has incorporated lessons from previous development policy operations
including the first operation under this series (PTSC-I)\. The program will focus on a limited number of transformational
structural reforms necessary for boosting productivity, unlocking inclusive growth, and diversifying the economy\.
Transparency and accountability issues were mainstreamed into the framework for the main productive sectors as well as
in education\.
E\. Poverty and Social Impacts and Environmental Aspects
Poverty and Social Impacts
The poverty and social impact assessment (PSIA) of most policy measures supported under the proposed DPO series
(PTSC-II) are expected to be largely positive\. Reforms to boost productivity are also expected to have a significant
positive impact on poverty reduction in Sierra Leone\. The reforms in agriculture and fisheries could also have positive
impacts on food security and the prevalence of malnutrition by increasing the provision of micronutrients, including
protein, to the population and reducing the countryâs vulnerability to food price shocks\. Reforms to enhance
transparency through the Treasury Single Account (TSA), Asset Disclosure and the Extractive Industry Revenue Law are
expected to be positive\. However, preliminary results from the PSIA on fuel price liberalization, supported under energy
reforms in Pillar I, indicate that the reform is likely to have a short term negative impact on poverty although this is largely
mitigated by the launch of the free education program\.
Environmental Impacts
7\. Most of the policy measures supported by the proposed operation are expected to have neutral-to-positive
environmental impact\. Reforms in agriculture and fisheries are expected to have largely positive effects on the
environment\. For example, reinforcement of the fishing monitoring system is expected to reduce illegal fishing while the
fertilizer and seed laws will enhance the quality of fertilizer and seeds\. The Environment Protection Agency (EPA) in Sierra
Leone also ensures that routine monitoring and inspections exercises are undertaken to enhance transparency and
accountability in the protection and management of the environment and use of the natural resources\.
Page 4 of 6
The World Bank
Sierra Leone - Second Productivity and Transparency Support Credit (P168259)
\.
CONTACT POINT
World Bank
Kemoh Mansaray
Senior Economist
Borrower/Client/Recipient
Republic of Sierra Leone
Jacob Jusu Saffa
Minister of Finance
jjsaffa@yahoo\.co\.uk
Implementing Agencies
Ministry of Agriculture Forestry and Food Security
Samking Koihnah Braima
Depurty Minister
samkin\.brima@maf\.gov\.sl
Ministry of Energy
Alhaji Kanja Sesay
Minister
sesaykeh@gmail\.com
Ministry of Basic and Secondary Education
Alpha Timbo
Minister
atimbo@gmail\.com
Ministry of Fisheries
Josephus Mamie
Deputy Director
josephusmamie2013@gmail\.com
Anti-corruption Commision
Francis Ben Kelfala
Commissioner
fbkaifala@anticorruption\.gov\.sl
Page 5 of 6
The World Bank
Sierra Leone - Second Productivity and Transparency Support Credit (P168259)
FOR MORE INFORMATION CONTACT
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 473-1000
Web: http://www\.worldbank\.org/projects
APPROVAL
Task Team Leader(s): Kemoh Mansaray
Approved By
APPROVALTBL
Country Director: Gayle Martin 05-Nov-2018
Page 6 of 6 | APPROVAL |
P004278 |  Johor water supply project
Report No: ; Type: Report/Evaluation Memorandum ; Country: Malaysia; Region: East Asia And Pacific; Sector: Urban Water Supply; Major Sector:
Water Supply & Sanitation; ProjectID: P004278
Malaysia: Johor Water Supply Project (Loan 2654-MA)
The Implementation Completion Report (ICR) on the Malaysia Johor Water Supply Project (Loan 2654-MA, approved in
FY86), prepared by the East Asia and Pacific Regional Office, was reviewed by the Operations Evaluation Department
(OED)\. The loan of US$62\.0 million, was closed on March 31, 1995, three years behind schedule\. The original loan
amount was reduced by US$15\.0 million at the Borrower's request in April 1990 and a balance of US$2\.75 million was
canceled at the time of loan closing\. These cancellations reflect savings from large contracts which were bid
significantly below appraisal estimates\. The Borrower contributed information for, but did not comment on, the ICR\.
This project followed three Bank-funded water supply and sewerage projects for Malaysia's capital, Kuala Lumpur\. Its
objectives were: (a) to improve water supply services to existing consumers and extend service to new customers in
Johor, Malysia's southernmost state; (b) to reduce the dependence of Johor State on water purchases from Singapore; and
(c) to strengthen operations by creating an independent Water Department with improved commercial accounting and
financial management systems to ensure its financial viability\. Physical objectives were to be achieved through the
construction of a new raw water reservoir, pumping stations, groundwater wells, treatment plants, transmission mains,
distribution networks and storage reservoirs, and operational facilities which would raise the service coverage to 92
percent by 1995 in the Johor Bahru metropolitan area and to 85 percent and 86 percent, respectively, in the urban and
rural areas of the Batu Pahat and Kluang Districts\. Institutional objectives were to be achieved by providing consulting
services for surveying existing distribution networks, providing experts to help develop a training program for staff, and
providing training facilities\.
Physical objectives were fully achieved, and in some areas surpassed\. As a result, the unaccounted-for water is currently
about 25 percent, down from 46 percent in 1987\. The service coverage in 1995 reached 96 percent in all project areas\.
The water production capacity was increased by 290 million liters per day thus reducing Johor State's relative reliance on
purchases from Singapore\.
The institutional objective of creating an independent Water Department for Johor Bahru was fulfilled, although
somewhat later than originally planned\. Strengthening of accounting and financial operations of the Department was
delayed and was only partly successful during project implementation\. Later on, the Government established a
stateowned water company with management autonomy exceeding the level originally proposed\. The new company has
initiated a new financial management program and recent progress indicates that substantial improvements are likely to
emerge, including improved performance on tariffs and cost recovery\. Training of staff started late but is now under way
and has already improved operational performance\. In addition, the water sector has began to attract private sector
participation both in management of facilities under concession agreements and in financing for new investments\. The
project's recalculated economic rate of return, using revenues from incremental sales of water as a proxy for direct
benefits, is 9\.3 percent, i\.e\., somewhat higher than the appraisal estimate of 7\.7 percent\. Both values would be higher if
the indirect benefits such as health benefits and productivity improvements, often difficult to quantify, would be added\.
OED rates the project outcome as satisfactory, sustainability of benefits as likely, institutional development impact as
moderate, and Bank performance as satisfactory\. All ratings are consistent with those in the ICR\. The sustainability
rating of "likely" is based on the assumption that recent operational improvements will ensure future financial viability\.
Two major lessons from this project are noteworthy\. First, the Bank's firm stand on compliance with institutional re-
structuring objectives resulted in an initially reluctant Borrower complying with covenants and establishing a new entity
with a high level of operational autonomy\. Second, the project demonstrates that a committed borrower can achieve
significant results in reducing unaccounted-for water\. The Johor experience could serve as a model of Best Practice in
these areas\.
The ICR is satisfactory\. It provides a detailed description and analysis of achievements\. The project may be audited at a
later date\. | APPROVAL |
P050672 | Report No\. PID7460
Project Name Nepal-Terai Groundwater Irrigation Project
Region South Asia
Sector Rural Development
Project ID NPPE50672
Implementing Agency His Majesty's Government of Nepal
Contact: Mr\. B\.R\. Regmi
Secretary, Ministry of Water Resources
His Majesty's Government of Nepal
Kathmandu, Nepal
Date PID Prepared December 22, 1998
Board Presentation Date August 2000
1\. Project Objectives\. The objective is: (i) the capacity of National
Government to formulate policy and legislation framework for groundwater
management; (ii) Local Governments' (DDCs and VDCs) capacity to monitor and
manage groundwater resources defined by Groundwater (GW) Conservation Zones
and (iii) local beneficiary water user associations (WUAs) to properly
utilize and maintain groundwater resources for sustainable increased
agricultural production in Bara, Parsa and Rupandehi Districts of the Terai\.
2\. Project Description\. The main components of the project would be:
Component 1- Institutional Strengthening\. The project would address the
groundwater management issues in the context of nation's water resources
strategy formulation for establishment of Groundwater Legislation and
Regulation\. It would also aim at institutional strengthening of the present
Groundwater Development Division of the Department of Irrigation (DOI) to
enabling in proper planning and monitoring of the expanded exploitation
program of groundwater potential in the Terai and information dissemination of
district-wise groundwater potential and usage to the public and to the local
government including Water User Associations\. Support for strengthening the
local participation of DDC, VDC, WUAs, and women's groups in groundwater
irrigation will also be provided for within this component\.
Component 2-A Irrigation of 4,000 ha by Medium/Deep Tubewells in Rupandehi
and Birgunj areas\. The project would provide funds for the systematic
development of M/DTW irrigation on about 4,000 ha of land in the unit size of
15 (MDTW) or 40 (DTW) hectares in areas where: (i) the manually driven STW are
not possible; (ii) where manually driven STW are possible but the
transmissivity of aquifier is not sufficient enough to irrigate the targeted
4-5 ha per well at a shallow depth of about 20 m; and (iii) where the area is
not covered by NISP (i\.e\. mainly in Central Region)\. The project would be
designed following the Government's demand-based approach for all options of
TW \. Based on this area selection, the proposed project would complement
groundwater irrigation to those areas where manually driven STW are
infeasible \. This approach would enable farmers' participation in planning,
design, construction, and operation and maintenance (O&M) of groundwater
irrigation management\. The TW units (15 ha or 40 ha) will be handed over to
farmers after completion for their ownership and management\. Unless a TW
location is very near to power line (less than 1-2 Km) all TW units will be
diesel driven\. Based on the consultant report, TW unit sizes with command area
of 15 ha and 40 ha have been found feasible among different sizes such as 5
ha STW, 15 ha MDTW, and 40 to 80 ha DTW\. The recommended sizes have been
chosen based on groundwater project experiences in other projects executed in
the country including the completed Irrigation Line of Credit pilot project,
and in light of: (i) organizational and maintenance manageability by WUGs,
(ii) lithological constraints and the potential for over- and under-
exploitation in the case of STW development; and (iii) the incidental benefits
derived from access roads and electrification if required for the development
of S/M/DTWs and DTWs\. The tentative distribution of the TW by project sub-
areas would be (a) 3,000 ha command area for Birgunj area in two districts
Bara and Parsa and (b) about 1000 ha command area for Rupandehi area\. The
Rupendihi area will serve as the pilot phase for the proposed development in
the first year of the proposed project to test the farmers' response to
Government's new subsidy policy to MDTW/DTW\. It should be emphasized that
selection of subareas for clustered TW development from among the proposed two
regions will be based equally on physiography, hydrogeology, accessibility,
user readiness, and economics, and therefore can be changed at the later
stages of project preparation\.
Component 2B- Management Transfer of Narayani Zone Irrigation Development
Project (NZIDP) Deep Tubewells\. The proposed project is based on the demand-
driven principle and all tube-well units after development would be
transferred to the WUGs for O&M and ownership\. In the Birgunj area, in late
1960s there have been operating 29 public DTWs each with a service unit area
of size 100-120 ha which were constructed under NZIDP\. These TW were
originally designed to serve the total area of 2,800 ha\. However, the
performance of these wells has not been encouraging\. Out of 29 DTWs drilled
and developed originally, only 14 wells are operating at present at less than
design capacities\. If the proposed TGWIP established M/DTW irrigation in the
same area under the principle of demand driven approach in which beneficiary
farmers would takeover O&M of the finished TW units, there should not be two
different modes of operation in the same area i\.e\. public and private
management\. The project would provide assistance to carry out management
transfer of these 14 public DTWs so that there are no longer public tube-wells
for irrigation operating in the area\. The management transfer of the NZIDP
DTW would be taken as initial project activities and as test case for farmers'
interest in the TW irrigation\.
3\. Project Implementation\.
The project would be implemented over a five year period\. The tentative
arrangement (to be refined further during preparation) for overall project
management, followed by possible arrangement for implementing each component\.
Implementation of the project's institutional strengthening component would be
the main responsibility of the DOI, which falls under the administrative
jurisdiction of the Ground Water Resources Development Board (GWRDB) of the
MOWR\. Formulation of the draft Groundwater Legislation and Regulation would
be carried out before the Board approval by the Ministry of Water Resources
(MOWR) with guidance from the Cabinet of Ministers\. HMGN would
institutionalize the Ground Water Regulation in the first year of the project
and would entrust the authority to the concerned District WR Committee (DWRC)
in accordance with the GW conservation zones\. The DWRCs would be assisted
technically by the district Groundwater Project Offices (GPOs) within the
proposed project area\. All GPOs would also implement the groundwater
- 2 -
exploration and monitoring program but the central GW project office will be
responsible for providing technical and man-power support and for establishing
the district-level GW maps\. The physical implementation of the tube well
units in the project area would follow the guidelines and sub-project
selection criteria adopted under Nepal Irrigation Sector Project\. The
technical assistance (consultancy services) would be provided to the central
GW project office for GW exploration, exploitation and supervision support of
the project\. The strengthened Butwal and Birgunj Groundwater Field Offices
(FO) of the Groundwater Resources Division along with the concerned DDC/VDC
would hold primary responsibility for implementation of the TW installation
and the Narayani Zone privatization components\. These two FOs would provide
post-project technical support to the relevant WUGs\. A detailed project
implementation arrangement would be a subject for discussions in Borrower's
Project Implementation Plan\.
4\. Project Costs Financing\. The project cost is estimated at US$ 25 million\.
Bank assistance would be about US$21\.8 million\. Disbursements under the
credit would be against civil works, equipment and vehicles, agricultural
support services activities, training and consultancy services\. Civil works
would be grouped in small packages and geographically scattered, as such
national competitive bidding would be the predominant procedure\.
5\. Environmental Impact\. The project has been classified as B Category\.
Strengthening the environmental management dimension is particularly important
in relation to adoption of legislation and regulations for groundwater
development (exploration and exploitation)\. It will be harmonized with the
Environmental Protection Act and other legislation related to agriculture and
water resources uses\. Thus, the institutional framework for promoting
sustainable agriculture and preventing environmental degradation associated
with groundwater projects throughout Nepal will be strengthened\. The specific
TW installation component should also be considered in the light of the
environmental action plan component of the National Water Resources Strategy
currently being developed by the Government\.
The M/DTW irrigation on about 4,000 ha land could potentially have the
following adverse effects of groundwater abstraction: (a) land subsidence
caused by abstraction of groundwater; (b) effects on spring discharges, and
(c) interference with prior water rights\. So far TW are estimated to have no
effects on the yields of existing shallow TWs and thus should not interfere
with prior water rights\. Groundwater irrigation could generally have adverse
effects on: (a) soil fertility and water pollution through increased use of
fertilizers and pesticides; (b) biological aspects of impacts of particularly
aquatic biota in the ecosystems downstream of the command areas, through water
pollution; and (c) socio-economic and human health aspects possibly occurring
from use of pesticides\. Construction/rehabilitation of about 80 km of tertiary
(farm to market) feeder roads warrants environmental consideration during the
implementation phase\.
In both Rupandehi and Bara/Parsa areas, it appears that migrants from the
hills are encroaching on forest areas\. An Environmental Impact Assessment of
the BLGWP project area, first conducted in 1993 and updated in 1998, concludes
that the project has not had direct impact on deforestation\. However,
monitoring must take place under the proposed project to ensure that support
for irrigation development will not serve to regularize existing encroachments
and encourage future encroachers\. An Environmental Baseline Survey regarding
- 3-
this issue will be completed by the end of March 1999 for both project areas,
and will set the indicators against which environmental impacts of the project
will be closely monitored\.
The proposed project whould be designed observing elements of the
environmental action plan component of the National Water Resources Strategy
presently being developed by the Government\. The technical assistance for
drafting and adopting legislation and regulation of groundwater development
would include building adequate regulation for environmental safeguards into
the legislation, consistent with the Government's Environmental Protection Act
and Regulations of 1997\. An environmental management and monitoring plan
would be formulated as an integral component of the project and executed
throughout the construction and post-construction stages\. Baseline studies
against which impact assessments can be made and later compared should be
started as soon as possible\.
Consistent with the intentions for the Water Resources Strategy Formulation,
as well as with the overall objective to actively manage the Terai groundwater
aquifer for sustainability, a Regional Environmental Assessment (REA) would be
instituted at the preparation\. The REA should interface with the groundwater
exploration and monitoring program of GWD/DOI and the District Project
Offices, and with the development of the overall water/aquifer management
strategy\. REA will assess environmental concerns with the use of resource as
an entity, including cumulative impacts of alternative development and
management strategies related to the current 4000 ha\. and adjacent GW schemes\.
The REA will also address issues related to encroachment of bounding areas,
nationally classified and intended maintained as forests\.
In addition to the baseline studies related to encroachment (see above), these
should include assessing water quality of groundwater, present outflow and
recharge of the aquifer in the command area, and present water
supply/abstractions for use by inhabitants of the area\. The indicative EA
findings of the 1993 feasibility studies should be reexamined for
confirmation\. Notification of the project should be done to upstream and
downstream riparian, as well as to the general public in the command area\.
6\. NGO and Beneficiary Participation\. The project would promote the
involvement of both local Intermediary Organizations and community groups in
the choice and location of the project TW location\. Beneficiaries would be
responsible for the design, implementation, operation and maintenance of TW to
ensure their sustainability\. Beneficiary participation will be both in cash
and in kind for investment as per Government's Irrigation Policy, and upon
completion of the TW systems, they will be agreed to take over for ownership
and O&M\. As part of project preparation, a detailed Institutional Assessment
will be carried out in order to 'map' the extent of existing local
organizational capacity in the project area\. The Institutional Assessment will
focus on existing intermediary organizations, and will aim to understand how
well they have been able to foster and strengthen WUAs\. Information
dissemination, environmental awareness raising, and skills-training should be
offered to WUGs using NGOs in order to institutionalize measures that will
enable members of WUGs to cope sustainably with environmental issues in their
farming practices
7\. Impact on Women\. The new Irrigation Policy mandates 20 percent
representation of women in WUGs, which is currently about 5%\. Based on the
- 4 -
findings and recommendations of the Review and Evaluation of Women's Roles and
Needs in Irrigated Agriculture and the Inventory and Capacity Assessment of
Govt\. Agencies, NGOs and Others Involved in Activities for Women, the project
would address the following:
(a) promotion of active participation of women in WUG management through
extended membership, (b) link up with and strengthen existing activities
catering to women, which will be prioritized and selected by women themselves,
(c) promotion of women's skills development regarding improved agricultural
practices and other income generation activities, and (d) promotion of active
roles of women in pilot demonstration farms to ensure their involvement from
the beginning\.
Contact Point: The InfoShop
The World Bank
1818 H Street, N\.W\.
Washington, D\.C\. 20433
Telephone No\. (202)458 5454
Fax No\. (202) 522 1500
Note: This is information on an evolving project\. Certain activities and/or
components may not be included in the final project\.
Processed by the InfoShop week ending March 26, 1999\.
GW conservation zones (and sub-zones) are to be determined as per recharge divides,
approximately lying in between the four major perennial river systems, namely, Koshi,
Narayani, Karnali, and Mahakali\.
In order to eliminate the farmers' options for the DTW for which the current subsidy is
higher than STW, equitable subsidy for both TW types would be preconditions for further
project preparation\.
In upper and middle Terai, where groundwater table is generally shallow and
transmissivity of groundwater is high, the Terai ground is underlain by conglomerates
(gravel and boulders) which limits the manual drilling for STW\. In the case of lower
Terai, where lithology is made up of mixed sand and clay bands, the transmissivity is
usually not very high in many areas at the depth where STWs are developed\.
- 5 - | APPROVAL |
P115178 | Page 1
INTEGRATED SAFEGUARDS DATASHEET
APPRAISAL STAGE
I\. Basic Information
Date prepared/updated: 02/05/2009
Report No\.: AC4200
1\. Basic Project Data
Country: Yemen, Republic of
Project ID: P115178
Project Name: RY-FLOOD PROTECTION AND EMERGENCY RECONSTRUCTION
ADDITIONAL FINANCING II
Task Team Leader: Sameh Naguib Wahba
Estimated Appraisal Date: January 22,
2009
Estimated Board Date: March 24, 2009
Managing Unit: MNSSD
Lending Instrument: Emergency Recovery
Loan
Sector: Roads and highways (50%);Flood protection (50%)
Theme: Natural disaster management (P);Municipal governance and institution building
(S)
IBRD Amount (US$m\.):
0\.00
IDA Amount (US$m\.):
35\.00
GEF Amount (US$m\.):
0\.00
PCF Amount (US$m\.):
0\.00
Other financing amounts by source:
BORROWER/RECIPIENT
6\.50
6\.50
Environmental Category: B - Partial Assessment
Simplified Processing
Simple []
Repeater []
Is this project processed under OP 8\.50 (Emergency Recovery)
or OP 8\.00 (Rapid Response to Crises and Emergencies)
Yes [X]
No [ ]
2\. Project Objectives
The projects development objectives are to: (i) protect residents, economic activities and
infrastructure from the destructive effects of seasonal flooding in Taiz, Hadramout and
Al-Mahara; (ii) restore access to critical road infrastructure damaged by the floods and;
(iii) strengthen the capacity of local governments and support decentralization\.
3\. Project Description
The proposed project is an Additional Financing to, combined with a restructuring of the
Taiz Municipal Development and Flood Protection Project (TMDFPP), processed under
OP8\.0\. The restructuring reflects the GOYs objective of evolving the TMDFPP from a
single city (Taiz) focus on infrastructure construction into a national level flood
protection program\.
Consistent with the components of the TMDFPP, investments under the proposed
Additional Financing would be carried out under the first and third components, covering
flood protection and infrastructure, and capacity building respectively\. No investments
Page 2
would be allocated for the second component of TMDFPP covering resettlement
activities, as the activities proposed to be financed under Additional Financing are not
expected to trigger resettlement\.
Component 1--Flood protection and infrastructure rehabilitation (US$38\.5
millionequivalent, of which IDA share US$32\.8 million equivalent)\.
The objective of this component is to rebuild selected critically damaged infrastructure
in the affected areas to higher standards that could withstand future flooding events\. It
comprises of two sub-components focusing on rehabilitation and reconstruction of
priority damaged segments of the regional road network and the flood protection system,
as follows:
Regional road rehabilitation sub-component (US$24\.3 million equivalent, of which
IDAs share is US$20\.6 million equivalent)\.
Interventions under this sub-component include rehabilitating and reconstructing
selected priority regional roads where critical segments have been destroyed by the
flooding, and retrofitting with adequate storm water drainage systems\. This sub-
component will finance the repairs of damages over the entire regional road network in
the Wadi Hadramout area (the worst affected by the disaster) as well as the Riyan-Ben
Aifan regional road in Sahel Hadramout (one of two road connections between Wadi
Hadramout and the rest of Yemen, the other being Ben Aifan-Al-Abr)\. The flood-related
damages to be tackled under the project include: (i) washout/erosion of one or both sides
of the road caused by inadequate slope protection structures including some instances
where the whole road has been damaged and traffic rerouted; (ii) damages to and
blockages of single or multi-cell box culverts and pipe culverts causing consequential
local damages to the road; (iii) partly or fully damaged Irish crossings (cement concrete
drifts across river beds); (iv) damages to bridges and bridge abutments; (v) minor
damages to road pavement and shoulders due to soaking of the pavement and subsequent
loss of load bearing capacity requiring asphalt patching and shoulder rehabilitation; and
(vi) damages and blockages of roads due to rock fall and slides caused by extensive rain
and which led to subsequent damages to road pavements and side drains\.
Specifically, 12 regional roads would be covered, totaling 40km in damage length\.
These are: Rayan-Ben Aifan, Almashad-Dawan, Alhawra-Azzaher, Ben Aifan-Alabr,
Seiyoun-Ben Aifan, Alkhashaa-Rakhi, Seiyoun-Tarim, Tarim-Alsom, Prophet Hood
road, AladlosRasib, Algharf-Sah, and Alaleeb-Rahaba\. The preparation of designs and
tender documents is currently underway\. The repairs would allow building back the
damaged sections along the same footprint and alignment, but with adequate flood-proof
standards\. Of these US$24\.3 million, US$2\.4 million equivalent are estimated to be
needed for urgent repairs of segments that cause serious risks to motorists, which thus
call for a force account procedure since from a safety viewpoint it is not advisable to wait
for competitive tender\. These are instances of 7-meter wide highways, where one lane
collapsed and the other is threatening collapse due to erosion, but where the road remains
in use\.
Page 3
Flood protection system rehabilitation sub-component (US$14\.2 million equivalent, of
which ID
As share is US$12\.6 million equivalent)\.
Interventions under this sub-component include rehabilitating and reconstructing
selected priority components of the flood protection system in the affected areas, which
were damaged or affected by the storm and floods, and which served to protect human
settlements and agricultural lands\. Restoring the functioning of the main elements of the
flood protection system is thus a key priority to protect agricultural land and
shelter/human settlements, and thus facilitate post-disaster economic recovery and
safeguard any future reconstruction from the effects of future flooding events\. Flood
protection works that are both effective and labor-intensive (such as the use of Gabion
walls) will be relied upon where feasible to enable the creation of temporary job
opportunities for the affected communities to partly support the households that lost their
income and livelihoods in the disaster, for the duration of the reconstruction and recovery
period\.
Specifically, this sub-component will finance investments in affected areas in Wadi
Hadramout (US$6\.71 million), Sahel Hadramout (US$ 2\.56 million) and Al-Mahara
(US$5\.00 million)\.
Investments include stone works, flood protection works using gabions, dredging and
filling works and rehabilitation of Wadi beds, and removal of the Sayssaban trees that
block flood and storm water flow in Wadi beds\.
In the Wadi Hadramout region, works would be carried out in 11 Wadis: Dawan, Al-
Ein, Ammad and Qassam, Heynun, Hathyah, Ser, Bin Ali, the main Wadi running from
Kaoda to the west to Haid Qassim bridge to the east, Addam, Massila running from Haid
Qassim bridge to the east to Sena west of Al-Soum, and Thabi\.
In the Hadramout Sahel region, works encompass a total of 30 discrete activities in eight
different districts as follows: Dawan, Ghail Binyamin, Aryaf Mukalla, Hajar, Al-Shihr,
Raydah and Al-Qosseir, Yabooth, and Al-Diss Al-Sharkiya\. The works include the
rehabilitation and construction of new small flood protection structures to protect
agricultural land and shelter and the rehabilitation of irrigation canals, ditches and
diversion structures/dykes damaged by the floods\.
In Al-Mahara, works encompass flood protection works (retaining walls and protection
structures made of gabion walls) in 36 different sites in 12 different Wadis located in
three districtsâ
Al
-Ghaida, Haswain and Al-Massila\.
Component 2--Resettlement of Affected Persons (US$0\.0 million equivalent)\.
No investments would be allocated for the second component of TMDFPP covering
resettlement activities\.
Component 3--Capacity Building (US$2\.5 million equivalent, of which IDA share
US$2\.2 million equivalent)\.
The objective of this component is to prepare a flood protection plan for the vulnerable
areas of Wadi Hadramout; a storm water drainage master plan for Mukalla city; help set
up local government capacity in disaster preparedness, mitigation and response; finance
Page 4
the cost of design/tender document preparation and construction supervision; and cover
Project Management expenses over the three-year implementation period\.
4\. Project Location and salient physical characteristics relevant to the safeguard
analysis
The Project takes place in various affected areas in Hadramout and Al-Mahara
Governorates\.
The road network rehabilitation encompasses 12 regional roads that cover Wadi
Hadramout as well as the Riyan-Bin Aifan regional road in Sahel Hadramout region\.
The flood protection rehabilitation encompasses different Wadis in Wadi Hadramout,
Hadramout Sahel and Al-Mahara as detailed in the project description\.
5\. Environmental and Social Safeguards Specialists
Mr Mario Antonio Zelaya (MNSSD)
Ms Laila Al-Hamad (MNSSD)
Mr Maged Mahmoud Hamed (MNSSD)
6\. Safeguard Policies Triggered
Yes No
Environmental Assessment (OP/BP 4\.01)
X
Natural Habitats (OP/BP 4\.04)
X
Forests (OP/BP 4\.36)
X
Pest Management (OP 4\.09)
X
Physical Cultural Resources (OP/BP 4\.11)
X
Indigenous Peoples (OP/BP 4\.10)
X
Involuntary Resettlement (OP/BP 4\.12)
X
Safety of Dams (OP/BP 4\.37)
X
Projects on International Waterways (OP/BP
7\.50)
X
Projects in Disputed Areas (OP/BP 7\.60)
X
II\. Key Safeguard Policy Issues and Their Management
A\. Summary of Key Safeguard Issues
1\. Describe any safeguard issues and impacts associated with the proposed project\.
Identify and describe any potential large scale, significant and/or irreversible impacts:
Since all of the sub-projects to be financed are for replacement of existing structures
located at the same place and within the same alignments and right-of-ways, the
incremental adverse impact of the project is expected to be small\. Many adverse impacts
have already been caused by the storm and flood disaster such as substantial erosion and
change in alignment of natural drainage courses including damaged infrastructure\.
However, these impacts will be mitigated through the rehabilitation and reconstruction of
damaged infrastructure and protection of drainage courses from further erosion
particularly at places where populated and important agricultural areas are at great risk to
flood damage\.
Expected environmental impacts from the project are those typically associated with
road reconstruction and infrastructure rehabilitation\. Among other potential impacts,
Page 5
these include: (i) Temporary site disturbance associated with demolition of damaged
infrastructure; (ii) Temporary erosion and sedimentation in streams from reconstruction
of road foundations and associated increases in sediment loads and turbidity during
construction; (iii) In stream temporary disturbances from blasting or excavation works for
removal of damaged foundation; (iv) Dust and noise from operation of heavy equipment
during construction; (v) Handling, storage and disposal of waste materials; and (vi)
Traffic congestion or temporary re-routing and interruption of traffic around the
construction zones\.
All of these impacts can be managed during construction with known mitigation
measures included in the contracts and capacity building of supervising organizations\. It
should be noted that each construction site, whether for road reconstruction or flood
protection works, will be located at existing streams and crossings and at confined sites
so as to limit and avoid incremental damage\. In this way the potential impacts will be
very localized\. None of the sub-projects, therefore, will have large scale or regional
environmental impacts\. One or two of the roads sections at critical stream crossings may
require realignment\. At this stage, there is insufficient information on the nature of
realignment as the technical and feasibility studies have not yet been undertaken for the
two road segments\. The environmental impacts from the realignment are expected to be
minimal because the rehabilitation works will be limited in scope, both from the financial
and technical perspectives\. For this reason,the environmental category per OP 4\.01 will
be B\.
In addition, the possibility of realignment of said segments of road may imply land
acquisition\. In which case, the provisions of the Resettlement Policy Framework (RPF)
prepared for under this project will apply\. A disbursement convenant will be included in
the credit agreement requiring Environmental Management Plan (EMP) and RFP to be
prepared prior to the investments that will be found to require such instruments\.
At this stage the rating for OP4\.04 for natural habitats is yet to be decided\.The final
determination of these triggers will be made during the preparation of the Environmental
Management Plan\.
As for OP4\.11, during the construction phase, vigilance will be ensured for chance find
procedure\.
No resettlement issues are expected in any of the proposed sub-projects under the
emergency Project\. If the unlikely event that OP4\.12 is triggered, Abbreviated
Resettlement Plans (ARPs) and/or Resettlement Action Plans (RAPs), as may be
applicable, will be prepared for specific sub-projects in accordance with the projects
Resettlement Policy Framework (RFP), which was prepared by the Project Coordination
Unit (PCU) and submitted on January 30, 2009, for IDAs review and clearance\. These
RAPs if needed will be prepared during implementation upon the completion of the
detailed design studies\.
Page 6
2\. Describe any potential indirect and/or long term impacts due to anticipated future
activities in the project area:
Close attention will be paid in the preparation of the EMP and during implementation to
any potential adverse impact that may result from flood protection rehabilitation works--
construction debris or dust, etc--on sensitive coastal natural habitats, especially for
rehabilitation works in Wadis that are close to coastal areas\.
3\. Describe any project alternatives (if relevant) considered to help avoid or minimize
adverse impacts\.
As mentioned above, the incremental adverse impact resulting from the project is
expected to be small, since all activities to be financed are replacement of existing
structures located at the same place and within the same alignments and right-of-ways\.
Given that many adverse impacts have already been caused by the storm and flood
disaster such as substantial erosion and change in alignment of Wadis (natural drainage
courses) and damaged protection infrastructure, the alternative of doing nothing would
leave Wadi courses vulnerable to further erosion and put populated areas and agricultural
areas at a greater risk of flooding and further damage and loss of livelihoods\.
4\. Describe measures taken by the borrower to address safeguard policy issues\. Provide
an assessment of borrower capacity to plan and implement the measures described\.
The Borrower's existing implementing agency, the TMDFPP Project Management Unit
(PMU), will be restructured to reflect the expanded geographic scope of this project\. It
will comprise of a Project Coordination Unit (PCU) based in Sana'a and staffed with the
existing Project Director and fiduciary staff, which will be supported by Project
Implementation Units (PIU) based in Taiz (with the existing rest of the staff to implement
the ongoing Additional financing) and in Hadramout (to be set up for implementation of
the new proposed project)\.
The TMDFPP PMU--whose same management and staff, complemented with additional
staff will constitute the implementating unit of this project--has over 15 years experience
and strong track record in implementing IDA projects\. Specifically, the PMU has
extensive demonstrated experience in implementing safeguards: it has implemented a
resettlement component to resettle 244 households that lived in flood paths and which
was rated Highly Satisfactory and its environmental safeguards implementation is also
rated satisfactory\.
The environmental management plans, which will be prepared during the course of
implementation based on the completed Environmental and Social Screening and
Assessment Framework (ESSAF) will be carried out by the implementing agency\. The
latter includes a full-time Environmental and Safety Officer (ESO) in the Taiz office and
would recruit a new Environmental Officer for the to-be-established PIU in Hadramout\.
The environmental officer would oversee the preparation of and implement the EMP and
the environmental aspects included in the Projects Operations Manual\. The ESO was in
charge of supervising similar work under the original TMDFPP and the ongoing AF\. The
Page 7
environmental officer would continue to act in the same capacity for the proposed
additional financing\.
Given the limited possibilities of triggering OP4\.12 in light of the project scope, the
TMDFPP PMUs highly experienced social and resettlement officer, who would be based
in Taiz, would be relied upon as may be needed to address social and resettlement issues
that may arise\. Should such instances arise, which would likely be of a very small scale
based on a prior assessment of the sites by several experts, a draft RAP, satisfactory to
IDA, would be prepared as a condition of disbursement\. Monitoring day-to-day
construction activities to ensure that no resettlement issues would be triggered would be
the responsibility of the other PIU staff in Hadramout/Seiyun\.
5\. Identify the key stakeholders and describe the mechanisms for consultation and
disclosure on safeguard policies, with an emphasis on potentially affected people\.
Key stakeholders include inter alia the affected communities and households, elected
local councils at the Governorate and district level, and the Environmental Protection
Authority (EPA), the agency responsible for environmental matters in Yemen\.
Consultations through formal workshops and meetings taking place within the project-
affected areas would take place upon the completion of the EMP in conjunction with the
completion of the detailed designs of the different investments (which are still under
preparation)\. Elected local councils at Governorate and district levels will be called upon
to facilitate local consultations and in regards to dissemination and disclosure
requirements\.
In addition, the RPF and ESSAF are publicly available through the Ministry of Public
Works in Sana'a and in the General Department of Public Works and Highways in
Mukalla and Seiyun (Hadramout) and Al-Ghaida (Al-Mahara) and the World Bank
Information Center (Infoshop)\. The Arabic version of the documents will be disclosed by
February 16, 2009\.
B\. Disclosure Requirements Date
Environmental Assessment/Audit/Management Plan/Other:
Was the document disclosed
prior to appraisal?
N/A
Date of receipt by the Bank
02/04/2009
Date of "in-country" disclosure
02/05/2009
Date of submission to InfoShop
02/05/2009
For category A projects, date of distributing the Executive
Summary of the EA to the Executive Directors
Resettlement Action Plan/Framework/Policy Process:
Was the document disclosed
prior to appraisal?
No
Date of receipt by the Bank
Date of "in-country" disclosure
Date of submission to InfoShop
Indigenous Peoples Plan/Planning Framework:
Was the document disclosed
prior to appraisal?
Page 8
Date of receipt by the Bank
Date of "in-country" disclosure
Date of submission to InfoShop
Pest Management Plan:
Was the document disclosed
prior to appraisal?
Date of receipt by the Bank
Date of "in-country" disclosure
Date of submission to InfoShop
*
If the project triggers the Pest Management and/or Physical Cultural Resources,
the respective issues are to be addressed and disclosed as part of the Environmental
Assessment/Audit/or EMP\.
If in-country disclosure of any of the above documents is not expected, please
explain why:
EMP will be prepared during the course of implementation on the basis of the ESSAF
(which was prepared by IDA and discussed and confirmed with the implementing
agency)\. Clearance by IDA of the EMP represents a disbursement condition for all
works\.
C\. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the
ISDS is finalized by the project decision meeting)
OP/BP/GP 4\.01 - Environment Assessment
Does the project require a stand-alone EA (including EMP) report?
N/A
If yes, then did the Regional Environment Unit or Sector Manager (SM)
review and approve the EA report?
N/A
Are the cost and the accountabilities for the EMP incorporated in the
credit/loan?
Yes
The World Bank Policy on Disclosure of Information
Have relevant safeguard policies documents been sent to the World Bank's
Infoshop?
No
Have relevant documents been disclosed in-country in a public place in a
form and language that are understandable and accessible to project-affected
groups and local NGOs?
No
All Safeguard Policies
Have satisfactory calendar, budget and clear institutional responsibilities
been prepared for the implementation of measures related to safeguard
policies?
Yes
Have costs related to safeguard policy measures been included in the project
cost?
Yes
Does the Monitoring and Evaluation system of the project include the
monitoring of safeguard impacts and measures related to safeguard policies?
Yes
Have satisfactory implementation arrangements been agreed with the
borrower and the same been adequately reflected in the project legal
documents?
Yes
Page 9
D\. Approvals
Signed and submitted by:
Name
Date
Task Team Leader:
Mr Sameh Naguib Wahba
01/30/2009
Environmental Specialist:
Ms Kanta K\. Rigaud
02/05/2009
Social Development Specialist
Mr Knut Opsal
02/05/2009
Additional Environmental and/or
Social Development Specialist(s):
Approved by:
Regional Safeguards Coordinator:
Mr Hocine Chalal
02/05/2009
Comments:
Sector Manager:
Ms Anna Maria Bjerde
02/05/2009
Comments: | APPROVAL |
P104049 | Page 1
PROJECT INFORMATION DOCUMENT (PID)
CONCEPT STAGE
Report No\.: AB3421
Project Name
Local Development and Decentralization
Region
AFRICA
Sector
Other social services (20%);General education sector
(20%);Health (20%);General water, sanitation and flood
protection sector (20%);Roads and highways (20%)
Project ID
P104049
Borrower(s)
REPUBLIC OF MADAGASCAR
Implementing Agency
Republic of Madagascar
Madagascar
Ministère auprès de la Présidence de la République chargé de la
Décentralisation et de l'Aménagement du Territoire
Anosy
Madagascar
101
Tel: (261) 202457924 Fax: (261) 202256917
rymdat@mel\.wanadoo\.mg
Environment Category
[
]
A
[X] B [ ] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared
November 29, 2007
Estimated Date of
Appraisal Authorization
February 11, 2008
Estimated Date of Board
Approval
May 15, 2008
1\.
Key development issues and rationale for Bank involvement
Key development issues:
While Madagascar experienced positive economic growth (about 6 percent per annum) during
the period 2003-06, the poor did not participate fully in it\. Sixty eight percent of the population
still live below the poverty line with no or poor access to basic services such as health, education
and water\. According to the 2006 Country Assistance Evaluation overall, the country has made
no systematic inroads into poverty as measured in income and consumption terms\.
1
After a deep political crisis that lasted for six months and ended in 2002, the newly instated
government embarked on an ambitious development agenda outlined in a first PRSP in 2003 and
followed by a second PRSP in end-2006: the Madagascar Action Plan 2007-2012 (MAP)\. The
MAPs first objective is to improve the effectiveness and responsiveness of the government,
1
World Bank\. 2006\. Madagascar: Country Assistance Evaluation\. Report No\. 38213\. December 13\.p\. 22\.
Page 2
while decentralization and improvement of public service delivery are the key challenges that
must be met in order to achieve this objective\.
2
Although decentralization is not a new concept in Madagascar (the country first engaged in a
decentralization process in the 1990s), the process has so far suffered from inconsistencies and a
hesitant pace of reforms\.
3
As a result, the country remains highly centralized and the mandate,
capacities, and financial resources of
Collectivités Territoriales
(CTs) (1,558
communes
and 22
newly created regions) as well as
Services Techniques Déconcentrés
(STDs) remain limited\.
4
Important advances have recently been made regarding decentralization\. In November 2004, the
Government adopted an ambitious Policy Letter on Decentralization and Deconcentration
(LP2D) which was soon followed by an implementation program covering the years 2007-2008\.
5
The
Ministère de la Décentralisation et de lAménagement du Territoire
(MDAT) was created in
January 2005\.
The LP2D is articulated around three pillars: (i) consolidating decentralization by putting
communes and regions at the core of the decentralization process; (ii) strengthening
services
techniques deconcentrés
so that they can better support communes and regions; and (iii)
improving civic participation and enhancing collaboration between communes and regions on
one side, and public and private implementing agencies on the other side\.
Actions that have been taken so far to implement the LP2D include: (i) the development of a
fiscal decentralization strategy; (ii) the creation by decree in June 2007 of the
Fonds de
Developpement Local
(FDL) as a mechanism to finance communal investments;
6
(iii) the
piloting of
Centres dAppui aux Communes
(CAC), with the aim to strengthen communal
capacities,
7
,
and (iv) the establishment of decentralization and deconcentration units (
cellules
2D) in key ministries\. More recently, under the leadership of the President, all heads of the
17,000
Fokontany
(communities below the communal level - there is an average of 10
Fokontany
per commune) have received capacity building training, which may be a prelude to
their reinforced role in local development\.
Despite these activities, the overall implementation of the strategy has proven challenging\.
Functional, fiscal and administrative responsibilities of the
collectivités territoriales
still need to
be clarified, and so does the division of responsibilities between the
collectivités territoriales
and
2
Government of Madagascar\. 2006\. MAP Madagascar Action Plan 2007-2012\. A Bold and Exciting Plan for
Rapid Development\. October\.
3
For example, the 6 provinces that were created in 1998 were abolished in 2007\. The provinces were replaced by 22
regions, which were established in 2004\.
4
Services Techniques Déconcentrés
represent the central government, particularly the line ministries, at the level of
the region, district and
commune
\.
For more details on decentralization in Madagascar, see: World Bank\. 2003\.
Madagascar Decentralization\. Report No\. 25793-MAG\. November 5\.
5
1) Government of Madagascar\. 2005\. Lettre de Politique de Décentralisation et de Deconcentration (LP2D)\.
December\. 2) Government of Madagascar\. 2006\.
Programme National de Décentralisation et de Deconcentration
(PN2D), Phase I [2007-2008]
\. October\.
6
Government of Madagascar\. Decree No\. 2007-530\. June 2007\. We do not know whether this decree has been
signed, while it has not been gazetted\.
7
See Government of Madagascar\. Undated\.
Manuel de Procedures pour la Gestion des Centres dAppui aux
Communes
»\. Draft\. MDAT and FID\.
Page 3
the de-concentrated central government structures at the local level\.
8
Meanwhile, communes and
regions face serious financial and administrative difficulties, including their limited ability to
mobilize own resources
9
,
ad-hoc central government grants, weak planning, budgeting and
expenditure management, and lack of qualified staff\.
Rationale for Bank involvement:
The Bank will support the Governments decentralization and deconcentration program through
an investment lending operation, which might evolve into a Sector Wide Approach (SWAp)\.
The proposed program is expected to be supported by the E\.U\. and a number of other
development partners including Swiss Aid, GTZ, UNDP and the French Cooperation\.
Banks support for the proposed project is fully consistent with the Country Assistance Strategy
for Madagascar for the period FY2007-2011 (CAS), which explicitly recognizes the Banks
ambitions to support the MAP and to harmonize and align its activities with other external
partners\.
10
The proposed project supports the second pillar of the CAS, which brings together
activities geared toward improving access to and quality of services\. It also contributes to a
number of cross-cutting implementation aspects that are identified as being critical to the
governance agenda, including decentralization, public expenditure management, and capacity
building\. In each of these areas, the Bank has committed to improve government capacity and
efficiency by emphasizing measures that increase transparency, encourage the participation of
users in service provision, and involve citizens in monitoring the quality of service delivery\.
Given its regional and global experience and expertise in decentralization, deconcentration and
local government capacity development, the Bank is in a unique position to spearhead this
operation in collaboration with the European Union (E\.U) and a number of key development
partners in Madagascar\.
11
The proposed program will build on three existing donor-supported
local development programs in Madagascar, and seeks to integrate these initiatives\. Since 2004,
the E\.U\. has been supporting the ACORDS program (
Appui aux Communes et aux Organisations
Rurales pour le Développement du Sud
)
which supports the Governments decentralization
strategy in the southern regions of Madagascar\.
12
The Swiss Cooperation is similarly supporting
six regions through its program SAHA\.
13
The Bank has also supported a social fund (
Fonds
dIntervention pour le Développement
FID) in Madagascar for almost 15 years which has
evolved from a primarily demand driven social infrastructure project into a project that has
8
For more details, see ACORDS\.
2007\. Les Relations entre STD et Communes and Ramaroharinosy, W\. 2007\.
Rapport provisoire des Ateliers regionaux dans la Province de Tulear sur le Secteur Eau potable et
Assainissement: Pour une Maitrise dOuvrage de la Commune
\. UGP ACORDS\. 2007\.
9
Regions will have their own budget starting in 2008\.
10
World Bank\. 2007\. Country Assistance Strategy for the Republic of Madagascar for FY2007-2011\. Report No\.
38135-MG\. March 7\.
11
This project will be integrated in the Limelette process\. See:
http://siteresources\.worldbank\.org/WBEU/Resources/LimelettenoteforCSOs\.pdf
12
For more details, see European Union\. 2006\. Note de Dossier sur les choix et methodes de mise en oeuvre du
Programme dAppui aux Communes et Organisations Rurales pour le developpement du Sud\. May\.
13
See Mossigue, A\., Rasendrasoa, M\. 2007\. Mise en Oeuvre du Fonds de Developpement Local et Integration des
Mecanismes de Financement des Communes\. June, which also provides information on ACORDS and the FID\.
Page 4
adapted a comprehensive vision of participatory development empowering communities\.
14
A
window to finance communes was created in the FID in 2002\.
15
Finally, it is imperative to support the decentralization and deconcentration strategy of the MAP
in order to ensure that the increased allocation of fiscal resources to local governments requested
under the Poverty Reduction and Strategy Credits (PRSCs) lead to an increase in basic services
delivery at the local level\.
16
This proposed program will also strengthen the linkages with
reforms in public financial management and civil service, and enable the adaptation of national
level reforms at the local level\. Finally, the program will seek to harmonize mechanisms to
deliver public services at local level, in particular in the mining areas\.
2\. Proposed objective(s)
The overall development objective of the program is to improve public service delivery through
the financing of basic infrastructure and the provision of capacity building at local level\.
The program seeks to enhance the capacity of local authorities to utilize participatory and
transparent planning, budgeting, implementation, and monitoring systems and to strengthen the
capacity of service providers (
prestataires de services
)\. It will also assist in improving local
revenues and transfers to CTs and STDs\. Finally, an important objective of this program is to
harmonize existing donor-support in the area of local development (see above) and provide a
vehicle for future local development initiatives, including mining areas\.
To reach this objective, the program will support the Government in the elaboration of its
decentralization and deconcentration strategy, and in its implementation\. The program will
provide financial and capacity development support to the
collectivités territoriales
(communes
and possibly regions), and will seek to strengthen the
services techniques déconcentrés
so that
they can better support communes and regions\.
Principal output indicators may include: (i) overall resources (central capital and recurrent
transfers, own revenues) and staff available to
collectivités territoriales,
(ii) overall resources and
staff available to
services techniques déconcentrés
,
(iii) number of
collectivités territoriales
who
are able to prepare development plans and budgets through adequate process, (iv) number of
collectivités territoriales
who receive LDF grants, (v) number of
collectivités territoriales
with
annual audit records, (vi) number of local projects operated and maintained satisfactorily, (vii)
increase in number of people satisfied by LDF activities\.
14
See Fruchart, V\. 2005\.
Revue a Mi-Parcours du Projet de Developpement Communautaire\. March 16\.
15
See Fruchart, V\. 2004\. Rapport dEvaluation de la Composante Financement Direct des Communes du Projet de
Developpement Communautaire (FID IV)\. December 27\.
16
See World Bank\. 2006\. Program Document for a Proposed Credit in the Amount of SDR 26\.9 million (US$40
million equivalent) for a Third Poverty Reduction Support Credit to the Republic of Madagascar\. Report No\.
36416-MG\. June, and World Bank\. 2007\. Program Document for a Proposed Credit in the Amount of SDR 26\.3
million (US$40 million equivalent) for a Fourth Poverty Reduction Support Credit to the Republic of Madagascar\.
Report No\. 39028\. May 25\.
\.
Page 5
3\. Preliminary
description
The program is expected to have 4 components:
Component 1: Support to the decentralization process
\.
In coordination with other Bank
activities such as the Governance and Institutional Development Program (PGDI), the PRSCs
and the health SWAp, this component consists of activities to (i) support the formulation and
implementation of the decentralization and deconcentration strategy, and alignment with sectoral
strategies, (ii) strengthen central-local fiscal framework to support local revenue mobilization,
ensure adequate transfers to STDs and CTs including for O&M of basic infrastructure, (iii)
strengthen STDs to respond to incremental demands for their services,
Component 2: Capacity building
\.
This component will support the development of a national
capacity building strategy for CTs, provide capacity building grants to CTs, and provide capacity
building to service providers (
prestataires de service
)\.
Component 3: Infrastructure grants to
Collectivités Territoriales
\.
This component will
finance local infrastructure investments through a central-local intergovernmental transfer\. For
the duration of this project, grant funds are expected to be channeled through the recently created
public agency
Fonds de Developpement Local
(FDL)\.
Component 4: Support to program implementation,
and Monitoring and Evaluation
(M&E)
\.
This component will support, project management, monitoring, evaluation and audits of
the account of the program and accounts of all grant beneficiaries\. It will also finance activities
to ensure transparency and accountability and engage beneficiaries in the process of verifying
outcomes\.
4\.
Safeguard policies that might apply
Environmental Assessment (OP/BP 4\.01)
The project has a category B rating\. The investments under this project will focus on the
improvement of the delivery of basic services and are expected to result in improved living
conditions\. The investments under the project will be sectorally varied, given that they will be
determined by local level priorities which will differ from one local government to another and
cannot be determined a priori\. The types of investments are common community development
projects whose potential environmental and social effects are well understood, unlikely to be
significant, and readily manageable\. The main potential environmental issues associated with the
project include soil erosion (construction and during road use), health effects to construction
workers during construction, land disturbance (construction), waste management for schools,
markets place, and community clinics, and noise (primarily during construction)\. Following the
National law on the Protected areas, it is not possible to build infrastructures within protected
areas in Madagascar\. Therefore, there will be no direct impacts on protected areas\.
Involuntary Resettlement (OP/BP 4\.12)
Page 6
Land acquisition, compensation and resettlement of people may be inevitable for certain
categories of sub-projects\. This is a social issue of critical concern to the Government and the
World Bank, as its impact on poverty if left unmitigated, is negative, immediate and can be wide
spread\. The infrastructure p
rojects developed in several localities by the collectivites
territoriales could result in involuntary resettlement and lands acquisition\. These could occur in
the case of the widening of roads, the construction of markets, schools, community clinics, etc\.
While the Ministry of Decentralization could apply the National Law on Land Acquisition, this
is not considered to be sufficient according to the Bank Policy on the Involuntary Resettlement
OP 4\.12\. Therefore, it is proposed to prepare a Resettlement Policy Framework for the Local
Development Fund (LDF) project\.
5\. Tentative financing
Source: ($m\.)
BORROWER/RECIPIENT 0
International Development Association (IDA)
26
EC: European Commission
72
Total
98
6\. Contact point
Contact: Philippe Auffret
Title: Sr\. Social Protection Specialist
Tel: (202) 473-7174
Fax: (202) 473-8107
Email: pauffret@worldbank\.org
wb13870
P:\MADAGASC\HD\P104049\LEN\MAD-FDL-PID Concept Stage-Oct31-07\.doc
11/28/2007 10:04:00 AM | APPROVAL |
P131602 |  PROJECT INFORMATION DOCUMENT (PID)
CONCEPT STAGE
Public Disclosure Copy
Report No\.: PIDC679
Project Name Sustainable rural energy services (P131602)
Region LATIN AMERICA AND CARIBBEAN
Country Honduras
Sector(s) Other Renewable Energy (100%)
Theme(s) Rural services and infrastructure (50%), Rural markets (50%)
Lending Instrument Specific Investment Loan
Project ID P131602
Borrower(s) Ministry of Finance (Secretaria de Finanzas)
Implementing Agency Secretaria de Finanzas - Unidad de Cambio Climatico
Environmental B-Partial Assessment
Category
Date PID Prepared/ 22-May-2013
Updated
Date PID Approved/ 22-May-2013
Disclosed
Estimated Date of
01-Apr-2014
Appraisal Completion
Estimated Date of 24-Oct-2013
Public Disclosure Copy
Board Approval
Concept Review Track II - The review did authorize the preparation to continue
Decision
I\. Introduction and Context
Country Context
1\. Honduras is one of the poorest countries in the Latin American region with annual incomes
that are less than US$2,000 per person (2011 Atlas GNI per capita)\. Economic development over
the years saw a gradual decline in poverty rates, but economic growth was set back due to the
impact of the global economic crisis that began in 2008 and the political turmoil that followed in
Honduras in 2009\. The economy showed a modest recovery since 2010, posting a GDP growth rate
of 3\.6 percent in 2011 and 3\.3 percent in 2012\. The projections for 2013 call for a GDP growth rate
of 3\.3 percent\. The macroeconomic condition in Honduras has deteriorated\. Management of public
finances has lacked discipline, with fiscal deficits higher than planned, prompting the authorities to
declare a fiscal emergency in August, 2012\. The Governmentâs mid-year projected fiscal deficit of
4\.5 percent for the year compared with 3\.2 percent targeted in the 2012 budget\. The current account
balance, which was -6\.2 percent in 2010, reached -8\.7 percent in 2011, and is estimated at -9\.9
percent for 2012\. International reserves have declined significantly, and are estimated to cover only
three months of imports\.
Page 1 of 7
2\. Overall, over sixty percent of the people in Honduras live below the poverty line\. Many of
them live in rural areas where seventy five percent of the population is estimated to live in poverty
Public Disclosure Copy
including most people that are in extreme poverty\. Honduras ranks 121 out of 187 on the Human
Development Index\. Therefore, inclusive growth where the rural poor benefit from economic
development has become an imperative in Honduras\. An important and unique additional
development challenge in Honduras is crime and violence\. The country presently has one of the
highest homicide rate in the world\. An environment of weak governance, limited economic
opportunities, and a lack of many basic services/fragmented social safety nets have given rise to
organized crime such as narco-trafficking and youth gangs\. Crime and violence are challenges that
persist in urban as well as rural areas\.
Sectoral and Institutional Context
1\. The Energy Sector
3\. The Honduran energy consumption, based on the National Energy Balance, is comprised
mainly of imported oil products (42 percent) and firewood (43 percent)\. Oil products are mainly for
power generation and transport while firewood is mostly used for cooking , particularly in rural
areas\. Over sixty nine percent of the population relies on firewood for cooking since there is limited
availability of modern cooking options\. The remaining energy is from hydropower (11 percent) and
sugar cane bagasse (4 percent) â both for power generation\.
The Power Sector and Access to Electricity
4\. With regards to electricity generation capacity, Honduras had a hydro-dominated system till
the mid-1990s that has since gradually given way to a thermo-dominated one, with the country now
depending on costly imported fuels for about 63 percent of its generation capacity \. The power
Public Disclosure Copy
sector in Honduras is largely state-owned and vertically integrated\. The Empresa Nacional de
EnergÃa Eléctrica (ENEE) owns about 40 percent of generation and 100 percent of the transmission
and distribution systems; and is predominantly a single buyer (monopsony) of electricity for the
national power system\. ENEE is also responsible for the operation of the National Interconnected
System and the Load Dispatch Center\. The regulatory commission for energy (Comisión Nacional
de EnergÃa, CNE) and the Ministry of Natural Resources and Environment (Secretaria de Recursos
Naturales y Ambiente, SERNA) which are responsible for policymaking, have lacked sufficient
capacity and political support to carry out many of their functions\.
2\. Rural Energy Services
5\. Access to reliable and affordable energy services particularly in rural areas is still limited,
negatively affecting peopleâs quality of life and hampering socioeconomic development\. Efforts to
implement comprehensive sustainable rural energy programs targeting electrification and expansion
of efficient use of firewood have so far been hindered by the lack of an integrated rural energy
policy and the weakness of the institutional framework for the rural energy sector\.
Access to electricity
6\. Grid-connected\. ENEEâs estimates that as of December 2010 electricity grid coverage
Page 2 of 7
reached over 81 percent of the population\. This represents a substantial increase since 2000, when
access was barely over 55 percent and shows significant progress towards the GoHâs goal to reach
85 percent coverage by 2015 \. While the access rate in urban areas is nearly 100 percent, the ENEE
Public Disclosure Copy
electricity grid reached only 63 percent of the rural population\. A sizable 1\.5 million people
predominantly in rural Honduras remain without access to electricity\.
7\. Off-grid\. It is estimated that upwards of 10 percent of the rural population (over 80,000
households with more than half a million people) are beyond the reach of the national electricity
grid due to the economic reasons previously indicated\. These households are dispersed across
isolated areas, difficult to access, and are often typified by having relatively low levels of demand
for domestic electricity \. These households are not included in ENEEâs investment plan, which only
contemplate grid-based expansion\. Therefore, rural electrification efforts beyond ENEE that will
complement the utilityâs efforts are needed if Honduras is to achieve universal access, and ensure
that rural communities share the benefits of economic development\.
8\. Household-Level Solutions with Solar Home Systems (SHS): Off-grid electrification using
renewable energy sources has emerged as a solution to fill this void in Honduras\. A number of
programs have emerged to serve the predominantly unconnected rural population, so far distributing
an estimated 16,000 solar home systems (SHS)\. They include the PROSOL program implemented
by the Honduran Social Investment Fund (FHIS) and the EnDev-HO Program , among others\.
Each program has made modest contributions with regards to the overall off-grid electrification
challenge, but have demonstrated modalities that can be potentially scaled-up for greater impact\.
However, many of these programs have been scattered and have lacked any central coordination
limiting their scope and scale\. A policy and program framework that would better coordinate these
efforts under a consistent set of principles would help maximize their impacts\.
9\. These efforts can be scaled-up by creating sufficient incentives for the private dealers to
further expand sales in areas where it is economical\. In fact, the GoH is seeking to capitalize on
Public Disclosure Copy
existing capacity and momentum by augmenting the PROSOL initiative with additional financing
towards this end\. EnDev and other similar programs also can expand within the areas they operate
in; and could play a key role in immediately increasing access to modern electricity services in rural
areas\. However, stretching farther into more dispersed and remote areas will require new business
models, which will need to be designed, piloted and expanded in order to continue to provide access
to increasingly harder to reach households\.
10\. Clustered Renewable Energy Solutions: There is also a third category of unelectrified
households\. These are households that are too far from the grid to be economical for ENEE to
connect, but are sufficiently clustered to create relatively densely populated rural communities that
are best served through stand-alone, isolated renewable energy based electricity (mini) grids\. About
500 kW of hydropower power plant capacity have been installed to date, supplying electricity to
around 8,000 households, in small-scale plants ranging from less than 1 kW to 100 KW under the
EnDev-HO Program and also with the support of the European Union, UNDP and GEF\. Additional
sites have already been pre-identified for development of stand-alone hydropower projects in the
Departments of Colón and La Mosquitia\. Assessing the feasibility of these small-scale hydro
opportunities to contribute to the overall electrification target is important to progressing towards
universal access to electricity\.
Access to efficient cooking solutions
Page 3 of 7
11\. A majority of households in Honduras, even ones with access to electricity, still use
firewood as the main source of energy for cooking\. In urban and peri-urban areas, it is estimated
Public Disclosure Copy
that 55 percent of homes use firewood, of which 21 percent combine wood with other fuels \. In
rural areas, the proportion is significantly higher with 82 percent of the population relying on
firewood \. Household cooking is typically undertaken with a traditional stove (fogon) that is often
not very efficient (efficiency of 5 to 10 percent)\.
12\. The use of firewood in inefficient cookstoves has a number of implications ranging from
financial effects, the use of natural resources, and human health impacts\. In rural Honduras,
purchases of firewood can represent 9-17% of annual household income for the poorest 20% of
households\. For households that, instead of purchasing it, collect it directly from the forests, this
activity can require between two and ten hours per week\. On environmental impacts, studies
estimate that Hondurasâ forests are being depleted at a rate ranging from 28,000-67,000 hectares per
year\. While the leading cause of deforestation is due to fire (61%), firewood extraction is estimated
to account for about 14 percent , with an annual total consumption of firewood for cooking of
6\.4-7\.5 million m3\. A recent independent verification of a carbon finance project accepted the
estimate that 59 percent of the firewood extracted in Honduras is non-renewable\. In regards to the
negative health effects, there is substantial evidence from around the world that the inefficient
combustion of solid fuels in low quality stoves can be a significant health hazard \. The high number
of hours women and young children spend in the kitchen places them at risk to diseases such as
Chronic Obstructive Pulmonary Disease (COPD)\. On the basis of a World Health Organization
(WHO) and United Nations Development Program (UNDP) study, the number of deaths from
COPD due to solid fuel use in Honduras may be greater than 900 people per year \.
13\. Honduras has experience with clean and efficient cookstoves since the 1970s\. Most recent
efficient cookstove dissemination initiatives have ben sponsored by a variety of stakeholders
including the government, private institutions, international development partners, and NGOs, with
Public Disclosure Copy
often limited coordination amongst these efforts\. The Justa stove promoted under most of these
programs has been well received by users, and can be about 40 percent more efficient\. However,
penetration of these cookstoves within the wider population is still limited, with only a 10 percent
share in rural areas and three percent in urban area, even though there is an estimated 800,000
traditional cookstoves in use that could be replaced with cleaner, more efficient ones\. Therefore, it
will be important to review the entire supply chain for the manufacture, financing, and delivery of
improved cookstoves, so it can build upon the successes of existing programs and scale-up to reach
a wider group of beneficiaries and can be sustained over time\.
Relationship to CAS
14\. The proposed project is included in the 2012-2014 Country Partnership Strategy (CPS) for
Honduras\. The CPS is designed to respond to the Honduras Country Vision and National Plan\. The
World Bankâs strategic engagement to support the goals in the CPS focuses on the following areas:
i) Citizen security, ii) Expanding opportunities through reduced vulnerabilities, and iii) Enhancing
good governance\. The second area of strategic focus includes âenergy investmentsâ? as a means to
expand opportunities through reduced vulnerabilities\. More specifically, the CPS identifies the
proposed SREP project as a key energy investment that will help âstrengthen the national regulatory
frameworkâ? in support of increased investments in ârural electrification through small-scale
renewable sources\.â? It is also well aligned with the Bankâs overall energy sector objectives
Page 4 of 7
including the Sustainable Energy for All (SE4ALL) goal of providing universal access to modern
energy services by 2030\.
Public Disclosure Copy
II\. Proposed Development Objective(s)
Key Results (From PCN)
The key results expected from the proposed project are:
(i) Development of business modalities/structures that promote access to clean energy
(ii) Increase in access to electricity from renewable energy sources promoted
(iii) Increase in access to efficient cookstoves promoted
(iv) Energy generated from renewable energy sources
Other important impacts such as improvement in the quality of life of the poor, environmental
impacts and health benefits, which are difficult to easily quantify, will be qualitatively assessed\.
The specific indicators, baselines, and targets will be defined during project preparation\.
III\. Preliminary Description
Concept Description
The proposed project consists of the following three components:
17\. Component 1: Strengthening Policy and Regulatory Framework (Total: USD 1\.00 million -
USD 0\.85 million SREP-WB, USD 0\.15 million GoH)\. The main goal of this component is to create
a more conducive regulatory structure and guidance that would better facilitate greater rural
electrification utilizing renewable energy and access to modern cooking solutions\. A key activity is
Public Disclosure Copy
the preparation of an indicative Rural Electrification Master Plan that would provide an umbrella
policy, which would provide clarity and guide the various scattered electrification efforts including
new activities in a cohesive manner that is necessary to progress towards universal electrification\.
The Master Plan will provide a framework for the development of rural electrification at a national
scale by identifying the potential markets for rural electrification, proposing the least-cost technical
options to serve those markets, estimating the corresponding investment required, and providing the
main technical, social and environmental constraints to be considered\. The component will also
support the preparation of any other supporting policies and regulations that are identified during
preparation and implementation as being important to achieve the overall electrification and energy
access goals\. \.
18\. Component 2 : Increasing Rural Energy Access
� Component 2A: Off-Grid Rural Electrification (Total: USD 8\.50 million - USD 7\.0 million
SREP-WB, USD 1\.50 million GoH)\. The aim of this sub-component is to assist the GoH develop a
national program that will progressively help achieve universal connectivity, particularly focusing
on targeting mancomunidades (regional communities) that the grid expansion programs are unlikely
to serve\. It will seize on the existing momentum and private sector capacity that has already been
built and look to supporting immediate scale-up of access in areas where there is scope for
expansion under existing modalities\. The component will also develop specific additional business
models that will reach more deeply into rural areas with dispersed populations that would remain
Page 5 of 7
unserved under present modalities (i\.e\. the private dealer model)\. The effort will primarily focus on
household (and community facilities) level electrification through solar photovoltaic systems, and
where there are opportunities for off-grid clustered solutions, very small hydroelectric schemes will
Public Disclosure Copy
be considered\. The component will be prepared in coordination with other programs including the
World Bank funded PROSOL, in order to support existing efforts and ensure complementarity; and
include technical assistance to build institutional capacity for effective implementation The areas of
intervention and specific business models that will be supported under the proposed project, the
scale of the initial intervention, project impacts including gender impacts, scope for promoting
productive activities, and implementation arrangements will be determined during project
preparation
� Component 2B: Efficient Cookstove Program (Total: USD 1\.93 - USD 1\.43 million SREP-
WB, USD 0\.50 million GoH)\. This component will be designed to scale-up access to more efficient
cooking solutions for the poor in mainly rural and some peri-urban areas\. It will develop a
comprehensive national program targeting the entire value chain for delivering cookstoves that will
create a national strategy and enabling framework, establish standards and certifications, identify
financing mechanisms and develop incentives, and build capacity within the private and public
sector to implement the program\. The component will identify and help strengthen existing
efficient business models which take into account socio-cultural preferences (including gender
considerations), also helping to design and establish new ones, in order to sustainably and cost-
efficiently scale-up the use of clean and efficient cookstoves\. It is envisaged that aspects of the
program that can most effectively be implemented through the public sector (i\.e\. mainly initiatives
that improve market conditions and investment climate such as development of awareness
campaigns, establishment of cookstove standards and certification processes, and monitoring and
evaluation frameworks, among others) will be implemented through the proposed project, while
various other stakeholders will implement the private aspects, including through a SREP funded
related project supported by the Inter-American Development Bank (FOMIN â one of the private
sector arms of IDB)\. The preparation of this component is being carried out in full coordination
Public Disclosure Copy
with IDB as well as other private stakeholders in the cookstove industry
19\. Component 3: Project Management Support (including Monitoring and Evaluation) (Total:
USD 0\.61 million - USD 0\.51 million SREP-WB, USD 0\.10 million GoH)\. Support implementing
agency to coordinate a national rural energy access program including performing monitoring and
evaluation
IV\. Safeguard Policies that might apply
Safeguard Policies Triggered by the Project Yes No TBD
Environmental Assessment OP/BP 4\.01 â
Natural Habitats OP/BP 4\.04 â
Forests OP/BP 4\.36 â
Pest Management OP 4\.09 â
Physical Cultural Resources OP/BP 4\.11 â
Indigenous Peoples OP/BP 4\.10 â
Involuntary Resettlement OP/BP 4\.12 â
Safety of Dams OP/BP 4\.37 â
Page 6 of 7
Projects on International Waterways OP/BP 7\.50 â
Projects in Disputed Areas OP/BP 7\.60 â
Public Disclosure Copy
V\. Financing (in USD Million)
Total Project Cost: 13\.00 Total Bank Financing: 0\.00
Total Cofinancing: Financing Gap: 0\.00
Financing Source Amount
Borrower 3\.00
Strategic Climate Fund Grant 10\.00
Total 13\.00
VI\. Contact point
World Bank
Contact: Migara Jayawardena
Title: Senior Energy Specialist
Tel: 473-7436
Email: mjayawardena@worldbank\.org
Borrower/Client/Recipient
Name: Ministry of Finance (Secretaria de Finanzas)
Contact: Evelyn Bautista
Title: Vice-Minister of Credit and Public Investment
Tel: 504-2238-7014
Public Disclosure Copy
Email: ebautista@sefin\.gob\.hn
Implementing Agencies
Name: Secretaria de Finanzas - Unidad de Cambio Climatico
Contact: Leonardo Matute
Title: Coordinador SREP
Tel: 504-9450-1509
Email: lmatute@sefin\.gob\.hn
VII\. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Web: http://www\.worldbank\.org/infoshop
Page 7 of 7 | APPROVAL |
P009727 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No\. 6843
e
PROJECT COMPLETION REPORT
INDIA
ANDHRA PRADESH FISHERIES PROJECT
(Credit 815-IN)
June 24, 1987
General Agriculture II Division
Sout!i Asia Projects Department
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
Abbreviations and Acronyms
APFC - Andhra Pradesh Fisheries Corporation
APSCB - Andhra Pradesh State Cooperative Bank
ARDC - Agricultural Refinance & Development Corporation (now NABARD)
CMEU - Catch Monitoring & Evaluation Units
CP - FAO/World Bank Cooperative Programme
CWPRS - Central Water & Power Research Station
GOAP - Government of Andhra Pradesh State
GOI - Government of India
IDA - International Development Association
KBBY - Kakinada Boat Building Yard
MFV - Mechanized Fishing Vessel
NABARD - National Bank for Agriculture & Rural Development (formerly ARDC)
PCC - Project Coordinating Committee
SAR - Staff Appraisal Report
SPD - State Ports Department
VPT - Visakhapatnam Port Trust
WB - World Bank
FOR OFFCA UEONLY
THE WORLD BANK
Washington\. D\.C\. 20433
U\.S\.A\.
01g\.e of DvcutvCewral
Op\.ratmm Evaitua
June 24, 1987
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project ComplAtion Report in India Andhra Pradesh
Fisheries Project (Credit 815-IN)
Attached, for information, is a copy of a report entitled 'Project
Completion Report on India Andhre Pradesh Fisheries Project (Credit 815-IN)"
prepared by an FAO/World Bank Cooperative Programme\. Further evaluation of this
project by the Operaticas Evaluation Department har not been made\.
Attachment
This document has a rstricted distribution and may be used by recipbnts only In the performance
ol their official duties\. Its contents may not otherwise be disosed without World bank audth on\.
FOR OFFmCIAL USE ONLY
INDIA
ANDHRA PRADESH FISHERIES PROJECT
(Credit 815-INF)
PROJECT COMPLETION REPORT
Table of Contents
PRSFACE ***v**Z¢*v*¢¢¢¢e**ve**o s
BASIC DATA SHEET \. \. iv
EVALUAT10W SMM4ARY \.*\. v
I\. INT(RODUCTION \.I\. \. 1
II\. PROJECT IDENTIFICATION, PREPARATION & APPRAISAL \. 2
Project Origin/Reconnaisance 2\. \.,\. 2
Identification/Preparation \., 2
project Dscription \. 4406\.* 3
III\. PROJECT IMELEHENTATION \. \. 4
Loan Negotiations and Effectiveness \. \. 4
Projcet Changes after Appraisal \. \.eoo**o*\.**\. 4
implementation Schedule \.0\.000\.0\. 00\.0\.0\.0*oo\.o 000\. 5
Implementation of the Harbour Component \. 6
Implementation of other Project Components \. \. 9
Performance of Consultants and Contractors \. 11
Project Cost ** 0\.0\. 00 12
kroject Financing and Credit Allocation 13
IV\. INSTI'I'WTIONAL PERFORMANCE AND DEVELOLMmIT \.,\. 13
Implementing Agencies *\.0\.00000000000000*00000\.0000\.000**0 13
Andbra Pradesh Fisheries Corporation \.0\.00\.e\. 14
Credit Scheme for Fishing Vessels \. 15
Accounting and Reporting \.e\. * 16
Compliance with Covenants \., 17
V\. PAOJECt IM*ACT 7\. 0
This document has a restricted distribution and may be used by recipients only in the performace
of their official duties\. Its contents may not otherwise be disclosed without WMd Bank authofization\.
-ii-
Intended Impact \. \. \. \. \. *\. \. \. \. \. \.a \. 17
Assessment of Actual P1roject Impact \.,\. 17
Income frcm Fishing Vessels 21
Economic Re-Evaluation 22
VI\. BANK PERFORMANCE \.23
Overall Performance 23
Supervision 23
V\. CONCLUSIONS AND LESSONS LEARNED 24
TABLES
1\. Comparison of Appraisal and Actual Costs
2\. Visakhapatnam Harbour - Actual and Anticipated Expenditures
3\. Kakinada Harbour - Actual and Ar\.ticipated Expenditures
4\. Nizampatnam Harbour - Actual and Anticipated Expenditures
5\. khysical Parameters of Principal Works
6\. Allocation of Credit Proceeds
7\. Banking Plan for Ve sels, and Actual Financing
8\. Present Staffing of ETO's
9\. APFC - Comparative Balance Sheets
10\. APEC - Annual Revenue and Expenses
11\. Quick Freezing and Ice Making Facilities in Project Area
12\. Fishing Vessels in the Project Area
13\. Annual Registrations of Fishing Vessels in Kakinada (Number)
14\. Average Landing Prices of Shrimp and Fish in Visakhapatnam
15\. Escalation in Diesel and Lubricating Oil Prices
16\. Cash Flow Projection 23m Shrimp Trawler
17\. Cash Flow Projections lOm Trawler (ROYYA)
18\. Visakhaparnam - MFVs and Fish Landings Recorded
MAP
1\. Location of Project Districts and Harbours
CHART
1\. Implementation Schedule - Kakinada Harbour
2\. Implementation Scheaule - Nizampatnam Harbour
ANNEX I - Cormments from GOI
- iii -
PROJECT COMPLETION REPORT
INDIA ANDHRA PRADESH FISHERIES PROJECT (CREDIT 815-IN)
PREFACE
The following is a Project Completion Report (PCR) on the second World
Bank financed fisheries project in South Asia\.
The Andhra Pradesh Fisheries Project (Credit 815-IN) was appraised in
Septemzer/October 1977 and was approved on May 3, 1978\. The credit was signed
on June 19, 1978 and amounted to US$17\.5 million as against an estimated overall
project cost of US$36\.5 million equivalent (including duties and taxes) of which
the foreign exchange component was put at US$0\.2 million\. The credit became
effective on October 31, 1978\. The project was expected to be closed by
September 30, 1984 but actually closed in March 1985\. The Government of India
(GOI) and the Government of Andhra Pradesh (GOAP) were the ultimate recipients
of the credit\. Final disbursement reached 57% of the total credit amount\.
The PCR was originally prepared by GOAP based on a review of the
Project Appraisal Report (No\. 1896a-IN) dated May 15, 1978, the President's
Report (No\. P-2252-IN) dated May 17, 1978, and the Credit Agreement dated June
19, 1978\. At the request of IDA, and with GOI's concurrence, FAO subsequently
prepared the attached PCR, incorporating analysis based on supervision reports
and other files, as well as interviews with some members of the appraisal
mission, supervising staff, and consultants\. Key officials of GOI, GOAP, NABARD
(formerly ARDC), GFCCA, and DPF were also interviewed by the FAOI/,P PCR mission
and provided useful information\.
The draft report was sent to the Borrower for coments on March 5,
1987\. Comments received from GOI are attached to the PCR as Annex I and their
content has been taken into consideration in the final preparation of the
report\.
This report has not been subjected to audit by OED\.
- Iv -
lm
(Credt 815-ZN)
Metect Cm lotion Report
bate Data gbot
KMY PRO3ZC? DATA
Appratael Actal ead
atStne ActWal 3 of BAR
Totel Yroeect Cost (US$ million) 36\.5 25\.66 70
Credit Amount (us$ *illion) 17\.5 9\.9 57
Date of Board Approwvl NAY 30\. 1978 MaW 30* 1978
Date of 8ffectiveaez Oct\. 31\. 1978 oca\. 31 1978
Date yical COMponents C4mpleted Match 1982 June 196
Mosing Date Sept\. 30\. 1984 march 1985 /a
Econoic Rats of Return 35\.03 net ecalated Lk
Inatitutional Perfomac fair
liabery Performance
STA"? INPUTS (Staff weak)
mm ms im mF Mn l F m m ma Y
ProaPptaissl\. 2\.0 3\.0
Apprainl 46\.2
Negotiation 14\.0
Supervision 3\.5 9\.3 22\.2 6\.3 12\.0 3\.9
Other (NO and N00) 12\.5 12\.5 12\.5 12\.5 12\.5 12\.5 6\.0 2\.0 1\.0
Total 2\.0 63\.2 14\.0 21\.8 34\.7 18\.8 24\.9 16\.4 6\.0 2\.0 1\.0
CU*STIVE DIS3URS_SJN
7!!9 iM Ml m m nm m
Appraisal BatiatO (08$ millio) 0\.5 3\.79 10\.42 15\.66 16\.6 17\.5 17\.S
Actual (u8s million) - 1\.00 2\.90 6\.10 7\.3 8\.8 9\.98
Actual t X ofatimate 0 26 28 39 44 50 57
Date of Final Dicburmentt Nay 10\. 1985
MISSION DATA
Date No\. of Nantda Spatinatis ltrfTe lypes of
(!-r) sent Parson in tie1d kiefint3a LA \.otiS L Sd Z!WLa kki /f
Reconnaissnce Nov-Dec/74 FAo/CP 3 90 Be D, 1
de nt\./Itep\. Jul-A#S/75 FAO/CP 6 189 So DI t
Appraima Sopt-Oct/77 IDA 7 161 Be DI 3\. Y, G
Supervidion I Sept/78 IDA 2 10 as I 1 1
Supervision II July/79 IDA 3 21 D, 1 1 1
Supervision III mar/80 IJV\. 2 18 0\. t 2 1 T
Supervision IV July/80 IM% 5 60 At 11 DIF 2 1 t
Supervision V lab-Mr/S8 IDA 3 36 Cs D, t 2 1 F
SupervviLon VI Ja-Feb/82 IDA 2 24 5, 0 2 1 t
supervision VII oct/82 IDA 3 33 8, 0D 1 2 1 t
Superviaion VIII Mar/Apr/83 IDA 2 12 D, 1 2 1 t
supervialon tX Oct/83 IA 2 12 0, V 2 3 ll
Copletion Mar/66 lAO/Cl 3 33 5\. 1
Oh1R PFOJUCS DATA
Borrower Government of Indie/Gaver et of Aadhia Fradteh
Fiscal Year of Borrower 1 Aptil to 31 March
"Ne of Currency Rupee (Rs)
Currency achange Ate\.: Apprsal Year U#81 a R 8\.60
Intervening Yeare Avera: r1s78 U88 * Ba 8\.20
179 US$1 a le 8\.10
115 U#18 a * 7\.90
1u81 uS$ a Re 8\.95
R82 US$l a bt 9\.65
1183 US$1 * Rs 10\.30
1T84 US$l a R 11\.90
M85 US$1 a Re 12\.20
Fn86 u$sl a R 12\.40
/s Credit was kept open inforally for an extra sin months\.
lb tato on banatits not avalabl, to aliei for eciwaic re-valuation\.
Ic A - Aq4aculture\. B- g oenica, C - lineciel Analysi\. 0 - Forto Civil hgimne:ia\. I - Crtit\.
V - Fisheries, C - Oval Architecture
Id I - ProblUt-tree or linor Problms\. 2 - Nbderat Froblema\. 3 - Major trobUcas
7; I Improving4 2 - Statioeary; 3 - Deterioratin4
/It - iaoncils N - Mftaeerialz T - TcOhnical; P - Political: 0 - other
PROJECT COMPLETION REPORT
INDIA ANDHRA PRADESH FISHERIES PROJECT (CREDIT 815-IN)
EVALUATION SUMMARY
Introduction
1\. The project was one of the first IDA assisted fishery projects in
India\. It was the second in a series of projects that were to assist GOI's
plans to modernize and develop fishery infrastructure to alleviate bottlenecks
created by over-crowded fishing harbors; it was the first uajor fishery de\.velop-
ment on the east coast of India\. The project was to make a major contribution
to India's marine fishing industry by facilitating exploitation of rich fishery
resources, particularly shrimp, off the Andhra Pradesh coast\. In addition, the
project was to provide a stepping stone in India's development of a deep-sea
fishing fleet, and was to make a major beginning in helping small subsistence
fishermen living in isolated fishing villages\.
objectives
2\. The project's main objective was to increase marine fishery production
on Andhra Pradesh's coastline by upgrading three harbors, providing credit for
acquiring fishing boats and vessels, establishing fish processing facilities,
nd increasing the productivity of small fishermen by constructing access roads
to fishing villages\. The major features of the project weret (i) improve,;sMt
of three harbors: Visakhapatnam, Kakinada and Nizampatnam; (ii) construction of
a coastal fishing village access road in Visakhapatnam, East Grodavari, and
Guntur Districts where the projects are located; (iii) credit for purchase of
360 MFV and 60 non-MFVs; (iv) credit for seafood processing facilities at two
harbors; and (v) technical assistance, providing harbor engineering and archi-
tecture consultants, a program of overseas study tours, and construction of two
experimental 23 m wood hull shrimp trawlers\. Total project costs were estimated
at US$36\.5 million\. The IDA credit was for US$17\.5 million\. The balance of
financing was to be provided by GOI/GOAP, ARDC, participating banks, and
borrowers\.
Implementation Experience
3\. The Andhra Pradesh Fisheries project was subject to even more problems
of implementation than that of the Gujarat Fisheries Project (Loan 1394-
INlCredit 695-IN), appraised a year earlier\. As in Gujarat, the delays in com-
pletion of harbors were due to design problems\. The Visakhapatnam harbor was
completed by 1982 (as expected), but significant delays were experienced at the
Kakinada and Nizampatnam harbors\. These were due to change in design, contrac-
tual delays, underestimation of breakwater costs, financial liquidity problems
of contractors, a High Court case, and difficult soil conditions\. In addition
- vi -
the construction of access roads was delayed because of disputes over land
acquisition\. Delays were also experienced in recruiting suitable consultants
for implementing the technical assistance component of the project\. Less than
half of the envisaged numbers of vessels and boats were built and poor perform
perfor-mance in meeting SAR targets for credit for purchase of vessels and boats
was due to the reluctance of the participating banks to promote a credit program
which had led to poor recoveries with past loans\. Despite frequent interven-
tions by GOI and GOAP, the banks stuck to their position that unless earlier
loans are repaid, they 9ould not increase credit to fishermen\. GOI commented
that the banks did not have a proper collection machinery at field level to
motivate fishermen to repay their loans\. Moreover, GOAP was already providing
non-mechanized craft on highly subsidized terms\. In addition, due to delays
with harbor works, financing of the processing facilities was initially delayed
and finally dropped\. Actual disbursement against the credit of US$17\.5 M was
US$9\.98 M, covering 39% of total project costs\. The final disbursement was made
in June 1985, and the balance of US$7\.52 million was cancelled\. Over 40% of the
amount disbursed relates to credit components (fishing vessels and fish process-
ing plants)\.
Results
4\. Since the benefits to be derived from the project were based on comple-
tion of the harbors, revised estimates of the ERR cannot be attempted at this
time due to lack of specific information and non-completion of two harbors at
the time of PCR preparation\. Tne principal benefits that will accrue when the
harbors are eventually completed will include the improvement in the quality of
fish landed by the existing fleet due to better landing facilities, and
increased fish and shrimp production\. Nevertholess, there are positive indica-
tions that the project has already had a positive impact on fishery development
in the eastern waters of India\. There is evidence of increased fishing days per
vessel and a sizable increase in the fishing fleet, it having doubled from 522
to 1,096 mechanized fishing vessels (MFV) over the project period\. A sample
survey indicates that income from trawlers increased by 30% and from MFV by
100%\. The harbor completion at Visakhapatnam and anticipated completion of
harbors at Kakinada and Nizampatnam has stimulated development of private sector
processing facilities\. The coastal road component provided access to 98
villages and 91,000 people, exceeding appraisal estimates by 20%\.
Sustainability
5\. The ability of the project to sustain its principal benefits is like-
wise contingent on completion of the harbors, so that sustainability is still
uncertain at this time\.
Findings and Lessons
6\. The principa\. lesson which can be learned from the project is that
investigatlon and design work of harbors should have been completed prior to
- vii -
appraisal\. This would allow for a better appreciation of complex problems,
e\.g\., sandy soils, which can emerge during implementation\. Other lessons from
the project are:
(a) It is necessary to investigate the field capabilities for proper loan
collection and to include specific provisions for credit recovery,
particularly for sectors where prior experience in loan recovery was
poor\. GOI cited that better loan recovery has been demonstrated where
loans have been routed through the State Fisheries Directorate\.
(b) In the case of activities where technical assistance is to be provided
over a prolonged period, it would be more satisfactory to require resi-
dent consultants, as considerable delays can occur if advice has to be
sought through correspondence from a non-resident consultant\.
INDIA
ANDHKA PRADESH FISHERIES PROJECT
(Credit 815-IN)
PROJECT COMPLETION REPORT
I\. INTRODUCTION
1\.01 In response to the priority placed by the Government of India (GOI)
on the development of marine fisheries, the World Bank appraised the Cujarat
Fisheries Project in May/June 1976 and the Credit/Loan became effective in
July 1977\. This was the first World Bank financed marine fisheries project
in India\. During the preparation of that project it was recognized that the
rapid expansion of the mechanized fishing fleet in India had not been accom-
panied by a corresponding development of essential infrastructural
facilities\. Fishery harbours as well as repair and other port facilities
were basically inadequate for even the existing fleet\.
1\.02 While the project in Gujarat addressed some of these needs on the
west coast of India, the Andhra Pradesh Fisheries Project, the subject of
this completion report, was aimed at developing fishing harbour and other
basic facilities on the east coast\. While the west coast (Kerala,
Maharashtra, Gujarat and Karnataka) as a whole accounted for around 70% of
India's total marine catch, production in Andhra Pradesh (AP) represented
approximately 10% of the all-India total; high value prawns accounted for
about 10% of their catch\.
1\.03 The project provided for the improvement/development of three fishing
harbours (Visakhapatnam, Kakinada and Nizampatnam), as well as credit for
acquiring fishing vessels, both mechanized and non-mechanized, and for set-
ting up fish processing facilities\. In addition, the construction of 215 km
of coastal village access roads in the three project districts was provided
for\. Finally, in addition to technical assistance and a small overseas study
tour component, provision was made for the construction of two experimental
wooden hull trawlers\. With the exception of works proposed for the Visak-
hapatnam harbour (which was to be executed by the Visakhapatnam Port Trust
(VPT), a GOI agency, and the credit components (to be financed through
various participating banks), the implementation responsibility for all other
components was with the Government of Andhra Pradesh (GOAP); the state's
Department of Fisheries was the lead agency, and the Commissioner of
Fisheries was designated as Project Coordinator\.
1\.04 A Project Completion Report was prepared in 1985 by the office of the
Project Coordinator\. That report, along with additional information provided
by his office as well as by other implementing agenciesp provide the basis
for *his PCR\. In addition, this report is based on a review of the Staff
-2-
Appraisal Report (SAR No\. 1896a-IN); the Development Credit Agreement dated
June 19, 1978; World Bank supervision reports and project files; a field
visit to the three harbour sites; discussions with project related staff at
both Hyderabad and in the project districts; and interviews with key offi-
cials of GOI, COAP, and the National Bank for Agriculture and Rural Develop-
ment (NABARD), formerly Agricultural Refinance and Development Corporation
(ARDC), as well as members of the appraisal mission, supervising staff, and
consultants
II* PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL
Project Origin/Reconnaissance
2\.01 With the rapid growth in marine fishery activites in the late six-
ties and early seventies, and a general awareness that considerable marine
resources were available for exploitation, GOI was conscious of the need for
further investment to promote this sub-sLctor\. The project's origin lies it
the considerable sector work which was carried out to identify and prepare
the Gujarat fisheries project\.
2\.02 Broad fisheries development programs for AP, Gujarat, Karnataka,
Keralap Maharashtra and Tamil Nadu had been identified by state governments,
and these were reviewed by an FAO/World Bank Cooperative Program (CP) recon-
naissance mission which visited India in November/December 1974\. Based on
various factors, including the respective stages of project preparation, the
CP mission recommended the inclusion of AP, Cujarats Maharashtra and Tamil
Nadu in a first phase project\.
Identification/Preparation
2\.03 As a follow up to the above, a CP Identification/Preparation mission
visited India in July/August 1975\. After discussions with GOI, agreement
was reached on the inclusion of AP, Gujarat and Kerala in a first phase
project\. The primary objective of the project was to improve fish quality
and reduce waste, by providing suitable facilities for handling the landed
fish catch\. For AP, the project components included improving/developing
fishing harbour facilities at Visakhapatnam, Kakinada and Nizampatnam,
providing shore facilities and services, ice plants, fish freezing and
storage plants, and credit for 8 medium sized 17m MFVs, 124 lOm MsVs and 60
9m MFVs\. In addition, it was intended that the project would assist in the
improvement of existing vessels through the installation oL ice boxes, or
the improvement of fish hold insulation\.
2\.04 While the CP mission had carried out a more detailed identification
of project components, preparation was still incomplete\. Further preparation
work on the AP project was done by the "Pre-Investment Survey of Fishing
-3-
Harbours" Project 1/ in Bangalore, and the AP State Ports Department (siD),
specifically on the harbour components\. GOI submitted the final proposals to
the Bank in May 1977\. These excluded the originally identified proposals for
improving the Kakinada harbour, as improvement works had already begun on the
existing harbour, and it was through that their inclusion in the project
would have may led to delays\. While GOI was keen that the Kerala project
also be appraised at the same time, AP was accorded a higher priority\.
AUjraial
2\.05 Based on the above, a World Bank appraisal mission visited India in
September/October 1977, during which the scale of the project was con-
siderably enlarged\. The ongoing improvement works at Kakinada were found to
be inadequate for the existing fleet, and offered little scope for expansion\.
Preliminary studies carried out by SPD for alternative harbour development
plans, were found adequate to establish the general engineering feasibility
to develop new fishing harbour facilities\. Consequently, Kakinada harbour
development was included as a component under the project\. In addition, an
access roads component for coastal villages, aimed at supporting traditional
fishermen, was also included, and the scale of the MFV component was
increased\. Finally, a credit component for 30 23m shrimp trawlers was also
included, which however, was dropped during negotiations at GOI request\.
Project Description
2\.06 As appraised, the project included the following components:
(a) Development of fishing harbours through the expansion of the harbour
at Visakhapatnam; relocation and expansion of harbour capacity at
Kakinada; and construction of new harbour facilities at Nizampatnam\.
(b) Construction of a water supply system for both Nizampatnam village,
and the proposed harbour\.
(c) Improvement of 58 km and construction of 157 km of coastal village
access roads\.
(d) Credit for 300 lOm MFVs, 60 9m MFVs, and 60 12m non-mechanized sail-
ing craft\.
(e) Credit for fish processing plants of Visakhapatnam and Nizampatnam\.
1/ The project, under GOI, had been set up with UNDP assistance between
1968-72, and was later supported by SIDA between 1974-76\.
-4-
(f) Technical assistance, which provided for a specialist in estuarial
river training works and a naval architect as consultants; a program
of overseas study tour for 10 people involved in project management;
and the construction of two experimental 23m wooden hull shrimp
trawlers\.
Over a five year period (1978-83), the project was estimated to cost US$36\.5
million (Rs 313\.6 million)\.
2\.07 With the exception of the Visakhar4tnam harbour works, for which the
VPT of GOI was responsible, the project was to be carried out by GOAP agen-
cies\. Refinance for credit operations, based on a previously prepared bank-
ing plans, was to be provided by NABARD\. A Project Coordinating Committee
(PCC), established at state level, had the responsibility for organizing the
execution of the project by delegating responsibilities to appropriate state
agencies\. The Department of Fisheries was the lead agency\. The principal
implementing agency was SPD, which was to plan and administer the construc-
tion of harbour works at Kakinada and Nizampatnam; the Panchayati Raj Depart-
ment responsible for overseeing construction of the village access roads and
the water supply scheme; and the Andhra Pradesh Fisheries Corporation (APFC),
which was (i) to build most of the 9m and 10m MFVs, and the experimental
wooden hull trawlers, (ii) own and operate new seafood processing plants; and
(iii) assist in identifying borrowers for MFVs and arrange for contributions
of those who would need assistance under the credit scheme\. Based on
benefits projected at appraisal, an economic rate of return of 35% was
estimated for the project as a whole\.
III\. PROJECT IMPLEMENTATION
Loan Negotiations and Effectiveness
3\.01 The negotiations between GOI and IDA took place between April 12-24,
1978\. The Bank's Board of Directors approved the proposed IDA Credit of
US$17\.5 million on May 30, 1978, and it was signed on June 19, 1978\. The
credit, which was to have become effective in September, became effective on
October 31, 1978\. This was on account of a delay in finalizing the Banking
Plan for the credit component\.
Project Changes After Appraisal
3\.02 The principal change made to the project after appraisal was the
deletion of the component for setting up seafood processing plants at Visak-
hapatnam and Nizampatnam (none were proposed for Kakinada at appraisal), in
view of adequate capacity already existing\. At Visakhapatnam, private sector
freezing capacity more than doubled during the period 1975-81, and additional
capacity was still being installed\. It was estimated that on account of
this, substantial overcapacity would prevail\. Furthermore, APFC's own
processing units at the port showed continuous low capacity utilization\.
-5-
With regard to Nizampatnam, APFC requested GOAP to limit investment to one
seafood processing plant (instead of two as proposed), and a small chilled
storage, in view of APFC's alreaJy poor financial situation, and the techni-
cal feasibility of transporting fresh shrimp from Nizampatnam to other exist-
ing APFC plants\. However, with delays in completing and commissioning the
harbour, and the continuing financial problems of APFC, no decision has yet
been taken on this\.
3\.03 With regard to the harbour component, some design changes became
necessary particularly to the Kakinada harbour\. These were based on the
surveys and studies which were done oe account of the very difficult soil
conditions\. Principal changes were made to the design of the breakwater
cross section, two landing jetties, and the concrete wave wall (see paras
3\.10 and 3\.12); sand drains were also introduced to stabilize the soil below
the breakwater\. In addition, the appraisal proposal for dredging at Kakinada
was deleted, as it was considered unnecessary to remove soft surface mud
because its density was not considered sufficient to prevent navigation of
vessels\. Finally, implementation responsibility for the roads component was
transferred from the Panchayati Raj Department to the Roads and Buildings
Department of PWD\.
Implementation Schedule
3\.04 Implementation of all project components was expected to be completed
by the end of 1983\. Improvements proposed for the Visakhapatnam harbour were
completed by 1982 (as expected), but significant delays were experienced in
the completion of all other components, and particularly the Kakinada and
Nizampatnam harbours (see charts 1 and 2 respectively)\. While Nizampatnam
has now been largely completed (SAR estimated completion in mid-1982), cur-
rent estimates indicate that the construction of Kakinada harbour will be
completed during the first half of 1987 (QAR estimate was end 1981)\. Con-
struction works at Kakinada have had to cope with very difficult soil condi-
tions, and have been subject to an arbitration between the contractor and
GOAP, and subsequent legal dispute which is still going on\.
3\.05 Delays in completing the coastal access roads component were
experienced on account of land acquisition disputes\. Most of the program
(though on a reduced scale as compared to appraisal) has now been completed,
and the completion of outstanding work depends on the successful resolution
of these disputes\. Delays were also experienced in recruiting suitable
consultants for implementing the technical assistance component of the
project\.
Implementation of the Harbor Component
3\.06 Visakhapatnam Harbor\. The proposals for the improvement of the
harbour were aimed at expanding the existing harbour, and included additional
quay length and four berthing jetties totalling 1,115 m; expanded slipway
-6-
facilities with repair jetty and a crawler crane; building including auction
hall expansion, fishermen's gear sheds and toilet block; construction of
roads, drains and culverts; additional water distribution system; land
acquisition; and dredging of slipway at the repair berth\.
3\.07 The civil works component of the Visakhapatnam harbour has been
performed without any major problem\. Some changes were made in design of the
proposed works\. The changes resulted in an increase in berthing length from
1,115m to 1,270m\. The construction of ways and jetties commences in mid-1980
and the harbour was officially opened mid-February 1982\. Presently work is
ongoing on completing additional navigational facilities and construction of
a rock bund for land reclamation, neither of which had been provided for at
the time of appraisal, but were added in 1984\.
3\.08 Kakinada Harbor\. The project investments were designed to relocate
the fishing harbour at a new site\. The existing fishing harbour is located
on the commercial canal in the centre of Kakinada City and is about 6 km from
the sea\. The number of MFV operating regularly from this harbour was
estimated at appraisal to be about 300, while the facilities available were
considered to be adequate for only 75 MFVs\. This inevitably led to heavy
congestion of fishing port facilities and extreme hazards in the commercial
canal\. Considering these facts, it was necessary to establish a new harbour\.
A site located about 8 km from the existing harbour was selected at appraisal
for which basic engineering data were available\. The construction proposals
under the project included a 880m long breakwater, with a 200m right angle
spur at the end; two landing jetties with auction halls for the smaller MFVs
and the 23m shrimp trawlers, each 150m long; two MFV berthing jetties each
185m long and a 150m outfitting jetty for MFV; dredging of harbour besin and
approach channel to 4\.Om minimum water depth for the trawler facilities; boat
repair facility; buildings including administration building, toilet block
and canteen; roads and drainage; ant services including power and light,
water and fuel points\.
3\.09 The construction works at Kakinada were awarded to two contractors,
one for constructing the breakwater and one for the landing structures\. The
contracts were awarded in October 1980 and December 1980 respectively\. Both
contractors are still at the site for completion of the works\. The break-
water is estimated to be completed by mid-1987 and the 'anding structures by
end of September 1986\.
3\.10 The construction works at Kakinada have encountered serious problems\.
The prevailing soil conditions at the site have been the main factor causing
delay and difficulties in the project\. The seabed is composed of silt and
silty clay down to approximately 8m below the seabed level\. Initially the
breakwater design was based on four borings carried out in 1976\. The Central
Water and Power Research Station, Pune (CWPRS) checked the breakwater design
against slip failure, based on information from these borings (1977)\. Some
time later the cross-section was apparently changed, but now new stability
-7-
evaluation was made\. As allowed for at appraisal, additional investigations
were performed prior to award of the construction contracto During 1978-79,
25 new borings were undertaken in the jetty and breakwater area\. Approval of
the award of the contract for harbour construction was postponed until CWPRS
had analyzed the total set of 29 borings\. The analysis resulted in revision
of the breakwater design and the lowest tenderer agreed to carry out the work
as per revised sections abiding the terms and conditions of the tender\. It
was also recommended by CWPRS that the soil below the breakwater be stabi-
lized by sand drains\. This item was not contemplated at the time of
appraisal\. Being a supplemental item, closely related to the main works, its
execution was entrusted to the contractor for the breakwater under a lump sum
contract\. Finally, in order to reduce the splashing action of waves and to
achieve additional safety to the wave wall, additional armoring on the sea
side of the breakwater was proposed by CWPRS in 1 which further increased
the quantity of work\. Table 5 gives an indication of the volume of works so
far carried out\.
3\.11 The construction of the breakwater has faced major problems due to
excessive settlement of the foundation causing increased rock usage\. This
resulted in severe financial liquidity problems for the contractor, and
caused delavs in completing other components which were contingent on comple-
tion of the breakwater\. Although the contractor had accepted the risk,
knowing the very weak nature of soil conditions, his financial position
forced him to release his work force\. A substantial increase in the price of
fuel and tyres had further increased his cost, as stones are transported by
truck from a quarry some 40 km from the site, and the agreed escalation
formula did not provide for the actual increase of prices for essential
commodities\. The contractor filed for arbitration in October 1982, and the
award in his favor was given in February 1983\. The award was contested by
GOAP in the local sub-court which set aside the award in August 1985s the
contractor filed an appear in the X gh Court in November 1985, which is
presently ongoing\. In the meanwhile a proposal for completion of the remain-
ing work paid at current unit rates, less 0\.51, has been submitted to the
Government\. Once a decision is taken, the outstanding work is expected to
take about a year to complete\. Successful complet\.ion within this schedule
also depends on the contractor setting an extension of the contract to use
his present quarry for recovering armour blocks\. Other major works remaining
at the breakwater are related to concrete works, i\.e\. wave wall and top slab,
which can now be carried out, as the rate of settlement of the foundation has
become insignificant\. Based on the present estimates for total cost, around
70X of the work has been completed (March 1986)\.
3\.12 Construction of the landing quays, berthing jetties and auction hall
has, as mentioned, been carried out as a separate contract\. The issue of
tender documents was delayed as certain aspects of the design presented
technical problems, causing concern for the stability of the structures\.
Consequently, the design was revised\. The works, which abut the breakwater,
-8-
have been further hampered by the slow progress of the breakwater construc-
tion, and damage to the contractors floating craft by a cyclone resulting in
stoppage of work\. It was initially estimated that 40 x 40 cm piles of 18\.5m
length should be used for the quays, and 35 x 35 cm piles of 17\.5m length for
the jetties\. The contract inc:ludes a clause stating that length and sizes of
piles shall be decided after performance of test load and driven test piles\.
After the test load it was decided to use 40 x 40 cm piles of 19\.8m length
for both quays and jetties\. This increased the concrete and steel quantity,
as well as the driving length of piles\. A contractual dispute is presently
ongoing regarding several claims by the contractor, including a claim for a
prolonged escalation period\. The present contract expired in March 1986 and
a request from the contractor for time extension up to September 1986 is
under consideration\. Remaining works are related mainly to the auction halls
and finishing work at the quays and jetties, and represent around 15% of the
total works\.
3\.13 In addition to the above works, a sloping surface has been con-
structed to be used for pulling up MFV for repair\. An area of approximately
3,000 m2 has been levelled for these works and a small workshop has been
constructed\. The facilities are nearly complete\. A port operation building
of 184 m2 has been completed, as well as a boundary wall around the area
where it is located\. In addition, an approach road to the port operation
building and to the weighbridge has been completed\.
3\.14 Finally, a 5 km power line with street lighting has been completed\.
Three navigation lights will soon be fixed on trestles and arrangements for
illuminating the breakwater and berthing structures are in progress\. The
permanent fresh water supply to the harbour will be provided by the Kakinada
Municipality\. It has been agreed that up to 450 tons of water per day shall
be provided as required\.
3\.15 Nizampatnam Harbour\. The project provided for a harbour basin 215 m
long and 30 m wide dredged to approximately 2m water depth; revetments; a
landing, outfitting and berthing quay 190 m long; a boat ramp; and auction
hall; 1\.2 ha of harbour working area; an administration building ard toilet
block; a harbour approach road of 3 km length; fuel and marine facilities
including a work boat and lighthouse, transit lights, and a maintenance
workshop with equipment; drainage; and services including water supply,
electricity, and lighting\.
3\.16 The construction of facilities included in the project have been
carried out without any major difficulties, although much behind the
estimated time schedule\. The works commenced in early 1979 with the con-
struction of a 3 km approach road which was the basis for construction of
all new harbour facilities, as no road connection to the harbour site
existed\. The various parts of the harbour improvement works have been car-
ried out through a number of small contracts, and the present situation is
-9-
that some dredgings surfacing and revetment works are estimated to be com-
pleted by mid-1986\. The physical parameters of the works carried out are
shown in Table 5\.
3\.17 Training Walls\. The need to improve the entrance for the Nizampatnam
harbour had already been discussed at the time of the pre-investment study of
the harbour\. The present depth at the mouth of the river (which leads to the
harbour) is sufficient for general use by non-MFVs; however, it can only be
used by MFVs during high tide\. The introduction of training walls at the
entrance is expected to ensure better depths\. The issue was considered at
appraisal, but construction of training walls was not included in the project
as log-piled training walls were then under construction (these, however
failed, and the construction was dropped)\. The project provided for the
recruitment of a river training specialist to advise on this matter\. In his
report of September 1983, the consultant recommended the construction of two
300 m training walls\. These have been sanctioned by GOAP and construction
work is about to conmence\. Time for completion is estimated to be one year\.
With the construction of these walls, it is expected that lcw water depths
will be ensured, although the depth of 1\.0 m is less than the 1\.3 m
originally anticipated\. This would, however, allow extended access time\. A
dredging commitment has also been identified\.
Implementation of Other Project Components
3\.18 Nizampatnam Water Supply Scheme\. A water supply system for
Nizampatnam village and harbour was included under the project\. The scheme
was revised to include additional pumping and storage capacity, and has just
been completed\. Under the revised scheme, water is also being supplied to
two additional locations, Gokarnattam village and a nearby ex-servicemen's
housing colony\. The system, as constructed, provides for raw water to be
collected at an irrigation channel approximately 4 km from the harbour\. The
water is pumped to a sedimentation tank and the clear water is collected in a
sump from where it is pumped to two elevated tanks (60,000 liter capacity
each), one at the harbour and one at Nizampatnam village\. Water is dis-
tributed for consumption from the elevated tanks\.
3\.19 Coastal Village Access Roads\. The project provided for the improve-
ment and construction of about 215 km of access roads\. The roads are located
in three districts and are serving about 100 coastal fishing villages and
landing centers\. At appraisal only preliminary estimates were available for
the alignments of the various roads and their costs\. Detailed engineering
of the roads was completed later, resulting in shorter road lengths without
impairing the program\. However, considerable revetment works had to be
included for the coastal sand roads\. Five major bridges were included in the
initial village road component, of which one in Visakhapatnam district is
still under construction\. In addition to these bridges, another two are
under construction in Guntur district, which would link the project's village
-10-
roads more directly with Nizampatnam harbour\. The appraisal targets, and the
actual program implemented is shown in the table below:
Appraisal Target Actual
District New Improve New Improve
\. \. b@O \. \. km\. @0*\.e
Visakhapatnam 67 31 42\.6 4\.9
East Godavari 49 20 61\.4 -
Guntur 41 7 21\.5 20\.9
Total 157 58 125\.5 25\.8
3\.20 In all three districts most of the road works have been completed\. A
total of about 6\.7 km remairs to be completed when land acquisition problems
have been resolved\. In addition, major revetment works have also been neces-
sary, which are scheduled to be completed by mid-1986, in Visakhapatnam and
East Godavari, and which still have to be started in Guntur\.
3\.21 Mechanized Fishing Vessels\. As opposed to the appraisal target of
300 10m MFVs, 60 9m MFVs, and 60 12m non-mechanized craft, a total of only
137 10m MFVs were financed under the project\. Of these, 36 MFVs were
financed through the Andhra Pradesh State Cooperative Bank (APSCB), where
borrowers were required to contribute 5Z of cost, GOAP loan to cover 151 of
cost, and APSCB loan, the balance\. The remaining 101 MFVs were financed by
the other participating banks, where the bank loan was to cover 85Z of the
cost with 15% being the borrower's contribution\. In fact, loans from banks
covered less than the originally anticipated share of total cost\.
3\.22 The poor performance in meeting project targets for MFVs was on
account of the reluctance of the participating banks to promote a credit
program for MFVs in view of their experience with poor recoveries of past
loans\. Data provided by NABMRD indicate that the percentage of overdues in
total balance outstanding against loans granted, as at end of December 1985,
ranged between 75X to 100X for the different \.participating banks\. The
problems have not been resolved, in spite of numerous meetings between
NABARD, the participating banks, and GOAP\. A comparison of the program as
actually implemented by the different banks, and the proposals in the banking
plan is shown in Table 7\. Regarding non-mechanized craft, GOAP was providing
these to fishermen at highly subsidized terms under various cyclonw relief
programs\. Consequently, there was no demand for the vessels provided for
under the project\.
3\.23 Study Tour\. As proposed under the project, 10 officers (four from
the Department of Fisheries, and six from APFC) undertook a 30 day tour to 6
south-east Asian countries, in July/August 1980\. They reviewed boat building
activities, as well as practices related to fish marketing and processing\.
-11-
3\.24 Experimental Wooden Hull Trawlers (23m)\. The objective of this
component was to develop cheaper indigenous shrimp trawlers, as compared to
the imported steel hull vessels\. Significant delays were experienced in the
implementation of this component\. Recruitment of the consultant naval
architect was delayed, and keels for the two trawlers were eventually laid in
June 1984\. At present, both hulls and the engine beds have been largely
completed, and the engines, fishing gear, and other equipment are at various
stages of ordering anl delivery\. It is expected that the vessels can be
launched by the end of 1986, and that test runs, after complete fitting of
all equipment, can be made during the first half of 1987\.
Performance of Consultants and Contractors
3\.25 Appointment of the river training specialist was delayed until late
1980\. By January 1982 it was found that not much progress had been made, and
a time schedule was agreed for the study to be completed by September 1983\.
The report, dated September 27, 1983 gives recommendations regarding stabi-
lization of the entrance by constructing training walls, and also an estimate
of maintenance dredging\. The proposals are based on investigations carried
out by the consultant, as well as results of model tests done by CWPRS\.
3\.26 Appointment of the naval architect for the development of indigenous
shrimp trawlers was also considerably delayed\. His first visit to the
Kakinada Boat Building Yard (KBBY) was made in January/February 1982, i\.e\.
more than two years behind schedule\. He has so far made three visits to
KBBY, for a total period of around one montht and provided the basic plans
for trawler construction\. Much further delay has been caused by the time it
took to clear or explain designs through correspondence between KBBY and the
non-resident consultant\.
3\.27 The contractor for the construction works at Visakhapatnam (one of
the largest contractors in India) fulfilled his work within the agreed time\.
Only minor technical problems occurred during thi construction period\. The
construction contract for the breakwater at Kakinada was awarded to a con-
tractor based in Vijayawada who had little prior experience in marine works\.
The WB expressed concern over this, but concurred with the tender committee's
recommendation after investigation of the contractor's capability\. While the
quality of work so far carried out is satisfactory, its completion has been
significantly delayed\. However, as described earlier in this report, the
contractor faced severe problems resulting in slow progress and financial
disputes\. The second construction contract for the Kakinada harbour, landing
structures, was awarded to a company based in Calcutta, having the lowest
tender\. The construction work has been progressing, though hampered by
adverse weather conditions and the slow progress of the breakwater construc-
tion\. Contractual disoutes on various issues, including extended time of
escalation period, are still pending\. The contractor has requested extension
of time for completion of the works\. For construction works at Nizampatnam
-12-
several small contracts have been awarded and no major problems have
occurred\.
Project Cost
3\.28 Table 1 shows a comparison between actual costs and estimates made at
appraisal for the different project components\. On completion, the project
is estimated to cost Rs 251\.4 million (US$25\.7 million), which is 80% of the
SAR estimate of Rs 323\.6 million (US$36\.5 million)\. Excluding the estimated
cost for the seafood processing facilities component, which was not imple-
mented, total actual cost in Rupee terms represents 83% of appraisal
estimates\. However, the present estimate of actual cost excludes any addi-
tional costs which may arise out of the ongoing case in the High Court
regarding the Kakinada harbour\. The total cost for that harbour can only be
finalized once the case is resolved\. At present, Rs 84\.4 million is included
in the above estimates of actual cost (SAR estimate was Rs 76\.7 million), for
the Kakinada harbour\. Detailed costs of the three harbours, compared to the
appraisal estimates, are shown in Tables 2, 3 and 4 respectively\. In addi-
tion, at the time of preparing this PCR, detailed actual costs of MFVs
against which participating banks disbursed their credit were not available
at the NABARD Regional Office (Hyderabad)\. Consequently, the cost of the MFV
component has been estimated on the basis of an average cost of Rs 203,000
per MFV\. 1/
3\.29 There has been a considerable underachievement of the physical tar-
gets set for the fishing vessels component (33% of appraisal expectations),
with correspondingly lower actual costs\. For the other two main components
(harbours and roads), total actual costs are in line with appraisal estimates
(99% and 100%, of SAR estimates respectively)\. However, there were cost
overruns in implementing the Kakinada and Nizampatnam harbours, (10% and 17%
respectively), principally on account of the larger volume of work carried
3ut as compared to what was expected at appraisal\. In the case of the roads
component, actual average unit cost for road construction are higher than
that estimated at appraisal (only 77% of appraisal target actually completed,
in terms of length)\. This is on account of improved standards and inclusion
of major revetments\. Also, improvements to existing roads represent only 17%
of the roads program actually implemented (as compared to 27% estimated at
appraisal)\.
Project Financing and Credit Allocation
3\.30 The IDA credit of US$17\.5 million was exeected to finance 48% of
total project cost\. Actual disbu\.5ement against the credit was US$9\.98
1/ This is based on the average cost of the 36 MFVs supplied by KBBY over
the five year period (1980/81-84/85), under the GOAP margin money scheme\.
-13-
million, which covered approximately 39% of actual project cost\. The final
disbursement was made in June 1985, and the undisbursed balance of US$7\.52
million (43% of the credit) was cancelled\. Loan disbursements were far
behind the appraisal schedule, principally on account of delayed implementa-
tion (see basic data sheet)\.
3\.31 Table 6 compares actual disbursements for different expenditure
categories with the proposed allocation at appraisal\. Over 40% of the amount
cancelled relates to the credit components (fishing vessels and fish process-
ing plants)\. For the other components, disbursements have also been low (70%
for civil works, and only 37% for the TA related costs)\. This was wholly on
account of delayed implementation, and the fact that the closing date of the
project was only informally extended for a six-month period\. The allocation
for equipment and materials has been more than fully utilized\.
IV\. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT
Implementing Agencies
4\.01 As envisaged at appraisal, project implementation was coordinated by
the office of the Commissioner of Fisheries (who was the Project Coor-
dinator); PCC was set up in June 1978, which was chaired by the Secretary,
Department of Forests and Rural Development\. In addition, District Subcom-
mittees were also set up in the three project districts, with the District
Collector as chairman\. These were active in identifying prospective
beneficiaries eligible for the GOAP margin money support for the MFV credit
component; they also monitored the progress of the project in the respective
districts, and in particular the coastal village access roads component\.
While the PCC and the District Subcommittees made efforts to accelerate
project implementation, delays could have been minimized by anticipating some
of the problems which have occurred\. Completion of the Kakinada harbour has
been delayed due to various problems, and commissioning of the Nizampatnam
harbour has also been considerably delayed even though most of the construc-
tion works had been completed by 1984/85 (see Chart 2)\. At GOI level, the
implementation progress of the project was monitored by the Central Coordina-
tion Committee set up earlier under the WB financed Gujarat Fisheries
Project\.
4\.02 The Visakhapatnam harbour component was executed in a timely manner
by VPT, while construction work at the Kakinada and Nizampatnam harbours was
supervised by SPD\. As provided for at appraisal an Executive Engineer was
recruited (on deputation from VPT) to assist SPD in implementing the works at
the latter two harbours\. As reviewed earlier, works at Kakinada have been
beset with various problems, both technical and contractual\. With regard to
the former, it appears that the Executive Engineer has done whatever was
possible to effectively supervise the harbour construction works under the
project\. Continuous and constructive support has also been obtained from
CWPRS\. The contractual dispute regarding the work related to the breakwaters
-14-
is by the Roads and Buildings Department of PWD, and the quality of work
carried out was found to be generally satisfactory\.
4\.03 Finally, APFC is building the project financed 23m experimental
wooden hull trawlers, and built some of the project financed 10m MFVs at
KBBY; it also channelled the 151 margin money provided by GOAP to small
borrowers identified for special assistance\. As reviewed in the section
below, APFC was faced with financial difficulties during the period of
project implementations With very few MFV loans having been disbursed, and
the fish processing plants component cancelled, its role under the project
was considerably reduced\. Credit to borrowers eligible for GOAP margin money
was provided by APSCB\. The credit scheme as a whele was supervised by
NABARD, and was based on banking plans prepared by them, in collaboration
with the participating banks\. As discussed below, the performance of the
credit institutions in implementing the credit component under the project
has not been generally satisfactory\. This is largely on account of difficul-
ties they experienced in recovering MFV loans, and their inability to develop
an effective loan recovery mechanism\.
Andhra Pradesh Fisheries Corporation
4\.04 APFC was established;in 1974 to encourage commercial fisheries
development in the state, particularly for marine fisheries\. Its principal
activities at present include marketing of marine fish, fish processing (at
Visakhapatnam and Kakinada), boat building (at KBBY), deep sea trawler opera-
tions (APPC owns two 23m trawlers), and operating diesel sale outlets\. APFC
is headed by a Managing Director, the present Commissioner of Fisheries\. Its
registered headquarters are in Kakinada, where under a General Manager, most
of its major business transactions occur, while a General Manager at Visak-
hapatnam oversees company operations and day-to-day procurement and market-
ing\.
4\.05 Throughout the period of project implementation, APFC has experienced
financial problems, with its combined operations yielding losses every year
(see Table 10)\. There has been an improvement in 1984/85 (though it still
incurred a net loss of Rs 1\.17 million), but losses in the previous three
years averaged Rs 5 million\. While APFC's trawler operations have been
profitable, the principal contributors to the large losses have been the KBBY
and the fish processing plants\. There has been a considerable increase in
activity at KBBY during 1984/85 and 1985/86; however, present capacity
utilization of the processing plants is estimated at around 35-40%\. As can
be seen from the comparative balance sheets shown on Table 9, accumulated
losses had totally eroded the capital base of the Corporation by 1983/84,
with its total net worth becoming negative\.
4\.06 Among the various factors which have contributed to APFC's poor
performance, an important one has been the lack of continuity in the upper
management (apparently, there have been 23 managing directors during the last
-15-
eight years)\. However, there has been an improvement in APFC's performance
in 1984/85p with further improvements expected in 1985/86\. Furthermore, the
Government is presently reviewing various possibilities for the financial
rehabilitation of APFC\.
Credit Scheme for Fishing Vessels
4\.07 Financing of vessels by banks under the project credit scheme fell
into two categories: (a) loans for cooperatively or privately owned vessels
with a 5% borrower contribution and a 15X GOAP loan, and (b) loans for
privately owned vessels with a 15% borrower contribution and no COAP loan\.
Of the 137 lOm MFVs financed under the project (against a target of 300), 36
fell under the former category and 101 under the latter\.
4\.08 NABARD formulated a banking plan in 1978 (which included four banks),
and a revised banking plan in 1982 when four more banks were inducted into
the program\. APSCB, which financed all the 36 MFVs under the farmer category
above, and the Bank of Baroda (which financed 34 HFVs), together financed
roughly 50% of the MFVs financed under the project\. Two banks (Central Bank
and Syndicate Bank) did not grant any loans under the scheme\. A total of Rs
17\.02 million were granted as loans to the beneficiaries, with the average
loan amount being Rs 124,000\. The latter represents just over 60% of the
average cost of the lOm MFV during the implementarion period\. Against the
total loans granted, Rs 13\.66 million in refinance was claimed from NABARD\.
4\.09 Initial delays were experienced in selecting beneficiaries under the
GOAP loan scheme, which was done by the District Subcommittees, and in par-
ticipating banks formalizing loan procedures under the scheme, particularly
with regard to security requirements\. However, the principal reason for the
poor achievement of targets set at appraisal for this component has been the
reluctance of participating banks to provide loans for fishing vessels on
account of very poor loan recovery\. Data provided by NABARD shows that three
of the participating banks have not recovered any of the amounts due as at
December 31, 1985, while for the other three banks recoveries have been
between 10-22% of total amounts due as of that date (see Table 7)\.
4\.10 Four of the participating banks carried out internal studies to
review the poor loan recovery experience\. While two of the banks specifi-
cally identified the problem as being one of willful default, general concern
on the declining profitability of the vessels was also expressed\. Shrimp and
fish prices during the period 1980-82 went up by about 50% (see Table 14),
and there was a much more rapid increase in fuel prices (Table 15), and
overall vessel operating costs\. However, there was a general consensus that
the vessels were sufficiently profitable to be able to repay the loans\. The
absence of any firm institutional marketing arrangements, through which loan
recovery could be affected, was also identified as a problem\.
-16-
4\.11 Most banks recognized that their existing system of collecting repay-
ments was not particularly suitable for fishery loans\. They agree that in
order to be more effective, collection efforts have to be frequent, should be
concentrated "on the beach", and bank personnel should get more closely
acquainted with vessel owners and the intricacies of vessel operations in a
particular area\. However, some banks, such as the Bank of Baroda, decided to
withdraw from the sector altogether on account of their unwillingness to
spend money on a special recovery mechanism for a sector in which the Bank
had limited interest\. Consequently, bank financing of MFVs came to a virtual
standstill by the end of 1981, even though a large number of applications
were pending with the banks for such loans\.
4\.12 In spite of numerous discussions between COAP, NABARD and the par-
ticipating banks to review alternative mechanisms to i\.prove recovery perfor-
mance, the banks remained reluctant to finance vessels\. No efforts were made
by the banks to set up a recovery cell at the fish landing site, which could
be financed jointly, and which would minimize costs to the banks\.
Accounting and Reporting
4\.13 Separate accounts were maintained for the different major categories
of project expenditure\. As envisaged at appraisal, the usual government
control and auditing procedures operated for expenditures incurred by GOI and
COAP\. However, in the case of APFC, the statutory audit of its accounts
since 1978/79 has not been carried out\.
4\.14 Fisheries Terminal Organizations, under the Department of Fisheries,
have been set up at the three harbours (see Table 8 for present staffing)\.
However, as the Kakinada and Nizampatnam harbours are still not operational,
and the auction halls in Visakhapatnam are not used much, these units have
been carrying out the functions of the Catch Monitoring and Evaluation Units
(CMEU)\. Much data were collected, largely by way of sample surveys, and
reports submitted, on landings, fish prices, catch value per boat/day, etc\.
However, because of the migratory nature of vessel operations, and the manner
in which the surveys are designed, the data generated does not give a total
picture on the annual and seasonal fishing effort by boat type, or the total
number of fishing days for the average boat of a specific class\. In addi-
tion, there appear to be some inconsistencies in the data collected (see Para
5\.15)\. In addition to these reports generated by the CMEU, progress reports
were prepared periodically on the overall implementation of the project\.
Compliance with Covenants
4\.15 In general, the covenants agreed with GOI, have been complied with\.
However, on account of the overall delays experienced in project implementa-
tion, it has not been possible to meet the target dates set out in all cases\.
In addition, as mentioned earlier, the accounts of APFC have not been audited
-17-
since 1978/79, and consequently, certified audit reports could not be
provided\.
V\. PROJECT IMPACT
Intended Impact
5\.01 At appraisal, benefits from the harbour component of the project were
assessed in terms of the incremental production from the project financed
fishing fleet and the seafood processing plants, as well as from the addi-
tional 23m shrimp trawlers which were expected to use the facilities created
for such large vessels at Visakhapatnam and Kakinada\. The impact from the
village access roads component was measured in terms of higher fish prices
frnm improved quality of marketed catch and an increase in fish production
(tiacremental production esti Zed at 1,000 tons) -as a result of better access
to services and markets\. Annual incremental fish and shrimp production at
full development was estimated at 26,000 tons from the project financed
vessels\. Based on these projected benefits, the economic rate of return
(ERR) for the project as a whole (excluding the technical assistance com-
ponent) was estimated at 35Z; ERRs for the three harbours were estimated at
28% for Visakhapatnam, 45% for Kakinada, and 17% for Nizampatnam\.
Assessment of Actual Project Impact
5\.02 Fishing Harbors\. A considerable downward revision has taken place
in the actual implementation of the direct production components proposed at
appraisal\. The component for establishing seafood processing facilities was
not implemented, and the number of fishing vessels financed (137) represents
only 33% of the number originally proposed (420)\. As appraised, these two
components represented approximately 30% of the estimated total project cost;
as implemented, they represent around 11% of actual total project cost\.
Furthermore, while the harbour works at Visakhapatnam were completed in 1982,
works at Kakinada and Nizampatnam (both of which are new harbours) have not
yet been completed\. The Nizampatnam harbour can be commissioned fairly soon,
but the Kakinada harbour is likely to be completed only by mid-1987, subject
to satisfactory resolution of ongoing disputes\. In view of this, it is not
possible to make a definite assessment of project impact for the two har-
bours\. However, one factor which can be observed at these three harbours is
the growth in the number of fishing vessels which has taken place over the
past few years (see Tables 12 and 13)\. While to some extent this may have
taken place as a result of the investment in the fishing harbours, the mag-
nitude is difficult to quantify\. As discussed in the following paragraphs,
the number of fishing vessels presently operating from the three project
locations will ensure adequate utilization of the harbour capacity created\.
5\.03 At the time of appraisal there was a fleet of 22 23m shrimp trawlers
and 200 lOm MFVs using the Visakhapatnam harbour\. At completion of project
works, it was estimated that the harbour would be able to serve 56 trawlers
-18-
and 300 MFVs\. As can be seen from Table 12, there are at present 86 trawlers
and an estimated 320 MFVs using the harbour, with the facilities created
already being overutilized\. Howevek, there are 410 regIstered MFVs at the
port, with a number of boats having migrated to other ports and some having
been scrapped\.
5\.04 At Kakinada, a totally new harbour is being constructed, with comple-
tion expected in mid-1987\. At the time of appraisal 300 MFVs were using the
old harbour, located in the middle of the city, which had facilities designed
for handling only 75 MFVs (SAR para 3\.04)\. Data on the number of MFVs that
have been using the port over the past eight years are not complete\. 1/
However, data are available on the number of vessels registered annually at
Kakinada port\. Between 1964-78, a total of 690 new MPVs, (187 9m, 416 10m
and 87 llm) were registered at Kakinada\. During the period 1979-85, the
number of registered vessels has significantly increased, with a total of 547
MFVs (41 9m, 413 10m and 93 llm 4FVs having been registered (see Table 13)\.
Thus, as compared to an average of 46 registered vessels per year during the
first 15 year period, registrations during the latter period average 78
vessels per year\.
5\.05 The present harbour facilities are extremely overcrowded, and fish is
landed under very poor conditions\. Consequently, and also on account of
declining catch rates, many boats have migrated away from Kakinada\. However,
given the historic growth in the fishing fleet, and the very good facilities
which are being constructed, the future utilization of harbour at Kakinada
should not prove to be a problem; the new harbour is designed to handle 410
lOm MFVs and 15 23m shrimp trawlers\. Furthermore, given that the harbour at
Visakhapatnam is already overutilized, it can be expected that some of these
vessels will begin to use the Kakinada harbour, once it is commissioned\. In
addition, a private boat building yard in Kakinada is presently constructing
30 23m trawlers (with orders for more), which can be expected to go into
operation in the next two years\.
5\.06 Finally, the boats plying from Nizampatnam are only partly using the
facilities which have been created because the harbour has not yet been
officially commissioned\. At present, they continue to beach on the river up
to 2 km upstream of the harbour\. At the time of appraisal there were 115
sailing vessels and about 25 9m MFVs operating out of Nisampatnam\. The
latter could only enter the mouth of the river at high tide\. Facilities
provided under the project were estimated to be adequate to serve an addi-
tional 60 MFVs and 60 non-MFVs\. Since harbour construction started, there
1/ Data collected shows average number of vessels operating out of the
harbour on a daily basis\. Given the seasonal migration which takes
place, it is not possible to estimate total number of vessels which use
the harbour on a seasonal or annual basis\.
-19-
has been a rapid increase in the number of MFVs, from 143 in 1981 to an
estimated 205 in 1986\. In additions around 150 non-mechanized craft are now
operating out of Nizampatnam\. Thus, once the harbour is commissioned, it is
assured of being fully utilized\.
5\.07 While much historical data has been collected on the number of fish-
ing vessels operating out of the three harbours and on fish landings, such
data does not provide a true picture of overall fishing activities in the
project area\. This is on account of the fact that fishing has assumed a
migratory nature with vessels extending their fishing areas up to Orissa and
West Bengal waters\. Consequently, not all the catch is landed in the har-
bours\. In addition, with the auction hall in Visakhapatnam not being used
much, and the existing poor facilities at Kakinada and Nizampatnam, it is
extremely difficult to accurately measure the fish landed at the ports\.
Finally, the survey methods adopted have not always been consistent to ensure
uniformity in the data generated (see para 5\.15)\.
5\.08 Data on annual catch for the different categories of vessels are not
available\. 1/ Discussions with local officials as well as with fishermen
reveal that catch rates for fish are lower than what was estimated at
appraisal, particularly around Visakhapatnam and Kakinada\. However, catches
of prawns and shrimp are still high\. Consequently, fishermen are making
either longer trips towards Orissa and West Bengal, or migrating for either
part of the whole season\. 2/ Furthermore, the larger 23m trawlers are
increasingly concentrating their activities on catching shrimp, as they find
that the fish catch which they bring in does not generate much revenue (see
Table 16)\.
5\.09 Based on discussions with local fishermen, the table below sets out
the present estimates of average catch rates of vessels operating out of the
three project harbours:
1/ Data has been collected on fish landings, but this does not provide
enough information to assess catch rates for the different categories of
boats (see para 5\.7)\.
2/ For example fishermen in Visakhapatnam reported that they are often
making six to seven day 'rips to the Orissa coast between the months of
October and February\.
-20-
Fish Shrmp Total Average
-------------tons) -------
MFVs
Visakhapat\.am 40 8 48
Kakinada 30 10 40
Nizampatnam 50 10 60
(Appraisal Estimate) (47) (6) (53)
23m Trawlers
(Appraisal Estimate) (120) (100) (220)
For the purpose of anaysis, an average annual catch of 48 tons has been
assumed for the 10m MFVs, comprising of 40 tons of fish and 8 tons of shrimp\.
5\.10 Corstal Access Roads\. At appraisal it was estimated that this com-
ponent would benefit an estimated population of 75,000 in 100 villages and
would, among others, lead to an increase in fish production\. However,
production has not been monitored at the villages (it would have required a
baseline survey, and thereafter regular monitoring surveys), and consequently
it is difficult to quantity the impact from the component\. However, based on
visits made to a few villages influenced by the roads, and discussions with
local traditional fishermen, it is obvious that the component has made a
significant difference to the lives of the locai population\. Buses are
plying in previously inaccessible areas, and the marketing of fish and other
commodities has certainly become easier\. The number of villages directly
influenced and their estimated populations are summarized in the table below:
No\. of Villages Population
Visakhapatnam 28 21,600
East Godavari 41 36,800
Guntur 29 32,400
Total 98 90,800
5\.11 Experimental Wooden Trawlers\. The likely impact of this component is
too early to assess, as the trawlers have yet to be launched and trial runs
made, which would give an indication of their performance as compared to the
steel hull trawlers\. In terms of cost, the wooden trawlers are certainly
cheaper, with the experimental trawlers estimated to cost Rs 7\.15 million
each; the cost of trawlers under commercial production would certainly be
lower\. This compares with the Rs 8\.5 million cost of imported trawlers at
present\. However, conditions have changed since appraisal\. First, wood has
-21-
become scarce and consequently more expensive\. For the trawlers, wood was
obtained at Rs 82 per 3 ft (from the Government) as compared to the present
price of Rs 150 per 3 ft (if purchased from Government) and Rs 300 per 3 ft
(open market)\. Secondly, the construction of steel trawlers had started in
India, and consequently tne original objective of import substitution is less
compelling\.
Income from Fishing Vessels
5\.12 Operating income statements have been prepared for 23 m shrimp
trawlers and the lOm MFVs, and are given in Tables 16 and 17 respectively\.
Prices used in the analysis are the average of prices obtained by fishermen
in the last three years\. The results are summarized below:
23m Trawler lOm MFV
Item S_ Present SAR Present
Investment Cost 4,500 8,500 169 230
Net Operating Income 1,604 2,087 51\.1 103\.5
Net Cash Flow 629 738 17\.1 64\.7
Financial Rate of Return 33% 21% 31% 43%
5\.13 As can be seen from the above, the net operating incomes from the
vessels are higher than those estimated at appraisal (30% higher for the 23m
trawler and 100% higher in the case of the 10m MFV)\. In spite of lower
catches than those projected at appraisal, incomes are higher on account of
considerably higher fish prices at present\. The financial rate of return
(FRR), as a measure of the return on total investment, is however lower now
in the case of the 23m trawlers (as compared to appraisal) on account of the
near doubling of investment cost\. The FRR for the MFV, though, is higher on
account of the comparatively smaller increase in its price\.
Economic Re-Evaluation
5\.14 As the harbours at Kakinada and Nizampatnam have not yet been com-
pleted and are not in use, it is not possible to assess their impact on
fishing activity, and consequently re-estimate economic rates of return (ERR)
from the investments made\. The principal benefits would accrue from improved
quality of fish landed by the existing fleet, on account of better landing
facilities, as well as increased fis&- and shrimp production, once the har-
bours are completed\. The latter would result from both an increase in fish-
ing vessels (generated as a result of stimulus provided by the investment),
as well as an increase in fishing days per vessels with the availability of
better protected harbours\. Most of these expected benefits are difficult to
estimate and quantify at present\.
-22-
5\.15 In the case of Visakhapatnam, while the harbour has been completed,
available data does not allow for quantitative analysis to be carried out
to re-estimate the ERR\. Table 18 presents data collected by the CMEU on
number of MFVs (excluding 23m trawlers) using the harbour, and their prawn
and fish landings between 1979-85\. As can be seen, the number of MFVS
reported as using the harbour shows a declining trend between 1979-83\. This
is despite the fact that more than half the 137 vessels financed under the
project came into operation during this period; and that annual vessel
registration data from Kakinada shows an increasing trend for these years\.
Since then however, there has been a sharp increase recorded\. Purthermore,
there appears to be little correlation between MPV numbers and the quantity
of fish landed\. For example, the number of MFVs declined by nearly 30%, to
130 in 1980 (from 182 in 1979), but fish landings in that year went up to
8,930 tons (by 36X) from 6,551 tons in 1979\. In 1985* 210 MFVs are recorded
as using the harbour, while fish landings are estimated at only 2,996 tons\.
In addition to possible inconsistencies in data measuring and recording, it
is possible that the earlier decline in MFV numbers is on account of migra-
tion to other fishing harbours on the eastern coast\. Also, as pointed out
earlier, not all fish is necessarily landed and recorded at the harbour\.
With regard to the 23m trawlers, historical data on catch, fish landed, and
on prices received have not been recorded\.
5\.16 In view of the apparently high mobility of fishing vessels between
fishing harbours along the east coast, a fairly detailed survey of fishing
harbours on the east coast and of fishermen's pattern of operations would be
necessary before economic benefits from such infrastructural investment con
be quantified\.
VI\. BANK PERFORMANCE
Overall Performance
6\.01 Despite delays in implementation, IDA assistance under the project
has resulted in the development of essential infrastructure to support the
marine fisheries sub-sector at a time when the need for such facilities was
being keenly felt\. While the decision to include the construction of a new
fishing harbour at Kakinada was justified in view of both the very poor
condition of the existing harbour and the rapid growth in fishing vessels
which has since taken place, the extent of likely construction difficulties
in the poor soil conditions was not foreseen\. Although provision was made
for time required to carry out additional surveys and investigations within
the period of implementation, this proved to be inadequate\. While the over-
all design of the project seems appropriate, with the benefit of hindsight,
it appears that the size of the credit component was too large\. At the time
of appraisal, much of the commercial bank's experience in lending for MFVs
was restricted to Kakinada\. Past experience there had shown that fairly
close bank supervision was necessary to effect loan recoveries on time\.
However, no specific provision (in terms of manpower and cost) was made
-23-
within the project, to allow participatirg banks to adopt such an approach\.
Finally, inadequate emphasis was placed on the functions of the CMEU, and how
these were to be carried out\.
Supervision
6\.02 A total of nine supervision missions were fielded by IDA between
September 1978 and October 1983\. The composition of the missions was techni-
cally strong, and there was good continuity of staff between missions\. The
latter was particularly important, given the complexities and technical
difficulties experienced during project implementation\. It resulted in
constructive dialogue and rapport between the Bank staff and those of the
implementing agencies\. As a result of suggestions made by the Bank during
supervision, additional survey and testing work was undertaken with regard to
the Kakinada harbour development proposals, where most of the difficulties
were faced\. In addition, the missions made concerted efforts, by discussions
with the various agencies involved, as well as by making detailed and
specific recommendations, to expedite the pace of project implementation\.
The frequency of supervision missions was adequate\. However, given that the
credit closing date was officially extended to March 1985, and that various
implementation problems were being faced, there should have been further
supervision of the project beyond October 1983\.
VII\. CONCLUSIONS AND LESSONS LEARNED
7\.01 Once all the harbours are completed and commissioned, the infrastruc-
ture created as a result of the project will meet the pressing needs of
fishermen in the project area, and generally on the east coast of India\. The
latter is an important aspect in assessing the overall contribution of the
project, in view of the increasingly mobile approach adopted by fishermen in
carrying out their operations\. The annual figures for new vessel registra-
tions show that the fishing fleet is growing rapidly, and consequently there
is a need for the development of complementary essential infrastructure to
service its needs\.
7\.02 While considerable problems have been faced in completing the
Kakinada harbour, it has certainly resulted in local engineers gaining con-
siderable experience and know-how in carrying out construction work under
particularly difficult soil conditions\.
7\.03 The coastal village access roads component has met an important
requirement of small fishing villages, with previously poor accessibility\.
While quantitative data are not available to assess the component's impact,
it is immediately apparent that the construction of access roads has made a
significant difference to the lives of the local population\.
7\.04 On the other hand, however, overall project implementation has been
considerably delayed, and the achievement of targets set at appraisal for
-24-
disbursing credit to finance fishing vessels was poor\. Participating baDks
were unable to develop an effective mechanism for recovering loans already
granted, and consequently stopped making further advances\. With regard to
the technical assistance component\. delays were experienced in recruiting
suitable consultants, which has resulted in delayed implementation par-
ticularly of the experimental trawler component\. The delay in completing the
report on the training walls for Nizampatnam has meant that the proposed
investment could not be considered for inclusion within the project\. These
factors have resulted in a large part (43X) of the IDA credit not being
disbursed, and subsequently being cancelled\.
7\.5 The principal lesson which can be learned from the experience gained
in implementing this project is that adequate investigation and design work
should be completed prior to appraisal\. this would allow for a better
appreciation of complex problems which can emerge during implementation, as
occurred at Kakinada\. Once the court provides judgement on the dispute
between GOAP and the breakwater contractor at Kakinada, it may be possible to
identify more specific lessons from the Kakinada harbour experience\.
7\.6 The implemeutation of construction works at Kakinada has also shown
that where closely interrelated civil works have to be carried out, and the
completion of certain works are contingent on completing other allied works,
it may be desirable to carry out the works under one overall, rather than
separate contracts\.
7\.7 Other lessons which emerge from the implementation experience of this
project\. include:
(a) the desirability to include within a project which has a sizeable
credit component\. specific provisions for credit recovery\. par-
ticularly for sectors where prior experience in recovering loans has
been poor; and
(b) in the case of components where technical assistance consultants are
expected to be closely involved with implementation, it is better
to provide for resident consultants, as considerable delays can occur
(as happened in this project) if advice has to be sought through
correspondence from a non-resident consultant\.
ANDHRA PRAOESH FISHERIES PROJECT
(Credit 815-IN)
Comoarison of Aooraisal and Actual Costs
AoJpraisal Estimates Actuals 1/ Actual as % of A\.cpraisal
Ltem units Rs'OOO USS'OOO inits Rs'OOO USS'OOO Units Rs'OOQ USS'OQO
I % I\. DUevLyI onmeftt
Visakhopatnam 80\.059 9\.309 - 69\.151 2J 7\.436 86 80
Kakinada 76\.701 8\.919 84\.436 V/ 8,335 110 93
N I zamp t IIdual 10\.203 1\.186 11\.892 &/ 1\.168 117 98 1
Still-Total 116,963 19,414 165\.479 16\.939 99 87 >
- 'j A\.c es R ads
Iskhakpatitam Disttict 98 km 16\.828 1\.957 48 17\.317 1\.701 49 103 87
e ast Godavari District 69 km 12,300 1,430 61 15\.544 1,627 8B 126 114
Gw*tt,r Distri:t 4f km 12\.6f39 1,470 42 8\.788 953 8e 70 65
i\.up_-Trtat 41,767 4\.857 41,649 4\.281 100 88
Ni4ampmatnam Water SuDDlv 579 67 1,552 161 268 240
F,skhSnn Vessels
1Dm MFV 300 68\.337 7,946 137 27\.811 2\.942 46 41 37
9m MFV 60 9\.156 1\.065 - - - - - -
lZmn ston-MFV 60 2\.896 337 - - - - - -
5J\.LILXLOtA± 420 80\.389 9\.348 137 27\.81t 2\.942 33 35 31
Seafoott PxcE\.Cssinc FJcilities 12,300 1\.430 - - - - -
j*\.eL jisLL I ASs\._ts
Riv4* Tra1iclesj Sp,ecialist :I m \.i, 2tl7 24 46 5 22 21
Naval Architect 6 m/m 473 55 756 79 160 143
Wooden Hlull Trawlers 2 10,000 1\.163 2 14\.297 1\.216 t00 143 105
Overseas Study lour 20 m/m 900 105 10 M/M 323 41 50 36 39
SotoJ-rotaI 11\.5H0 1,347 15,422 1,341 133 100
lo"a Losteg 3 t\._§78 36\.463 25t\.9t3 25\.664 AD Z0
s%ttudtt's pvesuet estimates tor cost-, of completing the harbours, roads, and the experirnental t\.awlers\.
* tat\. e-\. 2 4 irespoctively for breakdtow, of actual costs\.
- 26 -
Table 2
INDIA
ANIHRA PRADESH FISHERIES PROJECT
(Credit 815-11N)
Visakhapatnam HarKour - Actual and Anticipated Expenditure
Item Expenditure Costs for Total Appraisal
Up To 15-3416 CowPletion Costs Estimates
\. \. (Rs'OOO0)\.
Preliminary Works 234 - 234 661
Additional Quay Works 37,109 - 37\.109 j] 4e,061
Additional Slipway Facilities 2\.178 - 2,178 2\.194
Rock Dredging 1\.791 - 1,791 2\.261
Buildings 903 3502/ 1\.253 1,993
Roads, Drains and Culverts 372 - 372 1,137
water Supply 426 426 330
Equipment for Additional 6\.127 - 6\.127 2,962
Sli way
Power Supply Equipment 3,818 3,898 2,259
Land Acquisition 2,468 bi0 3,278 4,756
Engineering 5\.759 263 6\.022 4,771
Navigational Facilities 807 693 1,500 -
Rock lund 2,750 1\.311 4,061 -
Contingencies 189 713 902 -
SAR Price Contingencies - 16\.674
Total 64\.931 4\.220 69\.151 80,059
3/ Includes a claim for Rs4\.3 million from contractor which is under dispute, to be settled by
arbitration\.
/ Only construction of gear store still to be done\.
N/ ot provided for at appraisal\.
e\.QnOA PRADfSH rISHERIES PROJECT
(Credit ets-I"N
%isinada laibour - Actual artd Anticinata Ej7 e oiturev
Expenditure Costs for Tot\.j Aaoeaisal
1£Qj Up To 20\.3\.86 Comolat\.on 5 I 1' Ltfie
\. \. \.
\.ecakwate\. A Csad Dr-sits 26\.592 10\.723 37\.3iS 28\.750
Landing Quay 8\.363 ) ) 4\.025
Berthing Ouay R Jetties 5\.020 ) 4\.073 30\.909 6\.325
Trawler Landing Quay 13\.446 ) ) 5\.750
Auttiont heals s ) ) 2\.070
Oredging Channel a Oasin it5 5 120 2\.300
Boat Repair Facility 1\.297 503 1\.800 t\.550
Buildings 261 58 319 610
R*ads & Drainage 104 136 240 6tO
services a Utilities 2\.075 614 2\.689 3\.044
superv sIla\. "OsC#ges 6\.342 1\.501 7\.843 5\.543
Unforeseen, 151 737 6ee -
M\.P\.W\. Advantres 2\.113 - 2\.113 -
SAP Price Contingencies - - - 16\.124
Total 65\.886 18\.550 84\.436 76\.701
Sourc : Project Executive Engineers' Office\.
I/ Excludes aiy cost which way arise on the resolution of presently ongoing court case
regardingt breakwater contr-ct\.
1r
INDIA
ANDHRA PRADESH FISHERIES PROJECT
(Credit 815-IN)
Nizamoatnam Harbour - Actual and Ant$cipated Exoenditures
Expenditure Costs for Total Appraisal
Iteal Up To 23\.3\.86 Comoletion Cost Estimate
\. \.(Rs 000) \. \. \.
Dredging of Basin 1\.295 440 1\.735 961
Excavatiott in Hdrbouw Ase 225 27 252 961
Revetnenst 243 70 313 199
Quay Wall with Ramp 1\.125 98 1\.223 \.1611
Auction Hall 1\.019 - 1\.019 455
Surfwcing Harbour Area 286 757 543 405
Buildings 796 84 800 291
Approacls Road 2\.505 48 2\.553 2\.009
Marine & Maintenance Facilities 448 114 562 345
Services & LUtilites 984 20 1\.004 987
tUnforeseen 758 100 ass -
Supervision Charges 713 237 950 643
SAR Price Contingencies - - - 2\.297
Total 10\.397 1\.495 1/ 11\.892 I/ 10,03
Source: Project Executive Enintieets Office
If Tthis ixclt*des the rost of training walls \. ch were not included under project\.
Work has just started on these\. and they are estimated to cost Rs7\.375 million\.
INDIA
AtMHRA PRADESt FISHERIES PROJECT
(Credit 815-IN)
Phystcal Parametgra of Principoal WRrS
Orininal Dsaigned Revised Quantity Status December
Item Quantity t9H5
lak inada
Sand Drains - 74\.08t m 74\.081 m
Filter 16,960 m3 40\.000 m3 36\.330 m3
Rubble 145\.830 m3 175\.500 m3 157\.323 m3 1/
Armour 22\.680 m3 20\.200 m3 16\.634 m3 21
Road ont Breakwater 1\.080 m 1\.080 nm - 3/
Construction Wave Wall 650 m 650 m 10 m
Service Duct - 2\.2tO - _ 4/ t
Landing Quay 150 m 150 m 150 m
Outfitting Ouay 153 m 152 a 152 mi
Berthing Jetty (No\.1) 185 m 189 m tfg m
Betthing Jetty (No\.2) s88 m 178 m 178 m
Trawler Quay 160 m t60 a 160 m
Auctlon Hall 2 2 not completed
0oat Repair Faci7ities 5\.511 m2 5\.511 m2 4\.756 m2
buildings 184 m2 184 m2 184 m2
Services\. Power, Pipes 6 km 6 km 6 km
Roads 0,249 km 0\.249 km 0\.249 km
Rocks for Breakwater not specified not specified 347\.253 m3 intalled
15,000 m3 left
Nizamoatnam
Diedgitig 22,000 m3 22,000 m3 22\.000 m3 fJ
Excavation 31,000 m3 31\.000 \.3 31\.000 m3
Revetment 480 m 555 a 470 m
Quays 196\.5 m 214 a 214 m
Auction Hall 881 m2 1\.690 m2 1\.680 \.2 6J
Surfacinq 9\.650 \.2 9,130 m2 7,098 m2 7J
Admi\. Buildings 300 m2 300 mZ 30U m2
Canteen, Shops, Toilets 200 m2 200 m2 200 m2
Hartour Approach Road 3 km 3\.05 km 3\.05 km
Workshop 160 m2 160 m2 160 m2 \./_
It Trusnk of breakwater (880m) completed up to plus 2\.60\. level, berms partly completed\. 1
Spur of 200m laid up to plus 2\.00n level\.
2/ Armiourgisi work in progress from Ch\.430m to end of spur\.
3/ To be done after coapletion of breakwater\.
4/ For water and power supplies\. Work\. to be done\.
S/ Desilting with grab dredger in progress\.
6/ Earmarked for geas stores (420m2), auction hall (120m2)\. processing and cold stole
(1, 140\.2)\.
7/ Original contractor arkced out\. Agency fixed top\. and work now in progress\.
D/ Only bhfiding completed\.
OIAL
ANOHRA PRADESH fISHERIES PROJECT
(Credit 815-IN)
At;ocatlon of Credit Proceeds
ApDraisal Actual Amount Actual as j
Cateaory Allocation Disbursement Cancelled of Aporaisal
(1) Civil Works 11\.300 7\.900 3\.400 70
(2) Equipment & Materials 600 955 (115)1/ 119 I/
(3) Loans by ARDC 3\.900 678 3\.222 17
(4) Consultant Services\.
Study Tours, and L
Experimental Trawlers 1,200 444 756 37 0
(5) UJnallocated 300 \. - 300 0
Tgta1 17\.500 9L97L 7\.523 / 57
j/ No reallocation of loan proceeds was carried out\.
\.2/ 43l% of total credit\.
I-
INDIA
ANODSRA PRADESH FISIIERIES PRQJLCT
(Credit BIS-IN)
lankina Plan for Vns\.1s\. nad Actual financing
Bankins Plan It Actual RptuianCe by Total Recov2LY Ovrdue as
Bank lOm be tz Thotal Jj0\.9f\.V 1/ Total Lgan NA3AR\. i ot DekAnG
\.* \.be\.) \. (No\.) (Rs'OOO) \. (Rs'000) \. (S)
*,tate Bank of lnila 30 10 IS 55 22 2\.533 2\.163 - tOO
* Aoahra bank 5S IS lO 80 20 2\.124 1\.620 416 78
*1 Uaik of u aBetut 50 - - 50 34 2\.660 2\.034 349 90
Al' 'tate Cooperative Bank 96 IS 1S 126 36 5\.,80 4\.767 908 86
§\.* 'f i,idia 34 to to 54 15 1\.371 1\.097 - 100
! '\."tIan Sank 15 5 10 30 10 2\.430 1\.974 - OI
C Centtat Bank to - - 10 - - - _
t 5yndicste Bn% lO S - t5 - - - - - w
Total 30 4 \. 137 t7\.01S 13-655 1i\.6t3 _
'-"" NABARD\. Hyderabad\.
Revised Banking Plan drawn up in 1982\. when four more banks (Nos\.5-B) were inducted into the progr-ame\.
N one of the 9a and 120 vessels were financed under the project\.
- 32 -
Table 8
INDIA
ANDHRA PRADESH FISHERIES PROJECT
(Credit 815-IN)
Present Staffing of FTO's
Staff Posts VisakhPatnam Kakinada Nizampatnam
Dy\. Director of Fisheries 1 1 1
Gazetted Assistant 1 1
Senior Assistant 1 1 1
Junior Assistant 1 1 1
Typist 1 1 1
Attender 1 - 1
Driver 1 -
Inspector of Fisheries 1 7 2
Mechanic 1 1
INDIA
ANtDHRA PRAOESH FISHERIES PROJECT
(Credit 815-IN)
C - Comparative Balance Sheets
As at the Year End - 30 June
1985 1984 198,3, t982 1981 1980
\. \.(Rs'OOO)\.
Assets
Fixed Assets 10,076 10\.541 11\.106 12\.069 13\.104 14,042
Capital Works under Progress 11,101 7\.644 6\.415 5,792 4\.842 2\.645 1
Cutretit Assets 9,794 10\.637 9\.645 13\.378 14\.850 13\.808
Loans & Advances 7\.416 4\.255 4,854 4,880 24\.027 7\.002
iTal _1\.I38\.387 33\.077 32\.020 36\.119 \. 5-6-8- 37 497
Caoital \.& LiabiIities
Sthare Capital 30\.020 26\.886 26\.386 26\.386 27\.356 16\.Q16
Subsidies & Grants 19\.308 15\.931 14\.414 13\.278 13\.208 11t,1"9
Capital Reserve 451 451 451 45t 451 451
Accumulated Losses (46\.617) (45\.218) (40\.569) (33\.350) (27\.177) (17\.657)
Met Wor-th 3\.16 , (1\.950) 682 6\.765 13A83 tO\.OS9
Securee1 Loans 3\.608 3\.50t \.3,632 4\.149 24\.132 7\.297
Unsecured Loans 16\.036 14\.307 12\.327 11\.476 2\.014 7\.697
Cnrrent Liabilities 15\.581 17\.219 15,379 13\.729 16\.839 12\.444
Total Caoital & Liabilities 38\.387 33\.077 32 020 36\.119 56823 ,37\.497
5QuAIe: Unaudited Accounts of APFC\. I!
- 34 -
Table 10
INDIA
ANDHRA PRADESH FISHERIES PROJECT
(Credit 815-IN)
APFC - Annual Revenue and Expenses 1/
For the Year Ending 30 June
1985 1984 1983 1982 1981 1980
Revenue
Sales Revenue 27,026 22,872 28,721 35,466 49,930 27,685
Other Income 582 312 410 767 654 387
Total 27,608 23\.184 29,161 36\.233 472584 282072
Expenses
Depreciation 738 756 837 964 1,114 1,248
Interest 1,562 1,687 1,272 1,014 1,785 695
Operating & Other
Expenses 26,478 25,089 32,652 39,214 53,773 30,785
Total 28\.778 27,532 34,761 412192 56,672 32,728
(12170) (4,348) (5,600) (4,959) (9,088) (4,656)
1/ Restated from APFC Provisional Profit and Loss Accounts (Unaudited)\.
INDIA
AND"RA PRADESH FISHERIES PROJECT
(Credit 81S-IN)
Ouick Fcrexina and Ice Making Facilities in Pro-lect Area
Ice makhina Ice Storago Freezing Plant Frozen Storpue
Un1 Ut Caacac1t Un1it Caputacity Unit Capacity
(No\.) (tont/day) (No\.) (tons) (No\.) (tons/day) (No\.) (tonts)
kakinada 20 144 7 Ito 6 2S 6 700
Visskhapatnam 8 137 6 475 10 64\.3 10 1\.365
1tzawpatniam 25 - - - - I so
(Sinkapatem)
Total 30 ISQi 13 51 89\.3 t1 2\.115
- 36 -
Table 12
INDIA
ANDHRA PRADESH FISHERIES PROJECT
(Credit 815-IN)
Fishing Vessels in the Project Area 1/
1979 1980 1981 1982 1983 1984 1985 1986
Visakhapatnam
23 m trawlers 65 67 61 78 75 77 86 86
11 m vessels (Sorrah) 30 16 15 21 17 18 9 25
10 m vessels (Royya) 152 114 168 151 131 167 201 295
9 m vessels (Pablo) 15 - - - - - - -
Total 262 197 244 250 223 262 296 406
Nizampatnam
11 m vessels (Sorrah) 10 10 10 20 90 132 144 n\.a\.
10 m vessels (Royya) 63 73 93 100 63 63 53 n\.a\.
9i m vessels (Pablo) 40 40 40 38 28 23 8 n\.a\.
Non-mechanized vessels n\.a\. n\.a\. n\.a\. n\.a\. n\.a\. n\.a\. 150 n\.a\.
Total 113 123 143 158 181 218 205
1/ Data which show total number of boats using the Kakinada harbour are
not available on a seasonal/annual basis (only on a daily/monthly
basis)\. Table 13 shows annual registrations of new vessels in Kakinada\.
- 37 -
TabLe 13
INDIA
ANDHRA PRADESH FISHERIES PROJECT
(Credit 815-IN)
Annual Registrations of Fishing Vessels in Kakinada (Number)
1979 1980 1981 1982 1983 1984 1985
Registrations Each Year
llm vessels (Sorrah) 8 6 1 4 29 30 15
lOin vessels (Royya) 74 116 26 16 81 81 19
9m vessels (Pablo) 13 13 4 1 5 4 1
Total 95 135 31 21 115 115 35
Cumulative
llm vessels (Sorrah) 8 14 15 19 48 78 93
lOm vessels (Royya) 74 190 216 232 313 394 413
9m vessels (Pablo) 13 26 30 31 36 40 41
rotal 95 230 261 282 397 512 547
AA!4 PQfRAOESH FtSHERIES PROJECT
(Credit 815-IN)
Averaoe Landing Prices of Shrimo and Fish in Visakhauatna
1980 19{11 1982 1983 1984 1985 1986 I/
Fists (Rs/kg) 0\.55 0\.78 1\.31 1\.25 1\.75 2\.20 ?\.35
Slirimp (Rs/hqa) I
Tiger C1 42 53 St 76 85 70 105 OD
White C2 43 53 61 47 50 33 86
Brown C3 21 30 33 47 50 33 47 1
Small CIO 5 8 6 6 8 10 1S
j/ As In March 1986\.
I!
- 39 -
TabLe 15
INDIA
ANDHRA PRADESH FISHERIES PROJECT
(Credit 815-IN)
Escalation in Diesel and Lubricatina Oil Prices
Pefriod Diesel Lubricating Oil
Price Index Price Index
(Ri7sTTre) (Rs/5Tlitres)
From 1-1978 1\.34 100 10\.05 100
2-1978 1\.36 101 tu
11-1978 1\.47 110 of
11-1979 1\.58 118 11\.05 110
7-1980 2\.33 174 n
1-1981 2\.75 205 12\.05 120
7-1981 3\.11 232 16\.55 165
2-1983 3\.34 249 " U
7-1983 3\.42 255 it
9-1983 3\.37 251 Is
8-1985 3\.56 267 17\.00 169
INDIA
AND"RA PRADES" FISHERIES PROJECT,
(Credit 815-tN)
Cash Flow Projection 23m Shrimo Trawler
Av\. Catci-t Av\. PriCe Revenue/Costs SAR Estimates
Ltvm Tons/Unit !k R' Oa Rs'000
Revenue from Catch
Shrimp I/ 65 75 4\.875
Fish 60 3 180
Total - 5055 3070
Ooeratifin Costs
Fuel & lubricants ai - - 1,278
Maintenance / -- 565
Stores 4/ - 275
Port Fees - 60
Water _ _ 4
Insurance / 215
Miscellanleous - - 60
Wages §/ - - Si -
To Aaj_ _rVatin _C_\.t - - 2,968 1\.466
Ooeratintu Income - - 2\.087 1,604
Presepn-t I v-estmegjLCoQstl 8\.500 4\.500
FinanacitJW Ml Loan 6\.800 7/ 3\.600
Owtn FustiJs 1\.700\._ 900
Nb\.Jit se uvi\.jlt)i 1\.350 7/ 975
Avesaqe_As_uj l Net Cash Flow 738 629
Fi,iaitclal Rtte of Retutn r/ 21 33%
1/ Shrimps beheaded and deepfrozen\. 7% Cl\. 19% C2\. 42% C3\. 32% C4\.
2/ Lubricants 5% of fuel costs\. fuel 78 litre/hour\. 17 hrs/day\. 270 days/year\.
Rs3\.40/litre (trawlers get a subsidy on fuel at 50% of sales tax)\.
J/ Inclutdes yeatly geteeral overhaul vessel\.
4/ Ir\.cludes food and fisrhing gear\.
/ 2\.f68% of new vessels I)#ice\.
§/ Capt\. at Rs3O\.000\. mate and chief engineer at Rs24\.000\. 9 crew at Rsl2\.000 each\.
plus Rs325\.000 bonts for all crew\.
7/ Ml Loan at 12\.5%\. Debt servicing estimated on on the basis of an 8 year repayment
period\.
8/ Estimated on total investment, over a period of 10 years (as in the SAR)\.
- 41
- 41 - Table 17
INDIA
ANDHRA PRADESH FISHERIES PROJECT
(Credit 815-IN)
Cash Flow Projection 10m Trawler (ROYYA)
Averaqe Averaqe Revenue/ SAR
Item catcrun Pr ce/ku Costs Estimate
(tons) \. Rupee\. \.
Revenue From Catch
Shrimp 1/ 17% 8 34\.00 272,000
Fish 83% 40 2\.00 80,000
Total 100% 48 352,000 172,500
Operating Costs
Fuel and Lubricants (8% of
Fuel Costs) 2/ 123,525
Maintenace Hull and Engine 3/ 22,500
Fishing Gear Maintenance and
Replacement 4/ 22,400
Insurance 5/ 5,450
Port Dues 6/ 1,600
Miscelldneous 3,000
Wages 7/ 702000
Operating Costs 248,475 121,400
Operating Income 103,525 51,100
Present investment Cost 230,000 169,000
Financing - MT Loan (85%) 195,500 8/ 143,700
- Own Funds (15%) 34\.500 25,300
Debt Servicing 38,777 8/ 34,000
Average Annual Net Cash Flow 64\.748 17,100
Financial Rate of Return 9/ 43% 31%
1/ 7% Cl Rs77/kg, 19% C2 Rs43/kg, 42% C3 Rs43/kg, 32% C4 Rs8/kg, average
Rs34/Kg, average of last 3 years 1983-1985\.
2/ 250 fishing days, 12 hours/day, 125 litre/day Rs3\.66/litre\.
3/ Rs15,000 for hull Rs7,500 for engine\.
4/ 6 nets Rs2,000 each, 4 otterboards Rs600 each, 8OOm warp RslO/m\.
5/ RsS,OOO for vessel, Rs45O for crew\.
3/ 8 months at Rs200 per month\.
7/ 20X of gross value of catch\.
8/ MT Loan at 12\.5% debt servicing estimated on the basis of an 8 year
repayment period\.
9/ Estimated on total investment over a period of 10 years\.
- 42 -
TabLe 18
INDIA
ANDHRA PRADESH FISHERIES PR0iECT
(Credit 815-IN)
Vi2akhaDatnam - MFV& 1/ L Fish Ian,dinos Recorded
MrV Numb(er Prawn and Fish Landinos
urn ilia X±\.I\.L \.Ej\.Aa f £i Toa
\. tons \.
1979 30 152 182 848 5,703 6,551
1980 16 114 130 847 8,084 8,930
1981 15 168 183 698 5,237 5\.935
1982 21 151 172 643 4,023 4,666
1983 1? 131 148 571 4,059 4,630
1984 18 16? 185 1,025 3,742 4,?67
1985 9 201 210 384 2,612 2,996
1986 25 295 320 n\.a\. n\.a\. n\.a\.
Source: fTO, Visakhapatnam
l/ Excludes 23m trawler for which data on landings is not recorded\.
MAI AAR T A I LA 8 0
AIIB--NAOAn A
1LA KA It A RANDP RA PRADESH OISERES PROJECT
APROJECT DITRICTS AND OARBOURS
Q AA p tK _ I E
I N D IIIANOCENA
rv%s\.*ne _r n \._ \. - \.PFIOJ Ct
( Credit eiry-M )~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
- INDIA -
ANDHRA PRADESIl FISHERtES PROJECT
( CREDIT 815 - IN )
KAKINADA HARBOUR - IMPLEMENTATION SCHEDULE
I T E M 1 979 | 1980 1981 1982 1983 1984 1985 1986 1987
I - BREAKWATER WITH ROAO _DDI \.
2 - LANDING JETTY ( tO m BOATS ) li_@
3 - OUT FITTING BERTHING JETTY amm nnmm_ _ _
(10 m BOATS) __
4 - 8ERTHtN13 JETTY( t om BOATS ) mmi m - _
5 - TRAWLER JETTY t 23 m BOATS-) mm 10!_
6 - AUCTION HALLS am --_ I -wnm a19__ noE13
7 - DREDGING CWANNEL AND BASIN , mim 0 L E T 0
8 - BOAT REPAIR FACIUTY SHOP
9 - BUILDINGS
10 - ROADS AND DRAINAGE I_
tt - POWER WATER AND FUEL SUPPLY
flfmmnm AS PER APPRAISAL REPORT I ALREADY EXECUTEO E3E TO SE DOtE
- JN3 1 A -
ANOIRA PRAOESH FISHERIES PROJECT
(CREDIT 8t5 - IN)
NIZAMPATNAM HARBOUR - IMPLEMENTATION SCHEDULE
I T E Um 1979 1980 ___ 1982 | 1983 1984 1985 1986 1987
I DREDGING mm= 1 _- \._
2 EXCAVATION nnnO8pl 1
3 - REVETMENT _\. \.___\._
_ _~~~~~~ _
4 - OUAY AND RAMP u I
S - AUCTION HALL - - 1
6 - SURFACING PORT AREA i im
~~~~--I__
7- BUILDINGS -
o - APPROACH ROAD
9 - MARINE FACILITIES -il
10 - POWER WATER AND LIGHTING am m
I1 - TRAININO WALLS
M-i1_0M AS PER APPRAISAL REPORT AtREAY EXEiAUTED USK3 TO BE DONE
THIS PAGE
I BLANK s i 4
v 11X | A \I
* - ~~~~~~~~~47-
- - ~~~~~~ANNEX I
No\. 33013-2/87mPy(H) I Page 1
Government of India
Ministry of Agriculture
(Deptt\. of Agri, & Coopn)
New Delhi-io Dto the 8th May, 1987\.
Coments from GOI
To
Mre Graham Donaldson,
Chief, Agriculture & Human Resource
Division,
Operations Evaluation Department,
World Bank,
1818 H Street, NeW\.
Washington, D\.C\. 20433
U*S*A\.
Sir,
Kindly refer to your letter dated 5th March, 1987
regarding the draft Project Completion Reports in respect
of Gujarat and Andhra Pradesh Fisheries Project, 1394-IN/
Credit 695-IN and Credit 815-IN respectively\. A letter
addressed1 to the Department of Econoriic Affairs, M4inistry
of Pinance, in this ccrinecti\.on is enclosed\.
Yours faithfully,
(B,N\. ris hy)
Degut :missioner (PH)
5,3, ~~~~~~- 48 - ~ ~ ~t\.as\.y
Belo at e 609 58*31387-V(Ng)
hp^ §9"l (PR) RXc 1,4011 A\.NNEX I
(* 'ge 2
jNwR, qlfl -ttooot
GOVERNMENT OF INDIA
MINISTRY OF AGRICULTURE
( DEPARTTMENT OF AGRICULTURE A COOPERATION)
Krishi Shawan\. New DelhlI 110001
Dla1od fato5 So1t ll7
Dear
las rOtr to the cOPY of th !20er 30 4(1 )/864LAVn
datd 9th Aprl, 9 endorsed to Joint Deoer e7g gs
department e comments on the draft o\.ojo omplot;La report
In respect of World Ban assist d lote ted lotion reot
I isar aies ro,Pade
we ha bee ustin, for th detailed oo ho stat
Govroments\. We ba not "i received their 00usentse However, as ar
as th comments fZro Is MiWntry is conooeraed, It i stated here that
heU ai World Bo kpojeot\. &WoWW\.Issed quite statiactorily diring tb
poae ped wis thinte given constrints of administration aJd othe
proeere that ere followed an both goverant of India and World phuk
Mie* It Isi knonLfttat ihe oredit acmponent o ,e0 plro ts mad a
POWt ahoy, the Plhsica targeti In reepeet of so s ing vessels
snvieaamed to be achieved utill isirh cs redit faciliyune the prject
;7j; OUl %0%\. hftjLsmI of -L Wrd auk funds aintthe P
component vms not utili r\.Bth the St\.t*Goemstan this Ministy
sede concerted efforts to LUIWpov the oredit utilisatior with respect
to the lending9GI prpxme\. setin at the state level and at the central
level of the officers of the conoered nationalised banks were conveed
to Iaprss upn the banking authioriis the necessity of improving the
lending performane\. the banks oontinued with their stand that vnless
the repayment of a few loms omtioned earlie improved, they vwer not
In a position to tqke up new leadings, All this haLppene becase the
banks did not brve'"Veoper collection machinery at the field level to
motivate the fishemen In repayment of loans\.
Simultaneously the State Governmentu bad their own lending
pro s for introduction of the\. fishing\.vessels, During the same,
peniodthyvrsuooesaful bothIn lendinges well a a migthe
recovris floms frm the benefi\.taries\., the Depa~rtment of Fisheries
hd undertaken the* ropame of lending direotly to the beneficiariesl,
not thronWg natioalised banks\.* eo swces of the Flshories Department
ms attributed to the deployment of satisfactory ollectlon machinry
at Uhe field level\.
In view of the above, t o ould be stated that ono of the
lessons leaned frm the World huh projects ma that It would be not
praticable to entut the lpogr to the nationalized banks
In th cmos of lending moey to fiehom for purcser of boats vhen
thy ladk in required motivating field personnel\. Instead, the credit
Me to be rooted directly t1rou& fte State Directorate of pisheries\.
We have no other comments to make,
With
Tours sincerelyI,
e4\.- \.,\.
- 49 - ANNEX I
Page 3
8b:ri ReD, Jathouri
Thder Seoretary (")
Department of Eoonomic Affairs,
Ninistr of Pinance,
North Rock, | APPROVAL |
P009819 | Documnt of
The World Bank
FOR OFICIL USiE ONLY
Repot No\. 11995
PROJECT COMPLETION REPORT
INDIA
MADHYA PRADESH FERTILIZER PROJECT
(LOAN 2415-IN)
JUNE 15, 1993
Industry, Trade and Finance Division
Technical Department
South Asia Region
This document has a restricted distribution and may be used bv recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY ZOUIVALENT
Currency Unit = Rupees (Rs\.)
Rs\. 1\.00 = Paise 100
US$ 1\.00 = Rs\. 28\.01
Fiscal Year
April 1 - March 31
LIST OF ABBRZVIATIONS
DANIDA Danish International Development Agency
ERR Economic Rate of Return
EIA Environmental Impact Assessment
FRR Financial Rate of Return
FCI Fertilizer Corporation of India
FICC Fertilizer Industry Coordinator Committee
GOI Government of India
GAIL Gas Authority of India Limited
MP Madhya Pradesh
NFL National Fertilizer Limited
OECF Overseas Economic Corporation Fund
PDIL Projects Development India Limited
tpd Ton per day
tph Ton per hour
MMCMD Million cubic meters per day
MINAS Minimum National Discharge Standards
Ncm Normal cubic meter
SCF Standard conversion factor
FOR OFFICIAL USE ONLY
THE WORLD BANK
W"hington, D\.C\. 20433
U\.SA
Offico of Diretor-Goneral
Operations Evaluation
June 15, 1993
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Completion Report on India
Madhva Pradesh Fertilizer ProJect (Loan 2415-IN)
Attached is the Project Completion Report on India - Madhya Pradesh Fertilizer Project (Loan
2415-IN) prepared by the South Asia Regional Office, with Part II contributed by the Borrower\.
The PCR is of high quality\. It gives a clear account of implementation experience and discusses
all the pertinent issues\. It concludes that original objective of expanding nitrogenous fertilizer capacity,
using the vast and newly developed Bombay High and South Bassein natural gas resources as feedstock,
has been more than fully met; and that the problems encountered during implementation were expeditiously
and professionally resolved\. The result was an industrial facility that was completed on schedule and 36
percent below appraised cost\.
Thanks to the generous engineering design of the ammonia plant and the technical and managerial
capability of National Fertlizer Limited (NFL-the Beneficiary), the plant has been operating efficiently at
more than 110 percent of its nominal production capacity since commissioning\. The project was
deservedly awarded first prize for excellence by the Ministry of Program Implementation of the
Government of India\.
The project, constructed at Vijaipur, had adequate environmental provisions and an impact
assessment carried out four years after the plant's commissioning concluded that the Vijaipur's pollution
control measures and systems are effective and all effluents are within limits specified by Minimum
National Discharge Standards\. In addition, NFL has developed and implemented a detailed disaster plan
in Vijaipur\.
Although the project had highly satisfactory overall results and its sustainability is not in doubt,
its actual prospects are ded to the availability of natural gas in sufficient quantities-within a context of very
high demand for gas in the western regions of India\.
The project included a study to rehabilitate two large coal-based ammonia plants owned by the
Fertilizer Corporation of India\. The Bank concluded that, under the current and foreseeable market
conditions, new investments in these plants were not economically jusdfied\. However, there may be other
options in the future for the Bank to remain a partner in expanding India's fertlizer production capacity
if an agreement could be reached on fertilizer pricing and subsidies\. The 30 percent increase in the
controlled price of ferdlizers in July 1991, and the subsequent decontrol of the price of phosphatic and
potassic fertilizers in August 1992 represent promising steps in this direction\.
No audit of this project is planned\.
Attachment
This docummnt has a restricted distnbution and may be used by recipients only in the performance of their official duties\. its contents
may not oterwise be disclosed without World Bank authonization\.
FOR OmCIAL USE ONLY
PROJECT COMPLETION REPORT
INIDIA
MADHYA PRADESH FERTILIZER PROJECT
(Loan 2415-IN}
TABLE OF CONTENTS
PREFACE \.i
EVALUATION SUMMAR \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \.
PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE \. \. \. \. \. \. \. \. \. \.1
Project Identity \.1\. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \.
Background \.1\. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \.
Project Objectives and Description \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 2
Project Objectives\. 2
Project Description \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 2
Project Design and Organization \. \. \. \. \. \. \. \. \. \. \. \. \. \. 3
Organization and Implementation of the Rehabilitation Study \. \. 3
Project Implementation \. \. \. \. \. \. \. 3
Implementation Schedule \. \. \. \. \. \. \. \. \. \. \. \. \. 3
Main Problems Resolved During Implementation \. \. \. \. \. \. \. 4
Procurement \. 5
Project Costs \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 5
Financing \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 6
Allocation of Bank Funds \. \. \. \. \. \. 6
Disbursement Schedule \. \. \. \. \. \. \. \. \. \. \. \. \. \. 6
Market Development and Seeding Program \. \. \. \. \. \. \. \. \. \. 7
Operation Preparation \. 7
Project Results \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 7
Project Objectives and Physical Results \. \. \. \. \. \. \. \. \. 7
Market \. \. \. \. \. \. \. \. \.S\. \. \. \. \. \. \. \. \. \. a
Economic rates of return \. \. \. \. \. \. 8
Financial Rate of Return \. \. \. \. \. \.9\. \. \. \. \. \. 9
Financial Performance \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 9
Environmental Impact \. \. \. \. \.1\.0\. \. \. \. \. \. \. lo
Disaster Management \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 10
Project Impact \. \. \. \. \. \. \.0\. \. \. lo
Project Sustainability \. \. \. \. \. \. \. \. \. \. \. \. \. \. 11
Bank Performance \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 12
Borrower and NFL (the Beneficiary) Performance \. \. \. \. \. \. \. \. \. 12
Project Relationship \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 13
Consulting Services \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 13
Project Documentation and Data \. \. \. \. \. \. \. \. \. \. \. \. 13
PART II: PROJECT REVIEW FROM BORROWER'S PZRSPECTIVE \. \. \. \. \. \. \. 14
Confirmation of Information \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 14
Bank's Performance \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 14
Borrower's Performance \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 14
Project Relationship \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 14
Relationship with and Performance of Cofinanciers \. \. \. \. \. \. \. 14
This document has a restricted distribution and may be used by recipients only in the performance
of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
TABLE OF CONTENTS (Cont'd)
PART III: STATISTICAL INFORMATION \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 15
Bank Group Operations in the Fertilizer Sector \. \. \. \. \. \. \. \. \. 15
Project Timetable\. \. \. \. \. \. 16
Loan Disbursements \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 17
Project Implementation \. \.18
Project Costs and Financing \. \. \.19
A\. Project Costs (in Rs) \. \. 19
B\. Project Costs (in USS)\. \. \. \. \. \. \. \. 20
C\. Capital Costs - Phasing of Expenditures \. \. \. \. \. \. \. 21
D\. Project Financing\. \. \. \. \. \. 22
E\. Bank Financing\. \. \. 23
Project Benefits \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 24
A\. Direct Benefits \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 24
B\. Economic Impact\. \. \. \. \. \. \. \. \.25
C\. Financial Impact \. 27
D\. Study \. 28
Use of Bank Resources \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 29
A\. Staff Inputs \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 29
B\. Missions \. 30
Status of Covenants \. \. \. \. \. 31
ANNEXES
1-1 India-Projected & Actual Nitrogen Supply/Demand Balance 33
1-2 Total Marketing Program & Market Share \. \.34
2-1 Import Parity of Urea and Economic Value of Natural Gas 35
2-2 Economic Rate of Return \. \.36
2-3 Financial Rate of Return\. \. \.37
2-4 Retention Price Calculation \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 38
3 Financial Performance of NFL \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 39
4 Environmental Aspects \. \. \.40
5 PCR's File \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 44
PROJECT COMPLETION REPORT
INDIA
MADHYA PRADESH FERTILIZER PROJECT
(Loan 2415-IN)
PREFACE
This is the Project Completion Report (PCR) for the Madhya Pradesh
Fertilizer Project in India, for which Loan 2415-IN, in the amount of US$203\.6
million, was approved on May 17, 1984\. The Loan was closed on June 30, 1992,
three years behind schedule\. Due to a reduction in total financing
requirements, a total of US$36\.5 million was canceled, reducing the Bank Loan to
US$167\.1 million\. As of December 31, 1992, a total of US$166\.2 million had been
disbursed and the loan had an undisbursed balance of US$0\.9 million\. However,
US$0\.5 million out of special account has to be refunded to the Bank, which would
reduce total disbursed amount to US$165\.7 million and increase concellation to
US$37\.9 million\.
The PCR was jointly prepared by the Industry, Trade and Finance Division
of the Asia Technical Department (Preface, Evaluation Summary, Parts I and Part
III), and National Fertilizer Limited, the Beneficiary (Part II) \. A copy of the
PCR has been sent to the project co-financiers, the Overseas Economic Cooperative
Fund (OECF), of Japan, and the Danish International Development Agency (DANIDA),
of Denmark, for their information\.
Preparation of the PCR started during a project completion mission in India
in November 1992, and is based, inter alia, on the Staff Appraisal Report; the
Loan and Project Agreements; supervision reports; the Bank project files; and
information prepared by NFL\.
- iii -
PROJECT COMPLETION REPORT
INDIA
MADHYA PRADESH FERTILIZER PROJECT
(LOAN 2415-IN)
ZVALUATION SUMMARY
Obiective\.
1\. The main objective of the project was to expand domestic nitrogenous
fertilizer capacity, in order to lessen India's dependence on imports, taking
advantage of the vast and newly developed Bombay High natural gas resources as
economic feedstock\. The location of a large nitrogenous fertilizer plant in the
state of Madhya Pradesh (MP), also aimed at stimulating fertilizer consumption
in that state, whose agricultural potential was then under-utilized, by providing
easier access to fertilizer\. Finally, the project aimed at facilitating the
rehabilitation of under-utilized plant capacity, through the preparation of
rehabilitation study of two coal-based plants (para\. 3\.1)\.
Iwlementation zxDerience
2\. National Fertilizer Limited (NFL) has designed, organized and implemented
the project professionally\. Mechanical completion and start-up of the complex
occurred on November 5, 1987, about two months ahead of the Bank's original
appraisal schedule\. Commercial production was declared on July 1, 1988, and
Completion occurred slightly ahead of the Loan Agreement date of September 30,
1988\. However, implementation of three additional project components, accepted
by the Bank in the course of project implementation suffered substantial delays
and caused the closing date to be postponed three times from June 30, 1989 to
June 30, 1992\. These delays were due to late final Government approvals of these
investments (paras\. 6\.1 and 6\.2)
3\. Several problems were encountered during implementation\. All were detected
on time and efficiently resolved by the project team of NFL without any
significant impact on the overall project schedule, and within budget\. These
included: (a) delays in the supply by the Gas Authority of India Ltd (GAIL) of gas
for power and steam generation; (b) delays in the supply of water from the
Ruthiai Dam; (c) unexpected rocky subsoil on site; (d) error in the detailed
engineering drawing for the concrete of the synthesis gas compressor, detected
after its construction; and (e) inadequate road infrastructure for transport from
the Kandla port to site (1,265 kms) of the 410 tons ammonia converter (para\.
6\.4)\.
4\. Procurement was carried out efficiently and without delays, using
competitive bidding procedures for both international and local procurement\.
Actual financing requirements were 15% below appraisal estimates in Rupees and
amounted to Rs\. 5,370 million versus Rs\. 6,304 million at appraisal (US$397\.5
million versus US$618\.0 million)\. The main reasons for these underruns were
important reductions of import duties and interest during construction, and in
fact, excluding taxes and duties, the actual total installed cost of the project
as originally designed was only 3% below appraisal estimates (paras\. 6\.6 and
6\.7)\. Due to this large reduction in the project total financing requirements,
a total of US$36\.5 million was canceled, reducing the Bank Loan to US$167\.1
million (para\. 6\.11)\.
5\. Also, it appears that total funds relent by GOI to NFL from the Bank loan
and other cofinancing sources were substantially below appraisal estimates\.
Furthermore, a large portion of the loan proceeds, though transferred to the
Government, was not relent to NFL, and may thus be considered as having been
- iv -
used to finance GOI equity contribution to the project (which was transferred to
NFL in the originally planned amounts)'\. Main reasons for this deviation are the
substantial reduction in project costs, and a substantial increase in NFL's
contribution to the project from its own resources (para\. 6\.8)\.
Prolect Results
6\. Overall, the project objectives were more than fully met\. The plant was
completed on schedule and below cost, and has since been operated efficiently at
more than 110% of its nominal production capacity\. NFL started its commercial
operation on time, and has developed adequate markets for the Vijaipur plant,
and, through a seeding and education program, has expanded the fertilizer use in
the state of Madhya Pradesh to more than the level that was expected\. It is
estimated that the plants are, during their entire economic life, capable of
maintaining a sustained 110% capacity utilization (para\. 7\.1)\.
7\. The project economic rate of return (ERR) is now estimated at 31% and is
substantially higher than the base case of 18\.6% estimated at appraisal\. The
difference is mainly due to a substantially higher economic value of natural gas
estimated at appraisal\. For reasons given below, the project financial rate of
return (FRR) is estimated at 15\.6%, slightly lower than the appraisal estimates
of 16\.6% (paras\. 7\.6 and 7\.7)\.
8\. The Vijaipur urea plant is taxed by the retention price scheme and by the
gas pricing system: the project could reach a FRR of more than 21% if the
fertilizer sector was deregulated -- the urea retention price of Rs\. 3,733 per
ton for the pricing period 1991/93 is much lower than its international import
parity of Rs\. 5,727 per ton in 1991/92 and Rs\. 4,841 per ton in 1992/93; and the
price paid for natural gas of Rs\. 2,739 per thousand Ncm since January 1992 is
significantly above its equivalent economic value of Rs\. 2,014 per thousand Ncm
(para\. 7\.9)\.
9\. The project also included a study to rehabilitate two large coal-based
ammonia plants at Ramagundam and Talcher, owned by the Fertilizer Corporation of
India (FCI)\. The study was carried out by Krupp-Koppers, of Germany at a cost
of US$2\.7 million\. The Bank, after review of the consultant's study, concluded
that these investments were not economically viable and advised GOI to consider
closing down these plants, at least until international urea prices improve
(para\. 5\.1)\. The Government has yet to take a definitive action on the matter -
- these two plants continue to operate at very low rate of capacity utilization
(23% and 32% in 1989/90 respectively for Ramagundam and Talcher)\.
Invironmental Aspects
10\. Adequate effluent treatment and discharge facilities were constructed in
accordance with Indian environmental standards, which are comparable to standards
applied for such installations in industrialized countries and/or other
environmental standards acceptable to the Bank\. Furthermore, to overcome the
risk of water shortage and problem of liquid effluent disposal during the dry
season the plants were designed for maximum recovery and reuse of liquid
effluents and are equipped with sophisticated water treatment installations
(Annex 4-para\. 5)\.
11\. In addition to the compulsory initial environment assessment on the basis
of which the project was designed, a comprehensive environment impact assessment
(EIA) of the plant was prepared in 1987/88 by the National Environment
I The Bank has referred to GOI on this subject and is awaiting its
clarification\.
v
Engineering Research Institute (NEERI)\. The study was prepared on the basis of
data collected before and after commissioning of the plant\. NFL implemented most
of the recommendations of the NEERI's EIA, including: (i) the plantation of a
green belt of about 100,000 trees which has been developed using treated liquid
effluent; and (ii) the replacement, of chromate inhibitor for the treatment of
cooling water by a more expensive phosphate-based inhibitor\. Also, NFL
implemented additional investments: (i) an additional 5,000 tons double wall
ammonia storage for increased safety; (ii) a purge gas system to reduce energy
consumption and emission of carbon dioxide (CO2) in the atmosphere; and (iii) a
reverse osmosis plant for the treatment of cooling water blowdown (para\. 7\.13)\.
12\. A new EIA study, carried out by NERRI during 1992 after four years of
operation, concluded that the Vijaipur's pollution control measures and systems
are effective and all effluents are within limits specified by Minimun National
Discharge Standards (MINAS) (paras\. 7\.12 to 7\.14 and Annex 4) -- its main
conclusions are: (i) overall air quality within and around the fertilizer complex
is well within the limits specified by MINAS; (ii) the quality of treated
effluent is well within the limit of MINAS, and all effluents are used for
irrigation of green belt and in-plant horticulture; and (iii) the noise level is
also well below the limit of MINAS\.
Disaster Manaaement
13\. NFL has developed and implemented a detailed disaster plan in Vijaipur,
which includes an emergency plan, an evacuation plan and an emergency pollution
control plan\. Also, as part of the 1992 EIA, NFL is undertaking a risk assessment
study leading to the review of the current disaster management plan (para\. 7\.15)
Prolect Sustainabilitv
14\. If, in line with the present trend for economic policy reform, GOI decided
to deregulate the fertilizer sector, at projected import parity prices, the NFL's
Vijaipur plant would be able to withstand competition from imports even in the
absence of protective tariffs, and while paying natural gas at its fuel oil
equivalent economic value (para\. 7\.10)\. The major risk still faced by the
project is that, in order to reduce the financial burden of the fertilizer
subsidy, GOI may decide to revise urea retention price norms further downwards -
- the project would have an FRR of only 6% if the retention price of urea for
Vijaipur were to be reduced by 20W\. However, the implementation of NFL's
investment program, and/or the duplication of the Vijaipur plant if economically
viable and if adequate and sufficient gas supply is made available, would further
improve the project's sustainability (para\. 8\.1)\.
15\. In the long term, sustainable operation of the plant is also a function of
adequate supplies of natural gas feedstock and efficient operation of the HBJ
pipeline\. The project utilizes a maximum of 1\.72 million cubic meters per day
(MMCMD) of natural gas out of 18 MMCMD of gas currently transported by the HBJ
pipeline, the capacity of which can be further increased to 33 MMCMD\. There is
in the western region an excess demand of natural gas (potential total supply is
estimated at 61-75 MMCMD and potential demand at 91 MMCMD), the bulk of which is
used by the fertilizer and the power sectors, where the demand is mainly
generated by investment decisions taken by the Government\. Furthermore, this
does not pose any risk for Vijaipur's operation as a long term supply contract
was signed between NFL and the Gas Authority of India Limited (GAIL) on October
9, 1991 (para\. 8\.2)\.
16\. Also, the project has been implemented and is operated in an
environmentally sound manner\. The company is aware of the risks of such plants
and has taken the necessary safety measures, therefore, the risks of problems
with local communities are small\.
- vi -
Findings and Lessons Learned
17\. The NFL project was awarded first prize for excellence in project
implementation by the Minister of Program Implementation in 1989, and was
highlighted by GOI as an example of a well implemented and operated industrial
complex in the fertilizer sector (para\. 4\.2)\. The success of this project
illustrates the importance, in the implementation of any large public or private
sector project, of a number of key factors, which include (paras\. 4\.2 and 9\.2):
(a) a dedicated high-quality project team, established from the start,
headed by a project manager, with autonomy and authority, in charge
of project preparation, management, coordination and supervision\.
Furthermore, whenever possible, the same team should organize and
take the responsibility for plant operation later-on;
(b) a professionally competent planning and monitoring group, and a
quality control group, all supported by a well designed project
management system based on a detailed project execution plan;
(c) a strong procurement management system, based on competitive
bidding;
(d) organizational arrangements in place at the early stage of the
project to prepare the future operation of the plant, and develop
the market for project output early during the implementation phase;
(e) an effective financial incentive scheme contributing to the
commitment of all levels of management at the project; and
(f) availability of sufficient and timely funds\.
18\. Nevertheless, while the project was successful in meeting its objectives,
it could, in an adequate economic environment, have been implemented without the
help of the Bank\. The Bank's major objective in this project was to support GOI
strategy to increase domestic production of fertilizer, however, the important
fertilizer sector issues in India were not addressed under this project, except
for obtaining a vague commitment from GOI, during the project preparation stages,
to reduce total fertilizer subsidies\. The Bank could have adopted a broader
sectoral approach at the early stages of project appraisal\. In fact, this
project was one of the last two Bank operations in the sector\. The reform
measures proposed by the Bank were considered too radical by GOI, and the policy
dialogue in the fertilizer sector between GOI and the Bank ceased around 1987\.
Now that GOI has recognized the need to address sectorial issues, it may be the
time for GOI and the Bank to renew a fruitful dialogue\. GOI could benefit from
recent and on-going Bank experiences in helping other countries in restructuring
their fertilizer sector (para\. 9\.2)\.
19\. Another lesson was that substantial cost savings could have been achieved
by dividing the rehabilitation study of the two coal-based plants into two
phases, each preferably implemented by separate consultants, in order to avoid
possible conflicts of interest\. The first phase could have consisted of a pre-
feasibility study and the second phase of final design and feasibility study if
justified by the results of the first phase (para\. 5\.1)\.
PROJECT COMPLETION REPORT
INDIA
MADHYA PRADESH FERTILIZER PROJECT
(LOAN 2415-IN)
PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE
1\. Proiect Identity
Name: Madhya Pradesh Fertilizer Project
Loan Number: 2415-IN
RVP Unit: South Asia Region
Country: India
Sector: Industry
2\. Background
2\.1 The agricultural policy of the Government of India (GOI) aims at
ensuring increased food production, towards self-sufficiency\. The objective of
further expanding fertilizer use, which has grown from 70,000 tons per year of
nutrients in 1950/51 to more than 12\.5 million tons in 1990/91, is an important
part of GOI strategy to increase agricultural output\. Eight development plans
have given priority to the development of the fertilizer industry to ensure a
sustained supply of fertilizers, substitute for imports, and expedite the
achievement of agricultural self-sufficiency\. As a result, the bulk of
nitrogenous fertilizer consumed in India is domestically produced (87% for
1990/91) and large amounts of phosphate fertilizers are also produced by the
domestic industry, largely from imported inputs (67% of total supply in 1990/91);
however, the entire national consumption of potassic fertilizer is imported\.
2\.2 The policy framework of the fertilizer sector is one of the most
complex in India -- with tight Government control of feedstock and most output
pricing, of market allocations, and of fertilizer distribution\. Government
policies also limit the choice of technology, feedstock, plant location, project
execution arrangements and financing, and allocation of production licenses
between the public, joint, cooperative, and private sectors\. The fertilizer
pricing policy is characterized by: (i) low and uniform farmgate prices (Rs\.
2,760 per ton of urea since July 1992); (ii) producer prices set ex-factory for
each plant's output (retention prices) to cover almost all production costs on
the basis of a combination of actual and normative costs and to provide a post-
tax return of 12% of total equity; and (iii) a budgetary subsidy to bridge the
gap between the price paid by the farmer and the price paid to the producers\.
Retention prices for urea plants currently in operation range between Rs\. 2,250
and Rs\. 6,147 per ton, and averaged about Rs\. 3,560 per ton in 1991 (Rs\. 3,733
per ton for the Madhya Pradesh Project for the three year pricing period ending
FY 1992/93) -- most of the Indian urea producers presently receive ex-factory
prices that are within the range of landed prices of imported urea (about US$180
per ton of bagged urea in November 1992, or Rs\. 5040 at an exchange rate of
Rs\. 28 per US$)\.
2\.3 This policy has permitted India to develop a large domestic fertilizer
production -- India is today the fourth largest fertilizer producer in the world
-- and positively contributed to reaching the country's targeted large increases
in foodgrain production\. However this policy has also resulted in the growth
of the fertilizer subsidy to an unsustainable level (Rs\. 44 billion in 1992/93);
and in the survival of a few uneconomical fertilizer operations\. GOI has
recently recognized the need to address sectorial issues, but until now limited
its action to the implementation of some timid and somewhat conflicting
recommendations of a Joint Parliamentary Committee on Fertilizer Pricing: (i)
full decontrol of pricing and distribution of phosphatic and potassic fertilizer;
(ii) a 10% reduction in the controlled farmgate price of urea; and (iii)
reimposition of price and distribution controls on lower analysis nitrogenous
fertilizer which had been decontrolled since July 1991\. These measures may in
fact ac-entuate the already existing distortions in relative consumption of
nitrogenous, phosphatic and potassic fertilizer\. Furthermore, more recently (and
probably under the pressure of the farming community), GOI has granted a direct
subsidy of Rs\. 1000 per ton of phosphatic and potassic fertilizer\. The only
positive consequence of these measures is an increased transparency of the
subsidy paid for phosphatic and potassic fertilizer\.
2\.4 The Madhya Pradesh Fertilizer project is an integral part of GOI's
plans to utilize associated and non-associated gas from the Bombay High and South
Bassein offshore oil and gas fields, for use as feedstock for petrochemical and
fertilizer plants in the states of Maharashtra, Gujarat, Madhya Pradesh,
Rajasthan and Uttar Pradesh\. The project is one of six large, modern ammonia-
urea plants planned by GOI since 1979, which were to be constructed in a phased
manner, based on the lean gas portion of these gas resources during the sixth
Five-Year plan, in addition to two other plants, Hazira and Thal, which were
already under construction in 1984\. These six plants were to be constructed
along the planned Hazira-Bijaipur-Jagdishpur (HBJ) pipeline\. Three plants out
of six are already in operation (the project plant in Vijaipur, the IFFCO plant
in Aonla, and the private sector Indo Gulf plant in Jagdishpur), and the
remaining three are under implementation by the private sector (the RCFL plant
in Trombay, the Bindal Agro Chemical plant in Shahjahanpur and the Tata Chemicals
plant in Babrala)\. Furthermore, the duplication of the Vijaipur and Aonla plants
are now under consideration\.
3\. Prolect Obiectives and Description
3\.1 Project Oblectives: The main objective of the project was to expand
domestic nitrogenous fertilizer capacity, in order to lessen India's dependence
on imports, taking advantage of the vast and newly developed Bombay High natural
gas resources as economic feedstock\. The location of a large nitrogenous
fertilizer plant in the state of Madhya Pradesh (MP), also aimed at stimulating
fertilizer consumption in that state, whose agricultural potential was then
under-utilized, by providing easier access to fertilizer\. Finally, the project
aimed at facilitating the rehabilitation of under-utilized plant capacity,
through the preparation of rehabilitation study of two coal-based plants\.
3\.2 Prolect Description: The project consisted of:
(a) the construction at Vijaipur of a green-field nitrogen fertilizer complex
including: (i) a single train 1,350 tons per day (tpd) ammonia unit; (ii)
two 1,100 tpd urea units; (iii) integrated power and steam generation
facilities, including a gas turbine generator, exhaust heat recovery unit
and two boilers of 180 tons per hour (tph); (iv) raw water storage and
treatment facilities, and demineralized water plant and cooling water
systems; (v) storage for 10,000 tons of refrigerated ammonia and 50,000
tons of bulk urea and facilities for bagging urea; (vi) other related
offsites, including maintenance workshops, warehousing, administration
building, laboratory, transport facilities and effluent treatment; and
(vii) infrastructure, including a township with 1,015 housing units and
social facilities, road and rail links, and transmission lines for power
supply from the grid; and
(b) a study to rehabilitate two large-coal based ammonia plants at Ramagundam
and Talcher owned by the Fertilizer Corporation of India (FCI), a state-
owned company\. These plants, which were commissioned in 1980, were
operating at 331 or less of their capacity, mainly due to technical
problems associated with the use of a new and difficult coal gasification
technology for ammonia production and interruptions in power supply\. This
study was to prepare an investment phase for which GOI had requested Bank
assistance\.
4\. Prolect Desian and Organization
4\.1 The project was designed, organized and implemented by the state-owned
National Fertilizer Limited (NFL), with the assistance of: (i) Harold Topsoe, of
Denmark, in association with Projects Development India Limited (PDIL), a state-
owned engineering firm, for the construction of the ammonia plant; (ii) Snam
Progetti, of Italy, in association with PDIL for the construction of the urea
plants; and (iii) PDIL for all the offsites\. The scope of consultants'
assistance included supply of licenses, basic design, detailed engineering,
procurement services, construction supervision, and technical supervision of
commissioning\.
4\.2 To implement the project efficiently, timely and within the budget
(Para\. 6\.1), from the start, NFL created project organization arrangements
including: (i) a dedicated high quality project team with autonomy and authority,
in charge of project management, coordination and supervision -- the team
included a planning and monitoring group and a quality control group supported
by a well designed project management system; and (ii) the introduction of a
scheme of financial incentives tied to the achievement of physical progress
targets, timely completion of milestones, actual costs congruent with budgeted
costs, and attendance of employees -- this system contributed to a strong
commitment and determination at all levels of management to implement the project
without delays and cost increases, and to develop the necessary systems and
techniques for project planning, implementation, monitoring and control -- in
1989, NFL was awarded first prize for excellence in project implementation by the
Ministry of Program Implementation\.
4\.3 Another key factor in the successful implementation of the project
was the timely availability of sufficient funds\. Actual project costs were well
below appraisal costs estimates (Para\. 6\.6 and 6\.7) \. Equity funds from GOI
allocations and the company's internal cash generation were abundant and
available on time\. In addition to the Bank loan, NFL also obtained financing
from the Overseas Economic Corporation Fund (OECF) of Japan and the Danish
International Development Agency (DANIDA) of Denmark (para\. 6\.9 and Part III
para\. 5D)\.
5\. Organization and ImDlementation of the Rehabilitation Studv
5\.1 The rehabilitation study of the two coal-based ammonia plants was
carried out by Krupp-Koppers, of Germany, at a cost of about US$2\.7 million\.
While the consultant recommended the implementation of investments proposed and
already well defined in their study, the Bank concluded from its review that
these investments were not economically viable and advised GOI to consider
closing-down these plants, at least until international urea prices improve\.
Substantial cost savings could have been achieved by dividing the study into two
phases, each preferably carried out by different consultants in order to avoid
possible conflicts of interest\. The first phase could have consisted of a pre-
feasibility study, and the second phase of final design and feasibility study if
justified by the result of the first phase\.
6\. Prol-ct Implementation
6\.1 Imvlementation Schedule: Mechanical completion and start-up of the
complex occurred on November 5, 1987, about two months ahead of the Bank's
conservative estimate\. Production of urea started on December 1, 1987\.
Commercial production was formally declared on July 1, 1988, three months behind
the Bank appraisal estimate, however, by that time, the plant was already
operating normally at more than 90% of its capacity and had already produced
about 175,000 tons of urea\. Completion as defined in Loan Agreement (as
operation for not less than 60 consecutive days, at an average production rate
per day of at least 80% of daily capacity), occurred about one month ahead of
schedule on September 30, 1988\. A detailed comparative schedule is presented in
Part III\.
6\.2 Early in 1988, NFL requested to use part of the project cost savings
to include three additional investments under the project: (i) an additional
5,000 tons ammonia atmospheric double-wall storage, for increased safety and
flexibility; and (ii) a purge gas recovery system which would reduce energy
consumption and increase capacity by 75 tpd of ammonia; and (iii) a 150 tpd
carbon dioxide (CO2) recovery system\. The Bank accepted this request as these
components were within the project scope and objectives and could reduce the
environmental impact of the project while improving its efficiency\. However,
their implementation suffered substantial delays and caused the closing date to
be postponed three times from June 30, 1989 to June 30, 1992\. These delays are
due to the late final GOI approvals of these investments\. The ammonia storage
became operational in November 1991, and the Purge gas recovery unit was being
commissioned in December 1992\. The CO2 recovery system is scheduled to be
ordered by the end of FY1992/93, and therefore has been excluded from Loan
financing\.
6\.3 The rehabilitation study for the two coal-based plants was contracted
to Krupp-Koppers of Germany, on July 11, 1985 and was completed in March 1986\.
6\.4 Main Problems Resolved Durina Immlementation: Several problems were
encountered during implementation\. All were detected on time and efficiently
resolved by NFL's project team without significant impact on the overall project
schedule and within the budget\. These included:
(a) delays in the supply of gas for power and steam generation-- gas was due
to be delivered by the Gas Authority of India Ltd (GAIL) before March 1987
for power and steam generation (October 1, 1986 according to the Loan
Agreement) and June 1987 for feedstock, however, gas supply only started
on August 19, 1987\. To avoid delay in pre-commissioning, the project team
quickly decided to adapt the power and steam generation plant to use light
distillates and to install the necessary facilities\. The steam and power
plants were commissioned, respectively, in March and May 1987, allowing
pre-commissioning to proceed on time and avoiding about four months delay -
- they were switched over to gas when it became available;
(b) Delays in the supply of water from the Ruthiai Dam-- the project team
assessed early that important delays of about two years would occur in the
completion of the dam and immediately implemented a contingent water supply
system from the Parvati river;
(c) unexpected rocky subsoil on site-- this required conceptual changes in the
design of levelling and grading works for the plants and the water
reservoir;
(d) error in the detailed engineering drawing for the concrete base of the
synthesis gas compressor, detected after its construction-- an innovative
solution was found which avoided considerable delays, it consisted in the
drilling of 30 millimeters diameter holes and epoxy grouting of the
reinforcement bars, while the proposed initial solution involved the
excavation of eight holes of one square meter through the two meter thick
concrete base; and
(e) inadequate road infrastructure for transport from the Kandla port to site
(1,265 kms) of the 410 tons ammonia converter-- the project team planned
this transport efficiently (which lasted about 5 months), carrying out the
necessary modifications to roads and bridges\.
6\.5 Procurement: Very early, NFL prepared model bidding documents for
Bank review and subsequently strictly adhered to Bank procedures\. NFL's project
management claims that adoption of International Competitive Bidding (ICB)
procedures resulted in time and cost savings\. In fact, NFL used equivalent
procedures for local procurement\. Procurement was carried out efficiently and
without delays\. This success was due to: (i) extensive reliance on consultants;
(ii) the formation of a procurement task force including personnel from NFL,
PDIL, and Topsoe, in charge of monitoring of inspections and expediting
consultants' reporting; and (iii) the formation of a special committee of NFL
Directors, which met frequently to expedite clearance of procurement
recommendations\.
6\.6 Proiect Costs: Actual financing requirements amounted to Rs\. 5,370
million versus Rs\. 6,304 million at appraisal, equivalent to US$397\.5 million
against US$618\.0 million (excluding Rs\. 210 million, equivalent to US$20\.6
million, considered at appraisal as short term debt financing to cover about 65%
of working capital requirements)\. The main deviations from original estimates
are summarized in table 1 below\.
Table I
Appraisal
Estimates Actual Costs % Variation
US$ Rs US$ Rs
Million Million Million Million US$ Rs
Original NFL Project:
- Total Installed Cost excluding Taxes 460\.8 4,700 336\.2 4,546 -27 -3
and Duties
- Taxes and Duties 82\.9 846 11\.7 158 -86 -81
- Working Capital 11\.1 113 10\.2 138 -8 22
- Interest During Construction and 60\.2 614 15\.4 206 -74 -66
Front-end fee
Total Financing 615\.0 6,273 373\.5 5,048 -39 -20
New Components - - 21\.3 288 - -
FCI Rehabilitation Study 3\.0 31 2\.7 34 -10 10
Tota Financina Required 618\.0 6,304 397\.5 5,370 -36 -15
6\.7 Actual total financing requirements are substantially below appraisal
estimates, about 15% in local currency and 36% in US Dollars\. The differences
in cost underrun between local currency and US Dollars are due to the devaluation
of the rupee which took place over the period\. In Rupees, the actual total
installed cost of the project net of taxes and duties and excluding the
additional components, is in fact only 3% below appraisal estimates\. However,
significant savings occurred in: (a) taxes and duties-- the project was exempted
from custom duties on direct imports and excise taxes on indirect imports; and
(b) interest during construction -- due to lower and later loan financing of the
project (paras\. 6\.8 and 6\.13); they permitted an important reduction in total
financing requirements\.
6\.8 Financing: Total funds relent by GOI to NFL from the Bank loan and
other cofinancing sources were substantially below appraisal estimates\.
Furthermore, a large portion of the loan proceeds, though disbursed for project
purposes, was not relent to NFL, and may thus be considered as having been used
to finance GOI's equity contribution to the project (which was transferred to NFL
in the originally planned amounts)\. In strict legal terms, this would appear to
be inconsistent with Section 3\.01 (b) of the Loan Agreement which required the
Borrower to relend the loan proceeds to NFL, rather than to pass them on in the
form of equity, as seems to have been the case for some part of the loan
proceeds\. However this in no way jeopardized the successful implementation of
the project, and would seem to have been a reasonable response to the substantial
savings in project costs (para\. 6\.7) which occurred, enabling NFL and the
Government to seize the opportunity to strengthen the company's balance sheet\.
The Bank has requested a clarification from GOI to set the record straight, and
will take appropriate action once this is received including, if necessary,
appropriate revision of the above provision of the Loan Agreement\.
6\.9 In addition to the Bank loan, GOI also received the following other
cofinancing funds for the project: (i) 7\.6 million Yen from OECF (Japan); and
(ii) DKR 167 million from DANIDA (Denmark)\. These funds also were not relent to
NFL\.
6\.10 Allocation of Bank Funds: In mid 1987, while construction was over
90% completed, GOI submitted a request to the Bank to reallocate the undisbursed
balance of the loan, evaluated at more than US$70 million, to finance civil works
as well as equipment already procured under LCB but financed by the company\.
Extensive discussions took place with respect to: (i) the form -- equity or debt-
in which the surplus funds -- which could be substituting for GOI contribution
to the project equity -- would be passed on from GOI to NFL; and (ii) the
possible financing of equipment for which reserved procurement may have been
used\. The Bank initially refused (September 1987) to make an exception to its
policy of canceling savings accruing as a result of lower than projected project
costs\. However, at the insistence of GOI, and in recognition of the inordinate
delays in responding to this request, the Bank reconsidered its decision and
agreed to finance civil works and erection contracts, but not equipment procured
under LCB\. Accordingly, the Loan and Project Agreements were amended on May 13,
1988, to permit the financing of civil works and erection contracts procured
under LCB of less than US$10 million each and up to an aggregate amount of US$50
million\. In fact, contracts totalling US$34\.81 million qualified and were
approved\.
6\.11 Disbursement Schedule: Due to the large reduction in project total
financing requirements, a total of US$36\.5 million was canceled, reducing the
Bank loan to US$167\.1 million\. As of December 31, 1992, a total of US$166\.2
million had been disbursed and the loan had an undisbursed balance of US$0\.9
million\. However, US$0\.5 million out of special account has to be refunded to
the Bank, which would reduce total disbursed amount to US$165\.7 million and
increase cancellation to US$37\.9 million\.
6\.12 The project closing date of June 30, 1989 was extended three times to
June 30, 1992 to allow the financing of civil works and of additional components
(para\. 6\.2) \. However, by the original closing date, disbursements already
amounted to US$158\.3 million, or 95% of the loan amount (net of cancellation),
and the project was already in commercial operation\. During the three-year
extension, additional disbursements totalled less than US$8 million\. These
extensions permitted the implementation of new components within the project
scope and objectives and resulting in increased safety, flexibility and capacity,
and in substantial energy savings\. Furthermore, they provided the Bank with an
opportunity: (a) to accompany the first years of operation of a project
efficiently implemented by a public sector company; and (b) to continue to follow
developments in the fertilizer sector, at a time when policy dialogue on
sectorial issues between the Bank and the Government had stopped (this project
was among the last two Bank fertilizer projects in India)\.
- 7 -
6\.13 Compared to appraisal estimates, substantial disbursement delays
occurred at the beginning of the project\. Appraisal estimates may have been
over-optimistic because foreign consultants contracts had not yet been signed by
negotiations -- this can explain delays in equipment procurement, which had to
await completion of basic engineering\. However, this did not have a significant
impact on overall implementation of the project (para\. 6\.1)\. The pace of actual
disbursements remained lower than appraisal estimates, but above the Bank
profile\. It was also slower than that of total project expenditures (para\. 3 of
Part III) -- this was normal however, given the differences in types of
expenditures financed from the Bank loan and other resources\.
6\.14 Market Development and Seedina Proaram: It was essential for NFL to
develop higher fertilizer demand in the new target market areas (Madhya Pradesh,
Rajasthan, and Uttar Pradesh) where consumption was low before the plant came on-
stream\. As expected at appraisal, the company developed a fertilizer seeding
program aimed at gradually increasing fertilizer sales in these states and
building-up NFL's marketing organization and dealer network\. To implement this
program, NFL was awarded about Rs\. 3\.7 million from the EEC as part of the INDO-
EEC Fertilizer Education Project\. Phase 1 of this project was executed by NFL
in the states of Madhya Pradesh, Rajasthan, and Uttar Pradesh between 1985 and
1988\. Phase 2 of this project has been under execution in ten districts of
Madhya Pradesh since October 1988, and will be completed in March 1993\. The
objectives of this education project are to increase consumption of fertilizers,
efficiency of fertilizer use, and develop an integrated input supply system\.
It is especially aimed at small and marginal farmers\.
6\.15 Operation Preparation: A separate team headed by a general manager
was formed early-on to implement the project, organize future operations ahead
of time, and assume the responsibility for plant operation at a later stage\.
This project team was strengthened as needed during project implementation, from
83 members in july 1984 to about 800 in 1988, wheft the plant started commercial
operations\. Operation preparation activities took place during project
implementation and, inter-alia, included human resources training, preparation
of management information systems, and of safety, environmental and operation
norms\.
7\. Prolect Results
7\.1 Prolect Oblectives and Physical Results: Overall, the project
objectives were more than fully met\. The Vijaipur plant production levels and
rates of capacity utilization since start-up are presented in Part III, para\. 6A\.
The rate of capacity utilization during the first year of operation 1988/89 was
over 94% and increased steadily to 118% and 123% for the ammonia and urea plants
respectively in 1991/92\. During 1992/93, plant operations stopped three weeks
for programmed maintenance, however it is expected that capacity utilization of
both plants will be maintained at 100% of their nominal capacity\. These high
rates of capacity utilization partly reflect: (a) GOI's decision to select Harold
Topsoe, as process licensor, who designed the ammonia plant less conservatively
than usual in the industry; and (ii) the use of high calorific value natural gas
since start-up\. It is estimated that the plants are capable during their entire
economic life of maintaining a sustained 110 capacity utilization, which is
substantially higher than the 95% maximum capacity utilization assumed at
appraisal to be achieved in the third year of operation\. This is equivalent to
798,000 tpy of urea and about 27,000 tpy of excess ammonia (from a total ammonia
production of about 491,000 tpy)\.
- 8 -
7\.2 MXrket: In 1991/92, actual demand for nitrogenous fertilizer in India
was in line with appraisal estimates, increasing from 4\.2 million tons of
nutrients per year in 1982/83 to about 8 million tons in 1991/92 (Annex 1-1)\.
Supply increased even more than the most optimistic appraisal projection, from
3\.4 million tons of nitrogen in 1982/83 to 7\.3 million ton in 1991/92, despite
the fact that only three new ammonia plants based on Bombay-High gas started
operations in addition to this project, instead of the five originally expected\.
Higher supply is mainly due to a larger than expected average capacity
utilization of nitrogen plants in India, which reached 89% in 1991/92\. In
1991/92, the 118% capacity utilization achieved by the project was higher than
the average capacity utilization of nitrogen plants in both public sector (69%),
and private sector plants (97%), and was about in line with capacity utilization
of cooperative sector plants (113%)\.
7\.3 In spite of lower sales during project implementation compared to
appraisal estimates, and some inventory build-up during the first two years of
operations, NFL developed its market much better than expected -- in the targeted
market areas of Madhya Pradesh, Rajashtan and Uttar Pradesh states, NFL built-up
its sales continuously from 65,400 tpy of nitrogen in 1984/85 to 360,000 tpy in
1990/91 and 408,000 tpy in 1991/92, compared with 315,000 tpy estimated at
appraisal\. Although, sales during the project implementation period were
significantly lower than estimated at appraisal, they increased rapidly when the
Vijaipur plant started\. As a result of the seeding and education programs, sales
from the Vijaipur plant started at a level of 197,000 tpy of nitrogen in 1988/89
and increased to 367,800 tpy in 1991/92\. NFL's total marketing program and
market share in the Vijaipur project market are presented in Annex 1-2\. NFL's
total country-wide sales of about 1\.08 million tons of nitrogen in 1990/91 were
also higher than appraisal estimates of 0\.88 million tons at the same date\.
7\.4 Due to faster than envigased increase in production and higher
capacity utilization of the Vijaipur plant, some inventory build-up occurred
during the first two years of operation, until the time that market fully
developed\. In order to reduce these inventories, in 1990/91 and 1991/92, NFL
respectively delivered about 30* and 22% of total sales from vijaipur out of the
originally targeted area\. The average transport distance for sales from vijaipur
was about 790 km in 1991/1992 compared to about 600 km estimated at appraisal\.
It is expected, however, that this average will rapidly decrease as accumulated
inventories decrease to acceptable levels\.
7\.5 In the State of Madhya Pradesh, the seeding and education program had
a major impact as the consumption of nitrogenous fertilizer reached 477,000 tons
of nutrients in 1990/91 versus 279,000 tons estimated at appraisal\. Increase in
consumption since 1987/88 in Madhya Pradesh corresponds to NFL's sales in this
state from Vijaipur (184,000 tons of nitrogen in 1990/91)\. In the states of
Rajasthan and Uttar Pradesh, NFL sales were developed as planned at appraisal\.
7\.6 Economic rates of return: The project economic rate of return (ERR)
is now estimated at 31% and is substantially higher than the base case rate of
18\.6% estimated at appraisal\. The difference is primary due to the substantially
higher economic value of natural gas assumed at appraisal\. The assumptions used
in estimating the revised ERR are summarized in para\. 6B-2 of Part III\. Para\.6B
of Part III also gives a comparison of appraisal and actual projections of the
economic and financial value of gas\. At the projected economic values used at
appraisal for natural gas (1984 constant US$152 for 1990/91, US$204 for 1995/96
and US$237 for 1999/00), the project's ERR would be highly negative, despite the
high plant capacity utilization achieved (in the appraisal estimates, the high
value of natural gas was compensated for by substantially high projected economic
prices of urea)\. However, the ERR remains at an acceptable 17% even if the
economic value of natural gas were to double\. The project remains economically
viable under any reasonable scenario and is mainly sensitive to the gas price\.
The ERRs and the sensitivity analyses are presented in para\. 6B-1 of Part III\.
Calculations for import parity of urea price and projected economic value of gas
- 9 -
are also presented in Annex 2-1\. Also, economic cost and benefit streams for the
base case, which were calculated using prices in 1991/92 constant Rupees, are
presented in Annex 2-2\.
7\.7 Financial Rate of R-turn: The project financial rate of return (FRR)
is estimated at 15\.6% slightly lower than the appraisal estimate of 16\.6%\.
Although, urea retention prices are much lower than those projected at appraisal,
their impact is compensated by: (i) the higher achieved rate of capacity
utilization -- more than 110% compared with 95% estimated at appraisal; and (ii)
the lower capital costs of the project\. The assumptions used for estimating the
FRR and the results of actual sensitivity analysis and those of appraisal
estimates are presented in para\. 6C of Part III\. The financial cost and benefit
streams for the base case, which were calculated using prices in 1991/92 constant
Rupees, are presented in Annex 2-3\.
7\.8 Revenues are based on projected retention vrices\. These were estimated
on the basis of actual retention prices for FY1992/93; actual project operating
costs (FY1990/91 and 1991/92); and the present retention price formula (Part III,
para\. 6C-2)\. Since April 1988, the retention price formula assumes a capacity
utilization for natural gas based plants of 80% the first year of operation, 90%
from the 2nd to the 10th year (85% for fuel oil-based plants) and 85* from the
11th year onwards (80% for fuel oil-based plants)\. Appraisal estimates were
based on a plant capacity utilization of 80%, which was the norm then\. Retention
price calculations and projections, compared with appraisal estimates, are
presented in Annex 2-4\.
7\.9 Since January 1992, prices paid for gas, Rs\. 2,739 per thousand Ncm
(Rs\. 2,597 in 1991/92 terms) was significantly above its economic value of
Rs\. 2,014\. It was conservatively assumed that gas prices would remain in
constant terms at its 1992 level\. Also, urea retention prices (Rs\. 3,733 per ton
over the three years pricing period 1990-93, projected Rs\. 4,052 per ton for the
three years pricing period 1993-96,) are much lower than their international
import parity (Rs\. 5,727 in 1991/92, Rs\. 4,841 in 1992/93, projected at Rs\. 5,023
in 1993/94)\. The Vijaipur urea plant then, is taxed by the retention price
scheme and the gas pricing system\.
7\.10 The project is financially sensitive to both gas and urea prices\. The
FRR would increase to more than 21% if the fertilizer sector was deregulated,
i\.e\. staring in 1993/94, NFL could buy natural gas at its fuel oil equivalent
value and sell urea at its import parity\. Urea retention prices and natural gas
prices are compared with their respective economic value in Annex 2-1\.
7\.11 Financial Performanc-: Selected financial data and performance ratios
are presented in Annex 3\. Since Loan Approval in May 1984, NFL has been in
compliance with Bank financial covenants\. However, the company's return on
equity (not subject to a covenant) decreased from 11\.1% in FY 1987/88 to 1\.3% in
FY 1988/89, due to an important reduction in retention prices of all NFL's plants
in April 1988, when they were revised for the 5th pricing period-- in its effort
to reduce the burden of fertilizer subsidies, GOI revised downward the norms for
depreciation (the depreciation period increased from 15 to 20 years) and capacity
utilization (para 7\.8), applicable to the retention price formula\. In addition,
retention prices of NFL's existing plants of Nangal, Bhatinda and Panipat were
decreased, due to the full depreciation of these plants assets\. Nevetheless,
NFL's return on equity increased again to 6\.1% in FY1990/91 and is expected to
improve substantially after 1991/92 -- in 1989, GOI decided to reverse its 1988
decision regarding the depreciation norm, and this resulted in some increase in
the retention price for Vijaipur\. In addition, some improvement in retention
prices was also obtained in 1991 for Bhatinda and Panipat on account of the
installation of captive power plants\.
- 10 -
7\.12 Environmental Impact: The project is located in a generally barren
and scarcely populated area\. Nevertheless, adequate pollution control measures
have been adopted: adequate effluent treatment and discharge facilities were
constrncted in accordance with Indian environmental standards, which are
comparable to standards applied for such installations in industrialized
countries and/or other environmental standards acceptable to the Bank\. Major
effluents from the plant include: (i) liquid effluents from the ammonia and urea
plants and from the water treatment plant; (ii) dust emissions from the urea
plant prilling tower; and (iii) sludge from the water treatment plant\. In
Vijaipur, NFL confronted a situation of limited water availability with risks of
water shortage, and a serious problem of liquid effluent disposal during the dry
season, when the Chopin and Parbati rivers are without flow\. To overcome these
risks, the plants were designed for complete recovery and reuse of process and
steam condensates, maximum reuse of treated liquid effluent and recycle of
ammonia (Annex 4-para\. 5)\.
7\.13 In addition to the compulsory initial environment assessment on the
basis of which the project was designed, a comprehensive environment impact
assessment (EIA) of the plant, sponsored by the Environmental Planning and
Coordination Organization of Bhopal (Madhya Padesh), was prepared in 1987/88 by
the National Environment Engineering Research Institute (NEERI)\. The study was
prepared on the basis of data collected before and after commissioning of the
plant\. NFL implemented most of the recommendations of the NEERI's EIA, including
the plantation of a green belt of about 100,000 trees which has been developed
using treated liquid effluent\. Furthermore, in order to avoid any water pollution
by chromium, NFL decided in July 1991 to stop using chromate inhibitor for the
treatment of cooling water and started using a more expensive phosphate-based
inhibitor\. Finally, NFL implemented additional investments: Ci) an additional
5,000 tons double wall ammonia storage for increased safety; (ii) a purge gas
system to reduce energy consumption and emission of carbon dioxide (CO2) in the
atmosphere; and (iii) a reverse osmosis plant for the treatment of cooling water
blowdown\.
7\.14 During 1992, after more than four year of operation of the Vijaipur
plant, NEERI carried out a new EIA to assess the actual impact of the project and
estimate the potential environmental impact of the plant expansion project\. A
draft report has already been submitted to NFL\. Its overall conclusion is that
the Vijaipur's pollution control measures and systems are effective and all
effluents are within limits specified by MINAS-- its main conclusions are: (i)
overall air quality within and around the fertilizer complex is well within the
limits specified by MINAS; (ii) the quality of treated effluent is well within
the limit of MINAS, and all effluents are used for irrigation of green belt and
in-plant horticulture; and (iii) the noise level is well below the limit of
MINAS\. The Vijaipur environmental control facilities; the environmental impact
assessment carried out at the time of commissioning; and of the recent assessment
carried out after four years of operation are summarized in Annex 4\.
7\.15 Disaster Manaaement: NFL has developed and implemented a detailed
disaster plan in Vijaipur, which includes: (i) an inventory of potential
disasters and precautions to be taken; (ii) an emergency plan; (iii) an
evacuation plan; (iv) emergency pollution control in the event of disaster; and
(v) a disaster plan control chart\. Finally, NFL as part of the 1992's EIA study
has undertaken a risk assessment study leading to the review of the current
disaster management plan, and a draft report is expected from NERRI in early
1993\.
7\.16 Prolect Impact: In addition to the expected impacts of such a large
project in a remote agricultural area (direct and indirect employment, increased
trade, company town, educational, medical and sanitary facilities, and
infrastructure etc\.), the project had a significant impact in: (i) contributing
to expand the domestic fertilizer supply at economically sustainable level; (ii)
expanding fertilizer use in the state of Madhya Pradesh-- fertilizer consumption
- 11 -
in the state increased much more than expected owing to fertilizer availability
from shorter distances and to the seeding and education program (para\. 7\.5);
(iii) facilitating transfer of technology to indian firms-- the project was
implemented with a major involvement of indian firms, which, by working in
association with international process licensors, could gain valuable know-how
and experience and further improve their capabilities in carrying out similar
projects; and (iv) development of human resources through training inside and
outside the institution;
8\. Prolect Sustainability
8\.1 It is estimated that, during its economic life, the plant is capable
of maintaining a sustained 110 plant capacity utilization\. If, in line with the
present trend for economic policy reform, GOI decides to deregulate the
fertilizer sector, at projected import parity prices the NFL's Vijaipur plant
would be able to withstand competition from imports, even in the absence of
protective tariffs, while paying natural gas at its fuel oil equivalent value\.
In fact, such decision would improve the project's FRR from the actual estimated
15\.6% to 21% (para\. 7\.10)\. In addition, if NFL implements its investment program
for CO2 recovery and energy conservation, the project sustainability will become
even greater\. The major risk, still faced by the project is that in order to
reduce the financial burden of the fertilizer subsidy, GOI may decide to revise
the urea retention price norms further downwards -- if the retention price of
urea for Vijaipur decrease by 20% below its present level (Rs\. 3,733 in 1992/93),
the project would become less attractive, and its FRR would decrease to about 6%\.
Finally, GOI and NFL are currently considering the production capacity
duplication of the Vijaipur plant\. If, as NFL's recent market study states,
enough product can be sold at viable distances, the doubling of capacity would
further improve the project's sustainability by reducing fixed cost per ton of
urea provided adequate gas supply would be made available for the expansion by
GAIL\.
8\.2 In the long term, sustainable operation of the plant is also a
function of adequate supplies of natural gas feedstock and efficient operation
of the HBJ pipeline\. The project utilizes a maximum of 1\.72 million cubic meters
per day (MMCMD) of natural gas (1\.38 MMCMD if gas for steam and power generation
is excluded) out of 18 MMCMD of gas currently transported by the HBJ pipeline,
the capacity of which can be further increased to 33 MMCMD\. In 1990, the
Department of Petroleum and Natural Gas estimated the natural gas potential
supply from the western region's fields and potential demand of gas from these
fields as follows in MMCMD:
Supply: 75\.0 3
Demand:
- Fertilizer 28\.0
- Power 40\.0
- LPG and Petrochemicals 7\.0
- Sponge Iron 6\.0
- Other 10\.0
Total Demand 91\.0
Therefore, in the western region, there is an excess demand of natural gas,
the bulk of which is used by the fertilizer and the power sectors, where demand
3 The Staff Appraisal Report of the Gas Flaring Project (Loan 3364-IN)
indicates a total supply of 61 MMCMD of natural gas for the Country's western
region\.
- 12 -
is mainly generated by investment decisions taken by the Government\. In fact,
a long term supply contract was signed between NFL and GAIL on October 9, 1991
(Part III - para\. 8)\. However, in accordance with this contract, GAIL has
already notified NFL that, starting April 1, 1993 it will supply gas to NFL's
Vijaipur plant only as feedstock, but not for power and steam generation\. This
shift is not expected to have an impact on the project viability and furthermore
the Vijaipur's steam and power generation plant is already equipped with the
necessary facilities to operate with light distillates (para\. 6\.4)\.
8\.3 The project has been implemented and is operated in an environmentally
sound manner\. The company is aware of the risks of the plants and has adopted
the necessary safety measures\. Therefore, the risks of problems with local
communities are small\.
9\. Bank Performance
9\.1 Bank performance during project identification, preparation, and
appraisal was satisfactory and procurement supervision was good\. As, the project
was problem-free, the supervision missions averaged one mission per year and
except for two missions, they consisted of one person during the implementation
phase (Part III - para\. 7B)\. However, more frequent and comprehensive missions
could have been helpful in maintaining sectoral dialogue with the Borrower\.
9\.2 The Bank's major objective in this as well as prior projects in the
sector was to support GOI's strategy for increasing domestic production of
fertilizer\. The main emphasis was on improving project implementation and
efficiency; on a rational selection of projects; and on expanding production
facilities and improving capacity utilization rates\. The important sectoral
issues were not addressed in this project, except for obtaining a commitment from
GOI during the project preparation stages, to reduce total fertilizer subsidies
by improving operation and management of existing public sector plants\. Although
the project was very successful in meeting its objectives, the Bank could have
adopted a broader sectoral approach at the early stages of project appraisal\.
However, this project was one of the last two Bank operations in the sector,
together with the Cooperative Fertilizer Sector Project (Loan 2729/2730),
approved in June 1986\. The reform measures proposed by the Bank being considered
too radical by GOI, and the policy dialogue in the fertilizer sector between GOI
and the Bank ceased around 1987\.
10\. Borrower and NFL (the Beneficiary) Performance
10\.1 Except for implementation of the additional investments, the project
was professionally designed, organized and implemented\. The plant was completed
on schedule and within cost, and is being operated efficiently at more than 110%
of its nominal production capacity\. NFL was also able to prepare commercial
operations in a timely manner and develop adequate markets\. NFL has been in
compliance with Bank financial covenants since loan approval3\. As already
indicated, the Vijaipur project was so efficiently implemented that it was
awarded first prize for excellence in project implementation, by the Ministry of
Program Implementation in 1989 (para\. 4\.2)\.
10\.2 This success can be attributed to several strengths of NFL, which may
constitute useful lessons for the implementation of any large public or private
sector project:
3 Although GOI provided sufficient funds to NFL to facilitate successful
and timely project implementation, it appears that GOI appears to have passed on
funds to NFL as equity rather than as a loan as required under onlending
agreements reached between the Bank and GOI (para 6\.8)\.
- 13 -
(i) from the start, NFL provided the project with a dedicated high
quality project team, headed by a general manager, with autonomy and
authority, in charge of project preparation, management,
coordination and supervision\. Furthermore, the same team organized
and took the responsibility for plant operations at a later stage\.
This project team included a professionally competent planning and
monitoring group and a quality control group, supported by a well
designed project management system based on a detailed project
execution plan;
(ii) NFL established an effective financial incentive scheme for project
execution, which contributed to commitment to the project at all
levels of management;
(iii) the project was provided with sufficient and timely funds;
(iv) through extensive reliance on consultants and on competitive
bidding, and a strong procurement management system, NFL could carry
out international and domestic procurement efficiently and without
delays; and
(vi) NFL timely provided on-site housing facilities and services
essential for efficient implementation in such a remote area\.
11\. Prolect Relationship
11\.1 The success of the Vijaipur project is in part a result of the high
level of professionalism of all parties involved and their good relationship; the
Borrower reliance on, and constructive relationship with, the Consultants; and
the amiable working relationships between the Bank and the Borrower\.
12\. Consulting Services
12\.1 The project obtained process technologies, and procurement,
engineering and construction management services from well known international
firms, in association with a state owned engineering firm (para\. 4\.1)\. All
consultants performed well and they provided valuable assistance to NFL for the
successful implementation of the project\. NFL also benefitted from the
experience acquired by the consultants during the earlier construction of the
Thal plant, which included two identical ammonia units\.
13\. Prolect Documentation and Data
13\.1 The legal documents of the project were adequate for achieving the
project objectives\. The Staff Appraisal Report and the documentation in the
Project File provided adequate background for the review of project
implementation\. A few weeks ahead of the Bank completion mission in November
1992, the Bank requested NFL to prepare the project-related information and data
needed for the preparation of the PCR\. All the requested information, was
provided and discussed during the mission\.
13\.2 The preparation of statistical data needed for Part III of the PCR is
time-consuming\. An effort should be made by the supervision missions to obtain
this information in the form requested in the PCR guidelines, early from the
start of project implementation, and maintain it up-to-date\.
- 14 -
PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVZ
Following are the verbatim comments of NFL, responding on the
Borrower's behalf:
Confirmation of Information
The factual information furnished in Part I-III of the PCR, is found
to be substantially adequate\. The statistical information, financial analysis
and presentation of the various aspects covered in the Report are found to be
precise and accurate\.
Review of the Project from Bank's perspective as contained in Part I
of PCR is found to be quite comprehensive and meaningful\.
Bank's Performance
The Project has immensely benefited by the indepth involvement of the
Bank in all stages right from project appraisal through procurement and
contracting, right upto the plant going into commercial production and
subsequently in implementation of additional schemes covered in the Loan\.
Adherence to procedures prescribed by the Bank and the periodic follow-up by Bank
officials during various phases helped the project implementation within approved
cost and time schedule\.
Borrower's Performance
NFL Project team comprised of officials conversant with the World Bank
procedures from the previous projects\. This helped in establishing effective
coordination between project authorities and the Bank\.
Lessons learnt during project implementation are:
(i) Adequate attention is needed for timely development of housing,
hygiene and health facilities for the construction workers to avoid
manday loss due to sickness; and
(ii) It is necessary to establish extensive fire fighting facilities and
safety measures for meeting exigencies during construction period\.
Prolect Relationship
Right from the inception, cordial and objective relationship developed
between the Project team and the Bank officials\. This resulted in considerable
saving in time for obtaining speedy clarifications and approvals from the Bank
required during implementation of the project especially in procurement phase\.
Relationship with and Performanc, of Cofinanciers
NFL's relationship with the cofinanciers was cordial and objective\.
As such, no difficulty was experienced in obtaining approvals and loan
disbursement\.
- 15 -
PART III: STATISTICAL INFORMATION
1\. Bank GrouD ODerationo in the Fertilizer Sector
Loan/Credit Proiect Name Year of Approval Status Loan in
Million
USU
Credit 264-IN Fertilizer Cochin July 1, 1971 Closed: June 30\. 1977 20\.1
Completion: March 12, 1980
Credit 279-IN Fertilizer Gorakhpur Dec\. 21, 1971 Closed: March 31, 1976 10\.0
Completion: Sep\. 9, 1976
Credit 357-IN Public Sector Fertilizer Jan\. 30, 1973 Closed: March 11, 1977 58\.0
Nangal Completion: August 31, 1979
Credit 520-IN Fertilizer Sindri Nov\. 26, 1974 Closed: Sep\. 30, 1978 91\.0
Completion: Dec\. 22, 1981
Credit 481-IN Fertilizer Trombay June 18, 1974 Closed: Dec\. 12, 1977 50\.0
Credit 598-IN Fertilizer Industry Dec\. 16, 1975 Closed: Dec\. 31, 1982 105\.0
Credit 1125-IN Hazira Fertilizer Mar\. 31, 1981 Closed: June 30, 1992 400\.0
Loan 1079-IN IFFCO Fertilizer Jan\. 07, 1975 Closed: Dec\. 31, 1980 109\.0
Completed: June 29, 1982
Loan 2415-IN Madhya Pradesh Fertilizer May 17, 1984 Closed: June 30, 1992 203\.6
Loan 2729/2730-IN Cooperative Fertilizer June 26, 1986 Under implementation, expected to be 302\.2
closed in June 30, 1993
EFC Indian Explosives Ltd 1967 Loan: 8\.6
Equity: 2\.9
IFC Zuary Agro-Chemicals Ltd 1969 Loan: 15\.1
Equity: 3\.8
IFC Deepak Ferdlizer and Nov\. 13, 1979 Loan: 7\.5
Petrochemnical Corporation Equity: 1\.2
IFC Coromandel Ferdlizer Ltd 1981 Loan: 15\.9
Total: 141\.9
The Bank Group has been a major partner in India's effort to increase
fertilizer production\. Total financial contribution of the Bank Group has
amounted to about US$1\.4 billion\. However, the Cooperative Fertilizer Loan (Loan
2729/2730), approved in June 1986, was the last operation in the fertilizer
sector -- it was designed to assist GOI in (i) expanding and increasing the
efficiency of fertilizer supply in India; (ii) develop and implement a system to
improve management of public sector companies; and (iii) assist in defining and
implementing a program of policy reform and subsidy reduction\. The reform
measures proposed by the Bank were considered too radical, and the policy
dialogue in the fertilizer sector between GOI and the Bank largely ceased around
1987\.
- 16 -
2\. Prolect Timetable
Date Date Date
Item Planned Revised Actual
- Identification Mission 02/1982
- Preparation (i) 11/82-01/83
- Appraisal Mission 02/83 02/83-03/83
- Post-appraisal Mission (ii) 01/84-02/84
- Loan Negotiations 10/83 03/84
- Board Approval 01/84 05/08/84 05/17/84
- Loan Signature 05/25/84
- Loan Effectiveness 08/24/84
- Loan Closing (iii) 06/30/89 06/30/90, 06/30/92
06/30/91,
06/30/92
- Loan Completion 09/30/88 08/88
Comments:
(i) Following the identification mission, and at the request of GOI, NFL
prepared a feasibility study which was received by the Bank in November 1982\.
(ii) The project was initially appraised in March 1983 on the assumption that
M\.W\. Kellogg had been selected to provide technology and engineering services for
the ammonia plant, as was conveyed by GOI to the Bank\. However, before the
contractual arrangements with Kellog were finalized, GOI revised its earlier
decision and selected Harold Topsoe as the engineering contractor for the ammonia
plant\. A post-appraisal mission visited India in January/February 1984 to assess
the impact of the change of technology and engineering arrangements for the
ammonia plant on the project's implementation arrangements, its capital cost
estimate and its viability\.
(iii) The project original closing date was extended three times to allow the
financing of civil works and of additional components, which were approved by the
Bank, for recovering purge gases and increasing ammonia storage capacity\.
- 17 -
3\.
Cumulative Loan Disbursement
BaLk Fiscal Year Total Actual
and Semester Appraisal Revined Countr Actual as ' Prolect
adlua BEstimate Estimate Profile Actual Of Estimated Excenditures
1985 - Dec, 84 9\.3 0\.5 2\.1 0\.5 5 12\.0
- Jun, 85 21\.1 6\.9 7\.1 6\.9 33 35\.5
1986 - Dec, 85 48\.5 11\.6 16\.7 11\.6 24 64\.3
- Jun, 86 89\.5 46\.2 30\.1 46\.2 52 153\.8
1987 - Dec, 86 123\.2 72\.2 50\.1 72\.2 59 232\.5
- Jun, 87 152\.0 112\.9 70\.2 112\.9 74 275\.5
1988 - Dec, 87 176\.5 125\.9 86\.9 126\.0 71 313\.7
- Jun, 88 191\.7 125\.9 103\.6 126\.0 66 361\.6
1989 - Dec, 88 199\.5 150\.0 117\.0 150\.0 75 364\.9
- Jun, 89 203\.6 158\.3 127\.0 158\.3 78 368\.4
1990 - Dec, 89 158\.3 133\.7 158\.3 78 372\.1
- Jun, 90 171\.6 140\.4 159\.4 78 375\.8
1991 - Dec, 90 179\.6 147\.1 163\.6 80 377\.1
- Jun, 91 184\.6 150\.4 164\.8 81 378\.4
1992 - Dec, 91 153\.7 166\.2 82 379\.4
- Jun, 92 157\.1 166\.2 82 380\.3
1993 - Dec, 92 160\.4 166\.2 82 381\.8
- Jun, 93 165\.4 383\.4
1994 - Dec, 93 167\.1 390\.6
Loan Disbursements & Proj\. Expenditures
Estimated and Actual
450
400 -
350
300
250
200_
100
50
0
1985 1986 1987 1988 1989 1990 1991 1992 1993
Bank FY
O Appraisal Estimates DisburtL Profile A Actual Disbursement
X Tot\. Project Exp\.M
- 18 -
4\. Prolect ImDlem-ntation
ADpriralsal
Indicdor NFL Estimates Estimates Actual
Zero Date April 1, 1984 April 1, 1984 June 1, 1984
Detailed Engineering Completed March 1986 March 1986 May 1986
Procurement of Equipment:
- All Purchase Orders Placed March 1985 March 1985 October 1986
- Supply Received October 1986 October 1986 July 1987
Civil Works Completed December 1986 December 1986 May 1987
Piping:
- Work Orders Placed March 1985 March 1985 January 1985
- Installation Completed April 1987 April 1987 NA
Electrical:
- Purchase Orders Placed January 1985 January 1985 April 1985
- Installation Completed February 1987 February 1987 March 1987
Instrumentation:
- Supply Received November 1986 November 1986 September 1986
- Installation Completed April 1987 April 1987 March 1987
Insulation & Painting Completed April 1987 April 1987 July 1987
Initial Gas Supply November 1, 1986 November 1, 1986 August 19, 1987
Mechanical Completion May 1, 1987 January 1, 1988 November 5, 1987
Commercial Production October 1, 1987 April 1, 1988 July 1, 1988
Project Completion as per Schedule 2 of Loan September 30, 1988 October 1988
Agreement
Additional Components
AAmmonia Storage in Operation November 1991
- Commissioning of Purge Gas
Recovery System December 1992
- CO2 Recovery System Not yet started\l
Coal-Based Plants Rehabilitation Study July 11,1985
- Contracted March 1986
- Completed
\1 C02 recovery system was expected to be ordered by December 1992\.
- 19 -
5 Project Costs and Financing
A\. Project Costa
(Rx\. Million)
Appraisal Estimates Actual Costs
Indirect Indirect
Foreign Foreign Local Foreign Foreign Local
Category Exchange Exchange Costs Total Exchange Exchange Costs Total
1\. Eguipment and Spares:
Ammonia Plant 688 52 100 840 647 79 152 878
Urea Plant 233 60 113 406 262 62 116 440
Power & Steam Generat\. 327 3 6 336 320 8 16 344
Power Distribution 10 26 51 87 9 23 46 78
Other Offaites 61 92 175 328 69 134 254 457
Spares 148 28 52 228 233 25 46 303
Construction Tools 29 15 31 75 39 2 4 45
Sub-Total 1496 276 528 2300 1579 332 634 2545
2\. Ocean Freight & Insurance 165 - - 165 Included in Supplies
3\. Inland Handling - 9 90 99 - 11 107 118
4\. Duties & Taxes - - 846 846 - 0 158 158
Delivered Cost of Equipment: 1661 285 1464 3410 1579 343 899 2821
5\. License & Engin\. Services 136 - 132 268 227 0 172 399
6\. Project Mngt & Insurance 6 - 116 122 - 0 214 214
7\. Land & Site Development - - 89 89 - 0 162 162
S\. Civil Works & Buildings - 20 337 357 - 28 471 499
9\. Erection 78 22 290 390 8 15 199 222
10\. Commissioning Charges 16 - 102 118 - 0 169 169
11\. Township - 8 114 122 - 10 148 158
12\. Power, Offaites, Cons\. Facilities - 3 34 37 - 5 55 60
Base Cost Estimate (BCH) 1897 338 2678 4913 1814 401 2489 4704
Physical Contingencies 95 17 134 246 - - - -
Price Escalation 120 30 237 387 - - - -
Total Installed Coat 2112 385 3049 5546 1814 401 2489 4704
Working Capital \1 10 - 103 113 - 0 138 138
Total Project Cost 2122 385 3152 5659 1814 401 2627 4842
Interest during Construction 466 - 142 608 - 0 200 200
Front-End Fee 6 - - 6 6 - - 6
New Components:
- Add\. Ammonia Storage - - - - - 24 44 68
- Purge Gas Recovery - - - - - 18 33 50
- C02 Recovery - - - - - 60 111 170
Total NFL Financing Req'd 2594 385 3294 6273 1820 502 3014 6336
FCI Rehabilitation Study 26 - 5 31 34 - - 34
,\. \. \. \. \. \. \. \. \. \. \. \.
Tota Financing Required 2620 385 3299 6304 1854 502 3014 5370
\1 Excluding Rs\.210 million (US$20\.6 million) estimated at appraisal for short term debt financing to cover
about 65% of working capital requirements\.
- 20 -
B\. Prolect Costs
(USS\. Million)\1
Appraisal Estimates Actual Costs
Indirect Indirect
Foreign Foreign Local Foreign Foreign Local
Item Exchange Exchange Costs Total Exchange Exchange Costs Total Change
1\. Equipment and Spares;
Ammonia Plant 67\.5 5\.1 9\.8 82\.4 47\.9 5S\.8 11\.2 64\.9 -21
Urea Plant 22\.8 5\.9 11\.1 39\.8 19\.4 4\.6 8\.6 32\.5 -18
Power & Steam Generat\. 32\.1 0\.3 0\.6 32\.9 23\.7 0\.6 1\.2 25\.4 -23
Power Distribution 1\.0 2\.5 5\.0 8\.5 0\.7 1\.7 3\.4 5\.8 -32
Other Offuites 6\.0 9\.0 17\.2 32\.2 5\.1 9\.9 18\.8 33\.8 5
Spares 14\.5 2\.7 5\.1 22\.4 17\.2 1\.8 3\.4 22\.4 0
Construction Tools 2\.8 1\.5 3 \.0 7\.4 2\.9 0\.1 0\.3 3\.3 -SS
Sub-Total 146\.7 27\.1 51\.8 225\.5 116\.8 24\.6 46\.9 188\.2 -17
2\. Ocean Freight & Insurance 16\.2 - - 16\.2 Included in Supplies
3\. Inland Handling 0\.9 8\.8 9\.7 0\.0 0\. 8 7\.9 8\.7 -10
4\. Duties & Taxes - - 82\.9 82\.9 0\.0 0\.0 11\.7 11\.7 -86
Delivered Cost of Equipment 162\.8 27\.9 143\.5 334\. 3 116\.8 25\.4 66\.5 208\.7 -38
5\. License & Engin\. Services 13\.3 0\.0 12\.9 26\.3 16\.8 0\.0 12\.7 29\.5 12
6\. Project Mngt & Insurance 0\.6 0\.0 11\.4 12\.0 0\.0 0\.0 15\.8 15\.8 32
7\. Land & Site Development 0\.0 0\.0 8\.7 8\.7 0\.0 0\.0 12\.0 12\.0 37
8\. Civil Works & Buildings 0\.0 2\.0 33\.0 35\.0 0\.0 2\.1 34\.8 36\.9 5
9\. Erection 7\.6 2\.2 28\.4 38\.2 0\.6 1\.1 14\.7 16\.4 -57
10 Commissioning Charges 1\.6 0\.0 10\.0 11\.6 0\.0 0\.0 12\.5 12\.5 8
11\. Township 0\.0 0\.8 11\.2 12\.0 0\.0 0\.8 10\.9 11\.7 -2
12\. Power, Offeites, Cons\. Facilities 0\.0 0\.3 3\.3 3\.6 0\.0 0\.4 4\.1 4\.4 22
Bare Cost EetimAte (BCE) 186\.0 33\.1 262 5 481\.7 134\.2 29\.7 184\.1 347\.9 -28
Physical Contingencies 9\.3 1\.7 13\.1 24\.1 - - - - -
Price Escalation 11\.8 2\.9 23\.2 37\.9 - - - - -
Total Inotalled Cost 207\.1 37\.7 298\.9 543\.7 134\.2 29\.7 184\.1 347\.9 -36
Working Capital 1\.0 0\.0 10\.1 11\.1 - 0\.0 10\.2 10\.2 -8
Total Project Cost 208\.0 37\.7 309\.0 554\.8 134\.2 29\.7 194\.3 358\.1 -35
Interest during Construction 45\.7 0\.0 13\.9 59\.6 - 0\.0 14\.8 14\.8 -75
Front End Fee 0\.6 0\.0 0\.0 0\.6 0\.6 - - 0\.6 2
New Conponents
- Add\. Ammonia Storage - - - - - 1\.8 3\.3 5\.0 -
- Purge Gas Recovery - - - - - 1\.3 2\.4 3\.7 -
- C02 Recovery - - - - - 4\.4 8\.2 12\.6 -
Total NFL Financing Raq'd 254\.3 37\.7 322\.9 615\.0 134\.8 37\.1 222\.9 394\.8 -36
FC1 Rehabilitation Study 2\.5 0\.0 0\.5 3\.0 2\.7 0\.0 0\.0 2\.7 -11
\.
\. \. \. \. \. \. \. \. \. \. \.
Total Financing Required 256\.9 37\.7 323\.4 618\.0 137\.5 37\.1 222\.9 397\.5 -36
Re per US$ 13\.520
Average Exchange Rate for Rehabilitation Study: Rs per US$ 12\.600
Exchange Rate at Appraisal Rs per USS 10\.200
- 22\. -
C\. Capital Costs - Phasing of Total Expenditure\.
Average Expenditures
Fiscal Year Expenditures Exchange Rate USS
----------- (Rs million) (Rs/USS) (Million)
1984/85 -- ----------- ------------
* June - Sept 84 67 11\.579 5\.8
* Oct - Dec 84 75 12\.158 6\.2
* Jan - March 85 154 12\.838 12\.0
Sub Total 84-85 296 12\.359 24\.0
1985/86
* Apr - June 85 144 12\.498 11\.5
* July - Sept 85 133 12\.048 11\.0
* Oct - Dec 85 215 12\.091 17\.8
* Jan - March 86 509 12\.312 41\.3
Sub Total 85-86 1001 12\.254 81\.7
1986/87
* Apr - June 86 603 12\.500 48\.2
- July - Sept 86 393 12\.592 31\.2
* Oct - Dec 86 620 13\.039 47\.5
- Jan - March 87 333 13\.015 25\.6
Sub Total 86-87 1949 12\.773 152\.6
1987/88
* Apr - June 87 222 12\.781 17\.4
* July - Sept 87 365 13\.049 28\.0
* Oct - Dec 87 133 13\.000 10\.2
Jan - March 88 507 13\.043 38\.9
Sub Total 87-88 1227 12\.992 94\.4
1988/89 227 14\.477 15\.7
1989/90 123 16\.660 7\.4
1990/91 46 17\.949 2\.6
1991/92 47 24\.519 1\.9
1992/93 \1 \2 88 28\.000 3\.1
1993/94 \1 217 30\.000 7\.2
1994/95 \1 109 30\.000 3\.6
\. ,_ \. \. \. \. \. \. \.
Total NFL Projoct\3 5330 13\.520 394\.2
\1 In Addition to payments still due at end of December 1992, expected disburament amounts
include RJ\. 170 million for the C02 recovery system, to be ordered by December 1992\.
\2 includes actual amounts up to September 1992\.
\3 does not include the front end fee (US5\.6 million) and the rehabilitation
study (US$2\.7 million)\. Total project cost amount to US$397\.5 million (Rs 5370 million)\.
- 22 -
D\. Project Financing
Ra\. Million USS Million
Source Planned Actual Planned Actual
\.y \. \. \. \. \. \.
Bquity
- GOI (1) 2,115 2,163 207\.4 160\.0
- Internal NFL Resources 1,025 1,292 100\.5 95\.6
Total Equity 3,140 3,455 307\.8 256
Debt
- World Bank 2,040 (2) 200\.0 0\.0
- OECF 643 (2) 63\.0 0\.0
- Denmark 92 (2) 9\.0 0\.0
- Italy 41 (2) 4\.0 0\.0
- GOI (2) 311 1,775 30\.5 131\.3
- AGI (Debentures) 100 7\.4
Total Long-term Debt 3,127 1,875 306\.6 138\.7
\. \. \. \. \. \. \. \. \. \. \.
Total Financing for NFL 6,267 5,330 614\.4 394\.2
- Front-end Fee on Bank Loan 6 6 0\.6 0\.6
- FCI Study (Bank financed) 31 34 3\.0 2\.7
\. \. \. \. \. \. \.
Total Financing Required for the Project 6,304 5,370 618 397\.5
(1) GOI provided NFL with the following equity contribution:
Year Million Rs\.
1985/86 510
1986/87 1,000
1987/88 653
Total 2,163
(2) G0I received a total of Rs\. equivalent 3,496 million from the following foreign currency loans:
Initially Actually Received by GOI
Contracted ------------------------------ Relent by GOI
by t0I in Foreign Rs\. to NFL
Foreign Currency Currency Equivalent Rn\. Equivalent \a
- World Bank, in Million US$ Equivalent 203\.6 166\.2 2,250 n\.a
- OECF, in Billion Yen 15\.0 7\.6 671 n\.a
- Denmark, in Million DKr\. 167\.0 167\.0 575 n\.a
Total RP\.-Equivalent 3,496 1,775
\a From this total amount, only RJ\. equivalent 1,775 million were relent to NFL\. The
allocation of relent amounts by sources is not available\.
- 23 -
R\. Bank Financina
Amomt of the Loe Alocated
(aqprewed In USS rflon Equivalent)
Cdesor-Y SAR _ Revb
Eaimtee AAuI
UD to
05113119U8 OU19/1991 04/16/1192 11119
(1)
(a) Equiprnent, Materials, and
Spaue Pauts 169\.000 130\.600 120\.000 117\.100 116\.480
(b) Civil Works and Erection
Contracts (ii) 50\.000 37\.150 34\.810 34\.810
(2) TechnicaliServices to NFL 11\.000 16\.500 11\.700 11\.700 11\.700
(3) Consultant's Services to FCI 3\.000 3\.000 2\.700 2\.700 2\.700
(4) Fee \.508 \.508 \.508 \.508 \.508
(5) Unallocated 20\.0,°2 2\.992 \.542 \.282
Sub-Total 203\.600 ,203\.600 172\.600 167\. 100 166\.200
Cancelled as of August 16, 1990 19\.000 19\.000
Cancelled as ofJune 7, 1991 12\.000 12\.000
Cancellod as of March 27, 1992 5\.500
Orignl Loan Amnouzi \.203\.600 203\.600
Coin^nta:
(i) Five reimbursement applications totalling Rs\. 46,151,293 were being
reviewed by Bank Legal/Procurement Departments as of December 1992\.
(ii) The Loan and Project agreements were amended on May 13, 1989, to
permit the financing of civil work and erection contracts procured
under LCB (Part 1-Para\. 5\.10)\.
- 24 -
6\. Prolect Benefits
A\. Direct Benefits
EmF
8 Nl/9 A 90/91 992 22 93/94 94f9Sn
1\. Producdom and Cadt U ---(Projections)--
* Ammonia Plant
- Production 57\.2 419\.4 475\.3 493\.8 525\.8 437\.5 486\.4 490\.9
(thousand tons)
- Capacity Utilization(%) 94 107 111 118 98 109 110
- Ammonia Consumption 418\.0 473\.7 491\.3 518\.3 429\.5 459\.7 464\.0
for Urea (thousand tons)
- Ammonia per ton of Urca 0\.594 0\.581 0\.578 0\.580 0\.581 0\.581 0\.581
(ton)
- Ammonia for Sale 1\.4 1\.6 2\.5 7\.5 8\.0 26\.7 26\.9
(thousand tons)
* Urea Plant
- Production (thousand 87\.5 703\.5 815\.7 849\.8 893\.2 739\.2 791\.3 798\.6
tons)
-Capacity Utilization(%) 97 112 117 123 102 109 110
- Cumulative Production 87\.5 791\.0 1,606\.7 2,456\.5 3,349\.7 4,088\.9 4,880\.2 5,678\.8
(thousand tons)
2\. Saks:
Total Urea Sales from 478\.4 545\.4 1087\.9 1030\.7 946\.4 791\.3 798\.6
Vijaipur (thousand tons)
Cumulative Sales from 478\.4 1023\.9 2111\.7 3142\.5 4088\.9 4880\.2 5678\.8
Vijaipur (thousand tons)
Comments:
(a) At appraisal, capacity utilization was estimated at 65t in the first year
of operation (1988/89), 80% in the second year (1989/90), and 95%
thereafter\.
(b) Appraisal estimates for, and actual countrywide, nitrogenous fertilizer
supply/demand balances are presented in A Also, appraisal
estimates and actual NFL's total nitrogen fertilizer marketing program and
market share in the Vijaipur market area are presented in Annex 1-2\.
- 25 -
B\. Economic Imact
1\. Economic Rate of return: Based on ERR assumptions presented in (para\. 2)
below, cost and benefit streams for calculations of the economic rate of return
are presented in Annex 2-2\. The base-case economic rate of return was re-
estimated at 31%, which is substantially higher than the 18\.6% estimated at
appraisal\. The results of the sensitivity analyses are summarized below:
ADmraiMMl
Economlic Rate of Return Current (Nov\. 1992) nti te
(%)
(%)
Base Case 31\.2 18\.6
Variable Costs up 10% 30\.0 16\.6
Variable Costs up 100% 17\.0 -
Production Costs up 10% 29\.8 16\.3
Revenues up 10% 35\.2 22\.3
Revenues up 5% 33\.2 -
Revenues down 10% 27\.0 14\.1
Capacity Utilization down 10% 28\.2 16\.3
Capacity Utilization at 95% of 26\.7 18\.6
Nominal Capacity (as estimated
at Appraisal)
Capacity at 95% of Nominal 19\.8 -
Capacity and Capital Costs up
50%
2\. Assumptionu used in the ERR Analysis
(a) Capital Cost: Total actual project financing, as estimated by NFL,
is Rs\.5,330 million, excluding interest during construction (Rs\. 200 million),
working capital (Rs\. 138 million) and the CO2 recovery system which, had not yet
been approved (Rs\.170 million)\. Total installed costs are estimated at Rs\. 4,822
million\. The economic cost of the project is based on the financial costs after
deducting taxes and duties and adding the cost of building the captive water
reservoir and canal\. A standard conversion factor (SCF) OF 0\.8 was applied on
the non-tradable items of the cost structure (at appraisal the same SCF was
applied to all local currency components of capital cost-- the application of the
same methodology would reduce the project's economic cost by more than 4%)\. All
costs were brought to constant FY 1991/92 terms, based on actual inflation rates
(Wholesale Price Index-WPI) and phasing of expenditures\. In FY91/92 prices
terms, total actual economic capital cost of the project is Rs\. 6,560 million,
and financial capital cost is Rs\. 7,029 million\. The plant operating life is
estimated at 12 years\.
(b) Revenues: Calculations and projections of economic prices of urea
are presented in Annex 2-3 in 1991/92 constant term\. They are based on Bank
projections for international FOB Europe prices of bagged urea, plus ocean
freight (US$45), and handling and port charges (US$8 equivalent per ton), plus
rail freight from port to the project market (Rs\. 475 per ton, equivalent to
- 26 -
about US$19), less freight from the Vijaipur plant to the market (Rs\. 475 per
ton, equivalent to about US$19)\. the economic value of surplus ammonia is
assumed as in the SAR at 90% of the economic value of ammonia\.
(c) ODeratinQ costs: the economic value of natural gas is assumed to
be equal to its fuel oil equivalent value based on calorific value\. The
international price of fuel oil is expected to move in line with Bank projections
for international crude oil prices\. Calculations and projections of the economic
value of gas are presented in Annex 2-3 The economic costs of utilities (such
as power and water), labor and overheads are derived from the financial costs by
deducting taxes and applying a SCF of 0\.8\.
3\. Coment: The ERR is now estimated at 31% and is substantially higher
than the base case of 18\.6% estimated at appraisal\. The difference is mainly due
to a substantially higher economic value for natural gas estimated at appraisal\.
Appraisal estimates and current economic and financial projections compare as
follow:
Economic and Financial Price- of Gas
Year ADDraiual Estimate* Actual Economic Actual Financial
Price Price
(In 1984 (in 91/92 (in 91/92 US$) (in 91/92 US$)
Us$) US$)
1990/91 152 228 101 113
1995/96 204 306 80 106
1999/00 237 355 85 106
At values projected at appraisal for natural gas, the project's ERR would
be highly negative, despite the high capacity utilization achieved in the plant\.
However, the ERR would still remain at an acceptable 17% if natural gas were to
cost twice the appraisal estimate\.
- 2 7-
C\. Financial Impact
1\. Financial Rate of Return: on the basis of the assumptions described in
para\. 2 below, the project's financial rate of return (FRR) is estimated at
15\.6%, slightly lower than the appraisal estimate of 16\.6%\. The difference is
due mainly to lower urea retention prices than projected at appraisal, even
though the impact of the currently projected lower retention prices is
compensated by: (i) the higher rate of capacity utilization achieved -- more than
110% compared with 95% estimated at appraisal --; and (ii) the lower capital
costs of the project\. The difference between the projected ERR (31%) and FRR
(15\.6%) is due to: (i) projected and actual urea retention prices for 1991/93 are
lower than the international import parity of urea (para\. 6\.9 of Part I and Annex
2-1); and (ii) actual gas price of Rs\. 2,597 per thousand Nmc in 1991/92 terms
(Rs\. 2,739 since January 1992) are higher than their equivalent economic value
of Rs\. 2,014\. It is conservatively estimated that they will remain at this level
in constant terms\. The cost and benefit streams for the base case are presented
in Annex 2-3\. The results of the sensitivity analysis, compared to appraisal
estimates, are summarized below:
Financial Rate of Return Current Estimates ADDraisal Estimates
(%) (%)
Base Case 15\.6 16\.6
Variable Cost up 10% 13\.3 -
Production Costs up 10% 13\.0 13\.0
Revenues up 10% 19\.9 -
Revenues Down 10% 10\.8 -
Capacity Utilization up 5% 16\.7 18\.3
Capacity Utilization down 10% 13\.3 13\.3
2\. Assumtions used in the Financial Rate of Return Analysis
The financial rate of return has been calculated using prices in 1991/92
constant Rupees\. Revenues are based on retention prices projected on the basis
Vijaipur's current retention price, actual project operating costs (1990/91 and
1991/92), and the present retention price formula\. The urea retention price is
fixed by the Fertilizer Industry Coordination Committee (FICC) for individual
producers on the basis of: (i) 12% post-tax return on share capital and reserves
employed in the production of urea; (ii) plant capacity utilization of 80% the
first year of operation, 90% from the 2nd to the 10th year, and 85% from the 11th
onwards; and (iii) variable and fixed costs based on standard rates\. Retention
price calculations and projections compared with appraisal estimates, are
presented in Annex 2-4\. Current urea retention price projections for the project
are much lower than appraisal estimates-- appraisal estimates were based on 80%
plant capacity utilization, as it was the norm then\.
- 28 -
D\. study
Purpose ^8 aDct of the
Defined at Status St
study Aimraimal
Contracted to The Bank
Rehabilitation These plants, Krupp-Koppers of concluded from
study of two which were Germany on July its review that
large coal-based commissioned in 1985 and the investments
fertilizer plants 1980, were completed in recommended by
at Ramagundam and operating at less March 1986\. the consultant
Talcher owned by than 331 of their were not
the Fertilizer capacity, mainly economically
Corporation of due to technical viable and
India (FCI)\. problems advised the
associated with Government to
new and difficult consider closing-
coal gasification down of these
technology and plants, at least
interruptions in until
power supply\. The international
purpose of the urea prices
study was to improve\.
prepare an
investment phase
for which GOI had
requested Bank
assistance\.
- 29 -
7\. Use of Bank Resources
A\. Staff Inuts
San of Project Cc eC _
Until Appraial 17\.9
Appraial 38\.7 Includes 12\.7 staff-weeks in FY84 for dte post-appraisal mission and
document up-daing (Pant m-pa\. 2, comment (ii))\.
Apprisal though Board Approval 43\.8
Boad Approval through Effectivene -
Supervision 83\.3 Only about 43% and 62 % of totsl supervision time have been spent
before mecanical completion and project completion respectively as
per Schdle 2 of dte Loan Agreement\. Also the preparation of tbis
PCR is not included\.
- TOW 183\.7
Comments;
Although the project required two post-appraisal missions (Part III - para\.
2, comment (ii)), actual staff input through Board approval totaled about 100
staff-weeks, very close to the original budget of 95 staff-weeks estimated in
February 1983\.
- 30 -
B\. Mission*
S1ffetan Moatb/Year Nunber of Dan S ot Prformance Tyne of Probems
Proece Cyce Peawns Fildd C/ nikon member RatiU Statux
a/ bl
Identification 02/82 n\.a n\.a n\.a
Appraisal 02/83 4 19 Eco, Bag
First Post- 08/83 1 9 Eco Apprtisa follow-up
Appraisal
Second Post- 01/84 4 20 Eco, Eng, FA Reappraisal to ssess
Appraisal impact of GO1 Decision
to change technology
choice\.
Supervision
1 04/85 1 21 Eng 1
2 03/86 1 15 Eng 2 Delays in
implementations of gas
and water supply
systems
3 02/87 1 18 Eng 2
4 10/87 1 17 Eng I
5 10/88 2 15 Eng, FA I
6 01/90 1 1 Enag
7 12/91 2 18 Eng, Eco I
PCR 11/93 1 6 Eng
com-nt
a/ Key to Specialization:
Eng: Engineer
Eco: Economist
FA : Financial Analyst
b/ Key to Status:
1: Problem-free or Minor Problems
2: Moderate Problems
3: Major Problems
c/ With the exception of mission #6, the numbers of days in field represents the
total duration of each supervision mission\. However, two or more projects were
supervised simultaneously during each mission and it is estimated that only about
50% of reported time has been really spent to supervise this project\.
8\. Status of Covenants
Covenant Subdoet Deadline for Cnlimce - tuc
A\. Lom Jumm
Section 2\.04 Closing date June 30, 1989 Closed on June 30, 1992
Section 3\.01 para\. (b) The Borrozr shall relad the proceeds of A portion of the loan procoeds\. though
the Loan to nFL, under a subsidiary loan transferred to the Gover net, was not
agreement, relent to NFL (Part II per&\. 5\.8 and Part
III para\. SA)\.
Section 3\.02 Without limitation or restriction\. upon in anual installments GOI provided NFL with the following euity
pravisions of section 3\.01, the Borrower according to the contribution:
specifically undertakes to make available requiremnts of the (Re\. Million)
to IFL an equity contribution up to an Projcet\. - 1905/86 510
aggregate _ount of rs\. 2\.115 billion\. - 1986f/7 1\.000
- 1967/88 653
Total 2\.163
Section 3\.03 The Borrower shall: (i) cause a study to The study was cmpleted in March 1986\.
identify the rehabilitaition requiremnts w
of PCIs coal based plants at Rmuand_m
ad Thalcoer to be carried out; nd (ii)
mke avalable to PCI the proceeds of the
Lamn Wer catagory 3 (US$3 million) for
the purpose of the study\.
Soction 3\.04 Th Borrower shall caws FCI to employ WS Krupp Kopperm of Germny wer
comaultants In accordance of bank contracted in July, 1985\.
sguidelne for use of consult-nto to
aSsait mCI In carrying out the
rehabilitation study\.
Section 4\.02 00I shall: (i) cause the accounts of FCI A copy of the report nding March 31,
related to the project (study) to be 1990\. was provided to tho Bank\.
audited by independet auditors acceptable
to the Dak; and (ii) cause PCI to furnish
to the Dak such reports\.
Section 4\.03 The NOrroer shall enur adequcate nd October 1\. 1966 GAIL started gas supply in August 19,
timely supply of gas for the project 1967, and since supply has been adquate\.
Schedule 2 Completion date, defined as operation for Septeer 30, 1988 It Is estiated that completion occured
not less than 60 comascutive days at an during August 1988
average production rate per day of at least
6ox of daily capacity\.
supznt 4bjec"st -Dedline for Consillnc- status
D\. prsi&c ki- &
Section 2\.05 (d) After completion of tho project\. NFL *shll Not letter than six NFL providod the information needed for
prepare a report on execution nd initial month after the the preparation of Parts I and III of this
operation of the project, its costs and closing date PCR\. nd indicated that it will prepare
benefits and tho performance of NFL and the Part II\.
Bank\.
Section 2\.08 ArL shall build and operate the project in The Envirocnsntal Impact Assessment
accordance with ecological and carried out by PERRI in 1992 after four
envirmental standards satisfactory to the years of operation\. conluded that the
Bank\. project's pollution control measures nd
system are effective nd all effluents
are within limits specified by MIA\.
Section 3\.04 NFL shall mko arrangements with Contracts for ass, water nd power
appropriate agencies for the provision of respectively were signed with GAIL\. the
adequate and timely supply of gas, water, GovarAeant of Madhya Pradesh, and the
and power for the project\. Madhya Pradesh State electricity Board\.
Section 4\.02 1FL shall: (a) have the Vijaipur plant's Each fiscal year\. Audited annual financial reports were
ccounts and its accounts and financial provided to the Bank up to FY 1990/91\. W
statement for aech fiscal year audited by
independent auditora acceptable to the
Bank; nd (b) furnish to the Bank not
latter tha nino months aftr the end of
*cas such year\. certifiad copieo of the
audited reports an well as the auditors
report\.
Section 4\.03 NIL shall: (a) at all times follow prudent At all time Since loan approval in Kay 1964, NFL has
financial policies; and shall maintain the bean in compliance with Bank financial
follwing ratios: i) debt to equity at laas covanants (Annex 2)\.
than 1\.5 times, (ii) current ratio of not
lees then 1\.2; nd (ii) internal cash
generation to the debt service requirements
for each year of at least 1\.3; (b) except
as the Bank shall agree NFL shall not
declare any dividend, nor repay any debt,
it as a result thereof, current ratio were
to fall below 1\.4\.
- 33 - Annex --
India - Madhya Pradesh Fertilizer Project
(Loan 2415-IN)
India - Projected and Acual Nitrogen Supply/Demand Balance
(in Million tons of Nutrient)
Appraisal Projections Actual
-----Supply ----- -----Shortage-----
Year Case I Case II Demand Case I Case II supply Demand Shortage
82/83 3\.4 3\.4 4\.3 0\.9 0\.9 3\.4 4\.2 0\.8
83/84 3\.5 3\.5 4\.9 1\.4 1\.4 3\.5 5\.2 1\.7
84/85 4\.4 4\.4 5\.3 0\.9 0\.9 3\.9 5\.5 1\.6
85/86 5\.0 5\.0 5\.6 0\.6 0\.6 4\.3 5\.7 1\.4
86/87 5\.3 5\.3 6\.0 0\.7 0\.7 5\.4 5\.7 0\.3
87/88 5\.6 5\.6 6\.4 0\.8 0\.8 5\.5 5\.7 0\.2
88/89 5\.7 5\.7 6\.8 1\.1 1\.1 6\.7 7\.2 0\.5
89/90 5\.8 6\.4 7\.2 1\.4 0\.8 6\.7 7\.4 0\.7
90/91 5\.8 6\.6 7\.6 1\.8 1\.0 7\.0 8\.0 1\.0
91/92 5\.9 6\.9 7\.9 2\.0 1\.0 7\.3 8\.1 0\.8
94/95 6\.1 7\.5 9\.2 3\.1 1\.7
Case I: Included output from all plants in operation and under implementation as of early 1984, plus M\.P\.
Project\. It assumed that capacity utilization of then existing plants would increase to 75% by 1989/90
and 80% by 1994/95 and thereafter; and that capacity utilization of the new Hazira, Thal and Madhya
Pradesh urea plants would reach 90% by their third year of operation\.
Case II: In addition to output under Case I, supply projections include five additional ammonia plants,
based on Bombay High gas, to be constructed under GOI program\.
Comment:
SAR estimates for total demand of nitrogen fertilizer was accurate\. However, actual 1991/92 supply
reached levels projected in case II for 1993/94, while only three new ammonia projects (Trombay, Aonla,
and Jagdishpur) based on Bombay High gas were then in operation in addition to M\.P\. This higher than
projected supply is mainly attributed to a higher capacity utilization than expected -- average capacity
utilization reached 89% in 1991/92 versus about 75% under case I of the appraisal estimates\.
NFL\. Total Marketing Program and Market Share for Nitrogen Fertilizer in Vilaipur's Plant Market Are
(thousand tons of Nutrient)
__ __ __ _ __ __ _ __ __ _ __ __ ct al _ __ __ _ __ __ _ ___Actual_ __ __ _ __ __ _ _Su__ __ _Estimatese _ __ __ _ __ __ _
64/85 85/86 86/87 A7/88 Ba/ag 89/9O 90/91 91/92 84/85 85/86 86/87 87/88 88/89 89/90 90/91
Madhya Pradesb
- Total State Consumption 223\.6 255\.9 289\.4 293\.2 386\.7 372\.6 477\.6 461\.2 182\.6 200\.0 214\.8 231\.3 248\.6 262\.5 279\.1
- total NFL Sale\. in the State 2\.3 2\.3 1\.6 3\.0 75\.3 126\.4 184\.6 197\.0 42\.0 54\.0 58\.0 74\.0 92\.0 105\.0 120\.0
- Sales from Vijaipur Plant - - - - 74\.4 121\.2 184\.0 197\.0 - - - - 92\.0 105\.0 120\.0
- NFL' Market Share 1\.0 0\.9 0\.6 1\.0 19\.5 33\.9 38\.6 42\.7 23\.0 27\.0 27\.0 32\.0 37\.0 40\.0 43\.0
Rajasthan
- Total State Con u ption 150\.4 160\.8 178\.4 149\.6 211\.9 194\.4 242\.7 291\.9 158\.8 172\.2 184\.2 200\.0 210\.5 235\.3 235\.3
- total NFL Sales in the State 14\.2 15\.2 19\.7 17\.5 46\.3 31\.0 31\.9 49\.9 27\.0 31\.0 35\.0 40\.0 40\.0 40\.0 40\.0
- Sales from Vijaipur Plant - - - - 14\.2 20\.7 23\.6 19\.2 - - - - 23\.0 22\.0 40\.0
- NFL\. Market Share 9\.4 9\.4 11\.0 11\.7 21\.8 16\.0 13\.1 17\.1 17\.0 18\.0 19\.0 20\.0 19\.0 17\.0 17\.0
Uttar Pradeh
- Total State Consumption 1,240\.0 1,328\.0 1,273\.2 1,186\.5 1,600\.5 1,547\.7 1,690\.7 1,697\.0 1,350\.0 1,462\.5 1,575\.0 1,687\.5 1,750\.0 1,875\.0 1,937\.5
- total NFL Sales in the State 48\.9 95\.1 84\.5 5S\.7 119\.0 89\.7 143\.0 161\.1 108\.0 117\.0 126\.0 135\.0 140\.0 150\.0 155\.0
- Sales from Vijaipur Plant - - - - 208\.4 80\.3 135\.5 151\.7 - - - - 105\.0 143\.0 155\.0
- NFL's Market Share 3\.9 7\.2 6\.6 4\.9 7\.4 5\.8 8\.5 9\.5 8\.0 8\.0 8\.0 8\.0 8\.0 8\.0 8\.0
Sub-Total VijaiPUr Original Target
Market Area
- Total Target Area Cnmsuwption 1,614\.0 1,744\.7 1,741\.1 1,629\.3 2,199\.1 2,114\.6 2,410\.9 2,450\.1 1,691\.4 1,834\.7 1,974\.0 2,118\.8 2,209\.2 2,372\.8 2,451\.9
- total NFL Sales in the Area 65\.4 112\.5 105\.8 79\.2 240\.6 247\.2 359\.5 408\.0 177\.0 202\.0 219\.0 249\.0 272\.0 295\.0 315\.0
- Sales from Vijaipur Plant - - - - 197\.1 222\.2 343\.1 367\.8 - - - - 220\.0 270\.0 315\.0
- NFL'a Market Share in the Area 4\.0 6\.4 6\.1 4\.9 10\.9 11\.7 14\.9 16\.7 10\.5 11\.0 11\.1 11\.8 12\.3 12\.4 12\.8 XS
Punjab I
- Total State Consumption 758\.7 787\.2 802\.9 791\.1 795\.5 817\.6 855\.4 913\.2 769\.2 833\.3 909\.1 984\.8 1,046\.9 1,133\.3 1,200\.0
- total NFL Sales in the State 255\.4 277\.9 250\.8 203\.5 393\.7 278\.0 378\.0 383\.2 300\.0 300\.0 300\.0 325\.0 335\.0 340\.0 360\.0
- Sale\. from Vijaipur Plant - - - - 11\.5 0\.0 36\.9 9\.2 - - - - - - -
- NFL'a Market Share 33\.7 35\.3 31\.2 25\.7 49\.5 34\.0 44\.2 42\.0 39\.0 36\.0 33\.0 33\.0 32\.0 30\.0 30\.0
Herya
- Total State Consumption 272\.7 296\.4 327\.0 300\.7 383\.6 402\.6 443\.2 470\.5 287\.5 319\.4 348\.5 371\.4 402\.8 434\.2 447\.4
- total NFL Sales in the State 115\.6 117\.7 114\.8 116\.2 223\.6 161\.2 207\.3 221\.4 115\.0 115\.0 115\.0 130\.0 145\.0 165\.0 170\.0
- Sales from Vijaipur Plant - - - - 11\.5 29\.9 - - - - - - 2\.0
- NFL's Market Share 42\.4 39\.7 35\.1 38\.7 58\.3 40\.1 46\.8 47\.1 40\.0 36\.0 33\.0 35\.0 36\.0 38\.0 38\.0
Other States \1
- Total States Consumption 1,601\.9 1,674\.3 1,728\.0 1,866\.4 2,373\.1 2,626\.2 2,796\.2 2,663\.6
- total NFL Sales in theme State\. 8\.4 5\.7 4\.8 6\.4 9\.4 76\.9 132\.3 73\.4 38\.0 29\.0 29\.0 29\.0 30\.0 32\.0 34\.0
- Sale\. from Vijaipur Plant - - - - - 67\.8 120\.4 67\.2 - - - - - - -
- NFL' Market Share 0\.5 0\.3 0\.3 0\.3 0\.4 2\.9 4\.7 2\.8 - - - - - - -
Total NFL'\. Marketing Program
- Total Consumption in NFL's Market 4,247\.3 4,502\.6 4,599\.0 4,587\.5 5,751\.3 5,961\.0 6,505\.6 6,497\.4 - - - - - - -
- total NFL Sales 444\.7 513\.9 476\.2 405\.4 867\.3 763\.3 1,077\.0 1,085\.9 630\.0 646\.0 663\.0 733\.0 782\.0 832\.0 879\.0
- NFLF Sales from Vijaipur Plant - - - - 220\.1 290\.0 500\.4 474\.1 - - - - 220\.0 270\.0 317\.0
\1 Bihar, Andra Pradesh, Meot Bengal, Maharashtra and Orissa, where NFL started fertilizer distribution recently\.
Import Parity of Urea
Fiscal Year 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92 92/93 93/94 94/9S 95/96 96/97 97/98 98/99 99/00
Urea-FOB Burope, Bagged
- In 1990 Constant US5 170 163 140 157 168 134 141 148 153 157 160 163 166
- In PY 91/92 constant US$ 174 166 143 160 172 137 144 151 156 160 163 166 170
Ocean Freight to Bombay 45 45 45 45 45 45 45 45 45 45 45 45 45
Handling, Port Charges, Storage and Losses 8 8 8 8 8 8 a 8 a 8 a 8 8
Urea ex-port in 91/92 Us5 226 219 196 213 224 190 197 204 209 213 216 219 222
Urea ex-port in 91/92 Rs\. 5,552 5,377 4,801 5,227 5,502 4,651 4,826 5,002 5,127 5,227 5,302 5,377 5,452
Rail Transport from Port to Market (Rs\./ton) 475 475 47s 475 475 475 475 475 475 475 475 475 475
Less Rail Transport from Plant to Market (Rs\./ton) 475 475 475 475 475 475 475 475 475 475 475 475 475
Rconomic Price at Pactory Gate in 91/92 Rs\./ton 5779 5596 4997 5440 5727 4841 5023 5206 5336 5440 5518 5596 5675
Retention Prices in 91/92 Rs\./ton - 5,203 4,925 4,117 3,733 3,489 4,052 4,052 4,052 3,843 3,843 3,843 3,730
Economic Value of Natural Gas
Fiscal Year 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00
_ _ _ _ _ _ _ _- - - - - - - - - - --_- - - - -- - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - -
Crude oil (1990 Constant US0$/BL) 14\.3 17\.2 21\.2 17\.0 16\.5 15\.7 15\.5 15\.6 16\.0 16\.4 16\.8 17\.3
Fuel Oil (1991/92 constant US5/ton) 66\.5 79\.9 98\.5 79\.0 76\.7 73\.0 72\.0 72\.5 74\.4 76\.2 78\.1 80\.4
Ocean feight to Bombay 3\.0 3\.0 3\.0 3\.0 3\.0 3\.0 3\.0 3\.0 3\.0 3\.0 3\.0 3\.0
Fuel Oil CIF Bombay (1991/92 US$) 69 83 102 82 80 76 75 75 77 79 81 83
Transport to Site 15 15 15 15 15 15 15 15 15 15 15 15
Economic Price of Fuel Oil (in 1991/92 US$/ton) 84 98 117 97 95 91 90 90 92 94 96 98
Economic Price of Fuel Oil (in 1991/92 R2\./ton) 2,071 2,401 2,857 2,378 2,321 2,230 2,208 2,219 2,265 2,310 2,356 2,413
Economic Price of Gas (in 1991/92 Rs\./1000cm) 1,520 1,796 2,083 2,478 2,063 2,014 1\.934 1,915 1,925 1,964 2\.004 2,043 2,093
Gas Price in Current Rs\./1000Ncm 2,563 2,566 2,566 2,563 2,563 2,739
Financial Price of GeJ (in 1991/92 Rm\./1000Ncm) - 3,263 3,037 2,787 2,562 2,597 2,597 2,597 2,597 2,597 2,597 2,597 i,597
Economic Rate of Return
(Constant 1991/92 Rs\. Killion)
Fiscal Year 64/85 85/86 86/87 87/88 08/89 89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00
__-- - - -- - -- - - - - ---- -- - _-_ __ - _-_ --_- -- - -- - ---- ---- ----- -- - -- - -- - -----
Reveu
Quantity:
- urea (thousand tons) 87\.5 703\.5 815\.7 849\.8 893\.2 739\.2 791\.3 798\.6 798\.6 798\.6 798\.6 796\.6 798\.6
- Ammonia (thousand tona) 1\.4 1\.6 2\.5 7\.5 8\.0 26\.7 26\.9 26\.9 26\.9 26\.9 26\.9 26\.9
Prie-s:
- Urea (Rs\./ton) 5,779 5,596 4,997 5,440 5,727 4,841 5,023 5,206 5,336 5,440 5,518 5,596 5,675
- Aaonia (Rs\./ton) \1 5,037 4,497 4,896 5,154 4,357 4,521 4,685 4,802 4,896 4,966 5,037 5,107
Total Revenues 506 3,944 4,083 4,635 5,154 3,613 4,095 4,283 4,390 4,476 4,540 4,605 4,669
Costs
Capital Investments \2 458 1\.456 2,670 1,571 269 136 (656)
Working Capital \3 176 (176)
Variable Costs
-Ga,
\. Quantity (million mm\.) 58\.6 472\.9 548\.3 572\.1 606\.7 504\.1 559\.5 564\.7 564\.7 564\.7 564\.7 564\.7 564\.7
P Frice (Rs\./thousand gmc) 1,520 1,796 2,083 2,478 2,063 2,014 1,934 1,915 1\.925 1,964 2,004 2,043 2,093
* Cost of Gas (million Rs\.) 89 849 1,142 1,418 1,252 1,015 1,082 1,081 1,087 1,109 1,131 1,154 1,182
- Water (million Rs\.) 0\.4 2\.7 3\.0 2\.8 6\.1 5\.0 5\.4 5\.4 5\.4 5\.4 5\.4 5\.4 5\.4
- Taxes on Electricity (million Rn\.) 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0
- Bagging (million Rn\.) 18\.4 147\.7 171\.3 178\.5 187\.6 155\.2 166\.2 167\.7 167\.7 167\.7 167\.7 167\.7 167\.7
Sub-total Variable Costs 108 1,000 1,316 1,599 1,445 1,175 1,254 1,254 1,260 1,282 1,305 1,327 1,355
Fixed Costs (RS\. million)
- Cheicals 28\.0 28\.0 28\.0 28\.0 28\.0 28\.0 28\.0 28\.0 28\.0 28\.0 28\.0 28\.0
- Stores and Parts 64\.0 64\.0 64\.0 64\.0 64\.0 64\.0 64\.0 64\.0 64\.0 64\.0 64\.0 64\.0
- Labor 57\.9 46\.3 46\.3 46\.3 46\.3 46\.3 46\.3 46\.3 46\.3 46\.3 46\.3 46\.3
- Fixed Charges on Electricity 16\.0 16\.0 16\.0 16\.0 16\.0 16\.0 16\.0 16\.0 16\.0 16\.0 16\.0 16\.0
- Overheads 45\.6 45\.6 45\.6 45\.6 45\.6 45\.6 45\.6 45\.6 45\.6 45\.6 45\.6 45\.6
Sub-total Fixed Costs 211\.5 199\.9 199\.9 199\.9 199\.9 199\.9 199\.9 199\.9 199\.9 199\.9 199\.9 199\.9
Total Costs 458 1,456 2,670 1,679 1,656 1,652 1,799 1,645 1,375 1,454 1,454 1,460 1,482 1,504 1,527 723
Met Cash Flow (458) (1,456) (2,670) (1,173) 2,288 2,431 2,836 3\.509 2\.238 2,642 2,829 2,931 2\.994 3,036 3\.078 3\.946
\. \.___\.____\. ___\._
Sensitivity Analysis ERR(%)
Economic Rate of Return (8) - 31\.2 -------------------- ------
--------------------------- ~~~~~~~~~~~~~~~~~~~~~Actual SAR Batimates
\. \. _ - \. ---Base Case 31\.2 18\.6
\1 the economic value of surplus amo nia is estimated at 90% of the economic value of urea\. Variable Costs Up 10% 30\.0 16\.6
\2 residual value at the end of project life - estimated at 10% of assets value Production Costs up 10% 29\.8 16\.3
\3 recovery of working capital at the end of project life Revenues up 10% 35\.2 22\.3
Revenues up 5% 33\.2 -
Revenues down 10% 27\.0 14\.1
Capacity utilization down 10% 26\.2 16\.3
At 95% of Nomial Capacity 26\.7 18\.6
Financial Rate of Return
(Constant 1991/92 Rs\. Million)
Fiscal Year 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/9S 98/99 99/00
Revenues
Quatity:
- Urea (thousand tons) 87\.5 703\.5 815\.7 849\.8 893\.2 739\.2 791\.3 796\.6 798\.6 798\.6 798\.6 798\.6 798\.6
- Ammnia (thousand tona) 1\.4 1\.6 2\.5 7\.5 6\.0 26\.7 26\.9 26\.9 26\.9 26\.9 26\.9 26\.9
Prices:
- Urea (Rs\./ton) 5,203 5,203 4,925 4,117 3,733 3\.489 4,052 4,052 4,052 3,843 3,843 3,843 3,730
- Ammnia (Ra\./ton) \1 5,585 5,286 4,419 4,007 3,745 4,349 4,349 4,349 4,125 4,125 4,125 4,004
Total Revenues 455 3,668 4,026 3,510 3,364 2,609 3,322 3,353 3,353 3,180 3,180 3,180 3\.086
Costs
Capital Investmets \2 491 1,560 2,861 1,683 289 146 (1\.201)
Working Capital \3 175\.5 (175\.5)
Variable Costs
- Gas
Quantity (ail*ion Nc\.) 59 473 548 572 607 504 560 565 565 565 565 565 565
Price (Rs\./tbouaand NcR) 3,515 3,263 3,037 2,787 2,562 2,597 2,597 2,597 2,597 2,597 2,597 2,597 2,597
Coat of Gas (million Rs\.) 206 1,543 1,665 1,594 1,555 1,309 1,453 1,466 1,466 1,466 1,466 1,466 1,466
- Water (million Rs\.) 0\.5 3\.8 4\.1 3\.9 8\.4 7\.0 7\.5 7\.5 7\.5 7\.5 7\.5 7\.5 7\.5
- Taxes on Blectricity (million Re\.) 1\.2 9\.8 11\.4 11\.9 12\.5 10\.3 11\.1 11\.2 11\.2 11\.2 11\.2 11\.2 11\.2
- Sagging (million Rs\.) 18\.4 147\.7 171\.3 178\.5 187\.6 155\.2 166\.2 167\.7 167\.7 167\.7 167\.7 167\.7 167\.7
Sub-total Variable Costs 226 1,705 1,852 1,789 1,763 1,481 1,638 1,653 1,653 1,653 1,653 1,653 1,653
Fixed Costa (Rs\. million)
- Chdmicals 28\.0 28\.0 26\.0 28\.0 28\.0 28\.0 28\.0 28\.0 28\.0 28\.0 28\.0 28\.0
- Stores and Parts 64\.0 64\.0 64\.0 64\.0 64\.0 64\.0 64\.0 64\.0 64\.0 64\.0 64\.0 64\.0
- Labor 58\.0 58\.0 58\.0 58\.0 58\.0 58\.0 58\.0 S8\.0 58\.0 58\.0 58\.0 58\.0
- Charges on Blectricity 20\.0 20\.0 20\.0 20\.0 20\.0 20\.0 20\.0 20\.0 20\.0 20\.0 20\.0 20\.0
- Overhead 57\.0 57\.0 57\.0 57\.0 57\.0 57\.0 57\.0 57\.0 57\.0 57\.0 57\.0 57\.0
Sub-total Fixed Costs 227\.0 227\.0 227\.0 227\.0 227\.0 227\.0 227\.0 227\.0 227\.0 227\.0 227\.0 227\.0
Total Costs 491 1,560 2,861 1,909 2,396 2,225 2,016 1,990 1,708 1,865 1,880 1,880 1,880 1,880 1,880 503
Met Cash Flow (491) (1\.560) (2,861) (1,454) 1,272 1,801 1,494 1,374 901 1,458 1,473 1,473 1,300 1,300 1,300 2,584
Financial Rate of Return (1) - 15\.60 Sensitivity Analysis FRR (8)
----------------------- Actual SAR Estimates
Base Case 15\.6 16\.6
,,,,,,,,,,,,,,\.,_\.----VariableCoatsUplO\.Variable Costs Up 10% 13\.3 -
\1 for amnonia retention prices, it hae been assumed that they will move in line with projected urea retention prices\.Production Costs up 10% 13\.0 13\.0
\2 as estimated at appraisal, recovery of residual value at the end of project life was estimated to include the Revenues up 10% 19\.9 -
value of nondepreciable assets ( land, site development, township and infrastructure) and 10% of depreciable assets\. Revenues up 5 17\.8 -
\3 recovery of working capital at the end of project life Revenues down 10% 10\.8 -
Capacity Util\. up 5% 16\.7 18\.3
I
Retention Price Calculation
(Re\. per Ton)
Fiecal Year 88/89 *9/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/ol 01/02 02/03
_ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -_- - - - - -
Pricing Period 88/89 89/90 90-93 93-96 96-99 99-03 03-06
Rate of Capacity Utilization (8) 80 90 90 90 90 90 90 90 90 90 85 85 85 85
Production (thousand tpy) 580\.8 653\.4 653\.4 653\.4 653\.4 653\.4 653\.4 653\.4 653\.4 653\.4 617\.1 617\.1 617\.1 617\.1
Net Fixed Annets (Ra\.aillion) 4,003 3,750 3,496 3,483 3,332 3,056 2\.780 2,504 2,228 1,952 1,676 1,400 1,124 648 572
Normative Working Capital (Rs\.million) 552 552 607 668 735 808 889
Total Capital Eployed (Rs\. million) 4,555 4,302 4,103 3,724 2,963 2,208 1,461
Depreciation (Ra\.million) 253 253 253 269 276 276 276 276 276 276 276 276 276 276 276
Outstanding Lo4na (Rs\. million) 1,775 1,739 1,597 1,420 1,242 1,065 887 710 532 355 177 36 36 -
Net Worth (Rs\. million) 2,780 2,563 2,506 2,660 2,431 2,172 1,461
Return on net Wort!h (Rs\. million) 690 636 602 660 603 539 363
Interest on Loans (Rs\. million) 266 261 240 160 80 s 0
Sub-total Return & Interaet (Ra\.million) 956 697 841 620 683 545 363
Sub-total Return & Interest OO
par ton of Urea (Rm\./ton) 1,545 1,287 1,255 1,046 883 588
Variable Coat & RFagging (R\./ton) 1,758 1,945 1,945 1,945 1,945
Fixed Costs (Rs\./ton) 300 429 429 455 455
Depreciation (Rs\./ton) 388 422 422 447 447
Total Production Coats (Rs\./ton) 2,446 2,797 2,797 2,847 2,847
\.,,\.,_\. \. \. \. \. \. \. \. \.
Calculated Retention Price Rm\./ton 3,733 4,052 3,843 3,730 3,435
Actual Retention Price (Rs\./ton) 4,086 3,867 3,733 3,733 3,733
Retention Price in FY
1991/92 Constant Rupees (Rs\./ton) 5,203 4,925 4,117 3,733 3,489 4,052 4,052 4,052 3,843 3,843 3,843 3,730 3,730 3,730 3,435
Retention Price\. as Entimated at
Appraisal (Rs\./ton) 5,345 5,486 S\.639 5,704 5,877 6,057 6,161 6,371 6,589 6,639 6,891 7,153
Economic Price\. in 1991/92 term\.
Plant Gate (Rs\./ton) 5,596 4,997 5,440 5,727 4,841 5,023 5,206 5,336 5,440 5,518 5,596 5,675
Farmgate Price (Rs\./ton before Bales
tax) \I 2,350 2,350 2,350 3,060 2,760
\1 faragate prices were fixed at: (i) Rn\.2,350 from October 31, 1986 to July 24, 1991; (ii) RJ\.3,360 from July 25,1991
to Augugt 13, 1991; (iii) Rn\. 3060 from August 14, 1991 to July 24,1992; and (iv) Rn\. 2,760 since July 25, 1992\.
- 39 -
Financial Performance of NFL
82/83 63/84 84/85 S5/86 86/87 87/88 88/89 89/90 90/91
Total Equity 3129 3364 3808 4650 5783 6777 6777 6795 7092
- Capital 2743 2743 2743 3251 4256 4906 4906 4906 4906
- Reserves & Surplus 386 622 1065 1398 1527 1871 1871 1889 2186
Long Term Debt 1949 958 833 765 989 1993 2827 2890 2312
^ Secured Loans
- Debentures - - - - 100 100 100 100
- Gov\. of Punjab - - - - - 1 1 1 1
- Uhit Trust of India - - - - - - 500 S00 469
* Unsecured Loans
- Gov\. of India 1949 958 833 695 989 1892 2026 1889 1712
- Gov\. Companies - - - 70 - - 200 400 30
Current Liabilities (i) 855 707 670 1444 1645 3848 4204 4222 3461
* Current Liabilities & Provisions 592 554 606 1083 1176 2355 2013 2338 1657
* Secured Cash Credit 263 153 64 361 469 1492 2191 1884 1804
Current Assets 2187 1770 2269 2944 3162 5565 6700 7256 6811
Internal Cash Generation: 1106 951 1052 959 777 1068 11S0 1289 1452
* Net Profit after Tax 346 253 418 337 163 442 49 115 297
D Depreciation 530 538 543 547 546 547 731 641 711
Interest on Long Term Debt 231 159 90 76 68 79 371 532 444
Debt Sevice Requirement 885 1072 215 144 104 115 407 569 627
Amortization of Long Term Debt 654 913 125 68 37 37 37 37 183
* Interest on Long Debt Term Debt 231 1S9 90 76 68 79 371 532 444
Ratios
Debt Equity Ratio 0\.62 0\.28 0\.22 0\.16 0\.17 0\.29 0\.42 0\.43 0\.33
Current Ratio 2\.6 2\.S 3\.4 2\.0 1\.9 1\.4 1\.6 1\.7 2\.0
Debt Service Coverage Ratio 1\.3 0\.9 4\.9 6\.7 7\.4 9\.3 2\.8 2\.3 2\.3
Return on Equity 12\.S 8\.6 18\.1 11\.4 5\.7 11\.1 1\.3 2\.9 6\.1
(i) includes secured cash credit from consortium of bankers, which has been assumed to be a short term liability
(ii) Financial Covenants:
- Debt Equity Ratio: lse than 1\.5
- Current Ratio: not lees than 1\.2
- Debt Service Coverage Ratio: at least 1\.3 -
Source: NFL's Annual Reports
- 40 -
Annex 4
Page 1 of 4
PROJBCT COMPLETION REPORT
INDIA
MADHIA PRADESH FERTILIZER PROJECT
(Loan 2415-IN)
ENVIRONDUNTAL ASPZCTS
1\. The project is located in a generally barren and scarcely populated area\.
Nevertheless, adequate pollution control measures have been adopted: adequate
effluent treatment and discharge facilities were constructed in accordance with
environmental Indian standards, which are comparable to standards applied for
such installations in industrialized countries and/or other environmental
standards acceptable to the Bank\. Major effluents from such plant include: (i)
liquid effluents from the ammonia and urea plants and from the water treatment
plant; (ii) dust emissions from the urea plant prilling tower; and (iii) sludge
from the water treatment plant\.
A\. 1987/88 Environment Imact Asme ents of the Viliour Plant
2\. In addition to the compulsory initial environmental assessment on the basis
of which the project was designed, a comprehensive Environmental Impact
Assessment (EIA) of the Vijiapur fertilizer plant, sponsored by the Environmental
Planning and Coordination Organization of Bhopal (Madhya Padesh), was prepared
in 1987/88 by the National Environment Engineering Research Institute (NEERI)\.
The study was prepared on the basis of data collected for air, water, noise,
biological, land and socio-economic impacts in the project area of influence
before and after commissioning of the plant\. The EIA analyzed the air, water and
biological, noise, land, and socio-economic environments, and included the
identification, projection and evaluation of the project's environmental impacts;
proposed a detailed environmental management plan, mitigating measures and a
detailed monitoring plan; and recommended an approach to disaster management\.
3\. The main conclusions of this EIA can be summarized as follows:
(a) the general topography of the area will not change significantly as
a result of the project, furthermore, the green belt, in and around the plant
will improve appearance;
(b) the project has a positive impact on the human environment, due to
increased employment opportunities and better medical, housing, sanitary and
drinking water facilities;
(c) the net impact of gas effluent emissions from the project will be
marginal and too insignificant to cause any adverse impact on human health and
vegetation in and around the plant;
(d) there is no significant direct and indirect impact from noise produced
in the plant beyond one kilometer from it and there is no sensitive areas around
it which would be adversely affected;
- 41 -
Annex 4
Page 2 of 4
(e) surface water quality will get only marginally affected due to the
low concentration of major pollutants present in the effluents\. Surface water
bodies are able to purify themselves within a downstream travel distance of less
than 1\.5 kilometer\.
(f) the impact on ground water resources in and around the plant is
small, but could later increase due to percolation through the natural drain
which was used at that time to transport liquid effluent\.
4\. The main recommendations of the proposed environmental manaQement
plan were:
(a) scrubbing of ammonia bleed-off gases or leakages to recover ammonia;
(b) use of low sulfur high stock fuel (LSHS) to keep S02 levels low,
whenever use of additional fuel is required in replacement for natural
gas;
(c) insulation of compressor control rooms and provision of personnel with
noise reduction equipment, and plantation of a green belt around
plant buildings and residential area;
(d) checking of the impermeability of effluent ponds and sludge pit;
(e) construction of a reverse osmosis plant;
(f) use of adequately treated effluent for the development of the green
belt;
(g) collection of storm water and use for irrigation after adequate
treatment if necessary;
(h) use of a non-chromate inhibitor for cooling water treatment;
(i) optimization of effluent recycle and minimization of waste water
discharge by using the effluent ponds extensively;
(j) construction of a closed pipe for the possible discharge into the
Parvathi river of adequately treated effluents;
(k) prohibition of use of the Chopan river water beyond the discharge
point for domestic use by farmers;
(1) safe deposit of spent catalyst in closed containers;
(m) transformation of domestic solid waste into compost;
(n) implementation of a detailed monitoring plan;
(o) need for environmental education; and
(p) the carrying out of a risk assessment study leading to the
formulation of a disaster management plan\.
D\. 3xiotina Environmental Control in the Viiaipur Plant
5\. In addition of the installing the pollution control facilities included in
the initial design of the project, NFL implemented the large majority of the
above recommendations made by NEERI\. The environmental control facilities of
Vijaipur, which according to NFL have required an investment of Rs\. 180 million,
are summarized below:
- 42 -
Annex 4
Page 3 of 4
(a) licuid effluent treatment: In Vijiapur, NFL confronted a situation
of limited water availability with risks of water shortage, and a serious problem
of liquid effluent disposal during the dry season, when the Chopan and Parvathi
rivers are dried out\. To overcome these risks, the plants were designed for the
complete recovery and reuse of process and steam condensates, and recycle of
ammonia\. The plant liquid effluent treatment facilities include: (i) a deep
hydrolysis section in the urea plant to treat process condensates, before they
are recycled as cooling water make-up; (ii) a stripping treatment of process
condensates in the ammonia plant to recover ammonia recycle after polishing the
condensates as boiler feed water; (iii) disk oil separators for the treatment of
oily waste water from compressors; (iv) collection and use for irrigation of
storm water, after treatment if necessary, depending on its quality; (v)
sophisticated and efficient effluent treatment of the cooling water blow-down;
(vi) sewage treatment; (vii) two separate corrosion-resistant lined ponds for the
storage of contaminated effluent, before treatment and reuse (110,000 m3) and,
for the treated effluent (220,000 i3), before its use for irrigation of the plant
green belt and horticulture on site; and (viii) the recent addition of a reverse
osmosis plant\. Also, in addition to monitoring plants effluents, NFL
continuously monitors groundwater 2\.5 km around the plant\.
(b) Air Pollution Control: the urea prilling tower is 96 meter high and
its exhaust contains less than 40 mg of dust per Ncm, well within the limit
stipulated in IS 2490 and MINAS\. Also, the use of natural gas as fuel allows a
sulfur dioxide content lower than 2 ppm and a negligible dust content in all
stacks, which are all higher than 30 meters\. Finally, all pressure vents, safety
vents and valves are discharged at 96 meters\. When light distillates will be
used instead of gas (Part I - para 8\.2), S02emissions will marginally increase,
but are estimated to be kept within standards (para\. 4 (b))\.
(c) Noise Control and Land Bnvironment: to improve the ecological balance
of the surroundings area and reduce noise and dust transmission a green belt of
100,000 trees have been planted, in and around the plant, on a total of 95
hectares\. The project area was initially deforested, however, the large scale
tree plantation program carried out by NFL is improving the micro climatic
conditions and the aesthetics of the area by improving the soil, reducing soil
erosion and helping in the restauration of the displaced fauna\.
(d) Bnviroanment Monitorina: adequate pollution monitoring stations and a
detailed monitoring plan have been established\. Also, a fully dedicated team of
engineers, constituting the core of the environmental monitoring group,
coordinates all the activities related to environmental protection, including
training and seminars\. Finally, an emergency system is in place (para\. 8)\.
C\. Environment Impact Assessment of 1992
6\. During 1992, after more than four years of operation, NEERI has undertaken
a new EIA to assess the actual impact of the project and estimate the potential
environmental impact of the expansion project\. A draft report has been submitted
to NFL\. This new study covers the same areas as the 1988/89 study\. Its overall
conclusion is that the Vijiapur's pollution control is effective and all
effluents are within limits specified by MINAS\. Its main conclusions on the
present situation can be summarized as follows:
(a) the liquid effluent treatment plant is efficient, the quality of the
treated effluents conforms to MINAS standards;
(b) cooling tower blowdown effluents are treated in the reverse osmosis
plant and the treated effluents are of high quality and recycled;
(c) the treated effluent pond can store treated effluent, to be used for
irrigation, for about 23-25 days\. Considering evaporation losses, the
treated effluent can be held for about 60-70 days;
- 43 -
Annex 4
Page 4 of 4
(d) the efficiency of the sewage plant is satisfactory;
(e) no treated effluent is discharged from the plant to the river, but it
is estimated that about 100m3/h of water seeps into the river from all
sources (irrigation of green belt and horticulture, storm water,
townsite etc\.)\. this combined stream does not show any high
concentration of pollutants and satisfies MINAS and IS 2490-1982
standards-- however, the Parvathi river was found to be polluted
downstream with colliforms and requires conventional treatment before
its use as drinking water\.
(f) flue gas from the power and steam generation plant contains about 2
ppm sulfur dioxide and negligible suspended particulate, which are
vented through 30 meter-high stacks\. Waste process gases containing
carbon monoxide, hydrogen and methane are vented through a 90 meter-
high stack after complete burning;
(g) exhaust air from the urea prilling tower contains less than 40 mg per
Nm3 of dust, all other gaseous streams from the urea plant are scrubbed
and are practically free from ammonia;
(h) air within and around the fertilizer complex is almost free from toxic
pollutants-- S02 concentration is lower than 26 micro-gram/mi3 much
lower than the MINAS limit of 120 micro-gram; the maximum
concentrations of NO2 is lower than 23 micro-gram/mr3; and suspended
particulate in the plant area are within limit; and
(i) the noise level is well within the established by MINAS\.
7\. Finally, in order to avoid any water pollution by chromium, NFL has decided
in July 1991 to stop using chromate inhibitor for the treatment of cooling water
and started using a more expensive phosphate based inhibitor as it was
recommended by NERRI\.
D\. Disaster Management and Risk Assessment Stu
8\. NFL has developed and implemented in Vijiapur a detailed disaster plan,
which includes: (i) an inventory of potential disasters and precautions to be
taken; (ii) an emergency plan; (iii) an evacuation plan; (iv) an emergency
pollution control in the event of disaster; and (v) a disaster plan control
chart\. However, as recommended by NERRI in the 1987/88 EIA study, it is very
important that NFL undertakes a risk assessment study leading to the review of
the current disaster management plan\. NFL had indicated that this study is
presently carried out by NERRI as part of the 1992 EIA and that the draft report
is expected at the beginning of 1993\.
- 44 -
Annex 5
PCR'\. Fil-
1\. Information prepared by NFL for the PCR\.
2\. The Fertilizer Association of India - Fertilizer Statistics 1990/91\.
3\. NFL - Vijaipur Unit Profile\.
4\. NFL - Vijaipur Project, Completion Report\.
5\. NFL - Vijaipur Unit, Salient Features\.
6\. Note on the Final Cost Estimates of Gas Based Fertilizer Plant at
Vijaipur\.
7\. NFL - Annual Reports for 1982/83, 1984/85, 1986/87, 1987/88, 1988/89,
1989/90, and 1990/91\.
8\. Planning Commission of India - A Case Study in Project Implementation,
Vijaipur Fertilizer Project - December 1989\.
9\. Administrative Staff College of India - Triumph in Project Management\.
10\. Report of the High Powered Committee on Fertilizer Consumer Prices\.
11\. Department of Petroleum and Natural Gas - Report of the Committee on
Pricing of Natural Gas, May 1990\.
12\. Ministry of Program Implementation - Award for Excellence in Project
Implementation, 1987/88\.
13\. Annual Fertilizer Production and Consumption, 1990/91\.
14\. GOI, Ministry of Agriculture, Department of Fertilizers - Annual Report,
1989/90\.
15\. Bank's Statistics and Records on the project\.
16\. P\.P\. Chandna - Procurement for a Project - Magnitude Organization and Role
of Consultants\.
17\. NERRI - Environment Impact Assessment of Vijaipur Project, April 1989,
(selected Chapters)\.
18\. NERRI - Rapid Environment Impact Assessment of Vijaipur Project, May 1992,
(selected Chapters)\.
19\. Environment Control at NFL Vijaipur\.
20\. Environment Monitoring at NFL Vijaipur\.
21\. NFL - Schemes for Energy Improvement\.
22\. Audited accounts of Vijaipur Plant, 1989/90\.
23\. FCI - Annual Report, 1989/90\.
24\. FCI - Proposal for Rehabilitation Phase 1 of Ramagundam\.
25\. FCI - Proposal for Rehabilitation Phase 1 of Talcher\. | APPROVAL |
P002812 |  ICRR 11370
Report Number : ICRR11370
ICR Review
Operations Evaluation Department
1\. Project Data: Date Posted : 08/13/2002
PROJ ID : P002812 Appraisal Actual
Project Name : Mineral Sector Project Costs 13\.9 12\.54
Development Technical US$M )
(US$M)
Assistance Project
Country : Tanzania Loan/ US$M ) 10\.29
Loan /Credit (US$M) 11\.58
Sector (s): Board: EMT - Central Cofinancing 1\.37 0\.94
government administration US$M )
(US$M)
(60%), Law and justice
(40%)
L/C Number : C2648; CP818
Board Approval 95
FY )
(FY)
Partners involved : Nordic Development Fund Closing Date 12/31/1999 12/31/2001
(NDF)
Prepared by : Reviewed by : Group Manager : Group :
Ramachandra Jammi Andres Liebenthal Alain A\. Barbu OEDST
2\. Project Objectives and Components
a\. Objectives
The principal objectives of the project are to :
support Tanzania's private sector -oriented mining development policy and to expand private investment in
mining;
strengthen the capacity of mining institutions to efficiently administer and regulate the sector; and
improve productivity, and environmental and social viability of artisanal and small -scale miners\.
b\. Components
The project had three main components :
1\. The legal, regulatory, fiscal and environmental component to help introduce appropriate mining laws and
regulations, and fiscal and environmental framework to promote and guide private investment in mining;
2\. The institutional strengthening component to improve organizational, manpower, and logistical capacity of the
Mineral Resource Department (MRD), help reactivate MRD's environmental and mine safety inspection, and
strengthen MRD's geological services including publication of geological maps and improvements of its mineral
laboratory; and
3\. The small-scale mining component covering a baseline data survey, the dissemination of information and
demonstration of simple and environmentally -sensitive technologies, and training and capacity building support
to small-scale miners through the Regional Miners Associations \.
c\. Comments on Project Cost, Financing and Dates
Cost and Financing: The total cost of the project was US$ 12\.5 million, US$1\.4 million below the US$13\.9 million
estimated in the MOP\. A credit balance of US$0\.9 million -- relating to certain small-scale mining activities which
were delayed in 2000-2001 -- remained to be cancelled at the end of the disbursements of the IDA credit on April 30,
2002\.
Dates: The project closed two years behind schedule on 12/31/2001\. Initial delays in establishing an adequate
Project Implementation Unit (PIU) accounted for slippage of 5 months before credit became effective, while other
project components were affected by delays in initiating cofinancing arrangements with NDF \. Ministerial and other
high-level changes contributed to lowered commitment and consequent delays in mineral sector initiatives and
implementation since 2000\. Insufficient funding for civil works and lack of counterpart funding through 1997 added to
the delays\.
3\. Achievement of Relevant Objectives:
The following are the main outcomes /achievements corresponding to the three major objectives :
A modern mineral policy and strategy was prepared under the project and approved by the government in 1997,
followed by a new Mining Act of 1998\. These included laws and regulation for SSM, and environmental controls
and management\. While the regulatory package is considered satisfactory after three years of functioning, there
is a need for second generation reforms to adjust and improve the package, particularly for SSM and
environmental issues\. The outcome under this objective is considered Satisfactory ;
The responsibilities of the State as a mining operator were eliminated and the institutional setup of the mining
sector was restructured for stimulating private investment, regulating mineral activities, compiling and
disseminating geo-information, and providing extension services to SSM \. However, the comprehensive
cadastral system for mineral rights and an aerial survey for developing basic promotional information were not
yet implemented\. Also, few details are provided on the specifics of institutional restructuring and its
performance\. The outcome under this objective is considered Moderately Satisfactory ; and
Under SSM activities, only one of the eight pilot demonstration plants was undertaken and completed due to
higher than anticipated costs and delays in procurement \. Significant progress was made in involvement of local
communities and miners in addressing mineral rights and mining "rushes" through stakeholder meetings, though
there is no mention of a long term mechanism having been created for this purpose \. With regard to
environmental issues, progress was reported in introducing practices to decrease adverse environmental
impacts involving better mining equipment, reductions in mercury use and improved tailing disposals \. The
outcome under this objective is considered Moderately Satisfactory \.
4\. Significant Outcomes/Impacts:
The number of prospecting and mining licenses increased from 9 to 250 from 1990 to 2001\. Total mineral
exports increased from US$15 million to US$312 million between 1990 and 2001, and are anticipated to exceed
US$400 million in 2002\. Revenues from gold exports rose from virtually nil to US$ 120 million between 1996 and
2000, and are expected to rise to US$ 326 by 2002;
The Tanzanian Women's Miners Association was formalized, for advocacy of womens miners issues; and
Significant stakeholder consultation -- including government, miners, representatives from local communities
and traders -- took place in the form of workshops and roundtables in the course of formulating policy for the
mineral sector and well as for SSM issues including environmental and safety concerns \.
5\. Significant Shortcomings (including non-compliance with safeguard policies):
Progress on the institutional front was affected by fluctuating commitment from mineral authorities though it
gained momentum towards the end of the project \.
Only one of the eight pilot demonstration plants was undertaken and completed; and
The project design did not adequately consider the risks related to downturns in commodity prices, even though
this did not appear to have impacted project outcomes significantly due to a combination of factors including
favorable geological conditions \.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Highly Satisfactory Satisfactory While the project contributed significantly
to increases in revenue from mineral and
metal (gold) exports, and generated
significant stakeholder participation and
consultation, outcomes in respect of
institutional development and SSM were
lower than expected\.
Institutional Dev \.: Substantial Substantial
Sustainability : Likely Likely
Bank Performance : Satisfactory Satisfactory
Borrower Perf \.: Satisfactory Satisfactory
Quality of ICR : Satisfactory
NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\.
NOTE:
7\. Lessons of Broad Applicability:
Consistent ownership and commitment from governmental authorities is essential for success of institutional
reform;
An integrated approach is necessary for the mineral sector because of the strong interrelationships between a
stronger legal, regulatory and fiscal framework, improved information systems, promoting investments, and the
interests of small-scale miners and local communities;
Effective mechanisms and processes for stakeholder participation are essential for sustainable and improved
contributions from mining activities to society; and
Options for diversification must be pursued to ensure sustainability of local economies beyond the life of mining
activity\.
8\. Assessment Recommended? Yes No
Why? There are several significant outcomes in terms of increases in production and investment,
improvements in environmental and working conditions, and stakeholder involvement, which have resulted from the
institutional and process changes attempted in the project \. However, the causal links between the project
components and the outcomes is not always clear \. It would be highly instructive to study these in detail in order
clarify the linkages as well as to yield lessons for countries in similar developmental situations \.
9\. Comments on Quality of ICR:
The ICR covers all important issues in considerable detail \. However, some assertions -- especially in respect of
various aspects of institutional development and SSM issues -- are not backed up by reference to tangible
achievements\. In some cases there are inconsistencies between assertions and related statements in other parts of
the ICR\. While the ICR does not deserve an Unsatisfactory rating, it is considered only marginally Satisfactory \. | APPROVAL |
P005861 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No\. 7582
PROJECT PERFORMANCE AUDIT REPORT
PEOPLE'S DEMOCRATIC REPUBLIC OF YEMEN
GREATER ADEN WATER SUPPLY PROJECT
(CRDIT 1038-YDR)
DECEMBER 30, 1988
Operations Evaluation Department
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
EXCHANGE RATES
(YD per US$)
Currency Unit = Yemeni Dinar (YD)
Appraisal Year end (1979) - US$1\.00 = 0\.345
Average Over Project Period - US$1\.00 = 0\.345
Completion Year Average 1986 - US$1\.00 = 0\.345
ABBREVIATIONS AND ACRONYMS
PDRY = People's Democratic Republic of Yemen
PWC Public Water Corporation
SAR = Staff Appraisal Report
Mm3/yr = Million cubic meters per year
PWC'S FISCAL YEAR
January 1 - December 31
THE WORLD BANK FOR OFFICIAL USE ONLY
Washngton\. DC 20433
USA
Oce to Drcvar-Ge~eal
OpMat twelusti
December 30, 1988
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Performance Audit Report on the People's
Democratic Republic of Yemen - Greater Aden Water
Supply Project (Credit 1038-YDR)
Attached, for information, is a copy of a report entitled "Project
Performance Audit Report on the People's Democratic Republic of Yemen -
Greater Aden Water Supply Project (Credit 1038-YAR)" prepared by the
Operations Evaluation Department\.
Attachment
This document has a restricted distribution and may be used by recipients only in the performance
of their official duties\. Its contents may not otherwise be disclosed without World Bank author4etion\.
FOR OFFICIAL USE ONLY
PROJECT PERFORMANCE AUDIT REPORT
PEOPLE'S DEMOCRATIC REPUBLIC OF YEMEN
GREATZR ADEN WATER SUPPLY PROJECT
(CREDIT 1038-YDR)
Table of Contents
Page No\.
Preface \. i
Basic Data Sheet \. ii
Evaluation Summary \. v
PROJECT PERFORMANCE AUDIT MEMORANDUM
I\. PROJECT DESCRIPTION \. 1
Background \. 1
Objectives \. 2
Project Description/Loan Description \. 2
II\. IMPLEMENTATION EXPERIENCE AND ISSUES \. 3
Water Supply Sector Development \. 3
Implementation \. 5
Procurement \. 6
Project Costs \. 6
Performance of Consultants, Contractors and the
Construction Industry \. 6
Institutional Performance \. 7
Accounting \. 7
Manpower Development and Training \. 8
Operational Performance \. 8
Financial Performance \. 9
Performance of the Bank \. 10
III\. CONCLUSIONS AND FOLLOW-UP \. 10
Sustainability of Benefits \. 10
Conclusions and Lessons \. 10
ANNEX 1
Comments from the Borrower \. 12
This document has a restricted distribution and may be used by recipients only in the performance
of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
TABLE OF CONTENTS (Cont\.)
Page No\.
PROJECT COMPLETION REPORT
I\. INTRODUCTION \. 20
II\. PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL \. 21
III\. PROJECT IMPLEMENTATION \. 23
IV\. OPERATION PERFORMANCE \. 28
V\. FINANCIAL PERFORMANCE \. 28
VI\. INSTITUTIONAL PERFORMANCE \. 31
VII\. PROJECT JUSTIFICATION \. 32
VIII\. CONCLUSIONS AND LESSONS LEARNED \. 32
PCR ANNEXES
1\. Appraisal and Actual Works Constructed \.34
2\. Bar Chart of Design, Bidding and Construction \.36
3\. Comparison of Appraisal and Actual Contract Schedule \. 37
4\. Appraisal and Actual Project Costs \.39
5\. Estimated and Actual Schedule of Disbursements \.42
6\. Production Capacity of Various Sources Compared to
Projected Demand \.43
7\. PWC - Income Statements - Projected and Actual 1980-86 \. 44
8\. PWC - Organization Chart - 1986 \.47
9\. PWC - Indications - Projected and Actual 1980-86 \.48
MAP
IBRD 14871R1
PROJECT PERFORMANCE AUDIT REPORT
PEOPLE'S DEMOCRATIC REPUBLIC OF YEMEN
GREATER ADEN WATER SUPPLY PROJECT
(CREDIT 1030-YDR)
PREFACE
1\. This report presents the results of a performance audit of Yemen
PDR's Greater Aden Water Supply Project, for which IDA Credit 1038-YDR was
made to the People's Democratic Republic of Yemen, with on-lending to the
Public Water Corporation (PC)\. The Credit of US$13\.2 million equivalent was
signed July 11, 1980, and became effective March 27, 1981\. The original
closing date of the Credit of December 31, 1984 was extended twice to December
31, 1986, by which time the Credit had been fully disbursed\. Additional
financing for the project was provided by loans from co-financiers: the Arab
Fund (US$12\.0 million), the OPEC Special Fund (US$4\.0 million), the Islamic
Development Bank (US$\.5 million), and Government contributions (US$4\.5
million equivalent)\. A follow-up project, Greater Aden Second Water Supply
Project (Cr\.1739-YDR), is currently being implemented\.
2\. The Project Performance Audit Report (PPAR) is made up of an
Evaluation Summary and a Project Performance Audit Memorandum (PPAM), both
prepared by the Operations Evaluation Department, and a Project Completion
Report (PCR) prepared by the former Water Supply and Sewerage Division,
Europe, Middle East and North Africa Regional Offices\.
3\. OED has reviewed the PCR, Bank Group files, the Credit and Project
Agreements, the SAR and President's Reports, and the transcripts of the
meeting of the Executive Directors when the credit was approved\. Pertinent
Bank Group reports on Yemen PDR were reviewed, and interviews were held with
staff familiar with the project\. An Audit visit to Yemen PDR could not be
arranged, consequently this report represents a desk audit only\.
4\. Based upon available information, the audit generally agrees with
the findings of the PCR\. The PPAM summarizes and supplements the material
found in the PCR, and comments on aspects of the project that are not covered
fully elsewhere\.
5\. Following standard OED procedures, copies of the draft PPAR were
sent to the Government of the People's Democratic Republic of Yemen, and PWC
for comments\. Comments received have been incorporated into the final PPAR
and are shown as an attachment to the PFAM\.
ii
PROJECT PERFORMANCE AUDIT BASIC DATA SHEET
YEMEN, PEOPLE'S DEMOCRATIC REPUBLIC
GREATER ADEN WATER SUPPLY PROJECT
(CREDIT 1038-YDR)
BASIC DATA SHEET
KEY PROJECT DATA
Item Appraisal Actual 2
Total Project Cost (US$ million) 39\.2 40\.2 98
Cost Overrun (US$ million) - 1\.0
Credit Amount (US$ million) 13\.2 - 100
Disbursed 13\.2
Cancelled Nil
Cofinancierst (US$ million equivalent)
Arab Fund for Economic & Social Dev\. 12\.0 -
OPEC 4\.0 -
Islamic Development Bank 5\.5 -
Date of Physical Completion 12/84 12/87 88 Ia
Proportion Completed by Appraisal Target Date 552
Internal Rate of Return 11 Not calculated /b
Financial Performance Very good
Institutional Performance Satisfactory
la From date of signing\.
lb Since portions of the major works are yet to be completed\.
CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENTS
(US$ Thousands)
Fiscal Year Appraisal Actual
Estimate
1981 1,650 1,129
1982 4,900 1,585
1983 8,210 6,830
1984 11,670 8,914
1985 12,970 11,216
1986 13,200 13,193
1987 (Sept\.1986) 13,200
iii
PROJECT DATES
Item Appraisal Estimate Actual
First Mention in Files 09/77
Government Application 09/79
Appraisal 12/79
Negotiations 04/80
Board Approval 06/80
Loan Agreement Date 07/80
Effectiveness Date 10/80 03/81
Closing Date 12/84 12/86
STAFF INPUTS
(man-weeks)
FY72 FY73 FY74 FY75 FY76 FY77 FY78 FY79
Preappraisal 5\.6 1\.2 1\.2
Appraisal
Negotiation
Supervision
Other 3\.5
Total 5\.6 4\.7 1\.2
FY80 FY81 FY82 FY83 FY84 FY85 FY86 Total
Preappraisal 10\.5 18\.5
Appraisal 46\.8 46\.8
Negotiation 9\.8 9\.8
Supervision 1\.1 10\.5 10\.5 7\.4 4\.8 5\.5 7\.1 46\.9
Other 1\.9 \.3 \.1 \.0 5\.8
70\.1 10\.8 10\.5 7\.5 4\.8 5\.5 7\.1 127\.8
iv
MISSION DATA
Purpose Month, No\. of No\. of staff Date of
Year Weeks Staff Weeks Report
Reconnaissance 09/78 0\.6 1 0\.6 09/22/78
Identificat-on 03179 1\.1 2 2\.2 05/23/79
Preappraisal 06/79 2\.6 2 5\.2 09/12/79
Appraisal 12/79 2\.6 3 7\.8 05/07/80
Supervision 1 12/80 1\.7 2 3\.4 12/18/80
Supervision 2 06/81 1\.1 2 2\.2 06/25/81
Supervision 3 03/82 2\.e 2 5\.8 03/22/82
Supervision 4 12/82 2\.3 2 4\.6 12/20/82
Supervision 5 06/83 2\.1 2 4\.2 07/25/83
Supervision 6 12/83 1\.6 1 1\.6 02/09/84
Supervision 7 07/84 2\.1 1 2\.1 07/30/84
Supervision 8 03/85 2\.1 2 4\.2 03/^c/85
Supervision 9 07/85 3\.4 2 6\.8 08/u9/85
Supervision 10 01/86 2\.0 1 2\.0 01/29/86
Supervision 11 06/86 1\.0 1 1\.0 06/27/86
Supervision 12 11/86 2\.0 2 4\.0 12/08/86
Total 57\.7
OTHER PROJECT DATA
Borrower: People's Democratic Republic of Yemen
Executing Agency: Publi\. Water Corporation (PWC)
Follow on Project: Greater Aden Second Water Supply Project
Credit No: 1739-YDR
Amount: US$5\.6 million
Credit Agreement: March 20, 1987
V
PROJECT PERFORMANCE AUDIT REPORT
PEOPLE'S DEMOCRATIC REPUBLIC OF YEMEt'
GREATER ADEN WATER SUPPLY PROJECT
(CREDIT 1038-YDR)
EVALUATION SUMMARY
Introduction
1\. The Greater Aden Water Supply Project, approved in 1980\. was
designed to respond to the needs of the capital city of Yemen PDR and its
surrounding urbanized areas, where available water production was about 30
percent below calculated demand\.
Objectives
2\. The objectives of the project were to make up the existing deficit
in supply compared with demand, and to increase water production sufficiently
to meet the maximum day demand up to 1987 (PPAM, para\. 5)\. In addition, the
project called for rehabilitation of the distribution system (incl-4ding
reduction of leakage losses from 20 percent to 10 percent), and improvements
in PWC*s organizational structure and administrative procedures through
consultant assistance and staff training\.
3\. In general, project objectives were appropriately modest, an
approach which had considerable merit considering that the implementing agency
was undertaking its first IDA-assisted project\. It was understood by both the
Bank Group and the borrower that the measures to be undertaken were only a
first step in addressing the needs for water supply in Greater Aden\. 1/
Implementation Experience
4\. The Master Plan, prepared under Credit S-21-YDR, had proposed the
development of a new well field at Wadi Bana in the upper Abyan Delta in order
to provide an additional 430 liters/sec to supply Greater Aden\. However,
initial experience with a total of 10 test wells indicated that sufficient
yield could not be obtained at the \.hosen site, which was eventually
abandoned\. Difficulties experienced in estimating and verifying groundwater
yield at the Wadi Bana site delayed project implementation about 4 years\. It
seems that groundwater studies originally carried out as part of the Master
Plan were not of sufficient detail to pinpoint the problem areas that later
developed\. Upon the recommendation of specialized groundwater consultants, a
11 A follow-on project, Second Greater Aden Water Supply (Credit 1739-YDR),
was approved in March 1987 to meet water supply needs until the year 2000\.
vi
new well field was developed some 10 km to the east of the original site\. It
is estimated that the upper Abyan Delta well field will yield an estimated
330-360 liters/sec to wells when facilities are completed (PPAM, paras\. 18-
20)\.
5\. In addition to the problems of finding a major new source of supply,
the long-term yield of existing well fields proved to :je less than originally
believed\. Groundwater consultants have recommended that withdrawal from the
Bir Nasir well field be reduced when new sources become available (PPAM, para\.
21)\.
6\. The closing date of the project was extended twice to December 31,
1986\. Remaining work is now expected to be conpleted in late 1988 under
financing arrangements made by the co-financiers and the Government (PPAM,
para\. 22)\.
7\. Estimated project costs to completion now total US$40\.245 millior
equivalent compared with US$39\.2 million estimated at appraisnl, a 2\.7 percent
increase\. However, current costs to completion are not directly comparable to
those at appraisal, since some components were deleted to remain within
available funding and to offset the additional costs involved in shifting the
well field location from Wadi Bana to a site 10 km further east (PPAM, para\.
24)\.
8\. The training component of the project was curtailed, although a
considerable Lumber of staff were trained through other IDA-financed projects
in the sector (Cr\.1159-YDR & Cr\.1418-YDR)\. In all, 144 PWC staff are reported
to have been trained in the period 1982-1986 (PPAM, paras\. 32-34)\.
Results
9\. Project objectives will have been attained when the main contract
works become operational in late 1987 or early 1988\. Considering that PWC had
not had previous experience in implementing large Bank Group projects, a
creditable performance was achieved\. Water sales increased by 30% through
increases in production and reductions -a unaccounted-for water in Greater
Aden\. PWC installed about 21,000 domestic meters in the period 1980-1986,
double the number projected\. PWC's new organi\.ational structure was
implemented satisfactorily, although staff reductions did not proceed as far
as planned (PPAM, paras\. 35-36)\.
SustainabIlity
10\. Although leak detection efforts will continue under Cr\.1739-YDR,
PWC's unaccounted-for water losses have already decreased (from 33% in 1978 to
22-24Z in 1987), and there is a good chance that the improved efficiency that
has been achieved will be sustained\. PWC appears to be capable of generating
I sufficient revenues and is doing so with the current tariffs in force\.
However, government tax claims to 85Z of the net income of the corporation may
have long-term implications with respect to PWC's ability to repay current
debt obligations, but changes are now being considered\. It should be noted
that the current sector projects underway represent a significant increase in
vii
the fixed assets of PWC, and repayment of these debts will require increased
vigilance in billing and collection, as well as possible tariff increases in
the future\. The current construction of a desalination plant in Aden may
increase the cost factor for water production in the agency, a consideration
which must be carefully weighed when considering future tariff issues (PPAM,
paras\. 45-46)\.
Findings
11\. The audit agrees with the PCP's finding that careful investigation
of groundwater resources is required (particularly in arid areas) prior to
designing a project\. As can be seen in this case, specialized groundwater
consultants with experience in similar hydrogeological areas can provide
useful assistance when uncertainties exist\.
PROJECT PERFORMANCE AUDIT MEMORANDUM
PEOPLE'S DEMOCRATIC REPUBLIC OF YEMEN
GREATER ADEN WATER SUPPLY PROJECT
(CREDIT 1038-YDR)
I\. PROJECT DESCRIPTION
Background
1\. The Greater Aden Water Supply Project (Credit 1038-YDR) was designed
to respond to the needs of the capital city of Yemen PDR and its surrounding
urbanized areas, where, in 1980, available water production was about 30
percert below calculated demand (SAR)\. Water levels in s\.urce aquifers
continued to decline because of over-pumping by both agricultural and munici-
pal users\. Although greater Aden had the best built and maintained water
supply system in Yemen PDR at the time of project appraisal, identified needs
included system rehabilitation, source augmentation, and inst\.tutional
strengthening within the Public Water Corporation (PWC)\.
2\. Because of the absence of surface water sources, all supply to Aden
has been from groundwater wells in nearby wadis (dry stream channels)\.1/
Prior to the project, Greater Aden generally relied upon wells tapping the
Wadi Tuban aquifer northwest of the City (at the Sheikh Othman, Bir Nasir and
Bir Ahmed well fields)\. Some wells had been abandoned in the Sheikh Othman
field near the coast, however, because of saline intrusion as a result of
over-pumping\. At the time of project appraisal, water service in Greater Aden
was intermittent, service being curtailed to fill distribution reservoirs to
meet the following day's demand\.
3\. In addition to inadequacies in supply, there was evidence of
disrepair and need for rehabilitation of existing pipelines, reservoirs, and
equipment in the Greater Ader system\. Both groundwater and soils in some
areas were reportedly corrosive to pipes, tanks and equipment of the system\.
Some observers feared th:t the system was reacting a degradation state beyond
which rehabi6itation might become impossible (SAR)\.
4\. The project under review is the second IDA credit for the water
supply sector in Yemen PDR\. In 1978 the Association approved credit
(S-21-YDR) of US$1\.2 million to finance the preparation of water supply master
plans for Greater Aden and other urban areas of PDRY\. The Master Plan for
Greater Aden was prepared by consultants, and led to the formulation of Credit
1038-YDR, the subject of this audit\.
11 A flash distillation unit (powered by residual steam from a nearby power
plant) is under construction in Aden through Soviet bilateral aid and is
expected to supply an average of 9\.7 Mcm/yr of desalinated sea water by
1988 (SAR, Cr\.1739-YDR)\.
2
Objectives
5\. The objectives of the Greater Aden project were to make up the
existing deficit in supply and to increase water production sufficiently to
meet ma-ximur day demand up to 1987\. In addition, the project called for some
rehabilitation of the distribution network (including reduction of leakage
losses from 20 percent to 10 percent), and improvements in PWC's organization-
al structure and administrative procedures through consultant assistance and
staff training\.
6\. Project objectives were appropriately modest, an appLiach which had
considerable merit because the implementing agency was undertaking its first
IDA assisted project\. However, it was understood by both the Bank Group and
the borrower that the measures to be undertaken were only a first step in
addressing the needs for water supply in Greater Aden\.
Project Description/Loan Description
7\. For administrative reasons, the proposed co-financing from the Arab
Fund could not be made available as early as the Association's funds; thus the
Aden project financing was divided, with Part A (financed solely by IDA)
designed for execution from 1980 through the first half of 1981, and Parts B
and C (financed by IDA and co-financiers) to follow through 1984\. In Part A,
a program of urgent improvements was to be undertaken, including geological
studies at Wadi Bana to verify the yield of the aquifer, final design of the
Wadi Bana uall field together with a 30 km transmission pipeline to the
existing Bir Nasir well field near Aden, the construction of wells in Wadi
Bana to yield an estimated 430 liters/sec of new water, a program of immediate
improvements to the existing Greater Aden system, the provision of water
meters anC operational equipment, and management assistance and training of
PWC's staff (PCR, para\. 2\.04)\.
8\. Disbursement of IDA funds on Parts B and C of the project were
subject to the effectiveness of the other co-financing agreements, which
became effective as originally scheduled (PCR, para\. 2\.02)\. Construction and
equipping of ';he Wadi Bana well field were to take place in Part B, together
1ith construction of the pipeline from the proposed Wadi Bana well field to
the existing Rir Nasir well field\. Part C was to include necessary storage
facilities and other improvemeits in the Wadi Bana and Bir Nasir well fields,
construction of a pipeline from Bir Nasir to the Sheikh Othman well field, and
expansion of the distribution network in Greater Aden\.
9\. The development of PWC into an effective national authority with a
capability to manage the sector was a major rationale for IDA's involvement
in the Greater Aden project, and it was believed that such involvement would
help provide leverage for the application for proper policies and procedures
for improvement and expansion of public water supplies in PDRY (SAR)\. Under
the earlier IDA-financed technical assistance project (Credit S-21-YDR),
management consultants had prepared a new organizational structure for PWC,
and had proposed new administrative procedures (SAR)\. To monitor
implementation of these procedures and further strengthen PWC's management
capabilities, the Greater Aden project called for the agency to retain a
3
management/financial advisor for three years to assist in its reorganization\.
Two additional advisors were also called for as part of the project to
supervise construction as well as operation and maintenance\.
10\. Costs for the Greater Aden project were estimated during appraisal
to be US$39\.2 million, toward which an IDA credit of US$13\.2 million was
authorized in July 1980\. Additional funding for the project included:
US$12\.0 million from an Arab Fund loan, US$4\.0 million from an OPEC Special
Fund loan, a US$5\.5 million loan from the Islamic Development Bank, and
Government contributions of US$4\.5 million equivalent for local expenditures\.
Credit 1038-YDR became effective March 27, 1981, five months behind schedule
as a result of delays in the introduction of a satisfactory tariff schedule
(PCR, para\. 3\.01)\.
II\. IMPLEMENTATION EXPERIENCE AND ISSUES
Water Supply Sector Development
11\. Being a land of sparse vegetation and few surface water sources,
groundwater is the source sought by most agricultural and municipal supply
schemes in Yemen PDR\. In coastal areas, rainfall seldom exceeds 50 mm/yr,
although u? to 500 mm/yr occurs in some mountainous areas further inland\.
Groundwater aquifers are generally comprised of shallow alluvial deposits in
the vicinity of dry stream beds, and rely upon surface and subsurface drainage
from mountainous areas that are part of the-'r recharge systems\. These
aquifers are fragile systems, which may be easily over-pumped in the face of
heavy agricultural and municipal usage, as can be seen by recent increases in
saline intrusion in many over-pumped areas near the coast\.
12\. Between 1968 and 1978, investments in potable water supply amounted
to only US$14\.4 million, mostly financed by Gove-nment funds\. After 1978 by
contrast, US$15\.2 million was invested in water supply works with multilateral
assistance (including IDA) in the short period from 1979 to 1981\. All
totaled, the Asscciation has participated in financing four major projects in
the sector (total credits of US$29\.3 million), involving improvements for
Greater Aden (Credit 1038-YDR and Credit 1739-YDR), Al Mukalla (Credit
1159-YDR), and Saiyun (Credit 1418-YDR)\. Credit 1038-YDR for Greater Aden is
the first of these to be f%illy disbursed, while the remaining projects are in
various stages of implementation\. 2/
13\. The Association has provided support to sector planning and
developmezt\. In 1973, a Sector Study was completed by Bank Group staff, 3/
2/ Some work continues on the Greater Aden (first) Water Supply Project,
although remaining items are covered under financing provided by
co-financiers and the Government\.
3/ IBRD/IDA, "Water Supply and Sewerage Study, People's Democratic Republic
of Yemen\." Report No\. 77-YDR\. 20 pages and annexure\. February 26,
1973\.
4
pinpointing areas where the water supply situation was critical\. These were
in the order of priority, Greater Aden, Al Mukalla (and nearby towns), and
the high plateau along the border with the Yemen Arab Republic\. The Sector
Study concluded that a proposed Aden sewerage project should be given a
lower priority than water supply improvements\. As yet, sewer systems are
found only in areas of Greater Aden and Al Mukalla, where outfalls to the
nearby Gulf of Aden are in service\. No treatment is provided to these ef-
fluents\.
14\. Following completion of the Sector Study, the Government requested
IDA assistance in the preparation of water supply master plans for priority
urbanized areas\. In June 1978, the Board approved an IDA credit of US$1\.2
million to carry out a Water Supply Engineering and Technical Assistance
Project (Credit S-21-YDR)\. The Grtiter Aden (first) Water Supply Project
(Credit 1038-YDR) was an outgrowth of this effort, and was designed to meet
the water supply needs of Greater Aden until the year 1987\. The Greater Aden
Second Water Supply Project (Credit 1739-YDR) was approved in October 1986 to
provide for the needs of the capital city until the year 2000\.
15\. Planning, design, construction and operation of public water supply
systems in Yemen PDR is the responsibility of the Public Water Corporation
(PWC), a national authority\. PWC was established under Law No\. 19 of 1970 to
replace the Aden Water Authority, which, before Independence only served the
Aden British Colony\. With the establishment of PWC the Water Supply Depart-
ments of Al-Mukalla, Lahej Capital Town and Dhala were amalgamated into PWC\.
In addition to these cities, PWC now provides water supply services in eight
other locations\. PWC is currently responsible to the Ministry of Energy and
Minerals, and operates as a semi-autonomous commercial enterprise\. A Board of
ten members, chaired by the General Manager, manages PWC's operation\. All th,
members are employees of PWC, representing the various activities inside the
company\. The General Manager is appointed by the Government\.
16\. Prior to project appraisal, PWC experienced operational difficulties
resulting from lack of financial resources, inexperienced management, and poor
system maintenance\. PtTC's problems were exacerbated by the poor economic
situation in Yemen PDR, in particular the inadequacy of worker's salaries, the
low living standards of the populace, and the lack of foreign exchange for the
purchase of spare parts (Project Brief)\.
17\. The Ministry of Agriculture and Agrarian Reform (MAAR) has responsi-
bility for management of all water resources in the country\. Until recent
years, however, MAAR had not given adequate attention to the problem of
sharing scarce water resources between urban and agricultural users\. Because
of the competing needs of both agricultural and public water supply sectors,
the Government set up a Water Committee in 1980 which was superseded in 1986
by the 'National Committee for Exploring and Rational Exploitation of Water
Resources" together with a "Branch Technical Committee designed to regulate
the collection and allocation of water resources and to establish usage
priorities\. The National Committee is chaired by the Deputy Prime Minister
and Minister of Energy and Minerals and includes the Ministers of MAAR and
Planning and representatives of PWC, Secretariats of the Party and the Council
of Ministers and the Aden Municipality\. The Branch Technical Committee is
5
chaired by the Minister of Planning and includes representatives of the
Department of Mineral Exploration, the Public Drilling Corporation, PWC and
the Aden Municipality\.
implementation
18\. The improvements to the Greater Aden system financed as part of
Credit 1038-YDR were expected to be completed prior to December 31, 1984, the
original credit closing date\. The initial assessment of the time required and
the complexity of operations relied upon the assumption that consultants and
contractors could readily locate and provide an additional 430 liters/sec to
supply Greater Aden by drilling wells at the Wadi Bana, the site selected by
the Master Plan consultant\. Each borehole in the well field was expected to
yield 20-30 liters/sec with a drawdown of not greater of 10 meters\. Expected
well yields did not materialized as the geology of the area proved to be more
complex than anticipated, and well field site was eventually abandoned\.
19\. Much of the poor performance during the early exploratory period
has been blamed on the drilling contractor who was poorly equipped, did not
complete the two original exploratory wells according to specifications, and
was not capable of determining the true aquifer parameters (file search)\.
Eventually a new firm hired for final design of Wadi Bana advised moving the
well field a further 10 km to the east\. However, in the Borrower's view, the
principal responsibility rested with the design consultants who's work, in
this respect, was considered less than satisfactory\.
20\. The difficulties experienced in estimating and verifying groundwater
yields in the Wadi Bana area delayed project implementation about 4 years (or
a 100 percent time overrun)\. It is clear that groundwater studies originally
carried out as part of the Master Plan (S-21-YDR) were not of sufficient
detail and accuracy\. More recent drilling efforts in the upper Abyan Delta
some 10 km to the east cf the original Wadi Bana site has led to the discovery
of a buried ancient wadi :hannel, with good yield to wells\. When completed
(now scheduled for late 1998), the yield of the upper Abyan Delta well field
is expected to be between :30 to 360 liters/sec, compared to the original
design calling for 430 liters/sec at Wadi Bana (PCR, para\. 3\.04)\.
21\. In addition to the problems of finding a major new source of supply
as part of the project, the long-term yield from existing well fields proved
to be less than originally believed\. Specialized groundwater consultants
recommended that the withdrawal from the Bir Nasir well field be reduced to
about 12 Mcm/yr to halt a decline in the water table and to prevent further
saline intrusion\. This compares with appraisal estimates that placed the long
term yield of Bir Nasir at 17 Mcm/yr (SAR, Credit 1739-YDR)\. Further
development of the Upper Tuban well field have thus served only to replace
reductions in withdrawal at the Bir Nasir well field instead of further
augmenting the Greater Aden supply as originally anticipated\.
22\. The closing date of the project was first extended to December 31,
1985, because of the delays mentioned above\. The events of January 1986,
however, forced the demobilization of contractors working on the project and
necessitated further extension of the closing date to December 31, 1986, at
6
which time the Credit was fully disbursed\. Much of the success of the project
has been attributed by IDA staff to the strong leadership of PWC's during the
early stages of the project\. It is now expected that remaining werk on the
project will be completed by late 1988\.
Procurement
23\. International competitive bidding procedures were used on major
project components, and no irregularities or major difficulties occurred\.
In general, good response was received to bids for the supply of project
equipment and materials\. However, only one bid was received initially for
civil works financed by the IDA credit\. This bid was very high (twice the
consultant's cost estimate) even though the submitting contractor was already
operating within Yemen PDR and the bid was subsequently rejected by PWC\. To
overcome the problem, PUC combined all civil works contracts financed by IDA
and other co-lenders into one package, to be awarded to a single contractor
(file search)\. Subsequent re-tendering resulted in a bid about 2% higher than
appraisal estimates\.
Project Costs
24\. Project costs, at the time of completion, totaled $40\.245 million
compared with $39\.2 million estimated at appraisal, a 2\.7 percent increase\.
These costs, however, are not directly comparable with the appraisal estimates
since some components were deleted to remain within available funding and in
order to finance additional works involved in shifting the well field location
from Wadi Bana to a site 10 km to the east\. Cost increases for the establish-
ment of the upper Abyan Delta well field (US$2\.9 million) and additional costs
in laying of the upper Abyan Delta pipeline (US$3\.2 million) were generally
offset by reductions in the cost of pipes for upper Abyan Delta pipeline
(US$2\.3 million) and in the scope of training and management assistance,
engineering hydrogeological studies, and supply of operational equipment
(totaling about US$3 million)\. Foreign currency requirements increased from
88\.5 percent of project costs at appraisal to 92\.3 percent actual, resulting
in a total foreign currency shortfall of US$2\.4 million\. The shortfall in
foreign currency was met by the co-financiers\.
Performance of Consultants, Contractors, and the Construction Industry
25\. In general, very little specific information was found in the files
regarding the performance of consultants and contractors on the project\.
According to the Borrower's comments, the design consultants performance (see
also Para\. 19) was less than satisfactory regarding prospective well yields in
the Wadi Bana well field but other consulting work was reportedly performed to
satisfaction\.
26\. Contractors involved in the project were slow to mobilize and were
hampered by lack of equipment and materials during early months of their
operation\. Once underway, however, the quality of the work was apparently
good, according to supervision mission reports\. As mentioned above (para\.
22), the events of January 1986 forced a demobilization of contractors, with
attendant delay in project works by about three months\.
7
27\. Construction carried out as part of the project relied predominately
upon foreign contractors\. Private sector domestic contractors are virtually
absent in Yemen PDR, and the capacity of those that are available is limited
to small commercial projects and private housing\.
Institutional Performance
28\. The Greater Aden Project was the first occasion for PWC to implement
a major Bank Group financed project\. In general, the procurement processes
were free Jlrom major problems and the major Bank covenants were complied with\.
However, staff reductions suggested by the Bank at appraisal did not proceed
as planned, as evidenced from the fact that by 1986 the actual staff numbered
1,115 versus the projected number of 650 at appraisal,
29\. Like other corporations in PDRY in recent years, PWC has suffered
from a shortage of qualified and experienced professional stalf\. At the time
of appraisal of Credit 1038-YDR there were only five graduate civil engineers
in the technical department, and no graduates in the administrative and
finance departments (SAR, Credit 1159-YDR)\. At the same time, the PVC had a
total of 960 employees, of whom 700 were posted in Greater Aden itnd the
remainder in the provincial branches\. This corresponded to a '\.atio of about
16 employees per 1000 connections (or 4 employees per thousand persons
served), geneL lly considered too high when compared to the ratio of 8
employees per thousand connections found in efficiently operated utilities of
the region\. By 1982 there were 21 engineers, but still no graduate
accountants or administrators (file search)\. Recent (1986) information places
the number of engineers at approximately 35 out of a total of 1,115 employees
in PWC\. There are now about 11\.7 employees per 1000 connections, indicating
that progress has been achieved in increasing the agency's efficiency (also
see PCR, para\. 6\.02)\.
Accounting
30\. At appraisal PWC was using a commercial accounting system, although
it showed considerable weakness\. The financial results since 1976 had not
been finalized due to difficulties in reconciling certain central accounts and
in consolidating the accounts of PWC's branch offices\. In addition, physical
inventory control was carried out at the end of each year in principle, but
the recorded levels of inventory were not reliable in view of the disorganized
conditions of the stores\. Furthermore, a large part of the investments
financed by the Government in the past had not been included in the Corpora-
tion's books and financial statements\.
31\. Based upon 1986 information, PWC's accounting system (although
considerably improved) still has room for improvement\. The Corporation's
books and financial statements are more accurate\. All past investments have
been recorded and assets were revalued in 1982\. The stores have been reor-
ganized, and the inventory levels (now processed on an electronic accounting
machine) are more reliable\. However, the incorporation of these accounts
into the Corporation's reconciled statement suffered some delays and assis-
tance through the help of advisors are required to further improve PWC's
8
accounting practices so that a clearer picture of the overall financial
situation can be obtained (SAR, Credit 1739-YDR)\. Such assistance is being
provided under Credit 1944-YDR\.
Manpower Development and Training
32\. The 1973 Sector Study recommended that training of professional
staff in PWC be undertaken outside PDRY, preferably in other Arab countries;
centers recommended included Cairo and Beirut\. A phased (1972-1980) program
of scholarships required for the training was included\. Sub-professional
staff were to be trained locally\. About 200 staff members were expected to
participate over the years 1981 to 1983 in a manpower development and training
component that was part of Credit 1038-YDR\. Estimated to cost US$ 128,000
(with a foreign exchange component of US$108,000), the program was to include:
(a) seminars and work discussions on management techniques in
general and operation of water supply systems in particular;
(b) in-service training by consultants and working on-the-job;
and
(c) participation in selected specialized courses abroad (SAR)\.
33\. During project negotiations, assurances were obtained that PWC
would finalize a training program for IDA approval not later than December
31, 1980, and that it would subsequently hire instructors and consultants
acceptable to the Association to execute the training program\. By early
1981, PWC had prepared a preliminary outline of a training program that it
intended to execute during the next two years\. Unfortunately, hoever, the
training component of the project was subsequently curtailed to permit the
project to remain within budgeted funds in the wake of cost overruns in other
areas\.
34\. In related developments, considerable staff training has been
reported after 1981 as part of two other IDA financed projects in the sector
(Credit 1159 and Credit 1418)\. During that period, 50 staff were sent to
technical institutes abroad to specialize in mechanical engineering, water
supply administration, water distribution systems and planning\. PWC's senior
managers participated in various seminars and special courses\. Some 30 staff
participated in a two week training course on pump operation and maintenance
in November 1982, and a dozen employees were trained each year at local
institutes in various subjects\. PWC has also organized various other training
courses for groups of PWC employees\. In all, 144 PWC staff are reported to
have been trained from 1982 to 1986 in various courses (SAR, Credit 1739-YDR)\.
Operational Performance
35\. One of the objectives of the project was to reduce system leakage
from the 20 percent estimated at appraisal to 10 percent by the end of 1984\.
While this is a creditable target, it ignores other components of the overall
unaccounted-for water (33 percent at appraisal)\. By 1981, estimates for
Greater Aden placed the percentage of unaccounted-for water at 30 percent; by
9
1985 it had decreased to 26 percent, a creditable performance\. The most
recent information indicates that PWC is seeking further reductions in un-
accounted-for water as part of work under the Second Aden Project (Credit
1739-YDR) by implementing a leak detection and repair program over the 4 year
period, beginning in 1987 (SAR, Credit 1739-YDR)\. However, because of the
corrosive nature of the soils and waters in and around Aden, special main-
tenance procedures will need to be followed\. Current indications are that
unaccounted-for water stands is about 22-24Z (PCR, para\. 4\.02)\.
36\. PUC installed about 21,000 new connections during the period 1980-
1986, double the number projected (PCR, para\. 5\.03)\. A concern in the first
project was the need to repair plumbing systems within individual households,
believed to be a source of considerable wastage of water\. As part of the
project it was stated that a unit would be established within PWC to be in
charge of repairing house plumbing systems (file search)\. Under legislation
of the time, PVC was authorized to go inside premises and inspect plumbing
systems for possible leaks and waste and to summon owners and tenants to make
necessary repairs\. However, the formal training program for plumbers was not
undertaken\. It was also felt that PWC's staff would find it difficult to gain
assess to private homes to undertake repairs due to social customs (PCR, para\.
6\.03)\. A voluntary program to inspect and repair fixtures is being intro-
duced\.
Financial Performance
37\. Provisions contained in the Project Agreement called for PWC to
undertake all measures, including adjustments in its tariffs, that would be
required to generate sufficient revenues to recover its operation and
maintenance costs, interest and other charges on debt, and repayment of debt
in excess of provisions for depreciation\.
38\. An increase in tariffs, a condition of credit effectiveness, was
implemented January 1, 1981, allowing PUC to show its first profit in that
year\. Tariffs in Al Mukalla were increased in December 1982 as well\. PVC's
financial position has steadily improved, moving from a net income before
taxes of YD 518,000 in 1983 on revenues of YD 2\.87 million to income of YD
1\.04 million on revenues of YD 3\.56 million\. An additional tariff increase
was approved by the Government in June 1986 as part of the conditions for
negotiation of the Greater Aden Second Project (Credit 1739-YDR)\. Rates in
municipal areas have been designed to cause minimal impact on low income
consumers, but with higher rates for industrial, public and commercial users\.
39\. By 1984, PWC had increased its net income by more than 40 percent
as a result of larger water sales in Aden (an increase of 10\.3 percent) and
containment of operating expenses which decreased by 6\.3 percent\. Labor
costs also dropped by 14 percent through staff attrition and the elimination
of bonuses\. In addition, a new pumping station was put in service with more
efficient pumps lowering energy expenses in 1984 in spite of a 10 percent
increase in the electricity tariff\. Besides other factors, increased effec-
tiveness in revenue collection has been responsible for the improved financial
performance\. PWC's rate of return on net fixed assets has been higher than
10
projected (PCR, para\. 5\.04)\. The internal rate of return on the project has
not been calculated since portions of the major works are yet to be completed\.
Performance of the Bank
40\. IDA supervision missions were adequately staffed and sufficiently
frequent (PCR, para\. 7\.03)\. However, supervision missions reported on project
progress in a rather mechanical way without giving basic Insights into the
problems that were being experienced by the implementing institution and its
consultants and contractors\. This is particularly evident in relation to the
exploration wells undertaken in Wadi Rana, where supervision missions ascribed
existing problems and inordinate delays to the poor performance of the drill-
ing contractor, without shedding much light on the uncertainties of the
groundwater situation beinq faced in the area\. It was not until an expatriate
groundwater hydrologist was engaged to examine the problem in June 1984 that
the severe limitations of Wadi Bana site became evident\. In general, super-
vision missions could have documented project issues and progress in greater
detail; the audit found it difficult to review this project with so little
useful information in the files\. The Borrower commented that access to the
Supervision Mission Reports would have greatly benefited the implementing
agency\.
III\. CONCLUSIONS AND FOLLOW-UP
Sustainability of Benefits
41\. Since groundwater for municipal and agricultural use has proved to
be less available than expected, further policy decisions may be necessary at
the highest levels of government regarding allocation of this resource among
users\.
42\. Although ongoing leak detection work will continue under Credit
1739-YDR, PWC's unaccounted-for water losses have already decreased and there
is a good chance that the improved efficiency in system operation that has
been achieved will be sustained\.
43\. PWC appears to be capable of generating sufficient revenue and is
doing so with the current tariffs in force\. However, government tax claims
of 85 percent of the net income of the Corporation may have long-term implica-
tions with respect to PWC's ability to repay current debt obligations\.
Changes in the taxation arrangements are now being considered by the Govern-
ment\.
44\. It should be noted that current sector projects underway in the
sector represent a significant increase in fixed assets of PWC, and repayment
of these debts will require increased vigilance in billing and collection as
well as possible tariffs increases in the future\. The current construction
of a desalination plant in Aden may also increase the cost factor for water
production in the agency, a consideration which must be carefully weighed when
considering future tariff issues\.
11
Conclusions and Lessons
45\. Project objectives will have been achieved when the main contract
works became operational in 1988\. The delay in project completion was due
primarily to technical factors which had not been fully taken into account at
project inception, particularly the poorly understood nature of local ground-
water hydrology and the difficulty of findin?g dependable new sources of
groundwater\. The new production facilities will be utilized to full capacit
when completed in order to reduce withdrawals from other overtaxed groundwater
sources\.
46\. Considering that PVC had not had previous experience in implementing
large-scale Bank Group projects, a credible performance was achieved\. Water
sales increased by 30% through increases in production and reductions in
unaccounted-for water in Greater Aden, from 33? in 1978 to about 22-24% in
1987\. PWC installed 21,000 domestic meters in the 1980-1986 period, double
the number projected\. PVC's new organizational structure was implemented
satisfactorily, although staff reductions did not proceed as far as planned\.
Much of the project's success had been attributed by IDA staff to the strong
leadership of PWC\.
47\. The thoroughness of project preparation is, once again, brought
into question, in this case, by the inadequacy of hydrogeological investiga-
tions\. This not only resulted in substantial delays and extra costs in
locating new sources of water but also in the abandoning of substantial
investments in the original well field\. Another consequence was the curtail-
ment of important institution building components with negative long term
implications\. On the brighter side, it should be noted, PWC has overcome the
problems with commendable efficiency and is obviously managing the sector
effectively\.
48\. The Borrower particularly highlighted the negative effect of tender
documents, specifications and drawings being based on "conceptual" rather than
on final designs\.
12 ATTACHMENT
Page 1 of 8
BORROWER'S COMMTENTS
Public Water Corporation
People's Defmfratic Republic of Yemen UIýIi ý;jl 4\.~
Head Office
PO Box 4004
Crater\. Aden
Telephone 53551-5 o* 0 - "
Telex 320 MEYAH ADEN ry
Cables: MEYAH ADEN - DU\. J
The World 3 a91 _2th NÃvember,1988
OpeZato ivaltioa l MnGW27 110
1818 St2eet NW
Washit~ DO 20433
U\.s\.a
30s atteate= et w\.bAlaxå l Nedeka
5a Sir,
su-\. ( 6\.S Ada Vator Supply ?»e
(0»«dt 1038 T-)
rSeet Peaft m\.e AuQit Ifferh
Thankyen fr dispatohg te us vide yur oweoing 1ette et
Oot 7,1988 the GMWSPI, P»oJ«et P*rzf* e Audit Repert fr Ceaeta,
vhok wa zoived by u e New 7,1988\.
Pleaso fin enolemed om ceimoats e the zePort\.
Yes Simeely,
BaetAbulaNi'
ATTACHMENT
13 Page 2 of 8
Coat\. sa PJset Pertse
Audit Reot , Credit 1038-YDR
I p~ajeet Pere*=ne Audit ménmodu
Paz 7 Lime 8
The lg Of +z~gmilkle PIPl~ w 45 km\.
PaM 15 Resnd RO-dztig f pam 15 ag felluNg t -
Planirg @design,onetrotien ad opematign #f Publi Water
Supply gystems in Ymm PDR is the resp~nuibility cf the
Publie Water Coxpoation (WC),a iatlemi authet\.
4C wm Established under Muv w\. 19 Gf 1970 te replae the
AdOn Vate Autheig vhieh befere Indepeaden*e enly gezved the
AdOZ 3ti~h Celer\.With the Egtablighet sf the fC the Vater
Sply Depar~Nts o Al1takalla, IUhej Capital to= and b3a
ten vater suppliu vers a="1shmmted inte dC\.In aditio to
these o1tie* , C amr prvides vater upply servis in e~ght
ether leatiens \.WO is ourently repponible te the inistiv
et Eney and Ninaeml, a Gpemtes as a sei\.autensus
Ges*rial entexri\.e \. A beazd of ten memberg ,ohi~ed by the
Generml 1mger ,age WC's opomtion \. All the members ars
empyess *f the WC »presenting the varsus atvities ad
caiamtion m inside the oa~y \. Tvo of the me~bero are la
advisW spaoity \. C's gom M er is appeinted by the
Geverant \.
Pam 17 The 0e~mittes refered te in the p~ has been superseded by the
EstabliUhent ef the maticaul c~ ttee ad the Banh T«ha a1
Ce~mittee as fslls\.
ATTACHMENT
Page 3 of 8
14
(i) ~um~te~ial Couan~ Reselutin Ne 10 et 19% pemig~ted
e 19\.4\.1986 etablishig ef a Katteml Cetteae r Ep1
and Rattoall Ezple\. ltion of ~e Water ses es \.
Døpu Pine n i and inister
et Ensoay & N=IDno&
imniser f Agontu= and
Ag ~a Re o Nai
liter of Plann~ng
Gemal Iger, IC
RapmeeatLve e th SeereMaiat
et Pu~;y
lepreue~ltve ø£ tho Seemtamat
et cO~ f unistøm
t~ipal engieer e~m ptal
(2) lumWteia1 zilut4e& (~aster ef Ef a 8 ltflaalu)
Nø 5 et 19% pz~e~4sted e 12 May %
3~h teknial e~tte te the Nmati~ C~ittee ter
3xp1e nd Ratieal R2pleitatien et the Water RbsU e\.
MLirtez et Planig amæ
Epemets Utive et Fber
JDpartvkt et naemaI Baelomattei
Publie B»2Ung CÃpemati~n
Ada ~£~ipaLty
P~blim Water Cøzp~stiea
ATTACHMENT
Page 4 of 8
15
Paza 19
The detenimation of the tru aquier pameters was the
responsibility of the design cenultats who failed te relize~
$he sigä~e et the lev pu test yield and high dravdean
reported\. Dri11iM works wre oaried *ut under the desig
censultants supervisien ,the berehele dxL\.ling uamples vore
inspected by the *ensultante bydegeeeg\.me alea
oarxied *ut the pumping teste
Refer te commext en FOR Paza 3\.18
Ro Projeot o*st et $40\.2 being a estimote ai refer to
eemment e PCR paz 3\.18
Total forelgc surremsy shortfall s U$3\.4X
Paza 25
Por ooments en olause 25 and 26
Refer te eemet en POR pam 3\.22 , 3\.23
Paz 28
Coepgea et statt strength sheuld tak* late asoemt alse
the isresase in the =Mer ef peeple sevod by the INC at
appril sd 1986 \.
Paz 36
Legislatien still in tr\. aiutherzig IWC te ge inside
premises snd ingpeot pluuing ytems and te serve netiee eo
esumere te =nke the n~oa~ repair\.Shortage et plumers and'
lack et inentive te cariv st the inteal repsirs have been
ever eon refer Oeiment POR pam 6\.03
Kene reamsm etated in olame 36 met oerret \.Seial eustemu
have te be respotdd\.With a väluntas~ progr~m outsiders vill
*sme te the preises when a zle member et the family ls ia
the huses\.
ATTACHMENT
Page 5 of 8
16
Para 40
It vould bo a :f value f a oepy et the Supervisin Mswie: reperta
is prvided te the ImplemmntiMg amey te befit frm the Obeatlm
et the Nission\.The Bak was pr~vided with the Supemvisin et the
0oetruetien Cen~ultant Repezt en Diin at Wadi Baa Sept\. 83
and C9Piaiersm eting inmludimg IDL was held in Aden De\.83~ 4/s\.
sve=l telexemsa reprte dispatohed ise Sept 83 en the un -
satistaotezry yield and d~wden ef the beeheles in the Wadf Un
wellfteld ja 0"0< 0 4*
Paa 47
Alse the teer deou~t\. for the ma e~entaet we*s oent \.10
wers pr*pard en oenptul desi n and =e detailed desig\. The
s\.ttiemtln , the BlUn et qmantities and dawigs are mwt
sufficiently detailed and effprehnive \. efer ea~ FOR Paza
3\.22\.
4TTACHMENT
17 Page 6 of 8
II Paoeot copletion report
Credit 1038 YDR
Pam 3\.16 Prgreso reports
In addition to the reports stated following reports have
been despatehed
No 15 Jan-Dee 86
16 Jan-lMroh 87
17 Apr\.June 87
18 Jan-De0\. 87
Regions Comments 19 J&* -Ju\. 88
Pam 3,18 U S 40\.2 million is the Project eatimted
The PCR reflects Re-onlusties set oaoulated at the Ce-finasiers meetig
project costs at of Oot 1986\.
completion as
of the time of The tetal foreign owmey shert fUll was US5\.4illion
PCR preparation\.
Subsequent cost th* addittenl 1 million $ beig the redueties In th US$
overruns were
financed by the mlized duvig the Implementatien of the Project due te
Arab Fund for
Economic and tho lomor a@mn of US xeiv" minly dus to the sove aa
Social Develop- of IM 6 DIM= to us $e
sent\.
PaM 3o20 The Foreign enzmemcy short fall ef US$ 3o4millies Was
fimnsed by the Arab Pund by additioal losn of Kuwaity
Dismre 1 million0
Potemasse of eemaltants, cotmetes sad supplier\.
PaM 3\.22 Design consultants \.
Their tender deenats were net fully detailed and speifie
which resulted in eoasidemble sabignities sad aruments
between the sontmeters ad the mezviia ef sastrustioa
oeasaultants duziaf the o*astreties phae Alse the
ealtaat had not given due ceadeation to the infem tioa
provided by the iaitial explematoy Dzilling ceatmeter,
failed to intezpxet and seeept the results of the 2nd
dzillit oeatmeter and the comelusioa of the smperviolea
of coastrustion conasltate of the ftlUe of the weltiol4
until estagezieally so decided by the graund tator soeZlalist
apponted by ID\.
ATTACHMENT
Page 7 of 8
18
Supervieiea et oeumtruntion Genmultants\.
1\. Weze slw in--ruliing the ~=*f et tOh RgI vellfield- 0
- i ~ sabeitting the coent e the *extaeters suision et
detailed dmigs and gpecifistion ft the ush \. Elot\.Plat
and alte dzaing \.
2\. Regular nethly and quarterly progren reorts ver* not wubitted\.
3\. Ceasideiable delay in deali with satmterolais and oetmat l
mtters
Cetmtrs\.
Pa 3\.23 Line 4 The problem vere only par~ialy reuelved \.Rwever
the eatuter eemtimued te gi?e ver ephai~ te the
eet et the Ve* at the expenme or qmlity e mateal and
ffa émp vhih rsted a ee*ideble vek load ter Ce
s~ eiM et oeuntutiea eeultante du~ig implementtion
ef the V**k End has rated a large amuat et remedial
Ve* te be 4~mpleted du~in te * slte e period\.
Suppliers \.
De supply etmote vere admin~itered eseeetsilly and
wel but ermted a let of aditmativc verk for the
WC projeet team \. Hovever the elleving supply eatmeta
rea lnt\. préblem\.
1\. Supply of paite
Ne peeal epwW pa~nt require te be atored under
oe~t e*itions and the st~ge lite and pet lite
are be~ shert \. NC experienned emnideable diffiulty
in 6peating and lmting the eeolifg ytem t the
centaimem in wioh the pat was precured and gettm
the paintiM est~ater te accept the rspOMiblit
rör the qaliting et the paint Ve*\.
ATTACDMENT
19 Page 8 of 8
2\. Supply cf Agb69t9\. oment pipus and fittiUg\.
The nand etetor resed te aoeept ~ ärensbilty for the
pipes a the Awbeste om~ joute en grund that tere
euld be hair lin omk whi~ h euld nt be deteeted\.Te reve
the =tter the pipes and jolmte had te be hydauli\.lly temted
bef~re the et~ter aseepted *hem ter laying and testi \.
This resulted la ext oeet et testing the pipen ad jouts
pam 4\.01 ftter senofd lin\. add
The B1r Huss~r-Gh\.Otm piplis,Netvork i Dar Sacd,
Sh\.Otbma and Num ad the Rubble mend ma ere all
fully emisined beteen Jun - Dee 1985\.
Pam 6\.03 Prep~ed tiniag pregma ter plmbere as n»t undertakev
dieetly but additienal f~\.ilities vere g ted to pern vies-
ing te ung plumberm test earIOd et by IVO \. Als effr
the y m ,the sheortage et plumbers whi\.h eisted at prejeet
evaluatiea sge has been versee by the la:e number et
pereas t=La»d is the tebhical *tts tzwaing Institut\.
The rUs in the vater mat\. haw ale* =de the cenunoere te
tak\. aeties to ear ut the repairs\.
Annez 1 page 2 et 2 \.
Cathedie p~etetio te resewir setial 12 No\.
A~ner 4 P 1 of 2 \.
The e\.ute ame net st~l oets the s umta stated au atal
oects are the esti ed sat used for Re-ealuatin the
emst et the Pr*jeet in 00\.986\.
se
Anaex 8 Reueut be zeagpredeed AS te be legible
last sheet ef reprt\.
Ge~e=l leget of the ater sply Nstem\.
Reuest be rewaded ae ss te be legible-
/'sr/
PEOPLE'S DEMOCRATIC REPUBLIC OF YEMEN
GREATER ADEN WATER SUPPLY PROJECT
PROJECT COMPLETION REPORT
(Credit 1038-YDR)
INTRODUCTION
1\.01 The People's Democratic Republic of Yemen (PDRY) is a largely desert
country, practically bereft of surface water resources and with a rugged
configuration, sparse vegetation and few natural resources\. Overall, a harsh
dry climate prevails with a mean annual rainfall ranging from 50 mm on the
coastal plain to 500 mm in the mountainous part of the country\. Water supply
is derived essentially from underground aquifers and there is severe
competition with agriculture for the very limited resources available\.
1\.02 The Public Water Corporation (PWC) is a national authority
responsible for potable water supply in PDRY\. It is estimated that about 66%
of the total population could be serviced by piped water systems\. At present,
however, only about 60% of this population is served with piped systems with
about 36% of these served by systems operated by PWC in 12 districts\.
Approximately 3% is supplied by systems which PWC is constructing in the
Seiyun region\. A further 21% is served by local cooperatives and private
systems which have been installed through regional and local initiative with
technical assistance from PWC\.
1\.03 Collection and disposal of solid and liquid wastes in PDRY are the
responsibility of local councils\. Most of Greater Aden is sewered and a sewer
system is under construction in Al Mukalla, the second largest city, to serve
about two-thirds of the population\. The remainder of the population uses
individual systems for waste disposal such as cesspools, dry pits and septic
tanks\. As water consumption increases, cesspits and septic tanks in some
densely populated areas have saturated the surrounding areas resulting in
serious structural problems with existing buildings and unsanitary conditions\.
1\.04 A sector study undertaken by the Association in 1972 concluded that
the sewerage development had a lower priority than water supply projects in
the country\. Accordingly, the Association's emphasis has been in the water
sector commencing with an engineering credit in FY79 (Credit S-21-YDR) to
develop water supply projects in the two main cities, Aden and Al Mukalla\. To
date, five credits have been made by the Association providing about US$20\.0
million to finance water supply projects in Aden, Al Mukalla and Seiyun\. A
total of about US$56\.0 million was contributed to the financing of these
projects by five co-financiers: The Arab Fund for Economic and Social
Development, the Islamic Bank, the Kuwait Fund for Arab Economic Development,
the OPEC Special Fund and the Danish International Development Agency\.
1\.05 The beneficiary of Credit 1038-YDR was the Public Water Corporation
(PWC) created by public law in 1970 to replace the Aden Water Authority\. PWC
is owned by the Government and is presently responsible to the Minister of
Energy and Minerals\. Under its statute it is an autonomous public enterprise
and functions as a commercial undertaking\. PWC has been gradually extending
21
its services outside the city of Aden and presently provides services to about
12 other areas\. In addition it provides technical assistance in the
development, operation and expansion of water supply systems to villages\. PWC
has been the beneficiary of the five IDA credits\.
1\.06 Under Credit 1038-YDR the Association provided US$13\.2 million
towards the financing of the Greater Aden Water Supply Project which included
the development of a borefield, construction of a transmission pipeline and
strengthening of the distribution system\. Preparation of the project was
undertaken with funds provided under the Association's Credit S-21-YDR\. The
Credit Agreement was signed in July 1980\. Co-financing totalling US$19\.5
million equivalent was provided by the Arab Fund, OPEC Special Fund, and the
Islamic Development Bank\.
II\. PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL
Origin, Preparation and Appraisal
2\.01 A sector study undertaken by the Association in 1972 identified the
areas of PDRY where the water supply was most critical\. These were in order
of priority: Greater Aden, Al Mukalla (the second largest city) and villages
in the high plateau along the border with the Yemen Arab Republic\. In 1977
the Yemeni Government requested the Association's assistance in preparing
feasibility studies in these areas\. In June 1978 the Board approved a credit
of US$1\.2 million to PDRY to implement a Water Supply Engineering and
Technical Assistance Project (Credit S-21-YDR)\.
2\.02 The Greater Aden feasibility study was undertaken by consultants and
completed in September 1979\. This study indicated that water production for
Greater Aden was about 30% below demand and would be reduced still further in
the future, as the water tables in existing borefields were lowered\. To meet
projected future demand the consultants provided a master plan to meet the
city's water supply requirements until 2000\. The project concept was first
discussed during a project identification mission to Aden in March 1979,
following which a first stage program of works was selected\. Negotiations
were held in April 1980, and the Credit was approved in June 1980\. Following
the introduction of a satisfactory new tariff structure, a condition of
effectiveness of the Credit Agreement, the Credit became effective on March
27, 1981\. For administrative reasons, the proposed financing from the Arab
Fund could not be made available at the same time as the Association funds\.
To avoid delays in project implementation due to this time lag, the urgent
project works were included in Part A of the project and financed by IDA\.
Disbursement of IDA funds on the other parts of the project works were subject
to the effectiveness of other co-financing loan agreements\. The other loan
agreements were made effective on schedule\.
22
Objectives
2\.03 The objectives of the project were (i) to make up the existing
deficit in water production for Greater Aden; (ii) to reduce water loss
through leaks in the system from an estimated 20% to not more than 10% by
rehabilitation of the existing system through the execution of a leak
detection program, rehabilitation of the existing water supply system and the
installation of measurement and control devices; and (iii) to assist PWC in
implementing a new organizational structure and improved administrative
procedures\.
Project Description
2\.04 The project, as appraised, consicted of:
(i) the construction and equipping of 17 boreholes in Wadi Bana
to yield a maximum flow of 430 1/sec, including the
installation of disinfection equipment and standby
generators;
(ii) the supply and laying of a 32-in transmission pipeline,
including the construction of a service track, between the
new well field and the existing facilities at Bir Nasir, to
carry the first stage capacity of 430 1/sec;
(iii) the construction of two 5,000-m3 reservoirs in Wadi Bana
and one of 15,000-m3 capacity at Bir Nasir;
(iv) the supply and laying of a 32-in pipeline between Bir Nasir
and Sheikh Othman;
(v) the construction and equipping of seven boreholes and the
installation of disinfection equipment and pipe connections
at Bir Nasir;
(vi) improvement and expansion of the distribution network,
including the installation of a 12-in and 10-in pipeline to
supply water to ships at the Aden Port;
(vii) a program of immediate improvements in the existing system,
including the installation of master meters, air valves,
control valves and cathodic protection equipment;
(viii) the supply of operational equipment including domestic
water meters, leak detectors, hydraulic and workshop tools,
cranes, laboratory materials and vehicles;
(ix) final design of the well field in Wadi Bana and
transmission facilities to Greater Aden;
(x) consulting services for construction supervision;
23
(xi) management assistance and training of PWC's staff;
including the provision of three qualified experts for a
period of three years;
(xii) a management study of water resources in Wadi Bana to
verify the safe yield of the aquifer and to determine the
allocation of additional resources (beyond 430 1/sec)
between urban supply and irrigation; and
(xiii) refinancing of the water supply engineering and technical
assistance Credit S-21-YDR\.
Revisions to the original project scope are discussed in paras\. 3\.04-3\.06\.
Major Covenants
2\.05 A summary of the major covenants under the credit is shown below:
(i) PWC to take all such measures as shall be required to
provide revenues sufficient to cover its operating and
maintenance costs, interest and debt repayment in excess of
provision for depreciation\. Fully complied with (para\.
5\.06[c])\.
(ii) PWC to employ thre, management advisors, one to assist in
water supply planning, the second to assist in
administration and finance and the third to assist in
operation and maintenance\. Two of the three advisors
appointed (para\. 3\.14)\.
(iii) The Borrower shall ensure that all public entities shall
pay their debts to PWC within three months\. Substantially
complied with (para\. 5\.06[d] )\.
III\. PROJECT IMPLEMENTATION
Start-up
3\.01 A minor delay in project commencement occurrad due to delay in
effectiveness of the credit whilst new tariffs were put into effect\. With the
appointment of a new General Manager of PWC in January 1981, however, rapid
progress was made with reorganization of PWC and meeting the necessary
covenants for effectiveness\. As an overall evaluation, start-up of the
project progressed smoothly, but the problems of drilling and locating
adequate water resources, which have been the major cause of delay and
additional costs of the project, in hindsight were already beginning to show
by the end of the start-up period\.
3\.02 Completion of design was up to a year behind schedule because of slow
progress by the first of two drilling contractors in completing exploratory
21A
boreholes at Wadi Bana, and the failure of those boreholes\.
3\.03 The consultant for construction supervision was appointed by July 1,
1981, six months later than stipulated in the Project Agreement, but in
accordance with the Association's requirements\.
Revisions
3\.04 The main revision to the project was the result of the failure to
find adequate water near Rawah village in Wadi Bana, the proposed major
borefield and water source for the project\. A total of ten boreholes was
constructed at Wadi Bana before it was decided that adequate water was not
available and the field abandoned\. Further investigations were then
undertaken at Upper Abyan, still located within the Wadi Bana catchment but a
further 10 km from Aden\. These were successful in locating a supply of 360
1/sec (compared to 430 1/sec originally proposed at Wadi Bana) and the project
proceeded on the basis of utilizing this Upper Abyan source\. An independent
consultant was utilized by the Association to help resolve the problems cf
groundwater evaluation\.
3\.05 Conceptually, this change is comparatively minor, in terms of cost it
is significant but not unmanageable, but in terms of delay to the project it
is most unfortunate having caused about four years delay or 100% time overrun
in completion of this critical component of the project\. This problem and the
resulting delay were exacerbated by a change in consultants; the firm
responsible for the dcsign report was replaced by a different consultant to
undertake construction supervision\.
3\.06 The need for the project revision was brought about by inadequate
field investigation during the project preparation phase\. This was largely
responsible for the foreign cost overruns which have occurred\. This
additional cost was financed by the other co-financiers and the Government
(para\. 3\.22)\. As a result of the cost overruns of the borefield, economies
had to be made, and the proposed training and management assistance component
of the project was curtailed and some remedial work, leak detection and repair
work were not undertaken\. The need to carry out very thorough investigations
of groundwater in arid areas such as PDRY is well demonstrated by this
problem\. The specification and drilling of exploratory boreholes and carrying
out the necessary pump testing and other measurements that are required for a
thorough scientific evaluation of aquifers are highly skilled and specialized
activities requiring the proper equipment\. This needs fuller consideration in
future projects especially in specifying the method of construction of
boreholes and supervision of drilling\.
3\.07 A minor change was also made to the storage provided at Bir Nasir in
that two reservoirs of 7,500 m3 capacity each were constructed, rather than
one of 15,000 m3 capacity proposed at appraisal, to facilitate maintenance\.
This was carried out within the appraisal cost estimated for this component of
the project\.
3\.08 During the course of the project, PWC found it necessary to construct
some additional works which were not included in the project as appraised\. In
25
particular the Hiswa pipeline, which serves the Hiswa power station and
desalination units, was constructed using funds from an alternative source\.
In retrospect it might have been more appropriate to have included this work
in the project and to have identified funds at the appraisal stage\. Further
details on changes to the project are summarized in Annex 1\.
Implementation
3\.09 The project implementation was managed by an effective project
manager working directly under the General Manager of PWC\. This project
manager was in fact one of the advisors appointed under the project (para\.
3\.14)\. He was assisted by consultants\. Overall, project management was
effective, and the project proceeded relatively smoothly in spite of necessary
revisions and various delays\.
3\.10 Actual and appraisal implementation schedules are compared at Annex
2\. Because of the problems experienced at Wadi Bana (para\. 3\.04), the
consultants and PWC have been averse to finalizing the specification for bore
pumps until the Upper Abyan investigation and drilling and testing of
production boreholes were completed\. As a result tenders for bore pumps and
their power supply were not invited until mid-1986, and contracts let in April
1987\. Completion of the project is not expected until late 1987, although
some limited production from the borefield may be possible before this\.
3\.11 About three months of the overall delay was caused by the
demobilization and remobilization of all contractors and consultants as a
result of the events of January 1986\. Claims for additional costs by
contractors and consultants are being considered and are expected to be
financed by the Government of PDRY\.
3\.12 Delays were also experienced with other parts of the project;
however, these have been of no consequence in relation to bringing the works
into operation since the borefield had become the critical component\.
3\.13 Initially bid documents were prepared as indicated in the appraisal
report, with separate bids required for supply of various equipment and
materials, and for various components of Lhe civil works\. The bids obtained
with this division of the work were considerably higher than appraisal
estimates, since there was limited interest in the comparatively small
packages offered\. The majority of the project works was therefore packaged
together and bids invited for materials supply and civil works together,
resulting in more satisfactory bids being obtained\. The resulting delay was
about nine months\. There was a further delay of about 12 months before the
contractor commenced work due in part to a dispute over the advance payment
for mobilization\.
3\.14 Two of the three advisors to PWC proposed under the project were in
fact appointed\. An engineering advisor, with long experience in water supply
in PDRY, became Project Manager for this project, and provided advice on other
26
PWC projects and operations\. An administration and finance advisor, also with
long experience in PDRY, was also appointed\. Both continued their activities
throughout the duration of the project\.
3\.15 Annex 3 provides a listing of bid packages proposed at appraisal
compared to actual contracts let\.
Reporting
3\.16 Preparation of quarterly progress reports by PWC was a requirement of
the credit; however, the issue of these reports has been sporadic\. Good
reports were prepared in 1983; however, only one report was received for 1984,
one for 1985 and one for the first half of 1986\. Reports have been brief but
informative, but the delays in their presentation have reduced their
effectiveness as an advisory and management tool\.
Prourement
3\.17 Procurement has been entirely through International Competitive
Bidding (ICB), and consultants selected in accordance with the Bank's
Guidelines for the Use of Consultants\. There were no problems with use of
these methods\. PWC has indicated that there has been considerable difficulty
in co-ordinating the requirements of the various cofinanciers\.
Costs
3\.18 Total project costs amounted to US$40\.2 million compared to US$39\.2
million at appraisal (YD 13\.9 compared to YD 13\.5 million)\. The net increase
was a little over US$1\.0 million or 2\.7%, a creditable performance\. The
proportion of foreign cvrrency required, however, increased from 88\.5% at
appraisal to 92\.3% actual, resulting in a total cost overrun of US$2\.4 million
in foreign currency\. This discrepancy was due to the Association's limited
experience in PDRY\.
3\.19 The small net increase in total costs was made up of a number of
compensating factors, as indicated in Annex 4\. The most important of these
were:
(i) a reduction of US$2\.3 million in the supply of pipes for
the main Wadi Bana pipeline;
(ii) reductions totalling about US$3\.0 million in the supply of
operational equipment, training and management assistance,
engitzeering hydrogeological studies, and equipping of
boreholes;
(iii) additional costs of US$3\.2 million in supply and laying of
distribution pipelines and the laying of the Wadi Bana
pipeline; and
(iv) additional costs of US$2\.9 million in the establishment of
the borefield\.
27
3\.20 The cost overrun in foreign currency was financed by the Arab
Fund (US$2\.0 million) and the Government (US$0\.4 million)\.
Project Financial Sources
Appraisal Actual
Amount % Amount %
-------US$ Million--------
IDA 13\.2 34 13\.2 33
Arab Fund 12\.0 30 15\.3 38
Islamic Development Bank 5\.5 14 4\.5 11
OPEC Special Fund 4\.0 10 4\.0 10
PDRY Government 4\.5 12 3\.2 8
Total 39\.2 100 40\.2 100
In addition to contributing to the financing of the project, the
Government provided substantial equity contribution to PWC to finance
additional works (para\. 5\.05)\.
3\.21 The actual disbursement of the Association's funds was delayed
only about nine months compared to appraisal estimate as work financed by
the Association was substantially completed on schedule (Annex 5)\.
Performance of Consultants, Contractors and Suppliers
3\.22 After the initial start-up problems were resolved, the performance
of consultants, contractors and suppliers has been generally acceptable\.
The problems with the originally proposed Wadi Bana borefield most
probably were due to inadequate hydrological investigation at the time of
the feasibility study; and some of the delay at start-up of the project
could be attributed to poor performance of the drilling contractor\.
3\.23 Initially there were considerable problems with the main civil
works contractor including delays in mobilization (para\. 3\.13), shortage
of experienced field supervisors and tradesmen, equipment in poor
condition and several changes of senior staff\. These problems were
resolved over time but resulted in a considerable delay in project
completi3n\.
3\.24 The original drilling contractor was also slow to mobilize, and
poorly equipped\. The drilling crews were inexperienced and had
difficulty communicating in Arabic or English\. Backup from the home
office was also poor\. This contractor's performance was generally
unsatisfactory\. On the other hand the contractor for the Upper Abyan
drilling carried out excellent work in good time\.
28
IV\. OPERATING PERFORMANCE
4\.01 At present, the major part of the project is not operational\. The
new bores at Bir Nasir have been operating for three years and have
produced considerably more water than the bores they replaced, such that
about a 10% production increase has been achieved from the borefield\.
Production from Upper Abyan is now expected to be 360 1/sec compared to
the 430 1/sec originally expected (16% reduction)\. Overall, production
will be very close to that expected at appraisal\.
4\.02 Water unaccounted for was 33% in 1979, and expected at appraisal
to reduce to 24% by 1987\. In fact, it had reduced to about 22% in 1985,
but had fluctuated somewhat above this figure in the previous years\.
Total annual water consumption since 1983 has exceeded the appraisal
projections, but peak daily demand is only 10% above average, compared to
30% anticipated at appraisal\. Total demand is now expected to continue
to increase above the appraisal projection, and severe shortages are
expected until the Upper Abyan borefield is brought into use, even if Bir
Nasir continues to be pumped at a rate above its long-term capacity\.
Upper Abyan will be fully utilized as soon as operation is commenced\.
Production capacity and consumption are indicated diagrammatically at
Annex 6\. It can be seen that demand has been essentially met up until
1986 by pumping the Bir Nasir borefield at a rate of 21 Mm3/year, well in
excess of its long-term capacity, and that pumping from that borefield
can only be reduced to its long-term capacity (about 13 Mm3/year) when
the Upper Abyan and other sources come into operation\.
V\. FINANCIAL PERFORMANCE
5\.01 ?WC's projected and actual Income Statements Balance Sheets and
Sources and Applications of Funds for the seven years 1980-1986 are in
Annex 7\.
Financial Performance
5\.02 During the seven years 1980-86, PWC's water sales were about 10%
higher than projected\. This together with an average tariff per m
sold, which was about 12% higher than projected resulted in an increase
in revenue of about 25%\. Operating costs were about 27% higher than
projected and all elements of costs contributed to this increase\. The
resulting net income before tax increased by about 140%\. However, an
excessive rate of income tax of about 85% resulted in the level of net
income after tax being in line with the SAR's projections\.
5\.03 PWC installed about 21,000 new connections during the seven year
period which is about double the number projected\. Steady progress was
29
also made in improving PWC's operating ratio from 108% in 1980 to 72% in
1986, about 6% better than projected\.
Rate of Return
5\.04 PWC's rate of return on average net fixed assets was substantially
higher than projected ranging from 21% in 1981 to 12% in 1986\. This
improvement was partly due to the delay in completing the investment
program\. The internal rate of return on the project was not calculated
as the major part of the additional water supply is not yet operational\.
Financing of PWC's Investment Program
5\.05 A comparison of PWC's projected and actual investment financing
plan during the seven years 1980-86 is shown below\.
Table 5\.1
Financing Plan 1980-1986 (YD Million)
Appraisal Actual
Amount Percent Amount Percent
Application of Funds
Project 13\.1 50 13\.5 57
Other Investment 11\.4 44 10\.0 43
Total Investment 24\.5 94 23\.5 100
Debt Service 1\.6 6 - -
To\.taAnAlicationA- zi M
Sources of Funds
Internal Cash Generation 3\.5 13 3\.4 15
Decrease (Increase)
in Working Capital 0\.6 2 (3\.1) (13)
Government Contribution 8\.5 33 14\.2 60
IDA Credits 4\.1 16 7\.3 31
Other Long-Term Loans 9\.4 36 1\.7 7
Total Sources of Funds 26\. Uu5 _0_
PWC's investment program at YD23\.5 million was marginally less than originally
projected\. PWC's internal cash generation was in line with projections\. The
Government's contribution increased from YD8\.5 milli,n to YS14\.2 million or
67% mainly resulting from the transfer to PWC of Arab Fund and OPEC Special
Fund resources in the form of equity contribution instead of loans\. About
30
YD3\.2 million or about 23% of this equity contribution, however, was financed
by income tax paid by PWC during the seven year period\. PWC debt equity ratio
of 36:64 at the end of 1986 was very satisfactory\.
Financial Covenants
5\.06 The Borrower's and PWC's performance on the financial covenants is
sumn ized below:
(a) Borrower to provide US$4\.5 million equivalent in the form of
equity to finance project imptcmentation\.
Borrower provided about US$41\.2 million towards the cost of
the project and other additional works\. However, about
US$16\.0 million of these funds were contributed by other
cofinanciers and were originally assumed as loan financing\.
(b) PWC not to incur any debts unless its net revenues shall be at
least 1\.2 times debt service\.
If PWC had paid its debt service in 1986 (para\. 5\.06e), the
debt service coverage would have been 1\.0 but this has
mainly resulted from the 85% income tax rate\. Without this
tax PWC's debt service coverage would be 1\.5 in 1986\.
(c) PWC shall take all such measures as necessary to provide it in
each fiscal year with revenues sufficient to cover its operating
and maintenance costs including depreciation, and interest and
debt repayment in excess of depreciation\.
PWC has met this target each year since 1981\.
(d) The Government shall ensure that all public entities shall pay
their debts to PWC within three months\.
Satisfactory progress was initially made in compliance with
this covenant but arrears began to increase again as a
result of the events of January 1986 and the substantial
increase in price implemented in July 1986\. PWC is
following up with the Government on this matter\.
(e) Under the Subsidiary Loan Agreement the Association's funds were
onlent to PWC and debt service was scheduled to commence in 1986\.
Due to the high proportion of surplus funds (85%) paid by
PWC to the Government, PWC failed to pay its debt service\.
The matter is still under discussion between the PWC and
the Government\.
31
VI\. INSTITUTIONAL PERFORMANCE
Organization
6\.01 One of the major objectives of the project was to assist PWC in
developing its organizational structure and administrative procedures\.
Consultants engaged under the engineering project (Credit S-21-YDR) prepared
proposals for improving PWC organization\. These proposals were accepted by
the Government and PWC and implementation was approved by Ministerial Decision
N* 16-1981\. The current organization chart is in Annex 8\. PWC's Board
consists of eight *senior employees under the Chairmanship of the General
Manager\. The Board is responsible for taking all major decisions but
Government approval must be secured before certain decisions are implemented,
including inter alia the operational and investment budgets, setting of
tariffs and borrowing\. The new organization is operating satisfactorily\. PWC
accounting and administrative procedures were also substantially improved and
a computer billing system was successfully implemented\.
Staffing
6\.02 In 1979, PWC had a staff of 960 employees which gave a ratio of
4 employees per 1,000 persons served\. This level was considered excessive and
PWC's management developed a program to reduce this level throigh attrition,
Satisfactory progress was made in reducing the ratio to 2\.6 per 1,000 persons
served in 1986 (Annex 9)\. PWC has recruited a substantial number of graduates
during the past five years and now has about 24 engineers and three graduates
in the accounting and administration departments\. A substantial number of
technicians have also been recruited\. However, these recent recruits lack
professional experience\. PWC has continued to engage the two advisors
employed as part of the project to provide guidance to their staff\.
6\.03 During the past five years, about 50% of PWC's staff have
participated in the corporation's training program\. About 50 staff members
attended technical institutes abroad for engineering, planning and
administrative courses in the water supply field\. PWC staff has also
participated in courses in administration and accounting organized by local
institutions\. In addition, PWC has organized various training courses for
groups of employees\. Part of the training and management assistance program
under this project was curtailed as a cost reduction measure in view of other
project overruns (para\. 3\.06)\. The training program, however, was continued
with funds provided under other IDA credits\. The proposed training program
for plumbers in the repair of household water supply systems was not
undertaken as it was felt that due to social factors, PWC's staff would be
unable to gain access to private homes to undertake repairs\.
32
VU\. PROJECT JUSTIFICATION
Project Objectives
7\.01 The objectives of the project to meet the deficit in water supply in
Greater Aden will be achieved when the main contract works become operational
late in 1987\. The new production facilities will operate at 100% capacity
from inception as the water in existing borefields is being mined to meet
current demand (para\. 4\.02)\. The Greater Aden Second Water Supply Project
(Cr\. 1739-YDR), expected to be effective in the near future, provides for a
further expansion of the production and distribution facilities to meet demand
to the year 2000\. The reduction of water losses was also achieved with
unaccounted-for water in Greater Aden falling from 33% in 1979 to 24% in 1987
(para\. 4\.02) and PWC's overall unaccounted-for water falling to 28% compared
to the projected level of 27% (Annex 7, Page 1)\. PWC's new organizational
structure was satisfactorily implemented\.
Least Cost Solution
7\.02 The change of borefield location from Rawah Village to Upper Abyan
(para\. 3\.04), resulting from the failure to locate adequate water at the
former location, was a minor change in project concept but did add
significantly Lo project costs and delays in construction\. The Upper Abyan,
however, continued to be the least cost solution for meeting the increased
water demand of Greater Aden\.
IDA Performance
7\.03 IDA's supervision missions were adequately staffed and the frequency
of about two missions per annum was satisfactory\. With a view to improving
PWC's reporting performance, a detailed format for the quarterly reports was
provided\. In addition, IDA engaged an independent consultant to evaluate the
hydrological data on the Rawah Village borefield to help PWC reach a decision
on whether to abandon this area and move to Upper Abyan\. During the seven
years this project has been under construction, the Association developed and
financed with PWC three additional projects, which reflects the mutual
confidence developed between the two institutions during the period\.
VIII\. CONCLUSIONS AND LESSONS LEARNED
8\.01 When the main contract for construction of the transmission line and
development of the borefield in Upper Abyan is completed late in 1987, the
project will have met one of its main objectives of meeting the existing
deficit in water supply for Greater Aden (para\. 4\.02)\. However, there was a
delay of about four years in meeting the objectives due to a combination of
technical problems (para\. 3\.05) and the fact that this was the first PWC
33
project financed by IDA\. In spite of this delay, water sales during the
period increased by 38% through increased production and reduction in
unaccounted-for water\. The reduction in unaccounted-for water was in line
with the objective of reducing losses through leaks from 20% to 10%\. PWC also
successfully implemented its new organizational structure\. PWC's financial
performance was very satisfactory (Chapter V)\.
Lessons Learned
8\.02 This project shows that in an arid country such as PDRY, a more
thorough investigation than elsewhere is necessary to locate groundwater
resources prior to appraisal\. Investigation in such areas requires highly
skilled and specialized staff with proper equipment to undertake the drilling
of exploratory boreholes, pump testing, and other measurements required for a
thorough scientific evaluation of the aquifers (para\. 3\.06)\. The project also
shows that it would have been advisable that implementation and supervilion
work be carried out by the same firm which undertook the preparation work
(para\. 3\.05)\.
34
ANNEX 1
Page 1 of 2
PEOPLE'S DEMOCRATIC REPUBLIC OF YEMEN
GREATER ADEN WATER SUPPLY PROJECT (CREDIT 1038-YDR)
PROJECT COMPLETION REPORT
Appraisal and Actual Works Constructed
Appraisal Actual
Wadi Bana Borefield No\. of Boreholes 21 10
No\. of Pumps 17 nil
Total Capacity 1/sec 430 nil
Upper Abyan Borefield No\. of Boreholes nil 22
No\. of Pumps nil 20
Total Capacity 1/sec nil 360
Wellfield Collection Mains (m) not stated 16,100
Wellfield Storage (m3) 2x5000 2x5000
Power Generation Included Included
Chlorination Included Included
Transmission main from
Borefield diameter (mm) 800 800
Transmission main from
Borefield length (m) 45,000 56,300
Bir Nasir Borefield No\. of Boreholes 7 7
No\. of Pumps 7 7
Total Capacity 1/s not stated 175
Bir Nasir Storage m3 15,000 Zx7500
Chlorination Included Included
35
ANNEX 1
Page 2 of 2
Appraisal Actual
Distribution System Diameter 800mm length(m) 10,700 9,000
700 1,700 2,110
500 2,400 2,600
400 2,200 2,400
300 3,600 3,700
250 3,000 3,000
200 1,000 1,000
150 - 200
TOTAL 24,600 24,010
Hiswa Pipeline Diameter 500mm length(m) - 6114
400mm length(m) 5701
Operational Equipment:
Flow meters 24" (No\.) 1
21" (No\.) 1
16" (No\.) 1
12" (No\.) 2
Pressure Reducing Valves 16" (No\.) 2
12" (No\.) 3
Air Valves (No\.) 120
Domestic Water Meters (No\.) 5000 locally
financed
Cathodic Protection to (No\.) 10
Reservoirs
Refinancing of Credit S-21-YDR Included Included
Completion of Design Included Included
Hydrogeological Studies of
Wadi Bana/Upper Abyan Included Included
Construction Supervision Included Included
Advisors 3 2
04/87
DOC\. 1769W, pp\. 20-21
PEOPLES DEMOCRATIC REPUBLIC OF YEMEN
GREATER ADEN WATER SUPPLY PROJECT
PROJECT COMPLETION REPORT
BAR CHART OF DESIGN, BIODING AND CONSTRUCTION
CALENDAR YEAR
ACTIVITY 1980 \.1981 1982 1983 1984 198 1986 1987
a-------------------------------- ------- *---------------- -------- --- --------------- -------- ------- ---
FINAL PROJECT DESIGN APPRAISAL ======
ACTUAL +++++++\. +++++
--- -- -- -- -- -- --- -- -- -- -- -- -- -- -- -- -- -- --- -- - -- -- - ------- -------- --------
WADI BANA BOREFIELD
Well Construction APPRAISAL
ACTUAL ++:OS++++++\. +++++ +0 +S+ \.
Equipment Bidding APPRAISAL
ACTUAL +0++;+S
Installation Bidding APPRAISAL
ACTUAL +0++:+S
Equipment Installation APPRAISAL
ACTUAL \.++\.
-------------: ACTUAL--- ----------- -------- -------- -------- -------- --------
WADI BANA PIPELINE
Pipe Bidding APPRAISAL
ACTUAL +OS
Installation Bidding APPRAISAL
?ACTUAL +OS
Pipeline Laying and APPRAISAL === ======
Testing ACTUAL ++++++++ ++++++:t +
a------------------------------------------- I--------- --------I--------- -------- -------- I -------------a ----- --------------\.- -
STEEL RESERVOIRS
Equipment Bidding APPRAISAL
ACTUAL +OS
Installation Bidding APPRAISAL ====
ACTUAL +OS
Reservoir Construction APPRAISAL
ACTUAL ++1+++\.+++++\. \.;i++++
a-------------------------------------- ------a------ -------S----- a--- -------- -------- -------S\.-\. *\.s
DISTRIBUTION SYSTEM
Pipe Bidding APPRAISAL
ACTUAL +aS
Installation Bidding APPRAISAL
ACTUAL +OS
Pipe Laying and Testing APPRAISAL ====a=-=a-===
ACTUAL ++ ++++ + +++\.+tt
------------------------------- ----------------- -----------a--- --------\.--- --
IMPROVEMENT WORKS
Equipment Bidding APPRAISAL
ACTUAL +0 +S
Equipment Installation APPRAISAL =
ACTUAL +++ \. ++++++ ++it++++++\.
---- ---- --- ---- --- ----------a--------------------- --a------ --------- ---------- - - - a - - - - - - -
Appraisal 0 Bid Opening a
++O++S Actual S Contract Signing a
------- --------------------------------------------------------------------------- - ------- I
37 ANNEX 3
Page 1 of 3
PEOPLE'S DEMOCRATIC REPUBLIC OF YEMEN
GREATER ADEN WATER SUPPLY PROJECT (CREDIT 1038-YDR)
PROJECT COMPLETION REPORT
Comparison of Appraisal and Actual Contract Schedule
APPRAISAL ACTUAL
1\. CONTRACTS TO BE FINANCED BY IDA
BID NO\. 1: SUPPLY OF EQUIPMENT AND MATERIALS
Group
No\.
1 - Well Casings and Screens Bid 8 and Bid 11
2 - Two 12-in\. One 16-in\. One 21-in, and One 24-in Flow Meters;
Two 16-in and Three 12-9n Pressure Reducer Valves; and
120 Air Valves\. Bid 1
3 - Cathodic Protection for 10 Steel Reservoirs Bid 1, Groups 3 & 4
4 - Five thousand 1/2-in Water Meters Deleted
5 - Pumps, Motors, Starters, Transformers, Pipes, Fittings
and Electrical Materials for 7 Wells\. Bid, Groups 1 & 2
BID NO\. 2: SUPPLY OF EQUIPMENT AND MATERIALS
Group
No\.
6 - One 15,000-m3 and Two 5,000-m3 Steel Reservoirs, Special
Valves and Connecting Pipes and Fittings Bid 10
7 - One Chlorinator, Injector, Balance and Accessories Bid 10
8 - 10,700 m of 32-in pipes Bid 3
1,700 m of 28-in pipes
2,400 m of 20-in pipes
2,200 m of 16-in pipes
3,600 m of 12-in pipes
3,000 m of 20-in pipes
1,000 m of 8-in pipes
ANNEX 3
Page 2 of 3
BID NO\. 3: CIVIL WORKS AND INSTALLATION
Group
No\.
9 - Installation of a 15,000-m3 and two 5,000-m3 Steel
Reservoirs and their Accessories, Piping Connections
and Special Valves Bid 10
- Laying of Pipes Ordered in Bic No\. 2, Group No\. 8
- Installation of a Chlorinator and Accessories
II\. CONTRACTS TO BE FINANCED BY OTHERS
BID NO\. 4: SUPPLY OF EQUIPMENT AND MATERIALS
Group
No\.
10 - Pumps, Motors, Starters, Transformers, Connecting Pipes
and Electrical Materials for 17 Wells Bids 12 & 13
11 - Four Generators and Accessories Bid 10
12 - 45,000 meters of 32-in pipes Bid 10
13 - One Chlorinator, Injector, Balance and Accessories Bid 10
BID NO\. 5: CIVIL WORKS AND INSTALLATION
Group
No\.
14 - Laying and Testing 45,000 meters of 32-in pipes Bid 10
- Construction of a Service Track
- Installation of Pumps, Motors and Electrical
Appurtenances on 17 Wells
- Laying and Testing of the Piping System between the Wells
- Construction of a Shelter for and Installation of four
Generators and Related Equipment
- Construction of a Chlorination Chamber and Installation
of a Chlorinator and its Accessories
39 ANNEX 3
Page 3 of 3
Comparison of Actual and Appraisal Contract Schedule
ACTUAL APPRAISAL
Group No\.
1 Kubota Bid 1, Group 5
2 Grundfos Bid 1, Group 5
3 Bid 1, Group 3
4 Bid 1, Group 3
Bid No\.
1 Bid 1, Group 2
2 Not let, became part of bid 10 Bid 2, Group 6
3 Bid 2, Group 8
4 Not let, became part of bid 10 Bid 3, Group 9
5 Not let, became part of bid 10 Bid 4, Group 12
6 Nat let, became part of bid 10 Bid 4, Groups 10, 11, 13
7 Not let, became part of bid 10 Bid 5, Group 14
8 Wadi Bana Drilling Bid 1, Group 1, Bid 3, Group 9
9 Installation of Equipment by PWC
10 Main Civil Contract Bid 2, Group 6, 8, 7, Bid 3,
Group 9
Bid 4, Groups 11, 12, 13, Bid 5,
Group 4
11 Upper Tuban Drilling
12 Bid 4, Group 10
13 Bid 4, Group 10
PEOPLE'S DEMOCRATIC REPUBLIC OF YEMEN
GREATER ADEN WATER SUPPLY PROJECT (CREDIT 1038-YDRI
PROJECT COMPLEXION REPORI
Anoraisal-and Agtual Project Costs
(US$100)
Aoraisal Estimate Actual Cost Actual over Aoraisal
Local Foreign Total Local Foreign Total Amount %
Construction of bores at
Wadi Bana & Sir Nasir 309 145 454 487 1,753 2\.240
Construction of bores at
Upper Abyan - \.1\. 1\.11J
Sub-total -5 \. -3\.3S 2\.900 M
Immediate Improvements to
System 61 1,301 1,361 - - -
Supply of 5,000 1/2 inch
Meters - 149 149 - - -
Supply of Operational
Equipment 27 - 64-
Sub-total -2AS& 13AA -809 -38
Final Design of Bana
System 41 597 638 - - -
Management Study of Bana
Aquifer 1948 7 IA -5 --
Sub-total - 12 22 92g w -577 -47
Management Assistance and
Training 211 845 1\.JLQ 8 107 15 -941 -89
Equipping Wells in Wadi
Bana (Upper Abyan) 276 2,611 2A\.88 354 1,796 i25* -737 -26
Standby Generators for Well
Field 102 960 1,0i 73 1,377 1\.450* 388 37
Chlorination System in Wadi
Sana 4 21 2E5 6 119 \.25 100 400
Supply of 32-in Bana Pipeline - 12\.912 12,212 - 10,600 1O600 -2,312 -18
o
ADpraisal Estimate Actual Cost Actual over ADDraisal
Local Foreign Total Local Foreign Total Amount %
Laying of Bana-Bir Nasir
Pipeline 1,927 3,354 5,281
Service Track along
Pipeline 1 683 84-
Sub-total 6,-27 6 gg5 A70 14
Two 5\.000m3 Reservoirs in
Bana 114 691 805
One IS,ooom3 Reservoir in
Bir Nasir 1 943 1\.-1-
Sub-total - J902 _1 1\.26 -g -
Chlorination System at
Bir Nasir 4 21 2 is ISO 165 140 560
Pipe Connections at Bir
Nasir 45 260 305
Bir Nasir-Sheikh Othman
Pipelines 520 4,357 4,877
Network in Dar Saad, Sheikh 4-
Ochman and Mansura 126 738 864
Pipeline to Rubble
Mound 1 5 Al-
Sub-total 46- 1 \.661 8277 8840 2,379
Construction Supervision 198 1,502 12270 162 1\.667 1,829 128 8
Refinancing of Credit
S-21-YDR --- 1\.200 1,200 -0 0 -398 -33
TOTAL PROJECT 4,500 34,700 39,200 3\.115 37,130 40,245 1,045 2\.7
*Estimated\.
Appraisal estimates include allowance for physical contingencies and price escalation:
Factors are: 1\.3550 on Local Costs
1\.4223 on Foreign Costs b
04/87 0
O
42 ANNEX 5
PEOPLE'S DEMOCRATIC REPUBLIC OF YEMEN
GREATER ADEN WATER SUPPLY PROJECT (CR\. 1038-YDR)
Estimated and Actual Schedule of Disbursements
US$ Thousands
Estimated Actual
Quarter Cumulative Quarter Cumulative
IDA Fiscal Year and Quarter
1981 1st\. Quarter - -
2nd\. Quarter 800 800
3rd\. Quarter 300 1,100 -- -
4th\. Quarter 550 1,650 1,129 1,129
1982 1st\. Quarter 770 2,420 - 1,129
2nd\. Quarter 980 3,400 181 1,310
3rd\. Quarter 800 4,200 4 1,314
4th\. Quarter 790 4,990 271 1,585
1983 1st\. Quarter 890 5,880 303 1,888
2nd\. Quarter 860 6,740 1,071 2,959
3rd\. Quarter 750 7,490 3,831 6,790
4th\. Quarter 720 8,210 40 6,830
1984 1st\. Quarter 850 9,060 124 6,954
2nd\. Quarter 920 9,980 90 7,044
3rd\. Quarter 900 10,880 1,188 8,232
4th\. Quarter 790 11,670 682 8,914
1985 1st\. Quarter 700 12,370 439 9,353
2nd\. Quarter 220 12,590 318 9,671
3rd\. Quarter 200 12,790 1,065 10,736
4th\. Quarter 180 12,970 480 11,216
1986 1st\. Quarter 150 13,120 477 11,693
2nd\. Quarter 80 13,200 618 12,311
3rd\. Quarter -- - 522 12,833
4th\. Quarter - -- 360 13,193
1987 1st\. Quarter 7 13,200
PEOPLES DEMOCRATIC REPUBLIC OF YEMEN
GREATER ADEN WATER SUPPLY PROJECT (CREDIT 1038-YDR)
PROJECT COMPLETION REPORT
Production Capacity of Various Sources Compared to Projected Demand
60-
50 -7
v
V
Current Desalinated
40- Projection of Demand Water
Demand and (Actual to '85) /
Production
Mm3/yr
\.30 Appraisal Tra
Projection of
Demand \.
20 ____
V S\. Othman /l
Bir Ahmed
10
Bir Nasir
79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98
FINC01 PEOPLE'S DEMOCRATIC REPUBLIC OF YEMEN
GREATER ADEN MATER SUPPLY PROJECT (CREDIT 1038-YOR)
PROJECT COMPLETION REPORT
PVC - INCOME STATEMENTS - PROJECTED AND ACTUAL 1980-96
1980 1981 1992 1993 1994 1985 19986
Fiscal Year Ending Dec\. 31st Projected Actual Projected Actual Projected Actual Prcjected Actual Projected Actual Projected Actual Projected Actual
\.------------------------------------------------------- VD Thouand ---------------------- ------------------------------
Mater Produced lMillion @3) 21\.79 N/A 1/ 21\.95 25\.90 22\.13 26\.59 22\.33 28\.15 26\.53 29\.01 27\.21 30\.19 28\.40 31\.09
Unaccounted-for Mater 1%) 33\.00 NIA 32\.00 37\.00 31\.00 37\.00 30\.00 37\.00 28\.00 31\.00 27\.00 26\.00 27\.00 28\.00
Mater Sold (Million 3) 14\.51 #/A 14\.99 16\.30 15\.30 16\.86 15\.72 17\.84 19\.09 19\.88 19\.91 22\.36 20\.90 22\.53
Average Tariff (FILSlm3) 56 N/A 119 133 119 132 119 134 120 133 161 135 161 154
Number of Connections 1000) 56 56 58 61 59 63 61 67 62 71 64 74 67 77
REVENUES
:\. \.
Mater Sales 923 1,008 1,773 2,172 1,822 2\.233 1,967 2,391 2,293 2,641 3,206 3,010 3,349 3,596
Meter Rental 32 25 34 26 35 27 36 29 37 31 38 49 39 149
Ne Connections 24 21 17 30 12 42 13 65 19 67 20 75 24 53
Miscellaneous 15 392 Is 67 15 292 15 395 15 295 Is 451 15 245
Total Revenues 94 1,436 1,939 2,295 1,94 2,594 1,931 2,970 2,363 3,034 3,279 3,595 3,427 4,D42
OPERATING COSTS
Nages, Salaries and Benefits 770 726 728 806 711 927 713 949 712 882 745 911 784 967
Energy, Fuel and Cheaicals 366 459 397 498 411 632 422 694 611 678 633 716 670 798
Distribution and Maintenance 77 98 82 100 ,' 149 94 179 144 161 154 207 166 204
General Administrative Expense 96 130 105 171 116 180 127 183 140 233 154 257 170 213
Provision for Bad Debts - 10 - It - 12 - 13 - 11 - 13 - 15
TOTAL OPERATINS COSTS 1\.309 1,422 1,312 1,596 1,325 1,900 1,356 2,018 1,607 1,965 1,686 2,104 1,790 2,187
Income Before Depreciation (415) 14 527 709 559 694 575 852 756 1,069 1,593 1,491 1,637 1,855
Depreciation 272 125 275 256 279 327 299 334 443 446 736 440 984 723
Income Before Interest (687) (111) 252 453 280 367 286 Si 313 623 957 1,041 753 1,132 \.
Interest - - - - - - - - - - 156 - 494 - 21
Income Before Taxes 1697) (11!) 252 453 280 367 286 518 313 623 701 1,041 259 1,132
Income Tax - - 95 83 105 310 107 440 117 529 263 894 07 962 W
PET INCOME 1697) (111) 157 370 175 57 179 78 196 94 438 157 162 170
Operating Ratio 176\.80 107\.90 96\.30 90\.26 95\.10 85\.80 85\.20 91\.90 96\.90 79\.50 73\.90 71\.00 79\.00 72\.00
Rate of Return on
Av\. Net Fined Assets - - 7\.00 21\.00 8\.10 10\.00 8\.10 12\.00 3\.50 12\.00 4\.50 17\.00 3\.20 12\.30
i/ Note: N/A - Not Available
2/ Interest due n *t \.:-ued\.
FINCON GREATER ADEN MATER SUPPLY PROJECT (CREDIT 1039-VOR)
PROJECT CONPLETION REPORT
PtC - BALANCE SHEETS - PROJECTED AND ACTUAL 1980-06
-------------------------------------------
1990 1981 1982 1983 1984 1985 1966
Fiscal Year Ending Dec\. 31st Projected Actual Projected Actual Projected Actual Projected Actual Projected Actual Projected Actual Projected Actual
\.--------\. -------------------------------------------------D Thomad----------------------------------------------------
Gross Fixed Assets 10,167 2,270 10,225 8,285 10,470 9,730 10,934 9,884 21,845 12,325 32,664 12,430 32 921 19 837
Less: Accumulated Deprec\. 16,465) (1,189) (6,740) (5,024) 17,019) (5,351) (7,308) (5,695) (7,749) (6,1221 (8,496) (6,5621 19,370) 7,265
\.--------------- ---- ------ ------ -\.---- - -------\. \. \.
Net Fixed Assets 3,702 1,091 3,485 3,261 3,451 4,379 3,626 4,199 14,096 6\.203 24,178 5,969 23,451 12,552
Mork-in-Progress 3,452 - 7,924 300 16,255 93 20,446 7,809 11,581 10,677 2,217 15,945 3,579 11,976
---------------------------- ---------------------- ------- --------------- ------- --------------- ------
Total Fired Assets 7,154 1,081 11,409 3,561 19,706 4,472 24,072 12,088 25,677 16,980 26,395 21,913 21,030 24,424
Inventories 492 156 399 232 260 593 213 585 210 931 234 753 247 2,094
Accounts Receivable 193 327 279 590 169 753 179 909 263 969 447 955 475 1,507
Other Receivables 367 701 317 373 267 84 217 224 167 287 60 395 0 360
Less Bad Debts - (232) - (122) - (94) * (104) - (115) - 1126) - (141)
Cash & Equivalent 385 1,059 345 1,332 275 1,440 175 2,301 150 2,519 150 3,447 125 3,407
------\.----\.-\.-----\.----\.----\.-\.-------\.----\.----\.-\.------ ------- ------- ------- ------
Total Current Assets 1,427 2,010 1,339 2,395 991 2,776 784 3,815 790 4,491 091 5,414 847 7,227
--------- --- ------------ ------- --------------- ------- --------------- --------------- ------- ---------------- \.-
TOTAL ASSETS 9,591 3,091 12,749 5,956 20,697 7\.249 24,856 15,903 26,467 21,371 V\.26 27,227 27,877 31,655
3ata3 33333 23t2a3 xe333 3s3333 33333 32=233 \.=2323 3m33c3 33m233 Convex =\.2333 *\.3az3 a33323
EQUITY AND LIABILITIES
323assassa33333s3as33a
Capital 2,077 929 2,077 929 2,077 929 2,077 1,296 2,077 1,296 2,077 1,296 2,077 1,296
6overnment's Contributions 6,123 1,364 61 3,664 8,06' 4,725 10,026 8,905 11,096 11,770 11,410 14,097 12,756 15,926
Revaluation Reserve 622 622 319 622 319 622 319 622 319 622 319 622 319
Legal Reserve 29 26 28 276 29 333 29 410 29 504 23 660 29 929
Earned Surplus (Deficit) (1,375) (232) (1,336) - (1,292) - (1,247) - (1,198) - 11,06) - (1,049) -
Total Equity 7,475 2,087 9,352 5,18 9,!i02 6,306 I1,506 10,830 12,625 13\.889 13,048 16,362 14,464 19,370
IDA Credit 166 - 925 - 2,487 - 3,684 2,799 3,966 4,211 3\.690 6,056 3 414 7,293
Other Loans 7 43 1,017 43 6,239 43 7,995 913 0,726 1,502 9,797 2,544 8,327 2,852
Total Loftq-Tere Loans 173 43 1,942 43 9,725 43 11,679 3,602 12,692 5,713 12,487 8,600 11,741 10,145
Customers' Deposits 101 112 106 126 110 150 114 195 119 219 123 253 129 275
Accounts Payable 336 424 956 314 1,590 643 949 1,254 553 1,503 807 2,012 502 2,865
Pension Fund 367 425 - 285 - - - 31 47 - - - - 0
Contract Retentions 130 - 393 - 771 - 610 - 262 - 126 - 138 -
Current Naturities - - - - - 106 - - 216 - 695 - 904 -
Total Current Liabilities 934 961 1,455 725 2,471 899 1,672 1,470 1,149 1,769 1,751 2\.265 1,673 3,140
TOTAL EQUITY & LIABILITIES 9,582 3,091 12,749 5,956 20,698 7,249 24,857 15,902 26,466 21,371 27,286 27,227 27,979 31,655
sas casms senses cocas *acres 22ssa Vaantas aa s2ssu asscos essats sasst assage aes
Current Ratio 2\.0 2\.09 1\.0 3\.3 0\.4 3\.09 0\.5 2\.6 0\.9 2\.5 0\.6 2\.4 0\.5 2\.3
Debt/Equity Ratio 42) 2:98 2:98 17:93 :99 49:52 1:99 50150 25:75 50:50 29:71 49:51 34:66 45:55 36s64
FICONl PEOPLE S DENOCRATIC IEPUBLIC OF VEAE
SKRATE ADE MATER SUPPLY PROJECT (CREIT l38-9fI
PROJECT COMPLE7I00 REPOR)
PE - SOURCES & APPLICATIONS OF FUNDS - PROJECTED AND ACTUAL 19"0-86
1980 1981 '982 1983 194 1995 1986 1980-1986
FStal year EndiAt OK\. Siat Projected Actal Projected Actual Projected Actual Projected Actual Projected Actual Projected Actual Projected Actual Projected Actual
\. \. \. \. \. \. \. \. \. ID Thousand ----------- - - - - ---------------------------- ---------
SOURCES 11F FUlMS
Met Income Sfre Deprec\. I
Interest and Alter Tat I
Surplus Distribution 11 (415) 14 314 523 323 384 334 412 492 540 1,001 597 1,418 993 3,467 3,363
Sovernsots Contributions 1,767 1,364 1,838 183 106 1,061 1,959 4\.447 1,070 2,965 314 2,317 1,376 1,931 8,430 14,176
Increase in Other Liabilistes 6 - 5 2(5 4 4 - 4 - 5 - 6 22 34 2S7
1,773 1,364 1,843 398 110 1,061 1,963 4,447 1,074 2,965 319 2,317 1,382 1,861 8,464 14,413
IDA Credit 166 - 75 - 1,562 - 1,197 2,789 454 1,422 - 1,845 - 1,237 4,138 7,293
Other Loans 7 (1,070) 1,0tt - 5,221 - 1,757 770 775 699 490 1,041 157 308 9,418 1,738
\. ~~~~ ~ ~ ~ --- --- --- --- ----- --
total Loans 173 11,070) 3,770 - 0,783 - 2,954 3,559 1,229 2,111 490 2,886 157 1,545 13,556 9,031
07IAL SOURCES 3,53) 308 3,927 921 7,216 1,445 5,251 8,418 2,795 5\.616 1,810 5,800 2,957 4,299 25,487 26,807
APPLICATIONS OF FUNDS
tao\.w=l== asmso*
Proposed Project 213 3,017 6,854 2,739 212 - - 13,105
Other Investments 1,465 1,514 1\.722 1,916 1,834 1,455 1,519 11,425
Total lvestents 1,748 Is 4,531 300 9\.576 1,238 4,655 7,950 2,046 5,239 1,455 5,373 1,519 3,330 24,530 23,453
Aaortiation - - - - - - - - * 216 - 695 - 911 0
Interest - - - - - - - - - 156 - 494 - 650 0
\. ~~~~~ --- \. \. --
Total Debt Service - - - - - - - - - - 172 - 1,189 - 1,561 0
Intcresu/Decroa in c
Iorking Upital 1217) 293 1604) 621 11,360) 207 596 468 749 377 (17) 427 249 961 (604) 3,354 M
Total pplications 1,531 309 3,927 921 7\.216 1,1445 5,251 9,419 2,795 5,616 1,810 5,800 2,957 4,299 25,487 26,807
saw Swsx *s*$ ass aSanS class Datao woes *Wft *38ss 8382# coast *2=3t solt" Does s"as
Debt Service Coverage * - - - - - - - - - 2\.70 - 1\.20 1\.10 -
PEOPLE'S DEMOCRATIC REPUBLIC OF YEMEN
GREATER ADEN WATER SUPPLY PROJECT
Public Water Corporation - PWC
Organization Chart - 1986
[ ]
{ - ]
tirs
___ * -OD
FINCON GREATER ADEN WATER SUPPLY PROJECT (CREDIT 1036-YDR)
PROJECT CONPLETION REPORT
PVC - INDICATIONS - PROJECTED AND ACTUAL 1980-86
1990 1981 1982 1993 1994 1985 1986
Fiscal Year Ending Dec\. 31st Projected Actual Projected Actual Projected Actual Projected Actual Projected Actual Projected Actual Projected Actual
YD Th3usand ----------------------------------------
INDICATORS
1\. STAFFi6
Nuaber of Employees 974 NA 773 921 720 - 683 996 651 1,039 650 1,109 650 1,115
Staff per I 00 Pop\. Served 4 NA 3 3\.7 3 - 3 2\.6 3 2\.6 3 2\.7 2 2\.6
Number of Staff Trained - NA 50 NA 75 94 75 30 - 79 - 116 - 10
2\. SYSTEN OPERATIONS
Mater Sold, N@3/Year 15 - 15 16 15 17 16 19 19 20 20 22 21 23
Mater Produced\. Na3/Year 22 - 22 26 22 27 22 28 27 29 27 30 28 31
Unaccounted-for ater, % 33 - 32 36 31 37 30 37 28 31 27 26 27 28
Number of Conn\./1,000 56 - 58 61 59 63 61 67 62 71 64 74 66 77
3\. FINANCE
Operating Patio, & 1/ 176\.80 107\.80 96\.30 80\.30 05\.10 85\.90 85\.20 81\.90 86\.80 79\.50 73\.90 71\.00 78\.00 73\.60
Rate of Return, % 2/ - 7\.00 21\.00 9\.10 10\.00 0\.10 12\.00 3\.50 12\.00 4\.50 17\.00 3\.20 10\.00
Current Ratio 2\.00 2\.09 1\.00 3\.30 0\.40 3\.90 0\.50 2\.60 0\.90 2\.50 0\.60 2\.40 0\.50 1\.00
Dbt/Eauity Ratio, 2 2:9 8 2:99 17:83 1:99 49:52 1:99 50:50 25:75 50t50 29:71 49:51 34:66 45:55 34:66
Aver\. Rate in Filsla3 Sold 57 - 119 133 119 132 119 134 120 133 161 135 161 154
Aver\. Rev\. in Fils/a3 Prod\. 41 - 84 99 85 98 86 102 89 105 121 119 121 127
er\. Exp\. in Fils/@3 Sold 90 - Be 97 87 113 86 113 84 99 85 94 86 98
\. Effectiv\. Index 3/ 60 - 65 56 74 59 71 62 69 65 70 74 74 60
II Total Operating Expenses divided by Total Operating Revenues x 100\.
21 Incae Bfare Interest divided by Average Rate Base x 100\.
3/ Revenue Collected per @3 Produced divided by Average Revenue Billed per 3\.
ï»¿ê¸ | APPROVAL |
P163486 | The World Bank
STRENGTHENING DRR COORDINATION, PLANNING AND POLICY ADVISORY CAPACITY OF SADC ( P163486 )
Project Information Document/
Identification/Concept Stage (PID)
Public Disclosure Copy
Concept Stage | Date Prepared/Updated: 30-May-2017 | Report No: PIDC110549
May 30, 2017 Page 1 of 7
The World Bank
STRENGTHENING DRR COORDINATION, PLANNING AND POLICY ADVISORY CAPACITY OF SADC ( P163486 )
BASIC INFORMATION
A\. Basic Project Data
Environmental
Project ID Parent Project ID (if any) Project Name
Assessment Category
STRENGTHENING DRR
COORDINATION, PLANNING
P163486 C - Not Required AND POLICY ADVISORY
CAPACITY OF SADC ( P163486
)
Region Country Date PID Prepared Estimated Date of Approval
AFRICA Southern Africa 30-May-2017 15-Jun-2017
Public Disclosure Copy
Initiation Note Review
Financing Instrument Borrower(s) Implementing Agency
Decision
Investment Project The review did authorize the
SADC Secretariat SADC DRR unit
Financing preparation to continue
PROJECT FINANCING DATA
FINANCING
FINANCING SOURCES
Select all that apply
[ ] Counterpart Funding [ â ] Trust Funds [ ] Parallel Financing
SUMMARY (USD)
Total Project cost 1,250,000
Total Financing 1,250,000
Trust Funds 1,250,000
Financing Gap 0
DETAILS
Trust Funds
May 30, 2017 Page 2 of 7
The World Bank
STRENGTHENING DRR COORDINATION, PLANNING AND POLICY ADVISORY CAPACITY OF SADC ( P163486 )
Source Currency Amount USD Equivalent
Global Facility for Disaster
USD-US Dollars 1,250,000 1,250,000
Reduction and Recovery(GFDR)
B\. Introduction and Context
Country Context
Africa is highly vulnerable to natural disasters, particularly meteorological and hydrological hazards such as droughts,
floods, storms, and excessive temperatures\. The incidence and severity of these events in the region have been
increasing in recent years, resulting in increased economic, social and environmental damages and losses at national,
local and community levels\. There are concerns that climate change could exacerbate the intensity of meteorological
and hydrological hazards in many parts of Africa in the future\. Vulnerabilities to natural hazards are compounded by
rapidly evolving economic, social, and environmental processes\. Southern Africa is frequently affected by floods,
droughts, volcanic eruptions, landslides, tsunamis, tropical cyclones, storms, wild fires, earthquakes, epidemics such as
Public Disclosure Copy
malaria, cholera, other diarrhoeal diseases, malnutrition and stunted growth\. In addition, animal diseases such as foot
and mouth and anthrax pose risks to the Southern Africa Region\. Southern Africa is furthermore one of the regions,
which is urbanizing fastest\. The population of the Southern African Development Community (SADC) is projected to
increase from about 250 million in 2015 to 550 million in 2050\. It is also projected that by 2050, the majority of
countries in Southern Africa will be over 50% urbanized, with Angola and Botswana being over 80% urbanized\.
Southern Africa has been severely hit by the El NiÃ
Âo induced drought since 2014, which has overwhelmed the disaster
preparedness capacity of most countries in Southern Africa\. This led to a declaration of a Regional Drought Disaster
and launch of the SADC Regional Humanitarian Appeal in July 2016\. The SADC Regional Humanitarian Appeal targeted
Regional and International Community to support to the affected populations, in particular to close the gap of US$ 2\.5
billion to assist 40 million affected people\. This drought response is currently ongoing in most of the member states
amid preparedness for possible flooding related disasters linked to the projected normal to above normal rainfall that
member states expect to receive in the 2016/17 season\. During the 2014âÂÂ15 rainy season, floods, drought and
cholera had the most devastating impacts, affecting approximately 4 million people were affected by floods, the
highest over the past five years\. Not only does this data suggest the intensity of floods in affected countries, but it also
demonstrates the inadequacy of preparedness and response capacity to match the changing nature of risks in the
region\. The population, urbanization and economic growth nexus is critical to DRR given the existing vulnerability of
the regional to natural hazards compounded by climate change and variability impacts\. Further, the pursuit of
economic growth has also increased the SADC regionâÂÂs exposure to a wide range of hazards, which trigger disasters,
resulting in the loss of lives and livelihood assets, economic losses and population displacement\.
Sectoral and Institutional Context
The Southern Africa Development Community (SADC) is one of the African UnionâÂÂs seven Regional Economic
Communities (RECs)\. It comprises 15 member states: twelve (12) in-land and three (3) island states of the south-west
Indian Ocean\. SADC was founded in 1980 as Southern African Development Co-ordination Conference (SADCC) with 9
countries initially and became a Development Community in 1992\. SADC Vision is âÂÂoneof a common future, within a
regional community that will ensure economic well-being, improvement of the standards of living and quality of life,
freedom and social justice; peace and security for the peoples of Southern Africa\.â The objectives of SADC, as stated
in Article 5 of the SADC Treaty (1992) are to: i) achieve development and economic growth, alleviate poverty, enhance
the standard and quality of life of the people of Southern Africa and support the socially disadvantaged through
May 30, 2017 Page 3 of 7
The World Bank
STRENGTHENING DRR COORDINATION, PLANNING AND POLICY ADVISORY CAPACITY OF SADC ( P163486 )
Regional Integration; ii) evolve common political values, systems and institutions; iii) promote and defend peace and
security; iv) promote self-sustaining development on the basis of collective self-reliance, and the inter-dependence of
Member States; v) achieve complementarity between national and regional strategies and programmes; vi) promote
and maximise productive employment and utilisation of resources of the region; vii) achieve sustainable utilisation of
natural resources and effective protection of the environment; and viii) strengthen and consolidate the long-standing
historical, social and cultural affinities and links among the people of the Region\. The SADC Secretariat is the Principal
Executive Institution of SADC, responsible for strategic planning, facilitation, co-ordination and management of all
SADC Programmes\. It is headed by an Executive Secretary and is located in Gaborone, Botswana\. The inaugural regional
DRR strategy for SADC was developed in 2006 aligned to the Hyogo Framework for Action (HFA) and the Africa
Regional Strategy for Disaster Risk Reduction (ARSDRR) (2004)\. All SADC Member States have Disaster Management
structures which undertake and coordinate national DRR activities\. The heads of the National Disaster Management
Agencies constitute the SADC Disaster Management Technical Committee (DMTC)\. Among others, the SADC DRR
Coordination Unit functions are as follows: a\. Develop SADC DRR Strategic Plan and ensure that it aligns with the
regional and international DRR frameworks; b\. Develop and implement a capacity for disaster risk mapping, hazard
Public Disclosure Copy
monitoring and risk/vulnerability assessments as a basis for disaster preparedness, prevention and response; c\.
Coordinate and implement the regional disaster response mechanism to guide regional response to disasters; d\.
Support Member States in the formulation and implementation of national DRR policies and action plans in order to
ensure their harmonization with other national, regional and international strategies; and e\. Facilitate training in
DRR/disaster management and coordinate the exchange of data and information, lessons learnt and best practices
among Member States\. The main strategic instrument for SADC is called the Regional Indicative Strategic Development
Plan (RISDP), which is a 15-year regional integration development framework, setting the priorities, policies and
strategies for achieving the long-term goals of the Development Community\. It is intended to guide Member States,
SADC Secretariat and Institutions, regional stakeholders, and International Cooperating Partners (ICPs) in the process of
deepening integration to turn the CommunityâÂÂs Vision into a reality\. The DRR strategic agenda is implied within the
current RISDP (2005-2020) although it is not explicitly mentioned\. DRR is implied across the Priority Intervention Areas,
for instance DRR is instrumental to achieving cross-sectoral intervention area such as Poverty eradication; Combating
the HIV and AIDS pandemic; Gender equality and development; and Environment and Sustainable Development\. DRR is
also considered vital to Infrastructure support for regional integration and poverty eradication; Sustainable Food
Security; and Human and Social Development which are sectoral cooperation and integration intervention areas
provided for by the RISDP\. DRR strategic provision within SADC are further explicitly provided for through the SADC
Organ's Protocol on the Politics, Defense and Security Cooperation\. Articles 2 of the initial Strategic Indicative Plan for
the Organ (SIPO I) states that one of the objectives of the Organ is to âÂÂenhanceregional capacity in respect of
disaster management and co-ordination of international humanitarian assistanceâÂÂ\.This strategic attachment
evolved from the active role played by uniformed forces in the response phase of disaster management\. The paradigm
shift towards disaster risk management â which broadens the disaster management agenda beyond response was
recognised by the Organ Directorate as evidenced by the revised Strategic Indicative Plan of the Organ (SIPO II), which
included DRR objectives and strategic activities and advocated for their mainstreaming in all sectors\.
Relationship to CPF
The project relates to the World Bank Africa Strategy âÂÂAfricaâÂÂs future and the world BankâÂÂs support to itâÂÂ,
which addresses vulnerability and resilience\. The strategy emphasizes building resilience to the negative effects of
climate change and natural disasters\. It further identifies the need for âÂÂenhancingthe ability of African countries to
cope with current climate variability\.â This response is centered around having better understanding of risks and
May 30, 2017 Page 4 of 7
The World Bank
STRENGTHENING DRR COORDINATION, PLANNING AND POLICY ADVISORY CAPACITY OF SADC ( P163486 )
vulnerability, strengthening the capacity for managing disaster risks, improving preparedness and early warning
system, mainstreaming risk reduction across all aspects of development and establishing effective risk financing
strategies\.
C\. Project Development Objective(s)
Proposed Development Objective(s)
The development objective is to strengthen the disaster resilience of Southern African member states through regional
collaboration and improved coordination, planning, policy advisory and knowledge dissemination capacity of SADC\.
The project will accelerate the effective implementation of an African Comprehensive disaster risk reduction and risk
management framework in the SADC region\.
Key Results
Public Disclosure Copy
The project expects to achieve the following results: (i) Regional disaster preparedness and response institutional and
coordination mechanisms implemented (ii) National and Regional DRR Information Management Systems
operationalized\. (iii) Regional Disaster Risk Reduction policy advocacy and capacity development programme enhanced
(iv) Mainstreaming of Disaster Risk Reduction in development plans and strategies enhanced (V) Strengthened
implementation and coordination capacity at the SADC Secretariat
D\. Preliminary Description
Activities/Components
The program âBuilding Disaster Resilience to Natural Hazards in Sub-Saharan African Regions, Countries and
Communitiesâ, which is financed by the ACP â EU through the 10th EDF Program of the European Union was launched
in 2015\. It is implemented along five result areas by several partners, including the African Development Bank (AfDB),
African Union Commission (AUC), the United Nations International Strategy for Disaster Reduction (UNISDR) and
GFDRR / World Bank\. Result area 2, which is managed by GFDRR / World Bank, supports four Regional Economic
Communities (RECs), including SADC, in Sub-Saharan Africa to âhave DRR coordination, planning and policy advisory
capacities operational to support their respective member states and regional and sub-regional programsâ\. The
program will provide targeted support to RECs to strengthen their capacities for improved coordination, planning,
policy advisory and knowledge dissemination to advance the regional Disaster Risk Management (DRM) agenda and
better support their respective member states in taking informed decisions in building resilience to disasters\.
The program âBuilding Disaster Resilience to Natural Hazards in Sub-Saharan African Regions, Countries and
Communitiesâ will be implemented as a SADC specific project in three phases, over a period of 4 years until December
31st 2019\. Phase 1 will have 24 months duration, phase 2 will cover 18 months and phase 3 will cover 6 months\. The
total budget available for SADC is US$ 5 million\. The following describes the overall budget for the project for the five
components and the overall implementation as recipient and Bank executed activities\.
Component 1: Enhancing regional disaster preparedness and response institutional and coordination mechanisms (US$
670,000 RE; US$ 935,000 BE) The project will include the development, roll out and continued support to member
states for a regional disaster preparedness and response plan and to carry out a feasibility study for the SADC
May 30, 2017 Page 5 of 7
The World Bank
STRENGTHENING DRR COORDINATION, PLANNING AND POLICY ADVISORY CAPACITY OF SADC ( P163486 )
Humanitarian and Emergency Operations Center linked to member states and UN agencies and conduct the related
capacity building for this program\.
Component 2: Operationalizing national and regional DRR information and knowledge management systems (US$
475,000 RE; US$ 455,000 BE)\. This component will support SADC to establish and roll out a regional and national level
hazard alert system and facilitate the harmonization of a regional disaster management information mechanism\.
Component 3: Strengthening the regional DRR policy advocacy and capacity development program (US$ 875,000 RE;
US$ 750,000 BE)\. The project will support SADC and member states to align national and regional strategies, polices
and plans of action with the in 2015 agreed Sendai Framework for Disaster Risk Reduction\. The project component will
furthermore foresee a number of national and regional level capacity building and research initiatives\. This initiative
would among others be implemented through a university and research partnership program\.
Component 4: Enhancing Mainstreaming of DRR in development plan and strategies (US$ 150,000 RE; US$ 30,000 BE)\.
The component will provide resources for strategic and targeted support for DRR mainstreaming and investment
Public Disclosure Copy
planning\.
Component 5: Strengthening the implementation and coordination capacity at the SADC Secretariat (US$ 580,000 RE;
US$ 105,000 BE)\. Staffing and operational expenses in support of the SADC DRR unit\.
The following activities are foreseen under the first phase, Recipeint executed of the project (this specific project):
1\. Staffing and operational costs of the Project Implementation Unit, including a Senior DRM Specialist, a DRM
Information Management Specialist, DRM Policy Specialist and Project Assistant\.
2\. Carry out a feasibility study and develop a road map for the establishment of the SADC Humanitarian and
Emergency Operations Center (HEOC), linking SADC to member statesâ HEOC, the UN disaster Assessment and
Coordination System and the regional interagency standing committee\.
3\. Support member states in re-aligning DRR policies, legislation and strategies to the Sendai framework for DRR
and the African Union Plan of Action for DRR;
4\. Facilitate a national and regional peer review mechanism for sharing knowledge and best practices on DRR\.
SAFEGUARDS
E\. Safeguard Policies that Might Apply
Safeguard Policies Triggered by the
Yes No TBD
Project
Environmental Assessment OP/BP 4\.01 X
Natural Habitats OP/BP 4\.04 X
Forests OP/BP 4\.36 X
Pest Management OP 4\.09 X
May 30, 2017 Page 6 of 7
The World Bank
STRENGTHENING DRR COORDINATION, PLANNING AND POLICY ADVISORY CAPACITY OF SADC ( P163486 )
Physical Cultural Resources OP/BP 4\.11 X
Indigenous Peoples OP/BP 4\.10 X
Involuntary Resettlement OP/BP 4\.12 X
Safety of Dams OP/BP 4\.37 X
Projects on International Waterways
X
OP/BP 7\.50
Projects in Disputed Areas OP/BP 7\.60 X
CONTACT POINT
World Bank
Public Disclosure Copy
Contact : Prashant Singh Title : Senior Disaster Risk Managemen
Telephone No : 202-473-8162 Email :
Borrower/Client/Recipient
Borrower : SADC Secretariat
Contact : Stergomena Tax Title : Executive Secretary
Telephone No : 2673641836 Email : registry@sadc\.int
Implementing Agencies
Implementing SADC DRR unit
Agency :
Contact : Clement Kalonga Title : Senior Programme Officer DRR
Telephone No : 2673641836 Email : ckalonga@sadc\.int
FOR MORE INFORMATION CONTACT
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 473-1000
Web: http://www\.worldbank\.org/projects
May 30, 2017 Page 7 of 7 | APPROVAL |
P065954 | Project Information Document (PID)
Project Name Slovak Republic - Health Sector Modernization Support Loan
(HSMSL)
Region Europe and Central Asia Region
Sector Health, Nutrition and Population
Theme Public expenditure, financial management; Health system
performance; Education for all; Other social protection and risk
management
Project P065954
Borrower(s) GOVERNMENT OF THE SLOVAK REPUBLIC
Implementing Agency(ies) Ministry of Health
Environment Category C (Not Required)
Date PID Prepared May 15, 2003
Auth Appr\. Date May 28, 2003
Bank Approval Date July 21, 2003
1\. Country and Sector Background
The Slovak Republic is facing a crisis in the health sector\. Public expenditures on health care are
already 7% of gross domestic product (GDP), there is a chronic problem with hospital arrears to suppliers,
and technical efficiency of the health sector as compared with other EU accession countries is poor\. Clinical
protocols for major diseases in Slovak Republic are outdated and non-compatible with evidence-based
medicine and cost-effectiveness analysis, and quality of care is generally low\. The health status of the people
of Slovak Republic is in line with other middle-income countries, but relative to EU averages, life expectancy
in Slovak Republic is lower by 6 years, and infant mortality and the incidence of tuberculosis are higher\.
Death rates in Slovak Republic due to circulatory system disorders, cerebrovascular diseases, and ischemic
heart diseases are significantly higher relative to EU averages\.
The Government of Slovak Republic has adopted a comprehensive and an ambitious strategy to
address these problems, and has initiated a broad range of health sector reforms aimed at improving financing,
delivery, production and management of health services\. The general thrust of these reforms is to enhance
efficiency, effectiveness, quality and equity in the health sector, with the ultimate objective of improving
health outcomes\. The Government strategy gives priority to controlling the growing indebtedness in the
health sector, making hospitals more responsive to the needs of the people by granting legal, administrative
and financial autonomy to state-owned health care institutions, improving quality and effectiveness of health
care by introducing continuous quality improvement, and ensuring equity and access to health services,
particularly in respect of the highly cost-intensive health services and for the poor and the vulnerable sections
of the population\. The reforms propose to continue with the decentralization process already underway, and
create legislative conditions for increased participation of regions in the ownership of health care institutions\.
The reforms emphasize the need to fight corruption in the health sector, and increase the effectiveness of
health expenditures and interventions\.
2\. Objectives
The overall goal of the HSMSL is to support comprehensive health sector reforms that promote fiscal
sustainability while continuing to provide quality health care services and financial protection for the
population\. The overarching objectives are to: (i) improve fiscal discipline through structural changes in the
health sector that will alleviate the chronic problem of arrears in the health sector, encourage greater technical
and allocative efficiency and institute a system that will promote fiscal sustainability; and (ii) improve the
quality and cost-effectiveness of the health sector; (iii) mitigate any possible negative impacts on health care
access, specially for vulnerable populations\.
3\. Rationale for Bank's Involvement
The rationale for the proposed HSMS SECAL at this point in Slovak Republic's transition rests on
the observations that: (i) the health sector is facing a real crisis and investments are not reaping the desired
outcomes; (ii) the health sector is a major contributor to the fiscal problem facing the country and in the
context of EU accession, there is strong interest and commitment in the Government to reforming the health
sector; (iii) implementation of health reforms so far have been piecemeal; (iv) the present government has
developed a comprehensive reform program and is intent on implementing the proposed reform package,
thereby providing a political window of opportunity for Bank support; and (iv) the approach that Slovak
Republic has adopted to improve efficiency and effectiveness in the health sector requires important policy
and legal changes complemented with selective investments in building capacity of managers to operate under
the new system, developing management information systems, and improving the quality of care, and Bank
support will provide the necessary technical and financial instruments to further this process\.
4\. Description
The HSMS TAL will have six components to build the institutional capacity in MOH, Health
Insurance Fund and related institutions to effectively design and implement the reform agenda: (i) Reforms in
Health Care Financing and Delivery; (ii) Development of Quality Improvement System; (iii) Development of
Health Management Information Systems; (iv) Reforms in Social and Long-Term Care; (v) Social Impact
Analysis and Public Information Campaign; and (vi) Project management and monitoring\.
5\. Financing
Source (Total (US$ 55 m)
BORROWER (0)
IBRD (55)
Total Project Cost: USD 55\.00
6\. Implementation
Slovak Republic is undertaking a major and complex reform of the health care system, which will change
the basic paradigm within which health care financing, delivery and regulatory institutions are required to
operate\. International experience in the implementation of health sector reforms shows that adequate technical
capacity of the MOH and other key institutions responsible for regulatory functions, health insurance funds
and health providers is critical for the successful implementation of a health sector reform program\. Reforms
proposed in the Government's Manifesto would be supported by a companion Technical Assistance Project
(HSMS TAL), which will focus on the development of technical capacity within Slovak Republic, especially
within institutions such as the MOH, health insurance funds, hospitals and units created to implement the
complex health reforms proposed under HSMS SECAL\. Without the development of this technical capacity,
implementation of the health sector reforms are not likely to be successful\.
7\. Sustainability
Implementation of the reforms proposed in the HSMS SECAL would contribute significantly to
expenditure control in the short term and reduction in the mnediunm termn\. The granting of autonomy to
hospitals, especially tertiary hospitals in Bratislava, would have the immediate impact of removing
govemment guarantees to hospitals with concomitant implications for setting a hard budget constraint for
hospitals and reducing the build-up of unsustainable debts to suppliers\. There would be improvements in
allocative and technical efficiency in the health sector as health insurance funds and health providers make
necessary changes in response to the incentives generated through the health reforms\. There would be greater
transparency in public resource management and planning\.
8\. Lessons learned from past operations in the country/sector
Preparation for the health sector reforms has been underway for quite sometime now\. Between
December 1999 and June 2002, the MOH utilized a PHRD Grant of US$509,400 to examine several issues
related to strengthening finance, delivery and management of health services\.
9\. Environment Aspects (including any public consultation)
The proposed HSMS SECAL is not expected to result in any negative impact on the environment\. For the
purpose of Operational Directives 4\.01, it has been placed in Category C, which does not require an
environmental assessment\. The ISDS has been reviewed and cleared by ECSSD environment staff\.
10\. Contact Point:
Task Manager
Mukesh Chawla
The World Bank
Liaison Office, Budapest
Hungary
Telephone: (202) 458-1291
Fax: (202) 477-3387
11\. For information on other project related documents contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-5454
Fax: (202) 522-1500
Web: http:// www\.worldbank\.org/infoshop
Note: This is information on an evolving project\. Certain components may not be necessarily
included in the final project\. | APPROVAL |
P009941 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No\. 19235
IMPLEMENTATION COMPLETION REPORT
INDIA
MAHARASHTRA POWER PROJECT
(LOAN 3096-IN)
June 24, 1999
Energy Sector Unit
South Asia Region
This document has restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
INDIA
MAHARASHTRA POWER PROJECT
LOAN 3096-IN
IMPLEMENTATION COMPLETION REPORT
PREFACE
This is the Implementation Completion Report (ICR) for the Maharashtra Power Project in India, for
which Loan 3096-IN in the amount of US$ 400 million equivalent was approved on June 15, 1989, and
made effective on December 14, 1989\. The Borrower was India, acting by its President\. The
Implementing Agencies for the project were the Irrigation Department of the Government of Maharashtra
(GOMID) and the Maharashtra State Electricity Board (MSEB)\. The project comprised a hydroelectric
generation component, distribution components, and technical assistance to MSEB\.
The physical components of the project were implemented as planned, although the
implementation of the main component, the 1,000 MW fourth stage of the Koyna hydroelectric scheme
was delayed because of procurement difficulties, and worse than expected geological conditions\.
However, the underlying developmental objectives, including improving Maharashtra's retail power
tariff structure; strengthening the sector's finances; and introducing institutional improvements, have not
been achieved\. A full account of how the state's power sector has deteriorated in the 1990s is contained
in the Implementation Completion Report (Report No\. 19236 ) for the Second Maharashtra Power Project
(Loan 3498-IN)'\. Loan 3096-IN closed on December 31, 1998, after two one-year extensions\. Final
disbursements took place on March 23, 1999, when the loan amount was fully utilized\.
This ICR was prepared by Anthony E\. Sparkes (Task Leader), South Asia Energy Sector Unit
(SASEG), Sameer Shukla (Financial Analyst), and I\. U\. B\. Reddy (Social Development Officer), and
reviewed by Kari Nyman, India Energy Team Leader, Energy Sector Unit, South Asia Region\.
Preparation of this ICR began during a Bank ICR mission in December 1998, and was finalized during a
follow-up mission in February 1999\. It is based on material in the project file and site-specific
information collected during the ICR mission\. The implementing agencies, GOMID and MSEB,
contributed to the preparation of this ICR by providing technical data, the details of the final costs of the
project, and financial records and projections\. GOMID's and MSEB's evaluation of their implementation
of the project components are given in Appendix Al and A2 of this ICR\.
' Because of non-compliance with several of the financial covenants related to Loan 3498-IN (approved June 25,
1992), and because Government of Maharashtra failed to pass on to MSEB part of the proceeds of Loan 3498-IN,
the Bank suspended disbursements as of October 22, 1996\. Although most of these covenants were later complied
with, MSEB's receivables position did not improve, and remains to-date at about 4 months instead of the 2\.5 months
covenanted\. Thus the suspension remained in place, and US$237\.7 million was canceled, effective June 30, 1998,
when the loan account closed\.
IN1DIA
MAHARASHTRA POWER PROJECT - LOAN 3096-IN
IMPLEMENTATION COMPLETION REPORT
EVALUATION SUMMARY
Introduction
1\. In 1988 demand for electricity in Maharashtra had risen to about 5,400 MW, and most of this was
being supplied by thermal (coal) plants, with only a small portion being supplied by hydro-generated
electricity \. Because of this high thermal share, a substantial portion of peak demand was being met
mainly with thermal plant, which for the Western Regior? was expensive and difficult to operate with
appropriate flexibility to follow the varying peak load, which hydro power can usually more easily
accommodate\. To correct the imbalance, between thermal and hydroelectric sources, the long term
expansion plan for the Western Region, of which Maharashtra is a part, included the installation of a
number of peaking hydro plants, including the Koyna Phase IV scheme\. This scheme, to increase peak
supplies by 1,000 MW, was least cost, minimized the displacement of population and had minimal
environmental impacts because no new reservoir was needed and the scheme would be built by the
Government of Maharashtra's Irrigation Department (GOMID) almost entirely underground (Part I,
paragraphs 6, 7 and 8)\.
Project objectives
2\. The project's stated objective were to improve the power supply and operating efficiency of the
Western Region and to improve the retail power tariff structure of Maharashtra State Electricity Board
(MSEB), strengthen MSEB's financial position, and introduce institutional improvements (Part I,
paragraphs 9 and 10)\.
Implementation Experience and Results
3\. Implementation\. (Part I, paragraphs 11, 13, 14 and 15)\. The Koyna IV power plant has been
constructed, commissioning began in March 1999, and the scheme will be fully commissioned by
December 1999, which constitutes a delay of four years compared to the appraisal schedule (Part I,
paragraphs 17, 18 and 19)\. All transmission and distribution components were completed by MSEB in
1996, and have been in operation since then, resulting in operational and efficiency improvements for
MSEB and its consumers\.
4\. Developmental outcome\. (Part I, paragraphs 16, 25, 32 and 33)\. The underlying developmental
objective, to strengthen the power sector in Maharashtra, has not been achieved\. The sector deteriorated
in the 1990s3\. MSEB financial position is precarious and its future outlook is alarming, to the extent of
threatening increasingly to constrain state finances and economic development in Maharashtra\.
5\. Project costs, savings, cancellations and closing date: (Part I, paragraphs 20 and 21)\. Following
the use of international competitive bidding procedures, most of the contracts were awarded to Indian
2 The Western Region electricity network serves Maharashtra, Gujarat and Madhya Pradesh\.
3An account of this deterioration is described in detail in the Implementation Completion Report (Bank Report No\.
19236) for the Second Maharashtra Power Project (Loan 3498-JN)\.
ii
companies\. This factor and the substantial devaluation of the Rupee during the project implementation
period resulted in the project costs (US$656 million), in dollar terms, being much less than the appraisal
estimates (US$1,079 million)\. US$46 million was canceled from the loan account in 1992 because it was
expected that the cost of the transmission component would be lower than expected\. In 1996, the Bank
cancelled US$16\.67 million from the loan, when it concluded that MSEB had mis-procured overhead line
conductor to this value, following an MSEB exercise with two bidders, in which the bid prices were the
subject of negotiations\. The closing date for the loan account was extended twice from December 31,
1996 to December 31, 1998\. This conformed to the policy of the South Asia Region that closing dates are
only extended under unusual circumstances beyond the control of the beneficiary or borrower - in this
case because of delays at start-up (Part I, paragraph 17) and delays during construction (Part I, paragraph
19), which were beyond the control of the beneficiary\.
6\. Rate of Return: (Part I, paragraphs 22 and 23)\. The main component of the project, Koyna IV,
cost less than estimated to construct, and is the least cost solution to supplying system peak demand\. The
financial benefits of the scheme will begin to accrue to Maharashtra when thefrequency-linked pool rate
comes into effect, which is expected soon\. This will encourage regional interchanges of electricity and
will lead to great economic advantages to India\. Koyna's additional 1,000 MW of peak capacity will be
utilized both in Maharashtra and in other regions, especially the south of India, where capacity (MW)
shortfalls will persist for the next several years\.
7\. Sustainability\. (Part I, paragraphs 25 and 26)\. Well qualified MSEB operations and
maintenance staff will ensure that the physical achievements of the project, the Koyna IV plant and the
transmission lines, will be sustained for the planned lives of the components of thirty to forty years\.
However, MSEB's general financial position continues to deteriorate; it remains a burden on the State's
finances\. The position is unlikely to improve until Maharashtra enters into a program of reform, along the
lines of the recommendations of the Rajadhyaksha Committee, which GOM commissioned to advise it -
recommendations which the Bank has endorsed - to create a power sector which will attract investments
from private sources, in the amounts needed, so that the power sector can expand at the rate required to
support Maharashtra economic development\.
Summary of Findings, Future Operations, Key Lessons Learned
8\. Bank Performance: (Part I, paragraphs 27, 28 and 29) Bank staff made major contributions to
help prepare MSEB's portion of the project, and later in its support to GOMID in the implementation
phase\. However, the main component, Koyna IV, was not sufficiently well prepared when the loan was
approved\. An implementing team in GOMID had not been established and bidding documents had rnot
been prepared\. Also there were deficiencies regarding the resettlement and rehabilitation of the people
affected by the project, which were eventually identified and appropriately addressed, but only several
years after project start-up\.
9\. Borrower Performance: MSEB completed it components on time and below cost\. However,
compliance by Maharashtra and by MSEB with several superceding covenants of the Second Maharashtra
Power Project loan (3498-IN) was unsatisfactory\. Interference by the Government of Maharashtra
(GOM) in the operations of MSEB resulted in MSEB being unable to perform as a commercial utility\. In
contravention of the covenants, which required that GOM ensure that MSEB operates along commercial
lines, GOM did not allow MSEB to charge appropriate tariffs and insisted (and insists) that MSEB
provide low and heavily subsidized tariffs to agriculture users and to the Mula Pravara Cooperative
Society, which in turn meant placing a huge burden on industrial consumers\.
10\. Inadequate and untimely tariff increases caused severe strain on MSEB's finances\. MSEB was
also restricted from taking much needed actions to recover dues from non-paying consumers\. This led to
an ever increasing burden of receivables, most of which, because of its age, has now become an
uncollectable bad debt\. In addition, GOM issued directives to MSEB to provide and maintain additional
iii
electricity supplies to agricultural users, leading to shortages for other paying categories of consumers\.
Besides weakening MSEB financially, this operational interference by GOM has over the years led to a
lack of accountability in MSEB, and a slackening of commercial discipline\.
11\. GOMID successfully incorporated several examples of very modem technology in the Koyna IV
scheme, and these are detailed in Part I, paragraphs 30 and 31\.
12\. Assessment of Outcome and Future Operations: (Part I, paragraphs 32-35) The results of the
project are mixed\. The transmission and distribution components were completed ahead of time and
under budget, and the main component, the Phase IV extension of Koyna, will be completed late in
FY1999 also under budget\. However, the underlying developmental outcome to strengthen MSEB was
only marginally successful\. In response to requests for financial support to its power sector, the Bank has
advised Maharashtra that its current reform proposals, which mainly consist of establishing a tariff
commission instead of a power sector regulatory commission, and a trial of privatization for a small
portion of its network, fall far short of its own adviser's (theRajadhyaksha Committee) recommendation,
and the Bank's expectations\. Thus Bank support in the Maharashtra state power sector is currently not
possible\.
13\. Key Lessons Learned: (Part I, paragraphs 36-38) The project did not produce the operational
and financial improvements in Maharashtra power sector, and as such it confirmed the position that has
been taken by the South Asia Region\. Beginning in the mid-1980s, the Bank had attempted to improve
the performance of SEBs by direct involvement at the state level\. This approach was generally
unsuccessful and the revitalization of institutionally and financially weak SEBs did not turn out to be
feasible\. Projects failed to meet expectations beyond the physical construction of facilities, as was the
case with the subject project\. The Bank was forced to take such strong measures as suspending
disbursement (including the Second Maharashtra Power Project) and subsequently canceling loans\. It has
become clear that a sustainable solution to the sector's problems requires a focus on restructuring the state
power sector rather than revitalizing the state electricity boards (SEBs) as attempted in the past This
restructuring includes, inter alia, the unbundling of monopoly utilities, corporatization, establishment of
independent regulatory commission, tariff reforms, and privatization of distribution\. This lesson has been
applied in the on-going power sector reform projects in Orissa, Haryana and Andhra Pradesh\.
14\. Projectpreparation: Inadequate project preparation prior to loan approval, resulted in the
Koyna IV component taking four years longer than forecast at appraisal\. Projects must be carefully and
adequately prepared, including the evaluation of risks that might cause delays, with an implementation
team in place prior to loan approval, with bidding documents prepared and preferably issued and bids
received\. These are pre-requisites if projects are to move smoothly from the preparation to the
implementation phase, and with minimum delays to project completion\.
15\. Resettlement and rehabilitation: It is difficult, and time and resource consuming to fix
resettlement problems during project implementation\. In the case of this project, only through continual
Bank staff involvement were the issues eventually resolved, many years after they should have been\.
Failure could well have been the result\. Detailed and careful attention to the issues must be part of early
project preparation\. Also the resettlement and rehabilitation plans need to be prepared by the institution
which will be responsible for carrying out the rehabilitation\.
1
INDIA - MAHARASHTRA POWER PROJECT - LOAN 3096-IN
IMPLEMENTATION COMPLETION REPORT
PART I\. PROJECT IMPLEMENTATION ASSESSMENT
A\. PROJECT OBJECTIVES
1\. Background Despite the progress India had made in expanding its generating
capacity from 32,000 MW in 1981 to 54,000 MW in 1988, supply shortages persisted in
1988, which were equivalent to about 20% of maximum power demand and 10% of electrical
energy supplied\. Also the quality and reliability of the supplied electricity was mostly
unsatisfactory\. Therefore, to meet a higher proportion of the demand, improve the quality of
supply, and to further extend rural electrification, the Government of India (GOI) planned in
1988 to install an additional 80,000 MW of capacity by the turn of the century, with power
sector investments for generation, transmission and distribution costing about US$150
billion\. Some of these investments were expected to be made in the further development of
India's hydroelectric potential, which has an estimated capacity of about 100,000 MW\.
2\. By 1988 only 16,000 MW of this hydro-potential had been developed with only a
further 4,700 MW under construction\. The pace of India's hydroelectric investments had
been slow in the previous decade, and at the time of project appraisal GOI was striving to
increase the role of hydroelectric schemes in regional least-cost power developments\.
Progress in developing hydro-schemes, which are generally capital intensive, had been slow
because of (a) inadequate financial resources in states with the greatest hydro potential, (b)
lengthy disputes over water rights and environmental issues, and (c) the limited technical
resources available for the preparation of large hydroelectric projects\.
3\. Some system efficiency improvements were made in the 1980s to address the
unsatisfactory state of the power sector, including increased utilization of generating plant
and reductions in fuel consumption\. In 1980 plant load factors averaged 42%, and about 800
tons of coal were required to produce one million units of electricity\. By 1988 these figures
were estimated to have improved to 52% and 720 tons respectively\. Tariff structures had
also been improved and increased, and in the 1980s tariffs rose in real terms by an average of
5% per annum\. However, although tariffs to industrial and commercial consumers had been
increased to about 80% of marginal costs, the tariffs charged to agriculture were very low
and heavily subsidized\.
4\. Even with these general improvements, India's power utilities were (and remain) for
the most part relatively inefficient\. Key constraints included the divided responsibility
between GOI and the States for power development, political interference in the operations
of the State Electricity Boards (SEBs), and weaknesses in the financial structure of the sector\.
These had undermined financial performance, and had held down resource mobilization\.
Thus India's power systems were (and still are) delivering to consumers less power of a
poorer quality, and at a higher cost than they should be able to\. The costs to the Indian
economy of shortages and poor quality supplies were magnified by inefficiencies in end-use
2
of electricity, caused mainly by insufficient commercial incentives in many markets and by
subsidized power prices to low voltage consumers, particularly agriculture\. The National
Thermal Power Corporation (NTPC) was (and remains) the one notable exception in this
picture\. By 1988, a ten year old NTPC was already providing about 12% of the SEBs' bulk
electricity supplies, and had emerged as an efficient utility, making a return of about 17% on
its assets (most of which were less than fives years old)\.
5\. In the late 1980s, GOI continued with its initiative to reduce the power sector
inefficiencies, and to minimize their repercussions on future sector development\. In an
attempt to improve the financial strength of the SEBs, GOI amended the Electricity (Supply)
Act to require them to earn a 3% rate of return on net assets at historic cost, after meeting
operating expenses, taxes, depreciation and interest\. GOI also accelerated development of
the relatively efficient central utilities, particularly NTPC\. GOI also formed the Power
Finance Corporation (PFC) to mobilize additional resources for SEBs willing to make needed
institutional reforms\.
By the end of the 1980s GOI had recognized that central and state government
funding of the power sector investment programs would be insufficient, and that the
central and state government-owned utilities would have to rely increasingly on
their own internal resources and in particular on investments from the private sector\.
In 1991 GOI opened the power sector to enable private investments to be made in
generation by modifying the law so that electricity production was removed from
the list of activities reserved for the public sector\. The 1948 Act was amended, so
that many of the regulatory disincentives to private investment in the power sector
were lifted\. In particular these changes provided for ownership of generating
companies by the private sector, and for private generating companies and captive
plants to sell power to the SEBs\. Foreign companies were also allowed to
implement power projects\. In October 1991, GOI established a Board to promote,
accelerate and clear private investment proposals in power projects\.
6\. In 1989, when the Maharashtra Power Project was appraised, private utilities were
making only marginal contributions to public electricity supply\. Two of Indian's four private
utilities were in Maharashtra, where a significant expansion of private involvement in power
supply was expected over the following few years\. Government of Maharashtra (GOM) was
already actively seeking proposals from the private sector for projects to be constructed
during the Eighth Plan\.
7\. Demand for electricity in Maharashtra, with a population of 75 million, was growing
at a rate of about 9% per year\. In 1981 the State's demand, constrained by deficiencies in
supply capacity, stood at 2,990 MW, and by 1988, with increasing deficiencies in supply, the
demand had risen to about 5,400 MW\. This demand was mainly being met by the generating
plants owned or leased and operated by the Maharashtra State Electricity Board (MSEB), by
the plant owned by the two private utilities, and by imports from NTPC\. Most of these were
thermal (coal) plants\. Because of this high thermal share, the peak demand in the Western
Region was being partially met with expensive-to-run thermal plant\. This inefficiency was
further compounded by the added substantial cost of additional maintenance for the coal-
3
fired units, caused by thermally cycling them to match the peak load shape, with a rapidity
for which they were not designed\.
8\. To correct this thermal/hydro imbalance, the long-term expansion plan for the
Western Region included the installation of a number of peaking hydro plants\. The plan
included the Koyna Phase IV scheme, which was to more than double the capacity of the
existing hydroelectric site from 880 MW to 1,880 MW4\. This proposal was least cost,
minimized the displacement of population and had minimal environmental impacts, because
no new reservoir was needed and all of the above-ground infrastructure, except for a new
transmission line, was already in place, serving the existing phases of the scheme\. The
development of Phase IV of the scheme would increase Koyna's capacity to generate at peak
hours with water currently stored and used to generate electricity at times when spare
capacity, mainly thermal, existed elsewhere\. Shifting Koyna to higher peak load duty would
result in existing thermal units operating at a higher load factor, and would increase their
energy generation by about 1,390 GWh per year\.
9\. The project's stated objective was thus to improve the power supply and operating
efficiency in MSEB's and the Western Region's power systems through: (a) expanding
regional peaking capacity at least cost; (b) improving utilization of existing generating
capacity; (c) appropriately strengthening and upgrading MSEB's transmission and
distribution systems; (d) recommending ways to improve load dispatch in the Western
Region and rationalize bulk power regional trading; (e) improving MSEB's retail power
tariff structure; (f) strengthening MSEB's finances; and (g) introducing institutional
improvements to MSEB\.
10\. The project, as part of Maharashtra's least cost power development program,
included: (a) the construction of the fourth stage of the Koyna hydroelectric power plant (4 x
250 MW); (b) detailed inspection of the existing Koyna dam, repairs as needed, upgrading
of instrumentation, and review of emergency plans as required; (c) supply and erection of
equipment and materials for MSEB's five-year transmission and distribution investment
program, and strengthening of MSEB's capabilities for planning of distribution systems; (d)
implementation of plans to strengthen MSEB's finances, management, and operations
including: (i) financial performance targets and corresponding actions; (ii) setting up of
corporate planning, operational performance monitoring, and management accounting
systems; (iii) streamlining internal procedures; and (iv) accelerating development of data
processing and internal audit systems; (e) consultancy and training services, including
services of a Panel of Experts to advise on matters related to the Koyna IV scheme and the
existing dam; and (f) computer hardware and software required to implement parts (a) to (e)
of the project\.
B\. ACHIEVEMENT OF OBJECTIVES
11\. As described below, the physical components of the project (expanding regional
peaking capacity at least cost; improving utilization of existing generating capacity; and
appropriately strengthening and upgrading MSEB's transmission and distribution systems)
4The Koyna scheme is described in further detail in the Annex to this ICR\.
4
were all completed on time, except for the Koyna IV extension, which was the subject of a
four year delay\. They were completed at costs below the appraisal estimate\. The stated
objectives of the project, to improve power supply and operating efficiency in MSEB's and
the Western Region's power systems might thus be judged to have been achieved\. However,
this would be a superficial and erroneous conclusion, because, despite achieving the
implementation of the physical components, the Maharashtra power sector is in an even
worse financial shape than it was in when the loan was approved in 1989\.
12\. In essence, the underlying developmental objectives, including improving
Maharashtra's retail power tariff structure; strengthening the sector's finances; and
introducing institutional improvements, have not been achieved\. A full account of how the
sector has deteriorated in the 1990s is contained in the Implementation Completion Report
(Bank Report No\. 19236) for the Second Maharashtra Power Project (Loan 3498-IN)5\.
Although MSEB continues to be technically and managerially one of the better performing
Indian SEBs, its financial position is precarious and its future outlook is alarming, to the
extent of threatening increasingly to constrain state finances and economic development in
Maharashtra\. The makings of a state financial crisis, emanating from the deleterious impacts
of its power sector are very much evident (paragraph 16)\.
Implementation of Physical Components
13\. Objective (a) expanding regional peaking capacity at least cost\. This objective
has been met with the construction of the fourth stage of the Koyna hydroelectric power
plant, including the supply and installation of its four 250 MW turbine generators\. The
commissioning of the first of these was complete in May 1999, and commissioning of all
four units will be completed by December 1999\. This constitutes a delay of about four years
compared to the schedule envisaged at appraisal\. The causes for this delay are detailed in
paragraphs 17, 18 and 19\.
14\. Objective (b) improving utilization of existing generating capacity\. This
objective has been accomplished, because as the four Koyna units become available to the
system, they and the other hydroelectric units at Koyna will contribute electrical power to the
peak demand, and will enable coal-fired units to be used more expeditiously with lower
operating and maintenance costs\. Also, consultants were employed to carry out detailed
inspections of the existing Koyna dam, and provide advice, which GOMID has acted upon\.
The necessary repairs have been performed to the dam and these have stopped the leakages,
which though not at an unusual high rate for a dam of this kind, had been increasing steadily
over the last twenty or so years\. The Panel of Experts, which was established to oversee the
construction of Phase IV and advise on the dam repairs, has expressed satisfaction at the
greatly reduced rate of leakage\.
15\. Objective (c) appropriately strengthening and upgrading MSEB's transmission
and distribution systems\. MSEB utilized proceeds of the loan to help procure, via
International Competitive Bidding (ICB) procedures, materials which have been erected in
the construction of 49 schemes to extend and reinforce its transmission system\. These
SSee also Footnote to Preface
5
included the building of 1,194 kilometers of transmission lines at 400 kV, 220 kV and 132
kV, and the construction of substation additions amounting to 4,122 MVA\.
Achievement of Developmental Objectives
16\. The project failed to achieve the developmental objectives set out at the time of
appraisal, namely improving Maharashtra's retail power tariff structure; strengthening the
sector's finances; and introducing institutional improvements6\. The project was one of
several by which the Bank attempted, in the 1980s, to improve the performance of SEBs by
direct involvement at the state level\. As with the other projects, this approach was
unsuccessful, even with MSEB, one of the better performing SEBs, and the revitalization of
an already institutionally and financially weak utility turned out not to be feasible\. It has
since become clear that a sustainable solution to the sector's problems cannot be achieved by
revitalizing the SEB, as attempted in this project, but rather requires a focus on addressing
the root causes of the crisis:- the politicization of decisions, non-technical losses due to theft,
lack of a commercial culture, which can be achieved only through structuring the state power
sector\. This restructuring includes, inter alia, the unbundling of monopoly utilities,
corporatization, establishment of independent regulatory commission, tariff reforms, and
privatization of distribution\.
C\. MAJOR FACTORS AFFECTING THE PROJECT
17\. Projectpreparation The main component of the project, Koyna IV, was the
subject of major delays at start-up\. The project was submitted for Board approval without
the prerequisites that are now expected of the borrower/beneficiary at project entry\. The
loan became effective in December 1989\. But it was not until April 1990 that a working
group was set up in GOMID to handle the project\.
18\. Procurement (see also paragraph 21) Bidding document had therefore not been
prepared, and only following a protracted exercise7 between GOMID and the Bank, were
the civil works bid documents approved by the Bank in April 1991\. Despite the SAR
stating that because of their size the turbine generators were unprecedented in India, the
bidding documents for the procurement of these were also not available prior to loan
effectiveness\. The civil works and the turbines in a project of this nature are inextricably
inter-linked\. The SAR implementation schedule envisaged that the civil works contract
and the turbine generator contracts would be effected in September 1990, i\.e\. nine months
after loan effectiveness\. This was an impossible target\. Civil works contracts were
eventually effected in March 1992, eighteen months later than envisaged in the appraisal
schedule\.
19\. The exercise to evaluate the turbine generator contract bids was especially complex,
requiring lengthy discussions in the Bank, and with GOMID and the Central Electricity
6 Details of the studies, which were to be financed under the loan, how they were carried out, and their impacts,
are provided in Table 7, page 15, of this ICR\.
7The exercise included exchanges between the Bank and GOMID and GOI over the period November 1987 to
April 1991, when the bid documents were eventually issued\.
6
Authority (CEA), and the employment by the Bank of consultants to advise it on special
aspects of the ICB bids\. This exercise was unprecedented, and has been described by the
Bank's Procurement Policy and Services Group as the most complex bid evaluation the
Bank has been involved in\. It took ten months to resolve\. As a result of the combination
of these procurement complexities, an already tight implementation schedule was delayed
in its start-up by two and half years compared with the schedule envisaged at the time of
appraisal\. The implementation of the underground works were delayed by worst than
expected rock conditions, which, contrary to the original design plan, required the tunnel to
be lined with reinforced concrete\.
20\. Costs\. Project cost estimates were prepared at appraisal on the basis of international
prices of various plant components\. The final cost of the project is summarized in Table 8A\.
The cost of the Koyna IV component was about US$ 331million equivalent compared with
US$ 455 million estimated at appraisal in 1989\. The cost of the transmission and distribution
components was about US$ 325million equivalent compared with US$ 624 million estimated
at appraisal\. This greatly reduced cost for the transmission component was mainly because
MSEB's generation program during the project period was not as extensive as envisaged, and
several evacuation transmission lines where thus omitted from its development activities\. A
major factor contributing to the reductions in costs of both the Koyna and transmission
components relates to the devaluation of the rupee8, linked to the fact that most of contracts,
especially those for the supply of materials for the transmission lines, were awarded,
following international competitive bidding, to Indian suppliers, who were well able to match
the appropriate standards of the specifications, which GOMID and MSEB had included in the
bidding documents\. The turbine generators were supplied by European manufacturers\.
21\. Cancellations, and Closing Date\. In May 1992, US$46 million was canceled
from the loan account at the request of MSEB and India's Department of Economic Affairs
(DEA) because it was expected that the cost of the transmission component would be lower
than expected (paragraph 20)\. In October 1996, the Bank cancelled US$16\.67 million from
the loan proceeds, following a lengthy investigation, when it declared that MSEB had mis-
procured overhead line conductor to this value, following an MSEB exercise with two
bidders in which the bid prices were the subject of negotiations\. In response to GOMID and
DEA requests, the closing date for the loan account was extended twice from December 31,
1996 to December 31, 1998\. This conformed to the policy of the South Asia Region that
closing dates are only extended under unusual circumstances beyond the control of the
beneficiary or borrower\. In this case it was agreed that the loan closing date be extended to
allow access to the remaining funds because the delays at start-up (paragraph 17) and during
construction (paragraph 19) were beyond GOMID's control\.
22\. Rate of Return\. It was recognized at the time of appraisal that the benefits of the
Koyna IV project would relate to the additional value of concentrating the station's
generation into periods when system demands are highest\. The benefits of Koyna IV would
be to move 1,390 GWh of generation from off-peak to peak periods and to provide an
additional 47 GWh from efficiency improvements\. It was also recognized that there would
8 At appraisal in 1989, the exchange rate was Rs\. 15 per US$\. By loan closure the rate had changed to about
Rs\. 40 per US$)
7
be no financial benefit to the concentration of generation into peak periods until the retail
tariffs in the Western Region distinguished between the costs of supplying energy during
peak and off-peak periods, and that there was a likelihood that two-part tariffs would be
introduced for large consumers in the following few years\. For Maharashtra, this was to be
one of the principal objectives of the ongoing pricing study\. The financial benefit of Koyna
IV would then be the difference between peak and off-peak revenues on Koyna's off-peak
generation which would be concentrated into peak periods\. Despite the study conclusions
that Maharashtra should invoke time-of-day tariffs, GOM has declined so far to allow MSEB
to apply these for its consumers\.
23\. However, the Koyna IV scheme, with a cost-to-completion considerably less, in
dollar terms, than estimated, was the least cost solution to Maharashtra's and the Western
Region's peak demand needs\. India will soon employ an inter-regional electricity trading
system, which is expected to bring a significant improvement in grid discipline, through a
frequency-linked pool rate\. This will provide opportunities for inter-regional trading, when
adequate interconnections are developed so that power can be transmitted from one region to
another\. Koyna will be able to contribute to meeting the peak demand in the Western
Region, and even be able to help with meeting peak demand in the Southern Region to where
an import/export interconnector has recently been constructed, and where power is in short
supply 24-hours a day\. Therefore, besides its immediate economic advantages, Koyna will
soon be able reap the financial benefits for MSEB and Maharashtra\.
24\. Financial management At the time that the Bank suspended India's right to
access the funds of the loan of the Second Maharashtra Power Project, MSEB and GOM
were not in compliance with a number of covenants\. MSEB was not in compliance with the
accounts receivables covenant and the rate of return covenant, and also GOM had failed to
pass on the proceeds of the Bank loan to MSEB\. While these defaults were to a large extent
the outcome of traditionally poor financial management practices in both MSEB as well as
GOM, they were also symptomatic of the malaise affecting most states, i\.e\. that of a lack of
commercial accountability in the state governments as well as in the SEBs resulting from
years of political intereference in most aspects of the operational, administrative and
financial functioning of the power sector\.
D\. PROJECT SUSTAINABILITY
25\. The physical achievements of the project are highly likely to be sustained\. The
Koyna IV power plant will remain in the ownership of GOM, but will be leased to MSEB for
future operation and maintenance\. It will be operated to help meet the system peak load for
about four hours per day with a load factor of about 17%\. MSEB has trained sufficient, and
suitably qualified, staff at the other Koyna power stations and hydroplants throughout the
state, and these will operate and maintain the Koyna IV plant to MSEB's high standards\.
Operational plans to ensure the sustainability of the Koyna IV scheme and the transmission
and distribution components of the project have been discussed and agreed with MSEB's
management\. These include the provision of spares for the first few years of Koyna IV's life,
and through the annual budget of adequate funds for the appropriate maintenance and
operation of the Koyna IV and transmission plant and equipment\.
8
26\. The marginal improvements in MSEB's financial position brought about in 1996,
following the threat to suspend disbursements from Loan 3498-IN and the suspension itself,
have been sustained\. GOM has not since issued instructions to MSEB with regard to any
particular consumer groups; and a tariff increase of 13%, mainly falling on industrial
consumers, was allowed in 1998\. However, MSEB's position continues to be weak, and
dependant on Government subsidies\. Thus the sector is unlikely to be able to attract
investments in the amounts needed for electricity developments to support Maharashtra's
economic development\. It is doubtful if the position will improve unless Maharashtra enters
into a program of reform, as recommended by its consultants\.
E\. BANK PERFORMANCE
27\. Identification and appraisalBank staff performance was good in that it helped
MSEB identify and prepare the components of transmission and distribution, and prepared
pertinent terms of reference for the recommended studies\. However, Bank's involvement
in the preparation of the Koyna IV component of the project was unsatisfactory\. Technical
specifications were not ready at the time of loan approval, and the pre-qualification of the
civil works contractors was left to be performed in the initial stages of implementation\.
This resulted in substantial delays in project start-up and completion (see paragraph 17 and
18 above)\. However, staff involvement at negotiations was correct when it insisted that
GOMID strengthen its technical staff, because GOM was reluctant to hire foreign,
specialists\. It was also appropriate that the Bank recommended that GOMID should
appoint a Dam Safety Panel, which contributed substantially in resolving several difficultl
technical problems with clarity and speed\.
28\. Resettlement and rehabilitation There were deficiencies in the resettlement and\.
rehabilitation preparation for the project, though fortunately the scale of resettlement was
small (see Appendix C)\. At the outset, in 1989, there was no resettlement plan, but only a,
number of commitments from GOM to eventually provide resettlement information\. A
technical specialist visited the field in 1992, and discovered that 530 families would be
affected, primarily by land acquisition\. Subsequently in the latter years of the project's
implementation, the quality of supervision improved, the problems were properly studied
by Maharashtra's Department of Forestry and Revenues, by using the services of an
independent consultant\. Bank staff then helped in a lengthy exercise, including linking the
extensions of the loan closing date with the implementation of retrofit economic
rehabilitation plan in the form of house improvement grants, financial assistance for
starting income generation activities, and upgrading and creating basic civic amenities in
the affected villages\. As a result, the overall living standards of affected persons have
improved\. The economic rehabilitation program prepared in response to Bank's
supervision mission's recommendation is under implementation, and GOM has assured the
Bank that it will complete the implementation by June 1999, and that adequate funds have
been earmarked for this purpose\. GOM will be providing the Bank with a report in July
1999 which confirms the completion of the program, and details the final actions taken\.
29\. Supervision Bank supervision performed professionally in addressing delicate
procurement problems (including cases of misprocurement), thereby avoiding further delays
to project implementation\. The Bank successfully maintained a good working relationship
with GOI, GOMID and MSEB, and provided advice on the use of modem technologies
9
(paragraph 29), financial and managerial issues, and advised GOM on how it should reform
the power sector\. Complex procurement issues, including numerous complaints from bidders
in the ICB process were handled expeditiously\. A mid term review of this project and the
Second Maharashtra Power Project (Loan 3498-IN) took place in February 1996, which
confirmed the Bank's concerns over MSEB's weak financial position, and eventually led to
the suspension of Loan 3498-IN, in an attempt to ensure that the concerns regarding MSEB's
weak financial position were addressed\.
F\. BORROWER PERFORMANCE
30\. GOMID prepared a least-cost, economical and sustainable project, utilizing the
experience it had acquired in designing and building several hydroelectric schemes and many
irrigation dams and waterways in the state\. GOMID is to be commended for its employment
of several new technologies in the Koyna IV scheme\. The scheme utilizes 400 kV gas-
insulated (SF6) switchgear, which is installed in an underground cavern\. It also includes the
use-of the world's first commercial installation of 400 kV gas-insulated cabling (about 7 km -
14 phase runs, each with a length of 500 meters)\. This runs from the underground generator
transformers to the small (/2 hectare) take-off yard at the commencement of the transmission
line, which is the only evidence above ground that the 1,000 MW scheme exists\.
31\. The scheme has been constructed entirely underground, including the power house,
the transformer and switchgear halls and, notably, the water intake structures\. In excavating
the intakes, which entrain the water from the existing reservoir into the head race tunnel,
GOMID performed the first underwater lake tap in India\. This environmentally protective
exercise, which was performed without lowering the level of the water in the reservoir, is a
forerunner to several exercises, which will need to be performed in India, as it follows a least
cost plan of development, in devoting more of its existing hydro-sites to supplying peak
demand, and creating new pumped storage schemes at existing reservoirs\. In preparation for
the Koyna IV exercise, staff of GOMID witnessed lake taps performed in Europe, and
technical experts from Sweden and the United States were employed to advise on the
complex drilling operation and the placement of explosives\.
32\. Compliance by Maharashtra and by MSEB with several superceding covenants of the
loan for the Second Maharashtra Power Project was unsatisfactory\. Interference by the
Government of Maharashtra (GOM) in the operations of MSEB resulted in MSEB being
unable to perform as a commercial utility\. In contravention of the covenants, which required
that GOM ensure that MSEB operates along commercial lines, GOM did not allow MSEB to
charge appropriate tariffs and insisted (and insists) that MSEB provide low and heavily
subsidized tariffs to agriculture users, which places a huge burden on industrial consumers,
especially when the favored consumer groups fail to pay\. Inadequate and untimely tariff
increases caused severe strain on MSEB's finances\. MSEB was also restricted from taking
much needed actions to recover dues from non-paying consumers leading to an ever
increasing burden of receivables, most of which, because of its age, has now become an
uncollectable bad debt\. In addition, GOM issued directives to MSEB to provide and
maintain additional electricity supplies to agricultural users, leading to shortages for other
paying categories of consumers\. Besides weakening MSEB financially, this operational
interference by GOM has over the years led to a lack of accountability in MSEB, and a
slackening of commercial discipline\.
10
G\. ASSESSMENT OF PROJECT OUTCOME
33\. The results of the project are mixed\. The transmission and distribution components
were completed ahead of time and under budget\. The main component, the Phase IV
extension of Koyna, will be completed late in FY1999, and the resulting benefits will
transpire (paragraph 23)\. But, the underlying developmental outcome to strengthen MSEB
was only marginally successful and is unlikely to be sustained (paragraph 16)\. However, this
project and the Second Maharashtra Power Project served to ensure that Maharashtra studied
the need to restructure its power sector, but seemingly it has decided that it is not necessary
yet\.
H\. FUTURE OPERATIONS
34\. Maharashtra has inquired as to whether the Bank would be able to support with a
new loan or other instrument, its plans to further develop its hydroelectric potential, in
particular a pumped storage scheme at Koyna (Phase V)\. The Bank has responded that it
would welcome the chance to support Maharashtra power sector, including hydroelectric
developments, but only if the sector enters a reform mode, consistent with the
recommendations of its consultants - recommendations which the Bank endorses\. The
consultants have recommended, inter alia, that MSEB be corporatized and remain
responsible only for generation and transmission; that distribution be privatized; that tariffs
be rationalized to limit cross-subsidies and to properly reflect the cost of supply; that all
consumers be metered; a power sector reform bill enacted; and a power sector regulatory
commission established\. The Bank has advised Maharashtra that its current reform
proposals, which mainly consist of establishing a tariff commission instead of a power sector
regulatory commission, and a trial of privatization for a small portion of its network, fall far
short of its consultant's recommendation and the Bank's expectations, so that Bank support
in the Maharashtra state power sector is currently not possible\.
35\. MSEB is one of the better performing SEBs, yet its financial position is precarious
and its future outlook is alarming, threatening to increasingly constrain state finances and
economic development in Maharashtra\. The makings of a deep crisis are very much evident\.
The scope for continuing and increasing Government subsidy support mainly on the basis of
adjustments such as debt to equity conversions, and loan and equity write-offs, is being
exhausted\. The Government's own financial position does not allow large cash subsidies\.
The Bank has urged the Government to start addressing this looming power and fiscal crisis
before it becomes an acute reality\. Maharashtra Government could examine the experience
of Andhra Pradesh in this respect\. The Andhra Pradesh Government has recently launched a
comprehensive program of reforms in the power sector, but only after APSEB's situation had
reached crisis proportions\. MSEB is headed in a similar direction, and MSEB's burden on
the Government is rising\. It would be much easier to launch and implement a comprehensive
power sector reform program now, rather than 3-5 years down the line when options are
limited and implementing them has become much more difficult\.
11
I\. KEY LESSONS LEARNED
36\. Reform in thepowersector Beginning in the mid-1980s, the Bank had attempted to
improve the performance of SEBs by direct involvement at the state level\. This approach
was generally unsuccessful and the revitalization of institutionally and financially weak
SEBs did not turn out to be feasible\. Projects failed to meet expectations beyond the physical
construction of facilities, as was the case with the subject project, where the objectives of
operational and financial improvements did not result\. The Bank was forced in several
instances to take such strong measures as suspending disbursements (including the Second
Maharashtra Power Project) and subsequently canceling loans\. It has become clear that a
sustainable solution to the sector's problems requires a focus on restructuring the state power
sector rather than revitalizing the SEBs as attempted in the past This restructuring includes,
inter alia, the unbundling of monopoly utilities, corporatization, establishment of
independent regulatory commission, tariff reforms, and privatization of distribution\. This
lesson has been applied in the on-going power sector reform projects in Orissa, Haryana and
Andhra Pradesh\.
37\. Projectpreparation Projects must be properly prepared, with an implementation
team in place prior to loan approval, with bidding documents prepared and preferably issued
and bids received, if projects with accurate estimates of costs, are to move smoothly from
preparation to implementation\. The implementation of Koyna IV took two to three years
longer than planned because the project was not adequately prepared at the time of loan
approval, resulting inter alia in higher costs, and charges, which could have been lower, on
un-disbursed portions of the loan\.
38\. Resettlement and rehabilitation It is difficult and time consuming to fix
resettlement problems during project implementation\. Early, detailed and careful attention to
the issues must be part of project preparation, and the details need to be prepared by the
institution which will be responsible for the rehabilitation\. In the case of the Maharashtra
Power Project, the institution responsible, the Forestry and Revenue Department, only
became active in the exercise several years after the project took off\.
12
PART II: STATISTICAL TABLES
Table 1: Summary of Assessments
i A\. Achievement ofOectis Substantial \.tial Negliible Notapplicable
Macroeconomic policies
Sector policies
Financial objectives
Institutional development
Physical objectives
Poverty reduction
Gender issues
Other social objectives
Environmental objectives V
Public sector management
Private sector development
Other
_ _ Ub Unlikely Uncertain
B Project Sustainability
C\. Bank perfmance Highy Satisf |ry Safis6ewry Deficient
Identification
Preparation assistance \.
Appraisal
Supervision , ___\.
D\. Bopower erorAmae Hlg S-tisfactoy Satisftry Mr hrinallysaictory Deficient
Preparation (physical elements)
Implementation (physical elements)
Covenant compliance
Operation (physical elements) v
E Assessment of outcomvHigbly
E\. Assessment of outcome v
13
Table 2: Related Bank Loans/Credits
Preceding Operations
Ramagundam Thermal 3x200 MW January 1979 Complete
Farakka Thermal 3x200 MW June 1980 Complete
Second Ramagundam Thermal 3x500 MW December 1981 Complete
Central Power Transmission 400kV+220kV transmission May 1983 Complete
Second Farakka Thermal 2x500 MW June 1984 Complete
Rihand Power Transmission 500kV HVDC+400kV AC tr\. May 1985 Complete
Combined Cycle Power 413 MW (Anta) April 1986 Complete
Capital Power Supply 4x210 MW (Dadri) June 1987 Complete
Talcher Thermal 2x500 MW June 1987 Complete
Chandrapur (Maharashtra) 2x500 MW May 1985 Complete
Nathpa Jhakri 6x250MW January 1989 Under
construction
Second Maharashtra Power lx500 MW (Chandrapur Unit 7);
±500 kV HVDC line June 1992 Complete
Following Operations
Orissa Power Sector Restructuring T and D May 1996 Under
implementation
Haryana Power APL 1 T and D January 1998 Under
implementation
Andhra Pradesh APL 1 T and D February 1999 Under
implementation
Total IBRD Loans: 14
Preceding Operations
Singrauli Thermal 3x200 MW April 1977 Complete
Ramagundam Thermal 3x200 MW January 1979 Complete
Korba Thermal 3x200 MW April 1970 Complete
Second Singrauli Thermal 2x500 MW May 1980 Complete
Farakka Thermal 3x200 MW June 1980 Complete
Second Korba Thermal 3x200 MW July 1981 Complete
Total IDA Credits: 6
Table 3: Project Timetable
Identification 08/87 08/87
Preparation 10/88 10/88
Appraisal 01/89 01/89
Negotiations 05/89 05/15/89
Board presentation 06/89 06/15/89
Signing 09/89 09/11/89
Effectiveness 11/89 12/14/89
Project completion (physical elements) 12/95 12/99
Loan closing 12/31/97 12/31/98
14
Table 4: Loan Disbursements: Cumulative Estimated and Actual
&uk FiW Yeas FY0 ml93 9
Appraisal estimate (US5 million) 39\.6 111\.0 186\.0 261\.6 344\.0 393\.9 400\.0
Actual (US$ million) 19\.9 23\.3 41\.2 93\.6 144\.3 175\.7 252\.3 296\.8 337\.3*
Actual as % of estimate (%) 50 20 22 36 42 46 64 74
Date of final disbursement = 03/23/99
* US$62\.67 million was cancelled from the loan (see text, paragraph 21)
Table 5: Key Indicators for Project Implementation
Construction and Commissioning
Cont-ad effeaed Completion Comneril operation
Co _,ou eut be,in_
SAR Actual SAR Actual SAR Actual
Koyna civils 08/90 10/92 3/94 4/99 - -
KoynaE and M 08/90 1/95* 12/95 12/99** 3/95 4/99
* Although the main contract for the supply and erection of the 4x250 MW turbogenerators was signed on May 26, 1994, it did not
become effective until January 1995, when GOMID had established an LOC in favor of contractor, as per conditions of contract
* First unit commissioned in April 1999\. Fourth unit expected to be commissioned before end of December 1999\.
Table 6: Key System Indicators
1991/2 1992/3 1993/4 1994/5 1995/6 1996/7 1997/8
State system annual load factor % 73\.2 75\.4 72\.0 75\.9 77\.9 78\.0 nya
MSEB thermal plant availability factor % 77\.4 77\.7 79\.8 81\.9 83\.8 85\.2 84\.2
Resere miargin MW Nil
MSEB coal consumption (kg/kWh) 0\.770 0\.800 0\.800 0\.798 0\.804 0\.788 0\.80C
Number of system collapses I/ 3 1 1 - 7 3 1
MSEB installed capacity (MW) 7,503 7,503 7,593 7,725 7,725 7,725 8,281
MSEB annual generation (GWh) 31,360 31,030 34,110 38,210 39,390 41,020 41,630
MSEB annual sales (GWh) 30,960 34,560 37,760 41,620 42,700 nya
Total losses % 15\.7 15\.3 15\.2 15\.3 15\.4 15\.3 nya
MSEB average tariff income p/kWh 107 136 150 161 169 199 213
MSEB income from sales Rs\. crores 3,285 4,306 5,202 6,081 7,034 8,498 9,888
MSEB rate of return % 3\.0 5\.2 4\.8 4\.7 4\.8 4\.5 4\.5
Self financing ratio 11\.6 27\.5 11\.2 38\.3 36\.0 53\.6 44\.9
Receivables (days) 138 137 139 134 128 112 107
Collections to billing ratio n/a n/a 93\.2 94\.3 94\.4 92\.5 91\.6
Payables (days) 140 153 57 58 54 54 52
Debt service ratio 0\.97 1\.20 1\.18 1\.41 1\.55 1\.39 nya
No\. of consumers (million) 8\.84 9\.27 9\.75 10\.27 10\.87 11\.42 nya
No\. employees (regular) 107,450 111,514 111,514 111,514 110,662 110,874 110,681
Consumers/employee 82\.2 83\.1 87\.4 92\.1 98\.3 103\.0 nya
Employee/MW installed 14\.3 14\.9 14\.7 14\.4 14\.3 14\.4 13\.4
Transmission I lkV & above (km) 177,000 - - - 208,887 214,593 nya
DistributionbelowllkV(km) 317,000 - - - 396,113 397,348 nya
Transmission s/s capacity (MVA) 43,000 - - - 43,542 46,163 nya
1/ System collapses will likely reduce in number with commissioning in 1999 of +500 kV HVDC line, between
Chandrapur and Bombay, which was financed under 3498-IN
15
Table 7: Studies Included in the Project
Recommendations on ways to improve load dispatch in the Western Region and
rationalize bulk power regional trading\.
It was agreed in 1991, that this study should not be performed under the project, and that the
Power Sector Review being carried out by the Bank (ESMAP) superceded it\. The ESMAP
work resulted in the Bank Report No\. 9786-IN, INDL4 - Long Term Issues in the Power
Sector\. The Report advised that: (a) huge savings could be derived for India by improved
coordination through regional inter-trading, and by the implementation of two-part tariffs for
the supply to NTPC of generation, and that such improvements would also bring about
improvements to the environment as a result of reduced emissions and reduced ash
production; (b) the enormous sector investment program would need considerable support
from the private sector if it were to succeed; (c) increasing tariffs would provide substantial
economic benefits, and that raising them to the level of LRMC would produce saving to the
Indian economy of Rs\. 400 billion to 2000; (d) substantial saving both in capital investments
and annual costs could be made through improved end-user efficiency\.
Improving MSEB's retail power tariff structure\.
This study was performed, and one of its main conclusions was that MSEB should employ
time-of-day tariffs, to minimize investments and to maximize the use of its existing sources
of generation\. However, GOM has not allowed MSEB to use these (see text at paragraph 22
and 23)
Strengthening MSEB's finances\.
In 1994, using its own funds, Maharashtra engaged international consultants to advise it on
how to strengthen the position of MSEB, with a view to making changes in the sector to this
effect\. But the recommendations of the consultants were not heeded, and MSEB's condition
failed to improve\.
Introducing institutional improvements to MSEB\.
Consultants were employed by MSEB, and as a result of their advice, MSEB, inter alia,
established a Corporate Planning Unit, re-organized and improved its data processing
procedures, established an Operations and Maintenance Unit and System to monitor the
operational performance of its generation and transmission and distribution systems,
strengthened its internal audit procedures, and established the Environmental Protection Cell\.
MSEB is currently proceeding with a Board-wide computerization plan including the
establishment of Board-wide and local area networks\.
16
Table 8A: Project Costs
Appraisal estimate Actual
(US$ million) a/ (US$ million)
Koyna IV civil works 149\.6 127\.5
Koyna IV electrical and mechanical equipment 262\.6 189\.3
Koyna IV engineering and administration 42\.5 14\.2
Koyna IV total 454\.7 331\.0
MSEB transmission 508\.4 229\.0
MSEB distribution 113\.1 95\.9
MSEB institutional development 2\.5 0\.5
MSEB components total 624\.0 325\.4
Interest during construction 265\.0 b/
Total financing required 1,343\.8
a/ Included physical and price contingencies
b/ Detail not provided by GOM or MSEB\.
Table 8B: Project Financing
Appraisal Estimate (US$m) Actual (US$m)
Source Local Foreign Total Local Foreign Total
IBRD 400 400 - 336\.6 336\.6
Co-financiers d/ 150 150 | |
MSEB/GOM 471 58 529 285\.2 34\.6 319\.8
Total c/ 471- 608 1,079 285\.2 -S371\.2 656\.4
c/ Comparisons exclude IDC - see footnote b/ above\.
d/ It was envisaged at appraisal that co-financiers would need to be identified\. This became un-necessary
because bids were much lower than expected, and further funding was not required\.
Table 9: Analysis of Economic Costs and Benefits
No post completion quantitative analysis of financial benefits and the project return was performed, for the
reasons provide in the text at paragraphs 22 and 23\.
17
Table 10a: Status of Legal Covenants (dated September 11, 1989) of Loan 3096-IN
__________________ GOI/GOMID: Special Account and S,QE to be audited nnually within 9 months of FY end\. Complied with
4\.01 GOISGOM: Ppecial Account and SOE to be audited annuallywithin 9 months of FY end\. Complied with
4\.01 GOI/GOM: Project accounts to be audited within 9 months of FY end\. Comiplied with
Schedule 2\.10 c GOI to cause MSEB to furnish resettlement plan for persons displaced or to be displaced by Complied with
the construction of any substation under the project
Schedule 2\.6 GOI to furnish to the Bank report on all persons to be displaced by'Koyna IV by Dec\.31, Complied with\.
1989, and to compensate eligible persons in accordance with provisions of MPDP 1976\. Compensation - see
Appendix C\.
Paragraph 6\.
Table 10b: Status of superceding Legal Covenants (dated July 8, 1992) of Loan 3498-IN
2\.02 (b) GOI to open and maintain a Special Deposit Account in dollars with the Reserve Bank of Complied with
India\.
3\.04 GOI to take actions to ensure adequate coal supplies for the efficient operation of the Complied with
project's power plant\.
4\.01 (b) (ii) GOM shall, jointly with the Bank, carry out a mid-term review in the 3rd year of the project Performed in February
to assess oyerall progress of the project\. 199
j ___ _Q Q Q_ ~~~~~~~~~~~~~~~~~~~~~~~10_
2\.02 GOMIMSG B on-lending arrangement Complied with
4\.01 (b) (ii) GOM: Project account to be audited and audit report to be furnished to the Bank no later Complied with
than 9 months after FY end
4\.04 MSEB to make necessary financial arrangements for the acquisition and installation of Complied with
HVDC tenminals required under Part A(ii) of the project
Schedule 2\.2 GOM shall (a) establish a commission to review institutional arrangements in the power (a) complied with in
sector in Maharashtra, and (b) not later than Dec\. 31, 1993, discuss the findings and 1994
recommendations of the said commission with the Bank\. (b) complied with in
1996
Schedule 2\.3 GOM shall, jointly with the Bank, canry out a mid-term review in the 3rd year of the project Performed in February
to assess overall progress of the project 1996
Schedule 2\.3 MSEB to fumish to the Bank no later than March 31of each year, a work plan, including the Complied with
list of distribution lines and substations to be constructed under the project in the following
year
Schedule 2\.5 MSEB to implement various environmental mitigatory measures at Chandrapur, including Complied with
inter alia, the implementation of a waste water treatment & management scheme, the
installation of a dust suppression acquisition and maintenance of various monitoring
equipment\.
3\.01 (iii) MSEB to take out insurance against risks in such amounts as will be consistent with Complied with
appropriate practices\.
3\.02 (i) Ln 3498-IN: MSEB to reduce commercial receivables (less any disputed amounts) to less Not complied with
than 2\.5 months of revenue\.
3\.02 (ii) MSEB to reduce commerial payables to less than 2\.0 months of consumption of fuel and Complied with
consumables, plus purchase of power\.
4\.02 (c) MSEB to fumish to the Bank, certified financial statements within 9 months of FY end, and Complied with
auditor's report within 12 months\.
4\.03 (a) (i) MSEB to generate funds from intemal sources (excluding GOM subsidies) equivalent to not Complied with
less than 20% in FY93 and FY94, and 25% from FY95 onwards, of the annual average of its
capital expenditure incurred, or expected to be incurred, for the previous, current and
following fiscal year\.
4\.03 (a) (ii) MSEB to eam a retum on net fixed assets of no less than 4\.5% from FY93 onwards\. Complied with
4\.04 MSEB to ensure that Debt Service Coverage is at least 1\.0 in FY90/91 and 1\.2 thereafter Complied with
Schedule 2\.1 MSEB to fumish to the Bank, no later than Dec\. 31 of each year, annual revisions to the 5- Complied with
year revolving capital investment and associated financing plan of MSEB
18
Table - 11: Compliance with Operational Manual Statements
Statement number and title I Comments on lack of compliance
All Bank policies were complied with, with the exception of OP/BP 10\.02\. The main component of the
(First) Maharashtra Power project was executed by GOMID, which typically follows government
accounting systems which are cash-based single entry systems\. GOMID opened a separate budget head to
capture project-related expenditures\. However, no separate project accounts were compiled by GOMID\.
The financial management of GOMID, like that of any other government department, leaves much to be
desired\. Any future project that the Bank might help finance will need to address this issue well in advance
of loan negotiations\.
Table 12: Bank Resources: Staff Inputs
Weeks US$ ('000)
Through Appraisal 87\.1 193\.6
Appraisal-Board 59\.3 153\.5
Board-Effectiveness/Supervision 219\.7 605\.0
Completion 13\.5 31\.5
TOTAL 379\.6 983\.6
Table 13: Bank Resources: Missions
Stage of Project month/yr No\. of Days in Specialization (see key below)
Cycle Persons field _
Identification 08/87 3 7 PO, E, SOO
Preparation 11/87 6 4 SOO, Econ, E, PO, E, DC
Preparation 05/88 5 5 SOO, E, FA, Econ, E
Preparation 10/88 6 15 SOO, FA, FA, E, Econ, P0
Appraisal 01/89 9 14 FA, E, E, ENV, Econ, MS, Econ, FA, FA
To effectiveness 09/89 1 5 E
Stage of Project month/yr No\. of Days in Specialization Performance Rating
Cycle Persons field Implementation Development
Supervision 1 02/90 6 5 FA, E, E, E, A, Econ I S
Supervision 2 11/90 2 5 E\.ENV I S
Supervision 3 02/91 2 5 E, E, FA I S
Supervision 4 08/91 1 5 FA 1 S
Supervision 5 10/92 7 8 E, E, E, E, FA, FA, MS 1 S
Supervision 5 07/93 2 5 FA, FA 1 S
Supervision 6 07/94 3 5 E,E,SOC 2 S
Supervision 7 11/94 1 5 E 2 S
Supervision 8 12/94 3 5 E,E,FA 2 S
Supervision 9 12/95 3 7 E,E,FA 2 S
Supervision 10* 03/96 6 8 E,SOC,E,FA,FA,ENV I S
Supervision 11 06/96 2 5 E,SOC I S
Supervision 12 12/96 3 5 E,E,FA I S
Supervision 13 06/97 1 5 E I S
Supervision 14 01/98 2 5 E, SOC I S
Supervision 15 06/98 3 6 E, E, SOC 1 S
ICR review mssn 12/98 4 E,FA,SOC 1 U
Key:- PO - Project officer; SOO - Senior Operations Officer; DC - Division Chief; FA - Financial analyst; E - Engineer;
MS - Management specialist; Econ - Economist; IT - Information technology specialist; ES - Energy specialist; SOC -
Sociologist; ENV - Environmental protection specialist; A - Anthropologist; S - Satisfactory; U - Unsatisfactory
* - Mid-term review
19
Annex
The Koyna Phase IV Concept
1\. The proposal was to more than double the power capacity of the Koyna site with the
fourth stage development in parallel to the existing first and second stages\. These draw water
from Lake Shivajisagar, the reservoir behind the existing Koyna Dam\. These waters have
since the 1960s been serving Phases I, II and III, via diversionary tunnels through India's
continental divide, the mountains of the Western Ghats, westwards to the Arabian Sea
instead of eastwards to the Bay of Bengal\. The Koyna Dam is located 56 km west of Karad,
and the power station site is located 25 km from Chiplun, which is on the coastal road from
Bombay to Goa\. The dam is therefore situated about 350 km south of Bombay\. Because of
its location at the top of the steep scarp and its orientation parallel to it, the catchment area
receives a very high rainfall averaging about 6,000 mm (about 20 feet) per year\. About
eighty percent of this rain-flow occurs during the monsoon season which extends over the
period from June to October\.
2\. The existing Stage I and Stage II developments at Koyna consist of an intake on Lake
Shivajisagar, supplying water via twin headrace tunnels and inclined shafts to an
underground powerhouse, in which are installed eight Pelton-type generating units with a
total installed capacity of 560 MW\. From the powerhouse a tailrace tunnel leads to Lake
Kolkewadi which is the forebay of Koyna Stage III which provides a further 320 MW of
generating capacity\. The Stage I and II units were commissioned over the period 1962 to
1967, while Stage III units were commissioned in 1975-76\. Stages I, II and III thus had a
combined capacity of 880 MW\.
3\. The Stage IV development parallels the existing Stages I and II, also developing the full
521 meter head between Lake Shivajisagar and Lake Kolkewadi\. However the routing of the
new power conduits have been more direct than those of the previous development, which
had to accommodate implementation in stages\. Koyna Stage IV involves the installation of
four additional 250 MW units driven by Francis type turbines, in a new underground
powerhouse\. No additional flows have been diverted, and no extra water is utilized\. The
combination of the Stage IV development along with the existing plant provides more than
twice as much capacity (1,880 MW) at the times of the system peak, but with approximately
the same energy output as previously (a small increase in energy is realized due the improved
efficiency of the new turbines and generators)\.
20
Appendix Al
Project review from the borrower's perspective
(Contribution by GOMID on KHEP STAGE-IV Component)
1\.0 Introduction:
The World Bank granted a loan of US $ 400 million in September 1989 to GOI for
the Maharashtra Power Project IBRD loan 3096 IN\. It had two components (A)
Koyna-IV for US $ 230 million and (B) MSEB for US $ 170 million\. The loan
closing date was initially 31 " December 1996 and was extended in two stages viz\., (i)
up to 31st December 1997 and (ii) up to 31st December 1998\. This portion of
Appendix A deals with the implementation of the Koyna-IV component\.
2\.0 Project objectives: The objectives of the Maharashtra Power project were to
improve power supply in the western region of India and the operating efficiency of
the Board\.
The Project consisted of two parts, Part(A) pertained to Govt\. of Maharashtra and
Part(B) was with MSEB\. As the present report is only for GOMID i\.e\. Part-A only,
the project objectives as detailed in Project Agreement were as under:
1 \. The construction of the fourth stage of the Koyna hydro Electric Power plant
(Koyna IV) comprising: (i) intake structure in the existing Koyna reservoir;
(ii) a 4\.5 km long head race tunnel; (iii) a 1,000 Mw (4 x 250 Mw)
underground power station and ancillary structures; (iv) a 2\.1 km long tail
race tunnel; (v) a 1 km long approach tunnel for access to the power plant;
and (vi) the associated 400 kV switchyard\.
2\. The carrying out of detailed inspection of the existing Koyna dam and repairs,
upgrading of instrumentation and review of emergency plans as required\.
3\. The utilisation of specialists services and carrying out of training, including
the review of the Project by a Panel of Experts\.
These works were executed in accordance with guidelines of World Bank\.
Project design - The project covered definite target of commissioning of 4 x 250
MW machines by having close monitoring\. There was definite package-wise
procurement schedule\. Thus, the design of project was framed in an objective
methodical manner\.
3\.0 Project Implementation Procedure Adopted:
The Project Agreement Schedule 1 covered details of (i) procurement of goods and
work & (ii) employment consultant's services\. The contract documents for executing
works and employment of the consultants were framed in accordance for
procurement under IBRD loan\. These documents were vetted by World Bank mission
from time to time to ensure that the works get executed in accordance with World
21
Bank guidelines\. The timely vetting by the World Bank mission provided
opportunities to GOM officers to have interaction with latest procurement procedures
for execution of project of this magnitude \. It is necessary to state here that world
Bank missions had scrutinized drawings, technical specifications\. The World Bank
emphasized on exhaustive pre-qualification exercise which enabled participation of
competent bidders in the procurement process\. Some works for equipment and civil
works estimated to cost the equivalent of US $ 2,00,000 and US $ 5,00,000 were
executed by resorting to local competitive bidding procedure\.
(a) GOM have taken review of technical aspects of Koyna-IV from time to time
accordance with the help of POE\. The Panel of experts consisted of 5
members, One Chairman, 2 Civil and 2 E&M members\. The GOM had set up
a Steering Committee under the Chairmanship of Hon\. Chief Secretary for
closely watching progress of works and resolving difficulties\. This is the
measure adopted by GOM, though not specified by World Bank, for
successful completion of project\.
(b) To review the present condition of existing Koyna Dam, determine the scope
of (i) additional investigations, (ii) repairs to Koyna Dam, Dam Review Panel
was constituted\. \. This Dam Review panel consisted of experts of international
reputation\. Dynamic analysis of Dam based on maximum credible
earthquake, studies of Hydrology with Peak Maximum Flood and under water
epoxy grouting treatment from upstream face dam block to joints were
carried out\. The D\.R\.P\. expressed that condition of Koyna Dam is safe\.
(c) GOM had revised the organizational structure for implementation of the
project Independent offices viz\., Chief Engineer, Koyna Design Circle, Pune,
Koyna Construction Circle, Satara ; Koyna (E&M) Designs Circle, Koyna
E&M Construction Circle, Satara were created\. The appointed staff members
were having background knowledge of implementation of Hydro Electric
Project\.
(d) GOM furnished a plan of economic rehabilitation of persons whether
landowning or Landless affected by construction of Koyna-IV and
compensated eligible persons in accordance with the provisions of the
Maharashtra Project Displaced persons Act 1976\.
(e) After obtaining necessary forest clearance under Forest (conservation) Act
1980, the project constructed access road to the surge tank for Koyna-IV\.
(f) GOMID established a thorough reporting system to World Bank and
monitored progress of work by using computerized monitoring system\.
3\.2 Operational experience: The World Bank reviewed progress of work through
several missions\. The World Bank mission used to inspect physically progress of
works, discussed with project officers both of department and contractors and
suggested areas where specific attention of implementation authorities is required\.
The monthly progress reports which were very punctually submitted to the world
22
Bank helped world Bank to take an overall stock about progress of work\. A very
heartening feature of Mission visits was their professional approach\. This fetched
good results particularly in respect of following elements:
a) Epoxy grouting treatment from upstreamn face of Dam to monolith block joints for
control of leakage in the Koyna Dam\. This reduced leakage which was more than
7,000 liters per minute (1pm) to less than 1,500 1pm Treatment was given to heavily
leaking block joints (more than 200 1pm)\.
b) Fixation of contracts for civil works critically monitored by World Bank\. The World
Bank scrutinized drawings for civil works of water conductor system of Koyna-IV\.
The World Bank readily accepted the separation of supply of steel plates 1 (ICB-3) -for
Pressure Shaft lining, floating independent package for Design and supply of
Hydraulic Hoist and gates\.
c) The Department officers could get access to the latest developments in Geo-technical
field through visit of GOMID Engineers to Norway, Canada\. M/s\. Golder Associates
the technical consultants had reviewed proposed support treatment for caverns and
tunnels in 1992\. They provided geo-technical training, geo-technical advice and
design review\. Thus, the support treatment of Koyna-IV water conductor water
system provided is in tune with latest development in this field\.
d) The World Bank helped GOMID in respect of following E&M works\.
i) Selection of proper and efficient Francis Turbine of such a high head and
large capacity from the global offers received was a very crucial job\. The
World Bank held meeting at Washington (1993) and had discussions with
various bidder, SGI Consultants, GOMID Officers and advised proper
selection\.
ii) Very safe and proper selection of alternative of Gas Insulated Switchgear
(GIS) as compared to open air switch gear (1995)\.
iii) Selection of 400 KVA XLPE cable in comparison to GITB (1996)\.
e) The World Bank helped in making paymnents for foreign contractors by following
direct payment procedure\.
f) The periodic review progress by World Bank missions brought out following
important points\.
g) (i)The delay in fixation of contracts for E&M main equipment (In May 1995) and the
inherent interface with civil works in respect of erection of units made it obligatory
to revise key dates for completion of various elements of civil works and grant of
corresponding extension in contract period for civil works\.
23
(ii)The World Bank upheld the proposal of having underwater lake tap for connecting
water conductor of Koyna Stage-IV to Koyna lake\. Initially, it was proposed to
deplete the lake and have final lake blast from top\. This has helped in having transfer
of technology to India for using lake tapping method for generation of power
wherever pen stocks are not embedded in body of the dam\.
(iii)The World Banks insistence for economic rehabilitation provided new insight to
the issue\. Reviews of rehabilitation works by World Bank mission was important in
accelerating actions\. The environmental aspects were also duly taken care of\.
h) As per covenant, the accounts were maintained in accordance with sound accounting
system\. All records, invoices bills etc\. evidencing expenditure were retained\. The
Accountant General had carried out audit inspections and issued certificates\. The
adherence to proper accounting system enabled GOM Officers to have full-fledged
updated figures of component-wise utilisation of loan figures\.
4\.0 Relationship between Borrower and World Bank\.
4\.1 The relationship between Borrower and Bank were very cordial and the
suggestions of Bank missions were implemented for successful completion of
Project\. It may be mentioned here that in an underground project of this
magnitude and having such a wide time span, slippage in progress of works
has to be taken as an inevitable feature\. The requirement of extra time in civil
part were mainly; because of (i) the occurrence of breccia instead of good
basalt\. This called for extra time for excavation and subsequent R\.C\.C\. lining
for HRT, Head Surge\. (ii) requirement of having pilot excavation for pressure
shaft by using boretec machine and subsequent laying of rails etc\. The
inclination of 58 degree instead of so far adopted 45 degree for pressure shafts
called for adoption of stringent safety measures and consequent extra
requirement of time for pressure shaft lining\. (iii) execution of additional
works such as cooling water tank, discharge header tunnel in power house\.
4\.2 The deployment of latest type of equipment for e\.g\. (i) Francis Turbines of
compact size with runner removal passage, (ii) G\.I\.S\. forces on Transformer
Hall slab etc\. called for use of latest software\. The tolerance limits such as
deflection due to forces are very small\. Availability of POE, whose reports
were reviewed by World Bank time to time, helped in effectively solving
problems\.
4\.3 The clause of imposition of liquidated damages for non completion of
elements in time proved to be a very stringent provision\. The World Bank
mission realised this and objectively viewed the difficulties and concluded
that the reasons for delay beyond control of contractors\. This unavoidable
delay was subsequently ratified by GOM by granting extension in time limits
to the civil contractors\.
4\.4 The approach of World Bank missions about the issues faced by GOM was
practical and objective and the World Bank was satisfied that sincere efforts
24
are being made for completion of project\. The World Bank granted extension
twice\. Thus, though by the time extended loan limit of 31't December 1998,
no machine was spun, their completion was very much in view (i) first
machine (Unit No\.4) was mechanically spun on the 315t March 1999 and (ii)
the other units are in advance stage to get complete by year 2000\. It may be
recalled here that Task manager, at the time of final lake blast 13h March 199
sent a letter which said 'our Koyna Project'\. This is speaking example of
healthy relationship between borrower and client\.
5\.0 Financial Aspects:
5\.1 SAR Provisions: The total estimated cost of the project of appraisal stage
1989) was estimated to be as under (c\.f\. Page No\.34 of SAR)\.
Sr\. Particulars Local Foreign Total Local Foreign Total
No\. Rs\. Million Rs\. Rs\. US US US
Million Million Million Million Million
1 Civil works 945\.8 602\.2 1548\.0 65\.8 40\.3 106\.1
2 Equipment 897\.8 1817\.2 2715\.0 62\.5 123\.5 186\.0
3 Consulting 32\.8 4\.2 37\.0 0\.3 2\.2 2\.5
services
4 Engineering 405\.0 0\.0 405\.0 27\.7 0\.0 27\.7
and
Administration
Total 2281\.4 2423\.6 4705\.0 156\.3 166\.0 322\.0
The total cost including physical contingencies was estimated as under (c\.f\. SAR Page
No\.108 and 109)\.
Particulars\. Total (Rs\.Million) Break down of total cost (Rs\. Million)
CIVIL 2338\.9 56\.8 91\.4 1\.4 149\.6
Equipment 4315\.8 175\.5 44\.4 42\.5 262\.6
Consulting services 56\.4 3\.1 0\.4 0\.0 3\.5
Engineering and 608\.9 0\.0 38\.0 0\.0 38\.0
Administration
Land for construction 14\.9 0\.0 1\.0 0\.0 1\.0
Total: 7334\.8 235\.5 175\.3 44\.0 454\.8
(The rate of exchange at Appraisal Stage: Rs\. 15 = 1 US $)\.
25
Expenditure incurred up to January, 1999 end are as under\.
Rs\.Million U\.S\.Dollar Million\.
Civil Works 4440\.300 137\.280
E&M Works 6990\.325 193\.734
Total: 11430\.625 331\.014
It may be mentioned here that there will be some expenditure in year 1999-2000 and beyond
towards completion of remaining works of KHEP STAGE-IV\. It would be to the extent of
Rs\.300 Million for Civil woks (U\.S\.Dollar 8 Million) and for Electrical works, it would be
Rs\.1,200 Million (U\.S\.Dollar 32 Million)\.
Lessons learned
The pre-qualification exercise for deciding eligible contractors, finalisation of technical
specifications was a time consuming job sufficient progress in respect of finalisation of
technical specifications is required to be made before posing a project for external assistance\.
A clause to provide for a Dispute Resolution Board would have been useful\.
The provision of imposition of liquidated damages is very stringent to be implemented
Some lenient provisions are necessary for making contractors to work as per guidance of
Department especially in respect of achieving interface dates\.
Very intimate relations between (i) Borrower and client, (ii) wings of execution civil and
electrical are essential for having constructive approach in successful completion of
underground Hydro Electric Project of this magnitude\.
Conclusion
Execution of the KHEP STAGE-IV can be considered as a successful story in the history of
externally aided projects\. This was possible; because of close monitoring of progress of
project by Panel of Experts; Steering Committee; dedicated staff; World Bank missions, and
healthy relations between executing agencies\.
26
Appendix A2
Project review from the borrower's perspective
(Contribution by MSEB on Transmission and Distribution Components)
A\. Preface
This is MSEB's perspective part of the Implementation Completion Report (ICR) for first
Maharashtra Power Project covered under financing of IBRD Loan 3096-IN for an amount
equivalent of US$ 400 million\. The loan proposal was appraised in 1989, contract agreement
for which was signed on 11th September 1989, and it became effective on 14th December
1989\. The scheduled loan closing date was 31st December 1996\.
First Maharashtra Power Project has been an important and ambitious project having multiple
targets for the executing agencies (Govt\. of Maharashtra (GOM) and Maharashtra State
Electricity Board (MSEB))\. As it appears in the proceeding paras\., the basic physical
objectives were to improve power supply and operating efficiency in MSEB and in the
Western Regional Power System\.
The contents of this part of the ICR were prepared during January 1999-March 1999 and
include references from documents including Staff Appraisal Report (SAR) for Loan 3096-
IN, Loan and Project Agreements, aide memoires, site reports and inputs received from
concerned groups of MSEB involved with the implementation of this project\.
B\. Project Objectives
This project objective was to improve power supply and operating efficiency in MSEB and in
the Western Region Power systems through: (a) expanding regional peaking capacity at least
cost; (b) improving utilisation of existing generating capacity; (c) strengthening and
upgrading MSEB's transmission and distribution systems; (d) recommending ways to
improve load despatch in the Western Region and rationalize bulk power regional trading; (e)
improving MSEB's retail power tariff structure; (f) strengthening MSEB's finances; and (g)
introducing institutional improvements in MSEB\. Out of the above items (a) and (b) were
implemented by GOM through construction of Koyna Stage-IV, whereas others were within
the scope of MSEB\. However, item (d) was subsequently deleted due to utilization of funds
meant for the consultancy part by GOM\.
IBRD Loan 3096-IN of US$ 400 M consists of US$230 M for Koyna Stage IV (implemented
by Govt\. of Maharashtra) and US$170 M for transmission lines associated with evacuation of
Koyna Stage IV as well as various transmission schemes (implemented by MSEB)\.
This Implementation Completion Report is furnished for MSEB's scope of work included in
the project\. The project description for MSEB Component can be further
elaborated/described as under:
(a) The acquisition and installation of equipment and materials for the Board's
transmission and distribution investment programme\.
27
(b) The construction of 400kV transmission lines to connect Koyna IV to the
existing transmission system of Maharashtra\.
(c) The implementation of a plan to strengthen the Board's operations and
finances and for managerial development including setting up of performance
monitoring system, management accounting, streamlining internal procedures
and accelerating development of data processing systems\.
(d) The utilization of specialists' services and carrying out training\.
C\. Achievement of Objectives
(i) The first and prime-most object (of supply and erection of equipment and
material for MSEB's five-year transmission and distribution investment
programme) has been successfully achieved by way of commissioning all the
49 Extra High Voltage (EHV) schemes utilising the equipment procured
against the loan\. The total loan amount of US$107\.33M was utilised before
closing date of the loan which was 31st December, 1996\.
(ii) The construction of 400 kV transmission lines to connect Koyna Stage IV
Power Station to transmission system of Maharashtra has also been achieved
by commissioning 400 kV Koyna - Karad D/C Line (via New Koyna
substation) and 400 kV Koyna IV Lonikand D/C line well in advance of
commissioning of Koyna Stage IV Power Station\.
(iii) M/s\.Worley International Ltd\. were appointed by MSEB for availing the
consultancy services in respect of Planning of distribution network\. The
software and hardware required for the purpose was also acquired\. Further
sample distribution reinforcement schemes were also prepared for two
districts\. The methodology suggested by the consultant is being adopted for
distribution system planning\.
D\. Project Cost Estimate
1\. Transmission Project
The estimated project cost (during loan appraisal) was Rs\.9,570 Million\. The revised
up-to-date cost works out to Rs\.10,235\.2 Millions (US$324\.92 Million)\. The up-to-date cost
includes Rs\.684\.30 million which is the cost for evacuation of power from Koyna Stage IV
by 400kV lines\.
In December 1989, the World Bank sanctioned a loan of US$400 Million under this
Loan No\.3096-IN\. It consisted of US$230 Million for Koyna Stage IV and US$170 Million
for transmission lines associated with evacuation of Koyna Stage IV Power Station as well as
various other transmission schemes\.
MSEB surrendered US$62\.67 Million worth loan due to devaluation of Indian Rupee\.
Thus for transmission projects the balance loan amount was US$107\.33 Million\.
28
2\. Consultancy Services
The initial estimates of consultancy services were Rs\.30\.00 Million (US$2\. 10
Million)\. However the revised scope of consultant's services worked out to Rs\. 15\.624
Millions (US$0\.496 M)\.
E) Implementation Schedule
1\. The transmission schemes covered in the Maharashtra Power Project-I were
commissioned as scheduled and their commissioning dates are indicated in Annexure- 1\.
2\. Consultancy Services
The works of all the consultancy services undertaken by the consultants have been
completed, as per the scheduled time frame\.
MSEB secured consultants' services of M/s\.Worley International Limited, New
Zealand, in December 1994\.
The consultant has submitted the inception report in the month of March 1995 which
included:
(a) Network analysis
(b) Design review
(c) Operational view
(d) Data Base development
(e) Skill Transfer
(f) Implementation
(g) Reporting
The consultant has submitted the following:
(i) Design Review Report in the month of July 1995;
(ii) Master plan for the implementation of Network Infornation Management
System in the month December 1995\. They have also supplied Power System
Simulator (PSSU) Software required for Distribution Network Analysis;
(iii) Design Report for District of Solapur and Parbhani in January 1996; and
(iv) Final Report (preliminary) and final report in the month of March 1996 and
May 1996 respectively\.
The Consultants have also trained MSEB engineers in India as well as in New Zealand\.
29
F\. Design Features
1\. Transmission Project
MSEB has already acquired sufficient experience of installation and commissioning of
EHV transmission lines and substations including procurement of materials\. All the
technical specifications of supply packages were prepared, tenders floated, bids received and
evaluated and contracts were awarded by MSEB's Project Design Office at Mumbai headed
by the Chief Engineer (Trans\. Planning)\. Similarly, the project implementation was executed,
by MSEB's Chief Engineer, 400kV Construction Zone, Nagpur for 400kV schemes and
Chief Engineer EHV Construction Zone, Pune for other Transmission Scheme\. MSEB has
adequate and experienced inhouse staff for operation and maintenance (O&M) activities of
EHV Lines and Substations\.
G\. Lessons Learnt
1\. Transmission Projec
In case of procurement of Bersimis conductor, the World Banlk's approach regarding validity
of the offers, resulted in some delay\. It may be noted that the bidders do not have any reason
to go on extending validity of their offers unless asked for\. Therefore World Bank s action of
declaring procurement of part quantity of conductor as misprocurement could have been
avoided\. (This has resulted into loan amount being slashed down from US$124 Millions to
US$107\.33 Millions)\.
2\. Consultancy Services
MSEB's association with M/s\.Worley, International Ltd\. has been of immense
benefit\.
Several specific lessons can be drawn from the project that has both operational and
strategic implications for similar projects likely to be implemented in future\.
(i) A sound financial health is key element to the success of stability\.
(ii) The procurement cycle right from starting of the issue of bid documents to the
stage of the award of the contract simplified and shortened\.
H\. Performance of Co-financiers
There was no co-financier for this project\.
I\. Borrower's Performance
MSEB's performance as far as execution of project components covered under
Maharashtra Power Project was satisfactory\. All 49 Nos\. Transmission Schemes have been
commissioned\.
30
The works of consultancy services have been undertaken as per schedule and to the
satisfaction of MSEB\.
K\. Evaluation of Bank's Performance
The Bank has adequately assisted MSEB in upbringing the physical tasks of
Maharashtra Power Project-i\. Bank provided number of visits of supervisory/review
missions\. These efforts of World Bank have undoubtly contributed towards MSEB's
attempts for timely realisation of project objectives\.
The World Bank was consistently involved right from the project preparation to the
project completion\. The relations between MSEB and the Bank officials were quite cordial\.
Frequent reviews undertaken by the Bank missions throughout the tenure of the project have
helped MSEB in a way to appreciate and adopt broader sectoral concerns in their operations\.
The performance of the Bank from the project preparation through the project completion
stage was satisfactory\. The involvement of Banks delegates during their supervisory/revielv
missions and through correspondence and communication has always been appreciable and
has contributed enough while implementing this project\.
However, Bank can render more realistic functions by way of giving due
considerations for the conditions prevailing in a country like India where sometimes some
things are in contrast and not comparable/compatible to the conditions/environments as
experienced and viewed by the Bank\.
L\. Plan adopted for Operation and Maintenance Phase of the Project
The transmission lines and substations covered under the project were commissioned
as scheduled\. These lines and substations after commissioning were handed over to the
respective superintending engineers, EHV O&M Circles located at
Nagpur/Chandrapur/Amravati/ Parli/ Nashik/Pune/Karad/Panvel/Kalwa\. O&M of EHV
Lines and Substations is a day to day business of MSEB and no special performance
indicators are rrequired to be used to monitor the operational and developmental impact of
the schemes covered under this project
The overall transmission system of MSEB is quite healthy\.
M\. List of Enclosures
(i) Name of the scheme and date of commissioning Annex\. 1
(ii) Updated project cost summary and Finance Plan Annex II
31
APPENDIX A2
ANNEX I
Sr\. Name of the Scheme Date of completion
No\. of the scheme
1\. Augmentation of transformer capacity at Chandrapur substation Nov\. 94
lx315 MVA, 400/220kV
2\. Augmentation of transformer capacity at 400kV Koradi substation 8\.4\.94
lx315 MVA, 400/220kV
3\. Erection of 400kV Babhleshwar-Dhule D/C line and establishment of 24\.11\.95
400kV S/S at Dhule
4\. LILO on existing 400kV Babhleshwar-Kalwa line at Padghe (3 Kms) 9\.6\.94
5\. LILO on existing 400kV Lonikand-Kalwa line at Padghe (93 Kms) 28\.3\.97
6\. Stringing of 2nd CKt\. on 400kV Babhleshwar-Kawla D/C tap to 400kV May 96
Padghe S/S (46 Kms)
7\. 400kV Koyna-Karad D/C line (80 Kms) Jan\. 99
8\. 400kVKoyna-Lonikand D/C Line (180 Kms) Feb\.98
9\. Establishment of 400kV Kharghar S/S 26\.3\.99
10\. Establishment of 220kV Malharpeth S/S 17\.3\.92
11\. Establishment of 220kV S/S at Chandrapur MIDC 26\.3\.93
12\. Establishment of 220kV Barshi S/S 13\.12\.91
13\. Establishment of 220kV Jejuri S/S 18\.11\.92
14\. Establishment of 220kV Alephata S/S 18\.3\.93
15\. Establishment of 220 kV Loteparashuram S/S 31\.3\.92
16\. Establishment of 220kV Badnera S/S 22\.3\.94
17\. Establishment of 220kV Jeur S/S 11\.11\.92
18\. Establishment of 220kV Baramati S/S 12\.12\.93
19\. Establishment of 220kV Ichalkaranji S/S 7\.9\.95
20\. Establishment of 220kV Boisar S/S 22\.3\.96
21\. Establishment of 220kV Murud S/S 30\.1\.93
22\. a) Establishment of 220kV Malegaon S/S 8\.12\.95
b) Establishment of 220kV Kharepatan S/S 3\.6\.95
23\. 220kV D/C line between Uran & Kharghar 10\.8\.98
24\. Establishment of 220kV Nerul S/S 31\.3\.95
25\. Establishment of 220kV Peth S/S 28\.3\.96
26\. Establishment of 220kV Halkami S/S 23\.12\.96
27\. Establishment of 220kV Kanhan S/S 27\.10\.96
32
28\. Establishment of 132kV Palghar S/S 18\.2\.95
29\. Establishment of 1 1OkV Kavathe-Mahankal S/S 30\.3\.94
30\. Establishment of 220kV Kurkumbh S/S 20\.10\.93
31\. Establishment of 132kV Kothrud S/S 31\.3\.93
32\. 11 OkV Dudhganga-Radhanagari line (15 Km) 3\.4\.95
33\. Establishment of 132kV Shiroli S/S 8\.3\.93
34\. Establishment of 132kV Dindori S/S 24\.1\.94
35\. Establishment of 132kV Kharadi S/S 21\.12\.96
36\. Establishment of 220kV Vita S/S 20\.12\.96
37\. Establishment of 132kV Dusarbid S/S 18\.8\.93
38\. Establishment of 132kV Kardha S\.S 4\.1\.94
39\. Establishment of 132kV Shirala S/S 23/10/96
40\. Establishment of 132kV Mangalvedha S/S 31\.3\.98
41\. Establishment of 132kV Taloda S/S 2\.9\.92
42\. Establishment of 132kV Bhoom S/S 12\.6\.92
43\. Establishment of 132kV Shevgaon S/S 6\.9\.94
44\. Establishment of 11 OkV Diaganchi S/S 30\.3\.95
45\. Establishment of 132kV Takii S/S 21\.1\.93
46\. Establishment of 132kV Yaola S/S 27\.3\.97
47\. Establishment of 132kV Warwatbalkal S/S 19\.3\.94
48\. Establishment of 132kV Buldhana S/S 7\.10\.93
49\. Establishment of 132kV Ajgaon S/S 23\.3\.95
33
APPENDIX A2
ANNEX II
PROJECT COST SUMMARY
Exchange Rate: Rs\. 31\.5 per US$
MSEB Investment Rs\. (in Millions) US$ (in Millions)
Local Foreign Total Local Foreign Total
TRANSMISSION
(a) Equipment & Material 6064\.92 66\.30 6131\.22 192\.55 2\.10 194\.65
for Transmission
(b) Erection of lines & S/S 613\.12 - 613\.12 19\.46 - 19\.46
(c) Engineering & 468\.86 468\.86 14\.88 14\.88
Administration
DISTRIBUTION
(a) Equipment & Material 2567\.00 2567\.00 81\.49 81\.49
for Transmission
(b) Erection of lines & S/S 256\.70 256\.70 8\.15 8\.15
(c) Engineering& 198\.30 198\.30 6\.29 6\.29
Administration
CONSULTING 15\.62 15\.62 0\.50 0\.50
SERVICES**
TOTAL (I + I) 10168\.90 66\.30 10235\.20 322\.82 2\.10 324\.92
**Portion from unallocated loan amount\.
Note: 1) Item I (b) includes local contracts financed by WB (10\.23M) and MSEB
2) Item 11 (b) includes local contracts financed by MSEB\.
FINANCE PLAN
Exchange Rate: Rs\. 31\.5 per US$
Funding Rs\. (in Millions) US$ (in Millions)
Source
Local Foreign Total Local Foreign Total
MSEB 6854\.31 - 6854\.31 217\.59 - 217\.59
IBRD 3314\.59 66\.30 3380\.89 105\.23 2\.10 107\.33
TOTAL 10168\.90 66\.30 10235\.20 322\.82 2\.10 324\.92
Against total loan amount of 124 M US$, two packages for Bersimis
conductor worth 16\.67 M US$ could not be finalised and hence this
amount is reduced to 107\.330 M US$\.
34
Appendix B
Environmental Impact Issues9
1\. Koyna scheme The environmental impact of the fourth phase of development of the
Koyna hydroelectric scheme was judged at appraisal to be negligible because no new
reservoir was required and all the works were to be undergroundl, except for the small (l/2
hectare) pothead yard where the 400 kV cables are brought up to ground level and connected
to the commencement of the transmission line\. The scheme has been built as envisaged\. In
order to minimize any adverse effect of the construction operations on the environment,
GOMID undertook to restore all construction-affected areas to an environmentally sound
condition by adequate afforestation, and re-afforestation, in the event that any trees had to be
felled, and appropriate treatment to minimize the visual effects of quarries and excavated
rock dumping areas\. These requirement were built into the civil works contracts, which had
been approved by the Bank, and which included specifications for environmental treatment
and bill of quantity items\.
2\. GOMID will ensure that this work is carried out to the high standards already evident on
the portions of the Koyna site, which are associated with Phases I, II and III of the
development\. GOMID has formed an eleven member-strong Environmental Administrative
Committee for Koyna Stage IV, which will advise on the work of landscaping, afforestation,
etc\. It consists of nine members drawn from the Central Water Commission (New Delhi),
Nagpur's Branch, the Directorate of Geodetic Survey Department, (Satara office), the Forest
Department, Karad, the Social Welfare Department, the Public Health Department\. Two
other members are the Retired Deputy Director, Horticulture Department, Ratnagiri and the
Editor of the Koyna Express, Koynanagar\. The work of landscaping, afforestation etc\. in the
project area will be carried out through the Forest Department\. The Forest Department has
prepared and submitted an estimate for afforestation, landscaping, muck area development
etc\. This has been approved by GOM, and funds have been reserved appropriately\. GOMID
has a dedicated site staff, who will ensure completion of the implementation of the work as
described\. However, SAR is budgeting resources for a short follow-up mission to the site in
late FY2000, when the status of the work will be reviewed\.
3\. Transmission and distribution component\. This component consisted of about
1,000 km of transmission lines at voltages of 132 kV to 400 kV\. These lines needed about
7,000 hectares of land for right-of-way for which MSEB was require to obtain clearance of
the Ministry of Revenue and Forests, GOM, and of the Ministry of Environment and Forest,
GOI\. As covenanted, MSEB furnished the Bank, with evidence that such clearances had
been obtained for all the transmission lines prior to their erection\. At appraisal it was noted
that MSEB had to deal with issues involving environmental protection on a number of fronts,
and that because these activities were dispersed throughout different units in MSEB, there
9EA Category rating "C"\.
10 The construction of the intake to bring water from the existing Koyna reservoir into the Stage IV head race
tunnel was performed entirely underground (see text, paragraph 30)\.
35
was no systematic and coordinated approach\. It was thus agreed that MSEB would
establish an Environmental and Forest Affairs Unit\.
4\. MSEB improved on this agreed approach\. A technical assistance component to strengthen
MSEB's environmental capabilities, including the employment of international consulting
expertise, was financed under loan 3498-IN for Chandrapur Unit 7\. The consultant began work
in September, 1994, and the study and training was completed in 1996\. MSEB has since taken
a pro-active approach to the environmental management activities included in the technical
assistance, and has implementing these actions at all its thermal power stations, not just at
Chandrapur\. MSEB has established an Environmental Protection Cell (EPC), whose efforts
to-date have included various environmental impacts studies, and where appropriate the
implementation of the results\. These have included coal quality impacts on power station
financial and environmental performance, comparison of upstream and downstream
environmental controls, alternative boiler technologies and an optimization analysis of coal
washer usage and location\.
5\. Several environmental management activities have been initiated by the EPC, including:
water management systems redesign and construction for "zero discharge" of effluent; air
emissions control improvements; ash utilization studies and pilot projects; occupational
health and safety audits, risk ratings and occupational assessments; institution of a safety
audit and safety rating system; environmental audits; environmental data base; dispersion
modeling; disaster management plans; energy conservation for pollution\.
6\. MSEB has adopted an Environment Health Safety Policy, inter alia, with the
objective to achieve zero water discharges from its several thermal power stations by the year
2000\. The various effluents at the power stations are collected and after treatment the water
is recovered and recycled for appropriate re-use\. Wet ash is collected in
compartmentalized lagoons, settled, and the clear water is available for recycling and reuse\.
At Chandrapur (capacity 2,400 MW), the objective is close to being reached, and in the year
1998/9, 11 million cubic meters of water were recovered from the ash slurry, which is the
amount of water required for 250 MW of annual generation\.
7\. To prevent fly-ash from being wind-blown, MSEB has planted over 2 million trees on
about 1,000 hectares of thermal power station grounds\.
36
Appendix C
Land Acquisition and Resettlement and Rehabilitation Issues
Background
1\. This Appendix relates to the analysis of land acquisition and resettlement elements of
the project and its implementation achievement as on the loan closing date of December 31,
1998\.
Koyna IV - Resettlement and Rehabilitation
2\. Construction of the Koyna IV power plant necessitated the acquisition of 571 hectares
of land from 530 land-owners residing in five villages of Satara and Ratnagiri districts in
Maharashtra\. Of these affected persons, six families also lost their houses\. The land was
used for construction of approach roads, power house, switch yard, muck yard, contractors
colony, etc\. The famnilies were compensated for loss of lands, houses and other assets in
accordance with the "Maharashtra Project Displaced Persons Act"\. In response to Bank's
supervision mission's recommendations in 1992, GOM carried out a socioeconomic survey
to assess the living standards of those affected families\. The objective of the survey was
establish data about the living standards of the affected persons, and to detennine the type of
additional assistance required to improve the living standards in the case of those who were
still living below minimum living standards\. Against this background, this Appendix to the
Implementation Completion Report (ICR) was prepared to assess the implementation
progress of R&R activities including the implementation of economic rehabilitation program\.
Summary of Implementation Performance
3\. In order to assess the performance of the borrower for satisfactory completion of R&R
program, an overall progress on different activities was assessed as on loan closing date of
December 31, 1998\. By that date the GOM had completed the payment of compensation to
affected persons and resettled the 6 displaced families as mentioned in paragraph 6 of the
Project Agreement between IBRD and State of Maharashtra, dated September 11, 1989\.
The economic rehabilitation program prepared in response to Bank's supervision mission's
recommendation is under implementation, and GOM has assured the Bank that it will
complete the implementation by June 1999, and that adequate funds have been earmarked for
this purpose\. The key activities that have been successfully completed by the loan closing
date include: (a) payment of compensation for loss of land and other assets; (b) relocation of
six displaced families in the near-by area by offering alternative house plots; (c) offering
employment in the project to 31 percent of 181 targeted persons; (d) extension of assistance
to 97 percent of 110 targeted familiars to start income generation activities; (e) offering
assistance to 70 percent of 388 targeted families for improvement and upgrading of houses;
and, (f) upgrading and improvement of various civic amenities in three affected villages\. The
summary of R&R activates are shown in Table 1\.
37
Table 1: Status of Resettlement Activities
No Activity Target Achievement Remarks
Enumeration Through Completed A list of 443
consultants and famnilies was
district prepared
administration
2 Payment of compensation for 530 * 530 (100%)
loss of land and other assets
3 Physical relocation 6 * 6 (100%)
4 Assistance for house upgrading 388 households * 262 were given The balance
part assistance works are
(67%) expected to be
* 8 have completed by
completed the June 30, 1999
upgrading (2%)
5 Income generation Activities 110 107 (97%) The remaining
(Below the poverty line) three families will
receive assistance
by January 31,
1999
6\. Employment in the project 181 56 (31%)
6 Civic amenities * Intemal roads The construction
\. Community of civic amenities
toilets are at various
* Upgrading of stages of
water supply completion and
schemes expected to be
* Open drains completed by
* Upgrading of March 31, 1999
community
centers
* Upgrading of
school buildings
4\. Payment of Compensation and Relocation: At the time of appraisal, it was
envisaged that R&R included payment of compensation for loss of assets and the provision
of alternative house sites to those who were physically displaced\. In addition, the provision
of employment opportunities in the project, subject to availability and suitability was also
envisaged\. The project authorities have confirmed that all persons who had lost lands and
houses have been paid compensation, and those six displaced families were provided
alternative sites and that they had completed the construction of alternative houses\. As
regards employment, 31 percent of 181 identified persons were offered employment, and the
remainder were supposed to be provided as and when the vacancies arise\. However, due to
ban on new recruitment by GOM, other families could not be provided employment
subsequently\.
Economic Rehabilitation Action Plan
5\. Socio-economic survey was carried out by GOM with the assistance of local
consultants in 1995-96, to assess the living standards of affected persons and to identify the
type of assistance required for those who are still living below minimum living standards\. In
38
order to extend the assistance, GOM brought out a Government Resolution (GR) dated
December 9, 1997 detailing the economic rehabilitation assistance\. This reflects the
commitment of GOM to extend assistance to those who are living below minimum living
standards\. The type of economic rehabilitation assistance include: (a) housing assistance
(Rs\. 15,000 for agricultural families and Rs\. 10,000 for non-agricultural families) to those
PAPs who are living in kuccha and semi-puce houses in order to upgrade or undertake the
repairs of their houses; (b) assistance (up to Rs\.55,000) for creation or upgrading of irrigation
facilities to those landed PAPs who do not have adequate irrigation facilities; (c) assistance
upto Rs\.18,000 to landless PAPs living below the poverty line to start income generation
activities with a view to raise their living standards; and, (d) construction or upgrading the
basic civic amenities in the affected villages as per "Maharashtra Project Affected Persons
Act"\.
6\. The implementation of the Economic Rehabilitation Program was commenced only
during middle of 1998 and is at various stages of implementation at the time of loan closing
date (Table 2)\.
Table 2: Summary of Implementation of Economic Rehabilitation Program
Target as per Achievement Balance as on Likely date of
Details Implementati as on December 31, completing
on Plan December 31, 1998 Target
1998
1 Housing Upgrading 388 262 (67\.%) 26
30-June-99
(a) No\. PAPs to be given 388 262 (67%) 26
assistance
(b) No\. PAPs who have 388 8 (2%) 280
started repairs
(c )No\. of PAPs completed 3\.66 1\.71 1\.95
repairs
(d) Total (Rs\.million)
II\. Income Generation
Activities 110 9%3Ja319
(a) No\. of PAPs to be given 110 107(97%) 3 Jan-31-99
assistance 2\.03 2\.03 (100%)
(b) Total Cost (Rs\. Million)
III\. Civic Amenities
4\.75 1\.00 3\.75 31-Mar-99
(a)Total Cost (Rs\. Million) I_I_ I I _
7\. (a) Assistance to improve the housing conditions: Based on the existing housing
conditions, 388 families were identified for extending the assistance\. A large number of
families (262) were released first installment and the reports and upgrading are in progress\.
Only 8 households have completed the repairs or upgrading to their houses\. It was expected
that these activities will be completed by June 30, 1999\.
39
8\. (b) Assistance to improve or upgrade irrigation facilities: This component was yet
to be started at the time of the loan closing date\. The project officials informed that digging
of wells or lift irrigation schemes are not suitable in this area\. The lift irrigation scheme was
found to be not feasible from the point of view of recurring expenditure on maintenance\.
The project officials in consultation with the PAPs are exploring various other options to
provide assistance to upgrade their irrigation facilities\. Alternatively, the option of providing
assistance to start self employment activities in lieu of irrigation facilities is being looked
into\.
9\. (c ) Income generation activities: All those landless families living below the poverty
line were given assistance to start self employment activities\. Out of 110 families identified
under this program, 107 families have been offered assistance to start the income generation
activities\. The assistance mostly include for dairy, goat/sheep rearing, tailoring and setting
up of a shop\. This program was implemented with the assistance of a local NGO- Shramjivi
Janata Sahayyak Mandal\. The details of different type of activities funded under Economic
Rehabilitation Program is provided in Table 3\.
Table 3: Details of Income Generation Activities
No Type of Activity No\. of beneficiaries
1 Dairy 72
2 Goat/sheep rearing 13
3\. Grocery shop 3
4 Tailoring 10
5 Others* 10
I Total 107
o others include: restaurant, dry fish shop, welding,
photo studio, etc\.
10\. (d) Improvement of Civic amenities: The implementation of civic amenities is at
various stages\. The improvement of facilities was undertaken in three affected villages-
Vasti, Dicholi and Manainagar\. The facilities undertaken include: internal roads, cross
drainage works, open sewers, community toilets, upgrading of water schemes, upgrading of
primary schools, etc\. The estimated cost of implementing civil amenities has been estimated
at Rs\.4\.75 million\. The details of physical and financial progress for various activities is
shown in Table 4\. It is expected that all civic amenities will be completed by March 31,
1999\.
40
Table 4: Details of Progress on Implementation of Civic Amenities
Target as per Achieved at Balance on Likely date of
Implementation December December completing of
Details Plan 31, 1998 31, 1998 targets
Masonry Gutters (open sewers)
(a) Physical (meters) 1200 350 (35\.%) 850 31-Mar-99
(b) Financial (Rs\.million) 0\.65 0\.15 (23%) 0\.50
2 New Internal Road
(a) Physical (Meters) 40 40 31-Mar-99
(b) Financial (Rs\. Million) 0\.15 0\.15
3 Strengthening of Roads
(a) Physical (Meters) 2350 2350 28-Feb-99
(b) Financial ( Rs\. Million) 0\.76 0\.29 (38%) 0\.47
4 Retaining Wall
(a) Physical ( Cubic meter) 768 545 (71%) 223 28-Feb-99
(b) Financial (Rs\. Million) 0\.73 0\.51 70%) 0\.22
5 Cross Drainage Works
(a) Physical (Numbers) 14 2 (14%) 12 28-Feb-99
(b) Financial (Rs\. Million) 0\.31 0\.05 (16%) 0\.26
6 Asphalting of Internal roads
(a) Physical (Meters) 2095 2095 31-Mar-99
(b) Financial (Rs\. Million) 0\.68 0\.68
7 Community toilets
(a) Physical (Numbers) 13 13 31-Mar-99
(b) Financial (Rs\. Million) 0\.38 0\.38
8 Upgrading of Water Supply Scheme
(a) Physical (Number) 3 3 28-Feb-99
(b) Financial (Rs\. Million) 0\.69 0\.69
9\. Repair/construction of Community
Center 2 2 31-Mar-99
(a) Physical ( Number) 0\.30 0\.30
(b) Financial (Rs\. Million)
10 Upgrading of Primary School
(a) Physical (Number) 1 1 31-Mar-99
(b) Financial (Rs\. Million) 0\.10 0\.10
Total
(a) Physical 31-Mar-99
(b) financial (Rs\. Million) 4\.75 1\.00 3\.75
11\. Action Program for Completing Balance Activities: The R&R activities agreed
under the project include payment of compensation for loss of lands and other asserts and
providing alternative house sites to those who had displaced from their houses\. The payment
of compensation and providing alternative sites to those displaced by the project have been
completed\. GOM has agreed during the supervision of the project to formulate and
implement a Economic Rehabilitation Program to those PAPs who are still living below
minimum living standards\. This plan is currently under implementation and the following
activities were outstanding as on loan closing date (December 31, 1999):- (a) payment of first
and second installment to 126 households and second installment to 254 households for
house upgrading or improvement; (b) finalization and implementation of assistance to
improve or upgrade the irrigation facilities; (c) assistance to three households to start income
generation activities; and, (d) completion of on-going and proposed civic amenities in the
affected villages\.
41
12\. The GOM had committed to complete the implementation of economic rehabilitation
program by June 30, 1999 and the required funds were made available by the irrigation
department to the rehabilitation division who are responsible for implementation of
rehabilitation component\.
Transmission and Distribution Components - Resettlement and Rehabilitation
13\. The exact sites of the proposed sub-stations and transmission routes had not been
identified at the time of appraisal and the likely number of persons, if any, that might be
affected was also not known\. However provisions were made in the project cost estimates
for payment of compensation for acquisition of any private lands should the need for
compensation arise\. All affected persons were to be paid compensation and extended
resettlement provisions in accordance with the Maharashtra Project Affected Persons Act\.
14\. There are very few cumulative adverse impacts due to implementation of transmission
and distribution components because of the nature of the activities\. This is primarily because
the amount of land required for sub-stations was small (330 meters by 300 meters), and for
the transmission routes no land needed to be acquired, because the owners of the land where
the lines passes through will continue to have the right to cultivate the lands even after the
erection of the towers and the overhead lines\. However, wherever the land owners suffered
damages to their standing crops or fruit-bearing trees or any other proprieties, they were paid
cash compensation for the damages suffered by them\. Under the project the total length of
transmission lines erected is about 1,000 km, and none of the persons were adversely affected
due to these activities\. A few people suffered damages to their standing crops and fruit-
bearing trees, when erection during the growing season was inevitable, and they were paid
agreed compensation for the losses\.
15\. In general, sub-stations were sited on vacant government land in order to avoid as
much as possible land acquisition or other adverse impacts\. However in these cases, the
lands were either acquired under the Land Acquisition Act, or through direct negotiations\.
Where the lands were acquired under the Land Acquisition Act, through the Revenue
Department of the Maharashtra State Government, the compensation was paid in accordance
with that Act\. Since the land owners lost only very small portions of their total land
holdings, none of them were severely affected\. Specifically 41 substations were constructed
on a total of 208 hectares (Government owned 78 hectares and the rest was acquired from
private owners)\. 125 persons were affected, and they were all paid compensation\. The total
compensation paid out was Rs\. 33,850,777\. No-one was displaced, and therefore no
resettlement or rehabilitation measures had to be taken\.
42
Appendix D
Financial Overview
1\. MSEB's Financial Position at Project Appraisal\. At appraisal, in FY1989, MSEB
was performing well technically, but there were already signs of financial difficulties
looming in the future\. MSEB sold about 25 billion units at an average rate of 78 Paise/kWh,
which was not sufficient to enable MSEB to cover its costs\. Subsidies of about Rs\. 2 billion
helped MSEB post a small net profit, but were not enough for MSEB to earn the statutory
rate of return of 3% (net income over net fixed assets)\.
2\. At appraisal, in FY1989, MSEB was unable to cover its debt service obligations despite
the subsidy, having,a DSCR of 0\.9\. It was also unable to generate enough internal resources
to contribute towards financing its capital expenditure\. As a result, capital expenditure was
financed entirely out of long tern loans from GOM and other sources\. MSEB's receivables
position from sale of power was already unsatisfactory, and in FYI 989, stood at 3\.8 months
of sales\. Maharashtra had agreed at negotiations to ensure that starting FY1990, MSEB
would maintain its receivables at less than 2\.5 months of sales, and earn an annual return of
3\.0% on its historical net fixed assets in operation, increasing to 3\.5% from FY1992 and then
to 4% from FY 1994 onwards\. Return on net fixed assets continued to remain below the
covenanted level till FY1992\.
3\. MSEB's Current Financial Position at Project Completion\. MSEB performed
better than other state electricity boards during the project period, but its financial position
has deteriorated\. In FY1996,FY1997 and FY1998, MSEB needed significant amounts of
subsidy to achieve a 4\.5% return on its net fixed assets\. In FY 96, while MSEB booked a
subsidy from GOM of Rs\. 6\.3 billion it actually received much less (only about Rs\. 3\.8
billion by adjustment against interest and lease rent due to GOM), leading to a return on net
fixed assets of about 1\.3%\. Even if the write-off of Rs\. 1\.65 billion is excluded, the return
would have been 3\.4%\. While MSEB's operating revenues did not enable compliance with
the DSCR covenant of 1\.0 in FY1991 or 1\.2 in FY1992, since FY1993, MSEB has been in
compliance with the covenant\. Payables on account of fuel and power purchase have reduced
from 2\.3 months in FY1989 to 1\.5 months in FY1998 (though payables increased to 4\.6
months in FY1992)\. MSEB has consistently met the commercial accounts payables covenant
of 2\.0 months since FY1994\.
4\. MSEB's performance on receivables has not been creditable, demonstrating an inability
to function commercially, although it has contained its receivables at slightly above 4 months
of sales (mainly through write-offs of uncollectable dues) over the project duration\. While
MSEB's collection (excluding write-offs) of current bills has improved from 90% in FY1992
to 94% in FY1998, it has been unable to recover dues from specific categories of consumers
such as the Mula Pravara Society\. Despite the Bank's recommendations, MSEB has not been
able to write off the large amounts which are due from the Society and other consumers, even
though MSEB itself considers these to be uncollectable\. As is evident from the table below,
the majority of receivables (as a proportion of sales to the respective categories) are from the
Mula Pravara society and agriculture\. The other significant contributor to the defaults is the
category of public bodies (government departments), accounts which are directly or
indirectly controlled by the govermment\.
43
Analysis of Receivables for Sale of Power (For the year ended March 31, 1998)
Sales Receivables for sale of powert'
(Rs\. Million) < 2 mths 2-6 mths 6-12 mths 1-2 years 2-3 years >3 years Total Receivables
__________ ________ ~~~~~~~~~~~~~~~(mths)
Domestic 8107 568 722 438 366 298 426 2817 4
Commercial 4902 326 337 256 190 164 224 1496 4
Industrial 51986 634 895 700 2029 1386 2409 8052 2
Agriculture 3301 284 1519 1442 1120 1003 1106 6473 24
Mula Pravara 58 0 0 0 0 0 3108 3108 641
Public bodies 6536 590 523 496 195 228 1051 3083 6
Others 16765 0 0 0 27 654 19 700
Total \. 91656 2401 3996 3332 3926 3732 8342 25729 3
a/: I he totals do not mauch the auicted ttgurcs smce these numbers do not wclude some accius _
5\. MSEB is a clear case of a good utility being constrained by the priorities of the state
government\. An example of this is the fact that MSEB's request for a tariff increase of 13%,
effective April 1998, was delayed until September because of elections in the state\.
Similarly, although MSEB's receivables from certain categories of consumers have been
increasing, GOM has frequently issued orders restricting MSEB from taking corrective or
punitive action against them\. MSEB's dependence on GOM for tariff increases, belatedly
allowed, has resulted in a tariff structure which penalizes commerce and industry too highly
for their use of bulk-generated electrical energy\.
6\. Due to Maharashtra's unwillingness to allow increases in the tariffs for agricultural
consumers, commercial and industrial consumers have experienced repeated tariff increases,
and this has resulted in large cross-subsidization\. The consumer category which includes
large industrial users, currently pays about Rs\. 3\.7/kWh, while agricultural consumers on
average pay only about Rs\. 0\.25/kWh, compared to an average MSEB cost of supply of about
Rs\. 2\.3 1/kWh\. As a result, and to avoid paying the industrial tariff, industries are increasingly
depending on captive generation at uneconomic costs, i\.e\. above MSEB's costs of
production; and the position will worsen further (see next paragraph), when tariffs again have
to be increased\.
7\. While MSEB has been able to raise the requisite level of finances to meet its planned
capital expenditures, the situation is expected to deteriorate in the next few years\. When the
expensive private power comes on stream, MSEB's finances will be badly impacted, and the
situation will worsen because MSEB will have to frequently back down its own low-cost
generation in order to fulfil the contractual obligations which MSEB has entered into with the
independent power producers\. MSEB's ability to generate sufficient internal resources to
contribute meaningfully towards capital expenditure will be impaired severely, and MSEB
will increasingly have to depend on borrowings to finance its investment plan, and perhaps
even for operating and working capital needs\.
8\. The ability of the Maharashtra power sector to avoid this scenario, and indeed, its very
financial viability, hinges (a) on it having the requisite operational and managerial autonomy,
along with an incentive system which encourages reduction of inefficiencies, to enable it to
operate effectively as a commercially oriented utility, and (b) on it being allowed tariffs
44
which increasingly (even if gradually, in some cases) move towards recovering cost of
supply from each category of consumers\. It is unlikely that these will happen in the absence
of comprehensive reforms which distance the sector from the state government, which
enables independent regulation and which brings in commercially-oriented, private
ownership and management in distribution\.
India
Second Maharashtra Power Project (LN 3096-IN)
MSEB's Financial Performance - FY 89 to FY 98(see Table next page, for support data)
Financial Year ending FY 89 FY 90 FY 91 FY 92 FY 93 FY 94 FY 95 FY 96 FY 97 FY 98
March 31
Covenants
Retum on Net Fixed Assets
Covenant 0\.0% 3\.0% 3\.0% 3\.5% 4\.5% 4\.5% 4\.5% 4\.5% 4\.5% 4\.5%
Actual 1\.4% 0\.5% 2\.6% 3\.0% 5\.2% 4\.8% 4\.7% 1\.3% 4\.5% 4\.5%
Receivables (months)
Covenant - 2\.5 2\.5 2\.5 2\.5 2\.5 2\.5 2\.5 2\.5 2\.5
Actual 3\.8 3\.8 4\.0 4\.5 4\.6 4\.6 4\.4 4\.2 3\.7 4\.0
Payables - fuel, power (months)
Covenant 0\.0 3\.5 3\.0 2\.0 2\.0 2\.0 2\.0 2\.0 2\.0 2\.0
Actual 2\.3 2\.5 2\.2 4\.6 5\.0 1\.9 1\.7 1\.6 1\.8 1\.5
DSCR
Covenant - - 1\.0 1\.2 1\.2 1\.2 1\.2 1\.2 1\.2 1\.2
Actual 0\.9 0\.9 0\.9 1\.0 1\.2 1\.2 1\.4 1\.5 1\.4 1\.3
SFR (excluding subsidies)
Covenant 0 0 0 0 20\.0% 20\.0% 25\.0% 25\.0% 25\.0% 25\.0%
Actual -46\.3% -19\.4% -8\.4%, 11\.6% 27\.4%, 11\.2% 38\.3% -2\.3% 40\.1%1 -7\.0%
45
India
Second Maharashtra Power Project (LN 3096-IN)
MSEB's Financial Performance - FY 89 to FY 98
Actual performance vis-a-vis SAR forecasts
(Values in Rs\. million)
Financial Year FY 89 FY 90 FY 91 FY 92 FY 93 FY 94 FY 95 FY 96 FY 97 FY 98
ended March 31 Act SAR Act SAR Act SAR Act SAR Act SAR Act SAR Act SAR Act Act Act
estimate estimate estimate estimate estimate estimate estimate
Sales (GWh) 24,981 25,698 26,972 29,501 28,414 32,625 30,472 35,640 31,454 37,744 34,562 37,787 37,763 41,038 41,619 42,698 43,894
Average Revenue (Rs/kWh) 0\.78 0\.75 0\.82 0\.78 1\.02 0\.83 1\.08 0\.90 1\.37 1\.00 1\.51 1\.11 1\.61 1\.22 1\.69 1\.99 2\.09
OperatingIncome 2,984 3,684 3,271 4,090 5,035 5,084 6,719 6,434 9,258 7,634 10,164 9,268 10,226 11,568 10,840 11,095 12,264
Net Income 395 1,372 143 1,338 855 1,710 1,253 2,096 2,721 2,368 2,889 3,259 3,208 4,287 3,496 3,466 3,423
Intemal Sources 4,862 5,423 6,714 6,332 9,507 7,729 10,805 9,778 15,643 11,551 17,938 13,394 19,362 17,065 18,092 24,828 22,520
Borrowings 10,166 5,985 9,084 8,405 12,310 12,326 8,348 13,629 9,103 15,012 8,033 19,260 11,364 22,662 7,652 13,825 24,700
Total Sources 15,028 11,408 15,798 14,737 21,816 20,055 19,153 23,407 24,746 26,563 25,971 32,654 30,726 39,727 25,744 38,653 47,220
Capital Expenditure 8,680 8,064 10,517 10,420 12,228 14,321 12,680 15,697 13,736 17,126 11,784 22,406 15,145 26,786 15,448 19,931 20,431
Working Capital Changes 1,611 (521) (63) (443) 1,939 135 (2,533) 585 449 830 1,841 209 3,404 1,248 (2,214) 3,820 10,092
Debt Service 4,737 3,865 5,342 4,761 7,650 5,599 9,007 7,125 10,562 8,606 12,344 10,040 12,178 11,693 12,510 14,902 16,697
Total Applications 15,028 11,408 15,797 14,738 21,817 20,055 19,154 23,407 24,747 26,562 25,969 32,655 30,727 39,727 25,744 38,653 47,220
CurrentAssets 13,902 12,111 16,125 12,901 18,392 14,291 22,771 16,198 29,383 18,473 28,628 20,005 33,775 23,196 44,214 41,797 54,779
LessCurrentLiabilities 17,104 10,679 20,516 11,913 22,539 13,168 30,551 14,490 38,335 15;935 37,766 17,259 34,834 19,201 44,239 42,158 47,596
(3,201) 1,432 (4,392) 988 (4,147) 1,123 (7,780) 1,708 (8,952) 2,538 (9,138) 2,746 (1,059) 3,995 (26) (361) 7,183
NetFixedAssets 52,571 51,819 61,637 60,510 72,153 72,720 82,909 85,768 93,164 99,761 100,698 118,578 108,930 140,991 115,969 126,794 141,513
Total Assets 49,369 53,251 57,246 61,498 68,006 73,843 75,129 87,476 84,212 102,299 91,561 121,324 107,871 144,986 115,944 126,433 148,696
Debt 44,502 47,829 51,372 54,224 60,211 64,326 65,019 75,167 70,096 86,839 73,060 102,069 64,478 120,319 66,964 73,516 90,361
Equity 4,868 5,421 5,877 7,273 7,797 9,517 10,111 12,309 14,115 15,460 18,502 19,255 43,394 24,660 48,980 52,918 58,336
Total Debt+ Equity 49,369 53,250 57,249 61,497 68,009 73,843 75,130 87,476 84,211 102,299 91,562 121,324 107,872 144,979 115,944 126,434 148,696
Ratios:
Rate of Retum (Gol) 1\.4% 2\.9% 0\.5% 2\.9% 2\.6% 3\.0% 3\.0% 3\.5% 5\.2% 3\.5% 4\.8% 4\.0% 4\.7% 4\.0% 1\.3% 4\.5% 4\.5%
RateofRetum(Before 10\.7% 10\.1% 10\.9% 9\.6% 15\.1% 9\.3% 16\.2% 9\.4% 17\.8% 10\.0% 16\.9% 10\.5% 15\.1% 10\.2% 13\.9% 14\.4% 16\.1%
Interest)
NICGas%ofCapital -46\.3% 32\.9% -19\.4% 11\.0% -8\.4% 8\.1% 11\.6% 11\.1% 27\.4% 12\.9% 11\.2% 19\.0% 38\.3% 21\.4% -2\.3% 40\.1% -7\.0%
Expenditure
Debt Service Coverage 0\.9 1\.3 0\.9 1\.2 0\.9 1\.3 1\.0 1\.3 1\.2 1\.3 1\.2 1\.3 1\.4 1\.4 1\.5 1\.4 1\.3
Current Ratio 0\.8 1\.1 0\.8 1\.1 0\.8 1\.1 0\.7 1\.1 0\.8 1\.2 0\.8 1\.2 1\.0 1\.2 1\.0 1\.0 1\.2
Debt as % of Debt+Equity 0\.90 0\.90 0\.90 0\.88 0\.89 0\.87 0\.87 0\.86 0\.83 0\.85 0\.80 0\.84 0\.60 0\.83 0\.58 0\.58 0\.61 | APPROVAL |
P146003 |  PROJECT INFORMATION DOCUMENT (PID)
APPRAISAL STAGE
Report No\.: 83309
Project Name ADDITIONAL FINANCING FOR PRODUCTIVE
PARTNERSHIPS IN AGRICULTURE
Region EAST ASIA AND PACIFIC
Country Papua New Guinea
Sector Crops (50%); Rural and Inter-Urban Roads and Highways (25%);
Agricultural extension and research (15%); General agriculture,
fishing and forestry sector (10%)
Project ID P146003
Parent Project ID P110959
Borrower(s) INDEPENDENT STATE OF PAPUA NEW GUINEA
Implementing Agency
National Department of Agriculture and Livestock
PO Box 2033
National Capital District
Papua New Guinea
Tel: (675) 321-4096 Fax: (675) 321-1387
abenjamin@datec\.net\.pg
Coffee Industry Corporation Ltd (CIC)
PO Box 137
Goroka
Eastern Highlands Province
Papua New Guinea
Tel: (675) 732-1266 Fax: (675) 732-1431
navicic@daltron\.com\.pg
Cocoa Board of Papua New Guinea
PO Box 352
Kokopo
ENB Province
Papua New Guinea
Tel: (675) 982-9083 Fax: (675) 982-8712
cocao_board@global\.net
Environment Category [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared November 14, 2013
Date of Appraisal November 26, 2013
Authorization
Date of Board Approval February 28, 2014
1\. Country and Sector Background
1\. The country and sector context remains largely unchanged since the Project was
approved in 2010\. PNG is a resource-rich, lower middle income country of approximately 7\.2
million people, with a dual economy\. The modern extractive sector draws on substantial reserves
of metal ores and hydrocarbons and accounts for more than a third of GDP, but generates only a
small fraction of employment\. The majority of the population (86 percent) resides in rural areas
and is largely dependent on semi-subsistence agriculture\. Agriculture accounts for approximately
a third of GDP and the sector is dominated by smallholder farming systems\. Coffee and cocoa
are the main cash crops, with respectively over 30 percent and 20 percent of the total labor force
at national level involved in their production, processing and sale\.
2\. The Productive Partnership in Agriculture Project (PPAP) supports the development of
the cocoa and coffee value chains\. For cocoa, approximately 20 percent of PNGâs rural
population is engaged in cocoa production, processing and sale\. About 85 percent of Papua New
Guineaâs cocoa is produced on small holdings by an estimated 150,000 families\. Cocoa is the
largest single source of income in East New Britain Province and the Autonomous Region of
Bougainville\. The cocoa sector itself has been devastated by the emergence of cocoa pod borer
(CPB)\. CPB-tolerant clones of cocoa and these could be used to scale and accelerate the industry
cocoa response to CPB\. For coffee, approximately 2\.5 million people in the country, over one
third of the population, are dependent on coffee production, processing and sale for their
livelihood\. However, productivity is low, with yields on average 30-50 percent of their potential,
and quality has also been deteriorating\.
3\. Both for coffee and cocoa production, smallholder farmers are faced with similar
constraints and significant market failures that impede their performance and their ability to
respond to market signals\. They are disadvantaged by significant diseconomies of scale resulting
in high transaction costs and limited market access\. Without appropriate intervention to control
the rapid spread of the cocoa pod borer (CPB), the CPB threatens to devastate the economies of
provinces highly reliant on cocoa\. Similarly, reversing the long-term decline in coffee production
would boost incomes and improve livelihoods among some of the most disadvantaged and
remotely located households of the country\.
4\. Agribusiness enterprises and traders are critical for communicating market demand to
producers and establishing value chains that effectively link them to the market\. Fostering a
scaling-up of those market-oriented interventions is expected to partly offset the limited outreach
of public institutions in improving the productivity and quality of smallholder cocoa and coffee
and in addressing the dire threat of the CPB\.
5\. The provision of additional finance would also enable the Project to focus on the gender,
literacy/numeracy and nutrition-related activities and to ensure that women and other
disadvantaged groups fully share in benefits from the Project\.
2\. Project Development Objective
6\. Project Development Objective\. The Project Development Objective (PDO) of PPAP is
to improve the livelihoods of smallholder cocoa and coffee producers through the improvement
of the performance and the sustainability of value chains in cocoa- and coffee-producing areas\.
The AF would not affect the scope of the original PDO\. However, the PDO is too broad
compared to the limited geographical scope of the project\.
7\. In order to better align the PDO with the scale and coverage of the Project, the
reformulated PDO is to improve the livelihoods of smallholder cocoa and coffee producers
supported by the Project\.
8\. Project Outcome Indicators\. Compared to the parent Project, the Results Framework of
the AF have been simplified to better align the PDO with the scale and coverage of the Project\.
3\. Project Description
9\. Proposed Components\. The AF would finance and help scale up the original Projectâs
components, as described below:
10\. Component 1: Institutional Strengthening and Industry Coordination (US$ 15\.4 million
total; US$ 8 million IDA; US$ 5\.8 million IFAD; US$ 0\.4 million EU; US$1\.2 million
GoPNG/Beneficiaries)\. The specific objective of this component would remain the same as
under the original project: it would be to improve the performance of sector institutions and to
enhance industry coordination in the cocoa and coffee sectors\. The AF would extend the support
to sector institutions until 2019, which would further reinforce the capacity of these institutions
in coordinating industry activities and help to facilitate the sustainability of their operations\.
Specifically, this component would retain the same four subcomponents as the original Project:
a\. Subcomponent A: Industry coordination and policy development:
b\. Subcomponent B: Communication and information management systems:
c\. Subcomponent C: Quality and sustainability management:\.
d\. Subcomponent D: Project management and monitoring and evaluation (M&E)\.
Technical Assistance (TA) and the operations of the Technical Appraisal Committee
(TAC) under Component 2\.
11\. Component 2: Productive Partnerships (US$ 35\.7 million total; of which US$ 11\.9
million IDA; US$ 8\.8 million IFAD; US$ 3\.6 million EU; and US$11\.4 million
GoPNG/Beneficiaries)\. The specific objective of this component, as in the original Project,
would be to increase the integration of smallholder producers into performing and remunerative
value chains\. The component would have the same two subcomponents as in the original Project\.
a\. Subcomponent A: Productive Partnerships in Cocoa Growing Areas (US$4\.7 million
IDA; US$3\.4 million IFAD; and US$ 3\.6 million EU): This subcomponent would
continue to finance result-oriented partnerships in cocoa growing areas to increase
smallholder productivity, quality and sustainability and improve faming systems\.
b\. Subcomponent B: Productive Partnerships in Coffee Growing Areas (US$ 7\.2 million
IDA and US$5\.3 million IFAD): This subcomponent would continue to finance
result-oriented partnerships in coffee-growing areas to increase smallholder coffee
productivity, quality and sustainability and improve coffee-farming systems
12\. The partnerships would be demand-driven and consistent with the specific priorities
identified in each subsector, as is currently done under the original Project\.
13\. Component 3: Market Access Infrastructure (US$ 21\.9 million total; 10\.1 million IDA;
US$ 7\.4 million IFAD; US$ 2\.4 million EU; and US$ 2 million GoPNG/Beneficiaries)\. As in the
original Project, the specific objective of this component would be to improve market access for
smallholder cocoa growers in the areas targeted under Component 2 of the Project\. The two
subcomponents would remain unchanged:
a\. Subcomponent A: Preparation of market access infrastructure investments\.
b\. Subcomponent B: Market access infrastructure development\.
14\. The expansion of the Project into new areas would increase the demand for additional
infrastructure to facilitate access to markets\. The AF would finance activities related to the
identification and selection of infrastructure rehabilitation and maintenance needs
(Subcomponent A) and to the actual investments in infrastructure rehabilitation and maintenance
(Subcomponent B)\.
15\. Project Cost and Financing Arrangements\. The overall project cost is estimated at
US$ 73\.0 million, and includes a US$ 30 million IDA Credit, US$ 6\.4 million equivalent (EUR 5
million) in EU Grant, US$ 4\.5 million in minimum GoPNG counterpart funding, US$10\.1
million from the private sector (including farmersâ contribution), and an estimated US$22
million in IFAD funds\. Table 1 shows a revised financing plan and Table 2 provides revised
costs by component for PPAP and the additional financing\. IFAD funding is to be confirmed
before appraisal and the minimum GoPNG counterpart funding will be confirming during Project
appraisal\.
4\. Financing
Source: ($m\.)
BORROWER/RECIPIENT 4\.5
Private Sector 10\.1
European Union (Cocoa component) 6\.4
International Fund for Agricultural Development (IFAD) 22\.0
International Development Association (IDA) 30\.0
Total 73\.0
5\. Implementation
16\. Implementation will be carried out by the National Department of Agriculture and
Livestock, the Coffee Industry Corporation Ltd (CIC), and the Cocoa Board of Papua New
Guinea
6\. Safeguard Policies (including public consultation)
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment OP/BP 4\.01 X
Natural Habitats OP/BP 4\.04 X
Forests OP/BP 4\.36 X
Pest Management OP 4\.09 X
Physical Cultural Resources OP/BP 4\.11 X
Indigenous Peoples OP/BP 4\.10 X
Involuntary Resettlement OP/BP 4\.12 X
Safety of Dams OP/BP 4\.37 X
Projects on International Waterways OP/BP 7\.50 X
Projects in Disputed Areas OP/BP 7\.60 X
7\. Contact point
World Bank
Contact: Kofi Nouve
Title: Senior Agriculture Economist
Tel: 5740+6580 / + 61 2 9235 6580
Email: knouve@worldbank\.org
Location: Sydney, Australia (IBRD)
Borrower/Client/Recipient
Name: Department of Treasury
Contact: Hon\. Don Pomb Polye
Title: Minister for Treasury
Tel: (675) 312-8817
Email:
Implementing Agencies
See above (first page)
8\. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Email: pic@worldbank\.org
Web: http://www\.worldbank\.org/infoshop | APPROVAL |
P074015 | Page 1
PROJECT INFORMATION DOCUMENT (PID)
CONCEPT STAGE
Report No\.: AB2107
Project Name
Protection of Basic Services
Region AFRICA
Sector
General public administration sector (100%)
Project ID
P074015
Borrower(s)
FEDERAL DEM\. REPUBLIC OF ETHIOPIA
Implementing Agency
Ministry of Finance and Economic Development
Environment Category
[ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared
January 19, 2006
Estimated Date of Appraisal
Authorization
January 24, 2006
Estimated Date of Boa
rd Approval
March 23, 2006
1\.
Key development issues and rationale for Bank involvement\.
While the Government of Ethiopia remains committed to poverty reduction and maintaining the level of basic
services for the poor, events of the past half year have created significant new risks for the smooth continuation of
economic and social development in Ethiopia\. At present, the Government faces both a critical drop in its ability
to continue financing and scaling up pro-poor services, and also to maintain its scaled up investment plans which
were intended to stimulate accelerated growth\. The effects of the deterioration in political governance an
d
the civil
disturbances threaten to spill over into the economic sphere\. They may also contribute to a reversal in important
gains made in human development and social indicators by not maintaining the provision of critical basic services
for the poor, thereby increasing their vulnerability and undermining the achievement of longer-term goals
including the MDGs\.
The World Bank has an important stake in helping Ethiopia avoid a sharp decline in the provision of critical
services for the poor\. Ethiopia
which, unlike many other countries is heavily reliant on public service
provisionhas made important gains in recent years, especially on human development indicators and reduced
isolation in rural areas, improvements in the investment climate, small town development, and the fight against
chronic food insecurity in rural areas\.
Given the recent political and economic developments, the Bank is suspending preparation of a new CAS for
Ethiopia\. Instead, the Bank will prepare an Interim Strategy Note covering the coming 12-18 months, with special
focus on providing support to avert a macroeconomic crisis and a deterioration of economic governance, while not
abandoning the provision of critical support for poor people and growth, and preserving upside potential by
protecting institutional capital\. As a first step, the Bank is stopping its budget support via the PRSC series, which
was providing support for key policy reforms and for an increase in financing for basic services at the
decentralized level\. In order that the funding for basic service delivery can be protected at budget levels, and
macroeconomic stability can be preserved, the Bank and DFID are however proceeding with the proposed
operation that could support basic services in the current fiscal year and next\.
2\.
Proposed objective(s)\.
The development objective of the proposed operation is to prevent a reversal in gains made in human development
results by protecting the delivery of critical basic services to the poor in Ethiopiaespecially at the local
government levelin the midst of political governance and macroeconomic fragility\. To achieve this, the
Page 2
proposed operation aims to: (i) enable poor households to maintain investments in the education and health of
their children and access to improved extension services; (ii) maintain predictable and adequate financing for
front-line service delivery through local governments; (iii) re-inforce and protect the vertical division of revenues
across the different tiers of Government; (iv) maintain institutional capital in terms of the capacity of the public
sector to deliver basic services; (v) reduce the burden of the current situation on the poor; and (vi) promote
transparency and accountability in service delivery\.
The proposed operation is regarded as a transitional operation as part of the Interim Strategy Note\. Once ISN
conditions for reverting back to a full IDA CAS and rage of ODA instruments
including direct budget support have
been met, it is expected that the need for this transitional operation will have passed\.
3\.
Preliminary description
\.
The proposed operation will have four components:
Component 1: Basic Services Block Grant to Regional Governments\. The core of the proposed
operation, Component 1 would provide grants to Regional Governments as a matching grant to
Governments continued provision of treasury resources to the Regions via the Regional Block Grant\.
These grants would in turn be used to protect the provision of critical basic services to the poor\. The
component will specifically aim to support services in certain key sectors that are deemed to be of
highest priority\.
Component 2: Health Commodities Fund\. This component would finance the establishment of a Health
Commodities Fund through which in-kind transfers to local governments would be made to finance
goods essential
for effective primary health services (bed nets, contraceptives, and vaccines) and that have high impact on services
for the health MDGs\.
Component 3: Budget Execution Transparency and Results Monitoring\. This Component would finance
technical assistance and systems development required to: a) improve the quality, quantity, dissemination and use
of data on key results; b) improve the frequency of fiscal reporting; c) Joint Budget and Aid Review (JBAR)
reviews between Federal, Regional and Bank authorities to be conducted on quarterly basis; d) elimination of
backlog on closure of Federal accounts; e) fiduciary assessment; f) roving audits; and g) publication of declared
woreda budgets\.
Component 4: Social Accountability Fund\. Through the establishment of the Social Accountability Fund, this
Component would undertake activities to enhance both communitys voice in service delivery decision-making,
and social accountability in services delivery\.
4\.
Safeguard policies that might apply
\.
Environmental safeguard is triggered by the Health Fund Components likely financing of vaccines and therefore
the proposed operation has been given an Environment Assessment of Category B\. To mitigate the potential
negative impact on the environment, the Medical Waste Management Plan that has
been prepared and disclosed for
another operation, will be re-disclosed for the proposed operation prior to appraisal\. Regarding Component 1, no
safeguards are expected to be triggered since block grants to Regions would largely cover operating costs\.
Page 3
5\. Tentative financing
Source:
($m\.)
BORROWER/RECIPIENT
INTERNATIONAL DEVELOPMENT ASSOCIATION
OTHER
Total
6\. Contact point
Contact: Trina S\. Haque
Title: Lead Economist
Tel: (202) 458-5775
Fax: (202) 473-8107
Email: Thaque@worldbank\.org | APPROVAL |
P114838 | Documentof
The World Bank
FOR OFFICIAL USEONLY
ReportNo\.: 46458-MD
PROJECTPAPER
ON
PROPOSEDADDITIONAL FINANCING CREDIT
(IDA CreditNo\. 4555)
INTHEAMOUNT OFAN SDR3\.4MILLIONCREDIT
(USDEQUIVALENT 5 MILLION)
TO THE
REPUBLIC OF MOLDOVA
FOR THE SOCIAL INVESTMENTFUND I1PROJECT
February26,2009
HumanDevelopmentSector Unit
Ukraine, Belarusand MoldovaCountry Unit
Europeand Central Asia Region
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties\. Its contents may not otherwise be disclosedwithout
World Bank authorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective January 30,2009)
Currency Unit = Moldovan Leu
MDL10\.575 = US$1
MDL 13\.5299 Euro 1
USD1\.51123 = SDRl
FISCAL YEAR
January 1 - December31
ABBREVIATIONS AND ACRONYMS
BP World Bank Procedure
CPS Country Partnership Strategy
ECA Europe and Central Asia Region
EGPRSP Economic Growth and Poverty Reduction Strategy Paper
EC EuropeanCommission
GPs World Bank Good Practice statement
IDA International Development Association
ILO International Labor Organization
FI Financial Intermediary
M&E Monitoringand Evaluation
MDL Moldovan Leu
MSIF-I (First)Moldova Social Investment Fund
MSIF-I1 SecondMoldova Social Investment Fund
NDS National Development Strategy
OP World Bank Operational Policy
SIDA Swedish International Development Cooperation Agency
i Vice President: Shigeo Katsu
Country ManagedDirector: Martin Raiser
Sector Director Tamar Manuelyan Atinc
Sector Manager: Kathy Lindert
Task Team Leader: MenahemPr wes
FOR OFFICIAL USE ONLY
MOLDOVA
AdditionalFinancingto the Social InvestmentFundI1Project
CONTENTS
Page
I\. Introduction \. 1
I1 Background and rationale for Additional Financing inthe amount o f US$5 million\.1
111\. Proposed Additional Financing \. 5
IV Consistency with the CPS\. 6
V \. Appraisal o f restructuredor scaled-up project activities\. 7
VI\. Expected Outcomes \. -9
VI1\. Benefits and risks\. 10
VI11 \. Financial terms and conditions for the Additional Financing \. -10
List of Tables
Table 1: Disbursements for IDA Credit No 393 1\.
\. 2
Table 2: Selected Output Indicators for Participatory Community Sub-projects \. - 3
Table 3: Selected Output Indicators for the Social Care Services Pilots \. 3
Table 4: Selected Outcome Indicators\. 3
Table 5: Summary of Difference inthe Difference Measures o f Project Outcomes\. 4
Table 6: Outputs from the Additional Financing\. 5
Table 7 : Maximum Size of Project Grants\. 6
Table 8: Budgetfor the Additional Financing by Category o f Expenditure and by Source o f
Financing\. 6
Table 9: Outcome Indicators for the Additional Financing\. 9
List of Annexes
Annex 1: Project and Additional FinancingTeam\. 11
Annex 2: Moldova SIF I1ProcurementPlan for Additional Credit (in US dollars) \. 12
This document has a restricted distribution and may be used by recipients only in the performance o f
their official duties\.Its contents may not be otherwise disclosed without World Bank authorization\.
PROJECTPAPERDATA SHEET
Country: Republic of Moldova Sector Director: Tamar Manuelyan Atinc
Project Name: Additional Financing to the Country Director: Martin Raiser
Environmental Category: FI
Recipient: Republic of Moldova
Responsibleagency: Moldova Social Investment Fund
P
Revised estimateddisbursements (Bank FY/US$m)
FY 2010 2011 2012
Annual 1\.o 3\.0 1\.o
Cumulative 1\.O 4\.0 5\.0
Current Closing Date: March 31, 2010
Have these beenapproved by Bank management?
I s approval for any policy exception sought from the Board?
\.
Revised project development objective/outcomes:
No changes to the project development objectives are proposed\.
The original key monitoringindicators were expandedand refined to measureproject
outcomes more effectivelv\. The revised indicators are inthe Proiect PaDer\.
For Additional Financing
[ ] Loan [XICredit [] Grant
For Loans/Credits/Grants:
Total Bank financing: SDR 3\.4 million (US$5 million equivalent)
Proposedterms: IDA Credit with a 10-year grace period and40 years to maturity\.
Financing Plan (US$m\.)
Source Local Foreign Total
Recipient 0\.2 0\.0 0\.2
IDA
Communities
I\. Introduction
1\. This ProjectPaper seeks the approvalofthe ExecutiveDirectorsto providean additionalCredit in an
amount of US$5 million to the Republic of Moldova for the Social InvestmentFund I1 Project (MSIF 11)\.
There will be no changes inthe original Project's development objectives\.
2\. The original MSIF I1Projecttrains local governments and communities, funds part of their proposed
infrastructureinvestments (sub-projects), and helps six pilot rayons (districts) to deliver social care services
to vulnerable groups\. The Additional Financing scales-up activities to enhance the impact of a well-
performing Project\.
3\. The Additional Financingfocuses support ontraining of local governments and small grants for their
sub-projects\. To achieve this, the Additional Financing extends support to poor villages that have not
benefitedfrom the Project (`new villages'), with a preference for villages damaged by floods in the summer
of 2008; it also delivers further support to small towns\. In both villages and small towns, the Additional
Financingwould help local governments to consult within their communities, plan for local developments,
and then would support the priority infrastructure sub-projects identified in their plans through grants\. The
beneficiary villages would be selected through a competition based on the indicators of deprivation and on
their proposals\. Small towns on the Prut and Dniester Rivers, most affected by the flood, will be selected
basedon the "first come, first served" principleand on their proposals\.
11\. Backgroundand rationalefor AdditionalFinancinginthe amountof US$5 million
4\. Moldova's has had a strong record of macroeconomic stability and growth in recent years\. The
Russian financial crisis of 1998-99 caused a severe contraction in Moldova\. Since then, GDP recovered
vigorously\. Cumulative growth of GDP over 2004-2007 reached an impressive 25 percent\. The economy
has been resilient to a number of external shocks, including sharp increases in natural gas prices, a Russian
ban on importing wine from Moldova, and a drought in 2007 that reduced agricultural production by 30
percent\.
5, Moldova's economic recovery moved 40 percent of the populationout of poverty between 1999 and
2004\. Despitecontinued growth of GDP, poverty reduction stalled in 2004 and 2005\. From 2006 to 2007,
poverty reduction resumed as remittances boomed and as strong investment in construction, increased
salaries - even though agricultural harvests sufferedbecause of a severe drought inthe summer of 2007\.
6\. The Moldovaneconomy and poverty rate are vulnerableto the financial crisis\. Workers' remittances
accounted for around 38 percent of GDP in 2008 - a modest increase from previousyears\. The high inflow
of remittances fuels consumer spending, housing investment, and the construction industry\. But this also
exposes the economy to risks of a regional downturn\. Already there are signs that remittances might have
slowed and some workers might have returned\. Ongoing increases in natural gas prices necessitate
adjustments in an economy that is still inefficient in its energy use\. The World Bank supports actions,
through the new Country Partnership Strategy, to mitigate the likely consequences of the financial crisis\.
The Additional Financingfor the MSIF-I1is one of these actions\.
7\. The project development objectives are to support Moldova's Economic Growth and Poverty
ReductionStrategy Paper (EGPRSP) and to empower poor communitiesand vulnerablepopulationgroups to
manage their priority development needs\. The EGPRSP ran its term to expiration and has been replaced by
the NationalDevelopmentStrategy (NDS)\.
8\. The original Project became effective on September 15, 2004, with an IDA Credit of US20 million
and total financing of US$29\.17 million\. The rating on the last Implementation Status Report (ISR) is
`Highly Satisfactory' andthe Project received an unqualifiedreport on its last financialaudit\.
1
9\. Component 1supports community mobilizationto select, fund, and operate sub-projects that help to
solve their priority problems (US$17\.38 million of the original IDA credit)\. Local governments and
community members contribute part of the funds for these sub-projects, which are typically rehabilitationof
decayed community infrastructuresuch as schools, natural gas connections, roads, and water supply\. The
original Component supports some small-scale new construction, such as extension of village water and
naturalgas pipes\.
10\. MSIF I1funds community sub-projects throughthese sub-components:
(a) Rural community development: grants for sub-projects to rural communities that did not
benefitfrom MSIF-1and are unfamiliarwith its participatorymethods\.
(b) Rural community-drivendevelopment: supports the preparationof strategic plans in villages
that benefittedfrom MSIF-1 and then contributesa small grant to realizationof a sub-project
inthe Plan\.
(c) Small town community-driven development\. Similar to (b), but assists small towns rather
than villages
11\. Component 2 supports the development of a network of social care services in six pilot rayons
(districts) with US$l\.16 of the original IDA credit\. In addition, the Swedish International Development
CooperationAgency (SIDA) generously supports realization of Component 2 through a grant for US$3\.3
million\. The component helps rayons to prepare integratedplans for delivery of social care services\. Then it
funds priority investments in each plan\. This benefits vulnerable groups such as children left behind by
parents who emigrated, people with disabilities, and the elderly, by delivering social services in their home
village or town, ratherthan forcing them into distantresidentialcare\.
12\. Component 3 of the Project supports a program to deliver over 33,000 person-daysof training with
US$0\.42million of the IDA Credit, to community leaders, including mayors and council members, and to
social service professionals\. The component also supports communication and monitoring & evaluation\.
Component 4 supports project managementand absorb US$l\.O4million ofthe IDA credit\.
13\. Implementationof the Project is runningahead of schedule\. The Project has disbursed 90 percent of
the total available financing and 78 percent of the IDA Credit (Table 1)\. It has already exceeded the
objectivefor community infrastructuresub-projects set inthe ProjectAppraisal Document andthen increased
the objective\. MSIF has completed 87 percent of its new objectivefor infrastructure sub-projects
Table 1: Disbursementsfor IDA Credit No\. 3931
(in millions of USdollars\. for calendar vears)
Per year Cumulative
2004 Q4 1\.o 1\.o
2005 2\.7 3\.7
2006 5\.7 9\.4
2007 4\.1 13\.5
2008 est 2\.5 16\.0
2009 est\. 3\.9 19\.9
2010 Q1 est 0\.1 20\.0
Total 20\.0
Source: MSIF\.
14\. Under sub-component 1\.1, MSIF supported 252 sub-projects in the new villages, close to the new
target of 281 (Table 2)\. Under sub-component 1\.2, MSIF helped 72 villages to prepare strategic plans for
their own development, and contributed US$25,000 to financing each of 75 priority sub-projects (some
villages received more than one sub-project)\. MSIF accelerated implementation of sub-component 1\.3 by
helping 44 small towns to implement 61 sub-projects\. To support and sustain these investments, MSIF
deliveredover 25,000 person-days oftraining\.
2
Table 2: SelectedOutput Indicators for Participatory Community Sub-projects
Gas connections
Source' MSIF\.
15\. MSIF is building;the social care services networks at a rapid rate\. MSIF is now financing the civil
works for 31 social care services centers (Table 3)\. Most were completed by January 2009; the remaining
three centers will open in March 2009, and MSIF recently added a 32nd center to its plans\. MSIF trained the
social care services managers and will train all personnel o f the rayon centers\.
Baseline May 2006 May 2007 May 2008 Target
Number of strategic plans for social care services 0 0 6 6 6
Number of sub-projects completed and hnctioning 0 0 0 2 30 a/
Persondays of training 0 420 2,353 2,524 720
Baseline May May May Sept2 Target
2006 2007 2008 008
Sustainable human & community development
Rate of school attendancein school sub-projects 92% 94% 94% 95% 95% 95%
Rate of educational achievement in school sub-projects 93% 90% 91% 94%
Schools with new educationalprograms in school sub-pjcts 9% 41% 50% 53%
Rateofrespiratoryand infectiousdiseases in communities 180 NA NA 111 NA 120
with school, water, or gas sub-projects (cases per 100,000)
Rate of communityparticipationin community 28% NA NA 77\.3% NA 70%
development in communities with sub-projects
Rate of consumptionof coal and h e 1wood for heating in 85% NA NA 79% NA 45%
communities with gas sub-projects\.
3
Empoweringpoor communities to manage their priority development needs\.
Numberofcommunitieswhich launchedinitiativesto NA NA 87 109 115 107
address developmentneedsduring sub-project
implementationand up to two years afterwards
Percentage ofrespondents ininstitutions surveys who said NA NA NA 67% NA 60%
that their capacityto managecommunitypriority
developmentneeds improvedbecauseof SIF training and
implementationoftheir sub-project
Percentage ofrespondents who express increased NA NA NA 49% NA 30%
satisfactionof local governmentmanagementoftheir
priority developmentneeds\.
# o f communitiesthat contributemorethan required\. NA NA 56 76 85 1 107
Table 5: Summary of Difference in the Difference Measures of Project Outcomes
Variable Difference in
differences
Satisfactionwith community social & economic development +13 % points
Satisfactionwith local public authorities +15 % points
Trust invillage government +7 YOpoints
Average monthly householdincome +51 Lei
Pupilabsences(incommunitieswith schoolsub-projects) -14 % points
Schoolsuccess(incommunitieswith schoolsub-projects) +4\.6 YOpoints
Volume ofwater usedinhouseholds (incommunitieswith water sub-projects) +30 YOpoints
Source: Bernard Brunhes International & CBS-AX4 (2008)
18\. Moreover, an independent study of the Project's impact shows that its interventions are associated
with improved outcomes for human well-being\. MSIF commissioned the study from Bernard Brunhes
International, France and CBS AXA, Moldova\. The study measures the change over time in outcome
indicators in communities that participated in the MSIF-I1 Project and all in similar `control' communities
that did not participate in the Project\. The net benefit of the Project is estimate using the `difference in
differences' methods\. Table 5 summarizesthese results, andthe difference in the difference estimates appear
in the right hand column\. The MSIF Project succeeded, even judging by this stringent standard\. The
Additional Financingis expected to generate comparable outcomes\.
19\. The rationale for Additional Financing is strongest for the Community Development component\.
Additional financing for this component (Component 1) would help absorb unemployment and generate
incomes in poor rural areas that are vulnerable to reductions in income from remittances and the return of
workers from abroad\. This component has demonstrated success in terms of improved living conditions\.
Moreover, the Additional Financing would support community sub-projects through local governments,
thereby building sustainable local capacity\. The justification for adding financing for the social care
services pilots is smaller because of the recent EC grant of Euro 4\.3 million(approximately US$6\.6 million),
which more than doubles its present size\.
20\. For all these reasons, the Recipient requests Additional Financingto scale-up the Projectto enhance
its benefits\.
4
111\. ProposedAdditional Financing
21\. The development objectives under the Additional Financingwould remainthe same\. The objectives
of the Additional Financingare to contribute to implementation of the Recipient's National Development
Strategy (NOS) by empowering poor communities and vulnerable population groups to manage their
priority needs\. These are the objectives of the original project, except that the NDS has replaced the
EconomicGrowthand PovertyReductionStrategy (EGPRS), which has run its term and expired\.
22\. The Additional Financing will support local governments in applying community-driven
development methods\. Local governments are directly elected and the mayors and local councils are
particularly accountable to their constituents\. But many local elected leaders and community organizations
lack training and experience in participatory methods and in project preparation\. The Additional Financing
assists local governments in consulting with communities, in working with community organizations, in
planning for local development, in mobilizing funds; then the Additional Financing funds the priority sub-
project each beneficiary community's development plan through a small grant\. Community sub-projects
usually include rehabilitation or new construction of small-scale community infrastructure, as well as
furniture, equipment, andtrainingand other service contracts\. The Additional Financingwill not support any
constructionwhich requires purchase of landor which triggers OP 4\.12, which concerns resettlement\.
23\. The Additional Financing extends, and deepens MSIF's present support for local government in
villages and small towns\. The Additional Financingsupports small grants to local governments, on behalf of
their communities, through Component 1 of the original Project - as well as associated planning,
architectural and engineering, and training costs\. The Additional Financing supports monitoring and
evaluationthrough Component 3\. It supports the additionalcosts of project managementthrough Component
4\. The Additional Financing will not support Component 2, as this is receiving generous Additional
Financingfrom donors\.
24\. The Additional Financingwould be targeted to poor villages and small towns\. The MSIF project
unit will invest the Additional Financingin sub-projects in certain types of villages and small towns with a
populationof less than 20,000\.
25\. Villages will receive support for sub-projects if they appear on the most recent list of deprived
villages received from the MET and if they have not already receivedMSIF's support for a sub-project\. A
village which suffered from severe flood damage may receive a support for a sub-project even if it already
receivedMSIF support\.
26\. Small towns on the Prut and Dniester Rivers will also receive support for sub-projects\. Most have
already benefitedfrom MSIF's support for a sub-project\. MSIF will select small towns for support through a
competition\. MSIF will select towns using the deprivation indicators as described in the Annex of the
Operational Manual for the Additional Financing, the "first come, first served" rule (with the technical
design and the community contribution) and will give preference to the small towns most affected by the
2008 floods\.
27\. With the Additional Financing, the Project would fund sub-projects in about 45 villages and small
towns using the community driven development methodology\. This would benefit an estimated additional
53,600 people(Table6)\.
Table 6: Outputs from the Additional Financing
~~ ~~ ~ ~ ~~ ~
Community-driven development sub- No\. of sub- No\. of Avg\. Cost O f sub- Total cost
components projects Beneficiaries projects
(in US dollars) (in US dollars)
Subcomponent 1\.2:New villages 32 22,400 95,076 3,042,421
Subcomponent 1\.3:Small towns 13 3 1,200 164,660 2,140,579
Total 45 53,600 5\.183\.000
Source: WorldBank and MSIF\.
5
28\. Funds will be disbursed from the designated account to accounts of local governments, that is, to the
mayor's office @rimaria) in villages and small towns\. The original Project pays (disburses) grants in two
ways: (i) it pays contractors directly in villages and towns which have not previously benefited from an
MSIF Project, and (ii)it pays grants to local government accounts in villages and towns that have carriedout
an MSIF-supportedsub-project and received training from MSIF\. Under the Additional Financing, payments
will be simplified into a single mechanism\. This should reinforce the capacity of local governments to
manage funds\. Local governments will order their Treasury accounts to pay contractors from Additional
Financingsupported accounts\.
29\. At present, the maximum size of the grants limits their impact on the outcomes\. For instance,
villages receive grants of only US$25,000 to finance part of their development plan\. Thereforethe proposal
is to increase the maximumgrant size as follows (Table 7)\.
Table 7: Maximum Size of Project Grants (in US dollars)
Present Limit New Limit
Villages 25,000 75,000
Smalltowns with less than 10,000 people 75,000 150,000
Small towns with 10,000 to 20,000 people 125,000 200,000
Source: WorldBank\.
30\. The Government of Moldova and communities will also add financing\. Communities, including
local governments, will contribute a minimum of 15 percent of the cost of each sub-project\. To encourage
local contributions, the total size of a sub-project that MSIF can finance would rise to 150 percent of the
grant\. With a contribution from the Government of Moldova, the total addition to financing will be
US$5,850,000 (Table 8)\.
3 1\. An extension of the Projectis necessaryto help communitiescomplete their development plans\. The
proposalis to extendthe ClosingDate ofthe Projectfrom March31,2010 to September 30,2012, to give the
MSIF unit time to train the new communitiesand helpthem to preparetheir development plans\.
Table 8: Budget for the Additional Financing by
Category of Expenditure and by Source of Financing
(in U S dollars)
IDA Gov\. of Community
Moldova contribution Total cost O/O
Goods 22,000 22,000 0\.4
Cons\. Serv\. 480,000 480,000 8\.2
Trainingand study tours 77,000 77,000 1\.3
Recurrentcosts 88,000 88,000 1\.5
Grants 4,333,000 200,000 650,000 5,183,000 88\.6
Total 5,000,000 200,000 650,000 5,850,000 100\.0
Source: WorldBank\.
IV\. Consistency with the CPS
32\. The Additional Financing supports the human development pillar of the new Country Partnership
Strategy (CPS)\. The Boarddiscussed and approvedthe new CPS on January 29,2009\. Humandevelopment
is the second of the three pillars of the new CPS\. The Additional Financing forms part of this pillar: it
supports community and local government delivery of basic economic and social services\. Moreover, the
Additional Financingis programmed specifically in the new CPS as part of the Bank's program of support
for Moldova\.
6
V\. Appraisal of restructured or scaled-up project activities
33\. Technical\. The Bernard Brunhes (2008) evaluation study, the outcome indicators, and repeated
review visits by the World Bank team suggest that the Project's methods for promoting community
participation led to completion of their infrastructure sub-projects and a sustained flow of social and
economic services from the sub projects\. Repeatedengineeringinspectionsfound good quality infrastructure\.
34\. Economic\. The Projecthelps local governments and communitiesmobilizeto provide public goods,
such as improve education, health, and water supply services, better road transport, etc\. These are public
goods since no single household would have an incentive to undertake the necessary investments\. The
output indicatorsand the Bernhard Brunhes study suggest that Projectinvestmentsyield a significant flow of
education andpublic healthbenefits\.
35\. Institutional\. The MSIF project unit operates as a not-for-profit, semi-governmental institution\. It
has been successful in implementingthe Project to date, performingwell on its annual financial audit, and
passing the World Bank team's regular financial management, procurement, and engineeringreviews\. The
MSIF unit recentlypassedan intensivemulti-year inspectionby the Moldovanaccountingchamber\.
36\. Fiduciary - Procurement\. The existing MSIF Procurement Department will continue to procure
consultants, other services, goods, and civil works under the Additional Financing\. MSIF's Procurement
Department consists of two procurement specialists, includinga newly promotedspecialistfrom the assistant
position agreed with the Bank\. The following actions shall be taken to further strengthen the procurement
capacity ofthe Recipientin the project implementation:
(a) The recently promoted procurement specialist will receive training in procurement
management; '
(b) MSIF shall hire independent technical and procurement auditor to conduct intensified post-
review includingphysicalinspectionunder sub-projects; and
(c) Periodic ex-post reviews by the Bank of contracts signed by MSIF during the supervision
missions\.
37\. MSIF will carry out procurement in accordance with the requirements set forth in the procurement
and consultants guidelines published by the Bank in May 2004 and revised in October 2006\. Furthermore,
the Projectwill be carried out in accordance with the provisionsof the Anti-Corruption guidelinesof October
15, 2006\. The Procurement Plan as prepared by the Recipient shall be updated from time to time in
accordance with paragraph 1\.16 of the Procurement Guidelines and paragraph 1\.24 of the Consultant
Guidelines ("Procurement Plan" attached in Annex 2)\. MSIF shall procure goods, works, and services
accordingto procurement arrangements set forth in the existing DevelopmentCredit Agreement of the main
Projectand inthe Project Operations Manual\.
38\. Fiduciary - Financial Management\. The Bank team's financial management specialist last
reviewed the MSIF-I1 Project in July 2008\. In particular, the specialist reviewed project accounting and
reporting arrangements, staffing, internal control procedures, planning and budgeting, counterpart funding,
the Financial Manual, and the external audits\. The Bank received the audited financial statements for FY
2007 on time and with unqualified audit opinions\. The Bank specialist found that MSIF's financial
managementprovisionscomply with the Development Credit Agreement\. As a result, the specialistrated the
Project's financial management arrangementsas satisfactoryto the Bank, but has asked MSIF to take several
steps to improve the control environmentand reporting\. Since the review, MSIF's Finance Manager left his
job and currentlythe chief accountant is acting(the chief accountant has significant experience working with
MSIF; thereforeas a temporarymeasure,this arrangement is adequate)\.
39\. In general, the MSIF will follow the same procedures, with regard to the designated account, as in
the main project in terms and therefore no major changes are required in the financial management
arrangements for Additional Financing, includingfunds flow\. However the financial relationshipwith local
governments will change\.
7
40\. In the past, MSIF procedures made direct payments to local governments in villages with previous
experience with the Project, but paid contractors directly in villages with no previous experience\. Under the
Additional Financing, MSIF will ask their commercial bank to disburse directly to the treasury accounts of
local governments in villages and towns that benefit from the Additional Financing\. The majority of
beneficiariesof Additional Financinghave experience working with MSIF and thereforethe same procedures
will be applied(smalltowns)\.
41, However, there are some beneficiaries(villages) with no experience, and for these, MSIF will apply
additional procedures\. First, MSIF will train the mayors and accountants of these villages in MSIF
procedures\. Second and in parallel with its normal control procedures, the Treasury will execute additional
controls of the requests for payment submittedby the local governments prior to making the payment, thus
avoiding payments for which works were not completed\. In exceptional cases, based on a decision of the
MSIF Executive Committee, direct disbursements of funds from MSIF bank accounts to Contractors
accounts couldbe done\.
42\. Basedon the above, the financial managementactions for Additional Financingare that MSIF will:
(a) Recruita new MSIF financial manager acceptableto the Bank (effectiveness condition);
(b) Amend intermediateun-audited financial reporting formats to reflect Additional Financing
(by submission ofthe first set of IFRsthat will includeAdditional Financing); and
(c) Amend existing audit Terms of References to reflect Additional Financing funding source
(by the time when the auditor's selectionand appointment procedures are made)\.
43\. The limits for prior review of expenditures will not change, with the following exception: the
maximumsize of grants to communitiesthat MSIF makeswithout prior review will rise as shown on Table 7
above\.
44\. Safeguards\. The EnvironmentalCategory for the Additional Financing will remain FI (Financial
Intermediary)because it adheres to the design of the original Project, in that it involves on-lendingthrough a
financial intermediary and it continues to finance sub-projects whose content is not determined at the start\.
The EnvironmentalGuidelineswhich were prepared and disclosed prior to appraisal of the MSIF-I1project
will continue to be used, with some small revisions based on the implementation experience to date\. The
Environmental Guidelines explain the environmental aspects of the procedures for the design, screening,
appraisal, and implementationof the small-scale community infrastructuresub-projects\. The Guidelines are
attachedto the ProjectOperations Manual and form part ofthe Project's regulatory framework\.
45\. In early December 2008, a World Bank environmental specialist reviewed and `verified MSIF's
implementation of Environmental Guidelines for sub-projects\. Overall implementation was found to be
good, with specified mitigation measures being followed and documented as required\. The Bank project
team and MSIF staff agreed on several improvements to the EnvironmentalGuidelines to improve MSIF's
control of implementationof the most importantenvironmentalpolicies; the changes will also help the Bank
team to review implementation\.
46\. In particular, MSIF will revise the form for rating environmentalrisks so that it identifies the most
prevalent specific risks in sub-projects\. For example, one risk is of seepage of pollutants into water supply
sub-projects; a further risk is the replacement, during the rehabilitationof public infrastructure, of roof tiles,
pipes, or insulation containing asbestos\. Moreover, the revised Environmental Guidelines will add a
provision for removal of materials containing asbestos by workers wearing protective gear and for
appropriate disposal of these materials\.
47\. The Project and the Additional Financing do not trigger the World Bank's policy toward
Resettlement, OP 4\.12, since none of the sub-projects would require acquisitionof land\. Water and gas pipe
lines that need to be installed and buried cause a temporary loss of access to land; but this is done in
consultationwith the affectedpopulation, represents only a temporary inconvenience, and does not constitute
landacquisition\.
8
48\. Furthermore, the Project and the Additional Financingdo not trigger the World Bank's policy toward
Physical Cultural Resources as the safeguards specialist found that there is no reason to expect that physical
cultural resources would be impacted\. The usual provisions for 'chance finds' are included in the standard
biddingcontracts\.
VI\. ExpectedOutcomes
49\. The Additional Financing will be evaluated usinn outcome rather than output indicators\. The
original project indicators are traditional output rather than outcome indicators\. In agreement with the Bank,
MSIFuses new, outcome-oriented, indicators to asses the original Project on an informal basis\. It intends to
formally adopt these new indicators for the original Project\. The Additional Financing will be evaluated
usingthe new outcome indicators below (Table 9)\.
Table 9: Outcome Indicatorsfor the Additional Financing
I I I
Hierarchy of Objectives Indicators Baseline Target
Increasedschool attendancein participatingschool projects 92%' 95%
Higher Order CPS Goal:
Increasedlearningresults inrehabilitatedschools %yo2 96%
Poverty alleviationand
sustainablehuman and Increasednumber of schools with new educationalprograms 9%3 90%
communitydevelopment in participatingschools\.
Decreasedrespiratoryand infectiondiseases in communities 180 cases per 120
with school\. water and gas subprojects 1000 per year4
Increasedparticipationof communitymembersin 28%5 70?'o6
communitydevelopment in participatingcommunities
Decrease inconsumption o fcoal and fuel wood for heating 85% 45%
inparticipatingcommunities (gas connections sub-projects)
Project Development 1 Numberof communities which have made new NA 107
Objective: Contribute to the initiativeslactivitiesto address development needs during
implementationof Moldova's sub-project implementationand up to two years after the
NationalDevelopment completionofthe sub-projects
Strategy by empoweringpoor
communities and vulnerable 2\. Numberof respondentsin institutions surveyedwho NA 60%
populationgroups to manage state that their capacity to manage communitypriority
their priority development development needs has improvedbecause of SIF training
needs and implementationof the sub-projects\.
1 Establishedaccording with previous Beneficiary Impact Assessments (BIA)\.
Establishedaccordingwith results of previousBIA\.
Establishedaccordingwith results of previousBIA\.
' Established accordingwith results of previousBIA\.
Computed based on BIA results: in 121 communities from component 1\.2, 80 percent of population participates in
solving communityproblems, in the rest 360 communities of other subcomponent-the average participationis 10%\.
Computed based on BIA results: after MSIF intervention, in 121 communities from component 1\.2, 90 percent of
populationwill participatein solving community problems, inthe rest 320 communities of subcomponents 1\.1 and 1\.3
will be 70 percent,while inthe 42 towns the average participationwill be 10percent\.
7 Computed based on BIA results: in villages not having gas, 100 percent of population use coal/wood, in having gas
communities - only 45 percent use it\. Proportionscomputed taking the assumption that the 121 SP (of subcomponent
1\.2) have the same structure of gas SP (25 percent) as in MSIF 1 project (Le\., in 30 SP coal is used by 45 percent of
population, and for the 80 SP -100 percent)\. After the MSIF 2 intervention all gas villages will have the same 45
percent of use of coallwood\.
9
Hierarchy of Objectives Indicators Baseline Target
3\. Number of surveyedrespondents who express
increasedsatisfaction with local governments' way of NA 30%
managingcommunitypriority development needs\.
4\. Number of communities with higher community NA 107
contributionsthan required
Component 1: Community Development
1, Number of communities which duringthe two years of NA NA
Objective: Enhanced sub-project completionhas followed all clauses inthe
capacities of local government sustainabilityplan
in organizingprovisionof
improvedpriority basic 2 Numberof communities where the Beneficiary NA NA
services in partnershipwith Associations still operational duringtwo years after sub-
civil society project completion
3 \. Number of respondents(in a survey)\. who express NA 30%
increasedsatisfaction with local governments' way of
organizingprovisionofbasic services
Component 3 Institution-building,training, public information
monitoring, evaluation,
Objective:Dev\. Of
institutionalmechanismto Number of MSIFbest practicesreplicatedby government 0
reflect communityexperiences and non-governmentinstitutions
and influencenationalpolicies\.
VII\. Benefitsand risks
50\. The team expects that the Additional Financing will generate benefits similar to those from the
present Project (see Table 4) and the Bernard Brunhes International and CBS-AXA study\. The Additional
Financing is relatively low risk\. The Project is not controversial and forthcoming elections are not expected
to change Government support for the Project\.
VIII\. Financialterms and conditionsfor the AdditionalFinancing
5 1\. The Conditions of Effectives for the Additional Financing are:
a) The Implementation Agreement has been executed on behalf of the Recipient and MSIF\.
(b) The Original Project's Project ImplementationPlan and Operational Manual, as amended to
the date of the Financing Agreement, have been modified and adopted by the Recipient in a
manner satisfactory to the Association\.
(c) MSIFhas recruitedanew financial manager ina manner satisfactory to the Association\.
52\. The Additional Financing will be an IDA credit\. The Credit will have a 40-year term with a 10 year
grace period\. For FY2009, there is no commitment charge\. There is a service charge, which will be set in
the financial agreement\.
10
Annex 1: Project and Additional FinancingTeam
Name Title Unit
Menahem Prywes Senior EconomistandTeam Leader ECSHD
Andrei Busuioc FinancialManagement Specialist ECCAT
Yingwei Wu Senior Procurement Specialist ECSPS
Dmytro Glazkov Operations Analyst ECSSD
HannahKoilpillai Senior Finance Officer LOAFC
RuxandraCostache Counsel LEGEM
Alexei Ionascu Operations Analyst ECSHD
Anna Goodman ProgramAssistant ECSHD
Tamara Ursu ProgramAssistant ECCMD
Source: World Bank\.
11
Annex 2: MoldovaSIF I1ProcurementPlan for AdditionalCredit (in US dollars)
Ref\. Description Type Estimated Procurement Review Expected
No\. cost Method by Bank Proposals\.
Submission
Date
Component 1 CommunityDevelopment
-
1\.1 TA at community level
(32 new villages and 13
small towns)
1\.1\.1\. Promotion (social cons\. sew\. 5 1,146\.00 CQ Post Feb\. 2009
appraisal, follow-up
appraisal, post-
implementingappraisal)
1\.1\.2, Elaboration of strategic cons\. serv\. 80,000 CQ Post Feb\. 2009
plans
1\.1\.3\. Civil Engineering TA at cons\. serv\. 29,700 ss Prior Apr\. 2009
appraisal stage (1
consultant for sub-comp\.
1\.2 + 1 cons\. for sub-
comp\. 1\.3)
1\.1\.4\. Civil Engineering TA at cons\. serv\. 37,800 ss Prior Apr\. 2009
follow-up stage (1
consultant for subcomp\.
1\.2 + 1cons\. for
subcomp\. 1\.3)
1\.1\.5\. Microproject Assistant cons\. serv\. 12,600 ss Prior Apr\. 2009
1\.1\.6\. Training & study tours training 30,000 SOE Post
1\.1\.7\. goods
22,000 I1 Sh I Post I
1\.1\.8\. 50,000 Sh I I
1\.2\.1\. 1Sub-Grant with Local I272,0745 I
Government, including:
1\.2\.1\.1, Civil Works and/or sub-grant
- 2,548,984 NCB/Community I Post Nov\. 2009
software Participation
1\.2\.1\.2\. Engineering Design sub-grant 95,225 LCS/Community Post July 2009
Participation
1\.2\.1\.3\. Announcements sub-grant 1,920 Sh/Community Post
Participation
1\.2\.1\.4\. Local Supervison sub-grant 54,4 14 IC/Community Post Nov\. 2009
Participation
1\.2\.1\.5\. Local travel sub-grant 19,200 SoE Post Apr\. 2009
1\.2\.1\.6\. Financial management sub-grant 1,000 IC Post Apr\. 2009
of sub-grant
implementation in CDD
projects
12
1\.3\.1\.4\. Local Supervison sub-grant 38,285 -00 IC/Community Post Nov\. 2009
Participation
1\.3\.1\.5\. Local travel sub-grant 7,800 SoE Post Apr\. 2009
1\.3\.1\.6\. Financial management sub-grant 1,000 IC Post Apr\. 2009
of sub-grant
implementation in CDD
projects
Component3\. CapacityDevelopment, CommunicationsMonitoring and Evaluation
3\.11 Procurement Auditor for cons\. serv\. 10,000 IC post Aug\. 2011
CDD Subgrants
3\.12 Technical Auditor for cons\. sew\. 10,000 IC post Aug\. 2011
-
CDD Subgrants
3\.13 Financial Audit cons\. serv\. 30,000 LCS post Apr\. 2010
I Component 4\. Project Management
13 | APPROVAL |
P162263 |  The World Bank
Water Services and Institutional Support Program (P162263)
Project Information Document/
Integrated Safeguards Data Sheet (PID/ISDS)
Concept Stage | Date Prepared/Updated: 08-Mar-2018 | Report No: PIDISDSC23310
March 16, 2018 Page 1 of 13
The World Bank
Water Services and Institutional Support Program (P162263)
BASIC INFORMATION
A\. Basic Project Data OPS TABLE
Country Project ID Parent Project ID (if any) Project Name
Uzbekistan P162263 Water Services and
Institutional Support
Program (P162263)
Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead)
EUROPE AND CENTRAL ASIA Oct 08, 2018 Dec 21, 2018 Water
Financing Instrument Borrower(s) Implementing Agency
Investment Project Financing Ministry of Finance Department for Operation of
Interregional Trunk Main
Tuyamuyun â Nukus,
Ministry of Housing and
Communal Services,
Samarkand State Unitary
Enterprise Suvokova,
Syrdarya State Unitary
Enterprise Suvokova
Proposed Development Objective(s)
The Program / Project Development Objective is to: (i) improve coverage, quality and efficiency of water supply and
sanitation services in selected project areas; and (ii) strengthen the capacity of sector institutions for improved service
delivery\.
Financing (in USD Million)
Finance OLD
Financing Source Amount
Borrower 25\.00
International Development Association (IDA) 190\.00
Total Project Cost 215\.00
Environmental Assessment Category Concept Review Decision
B-Partial Assessment Track II-The review did authorize the preparation to
continue
March 16, 2018 Page 2 of 13
The World Bank
Water Services and Institutional Support Program (P162263)
Other Decision (as needed)
B\. Introduction and Context
Country Context
1\. The Governmentâs vision is to transform Uzbekistan into an industrialized, upper-middle-income country by
2030\. Uzbekistan is a lower-middle-income, minerals-rich, but doubly landlocked Central Asian country with the largest
population in Central Asia â 32\.3 million as of July 20171\. Over the past decade, Uzbekistan has maintained a high and
stable economic growth rate2 and has gradually diversified its economy\. Coinciding with economic growth, poverty rates
have declined from 27\.5 percent in 2001 to 12\.5 percent in 20163, accompanied by equity gains, with B404 incomes
growing faster than T60 over the period 2008â2013\. Meanwhile, per capita GNI rose from US$2,020 in 2001 to US$5,840
in 2014\.5 This is a notable achievement for the most populous country in Central Asia\.
2\. Achieving an upper-middle-income status will require a more sustainable and inclusive growth model\. Growth
has been largely determined by the state rather than private sector investment, driven by large natural resource
endowments and characterized by low levels of energy, water, and other resources use efficiency\. The Government of
Uzbekistan recognizes the need to bring more private-sector activity into the economy and to improve the efficiency of
resource utilization\. In February 2017, the Government presented a broad 5-year Strategy of Actions for Development of
Uzbekistan for 2017-2021\. The authorities have started implementation of this Strategy, including initial steps to liberalize
the economy, to stimulate efficiency, and to facilitate productivity and competitiveness â ultimately to create well-paying
jobs for Uzbekistanâs growing population\.
Sectoral and Institutional Context
Sectoral Context
3\. Uzbekistan is characterized by high water resource dependency6 and scarcity of locally available freshwater
resources\. Traditionally, domestic water supply systems have relied to a large degree on groundwater\. However, shallow
groundwater resources in many areas have become highly mineralized or polluted with irrigated agricultural discharge\.
Climate change is expected to cause more severe and prolonged droughts with corresponding decreases in water
availability, reinforcing the need for effective planning and adaptation measures for enhanced water security\.
4\. Access to and quality of water supply and sanitation (WSS) services remains a significant challenge \. WSS
infrastructure, largely constructed during the Soviet central planning era, has exhausted its useful life and requires
extensive rehabilitation and renewal\. Public expenditure, whilst increasing substantially in recent years, has not kept pace
1
With annual population growth of 1\.7 percent in recent years\.
2
Per official estimates, annual GDP growth averaged 7\.2 percent between 2000 and 2016\.
3
The World Bank notes that the methodology for measuring poverty needs to be brought to international standards\. Official poverty
estimate does not consider nonfood items and the use value of assets
4
B40 -Bottom 40 percent of income distribution\. T60 â Top 60 percent of income distribution\.
5
These figures are presented in purchasing-power-parity terms\. In current U\.S\. dollars (Atlas method), GNI per capita rose from
US$560 in 2001 to US$2,111 in 2016\.
6
Over 80 percent of the countryâs water originates in neighboring countries\.
March 16, 2018 Page 3 of 13
The World Bank
Water Services and Institutional Support Program (P162263)
with requirements for asset replacement, maintenance and system expansion\. These infrastructure issues, combined
with institutional capacity constraints, have resulted in a stagnation or decline in water service quality and have acutely
affected rural areas, and district towns (or small- mid sized cities), where most of the population resides7\. Whilst
nationwide statistics indicate that access to improved water sources is relatively high (87 percent), those that receive
water through a piped connection is considerably lower (47 percent)\. Furthermore, continuity of service is a common and
serious issue across the country, with many systems supplying water for less than 12 hours per day\. Outdated and
oversized pumps, which lead to high operational costs, and power outages are often cited as causes for the intermittent
services\.
5\. Compared to water supply, sewerage services are substantially less developed\. Built in the 1970s and 1980s in
urban areas and largely neglected since then, sewerage infrastructure is in poor condition and continues to deteriorate\.
Wastewater treatment facilities are also highly degraded â in many cases non-functioning â resulting in pollution of surface
water resources\. In 2016 roughly 3\.7 million people (12 percent of the total population) were reported to be served by a
centralized sewerage system, most of them in Tashkent city and Tashkent region\. In other regions, on average only 5
percent of the population is connected to a centralized sewerage system\. The status of rural sanitation is not well
documented, and has largely been left to the initiative of households and communities\. Most households in rural areas
rely on self-built, on-site sanitation â that is, dry pit latrines or, for households with indoor bathroom facilities, septic tanks
with on-site disposal\.
6\. Despite these service issues, there have been several areas of improvements, particularly related to operational
efficiency\. Although Non-Revenue Water (NRW) data8 remain questionable due to a lack of measurement, staff efficiency
indicators are relatively good compared to global standards, with around 5 employees/1,000 connections on average in
2016\. Collection efficiency has likewise improved significantly, from between 50 â 70 percent in 2011 to more than 90
percent in 2016\. These efficiency gains have resulted in an overall performance improvement of the utilities\. Overall,
financial performance since 2010 has also improved\. Most service providers are now considered profitable9, albeit
marginally - with total net profit amounting to about US$2 million\. That said, it is suspected that operational expenses are
minimized due to the absence of available funds\.
7\. Water supply and sanitation services are the responsibility of regional State Unitary Enterprise (SUE) Suvokova
(Suvokovas)10, consolidated water and sanitation utilities whose assets are owned jointly by regional and local
governments\. The Suvokovas were created in 2016 through the merger of urban and rural service providers\. The
underlying objectives were to improve service delivery by consolidating human resources and technical capacity,
leveraging economies of scale, and promoting financial sustainability, thus creating companies that generate sufficient
revenues to fund or finance necessary capital investments to improve operational efficiencies and extend services to
currently unserved areas\.
8\. Recent economic and sector research has identified key challenges and constraints facing the newly created
Suvokovas11\. These are: (i) availability and reliability of sector data, (ii) institutional and human resource capacity, (iii)
conversion of policies into strategic plans and implementation, (iv) funding for investments in operational and efficiency
7
Approximately 64 percent of the population resides in rural areas (including district towns)\.
8
Reported data indicate NRW rates are around 28 percent on average for the year 2016\. However, the base data for calculation of
this KPI are unreliable due to lack of metering and therefore the level of NRW may have been underestimated\.
9
Based on unverified 2017 data from MHCS\.
10
There are 13 regions within Uzbekistan (including the semi-autonomous Republic of Karakalpakstan)\. Each region has its own
Suvokova, plus Tashkent city is an independent Suvokova (14 Suvokova in total)\.
11
Water Sector Reform Diagnostics, WPP financed TA executed by the World Bank in 2017\.
March 16, 2018 Page 4 of 13
The World Bank
Water Services and Institutional Support Program (P162263)
improvements, (v) difficulties in transitioning from annual to longer-term (5-year) planning, (vi) tariff policy to support
conversions from non-metered to metered billing, (vii) consumer awareness for tariff adjustments, and (viii) enabling
environment for private sector participation in the water sector\. Although tariffs have increased in recent years, they
remain too low12 to cover the real costs of operation and maintenance (O&M) or to accumulate funds for investment\.
Inadequate revenues result in low staff wages, reducing the ability of the Suvokovas to hire or keep skilled staff, and
perpetuates a cycle of weak O&M\.
Institutional Context
9\. Public administration in Uzbekistan is highly centralized, with inherent institutional and human resource
capacity constraints at various levels\. Although gradual adjustments are being made, accountability and transparency
remain key governance issues across the country\. The WSS sector reflects the broader administrative and governance
challenges, and in particular has historically suffered from (i) a fragmented institutional framework, (ii) limitations in
regulatory monitoring and compliance, and (iii) ineffective coordination and overall planning capabilities\. Staff incentives
have been low, including low compensation levels and few training and personnel improvement initiatives\.
10\. The Government recently launched a nationwide reorganization of its WSS institutions and the initiation of
financial and cost recovery mechanisms, with the objective of improving sector governance and utility management,
efficiency, and financial sustainability while maintaining affordability\. The first phase of the reforms began in
January 2016, when the Suvokovas were created\. Phase 2 was initiated in April 201713, and focuses on the institutional
framework for improved sector policy and governance\. Specifically, the second phase resulted in the creation of the new
Ministry of Housing and Communal Services (MHCS), the State Water Inspectorate (a quasi-regulator), and the Clean
Water Drinking Fund, amongst other elements\. Phase 3 of the reform, which has not yet commenced, aims to support
private-sector participation in the sector to improve efficiency and leverage private finance for capital investments\.
11\. In parallel, the Government initiated the Program for the Comprehensive Development and Modernization of
Water Supply and Sewerage Systems, 2017â2021\. This five-year State Investment Program defines strategic priorities
for investments in the WSS sector\. It furthermore sets out objectives and targets, including a nationwide increase in access
rates to safe and reliable water supply systems, to between 84-90 percent depending on the region\. To achieve these
sector development targets, the State Investment Program identifies 36 high priority infrastructure projects to be initiated
within the 5-year period\. This is a US$1\.35 billion program, of which around 55 percent (US$730\.7 million) is earmarked
for IFI financing14, with the remaining funds to be allocated through the State budget\. Around 45 percent of the total
investments over this period is planned to go toward improving wastewater management, including collection,
conveyance, treatment and re-use\.
Relationship to CPF
12\. The proposed Program is aligned with the Country Partnership Framework (CPF) for Uzbekistan FY2016-2020
(Report No\. 105771) Focus Area 3 âPublic Service Delivery and has linkages to Focus Area 1 -Private Sector Growth,
including state-owned enterprise reform\. The Program directly supports the Governmentâs commitment to Sustainable
Development Goal No\.6: to achieve universal and equitable access to safe and affordable drinking water, sanitation, and
hygiene by 2030\. Moreover, development of the social sector is defined as one of five Government priorities for 2017-
12
Average unified tariff for domestic customers in 2016 was 719 UZS/m3 or 0\.20 US$/m3 (compared to 93 UZS/ m3 or 0\.06 US$/m3 in
2010) varying from 0\.08 to 0\.37 US$/m³\.
13
Presidential Decree N° UP-5017 dated April 18, 2017\.
14
Including World Bank, Asian Development Bank and Islamic Development Bank, amongst others\.
March 16, 2018 Page 5 of 13
The World Bank
Water Services and Institutional Support Program (P162263)
202115 and is recognized as a key driver for human development and welfare\. In the context of economic and population
growth, the Government recognizes the critical need to improve access to WSS services\.
C\. Proposed Development Objective(s)
13\. The Program / Project Development Objective is to: (i) improve coverage, quality and efficiency of water supply
and sanitation services in selected project areas; and (ii) strengthen the capacity of sector institutions for improved service
delivery\.
Key Results (From PCN)
14\. Key results towards the specific Project Development Objective will be measured using the following indicators:
⢠Number of people in project areas provided with access to âimproved water sourcesâ? under the Project (core â
urban / rural)\.
⢠Number of people in project areas provided with access to âimproved sanitation facilitiesâ? under the Project
(core â urban / rural)\.
⢠Average hours of water supply service per day in utilities targeted by the Project\.
⢠Operating cost coverage ratio in utilities targeted by the Project\.
⢠Energy savings in utilities under the Project\.
⢠Sector-wide monitoring and evaluation system, established and operationalized\.
⢠Five-year delivery plan for utility performance improvement, developed and approved\.
D\. Concept Description
National Program â Rationale and Overview
15\. The World Bank is substantially engaged within Uzbekistanâs water supply and sanitation sector , through a
series of on-going projects which are now nearing completion16: (1) Bukhara and Samarkand Sewerage Project, (2)
Syrdarya Water Supply Project and the (3) Alat and Karakul Water Supply Project\. At the central level, the Bankâs
engagement has focused on strategic policy advice / economic and sector work designed to influence key aspects of the
sector development agenda - drawing upon results of the sector poverty and social impact assessments and diagnostics
related to institutional, financing and governance arrangements\. Furthermore, the Government is now actively engaging
with the Bank through on-going technical assistance, seeking advice in key areas of reform implementation (such as tariff
policy and PPP arrangements)\.
16\. The proposed national Program is designed to build upon the existing engagement and harness positive
momentum generated by recent reforms to leverage the impacts of sector investments\. The national Program will be
anchored within the MHCS and is broadly designed to support implementation of the Governmentâs sector reforms and
achievement of their stated sector development goals\. The overall effect will be the acceleration of progress towards the
long-term sectoral development objective, i\.e\., universal access to sustainable water services\.
15
Approved by Presidential Decree dated February 7, 2017\.
16
All three projects are scheduled to close June 30, 2019\.
March 16, 2018 Page 6 of 13
The World Bank
Water Services and Institutional Support Program (P162263)
17\. The proposed Program is structured in four strategically designed and complementary components \. Activities
under Components 1, 3 and 4 target the institutional strengthening and reform agenda, and it is envisaged that activities
will run over the lifetime of the Program - to be scaled-up, depending on evolving needs and lessons learnt during
implementation of SoP1\. The institutional interventions will be supported and complemented through physical
infrastructure investments implemented under Component 2\.
SoP1 â Project Description
Component 1: Sector-Wide Institutional Strengthening (US$15 million)
18\. This component will finance activities (goods and services) at the national level designed to support and enhance
implementation of sector reforms and strengthen capacity of the national-level sector institutions\. Component activities
will focus on improving sector policy, financing, regulation, investment planning, and supporting the institutional
architecture and capacity towards the achievement of the Governmentâs long-term sector development objectives\. This
will include capacity building and knowledge / skills development and support for preparation of future investments,
amongst other activities\. Component 1 will also finance preparation activities, including feasibility studies, for SoP2 of the
Program and / or other identified priority water supply and sewerage infrastructure and institutional investments\. In
addition, this component will support project management-related activities, including monitoring and evaluation (M&E)
of project activities, project audits, training, and financing of operating costs\.
Component 2: Water Supply and Sewerage Infrastructure Investments (US$160 million)
19\. This component will finance infrastructure investments designed to expand access and improve the efficiency and
quality of service delivery in the sub-project areas\. The component will finance goods, works and services (including
engineering design and construction supervision) and will include civil and electrical/mechanical installations for water
supply production, and transmission and distribution to households in the project areas, along with sewerage collection,
conveyance, treatment and disposal / re-use facilities\.
20\. Each sub-project will be implemented directly by the respective regional SUE Suvokova under a separate Project
Agreement\. SoP1 of this Program will include the first three priority sub-project areas, as defined in the State Investment
Program 2017-2021, directly benefitting up to 750,000 people\.
21\. The first three sub-projects are as follows\.
(i) Reconstruction and expansion of sewerage systems in Nukus, Takhiatash, Khodjeyli and Kungrad of
Karakalpakstan (US$60 million);
(ii) Improving water supply in Syrdarya, Gulistan and Saykhunabad districts and Yangiyer town of the Syrdarya
region (US$37 million); and
(iii) Reconstruction of water supply and sewerage systems in Kattakurgan town in the Samarkand region (US$63
million)\.
Component 3: Strengthening Water Utilitiesâ Capacity for Sustainable Service Delivery (US$20 million)
22\. Component 3 will finance specific activities (goods and services) designed to support and strengthen the capacity
of the provincial water utilities (SUE Suvokovas) engaged under Component 2 of the Program\. Activities under this
component will focus on enabling and equipping the Suvokovas with the knowledge and tools necessary to improve
March 16, 2018 Page 7 of 13
The World Bank
Water Services and Institutional Support Program (P162263)
operational efficiency, financial and investment planning capacity, quality of service delivery, and sustainability more
generally\.
Component 4: Energy Efficiency Credit Facility (US$20 million)
23\. Under Component 4, a credit facility will be established through Participating Financial Institutions (PFIs) to
support Suvokovasâ investments related to energy efficiency\. The overall objective is to support efficient utility operations
by improving energy efficiency, enabling such investments to be self-driven and re-paid, as well as integrated into the five-
year delivery planning process\. Financing would be independent of the central governmentâs sector investment planning
cycle and budget allocations\. The facility will be open to all 14 Suvokovas; applications will be reviewed by the PFIs based
on defined eligibility criteria and assessment of financial returns\. Specifically, the component will finance (a) a credit line
to PFIs for the provision of working capital and investment finance to investments in energy efficiency in the water utility
sector and (b) training and technical assistance for PFIs on sector-specific loan product development, loan appraisal, and
monitoring\.
SAFEGUARDS
A\. Project location and salient physical characteristics relevant to the safeguard analysis (if known)
The projectâs main infrastructure investments will be in the Republic of Karakalpakstan, Syrdarya and Samarkand regions\.
The Republic of Karakalpakstan is in north-west of the country and is characterized by an extreme continental climate
with very low precipitation rates and a desert-like environment\. All project settlements are located close to each other at
Amudarya River, except Kungrad\. At present, only about 28 percent of the population in Nukus, 12 percent in Takhiatash
and 5 percent in Khodjeyli towns are connected to the sewerage system\. Wastewater in Nukus is pumped to the WWTP,
consisting of bio-ponds\. However, due to the poor maintenance, wastewater is not treated adequately and infiltrates into
the soil contaminating soil and groundwater\. In the absence of proper wastewater treatment facilities in Takhiatash and
Khodjeyli towns, collected sewage is discharged into irrigation/drainage channels and disposal fields outside these towns\.
Syrdarya region is in the north-east of the country, adjacent to Tashkent region\. Its local economy is largely dependent
on agriculture, including cotton, wheat and a variety of fruits and vegetables\. The quality of the deep groundwater in 3
project districts Gulistan, Saykhunabad and Syrdarya, and Yangiyer town is very good due to their proximity with Syrdarya
River\. In three districts, there is no existing sewerage system, and majority of population relies on pit-latrines\. Around 80
percent of project population reportedly has access to improved water supply, however the quality of services is limited,
with intermittent supplies (less than 12 hours per day) cited as a common issue\.
Kattakurgan town in the Samarkand region is located 78 kilometers from Samarkand city in Zarafshan valley\. Population
is largely engaged in agro-based industry\. Current coverage of water supply system and sewerage are around 79 and 56
percent respectively\. Due to poor maintenance of the system, untreated sewage is discharged into fields where it is used
for irrigation\.
The project areas are predominantly located in a human-influenced environment with little significant environmental
features\. Considering the proposed project scope, environmental risks are expected to be limited to the typical impacts
associated with water supply and sanitation rehabilitation projects\. The severity of potential environmental impacts is
expected to be moderate and mostly limited to the construction period\.
B\. Borrowerâs Institutional Capacity for Safeguard Policies
March 16, 2018 Page 8 of 13
The World Bank
Water Services and Institutional Support Program (P162263)
The project's infrastructure investments will be implemented by three Suvokovas, regionally based water service
providers\. Each Suvokova has experience with implementation of Bank-financed projects, and are therefore familiar with
relevant safeguards requirements\. The implementation team at each Suvokova will be responsible for safeguards
management, with oversight and coordination at the central level through the Project Coordination Unit (PCU), under the
Ministry of Housing and Communal Services\. The Bukhara and Samarkand Sewerage Project and Syrdarya Water Supply
Project are currently under implementation by the respective Suvokovas\. Under these projects Consultants have been
engaged, including dedicated safeguard specialists to support implementation of project ESMPs, monitor contractors'
compliance, and report on safeguard implementation performance\. The PCU also has a full-time environmental safeguard
specialist, who monitors these aspects across projects\. Suvokovas' past experience with land acquisition relied upon
utilizing right-of-ways, vacant government owned land, or working with local authorities in finding land-for-land
exchange\. Contractors undertaking large civil works have a social specialist who oversees social aspects such as land
acquisition, consultations with impacted communities, and addressing grievances\. PFIs under Component 4 will be
identified during project preparation\. Assessment of their Environmental and Social Management Systems will be
conducted and necessary strengthening measures will be put in place\.
As the exact location of the proposed project activities will be known only after feasibility studies become available, an
Environmental and Social Management Framework (ESMF) and Resettlement Policy Framework (RPF) for the project will
be prepared, along with ESIA/ESMPs for the first-year activities\. RAP/ARAPs will be prepared if required once final designs
are completed\. The ESMF will have a dedicated section for Component 4, which will define roles and responsibilities of
PFIs and sub-borrowers (Suvokovas)\. The ESMF/ESMP will include a section on the training needs for the MHCS,
Suvokovas' and PFIs', consultants' and contractorsâ staff on environmental and social safeguards\. Each Suvokova will
engage a dedicated environmental and social safeguard specialist\. The task team will provide training for the Suvokova
staff during preparation, and support the project launch workshop with dedicated sessions on safeguards\.
C\. Environmental and Social Safeguards Specialists on the Team
Kristine Schwebach, Social Safeguards Specialist
Javaid Afzal, Environmental Safeguards Specialist
D\. Policies that might apply
Safeguard Policies Triggered? Explanation (Optional)
Component 2 will finance infrastructure investment
for water supply production, transmission and
distribution to households, along with sewerage
collection, conveyance, treatment and disposal/ re-
use\. The nature of works include rehabilitation,
expansion and/or upgrading of the existing or
construction of some new infrastructure\. Overall, the
Environmental Assessment OP/BP 4\.01 Yes project will result in positive human and
environmental health\. Adverse environmental
impacts will be limited and temporary, predominantly
associated with construction related activities\. Such
impacts are site-specific and reversible, remedied
through appropriate mitigation measures\. The project
will support the Suvokova to manage scarce water
resources through inclusion of demand management
March 16, 2018 Page 9 of 13
The World Bank
Water Services and Institutional Support Program (P162263)
practices (metering, consumption based tariffs etc) to
encourage rational water usage and through improved
policies and procedures for integrated water resources
management, including monitoring, environmental
protection and climate vulnerabilities\. Adequate
management of sludge from drying beds and
treatment facilities along with systems for ensuring
water safety and security are key areas where regular
monitoring is required\. The investments are designed
to improve access and quality of water services in
project areas which will alleviate current social
tensions and discontent, associated with the
deterioration of water services\. Moreover, through
citizen engagement mechanisms and communications
strategies, the project will support the Suvokovas to
respond to demands for improved public services\.
The project is proposed as Category "B" under the
World Bank Environmental Safeguard Policy OP 4\.01\.
An ESMF will be prepared for the project, including
energy efficiency investments proposed through the
credit facility under Component 4\. Environmental and
Social Impact Assessment (ESIA)/Environmental and
Social Management Plans (ESMPs) will also be
prepared for the first-year activities, prior to appraisal\.
The ESMF will include a check list for screening
proposed project investments, and will ensure
Category A type activities are not financed\. All relevant
Terms of Reference (TORs) for technical assistance
under Component 1 (i\.e\. investment planning, support
for preparation of future investments, feasibility
studies for SoP2 or other identified priority water
supply and sewage infrastructure and institutional
investments, etc\.) will include environmental and
social aspects\. Safeguards documentation will be
consulted upon and publicly disclosed prior to
appraisal\. Site-specific ESMPs will be prepared by the
contractors\.
The project area and proposed activities are in built-up
Natural Habitats OP/BP 4\.04 No areas with no natural habitat located within or close
by\. This policy is therefore not triggered\.
The project area and proposed activities are in the
Forests OP/BP 4\.36 No built-up areas with no forests located within or close
by\. This policy is therefore not triggered\.
The proposed project activities do not promote the
Pest Management OP 4\.09 No
use of or envisage any increase in the use of pesticides
March 16, 2018 Page 10 of 13
The World Bank
Water Services and Institutional Support Program (P162263)
as defined in the Bank policy, therefore this policy is
not triggered\.
Majority of the project infrastructure activities are
located in built-up areas and within existing rights of
way and therefore potential impacts on physical
cultural resources are unlikely\. However, during
Physical Cultural Resources OP/BP 4\.11 TBD project preparation and as the feasibility studies
progress, potential impacts on physical cultural
resources will be reviewed in detail to determine
whether this policy is triggered, and identify necessary
mitigation measures\.
Indigenous Peoples OP/BP 4\.10 No
The social risk rating for this project is moderate\.
Although the end project result will have a number of
social benefits, there is a risk with regards to land
acquisition for new construction of infrastructure\.
As site specific location of civil works is not known at
the time of project preparation and there is a
possibility of involuntary land take, a Resettlement
Policy Framework will be prepared for the project\.
Land acquisition needs and project impacts on assets
will not be known until final designs have been
prepared\. The project will need to conduct feasibility
studies and finalize designs in order to know location
Involuntary Resettlement OP/BP 4\.12 Yes of project activities\. During design phase, efforts will
be made to reduce and avoid negative impacts\. An
assessment will be made to determine if final designs
would require preparation of a Resettlement Action
Plan (RAP) or Abbreviated RAP (ARAP)\. If required,
RAP/ARAP will be implemented, and impacted persons
compensated, to mitigate potential negative impacts
from project activities\.
A Grievance Redress Mechanism will be established in
order to provide an avenue by which impacted
persons can lodge a complaint regarding project
activities and receive timely resolution of concerns
and complaints\.
Existing or proposed water systems under the project
do not withdraw water from dams\. Furthermore,
Safety of Dams OP/BP 4\.37 No there are no proposals to construct any new dam/weir
under the project\. This policy is therefore not
triggered\.
Projects on International Waterways Some of the existing sewerage schemes, which will be
TBD
OP/BP 7\.50 rehabilitated/expanded under the project currently
March 16, 2018 Page 11 of 13
The World Bank
Water Services and Institutional Support Program (P162263)
discharge to drains/fields which may ultimately flow to
tributaries of international rivers\. Some of the well
fields are located in areas where the groundwater
sources are potentially recharged by international
rivers\. In consultation with LEGEN, during the project
preparation it will be determined whether this policy is
triggered and whether waiver to notify the riparian
countries is applicable\.
The project is not located in any disputed areas as
Projects in Disputed Areas OP/BP 7\.60 No
defined in the Bank policy\.
E\. Safeguard Preparation Plan
Tentative target date for preparing the Appraisal Stage PID/ISDS
Sep 24, 2018
Time frame for launching and completing the safeguard-related studies that may be needed\. The specific studies and
their timing should be specified in the Appraisal Stage PID/ISDS
ESIAs/ESMPs for first yearâs activities along with ESMF and RPF documents will be prepared during project preparation
and finalized prior to appraisal\. If social assessments indicate that ARAPs/RAPs are needed for the year one activities,
these will also be prepared during project preparation\. These documents will include the outcomes of public
consultations and following Bank clearance, will be disclosed both in-country (on line as well as physically) and through
project portal at the World Bank\.
CONTACT POINT
World Bank
David Malcolm Lord
Senior Water Supply and Sanitation Specialist
Borrower/Client/Recipient
Ministry of Finance
Yorkin Tursunov
Deputy Minister
info@mf\.uz
Implementing Agencies
March 16, 2018 Page 12 of 13
The World Bank
Water Services and Institutional Support Program (P162263)
Department for Operation of Interregional Trunk Main Tuyamuyun â Nukus
Mirzamurad Ukeniyazov
Director
vodovodrk@umail\.uz
Ministry of Housing and Communal Services
Dilshod Azimov
First Deputy Minister
info@mjko\.uz
Samarkand State Unitary Enterprise Suvokova
Kadyr Tadjiev
Director
suvokova@mail\.ru
Syrdarya State Unitary Enterprise Suvokova
Yunus Jalalov
Director
oblsuvokava@mail\.ru
FOR MORE INFORMATION CONTACT
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 473-1000
Web: http://www\.worldbank\.org/projects
APPROVAL
Task Team Leader(s): David Malcolm Lord
Approved By
APPROVALTBL
Practice Manager/Manager: David Michaud 26-Feb-2018
Country Director: Serdar Jepbarov 16-Mar-2018
March 16, 2018 Page 13 of 13 | APPROVAL |
P174439 |  The World Bank
Bangladesh - Improving Hospital Services Quality and Financial Protection for the Poor (P174439)
Note to Task Teams: The following sections are system generated and can only be edited online in the Portal\. Please
delete this note when finalizing the document\.
Project Information Document (PID)
Concept Stage | Date Prepared/Updated: 10-Aug-2021 | Report No: PIDC29865
Aug 10, 2021 Page 1 of 14
The World Bank
Bangladesh - Improving Hospital Services Quality and Financial Protection for the Poor (P174439)
BASIC INFORMATION
A\. Basic Project Data OPS TABLE
Country Project ID Parent Project ID (if any) Project Name
Bangladesh P174439 Bangladesh - Improving
Services Quality of
Hospital Network and
Financial Protection for
the Poor (P174439)
Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead)
SOUTH ASIA Oct 18, 2021 Dec 21, 2021 Health, Nutrition &
Population
Financing Instrument Borrower(s) Implementing Agency
Investment Project Financing Ministry of Finance Ministry of Health and
Family Welfare
Proposed Development Objective(s)
To support the Government of Bangladesh to improve quality and utilization of clinical services for priority conditions,
and expand coverage of health protection schemes\.
PROJECT FINANCING DATA (US$, Millions)
SUMMARY-NewFin1
Total Project Cost 250\.00
Total Financing 250\.00
of which IBRD/IDA 250\.00
Financing Gap 0\.00
DETAILS -NewFinEnh1
World Bank Group Financing
International Development Association (IDA) 250\.00
IDA Credit 250\.00
Environmental and Social Risk Classification Concept Review Decision
Aug 10, 2021 Page 2 of 14
The World Bank
Bangladesh - Improving Hospital Services Quality and Financial Protection for the Poor (P174439)
Substantial Track II-The review did authorize the preparation to
continue
Note to Task Teams: End of system generated content, document is editable from here\. Please delete this note when
finalizing the document\.
Other Decision (as needed)
B\. Introduction and Context
Country Context
1\. Bangladesh has made rapid social and economic progress in recent decades and reached lower middle-income
status in 2015\. Officially reported gross domestic product (GDP) growth averaged close to 6 percent annually since 2000
and accelerated to over 8 percent in FY19\. Strong labor market gains contributed to a sharp decline in poverty, with the
national poverty rate falling from 48\.9 to 24\.5 percent between 2000 and 2016, while extreme poverty declined from 34\.3
to 13\.0 percent\.1 However, the pace of poverty reduction slowed in recent years particularly in urban areas and in the
west of the country\. Similarly, the progress on shared prosperity slowed between 2010 and 2016 after a decade of
improvements, with annual consumption growth of the bottom 40 percent trailing that of the overall population (1\.2
versus 1\.6 percent)\.
2\. The COVID-19 pandemic caused major disruptions to economic activity in FY20 and FY21\. The government
implemented a number of national shutdowns since March 2020 to control the domestic outbreaks\. Control measures
resulted in a sudden stop of economic activity in many sectors\. Consequently, real GDP growth is estimated to have
decelerated to 2\.4 percent in FY20\. Early signs of recovery emerged in the first half of FY21, after movement restrictions
were progressively lifted\. However, a new wave of COVID-19 infections during March and April resulted in renewed
movement restrictions that have dampened economic activity\.
3\. Bangladeshâs economy is expected to recover gradually, while remaining vulnerable to shocks, particularly those
related to climate change\. Given the significant uncertainty pertaining to both epidemiological and policy developments,
real GDP growth for FY21 could range from 2\.6 to 5\.6 percent depending on the pace of the ongoing vaccination campaign,
whether additional restrictions to mobility are required and how quickly the world economy recovers\. The unprecedented
uncertainties related to COVID-19 are likely to dampen private investment\. The recovery in subsequent years is expected
to be gradual, with the waning of pandemic-related economic disruptions partly offset by increasing fragilities in the
banking system\. Meanwhile, Bangladesh is extremely vulnerable to the effects of climate change\.2 Additional rural-urban
climate-related migration would have significant consequences for air and water pollution and unsustainable consumption
of natural resources, while putting additional pressure on urban labor markets\. Addressing climate risks is increasingly
urgent to ensure sustainable economic development of the country\.
1 Household Income and Expenditure Survey, 2000/01 through 2016/17\.
2
Germanwatch (2020) Global Climate Risk Index 2020\.
Aug 10, 2021 Page 3 of 14
The World Bank
Bangladesh - Improving Hospital Services Quality and Financial Protection for the Poor (P174439)
Sectoral and Institutional Context
Health outcomes
4\. Bangladesh has been one of the worldâs top performers on the Millennium Development Goals\. Life expectancy for
females in Bangladesh increased from 59\.5 years in 1990 to 74\.6 years in 2017, and from 57\.3 to 71\.8 for males\. Similarly,
under-5 mortality impressively declined from 132\.9 to 29\.3 per 1,000 live births between 1990 and 2019\.3 Maternal
mortality fell by 69 percent between 1990 and 2015\. The prevalence of stunting in Bangladesh also decreased significantly
over the past two decades\. However, the under-five mortality rate, and in particular, the neonatal mortality rate that
accounts for nearly half of deaths among children under 5 years, have not showed any sign of further decline since 2014\.4
It will be very challenging for Bangladesh to achieve the final targets set under the current Health Nutrition and Population
Sector Program (HNPSP) unless novel approaches are adopted\.
5\. The disease pattern in Bangladesh has changed over the years\. Notably, Non-Communicable Diseases (NCDs) have
become the leading cause of disease burden in the country (Figure 1)\. In terms of disease burden measured by death and
disability combined, the percentage caused by NCDs increased from 52 percent to 65 percent between 2000 and 2019\.
Addressing this emerging challenge will require significantly different health system approaches\.
Figure 1: Leading causes of death and disability in Bangladesh, and percent change between 2009 and 2019
Health service coverage and quality
6\. Although several indicators of health service delivery for maternal and child health care are relatively strong, there
are concerning gaps in provision of care for NCDs\. While 94 percent of public facilities provide basic maternal and child
services (sick child, vaccinations, antenatal care and family planning), only 42 percent provide services for basic infectious
disease care (tuberculosis, HIV, sexually-transmitted infections) and 52 percent provide services for common NCDs
(diabetes, hypertension, and COPD)\. Bangladesh performs particularly poorly in providing care for some NCDs such as
3 Institute for Health Metrics and Evaluation\. Bangladesh\. Institute for Health Metrics and Evaluation\. Published September 9, 2015\. Accessed February 16, 2021\.
http://www\.healthdata\.org/bangladesh
4
Bangladesh Demography and H Survey in 2014 and 2018 and Multiple Indicator Cluster Surveys (MICS) in 2019\.
Aug 10, 2021 Page 4 of 14
The World Bank
Bangladesh - Improving Hospital Services Quality and Financial Protection for the Poor (P174439)
cancers and stroke, as well as neonatal conditions\.5 For example, among all men and women living with hypertension, less
than half of women and one in three men receive a diagnosis for their condition\. Even when diagnosed, not all patients
initiate treatment and among those who are initially treated approximately one third are controlled hypertensives (15
percent of hypertensive women and 9 percent of hypertensive men receive treatment adequate for the control of their
illness)\. Similarly, for persons living with diabetes mellitus, approximately 40 percent receive a diagnosis, 38 percent of
women and 35 percent of men are initiated on treatment but only 12 percent of diabetic women and 13 percent of diabetic
men have controlled blood glucose levels6\. Although household survey data indicate that the utilization of both outpatient
and inpatient care is higher among women, this is largely a reflection of differences during child-bearing years\. For
example, inpatient admissions are significantly higher among males among both under-5 and over-60 populations,
pointing to an important gender equity agenda with regard to service utilization\.
7\. Bangladeshâs health access and quality score ranked 133 of all of 195 countries assessed in 2016\. The Health Access
and Quality (HAQ) index score increased from 17\.8 in 1990 to 47\.6 in 2016 (on a scale from 0 to 100)\. However, further
improvement in health access and quality has slowed after a period of rapid improvement between 1990 and 2000\. Major
access and quality gaps have been observed for cancers, neonatal disorders, stroke, epilepsy and adverse medical
practices\.
8\. The COVID-19 pandemic has created additional barriers for the delivery of essential health and nutrition services in
Bangladesh\. Bangladesh experienced the sharpest reductions in service delivery from March to May of 2020, with a
decline in the number of expected outpatient consultations by 74 percent, of antenatal care consultations by 23 percent,
institutional deliveries by 26 percent, childhood vaccinations by 56 percent and injectable family planning visits by 22
percent\. Disruptions in essential health service delivery were observed to be significantly greater for hospitals and Upazila
Health Complexes\. It is estimated that as of December 2020, these service disruptions led to approximately 11,337
additional child deaths and 387 additional maternal deaths, in addition to excessive deaths caused by NCDs 7\. Although
there has been some recovery from the disruptions to essential health service delivery, as of March 2021, the provision
of outpatient consultations continued to be nearly 25 percent lower than expected based on previous years\.
Health system governance
9\. The Constitution8 of the Peopleâs Republic of Bangladesh asserts that the State will secure basic health services to
all citizens of the country\. This has been reaffirmed by the three specific objectives of the Government of Bangladeshâs
(GoBâs) National Health Policy (2011) which includes ensuring primary and emergency health care for all, enhancing
equitable quality health care and accessibility, and promoting preventive health care services\. Bangladesh is also
committed to achieving target 3\.8 of Sustainable Development Goal (SDG) 3 emphasizing achieving Universal Health
Coverage (UHC), including financial risk protection, access to quality essential health-care services and access to safe,
effective, quality and affordable essential medicines and vaccines for all by the year 2030\.
10\. Health policy formulation is a joint product of the Government and development partners\. The Planning Commission
prepares the national Five-Year Plans (FYP) (currently the Eighth Five Year Plan, 2020â2025)\. Health sector planning is the
5
GBD 2015 Healthcare Access and Quality Collaborators\. Healthcare Access and Quality Index based on mortality from causes amenable to personal
healthcare in 195 countries and territories, 1990â2015: a novel analysis from the Global Burden of Disease 2015 study \. The Lancet\. 2017 May 18\.
6
National Institute of Population Research and Training (NIPORT), and ICF\. Bangladesh Demographic and Health Survey 2017-18\. 2020\. Dhaka,
Bangladesh, and Rockville, Maryland, USA: NIPORT and ICF\.
7
Roberton, T and Villar Uribe\. The impact of service disruptions in Bangladesh due to the COVID-19 pandemic\. World Bank Internal Report\. 2021
8 Article 15\.1 of the Constitution stipulates that it shall be a fundamental responsibility of the State to secure for its citizens the provision of the basic necessities of
life, including food, clothing, shelter, education and medical care\. In addition, Article 18 of the Constitution asserts that the State shall raise the level of nutrition of its
population and improve public health as some of its primary duties\. (ref: Bangladesh health system review\. Health Systems in Transition, Vol\. 5 No\. 3 2015\. Asia Pacific
Observatory on Public Health Systems and Policies)
Aug 10, 2021 Page 5 of 14
The World Bank
Bangladesh - Improving Hospital Services Quality and Financial Protection for the Poor (P174439)
main responsibility of the central government and has been led by the Ministry of Health and Family Welfare (MoHFW) in
collaboration with key domestic stakeholders and development partners\. National health plans provide guidelines
describing the overall sectoral goals, targets, and strategies for a five-year period, while also providing a strategic
framework to guide investments and budget allocation in the health sector\. Under each HNPSP, operational plans are
developed\. They are also monitored, evaluated, and updated regularly\. In addition, the MoHFW also develops various
specific strategies for health care financing, Maternal and Child Health, and NCDs, among others\.
11\. A number of challenges were highlighted by the independent review team during the mid-term review of the
current 4th HNPSP (2017-2022)\. The objective of the HNPSP is to achieve UHC by fostering improvements in equitable
access to high quality health care, through efficient service delivery\. The key health system challenges identified during
the mid-term review included (a) limited progress has been made in taking forward the Health Financing Strategy aimed
to increase government spending and reduction of out-of-pocket payments; (b) limited access to 24/7 emergency
obstetric and neonatal care; (c) lack of a functioning referral system across the various tiers of the health systems; and (d)
gaps in provision of care for NCDs including mental illnesses and injuries\. Because of the delays, including those caused by
the COVID-19 pandemic, the MoHFW plans to extend the 4th HNPSP for one year until June 2023\.
Health service delivery systems
12\. Bangladesh is at the very early stages of undertaking health system and service delivery reforms that are common
among middle-income countries\. These include a shift in the focus from reproductive and child health towards NCD care;
from access to quality of care; from paper-based to digital information systems; from âaccountingâ? (counting inputs) to
âaccountabilityâ?; from an exclusive focus on the public sector to an inclusive view of the health system including the
private sector; from top-down MoH management to greater autonomy to health providers; from out-of-pocket (OOP)
financing to budget financing; and from (supply-side) input-based financing to (demand-side) strategic purchasing of
services\. Together these reforms will require years or even decades to fully materialize, but they represent essential
ingredients to a modernized Bangladeshi health system that is prepared to address new challenges and the growing
expectations of the population\.
13\. Bangladesh has a pluralistic health system, involving government, non-governmental and private health services\.
There are many actors, including public (MoHFW, Ministry of Local Government, Rural Development and Cooperatives,
Ministry of Women and Childrenâs Affairs, Ministry of Social Welfare etc\.), private, NGOs, CSOs, etc\. working for the
betterment of the health of the population\. While holding exclusive regulatory control over the functions of public, private
and NGO providers, and including the responsibility for financing, functionaries, supplies, maintenance and infrastructure
development for service delivery, the MoHFW delivers services through both the Directorate General of Health Services
(DGHS) and the Directorate General of Family Planning (DGFP) operating structure at different levels (Figure 2) mainly for
rural populations\. Other sectors also finance and operate their own health care services\. In urban settings, provision of
health services is the direct responsibility of the local governments\. To add to the complexity, sectors such as railways,
etc\. run their own health service provision\.
Figure 2: Simplified health service delivery organizational structure in Bangladesh
Aug 10, 2021 Page 6 of 14
The World Bank
Bangladesh - Improving Hospital Services Quality and Financial Protection for the Poor (P174439)
Source: Bangladesh Health System Review (2015)
Primary care service delivery networks
14\. Strong primary health care (PHC) networks that link clients to higher-level services are critical for achieving UHC\.
PHC service delivery in Bangladesh occurs at community clinics, union sub-centers as well as upazila health complexes\.
Ideally, these facilities should mainly focus on disease prevention and ambulatory health care and referring patients with
complications to hospitals and specialists at higher levels\. The PHC network has been instrumental in advancing health
outcomes in the past; however, service readiness and structured referral mechanisms need to be strengthened, among
other actions, to improve overall service quality, prevention of overcrowding of hospitals, and efficiency in an era where
the disease profile has changed significantly\.9
Secondary health care
15\. Improving hospital care quality is important both for the effective response to COVID-19 and the further reduction
of neonatal and infant mortality, and NCDs\. A number of recent studies have revealed that COVID-19 mortality is
negatively associated with the number of hospital beds, in particularly intensive care unit beds, in both low-income and
high-income countries10,11\. Facility-based services has contributed to the significant reduction of neonatal mortality in low-
and middle-income countries12,13,14\. Decreasing the chronic NCD burden requires a two-pronged approach:
9 The 4th Health, Population and Nutrition Sector Program (HPNSP) 2017-2022 Mid-Term Review (MTR) 2020\.; 2020\.
10 Liang, LL\., Tseng, CH\., Ho, H\.J\. et al\. Covid-19 mortality is negatively associated with test number and government effectiveness\. Sci Rep\. 2020; 10:12567\.
11 Janke A\., et al\. Analysis of hospital resource availability and COVID-19 mortality across the United States\. Journal of Hospital Medicine\. 2021; 16:E1-E4\.
12
Darmstadt, GL, et al\. Evidence-based, cost-effective interventions: how many newborn babies can we save? The Lancet\. 2005; Volume 365, Issue 9463, 12â18\.
13 Moyer, CA\. et al\. Facility-based delivery and maternal and early neonatal mortality in sub-Saharan Africa: A regional review of the literature\. African Journal of
Reproductive Health\. 2013; 17(3): 31-43\.
14 Feng, XL\., et al\. China's facility-based birth strategy and neonatal mortality: a population-based epidemiological study\. The Lancet\. 2011; Volume 378, Issue 9801,
22â28\.
Aug 10, 2021 Page 7 of 14
The World Bank
Bangladesh - Improving Hospital Services Quality and Financial Protection for the Poor (P174439)
implementation of the multisectoral policies aimed at decreasing population-level risks for NCDs, and effective and
affordable delivery of primary care interventions for patients with chronic NCDs (NCD best buys)\. However, hospitals play
important role in making sure of technical assistance, quality of NCD care, and reduction of fatality rate of stroke,
myocardial infarction, kidney failure, etc\. These evidences underscore the importance of improving hospital capacity in
order to reduce mortality and improve population health\.
16\. Availability and utilization of hospital care appears to be low in Bangladesh, underscoring the importance of
hospital system capacity development\. Bangladesh has a low number of hospital beds per 1000 at 0\.8 (similar to India at
0\.7, but far lower than the minimum requirement of 3 recommended by the WHO)\. Hospital bed occupancy rates (BOR)
are quite high (perhaps driven by limited supply), at an average of 92 percent across a large sample of several levels of
hospitals, with district hospitals at 125 percent occupancy\. However, the BOR at upazila health complexes is much lower\.
Forty-eight percent of upazila health complexes had a BOR less than 80 percent\.15 Bangladesh also has some of the lowest
hospital discharge rates, at 24 per 1000 population per year (far lower than the low- and lower-middle income country
average in Asia Pacific of 96),16 which suggests low population-level utilization of hospitals for inpatient care, perhaps
driven by perceived low quality and high cost\. Hospital system capacity development will only become more imperative
as needs for complex medical intervention for NCDs rise\. In brief, although excess hospital use is a major concern in many
countries, inpatient utilization rates are so low in Bangladesh that foregone care, rather than unnecessary care, is the
more important concern at present\.
17\. A number of reasons may be responsible for the low availability and utilization of hospital care in Bangladesh:
ï High out-of-pocket spending is a common feature among patients admitted to hospitals\. The average OOP
incurred per admission is over BDT 11,000, or almost US$150, at government hospitals, almost two-thirds of which
is spent on medicines and diagnostics\. This qualifies as âcatastrophicâ? (exceeding 10 percent of a household
budget) for the majority of households in Bangladesh\.
ï The public hospital system is constrained by an ill-distributed service mix and workforce vacancies\. The service
mix is poorly distributed in that the specialty hospitals are primarily in Dhaka, and therefore more difficult to reach
for remote or under-resourced populations\. In addition, the low ratio of 5 doctors and 2 nurses per 10,000
population17 and high rates of provider vacancies (33 percent of physician positions, 11 percent of nurse/midwife
positions, and 38 percent of medical specialist positions are vacant18), in addition to limitations in clinical
competency, must be addressed to improve quality of care and user focus\.
ï Public hospitals also experience shortages of equipment, supplies, and medicines, particularly for high-priority
conditions\. Only 66 percent of District Hospitals have a full set of six basic pieces of equipment (adult scale,
infant/child scale, blood pressure cuff, stethoscope, thermometer, light source for examination)\. This is in contrast
to private hospitals, where over 82 percent have all six items\. The availability of infection control measures is
highly variable in DHs\. For example, less than 60 percent have medical masks and only 47 percent have alcohol-
based hand disinfectant\. The availability of any one of the 14 WHO-recommended set of essential medicines is
highly variable, and medicines to manage NCDs such as mental health conditions, hypertension,
15 Smith OK, Vargas V, Ahmed S, Begum T\. Fiscal Space for Health in Bangladesh: Towards Universal Health Coverage\. World Bank; 2016\.
http://documents1\.worldbank\.org/curated/en/268141537541184327/pdf/AUS17126-WP-OUO-9-Assessing-Fiscal-Space-for-Health-in-Bangladesh-has-been-
approved-P158730\.pdf
16 Health at a Glance: Asia/Pacific 2018: Measuring Progress towards Universal Health Coverage \. Accessed July 14, 2020\. https://www\.oecd-ilibrary\.org/social-issues-
migration-health/health-at-a-glance-asia-pacific-2018_health_glance_ap-2018-en;jsessionid=t7GAnCCUZh3snti3kbTg_Zr4\.ip-10-240-5-71
17 Ahmed SM, Hossain MA, Raja Chowdhury AM, Bhuiya AU\. The health workforce crisis in Bangladesh: shortage, inappropriate skill-mix and inequitable distribution\.
Hum Resour Health\. 2011;9(1):3\. doi:10\.1186/1478-4491-9-3
18 Niport NI of PR and T-, Welfare M of H and F, ICF\. Bangladesh Health Facility Survey 2017 \. Published online February 1, 2020\. Accessed July 14, 2020\.
https://dhsprogram\.com/publications/publication-SPA28-SPA-Final-Reports\.cfm
Aug 10, 2021 Page 8 of 14
The World Bank
Bangladesh - Improving Hospital Services Quality and Financial Protection for the Poor (P174439)
hypercholesterolemia, and diabetes mellitus are the lowest of all 14 examined (available at less than 75 percent
of DHs)\. Laboratory diagnostic capacity is particularly low in DHs for NCD-related tests\. Specifically, only 29 percent
of DHs can conduct a blood glucose test (particularly important for diabetes diagnosis), and only 40 percent can
conduct a liver or renal function test\.19
Digital health
18\. Advancing the appropriate use of at-scale patient-to-provider, provider-to-provider digital health tools is growing
in importance to support expansion, efficiency, and quality in patient-centered care\. Digital health systems in
Bangladesh play a critical information management role across multitudinous systems: they support patient clinical care,
disease surveillance, population-level vaccination campaigns, and have been integral to the COVID-19 pandemic response\.
The national reference OpenMRS+ platform and corresponding shared health record (SHR) database are utilized at a few
public hospital facilities, and private provider networks are delivering more robust PHC referral chains such as the Digital
GP model in select Upazilas of the Jamalpur district\. Tele-health call centers like Shastho Batayon (16263), Telenorâs Toniq,
the COVID-19 Surokkha vaccine registration platform, and mobile-applications like the DGFP eMIS have made strides in
leveraging digital health platforms for patient-centric care\. While many mature digital systems are utilized in Bangladesh
and deployed well-beyond the pilot phase, there is much work to be done from the perspectives of interoperability of
systems and client and information utilization\. Additional gaps in specific care priorities such as technology addressing the
NCD burden and general pharmacy services must be supported and integrated with patient information systems\.
Health financing
19\. Inadequate and inequitable financing to the health sector are critical impediments toward achieving the goals set
out in Bangladeshâs national policy documents, including the commitment to UHC\. Total health expenditure per capita
was US$42 in 2018, while government health expenditure was less than 1 percent of GDP, among the lowest in the world\.
As a result, over two-thirds of total health spending is sourced from OOP spending, the most inefficient and inequitable
mode of financing health\. Household survey data reveal that the incidence of catastrophic health expenditures has been
rising steeply since 2000\. A World Bank (WB) report found that over the short to medium term, reprioritization of the
MoHFW budget by increasing its share of the total national budget represents a significantly larger potential source of
fiscal space than economic growth or other sources of fiscal space\.
20\. In addition to the level of health spending, there is a need to undertake health financing reforms\. Many key aspects
of the middle-income country health financing agenda have yet to gain traction in Bangladesh\. These include a shift away
from input-based line-item budgets towards demand-side financing with a focus on the poor\. This agenda was initiated
by the GoB in the form of the Health Care Financing Strategy (2012-2032), the key strategic document guiding the UHC
financing agenda, but implementation progress has been very limited almost 10 years since its launch\. The link between
the strategy and MoHFWâs annual budget is very weak\. A key pillar of the strategy was the creation of Shasthyo Surokhsha
Karmasuchi (SSK), a health protection scheme targeted to the poor with an explicit benefit package of health services and
output-based provider payment model\. The scheme was launched in 2016 in three upazilas in Tangail, but coverage
remains very low (less than 100,000)\. Also, the establishment of a National Health Security Office (NHSO) to administer
demand-side financing schemes has yet to be accomplished\. As a result, the potential for SSK to become an important
vehicle for health financing reform in Bangladesh remains largely untapped\.
19Niport NI of PR and T-, Welfare M of H and F, ICF\. Bangladesh Health Facility Survey 2017\. Published online February 1, 2020\. Accessed July 14, 2020\.
https://dhsprogram\.com/publications/publication-SPA28-SPA-Final-Reports\.cfm
Aug 10, 2021 Page 9 of 14
The World Bank
Bangladesh - Improving Hospital Services Quality and Financial Protection for the Poor (P174439)
Health care seeking behavior
21\. Only 15 percent of outpatient care is delivered by public facilities, with over 80 percent by private providers or
pharmacies; however, 55 percent of inpatient care is delivered at government hospitals\. Urban Bangladeshis tend to
switch between public and private providers until they receive a satisfactory health outcome (Figure 3)\. The first point of
contact for a poor client â most often a slum dweller â is a home remedy by either self-treatment or through a traditional
(informal) provider\.20 In rural Bangladesh, self-treatment and delay of care seeking are common\. Again, homeopaths and
village doctors are among the first line of contacts\. Seeking outpatient care at public facilities is rare and seems to be the
last choice\. Access, cost, severity of illness, gender, age, and illness type are among the important determinants of
treatment choice for both urban and rural poor\. Public facilities tend to be preferred by individuals from the low-income
quintiles\. There is increasing utilization of private hospitals, although they still account for less than half the total, as
patients seek alternatives to public facilities, even if at significantly higher expense\. Despite perceived better quality as
measured by cleanliness and responsiveness in private hospitals among the patients interviewed21, there is no significant
difference in staffing, skills and professionalism between public and private hospital service providers22\.
Figure 3: Health Seeking Pathway for Urban Consumers\.
Relationship to CPF
22\. This project is fully consistent with the current country partnership framework (FY2016-2020)\. Human
development is one of the foundational priorities specified in the CPF\. Key interventions proposed under the CPF include
improving the quality of public service delivery (including workforce skills); increasing public funding for health and moving
towards universal health coverage; and extending coverage of innovative social protection to both the rural and urban
poor\.
C\. Proposed Development Objective(s)
Note to Task Teams: The PDO has been pre-populated from the datasheet for the first time for your convenience\.
Please keep it up to date whenever it is changed in the datasheet\. Please delete this note when finalizing the
document\.
22\. The project development objectvies are to (a) support the Government of Bangladesh to improve the quality and
appropriate utilization of clinical services for priority conditions, and (b) expand coverage of health protection schemes\.
20
Caldwell, B\.K\., Rashid, S\.F\., & Murthy, S\. The informal health sector and health care-seeking behavior of mothers in urban Dhaka slums\. 2014\. J Pop Research, 31,
111â129\.
21 Siddiqui N\., et al\. Comparison of Services of Public, Private and Foreign Hospitals from the Perspective of Bangladeshi Patients\. J HEALTH POPUL NUTR 2007;
25(2):221-2302007\.
22
Andaleeb, S\.S\. Service quality in public and private hospitals in urban Bangladesh: a comparative study\. Health Policy 2000; 50:25-37\.
Aug 10, 2021 Page 10 of 14
The World Bank
Bangladesh - Improving Hospital Services Quality and Financial Protection for the Poor (P174439)
Key Results (From PCN)
23\. The project development objectives will be measured by four key results in the project division, including: (a) improved
availability of NCD services, intensive care, comprehensive emergency obstetric and neonatal care (CEmONC), emergency
medical services, safe blood services in hospitals and selected Upazila Health complexes; (b) increased coverage of
appropriate treatment for people currently living with, or at high risk for, diabetes and cardiovascular diseases; (c)
increased proportion of women between 30 and 49 years old screened for cervical cancer at least once; and (d) increased
number of poor households protected by health protection schemes\.
D\. Concept Description
24\. The project is intended to support the ongoing 4th HNPSP and to generate information on good practices to inform
the transition to the upcoming 5th HNPSP\. It will mainly support the government-proposed priority activities in the
following operational plans (OPs) under the 4th HNPSP: community basic health care, Upazila Health Complex, hospital,
health information system (including e-Health), NCD, human resource development, health financing, and maternal and
child health\.
25\. By focusing on one division, Barisal, the project will function as a demonstration of the impacts of multi-pronged
interventions\. The Division of Barisal has been proposed by the Government because of needs (based on high NCD burden
and gaps in service delivery quality, and poverty level\. The MoHFW has committed to fill the gaps in terms of infrastructure
(such as IT, civil works, etc\.), human resources and commitment to reform/innovation proposed under the project\. While
Barisal is the district selected to receive the bulk of the resource support, the specifics of project design will draw on
lessons learned from other districts, and the project will also involve creation of various mechanisms, guidelines, protocols,
templates, and systems that will be applicable across the entire country\. Successful interventions can be scaled up
nationwide as part of the 5th HNPSP\.
26\. The project will encompass three components as follows\.
Component 1: Health System Strengthening
27\. This component relates to strengthening the foundations of the health system to improve the quality and
appropriate utilization of clinical services\. This means ensuring policy development or revision, capacity building and
technical assistance for implementing service delivery reform/innovations (e\.g\., redesign of service provision models
including introduction of hub and spokes model, patient-centered care, digital health, etc\.) and quality enhancement (e\.g\.,
service provider accreditation, development and updating of standards, protocols, and implementation of accountability
and incentive mechanisms that encourage increase in output, improved service quality, technical performance and care
coordination as described in Table 1)\.
Aug 10, 2021 Page 11 of 14
The World Bank
Bangladesh - Improving Hospital Services Quality and Financial Protection for the Poor (P174439)
Table 1: Characteristics of effective facility collaboration to be supported by this project
Network Service delivery components Digital components
functions
Expanded access ï Service package definition by level of care ï Telemedicine (provider-
ï Systems to promote shared laboratory diagnosis results patient)
among service providers
ï Transport links for routine, urgent and emergency cases
ï SOPs for transfer and referral
Continuity of ï Systems to support consistent clinical documentation ï Unique patient IDs
care ï Facilitation of consistent communication between ï Medical record sharing
facilities/providers and communities systems
Right-based care ï Patient-centered approach (in terms of where, when and ï Apps for facilitating
what services are provided) compliance
ï Expert patient and peer learning systems ï Telemedicine
ï E-prescription
Communication ï Health care provider training on respectful ï Teleconsultation (provider-
communication with clients provider)
ï Clear definition of cadre roles and responsibilities
ï SOPs on communication flows
Shared learning ï Learning meetings ï Conferencing
ï Participatory facilitation
ï Network clinical audits
Resource ï Rational distribution of resources ï E-claims
rationalization ï (Service package definition by level of care) ï PFM systems
ï Claims submission systems ï Telemedicine
Component 2: Improved health services for priority conditions
28\. This component will support the delivery of high-quality client-centric health services for pregnant women,
newborns, children, adolescents and people living with non-communicable diseases and injuries\. Health service
providers at different tiers, like community clinics, union sub-centers/rural dispensaries/union health and family welfare
centers, Upazila health complexes and district/general hospitals, under the defined âhub and spokesâ? service network will
be supported with improved infrastructure and other key inputs (in terms of human resources, funding, equipment,
medicines and other supplies)\. Quality enhancement programs will be implemented to strengthen facility management
and health care providersâ clinical competencies in diagnosing and treating high-burden conditions like NCDs and
neonatal/infant conditions/illnesses\. Key facility-level functions/services to be supported include emergency medical
service, safe blood service, intensive (including cardiac) care, Comprehensive Emergency Obstetric and Newborn Care
services (CEmONC), etc\. Digital health and telemedicine, managed equipment service, and logistical service will be
promoted through service contracts\.
Component 3: Improved financial protection for the poor
29\. This component aims to support the emergence of new and improved health protection schemes that can
effectively provide financial protection to the poor and vulnerable while strengthening hospital accountability\. The
project will support the redesign of health protection schemes (including improvements to beneficiary identification,
benefit package definition, management structures (purchaser-provider split, claims processing, management
information system, etc\.) through capacity building for the Health Economics Unit (HEU) and project districts, support of
Aug 10, 2021 Page 12 of 14
The World Bank
Bangladesh - Improving Hospital Services Quality and Financial Protection for the Poor (P174439)
premiums, scheme operator management costs, and other areas\. Due to the potential complementarities between the
health protection scheme and supply-side investments, the project is expected to initiate financial protection scheme
coverage in the same division (Barisal) prioritized by other components, while also supporting HEUâs current operations
indirectly through scheme-wide structural improvements\. In addition, autonomy with regard to the utilization of claim
revenues retained by hospitals will be piloted in the project districts\.
Note to Task Teams: The following sections are system generated and can only be edited online in the Portal\. Please
delete this note when finalizing the document\.
Legal Operational Policies Triggered?
Projects on International Waterways OP 7\.50 No
Projects in Disputed Areas OP 7\.60 No
Summary of Screening of Environmental and Social Risks and Impacts
\.
Note to Task Teams: This summary section is downloaded from the PCN data sheet and is editable\. It should match
the text provided by E&S specialist\. If it is revised after the initial download the task team must manually update the
summary in this section\. Please delete this note when finalizing the document\.
Environmental risks include generation of medical wastes, wastewater discharges from the health facilities, and air
emissions from incinerators and the major social risks of the project relate to inclusion of all stakeholders who come from
diverse social backgrounds\. Social impacts may also include management of labor and potential risk related to SEA/SH\.
There will also be risks and impacts related to infrastructure repair and renovation; and rehabilitation of health facilities\.
However, they are localized and short-term\. With enhanced capacity of the staff to manage E&S impacts, these risks and
impacts are expected to be mitigated adequately\. The project is expected to take place within the footprint of existing
facilities and is not expected to involve any land acquisition or involuntary resettlement\. No large-scale labor influx is
expected as the magnitude of construction limited to repair, renovation and small extension of the existing facilities\.
Note: To view the Environmental and Social Risks and Impacts, please refer to the Concept Stage ESRS Document\.
Please delete this note when finalizing the document\.
\.
CONTACT POINT
World Bank
Shiyong Wang, Bushra Binte Alam, Owen K\. Smith
Senior Health Specialist
Aug 10, 2021 Page 13 of 14
The World Bank
Bangladesh - Improving Hospital Services Quality and Financial Protection for the Poor (P174439)
Borrower/Client/Recipient
Ministry of Finance
Fatima Yasmin
Secretary
secretary@erd\.gov\.bd
Implementing Agencies
Ministry of Health and Family Welfare
Md\. Helal Uddin
Additional Secretary
helalu06@yahoo\.com
FOR MORE INFORMATION CONTACT
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 473-1000
Web: http://www\.worldbank\.org/projects
APPROVAL
Task Team Leader(s): Shiyong Wang, Bushra Binte Alam, Owen K\. Smith
Approved By
APPROVALTBL
Country Director: Dandan Chen 22-Aug-2021
Note to Task Teams: End of system generated content, document is editable from here\. Please delete this note when
finalizing the document\.
Aug 10, 2021 Page 14 of 14 | APPROVAL |
P078337 | Page 1
INTEGRATED SAFEGUARDS DATA SHEET
CONCEPT STAGE
Report No\.: AC721
Date ISDS Prepared/Updated: March 17, 2004
I\. BASIC INFORMATION
A\. Basic Project Data
Country: India
Project ID: P078337
Project Name: INDIA - Statistical
Strengthening Project
Task Team Leader: Salman Zaidi
Estimated Appraisal Date: June 6, 2005
Estimated Board Date: August 1, 2005
Managing Unit: SASPR
Lending Instrument: Specific Investment
Loan
Sector: Central government administration
(100%)
Theme: Economic statistics, modeling and
forecasting (P)
Safeguard Policies Specialists in the task team: -
Loan/Credit amount ($m\.):
IBRD: 50
Other financing amounts by source:
($m)
B\. Project Objectives [from section 3 of PCN]
The development objective of the ISSP is to help fulfill the mission statement proposed by the National
Statistical Commission:
The mission of the Indian Statistical System shall be to provide, within the decentralized structure
of the system, reliable, timely and credible social and economic statistics, to assist decision making
within and outside the Government, stimulate research and promote informed debate relating to
conditions affecting peoples life
C\. Project Description [from section 4 of PCN]
Main ISSP components
(Tier 1 is a Technical Assistance sub-project that is presently ongoing):
(i) Strengthening of state DES offices: The study being carried out under Tier 1 will help document the
status of data collection, processing, and standards followed in each state, assess infrastructure and human
resources available, and prepare a position paper for each state for discussion at an All-India workshop\.
Following the workshop, a fully-costed plan for upgrading each state office will be developed the MoS team,
and the resultant state plans will be implemented under the ISSP\.
(ii) All India Statistical Network: The main objective of establishing the network will be to help facilitate
improved data sharing and coordination among various bodies within the Indian statistical system\. The study
being carried out under Tier 1 will help identify options for what kind of a network can be established, and
will compare the benefits of different options (e\.g\. creation of a network, use of an existing network, etc\.)
Page 2
with corresponding costs\. The plan eventually selected from among these options will then be implemented
under the ISSP\.
(iii) Business Register:
Part of MoSs long-term plans to improve the reliability of GDP estimates is the
creation and progressive improvement of a business register to function as a sample frame for all enterprise
surveys\. The study carried out in Tier 1 will examine the feasibility of combining different administrative lists
for this purpose through a pilot to be conducted in Andhra Pradesh\. The All-India Business Register will be
established under the ISSP based on the blueprint developed through the Tier 1 study\.
(iv) Improvement of service sector statistics:
Indias services sector is heterogeneous as well as rapidly
growing and changing in composition and character, making the development of appropriate survey
methodology a major challenge\. MoS plans to develop a system of periodical surveys, covering one or more
sub-sectors every year through suitably designed surveys with a view to improve the availability and quality of
services sector statistics, particularly in the measurement of its contribution to GDP\. Small surveys covering
specific segments are being taken up initially under Tier 1 to gain experience and develop appropriate
systems\. The survey methodology developed through initial pilot studies of selected sub-sectors will be
extended to other services sub-sectors under the ISSP after suitable adjustments\.
(v) Statistical Consultancy Wing:
Both because of government policy and because the official statistical system
might not yet be equal to the task, it is important to buttress it with help from the private sector\. While there
are many private sector organizations engaged in data collection and related activities, relatively little
information is available on their capability, area of operation, infrastructure, expertise, etc\., a gap which is
expected to be filled through a study presently underway under Tier 1\. MoS is considering establishing a
consultancy wing to cater to increasing demands for professional statistical and survey services on a fee-basis,
so the Tier 1 study will also help identify statistical offices outside India that have a similar institution, and
propose possible structure, powers, and functioning of an Indian version that could utilize existing private
sector organizations\. A statistical consultancy wing will then be set up under the ISSP\.
(vi) National Accounts Type Studies:
MoS is working closely with the Ministries of Agriculture and Industry
to improve the coverage, timeliness, and reliability of information collected in these subject areas\. In addition,
MoS plans to conduct several type-studies to update the various rates and ratios used in compilation of GDP
estimates\. These studies will be carried out in close collaboration with research institutions, state
governments, and other professional bodies\.
(vii) Improvement of Household Surveys:
The NSC has made a number of recommendations to improve the
coverage and timeliness of household surveys conducted by the National Sample Survey Organization
(NSSO), including improvement in sampling procedures and questionnaire design, and selection of
appropriate reference periods for the various questionnaires used\. These surveys are an important source of
information for tracking income poverty and other MDG indicators\. Under the guidance of the various
Expert Groups appointed by GoI for each survey round, NSSO plans to conduct several methodological
studies to improve its extensive program of household surveys\.
(viii) Price Statistics:
Modernization activities to be carried out under the ISSP include base-year updating for
the various price indices, construction of a new series of All-India consumer price indices for urban and rural
areas, establishment of a databank on prices, improvement of the wholesale price index and construction of a
new producer price index, and establishment of a unified price data collection system\.
Page 3
(ix) Human Resource Development:
There are currently over sixty two thousand statistical personnel working
across central and state organizations\. However, there is an extreme shortage of adequate training facilities for
these staff, apart from a small MoS training division (which by itself is poorly equipped to service this huge
demand)\. The ISSP will help upgrade the training infrastructure by creating a database of statistical personnel,
with information on their existing qualifications, experiences, and training requirements that would help
implement better staff deployment and career management practices\. In addition, the ISSP will also help
develop improved curricula and other resource material needed to meet the training needs of staff at the
central and state level\.
(x) Strengthening of Organizational Structure:
The NSC has recommended the establishment of a permanent
and statutory National Commission on Statistics (NCS) as a policy-making body to oversee all statistical
activities and ensure effective coordination\. In addition, a National Statistical Organization will be established
within MoS, and will comprise Directorate Generals of Statistics (replacing the present CSO) and National
Sample Surveys (replacing the present NSSO), a Data Storage and Dissemination Center, and a National
Center for Statistical Consultancy\. The ISSP will help support this organizational restructuring; details
pertaining to the various activities that this will entail will be finalized once the NCS has been established (pls\.
see below)\.
D\. Project location (if known)
Delhi\. Other state capitals where the state Directorates of Economics and Statistics are located\.
E\. Borrowers Institutional Capacity for Safeguard Policies [from PCN]
N/A
II\. SAFEGUARD POLICIES THAT MIGHT APPLY
Applicable?
Safeguard Policy
If Applicable, How Might It Apply?
[ ]
Environmental Assessment
(
OP
/
BP
4\.01)
[ ]
Natural Habitats
(
OP
/
BP
4\.04)
[ ]
Pest Management
(
OP 4\.09
)
[ ]
Involuntary Resettlement
(
OP
/
BP
4\.12)
[ ]
Indigenous Peoples
(
OD 4\.20
)
[ ]
Forests
(
OP
/
BP
4\.36)
[ ]
Safety of Dams
(
OP
/
BP
4\.37)
[ ]
Cultural Property
(draft OP 4\.11 -
OPN 11\.03
)
Page 4
[ ]
Projects in Disputed Areas
(
OP
/
BP
/
GP
7\.60)
*
[ ]
Projects on International Waterways
(
OP
/
BP
/
GP
7\.50)
Environmental Assessment Category:
[ ] A [ ] B [X] C [ ] FI [ ] TBD (to be determined)
If TBD, explain determinants of classification and give steps that will be taken to determine that
EA category (mandatory):
III\. SAFEGUARD PREPARATION PLAN
A\. Target date for the Quality Enhancement Review (QER), at which time the PAD-stage ISDS
would be prepared\.
B\. For simple projects that will not require a QER, the target date for preparing the PAD-stage
ISDS
C\. Time frame for launching and completing the safeguard-related studies that may be needed\.
The specific studies and their timing
1
should be specified in the PAD-stage ISDS\.
IV\. APPROVALS
Signed and submitted by:
Task Team Leader:
Salman Zaidi
17
th
March 2004
Approved by:
Regional Safeguards Coordinator:
Pramod Agrawal
27
th
April 2004
Comments
Sector Manager:
Kapil Kapoor
8
th
April 2004
Comments
*
By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the
disputed areas
1
Reminder: The Bank's Disclosure Policy requires that safeguard-related documents be disclosed before appraisal (i) at the
InfoShop and (ii) in-country, at publicly accessible locations and in a form and language that are accessible to potentially af
fected
persons\. | APPROVAL |
P052368 | Document of
The World Bank
Report No: 22630-SA
PROJECT APPRAISAL DOCUMENT
ONA
PROPOSED GRANT FROM THE
GLOBAL ENVIRONMENT FACILITY TRUST FUND
IN THE AMOUNT OF SDR 6\.0 MILLION (US$7\.92 MILLION EQUIVALENT)
TO THE
REPUBLIC OF SOUTH AFRICA
FOR A
MALOTI-DRAKENSBERG TRANSFRONTIER CONSERVATION AND DEVELOPMENT
PROJECT
August 20, 2001
Environment and Social Development Unit - AFTES
Country Department 1, Botswana, Lesotho, Namibia, South Africa, Swaziland - AFCO1
Africa Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective August 2001)
Currency Unit = ZAR
ZAR I = US$0\.1219
US$1 = ZAR 8\.2
FISCAL YEAR
January 1 -- December 31
ABBREVIATIONS AND ACRONYMS
AfDB: African Development Bank
CAS: Country Assistance Strategy
DEAT: Department of Environmental Affairs and Tourism
FMC: Financial Management Committee
GEF: Global Environment Facility
ICR: Implementation Completion Report
INTOSAI: International Organization of Supreme Audit Institutions
KZNNCB: KwaZulu-Natal Nature Conservation Board
LHETP: Lesotho Highlands Ecotourism Project
LHWP: Lesotho Highlands Water Project
LMP: Land Management and Conservation Project
MEGYA: Ministry of Environment, Gender and Youth Affairs
MOU: Memorandum of Understanding
NES: National Environmental Secretariat
PCC: Project Coordination Committee
PCU: Project Coordination Unit
RMA: Range Management Area
RSA: Republic of South Africa
SADC: Southern African Development Community
SANParks: South African National Parks
SC: Steering Committee
SNP: Sehlabathebe National Park
Vice President: Callisto E\. Madavo
Country Director: Fayez S\. Omar
Sector Manager: Agnes I\. Kiss
Task Team Leader: Jan P\. Boj6
SOUTH AFRICA
MALOTI-DRAKENSBERG TRANSFRONTIER CONSERVATION AND DEVELOPMENT
PROJECT
CONTENTS
A\. Project Development Objective Page
1\. Project development objective 2
2\. Key perfonrnance indicators 3
B\. Strategic Context
1\. Sector-related Country Assistance Strategy (CAS) goal supported by the project 3
2\. Main sector issues and Government strategy 4
3\. Sector issues to be addressed by the project and strategic choices 7
C\. Project Description Summary
1\. Project components 8
2\. Key policy and institutional reforms supported by the project 16
3\. Benefits and target population 16
4\. Institutional and implementation arrangements 17
D\. Project Rationale
1\. Project alternatives considered and reasons for rejection 20
2\. Major related projects financed by the Bank and other development agencies 21
3\. Lessons learned and reflected in the project design 21
4\. Indications of borrower commitment and ownership 24
5\. Value added of Bank support in this project 24
E\. Summary Project Analysis
1\. Economic 25
2\. Financial 25
3\. Technical 26
4\. Institutional 26
5\. Environmental 27
6\. Social 30
7\. Safeguard Policies 31
F\. Sustainability and Risks
1\. Sustainability 32
2\. Critical risks 34
3\. Possible controversial aspects 34
G\. Main Conditions
1\. Effectiveness Condition 35
2\. Other Dated Covenants 35
H\. Readiness for Implementation 35
I\. Compliance with Bank Policies 36
Annexes
Annex 1: Project Design Summary 37
Annex 2: Detailed Project Description 41
Annex 3: Estimated Project Costs 48
Annex 4: Incremental Cost Analysis 49
Annex 5: Financial Summary 57
Annex 6: Procurement and Disbursement Arrangements 58
Annex 7: Project Processing Schedule 64
Annex 8: Documents in the Project File 65
Annex 9: Statement of Loans and Credits 67
Annex 10: Country at a Glance 69
Annex I 1: Community Consultation and Social Assessments 71
Annex 12: Rangeland Management and Biodiversity 78
Annex 13: Conservation Planning 87
Annex 14: Nature-based Tourism in Lesotho and South Africa 92
Annex 15: Financial Management Action Plan (South Africa) 95
MAP(S)
IBRD 30852
SOUTH AFRICA
Maloti-Drakensberg Transfrontier Conservation and Development Project
Project Appraisal Document
Africa Regional Office
AFTES
Date: August 20, 2001 Team Leader: Jan P\. Bojo
Country Manager/Director: Fayez S\. Omar Sector Manager/Director: Agi Kiss
Project ID: P052368 Sector(s): VM - Natural Resources Management
Theme(s): Environment
Focal Area: B - Biodiversity Poverty Targeted Intervention: N
Program Financing Data
[ [ Loan [ I Credit [X] Grant [ ]Guarantee []Other:
For Loans/Credits/Others:
Amount (US$m): SDR6\.0 (US$7\.92)
Financing Plan (US$m): Source Local Foreign Total
BORROWER 16\.80 0\.00 16\.80
GLOBAL ENVIRONMENT FACILITY 0\.00 7\.92 7\.92
Financing Gap 16\.80 16\.80
Total: 16\.80 7\.92 24\.72
Borrower/Recipient: REPUBLIC OF SOUTH AFRICA
Responsible agency: NATIONAL DEAT, KZNNC, DEAT (FS), DEAET (EC) & SANP
Estimated disbursements (Bank FY/US$m):
=FY2002 2003 2004 2005 2006
Annual 0\.50 1\.00 2\.00 2\.20 2\.20
Cumulative 0\.50 1\.50 3\.50 5\.70 7\.90
|Project implementation period: 5 years
A\. Project Development Objective
1\. Project development objective: (see Annex 1)
The context of the project is a long-term collaborative initiative between Republic of South Africa (RSA)
and the Kingdom of Lesotho (Lesotho) to protect the exceptional biodiversity of the Drakensberg and
Maloti mountains through conservation, sustainable resource use, and land-use and development planning\.
The project will focus on the Maloti-Drakensberg mountains, which are situated along the 300 km eastern
boundary of the Kingdom of Lesotho with the Republic of South Africa\. Three South African Provinces
are affected\. The western part of the KwaZulu-Natal Province forms the major area, but there are
extensions into the Eastern Cape Province to the south and the Free State Province to the north\. The
Golden Gate National Park, managed by South African National Parks (SANParks) also falls within the
area\. The total area covered in the initial project preparation ("the study area") is more than 13,000 km'\.
Gradual delimitation of this vast area has taken place as the preparation has progressed\.
The Maloti-Drakensberg transfrontier area encompasses distinct landscape and biological diversity\. It is
rich in species and high in endemism\. However, excessive livestock grazing, crop cultivation on steep
slopes, uncontrolled burning, alien invading species and human encroachment threatens this asset\. Hence,
the GEF objective is to conserve this globally significant biodiversity\. The project takes a regional
approach to conservation and development, and serves to hamess the potential of a transfrontier ecosystem\.
While the ecosystem shows similarities on both sides of the border, there are considerable legal, social,
institutional and economic differences between the two countries, which the project design recognizes\.
The secondary objective of the project is to contribute to community development through income
generation from nature-based tourism, by capacity building for sustainable utilization of the natural and
cultural heritage of the project area\. Again, the approach is a regional one, in that a common tourist area
will enhance the attraction for visitors considerably, and in that joint management in a number of areas can
capture economies of scale\. It is also clear that Lesotho has much to gain from capitalizing on the advanced
experience of conservation management in RSA, and its successful development of nature-based tourism, in
support of sustainable biodiversity protection\.
In both countries, the project will provide new resources for transfrontier collaboration, project
management and coordination\. A joint information management structure, common workshops, working
groups and studies, will allow for better planning of existing Protected Areas (PAs) as well as for wider
community-based conservation initiatives, with particular emphasis on rangeland management in
biodiversity priority areas\. It will support the establishment of viable conservation management institutions
at local level to ensure community involvement, and planning and community-level training for
nature-based tourism development\.
The components are adjusted to the specific situation in each of the countries\. For example, there will be
further support to national level institution building for conservation in Lesotho, while this is unnecessary
in RSA\. While the receptive capacity is more limited in Lesotho, the needs are also greater, and the
domestic counterpart funding more limited\. The transfrontier nature of the project will ensure that the
analysis and resolution of conservation problems will be shared, and the resources and expertise in each
country complemented\.
The GEF incremental cost contribution ofS 15\.25 million for the two countries together, of which $7\.3 25
goes to Lesotho and $7\.925 million goes to RSA, should also be seen in the context of major ongoing
support to biodiversity conservation in Lesotho (UNDP: $2\.5 million), and support to natural resources and
- 2 -
rural income enhancement in the highlands (AfDB: $8\.4 million)\. Both are counted here as associated
financing, in addition to the Lesotho government contribution ($1\.1 million)\. In RSA, the counterpart
contribution is estimated as $16\.8m\. Most of this represents expenditure for nature conservation by the
Kwazulu-Natal Nature Conservation Board (KZNNCB)\.
2\. Key performance indicators: (see Annex 1)
(i) Globally significant biodiversity maintained and enhanced through protection for key habitats and
indicator species\.
(ii) Expanded protected areas system in place with adequate buffer zones and community involvement\.
(iii) Sehlabathebe National Park in Lesotho formally established and conservation management and
development plan agreed and under implementation;
(iv) Community initiatives in nature-based conservation financially viable and benefit transfers working;
(v) Joint declaration by the Government of Lesotho and South Africa of a transfrontier conservation area
incorporating Sehlabathebe National Park, the uKhahlamba-Drakensberg Park, and additional areas as
appropriate\.
B\. Strategic Context
1\. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1)
Document number: R99-29/1 Date of latest CAS discussion: 03/23/99
The primary objective of the Bank's assistance to South Africa is to help reduce the apartheid legacy of
poverty and inequality\. This work is guided by three subsidiary objectives: (i) promoting growth and
higher employment; (ii) social and environmental sustainability; and (iii) regional development\. The project
will contribute to the first by helping to capture the economic potential of nature-based tourism, thereby
creating jobs of which many will require little formal schoolirng\. Through active involvement of local
conmmunities, it will also contribute to break down traditional barriers of inequality and exclusion\. The link
to the second objective is obvious, in that environmental sustainability rests on the wise utilization of
natural resources\. As one of the most biodiversity-rich countries on earth, South Africa also has a global
contribution to make in this respect\. The project will contribute to the third CAS objective by furthering
collaboration between Lesotho and South Africa in the field of nature conservation and tourism\. It will
engender positive collaboration between the two countries; enable shared learning and facilitate the process
of harvesting joint opportunities, e\.g\. by creating a regional tourism destination\.
Document number: IDA/R98-56 Date of latest CAS discussion: 06/04/98
The primary objective of the Bank's assistance to Lesotho is to support Government's strategy of poverty
reduction and its efforts to sustain macroeconomic performance through greater integration into the
sub-regional economy\. In this context, the Bank will support "a comprehensive approach to the natural
resource environment"\. This project will contribute to the overarching objective on furthering sub-regional
integration thanks to its transfrontier nature\. Collaboration with South Africa will offer Lesotho access to a
great deal of experience in protected areas management\. With better access to the Maloti mountain from
the South African side, enhanced management and joint marketing, it should be possible for Lesotho to tap
into the considerable tourism flows already available on the other side of the frontier\. The project will also
address the explicit CAS objective to "ensure conservation of natural resource and protection of the
environment"\.
-3 -
la\. Global Operational strategy/Program objective addressed by the project:
The project is consistent with the GEF Operational Strategy for Biodiversity Conservation and specifically
with O\.P\.4 (Mountain Ecosystems)\. Consistent with this program, the project will address conservation
and sustainable use in a transfrontier mountain ecosystem in southern Africa, which is under increasing
human pressure and imminent threat of degradation\. The Drakensberg highlands are a transfrontier area of
high biodiversity and cultural value along the borders of Lesotho and KwaZulu- Natal, Eastern Cape and
the Free State, South Africa\. This area lies within one of the 200 Global Ecoregions proposed by World
Wide Fund for Nature (WWF); it has been designated as an Afromontane Regional Center of Endemism\.
The uKhahlamba-Drakensberg Park has been listed as a Wetland of International Importance under the
Ramsar Convention, and a substantial part of the project area is proposed as a UNESCO World Heritage
Site and Peace Park\.
The project is consistent with COP guidance in that it seeks to encourage conservation and sustainable use
of threatened habitats and endemic species within a vulnerable montane ecosystem\. It responds to COP3
and COP4 guidance through capacity building for sustainable rangeland management\. It fosters the
ecosystem approach by promoting improved management and sustainable use across national boundaries
and an altitudinal gradient of montane habitats under different management regimes, from protected areas
to community rangelands\. The project further responds to COP4 guidance by promoting incentive measures
and community involvement in biodiversity management specifically to attain conservation objectives\. It is
expected that conservation co-management initiatives developed for the project area will prove relevant to
other protected areas and community lands elsewhere\. The project will support new and innovative
institutional measures to promote regional cooperation and exchange of expertise and to encourage
sustainable livelihoods consistent with both biodiversity conservation and poverty alleviation with a
particular emphasis on sustainable tourism\. By building capacity for community conservation programs
and alternative livelihoods based on nature-related tourism the project promotes more equitable sharing of
benefits derived from biodiversity conservation and sustainable use\.
2\. Main sector issues and Government strategy:
A\. Lesotho
The project is firmly grounded in major policy and strategy documents of the Government of Lesotho\.
Lesotho ratified the Convention on Biological Diversity on January 10, 1995\. The National Environmental
Action Plan completed in 1989 states that the most widespread environmental problems are related to
overstocking of rangelands\. Hence, the NEAP proposed the development of grazing associations,
enforcement of grazing regulations and the introduction of grazing fees\. Implementation of the NEAP has
been very slow, and it was only in 1994 that a small National Environmental Secretariat (NES) was
instituted\.
With support from UNDP, NES developed a National Action Plan to Implement Agenda 21 (1994)\. It
lays out a set of strategies including: the use of "low cost, easy to use erosion and rangeland control
measures" and the creation of "protected areas to save wildlife, and rare and endemic genetic material\."
This plan is currently under implementation by the Ministry of Environment, Gender & Youth Affairs
(MEGYA)\.
The 1996 National Environmental Policy of Lesotho promotes sustainable management of natural
resources and advocates "broad-based participation of communities in the development and management of
public land and village commons"\. It also notes the need to "collaborate with neighboring countries in the
- 4 -
conservation of biological diversity with programs of tourism, water, transport and other sectoral
development\."
A National Strategy on Lesotho's Biological Diversity: Conservation and Sustainable Use (1999) is also
available\. This document specially identifies the need to "Improve conservation of the Maloti-Drakensberg
Ecosystem and reduce over-utilization of the range"\. Furthermore, it discusses the need to "Create
transfrontier linkages in protected areas to ensure that biodiversity-rich ecosystems and habitat are not
neglected or over-exploited"\. It proposes the creation of a transfrontier peace park\.
The 1996 National Livestock and Range Management Policy established the overall goal "to achieve
greater self-reliance and increased incomes for livestock owners while protecting and regenerating the
underlying natural resource environment and resource base\." To achieve this goal, the strategy defines a
large set of measures, including: the elimination of transhumance from the lowlands to the mountains;
adjudication of grazing rights within cattle posts; training of livestock owners in sustainable use of natural
resources; creation of Grazing Associations\. To address the problem of degraded rangelands, six Range
Management Areas (RMAs) have been established covering a total of some 200,000 hectares (which
represent about one tenth of the grasslands in the country)\. The achievements of RMAs include
improvement in range conditions, the quality of animals, empowerment of range users in rangeland
management\. This project will work with the Range Management Division of the Ministry of Agriculture,
to manage grazing in areas of importance for biodiversity conservation\.
The Environment Bill (2000) has received Cabinet approval\. It is being considered by Parliament, and
once the Bill is passed, it will provide a legal foundation for Environmental Assessment in Lesotho, as
discussed further below\.
Tourism in Lesotho
In 1994, a consultant report, commissioned by the European Union, outlined a comprehensive Tourism
Development Plan for the Kingdom of Lesotho which was submitted to the Ministry of Tourism, Sports
and Culture but liffle of the plan has been implemented\. The national tourism bodies are small and poorly
financed, and the tourism functions of central government are fragmented\. The private business sector is
particularly weak in tourism and facilities and services are poor\. Overall tourism numbers are low,
reaching a peak of 416,882 arrivals in 1992\. Most visitors are South African and there are very small
numbers of non-African intemational visitors\. This is in stark contrast to the explosive development of
South African tourism, including the Drakensberg area, which receives approximately 300,000 per year\.
Documented problems reveal that in Lesotho the entire legal structure surrounding business development,
property law, insurance regulation, conflict resolution, loan guarantees and tourism regulation must be
upgraded if the private sector is to be enticed to fully contribute to tourism in Lesotho\. Such legal
restructuring is being considered and a proposed AfDB project will make a major contribution to tourism
policy and implementation, particularly in the Lesotho Highlands Water Project (LHWP) areas\. The
Maloti-Drakensberg Conservation project will promote development of nature-based tourism in the Maloti
range and provide new altemative livelihood opportunities for local communities based on biodiversity
conservation\.
The Ministry of Tourism has decided to elaborate a national tourism policy\. This is seen as a necessary
precursor to the passing of the Tourism Development and Incentives 2000 Bill\. The Bill provides for the
establishment of the Lesotho Development Corporation as a body corporate\. All income to the Corporation
is applied to the promotion of tourism, with no dividend paid to the shareholder (GoL)\. The Lesotho
- 5-
Tourist Board will be abolished once the Bill is passed\. It also allows for the designation of specific areas
for tourism development, where land can be sub-let to entrepreneurs\. The Bill provides the legal basis for
incentives to the tourism sector\.
The AfDB-supported Highlands Natural Recources and Rural Income Enhancement Project will bring
considerable resources to national level tourism development, as well as specifically to the LHDA project
areas\. These are distinct from the areas where the current project plans its activities\. (Additional details on
tourism are provided in Annex 14)\.
B\. South Africa
South Africa ratified the Convention on Biological Diversity on November 2, 1995\. The White Paper on
Environmental Management Policy (Department of Environmental Affairs and Tourism, DEAT, 1997)
sets out the vision, principles, strategy goals and objectives and regulatory approach that the government
will use for environmental management\. It defines a large set of priority areas, including the need to ensure
sustainable land utilization, conserve biodiversity, ensure sustainable tourism, and develop integrated
coastal-zone management\. The White Paper gives a clear indication of the importance of tourism for job
creation and economic growth, but emphasizes that realizing the potential for tourism development will
depend largely on ensuring that development is environmentally sustainable and does not degrade the
environment or reduce biodiversity\.
The White paper on the Conservation and Sustainable Use of South Africa's Biological Diversity
(DEAT, 1997) presents the following goals:
- conserve South Africa's biodiversity;
* use its biological resources sustainably;
i ensure that benefits derived from its genetic resources serve national interests;
e build human capacity to manage its biodiversity;
- create conducive conditions and incentives for biodiversity conservation;
- promote biodiversity conservation at the international level\.
Root causes of biodiversity loss include rapid population growth, agricultural and human habitation
expansion into areas of biodiversity significance, soil erosion and the spread of alien invading species that
suppress the indigenous vegetation and its related fauna\. It is recognized that unless ways are found for
local communities to benefit from nature conservation, these trends are likely to continue at an accelerated
pace in the future\. This project builds on that ambition by expanding biodiversity conservation into
community lands through linkages with improved range management and community income generation
linked to biodiversity conservation\. The said White Paper gave rise to the National Environmental
Management Act, 1998\.
South Africa has seen a major expansion in its tourism volume in the last decade to become the number one
destination in Africa\. Since 1994 the South African foreign-tourist arrivals have expanded at a
compounded rate of 20\.5% per annum\. In 1997 there were 5\.5 million tourist arrivals in South Africa,
providing receipts of US $2\.297 billion\. This growth is expected to continue\. The volume of domestic
tourism in South Africa is twice the size of foreign tourism, and 60% of all foreign tourists to South Africa
visit a game reserve or national park, revealing the very important element that parks and game reserves
play\. The province of KwaZulu-Natal is the most popular domestic holiday destination and the
KwaZulu-Natal protected areas support a mature nature-based tourism industry\. This market creates an
opportunity to combine biodiversity conservation with economic upliftment of local communities\.
(Additional details on tourism are provided in Annex 14)\.
- 6 -
C\. Transfrontier Collaboration in Nature Conservation
A fonnal Memorandum of Understanding, signed September 1, 1998 by the Principal Secretary of the
Ministry of Environment, Gender and Youth Affairs (Lesotho) and the Chairman of the KwaZulu- Natal
Nature Conservation Board (RSA) provided the platform for the preparation phase of this project\. Both
parties formally pledged support for the preparation of a project proposal to create the Maloti-Drakensberg
Transfrontier Conservation and Development Area\.
For the implementation phase, a wider MoU between the two countries is more appropriate\. Having a
final MOU between South Africa and Lesotho signed and in effect has been agreed as a condition of
effectiveness\. A draft MOU is already under consideration\. Lesotho in particular has much to gain from a
transfrontier project\. South Africa already has an advanced system for Protected Area management, and
has successfully developed nature-based tourism in border areas with about 300,000 visitors per year\.
Through enhanced planning and the development of sustainable financing, this effort can be consolidated
and applied to adjacent areas in RSA where the policies of the previous government resulted in extensive
damage to the resource base and threats to biodiversity\. A well-managed transfrontier conservation area
will stimulate further investment in tourism in both countries\. If only a fraction of these visitors' flows
could be encouraged to cross the border and utilize facilities there, the local economic impact could be
considerable\.
A framework for transfrontier cooperation is already in place through the Southem African Development
Community (SADC) environment and wildlife sectors\. The SADC coordination Unit for Environment is
based in MEGYA\. It has been consulted in the preparation process, and expressed support for the project
concept\.
In addition, the non-governmental Peace Parks Foundation, which has amongst its patrons, former
President Mandela of South Africa and King Letsie III of Lesotho, has recognized the Maloti-Drakensberg
Transfrontier Conservation and Development Area as one of seven key Peace Park initiatives in the SADC
region\.
3\. Sector issues to be addressed by the project and strategic choices:
Both countries have somewhat similar problems, but there are also pronounced differences in capacity and
the development of major sectors such as tourism\. The main issues in Lesotho are (i) grazing pressure on
rangelands containing globally significant biodiversity, (ii) lack of a protected areas system, (iii) inadequate
conservation management capacity, and (iv) poor utilization of the potential for nature-based tourism\.
Lesotho's Biodiversity Strategy identifies the need to manage biodiversity within the context of range
management\. The project will build on the experience of creating Range Management Areas with their
associated Grazing Associations to limit overgrazing and create altemative sources of livelihood through
nature-based tourism\. The project will also support institution and capacity building measures in Lesotho
to safeguard the efficient management of conservation areas\. This entails further support for the
establishment of community conservation forums at the local level, and for the establishment of a
financially viable and properly staffed and equipped conservation agency\.
A strategic issue to be addressed is the degree of involvement of the public sector in nature-based tourism
facility establishment and management\. The World Bank is currently supporting a more active private
sector involvement, and this includes tourism establishments\. In this spirit, the role of the public sector in
- 7 -
tourism development will be limited to matters of policy, legislation, and supportive infrastructure\. The
project will work with tourism staff in the public and private sector to implement policy reforms already
suggested by previous sector work\. Strong conditionality upfront would only serve to stall the process, but
the project will support the efforts of GoL and interested donors to undertake appropriate reformns to
stimulate private sector investment in tourism\.
In South Africa, tourism (both national and international) is well developed, much of it focused on national
parks, but nature conservation has traditionally been the domain of a relatively privileged elite\. This has
left a legacy of distrust between local communities and conservation agencies, which are now in the process
of being addressed\. Nature conservation services throughout South Africa are keenly aware of the need to
enhance community relations in order to make nature conservation a mandate with broad popular support\.
KZNNCB has initiated a program of community conservation, including a neighbor relations policy,
community conservation trust and levy, and associated programs\. This policy has progressed far beyond
the Board's former approach of providing neighbors on an ad-hoc basis with natural resources such as
wood and thatch, harvested in protected areas\. Today the policy aims to develop joint participation in
conservation programs and shared responsibility between the Service and community which lives adjacent
to protected areas\. Liaison forums have been created to discuss boundary and land issues, resolve problem
animal issues, provide controlled access to protected areas, and to formalize mutual commitments\.
KZNNCB also gives preference to local communities in employment, seeks to involve local entrepreneurs,
helps develop wildlife areas around the protected areas, conducts awareness raising activities, and has a
staff-training program for neighbor relations' projects\.
The KwaZulu-Natal Nature Conservation Management Act now makes specific provision for the
establishment of Local Boards for protected areas, giving communities a statutory role in protected area
management\. This concept is relatively new, local boards are in the process of being established and the
project provides an opportunity to implement this innovative approach\. In addition, a community trust and
levy has been established, where all visitors making use of the protected areas in KZN contribute\. During
1998 and 1999, approximately $0\.6 million per year has been raised, and the issue now is to ensure the
equitable allocation of these funds\. The local board structure is an essential component of this\. The project
will strengthen these efforts in KwaZulu-Natal, Eastern Cape and the Free State, and promote community
initiatives to find suitable ways of utilizing natural resources, while alleviating chronic unemployment
problems\.
C\. Project Description Summary
1\. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost
breakdown):
The context of the project is a long-term collaborative initiative between South Africa and Lesotho to
protect the exceptional biodiversity of the Drakensberg and Maloti mountains through conservation,
sustainable resource use, and land-use and development planning\. The project will focus on the
Maloti-Drakensberg Mountains, which are situated on both sides of the 300 km eastern boundary of
Lesotho with the RSA\. Three South African provinces are affected\. The westem part of the
KwaZulu-Natal province forms the major area, but there are extensions into the Eastern Cape province to
the south and the Free State province to the north\. The Golden Gate Highlands National Park, managed by
South African National Parks (SANParks) also falls within the area\. The total area covered in the initial
project preparation studies is more than 13,000 sq\. km in both countries (see map)\. Gradual delimitation of
this vast area has progressed during preparation, as specified below\.
- 8 -
The GEF project has eight inter-related components in both countries, that together serve to conserve
globally significant biodiversity, and to develop opportunities for nature-based tourism in the area\. These
components serve to complement activities in Lesotho funded by UNDP ($2\.5 million; ongoing) and AfDB
($8\.4 m\.), and significant domestic contributions in RSA\. Capacity building is a theme that runs through
the entire project in an integrated manner\. In RSA, the project will support strategic conservation planning
capacity for the project area and the project oversight function at the National DEAT level\.
The components are phased to provide for logical sequencing of tasks, and to allow for basic management
through the PCU to be established before actual implementation starts\. It is of particular importance that
financial management and procurement staff are in place early to handle the processing of financial flows
and orders\. The phasing of staffing is set to allow for proper time for recruitment in a competitive and
transparent manner\. Implementation of community-level investments will be preceded by extensive
consultation\. The legal basis for Sehlabathebe National Park (SNP), and recruitment of key staff will be
attended to before any on-site investment there is launched\.
Component 1\. Project management and transfrontier cooperation
The transfrontier nature of this project requires strong regional coordination mechanisms to support an
ecosystem management approach in the Maloti-Drakensberg area\. A bilateral Steering Committee was
established to guide project preparation and will continue to provide guidance to the project\. The project
will provide the incremental costs associated with transfrontier consultation, cooperation and management
through financing for (i) a bilateral collaboration forum (Steering Committee, SC), (ii) national Project
Coordination Committees, PCCs, (iii) coordination offices in RSA and Lesotho with full-time coordination,
financial management and procurement staff (PCUs), (iv) Financial Management Committees (FMCs)
attached to these Units, (v) joint technical working groups to develop and implement action plans to focus
on topics and issues of common interest (vi) joint workshops to present results and achieve consensus work
plans, (vii) communication linkages, including a GIS-based Knowledge Management system served by
trained staff, and (viii) joint management activities related to fire protection, rescue service, staff training
and nature-based tourism such as marketing, booking and visitor planning\. A bilateral MoU, a condition
of project effectiveness, will define the parameters for transfrontier cooperation\.
The project will provide resources for meetings and activities led by domestic coordination committees
within each country, ensuring wide stakeholder representation of all stakeholder groups within the project
area on management decisions related to protected areas and community lands within the broader
ecosystem\. This component will also support an extensive communication program using Intemet, radio
and newsletters, and community outreach will ensure that stakeholders are informed and involved in project
activities\.
This component will also address monitoring and evaluation of project progress against key performance
indicators through a six-monthly review of results, and involving the PCUs and Steering Committee\.
GEF contribution: $2\.64 m\. Co-financing: $0\.49 m\.
Component 2\. Conservation planning
The preparatory studies generated extensive documentation and data regarding resources in the study area,
including physical, biological, social and economic resources and uses\. The project concept is for a
transfrontier conservation and development area, which needs to be planned and zoned to ensure that areas
-9-
of global and national biodiversity importance are protected and managed appropriately\. This requires that
a vision and strategy are prepared following further stakeholder consultation and with the involvement of
the relevant authorities on both sides of the border\. Conceptual proposals for compatible land-use zonation
derived in the preparatory phase need to be negotiated and action plans prepared for implementation\. This
implies conservation planning at the landscape level, and is designed to be facilitated by appropriate
professionals, and with the full involvement of the staff of the respective ministries and departments in both
countries\. At this scale, there is also a need to harmonize, to the greatest degree possible, the approaches
and activities of the five nature conservation management agencies which have a responsibility in parts of
the area, namely the Conservation Division of the Lesotho Ministry of Agriculture, Cooperative and Land
Reclamation (MoA), South African National Parks (SANParks), the KwaZulu-Natal Nature Conservation
Board (KZNNCB), the Free State Department of Environmental Affairs and Tourism (FS-DEAT), and the
Eastern Cape Departrnent of Economic Affairs, Environment and Tourism (EC-DEAET)\.
Deficiencies in data, particularly for biodiversity, were identified in preparation, and these will be
addressed by focused data collection and further analysis to confirm priority areas\. A participatory
biodiversity monitoring system will also be designed to ensure that data on trends can be derived for areas
across the landscape\. Habitat and species data collected under the assessments will provide the baseline for
monitoring activities to determine project impact\. Field assistants recruited from local communities will
also be trained to assist in surveying as a precursor to ongoing monitoring of key components\. A core
professional support team for biodiversity conservation will be assembled in this component\. The project
interventions will support the current process whereby posts for specialized functions are being established
and filled, especially within the National Parks Section of the Conservation Division of MoA in Lesotho,
and will complement the competent but thinly stretched staff in the South African agencies\. By building a
solid foundation, it will be possible for these agencies to maintain effectiveness beyond the project lifetime,
including, in some cases the continuation of employment of specialist staff, for which provision is being
made in future planning\.
GEF: $1\.40 m\. Co-financing: $0\.50 m\.
Component 3\. Protected area planning
There are two sets of areas where further detailed planning is required, namely existing protected areas and
proposed conservation areas\. Planning is carried out in a number of phases, beginning with the overall
development and zonation plans for each area, then preparing detailed management programs and finally
addressing business planning and sustainability\. These phases are described in more detail under each
sub-component below\. Further detail is provided in Annex 2\.
Sub-component 3\.1\. Protected area development planning and zonation
The nature conservation management agencies have been unable to obtain the resources, particularly of
manpower, to complete overall detailed conservation development plans for protected areas\. In the
uKhahlamba-Drakensberg Park, the assignment of nature conservation management to the provinces
enabled the consolidation of several separately proclaimed and managed protected areas and state forest
nature reserves and wilderness areas into a single entity\. Management was rationalized accordingly, but a
long-outstanding component has been an overall concept development and zonation plan for the park,
which would ensure that protected area development takes place in an orderly way, that management
infrastructure is correctly placed, and to provide a basis for the elaboration of management programs\.
- 10-
In other parts of the study area, there are existing protected areas where inadequate overall development
planning and zonation has been conducted, and where there are insufficient skilled staff in the nature
conservation agencies to address the deficit\. These include Ongeluksnek and Ntsikeni in the Eastern Cape
and Sterkfontein Nature Reserve in the Free State\. The conceptual development plan for Sehlabathebe
National Parks (SNP) requires revision\.
Sub-component 3\.2 Protected area management planning
The preparation and continual update of protected area management plans is an essential component to
guide the operational management of protected areas in an adaptive way\. The protected area management
team including the specialist input of an ecologist and other professionals usually undertakes this exercise\.
It is designed to determine the priority management programs for the effective management of the resource
and the activities that occur there, and encompasses:
* Management to conserve biodiversity
* Community conservation programs
* Visitor facilities management
* Protected area administration (security, infrastructure, communications etc\.)
* Research and information
Objectives are determined for each within the policy framework and zonation established in 3\.1 above,
management options are detailed and discussed, action plans for implementation are developed, monitoring
programs are devised and implemented and essential research is conducted\. This allows the management
team to implement management programs in pursuit of the protected area objectives and vision\. Once the
first version of the management plan is in place, it is the management team that will implement and
adaptively develop the plan further\. The preparatory work for developing this project concept document
identified several deficiencies in the existing plans\. New areas which are being developed together with
communities will require a facilitated planning processes, once the earlier consultations have been
conducted\.
Sub-component 3\.3 Protected area business planning
Nature conservation management agencies have traditionally managed areas on the basis of budgets derived
from government subsidies\. Whereas, it is likely that subsidies will continue to provide core funding for
biodiversity management, there is an increasing requirement to develop alternative sources of conservation
funding, preferably through the sustainable use of the resource base and the leverage of funds in other
ways\. It is therefore essential that business plans be prepared for each managed area\. Business plans also
encompass the human resources and organizational systems that need to be in place to ensure effective
management\. Areas of interest for this activity include the need to optimize the retums from the use of the
resource base e\.g\. by tourists, to make contributions to both biodiversity management and community
development\.
A key strategy adopted in KwaZulu-Natal has been to ensure that nature-based tourism generates sufficient
revenues for this, but this has also required the development of appropriate business models to incorporate
private sector investment and community equity in developments based in or adjacent to protected areas\.
The business-planning component of the project activities will investigate all possible options for
sustainable financing, and provide a basis for the effective management of these resources to meet
performance targets\. In the context of new protected areas, it will also be necessary to demonstrate that the
option of conservation/nature-based tourism will generate greater benefits than the current subsistence
land-uses\.
- 11 -
The planning will be conducted by the core biodiversity conservation support team (Component 2) together
with a core planning support team established under this component, and with the assistance of the social
ecologists, community extension workers and facilitators (see Component 6)\.
GEF: $1\.35 m\. Co-financing: $0\.50 m\.
Component 4\. Conservation management in existing PAs
Components 4 and 5 address many of the same management issues, but with a major difference in context,
which has justified their presentation in two components\. Major threats to mountain biodiversity include
alien plant infestations, historical soil erosion, inappropriate fire management regimes, inadequate security,
over-grazing, poor waste management and poor management of cultural resources\. In the existing
protected areas there is need to develop strategies for effectively intervening and addressing continuing
threats and residual impacts\. In the areas that have yet to be developed as protected areas, a phased
approach will be taken with active management interventions preceded by extensive consultation\.
In RSA, the primary focus will be on the continued implementation of alien invading plant species control
programs, which have been enhanced by the successful Working for Water model already applied in some
parts of the study area\. The hallnarks of this approach are the employment and capacity-building of local
communities and the development of entrepreneurial opportunities using the materials that result from the
clearing\. This component will also support the (incremental costs) of rehabilitation and maintenance of
management roads, paths and tracks through conserved areas to minimize damage due to historical neglect
and poorly maintained infrastructure\. In some protected areas, there is a need to devise and implement an
appropriate fire management regime, improve security programs including the training and equipping of
field rangers, improve the management of flora and fauna, and address concerns with priority species, e\.g\.
oribi and sungazer lizards which are threatened\.
The major focus for activity in Lesotho concerns SNP\. This includes the construction of a new office
building, a new nature interpretation facility, a dormitory for school groups, upgrading of skills among its
staff, the employment of a resident ecologist, improvement of administrative, communication and power
facilities, implementation of a fire management program, upgrading of fencing, and acquiring necessary
vehicles for park management\. Virtually every aspect of protected area management will require the
development or transfer of strategy and capacity to achieve effectiveness\.
GEF: $3\.28 m\. Co-financing: $14\.90 m\.
Component 5\. Conservation management outside of existing PAs
Focusing on important areas identified under preparation, the project will work with community
conservation forums to understand concerns and problems, and to devise appropriate management solutions
to conserve biodiversity and promote sustainable use\. The management techniques will draw strongly on
strategies devised under Component 4, as well as the experience of Range Management Areas (RMAs) in
Lesotho, and will be tailored to the context of open access range management and the specific community
context in each area\. Of primary concern is the issue of overgrazing and loss of wetlands\. Conditions for
sustainable livestock management in conservation areas will be determined jointly with local comrnunities\.
The approach to be applied draws heavily on the experience gained in the LHDA Contract 604 situation,
where community conservation forums were established to define problems and seek solutions in defined
areas under their jurisdiction\. Support will be forthcoming from the Divisions of Land-Use Planning and
- 12 -
Range Management in Lesotho, and it has been suggested by the Lands, Survey and Physical Planning
Unit, that these areas are declared as Planning Areas\. Although this is a modest approach to be introduced
in fairly small and well-defined areas, it will provide valuable lessons to all stakeholders regarding its
applicability in other areas of the range\. Within new community conservation areas, the community
conservation program will draw on local expertise and employment to build capacity to implement similar
conservation measures to those envisaged in Component 4, but focusing mainly on range management and
the rationalization and rehabilitation of eroded tracks and paths\. In KwaZulu-Natal, in addition to range
management, substantial effort will be placed on the eradication of alien plants in the Upper Thukela area\.
Cultural heritage management is a part of this component\. The project will provide incremental financing
to develop teaching materials and displays, restoration of sites and selective development to attract visitors,
staff training and community education related to cultural heritage, particularly rock art\. This will build on
or replicate experience in RSA e\.g\. the training of community guides, the preparation of sites to
accommodate tourists, and the awareness program carried out by Bergwatch (an NGO) in the Mnweni
area\.
GEF: $1\.47 m\. Co-financing: $0\.20 m\.
Component 6\. Community involvement
The activities in Components 2 to 5 above have emphasized the need for extensive participation and
involvement of local communities\. This cannot, however be achieved in an ad-hoc way, since process of
participation must be built on trust, confidence and an enduring institutional framework\. The analysis of
stakeholders within the project area has reinforced earlier findings of a complex socio-economic context\.
Contemporary approaches to participatory learning and action suggest that enhanced natural resource
management involves the community at all levels and stages\.
Building on the highly successful community conservation programs in KwaZulu-Natal and around the
Golden Gate Highlands National Park, the proposed activities will expand these programs into new areas in
RSA and in the focal areas of Lesotho\. These community conservation programs will promote
conservation extension and alternative livelihoods consistent with biodiversity conservation objectives\. The
project will support staff and equipment needs for community conservation units in each country,
coordinated by a professional social ecologist with a support team of conservation extension staff\. At the
local level the project will encourage partnership fora and employ and train community facilitators to work
with local communities\. Targeted training will be offered to develop skills related to conservation and
cultural and nature-based tourism\. Possible areas for support include the establishment of pony trekking
stations, training local guides for nature and cultural heritage (e\.g\. rock art) interpretation services, training
in basket weaving, pottery and other craft production and marketing advice, and propagation and sale of
medicinal and omnamental plants\.
Community conservation programs will serve as an entry point for communication, conflict resolution and
development programs, and build and maintain trust between communities and conservation agencies\. The
long-term nature of this program will demand that there is continuity following project implementation\. In
Lesotho, MEGYA has created capacity for community outreach that could be expanded over the project
period to pick up some of these functions\. In RSA, there is commitment to support and expand community
conservation program, and to seek further co-financing\.
GEF: $3\.05 m\. Co-financing: $0\.45 m\.
- 13-
Component 7\. Nature-based Tourism Development
As discussed in detail in Annex 14, nature-based tourism is already a thriving business lead by the private
sector in South Africa\. In Lesotho, the private sector is still weak in this respect, and poorly supported by
the legislative and policy environment\. However, changes are imminent, as a new Tourism Policy will soon
be prepared in Lesotho, and new legislation has already been drafted\. The African Development Bank
(AfDB) is funding an operation in support of tourism development in Lesotho, and the cuwrent project has
carefully steered clear of any duplication of effort\. Hence, the focus will be very much on
community-focused capacity building\. The role of the private sector will be one of supplying managerial
know-how, marketing skills, and modest amounts of capital for tourism investment\. The project will
facilitate such partnerships between the private sector and communities\.
While the actual investment in tourism facilities will almost entirely be left to the private sector, there is a
legitimate role for the public sector, supported by this project\. The project will provide incremental
financing for planning for visitor management and sustainable tourism development in connection with
areas of particular interest from a biodiversity perspective, as well as providing training for agency staff
and local community members in marketing and service skills to promote community ecotourism initiatives\.
Specific components of this component are a sizable training program directed to community leaders and
emerging entrepreneurs in order for local talent to adequately capture commercial opportunities through
small-scale enterprises\.
An important component especially in South Africa initially, will be the development of models and
capacity to support the involvement of local communities in tourism development associated with existing
protected areas and proposed conununity conservation areas\. In both countries this activity will build on
experience from KwaZulu-Natal where the use of conimunity tourism levies on visitors to protected areas
is generating sufficient funds for communities to invest in equity in planned tourism developments in the
uKhahlamba-Drakensberg Park\. This component will provide both direct employment opportunities and
create an enhanced opportunity for the involvement of local communities in economic opportunities based
biodiversity conservation\. Private sector developers will also be encouraged to partner communities and the
conservation agencies to build the necessary capacity\. Entrepreneurs from the private sector have much to
contribute to the training programs for communities that the project will sponsor\. They can also serve as
paid "mentors" for communities\.
In Lesotho, there are already some emergent small hiking and pony-trekking businesses with the potential
for expansion to incorporate a "transfrontier mountain hiking way" and which could involve many
communities in the provision of overnight facilities and provision of food\. These opportunities will be
explored with the private sector operators and relevant communities\. In the Golden Gate National Park,
ovemight hiking accommodation already generates revenues that match the use of similar land for grazing\.
At a regional level, the project will support small incremental costs associated with development of regional
tourism information, an awareness program for nature-based tourism\.
GEF: $1\.65 m\. Co-financing: $0\.31 m\.+ significant AfDB associated financing
Component 8\. Institutional development
Lesotho has identified the need to develop an effective nature conservation management agency to manage
protected areas and nature conservation generally in the country\. The expanded scope and intensity of
conservation management at SNP, the development of Ts'ehlanyane and Bokong nature reserves and the
- 14-
potential development of new protected areas in the future will place further demands on this capacity\.
Some fundamental issues need to be addressed, including the drafting of appropriate enabling legislation to
create the new agency, and to define its functions and responsibilities\. This sub-component is very limited,
and will be implemented in close collaboration with the UNDP-funded conservation project to ensure
synergy and absence of duplication of effort\. At the local level, there will be a need to support the
community conservation forums that have already been established\.
In RSA, the introduction of local boards and community trusts for protected areas will require support,
following the community consultation and negotiation envisaged under Component 6\. In other areas in
South Africa, there are emergent community forums that require support to develop in stature and
involvement, perhaps along the lines of the KwaZulu-Natal model\. The activities in this project will be
largely confined to rationalizing some of the legislation, e\.g\. in the Eastem Cape, where several deficiencies
were identified in the preparatory studies\.
In both countries, there is a need to support the emergence of local boards representing communities around
conservation areas (see Components 4 and 5)\. At the local level, community conservation forums
established in Lesotho will require further support and formalization\. In RSA, the initiation of the program
to establish local boards for protected areas will be strengthened\. Of primary concem is to establish the
modus operandi for these structures, and to build capacity in the nature conservation agency, in the
appointed board/trust members and in the community at large to contribute towards the compilation and
monitoring of the implementation of the management plans for protected areas\.
GEF: $0\.41 m\. Co-financing: $0\.54 m\.
Summary of Component Costs
Indicative Bank % of GEF % of
Component Sector Costs % of financing Bank financing GEF
(USsm) Total (USSU) financing (US$MW flnancJng
1\. Project Management & 3\.13 9\.4 0\.00 0\.0 2\.64 17\.3
Transfrontier
2\. Conservation Planning 1\.91 5\.8 0\.00 0\.0\. 1\.40 9\.2
3\. PA Management Planning 1\.85 5\.6 0\.00 0\.0 1\.35 8\.9
4\. Conservation Management\. 18\.18 54\.8 0\.00 0\.0 3\.28 21\.5
PAs
5\. Conservation Management\. 1\.67 5\.0 0\.00 0\.0 1\.47 9\.6
Ex-PAs
6\. Community Involvement 3\.50 10\.6 0\.00 0\.0 3\.05 20\.0
7\. Nature-based Tourism 1\.96 5\.9 0\.00 0\.0 1\.65 10\.8
8\. Institutional Development 0\.95 2\.9 0\.00 0\.0 0\.41 2\.7
Total Project Costs 33\.15 100\.0 0\.00 0\.0,\. 15\.25 100\.0
Total Financing Required 33\.15 100\.0 0\.00 0\.0 15\.25 100\.0
Note: Figures in the table above may not add up due to rounding\. Further details on component activities and
costs are contained in Annex 4\.
- 15-
2\. Key policy and institutional reforms supported by the project:
The long-term transfrontier collaboration needs to take on a more firmly agreed, legal basis, to provide a
backbone to the implementation of this and possibly other projects related to the same area\. A
Memorandum of Understanding between RSA and Lesotho, acceptable to the World Bank, is a condition of
effectiveness\.
In RSA, the success of this project is not dependent on any significant change in policy or institutional
arrangements\. The basic legislation, policy and regulation for successful conservation and tourism
development is already in place, particularly through the National Environmental Management Act, 1998\.
The Lesotho Cabinet has approved the new Environment Bill, which is currently before Parliament\. This
will provide an adequate basis for the project in terms of environmental management\. For the specific
purpose of conservation management, there is a need for additional resources to establish an effective
conservation management authority\. This could be done in the form of a statutory body, probably linked to
MEGYA as a semi-autonomous institution\. This would allow the agency to generate and retain earnings
from conservation management, with enhanced prospects of financial viability in the future\. An
institutional arrangement that is satisfactory to the World Bank is a mid-term review target\.
Furthermore, the legal status of Sehlabathebe National Park needs to be formally confirmed\. SNP came
into existence in 1970 as a wildlife sanctuary and national park, by force of Government Notice No\. 34,
under the Game Preservation Proclamation No\. 33 of 1951\. The formal confirmation of its status as a
National Park under the more recently promulgated National Parks Act of 1975 is required as a condition
for effectiveness\.
3\. Benefits and target population:
The project will target local communities as major beneficiaries in both countries, and actively include them
in the implementation\. Land use in the project intervention areas will be enhanced through an adapted
RMA approach that will increase local productivity on rangelands in defined areas of high biodiversity
value\.
Benefit transfer schemes will be designed, so that a part of the increased tourism revenue will flow to
surrounding communities\. They will also be assisted to better organize themselves to capitalize on the
economic opportunities that ecotourism offers\. Nature-based tourism development will benefit those
directly employed in this diverse service industry as guides, hotel and restaurant employees, drivers,
tourism agents, makers and vendors of crafts and so on\. There will also be benefits for those indirectly
engaged in supplying the tourism industry with its goods and equipment\. In addition the project will
provide training and opportunities for community entrepreneurs to become involved in developing small
businesses related to biodiversity conservation such as ecotourism facilities and services, eradication of
alien species etc\., and methods of involving communities as direct shareholders in new tourism
developments will be investigated and applied\. The conservation of globally significant biodiversity will
benefit everyone concemed with the preservation of the natural heritage, in line with GEF objectives\.
International and national visitors to the conserved areas will enjoy recreational and aesthetic use-values,
while non-users will derive option and existence value from their conservation\.
It is also foreseen that the project could generate insights into successful models of community-based
biodiversity conservation, which could be replicated in other NRM projects, and hence benefit other target
communities\. Adequate provision has been made in the budget for information and communication about
the lessons from project implementation\. The project will continue to operate a website through which
- 16-
progress reports, studies and contact details can be disseminated\.
4\. Institutional and implementation arrangements:
Both countries recognize the need to strengthen transfrontier cooperation with respect to the
Maloti-Drakensberg area\. A Memorandum of Understanding was signed on September 1, 1998 by the
Principal Secretary of the Ministry of Environment, Gender and Youth Affairs (Lesotho) and the Chairnan
of the KwaZulu-Natal Nature Conservation Board (South Africa) for the preparation of the GEF Project\.
This structure has served to successfully test the ability to shape consensus-type solutions across the
frontier\.
Based on the experience of transfrontier management during the preparation phase, a Memorandum of
Understanding is being discussed between the two countries forrnalizing their long-term cooperation efforts
with respect to the area\. Under the proposed MoU, a joint Steering Committee (SC) will be established for
the purposes of serving as a forum for developing a combined programmatic and strategic vision for the
area\. In addition, the Steering Committee will promote policy discussions and issue recommendations
concerning the conservation and development of the area, as well as coordinate programs, projects and
initiatives\. Hence, the current project will be one of several initiatives that the new bilateral structure can
oversee\. The project will lend further support through legal training, to further strengthen the legal basis
for collaboration between the two countries\.
The proposed composition of the SC includes:
(a) Lesotho: (i) Ministry of Environment, Gender and Youth Affairs (Chair); (ii) Ministry of Agriculture,
Cooperatives and Land Reclamation (Conservation Division and Range Management Division); (iii)
Mvinistry of Tourism, Sports and Culture; (iv) Ministry of Local Government; (v) Ministry of Foreign
Affairs; and (vi) Ministry of Development Planning\.
(b) South Africa: (i) the Department of Environmental Affairs and Tourism (Pretoria: Chair); (ii)
KwaZulu-Natal Nature Conservation Service; (iii) Department of Foreign Affairs; (iv) Department of
Economic Affairs, Environment and Tourism (Eastern Cape); (v) Department of Environmental Affairs
and Tourism (Free State), and (vi) SANParks\.
Two Project Coordinators will assist the SC\. They will serve as the secretaries of the SC, and have the
overall responsibility for day-to-day implementation of the project in accordance with the Project
Implementation Plan (PIP)\. Additional staff agreed upon are two Project Accountants, two Procurement
Experts and support staff\. Together, these will form two Project Coordination Units (PCUs)\. The
Coordinators and Accountants will be in place as a condition of effectiveness to minimnize delay in
implementation\.
Several institutions in both countries have mandates to manage biodiversity, protected areas and
nature-based tourism\. To be effective, the project must accommodate this diversity of institutions in an
efficient framework\. The agreed arrangement on the domestic level will be a Project Coordination
Committee (PCC) in each of the two countries\. While the representation at the SC level is expected to be
at the top decision-making level, the PCC should attract technical level expertise\. At the PCC level,
inclusion of NGO/CBO representatives will be appropriate, which will be further reinforced by the
establishment of community-based conservation fora on a more local level\. Draft TORs for the PCCs were
agreed in principle at appraisal, while final agreement on the TORs is a condition for effectiveness\.
- 17 -
The PCUs will be overseen by Financial Management Committees (FMC) comprising professional
financial management staff from the PCU and external expertise\. The FMC will review quarterly Financial
Statements, Project Progress Reports and Procurement Management Reports\. Draft Financial
Management Plans including terms of reference for the FMC were developed at appraisal\. Finalization and
agreement on these, and installation of adequate financial procedures, are conditions of effectiveness\.
In Lesotho, the main implementing body will be the Ministry for Environment, Gender and Youth Affairs
(MEGYA)\. The Ministry came about as a result of the amalgamation of the former National Environment
Secretariat (NES), SADC-ELMS, Youth Affairs and the Department of Environment, Ministry of Natural
Resources\. NES was instituted in 1994 as a unit under the Prime Minister's Office\. NES within MEGYA
is headed by a Director and employs a staff of 31 and manages a budget of approximately $400,000 per
year\.
MoA currently oversees SNP and other protected areas\. The National Parks Section has 2\.5 posts at
Headquarters and 12 in the National Park\. Capacity building will be necessary to ensure sustainable
management of these and any new areas delineated in the transfrontier area\. Under the overall guidance of
MEGYA, the Conservation Division of MoA or other relevant agency, will be responsible for managing
that part of the grant destined for SNP and related capacity building\. The Division for Rangeland
Management within the same Ministry has also contributed to the design of this project, and will be
collaborating in the implementation of rangeland management initiatives\.
The Ministry of Tourism, Sport and Culture (MoT) will play a leading role in the nature-based tourism
component of the project in Lesotho\. Under the overall guidance of MEGYA, they will be responsible for
implementing this component\. Under the leadership of MEGYA, the implementing agencies in Lesotho will
form a Project Coordination Committee Agreement (PCC)\. Agreement in principle on a national Project
Coordination Committee and draft TORs was achieved at appraisal\.
In South Africa, the main implementing institution will be the provincial KwaZulu-Natal Nature
Conservation Board (KZNNCB)\. The role of KZNNCB and its operative arm, known as "KwaZulu-Natal
Wildlife" (KZNW) is defined in the KwaZulu-Natal Act No\. 9 of 1997: "The primary function of the
Conservation Service is nature conservation inside and outside protected areas" under the guidance of a
Board, appointed by the Minister responsible for environmental matters in the province of
KwaZulu-Natal"\. The KZNNCB has a staff of approximately 3,600 and a budget for 1999 of
approximately R250 million\. The KZNNCB is responsible for nature conservation throughout the
province, on state, private and commnunal lands and directly manages 110 protected areas, with a total area
of 79,600 hectares\. KZNNCB will implement the project under a management contract with National
DEAT\. A draft version was considered at negotiations, and a final version is a condition of effectiveness\.
Parts of the project will be implemented by the corresponding nature conservation agencies in the Free
State and the Eastern Cape Provinces and SANParks for the Golden Gate Highlands National Park\. The
Free State Department of Environmental Affairs and Tourism (FS-DEAT) was established by the
Ordinance #8 of 1969\. The mandate was derived from the constitution\. DEAT in the Free State has a staff
of 590 and an annual budget of R50 million\. The current protected areas within the project study area are
the Sterkfontein Nature Reserve (18,000 ha) and the QwaQwa National Park (22,000 ha)\. In addition,
39,000 ha of traditional land with conservation status is in the QwaQwa area\.
The Eastern Cape Chief Directorate of Environmental Affairs is part of the Eastern Cape Department of
Economic Affairs, Environment and Tourism (EC-DEAET)\. It was established in 1974 by the Nature
Conservation, Act 10, 1987, the Nature and Environmental Conservation Ordinance #19, 1974, and the
- 18-
Environmental Conservation Decree #9, 1992\. It has a staff of 940 and an annual budget of R60 million\.
Current protected areas are the Ongeluksnek Reserve, established in 1990 (11,756 ha), and the Ntsikeni
Wildlife Reserve, established in 1950 and extended to 9,200 ha in 1977\.
The South African National Parks (SANParks) manages 16 parks covering 3\.1 million hectares\. In
1997/98 these sites catered to 1\.5 million visitors\. One of these, the Golden Gate Highlands National Park,
falls within the project study area\. SANParks is currently the implementing agency of the highly successful
Cape Peninsula Biodiversity Project, funded by GEF\.
Under the leadership of National DEAT, the implementing agencies in RSA will form a Project
Coordination Committee (PCC)\. Draft TORs for the PCC were considered at negotiations, and final TORs
is a condition of effectiveness\. Coordination arrangements in RSA will also be subject to an inter-agency
MoU that is under discussion\. A final, agreed version of this is a condition of effectiveness\.
The project will provide support on a part-time basis for a long-term consultant attached to National
DEAT\. The mains tasks of this person will be to assist the DG of DEAT (i) to develop the appropriate
legal, institutional and managerial model for the long-tenn management of the project area, and (ii) to carry
out the project oversight functions\.
0\. Project Rationale
1\. Project alternatives considered and reasons for rejection:
PROJECT RATIONALE
The project area contains biodiversity of global significance\. The principal vegetation type is Austral
Afro-alpine vegetation, which is floristically distinct from mountainous areas to the north\. It is species
rich, and the entire Maloti-Drakensberg area contains at least 2,153 plant species, 295 bird species, 60
mammal species, 49 species of reptiles and 26 species of amphibians\. It is also distinct, with a high degree
of plant (estimated at 30%), bird and invertebrate endemism\.
This asset is under threat\. In the baseline altemative, the pressure on these resources from livestock
grazing, invading alien species, crop cultivation on steep slopes, umcontrolled burning, and human
settlement will continue to grow\. The root causes behind this development are discussed further in Annex
12\. The potential for sustainable and economically beneficial use that this asset represents runs the risk of
being squandered\. GEF funding to cover the incremental cost is necessary to enhance coordination between
the two countries, and to undertake the planning and management interventions required to secure
prioritized conservation, community consultation and development cooperation to realize the ecotourism
potential\.
The project is consistent with the GEF Operational Strategy for Biodiversity, especially support for in-situ
conservation and protected areas under the Operational Program for Mountain Ecosystems\. The
Drakensberg-Maloti Mountains form a distinct geological and biodiversity entity in the Austral
Afro-Alpine region, and is likely to meet the criteria for listing as a World Heritage Site in terms of both
natural and cultural criteria\. RSA has already submitted a World Heritage nomination proposal for the
Ukhahlamba-Drakensberg Park that the IUCN is currently evaluating\.
The project is also consistent with Article 8 (in-situ conservation) of the Convention on Biological
Diversity\. It will provide support for the strengthened protection, management and extension of protected
- 19-
areas in a region of unique biodiversity and will promote the protection of ecosystems, natural habitats and
maintenance of viable populations of species within, and beyond protected area boundaries\.
Moreover, the GEF alternative will promote the objectives of Agenda 21: Chapter 13 Managing Fragile
Ecosystems: Sustainable Mountain Development, by forging a common set of objectives and cooperative
management of the mountain ecosystem by communities and landowners adjacent to the protected areas,
and in the neighboring territory of Lesotho\. The project promotes conservation, sustainable use and the
more equitable sharing of the benefits of biodiversity with local communities\. The project will also promote
sustainable land-use practices in a region characterized not only by exceptional natural resource values
including biodiversity and watershed value, but also by great fragility and susceptibility to land
degradation\.
The project will support and endorse transfrontier cooperation in Southern Africa, consistent with the
importance given to sub-regional cooperation in the CAS for South Africa, and the restoration of social and
economic stability in the sub-region\. It will furthermore unlock the development potential of a region where
many people are greatly in need, and where development opportunities are compatible with the sustainable
development and use of the biodiversity resources within the transfrontier conservation and development
area\. It will avert the degradation, which occurs in the absence of comprehensive planning and
(levelopment control, and maintain the outstanding universal value of this unique area for humanity\.
1\. Project alternatives considered and reasons for rejection:
It is acknowledged that projects confined to a single country are easier to manage than projects with a
transfrontier character\. Considerable transaction costs are added to the preparation of the project because
two countries and their respective institutions have to agree on a common approach and set of activities\.
Ilowever, the essence of this project concept is to tie together a common ecosystem, and thereby capitalize
on the considerable experience and human resource potential that RSA has built up over decades of active
nature conservation, and Lesotho regarding range management on communal land\. The "twinning" of the
two countries in joint management of this area will allow cost-effective, joint activities compatible with
national sovereignty, and capacity building with a minimum of institutional boundaries to interfere\.
It should be noted that a road component that was previously prepared for Lesotho has been taken out of
the current project\. Road construction for nature-based tourism and conservation is still vital, but it has
been agreed that this component is best pursued as a part of the sizable sectoral program already in
existence in Lesotho\.
- 20 -
2\. Major related projects financed by the Bank and/or other development agencies (completed,
ongoing and planned)\.
Latest Supervision
Sector Issue Project (PSR) Ratings
___ ___ ___ ___ ___ ___ ___ ___ ______ ___(Bank-financed projects only)
Implementation Development
Bank-financed Progress (IP) Objective (DO)
Biodiversity Conservation Cape Peninsula Biodiversity HS HS
Conservation Project (RSA)
Biodiversity Conservation Great Addo National Park
(identified only) (RSA)
Tourism Development Research Nature Tourism's Contribution
to Econornic Development and
Conservation Finance (RSA)
Biodiversity Conservation A cluster of MSPs have been
prepared (RSA)
Water, Watershed management, Lesotho Highlands Water S S
community-based conservation Project (LS)
Agriculture Agriculture Policy & Capacity S S
Building (LS)
Road Maintenance Roads Rehabilitation and S S
Maintenance Project (LS)
Poverty alleviation Community Development
Support Project (LS)
Land Management Land Management &
Conservation Project (LS)
Other development agencies
EU Drakensberg-Maloti
Conservation Program (LS)
UNDP Conservation Mountain
Biodiversity in Southem
Lesotho
African Development Bank Highlands Natural Resources
and Rural Income Enhancement
Project (LHETP) _
IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)
3\. Lessons learned and reflected in the project design:
The Land Management and Conservation Project (LMP) in Lesotho was designed to develop local skills
in the planning and management of nature resources through a participatory approach\. The Credit became
effective in December 1988, but the project was closed ahead of schedule in June, 1995\. The project aimed
to prepare and implement 47 Resource Management Plans to improve land management of both range and
village lands in seven of the ten districts in Lesotho\. The project fell far short of its expectations\.
The Implementation Completion Report (ICR) summarizes a set of lessons learned: the need for careful
and detailed preparation; high training needs within Ministries and Councils; decision making at lowest
- 21 -
appropriate levels; flexible project design\. The current project has spent considerably more time in
informing the public and relevant institutions, in gathering necessary information and will build on pilot
experiences to develop community conservation in RSA\. There is a strong capacity building component for
Lesotho institutions and communities, building in opportunities for training and exchange of expertise
between Lesotho and RSA\.
The LMP project is said to illustrate that changes in required legislation should be in place before
negotiations or that a condition of Board presentation should be that parallel financing should be secured
throughout project implementation\. The current project requires only a minor change in legislation, which
concerns the SNP\. Realistically, this could be in place at the stage of effectiveness\. Parallel financing from
UINDP is already operational, but serves mainly to support geographically separate areas of conservation\.
This is also the case for the AfDB financing under preparation\. Hence, the success of this project is not
strictly tied to those efforts, but will be strengthened by these projects\.
Conservation programs require a long-term time horizon\. The current project stretches over five years, but
aims to build sustainable structures that are financially viable through income-generating nature-based
tourism, and substantial investments in training of staff and community members, and investment in
planning and basic infrastructure over the long run\. The ICR argues that project suspension or
r estructuring should be used more readily when project implementation problems drag on\. This lesson can
only apply in an implementation situation, and will have to be assessed if and when such problems occur\.
The Lesotho Highlands Water Project (LHWP) has initiated community-based conservation schemes in
four small areas in the watershed supplying the water for export to South Africa\. This is the aspect of the
l HWP that is of most direct relevance to the current initiative\. A consulting company, Earthplan, manages
the implementation of the conservation program\. The preparation mission visited these sites and reviewed
the experience so far\. Progress in terms of community involvement, area and initial construction of tourism
infrastructure is quite impressive\. However, the Earthplan involvement and LHWP funding is scheduled to
terminate during 2000\. A new "institutional home" for the selected areas must be found\. The Highlands
Natural Resources and Rural Income Enhancement Project prepared by the African Development Bank will
take on that challenge\.
The Agricultural Policy and Capacity Building Project in Lesotho became effective only in July 1999
and it would therefore be premature to draw any major conclusions\. It is noted, however, that domestic
political turmoil and difficulties in donor coordination have delayed the project\. However, no other donor
tunding is critical for successful implementation of the Maloti-Drakensberg Transfrontier Conservation and
Development project\.
The EU-funded Drakensberg-Maloti Conservation Program in Lesotho is a preparatory study,
undertaken primarily by two consultants (Team Leader and Community Development Specialist) working
in Lesotho for a period of 18 months\. The Team Leader of this program has been co-opted by the Steering
Committee for the current project preparation, in order to ensure full collaboration\. Progress reports are
also shared on a continuous basis with this program\. Major lessons so far are that it takes considerable
time and care to develop good community relations\. Considerable time and resources have already been
invested already in the preparatory phase of this project to consult communities\. Project design also allows
for a strong emphasis on community involvement\.
The UNDP-funded Conserving Mountain Biodiversity in Southern Lesotho has recently started\. The
long-term program objective is to ensure the conservation and sustainable utilization of unique alpine and
montane landscapes in Lesotho\. There are two immediate objectives\. First, to establish a planned and
- 22 -
rational network of small protected areas which adequately protects the full range of Lesotho's mountain
biodiversity\. Second, to create an environment supportive of improved resource management systems such
that the rate of biodiversity loss outside of formal PAs is reduced\. About $1 million of the UNDP-GEF
funds of the program are earmarked for PAs and related activities in the southern part of Lesotho, i\.e\. in
an area that is separate from the one included in the study area of this project\. The remaining
approximately $1\.5 million is set aside for the creation of a "supportive environment\." This entails a policy
review, economic valuation of biodiversity studies, support to RMAs, building of community capacity and
institutional support to conservation\. The program coordinator is based at MEGYA, and regularly attends
the Steering Committee meetings for the current project\. UNDP and its project staff have been consulted in
the preparation of this project, and it is agreed that the two initiatives are complementary\. The current
project will focus on different geographical areas, and add a considerable transfrontier aspect which is
virtually absent in the UNDP project\. Recruitment of key staff has been slow in this project\. Hence, the
current project contains explicit conditionality with respect to early recruitment of key staff\.
The Highlands Natural Resources and Rural Income Enhancement Project: This project is mainly
funded by the African Development Bank (AfDB)\. The area of intervention coincides with Phase IA and
lB of the LHDA\. The objective of the project is to generate revenue at the grass roots level, for private
enterprises as well as for the central government to alleviate poverty, while protecting the environment\.
The project is envisaged to contain five components (i) conservation and natural resource management, (ii)
ecotourism development, (iii) rural enterprise development, (iv) institutional strengthening and (v) rual
infrastructure\. The latter is particularly focused on LHDA, private sector interests, the Lesotho Tourist
Board and the Ministry of Tourism\. Total project cost is in the order of $8\.4 million, with a five-year
implementation period, starting late-2000\. LHDA is the proposed overall project executing and
coordination agency\. The proposed Steering Committee includes a representative of MEGYA\. The clearly
specified geographical and institutional focus of this project facilitates coordination with the current
project\. The project was approved by AfDB in September, 2000\.
In South Africa, the Cape Peninsula Biodiversity Conservation Project has been under successful
implementation since June 1998\. It has pioneered the use of "emerging contractors" recruited from
previously disadvantaged areas in Cape Town\. The contractors have been given training in group
leadership, accounting and management\. Gradually, they have assumed a more independent role as
competitive bidders for conservation activities\. This model will also be considered in the current project\.
Technical methods for clearing of alien invading species may also be of use in the Maloti-Drakensberg
area, as are also lessons learned from the Working for Water Project\. The need for close attention to
procurement training and management is a lesson that will impact the design of the current project\.
A tourism study was launched in 1999 in South Africa: Nature Tourism's Contribution to Economic
Development and Conservation Finance\. The purpose of this research is to develop a general sectoral
multi-market analytic framework that clarifies the principal direct and indirect linkages between the
economic, environmental, social and policy variables involved in nature tourism\. The model will respond
to the three key issues, namely: (i) the sustainability of resource use, (ii) the relative benefits from and
interactions among multiple users, and (iii) the roles of the public and private sectors in nature-tourism
activities\. Four types of empirical studies will be undertaken in close collaboration with the KwaZulu-Natal
Nature Conservation Service and with the support of the KwaZulu-Natal Tourism Authority: (i) Demand
studies; (ii) Producer survey; (iii) Ecological study and Construction of the Social Accounting Matrix\. The
demand and supply analyses enable an assessment of how changes in policy variables result in changes in
the various tourism product markets\. These changes will be broken down by region (local, provincial and
national)\. While results from this study will not be forthcoming in time to directly influence the preparation
of the project, its results could influence the implementation\.
- 23 -
4\. Indications of borrower and recipient commitment and ownership:
The Drakensberg-Maloti Mountain Conservation Program was initiated in 1982 as a collaborative effort
between the two countries\. Supervised by an Intergovernmental Liaison Committee, the program was
largely funded by South Africa through the National Department of Forestry, the Natal Parks Board, with
contributions of expertise and logistical support from Lesotho\. It continued until 1993 and entered a new
phase with the advent of democratic government in RSA\. The KZNNCB and the National Environment
Secretariat (now within the Ministry of Environment, Gender & Youth Affairs, MEGYA) of Lesotho have
been interacting with a range of role-players to maintain the initial momentum of the project, and to secure
further funding for the work required\.
This collaborative effort took an important step forward in a workshop held at Giants Castle in September
1997\. This workshop gathered representatives from the Government of Lesotho, Natal Parks Board and
other stakeholders to review the program of collaboration in this area, and its strategic direction\. This
resulted in a declaration from the participants to: (i) endorse the concept of a transfrontier conservation and
development area; (ii) recommend to the respective governments that they support the initiative; (iii)
establish a joint coordinating unit; and (iv) seek the necessary funds\.
The project concept has also been formally endorsed by the GEF Focal Point in Lesotho: Mr\. Bore
Motsamai, Principal Secretary of MEGYA (October 16, 1998)\. The PCD submission to GEF was
endorsed by the samne focal point on February 1, 2000\. The preparatory activities were supported by
in-kind contributions (offices, staff time, and supplies) from MEGYA\.
Similarly, the project concept was formally endorsed by the GEF Focal Point in South Africa: Dr\. Francois
Hanekom, Deputy Director-General of the National Department of Environmental Affairs and Tourism
(letter, November 3, 1998) and re-endorsed by Dr\. Patrick Fitzgerald (letter, October 25, 1999),
Director-General of National DEAT\. The GEF submission of the PCD was endorsed by Dr\. Crispian
Olver, DG of National DEAT and current GEF Focal Point, on February 1, 2000\. The preparatory
activities were supported by in-kind contributions (offices, staff time, and supplies) and a considerable
financial advance from KZN-NCB to cover consultant studies necessary for the preparation of the project\.
5\. Value added of Bank and Global support in this project:
While there is commitment on both sides of the border, there is clearly a lack of financial resources to
enable coordination and to undertake essential investment\. The long-term sustainability of this area must
rest on private and communal financial viability and sound public management supported by public
revenue\. To achieve a higher degree of protection of biodiversity, and to harness the ecotourism potential,
a period of investment in managerial capacity, planning, and infrastructure is necessary\.
In addition to funding, the Bank can offer its experience of similar projects elsewhere\. A number of them
have offered insight into adequate design and implementation of conservation objectives, in tandem with
development efforts, all based on community participation\.
Finally, the Bank's GEF support serves to complement well the ongoing UNDP-sponsored GEF activities in
southern Lesotho, and the AfDB-financed support to nature-based tourism development\.
- 24 -
E\. Summary Project Analysis (Detailed assessments are in the project file, see Alnex 8)
1\. Economic (see Annex 4):
o Cost benefit NPV=US$ million; ERR = % (see Annex 4)
O Cost effectiveness
* Incremental Cost
O Other (specify)
Other:
2\. Financial (see Annex 4 and Annex 5):
NPV=US$ million; FRR = % (see Annex 4)
The financial management capacity of relevant institutions has been assessed through a separate Financial
Management Assessment Mission to both countries (October, 1999)\. Draft Financial Management Plans
for both countries were elaborated at appraisal (January 2000)\. Agreement was reached in principle during
appraisal on the proposed Financial Management Action Plan for Lesotho and its embedded conditions\.
Most importantly, MEGYA needs to install necessary financial management and procurement capacity to
adequately implement the project\.
In RSA, the Financial Management Mission observed that the financial management systems operated by
the Offices of the National and Provincial Accountants General appear to produce meaningful interim and
final financial statements on a timely basis\. Internal control procedures appear to be good and are
documented in a Financial Handbook\. The Office of the Auditor General, a member of the International
Organization of Supreme Audit Institutions (INTOSAI), is recognized as being a capable and independent
Supreme Audit Institution (SAI)\. It is a well-respected Institution among members of the accountancy
profession\. The KZNNCB' financial management framework seems to be well established under
competent leadership\. It appears that either of the accounting systems reviewed is likely to provide a
suitable basis for introducing a PMR Method of disbursement\.
Fiscal Impact:
From a national budget perspective, the GEF grant does not entail any repayments, while the investments
that it allows will generate modest tax revenues\. However, the small enterprises that will most directly
benefit from the project will not be significant contributors to the government's revenue stream\. Some
increased revenue will accrue from the tax levied on goods that increasing numbers of foreign visitors will
buy\. Of more importance to consider are the implications for the budgets of conservation agencies that will
be responsible for maintaining the investments that the project will allow\.
In Lesotho, the investment in works of about $1\.4 million over five years primarily concerns rehabilitation
of wetlands, paths and service roads that have degenerated due to past neglect, and some alien plant
control\. Based on rule of thumb of 3% annual maintenance cost, this implies a fiscal burden of about
$20-25 thousand p\.a\. The other main component concems Sehlabathebe National Park (SNP) and includes
fencing, an environmental education center, upgraded staff accommodation, an entrance gate with reception
and shop, and so forth\. Based on a rule of thumb of 5% maintenance costs p\.a\., this implies a fiscal burden
of about $30-35 thousand\. Investment in goods such as cars, PCs, other office equipment, GIS, etc\.
amounts to about $450 thousand over the project's lifetime\. At a rate of 5% it implies a budgetary burden
of about $25 thousand p\.a\. for maintenance\. Adding running expenses, of about $50 thousand p\.a\. gives a
total of close to $75 thousand for maintenance and running of goods\. The sum total for Lesotho for works
and goods can thus be estimated to in the order of $130 thousand p\.a\. This should be compared to what
Lesotho currently spends on conservation-related activities, i\.e\. about $220 thousand p\.a\.
- 25 -
Hence, four types of measures must be put in place to mitigate this burden (i) revenue-generating activities,
and (ii) mobilizing new domestic resources, (iii) mobilizing new external funding, and (iv) if necessary
dismantle some of the investments\. Firstly, in terms of generating more revenue, it is apparent that the
SNP represents a dormant asset that could bring considerable revenues\. Assuming that the day visitor rate
could be brought up to 20 per day by year 5, each paying $2 in entrance fee, and that the number of night
visitors could be brought up to 10 per night on average, each paying $10, the revenue would amount to
more than $50 thousand p\.a\. Other conservation areas could also begin to generate revenue, albeit at a
lower rate than SNP\. Associated spending on crafts, local guides, horses for excursions, pack lunches and
so on would go straight to communities, and have almost no fiscal impact\.
Secondly, if only a fraction of the revenue pool available from the Highlands Water Project was devoted to
conservation purposes, the maintenance bill would be easily met\. The annual royalty through this project is
currently estimated at $40 million\. The UNDP-supported conservation project in Lesotho has identified the
establishment of a royalty-based trust fund as one potential source of sustainable income for conservation
purposes\.
Thirdly, the prospect of attracting additional donor funding appears promising\. Many bilateral donors
show a propensity to support environmental projects if a viable institutional basis can be demonstrated\.
The current project will equip Lesotho with an enhanced absorptive capacity, and increased ability to
market biodiversity-based activities more effectively to other donors in the future\.
Finally, to the extent that increased revenue and existing resources would not suffice to maintain completely
the investment, some of it would have to be shed\. After 3-5 years, the vehicles would still have a
second-hand value, as would some of the office equipment\. In the Lesotho case, it may not be realistic to
think that all staff and their equipment could be maintained after the project's closing, but the investment in
planning and compensation for past neglect would still be worthwhile\. The staff maintained during the
investment phase will have left behind trained counterparts at the national and local level that will be able
to carry on the work at lower cost\.
For South Africa, the fiscal impact would be negligible\. While the level of investment in works and goods
through the project are similar in magnitude to those in Lesotho, the annual fiscal burden would be
negligible in comparison to the more than $3 million that is already spent p\.a\. on co-financing activities,
most of this in KwaZulu-Natal\.
3\. Technical:
Methods used for clearing of alien invading plant species similar to those used in the Working for Water
Program and in the Cape Peninsula Biodiversity Project will be taken as a point of departure for the alien
clearing sub-component in this project\.
4\. Institutional:
4\.1 Executing agencies:
In Lesotho, Ministries of Environment, Agriculture and Tourism will execute the project, under the
leadership of MEGYA\. In RSA, the KZNNCB in KwaZulu-Natal, DEAT in the Free State, DEAET in
Eastern Cape, and SANParks in the Golden Gate Highlands National Park are the executing agencies\.
- 26 -
Other ministries, both national and provincial, may also be involved in project implementation, and overall
leadership will be provided by the National Department of Environmental Affairs and Tourism\. The DG of
DEAT will be supported on a part-time basis by a long-term consultant in strategic project area
development and project oversight\.
4\.2 Project management:
Overall coordination will be managed by the bilateral Steering Committee with high-level representatives
from key institutions in each country\. A technical level Project Coordination Committee (PCC) will oversee
the domestic implementation\. All executing agencies, as well as other key stakeholder institutions will be
represented on the PCCs\. The Project Coordinators will serve as the Secretaries of these Committees\. The
coordinators will be supported by adequate financial, procurement, and information management expertise,
and secretarial services\. Agreement in principle on its terms of reference was achieved at appraisal\. A
signed MoU between Lesotho and South Africa, acceptable to the World Bank, is a condition of
effectiveness\.
4\.3 Procurement issues:
A Procurement Assessment was undertaken before appraisal\. The results are summarized in Annex 6
4\.4 Financial management issues:
A Financial Management Assessment was undertaken during project preparation\. A Financial
Management Plan was prepared for both countries\. This is summarized in Annex 15\.
5\. Environmental: Environmental Category: B (Partial Assessment)
5\.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including
consultation and disclosure) and the significant issues and their treatment emerging from this analysis\.
EA in Lesotho will receive its formal legal backing once the Environment Bill 1998 has been passed by
Parliament\. This is expected in the next few months, as the Bill has already received Cabinet approval\.
The Bill prescribes a detailed procedure for Environmental Assessment, and defines the types of activities
for which an EA is required\. This Schedule includes the creation of national parks and game reserves,
commercial exploitation of natural fauna and flora, establishment of natural heritage sites, policies for
management of ecosystems, especially by use of fire, and any government policy on the use of natural
resources\.
In anticipation of the passing of legislation, guidelines for EA applied on a voluntary basis already exist:
EIA Guidelines for Lesotho (1997)\. The preparation mission reviewed these guidelines and found them
adequate for the purposes of this project\. By agreement with MEGYA, the project is committed to follow
the letter and spirit of the guidelines, even in the absence of binding legislation\.
The project will be implemented under the leadership of MEGYA, an organization whose main objectives
include environmental protection\. The other major institutional stakeholders include the Conservation
Division of the Ministry of Agriculture, whose mandate it is to manage Protected Areas in Lesotho, the
Range Management Division of the same Ministry, and the Ministry of Tourism, for which the
development of nature-based tourism is a key objective\.
The legal context is that environmental assessment in South Africa is govemed by regulations under the
Environmental Conservation Act\. Any development in the region concemed will be subject to these
regulations which make provision for authorization by the Minister of Environmental Affairs and Tourism\.
- 27 -
The provincial departments are responsible for the administration of these regulations\. This requires the
scoping of environmental impacts, a full public participation procedure and the preparation of specialist
studies\. The provincial department makes a recommendation to the National Minister for any development
in a Protected Area\. The KZNNCB is subject to the KZN Provincial Department of Environmental
Affairs\.
Institutionally, the project will be implemented by organizations whose main objectives concem nature
conservation\. Hence, the environmental objectives of the project are not in danger of being compromised
due to conflict of interest type of situations within the implementing bodies\. Significant parts of the project
implementation area are already under PA management status\. In RSA, the major area of implementation
falls under KZNNCB, which as an organization has an outstanding record of successful nature
conservation\. Several on-site visits by the project team and careful study of annual and special reports, and
meetings with key officials have thoroughly established this fact\. Similarly, SANParks, which only
manages a minor portion of the project area (Golden Gate Highlands National Park), is well known for its
conservation track record\. There is also direct experience of successful implementation of a GEF project
through SANParks: The Cape Peninsula Biodiversity Conservation Project\.
In both countries, project implementation is also associated with clear environmental benefits:
* Significant biodiversity assets will be carefully assessed, mapped and awarded better protective
status under active management;
* Communities concerned will be consulted and their active collaboration sought;
* The capacity of both communities and implementing agency staff for effective environmental
management will be enhanced;
* Visitor pressure will be more effectively channeled through upgraded tracks and paths, information
to visitors about appropriate behaviors enhanced, and enforcement of environmental regulation
enhanced;
* Eradication of alien invading species will contribute to preserve the indigenous flora and contribute
to a more attractive landscape\.
A systematic search for environmentally negative impacts related to the project yields few results and all of
them can be appropriately mitigated:
* Potential erosion of hillsides due to removal of vegetation\. Limiting removal areas in size, leaving
litter for ground cover, and generally building upon best practice from the Working for Water
Project and the implementation of the Cape Peninsula Project will mitigate this\.
* Potential health damage related to application of herbicides\. In RSA, application of herbicides can
only be carried out by staff who have received adequate training and are licensed for the task\.
Proper protective clothing and supervision will be supplied by the project\.
* Potential damage to the natural environment from herbicides\. The use of herbicides is strictly
regulated in RSA, and only a few registered and well-tested options exist\. The amount of herbicide
applied will be very limited, and application will be done directly onto stems, not using aerial and
seldom knapsack ground-spraying techniques\. Herbicides will be chosen that break down rapidly
after use\.
* Increased visitor pressures leading to littering, erosion of tracks, suppressing of indigenous flora,
illegal hunting of wildlife, etc\. Planning carefully for the development of Protected Areas and
- 28 -
specific sites will mitigate this\. This is a major reason behind the high level of attention given to
the planning stages in the project\. Furthermore, some of the resources of the project are
specifically destined to upgrade the infrastructure to better handle visitor pressure\. Finally, it
should be recalled that visitor pressure per unit area is expected to remain within reasonable limits
even with upgrades of the area's attractions\. The project area is not, and is not likely to be, the
scene of mass tourism\.
It should be pointed out that removal of alien invading vegetation will be a marginal activity in Lesotho, as
opposed to South Africa, where this features strongly\. Vegetative growth is less vigorous on the highly
elevated Lesotho side, and the few trees that sprout often fall prey to browsing livestock or the firewood
needs of the limited human population that is active in the area\. Hence, erosion associated with felling of
trees, health and natural hazards associated with unwise use of herbicides and so forth, are not concerns in
Lesotho\.
The reservation of some areas for biodiversity purposes could possibly lead to increased grazing pressure
in other areas\. Firstly, the areas concerned will be small in relation to the overall grazing areas in the
region\. Secondly, this should be seen in the context of the establishment of Grazing Management
Associations, associated introduction of rotational grazing, and upgrading of existing pastures and
livestock\. Implications for surrounding areas will be carefully considered in collaboration with the Range
Management Division of the Ministry of Agriculture, and in agreement with concerned local communities
and livestock managers\. Care will be taken for the appropriate selection of indigenous species in any
fodder enhancement program\. Grazing restrictions will only work if they have the full support of affected
communities\. The protected areas established in association with LHDA, in the LHWP phase lA-project
area illustrate that such agreements are possible to reach\. Attention will be paid to the need for maintaining
the genetic diversity of the livestock herd, to the extent that new breeds of stock might be promoted\.
In conclusion, the environmental benefits of the project are clear and tangible\. In terms of managing any
negative impacts, the legal, institutional and managerial basis is well established\.
5\.2 What are the main features of the EMP and are they adequate?
As the nature of the project is to enhance management of the environment, it is not applicable to speak of a
separate EMP in this case\.
5\.3 For Category A and B projects, timeline and status of EA:
Date of receipt of final draft: EA work was integrated in several
consultant reports that were finalized in
December, 1999\. See Annex 8\.
5\.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EA
report on the environmental impacts and proposed environment management plan? Describe mechanisms
of consultation that were used and which groups were consulted?
Please refer to section 6 below and to Annex 11 for details on the consultative process\.
5\.5 What mechanisms have been established to monitor and evaluate the impact of the project on the
environment? Do the indicators reflect the objectives and results of the EMP?
Monitoring the environment is at the core of the project's indicators as reflected in Annex 1\.
- 29 -
6\. Social:
6\.1 Summarize key social issues relevant to the project objectives, and specify the project's social
development outcomes\.
Community involvement during the preparation has been extensive and is documented further in Section 7
and in Annex 11\. KZNNCB already has considerable experience in this regard, and the experience of
LHDA and prior rangeland management project has provided encouraging evidence of such models\. A
major theme of this project is community involvement, and considerable resources are requested to
underpin this vital aspect of the project\.
6\.2 Participatory Approach: How are key stakeholders participating in the project?
A critical factor for the success of the project is that it involves communities and is supported by them\. The
participation of communities was therefore already a top priolity during the initial planning phase of the
project\. The details of the approach adopted are given in Annex 11\.
As part of the project preparation process, social assessments were commissioned for both South Africa
and Lesotho to assess project impacts and to map out the processes for community involvement (Annex
11)\. The main factors contributing to loss in biodiversity are a) overgrazing of communal lands, b) out of
season buming regimes and uncontrolled wild fires, c) increased cultivation on steep slopes of the
mountain, d) livestock trespassing across borders, and e) the invasion of alien plant species\. Project
components that will address some of these root causes (e\.g\. revitalization of range management areas,
clarification of customary land tenure and training programs to support community conservation bodies)
are outlined in Annex 12\.
a: Primary beneficiaries and other affected groups (see Annex 11 for details):
Lesotho:
The social assessment in Lesotho targeted four districts Qacha's Nek, Thaba Tseka, Mokhotlong and Butha
Buthe A sample of 36 randomly selected villages and 790 respondents were included in the participatory
land use planning surveys\.
In addition, the National Environment Secretariat of Lesotho commissioned a participatory rural appraisal
of six villages in the Mokhotlong District to determine the perspectives of the people in conserving the
ecosystem of the area\.
South Africa
The consultants charged with social assessment in South Africa adopted a different approach to that used
in Lesotho\. They had a far more diverse area and a much smaller budget and chose to base their
conclusions on existing studies\. Nevertheless, several community groups in each of the three provinces
were consulted\.
6\.3 How does the project involve consultations or collaboration with NGOs or other civil society
organizations?
For projects expected to receive authorization to appraise/negotiate (in principle) prior to April 30, 2000,
this section may be left blank\.
- 30 -
6\.4 What institutional arrangements have been provided to ensure the project achieves its social
development outcomes?
For projects expected to receive authorization to appraise/negotiate (in principle) prior to April 30, 2000,
this section may be left blank\.
6\.5 How will the project monitor performance in terms of social development outcomes?
For projects expected to receive authorization to appraise/negotiate (in principle) prior to April 30, 2000,
this section may be left blank\.
7\. Safeguard Policies:
7, Do any of the following safeguard policies apply to the project?
Policy Applica\.ility
Environmental Assessment (OP 4\.01, BP 4\.01, GP 4\.01) * Yes 0 No
Natural habitats (OP 4\.04, BP 4\.04, GP 4\.04) * Yes 0 No
Forestry (OP 4\.36, GP 4\.36) * Yes 0 No
Pest Management (OP 4\.09) 0 Yes 0 No
Cultural Property (OPN 11\.03) 0 Yes 0 No
Indigenous Peoples (OD 4\.20) 0 Yes 0 No
Involuntary Resettlement (OD 4\.30) 0 Yes 0 No
Safety of Dams (OP 4\.37, BP 4\.37) 0 Yes 0 No
Projects in International Waters (OP 7\.50, BP 7\.50, GP 7\.50) 0 Yes 0 No
Projects in Disputed Areas (OP 7\.60, BP 7\.60, GP 7\.60) 0 Yes * No
7\.2 Describe provisions made by thie project to ensure compliance with applicable safeguard policies\.
The EA safeguard applies as this is classified as a Category B project\. However, as the nature of the
project is to enhance environmental quality in the project area, the entire project could be seen as an EA
and EMP that ensures compliance\. This is the main management objective of the institutional structures
that the project will establish\. The safeguard for natural habitats is applicable only in the sense that such
areas will be enhanced by the project, through measures to decrease the grazing pressure and manage
visitor flows in sensitive areas\. The forestry safeguard is concerned only insofar as clearing of alien
invasive tree species will be undertaken as part of the project\. This does not involve logging or the
purchase of logging equipment for use in primary tropical moist forest, or even any area that would
generally be referred to as "forest" rather than "woodland" or "brushland\." Local stakeholders will be
identified and consulted in each area where alien clearing operations will be taking place\.
The safeguard for Pest Management is applicable insofar as limited amounts of herbicide will be used to
prevent certain species from coppicing after the initial clearing\. This will be applied directly to the stump
of the tree or coppice foliage, not by spraying of large areas\. South Africa's regulatory and institutional
capacity for safe, effective and environmentally sound pest management has been found satisfactory\. To
the extent that herbicides will be used at all in Lesotho, their use will be governed by the similar
considerations\.
The impact on cultural property was assessed during appraisal\. It was found that the project will impact
positively on this heritage, as it will assist in its identification, preservation and utilization as part of the
efforts to develop nature-based tourism\. With respect to indigenous people, it was found that most
stakeholders in the project area are AmaZulu, Basotho, AmaXhosa, and Griqua, and could be considered
- 31 -
"indigenous\." They will be fully involved in the implementation of the project, as community involvement
is a major component\. The San population no longer occupies the areas concerned\. In Lesotho, the local
stakeholders belong to the same group as nearly everyone in that country: the Basotho\. In terms of
vulnerability, no particular group was identified that could suffer hardship as a result of the project\.
With respect to involuntary resettlement, this is not foreseen to be a result of the project\. If, contrary to
expectations, this would take place in support of the project's objectives, the World Bank's safeguard would
apply, and a resettlement plan would have to be submitted to the Bank for approval\. The project does not
involve the construction of dams, nor will it impact international waterways or involve any disputed
territory\.
F\. Sustainability and Risks
1\. Sustainability:
Firstly, the project will bring new resources to address what are currently unsustainable practices\.
Secondly, the transfer of capacity is built into the project, with heavy emphasis on training and institution
building\. Thirdly, the domestic resource commitment to environmental management is actually increasing
in Lesotho, which is the country of most concern in this respect\. Finally, not all activities need to be
sustained at full cost level, as some items represent investments that only require small maintenance costs
or marginal upgrades\. These points are elaborated below\.
The project will enhance ecological sustainability by identifying important biodiversity areas, and work
towards the appropriate level of protection status\. Past neglect in controlling erosion along roads, trails
and paths in sensitive areas will be remedied, and invading alien species will be suppressed to promote the
indigenous flora and associated fauna\. The project will also enhance social sustainability through its
emphasis on community-centered capacity building\. Building good community relations between
conservation staff and community members, and illustrating in tangible forms the benefits of nature
conservation will influence the incentives and mindsets of local people\. Experience in both countries shows
that it can be done\.
Institutional sustainability will be enhanced through investment in legal platforms for nature protection,
establishment of community conservation fora, staff training, participatory planning processes, basic
buildings and equipment\. While the latter requires some maintenance, the expenditure level will be much
lower than during the investment phase\. This has been discussed in some detail above in Section E\.2\.
Given the already considerable financial revenues from nature-based tourism in RSA, and the prospect of
raising them considerably in Lesotho, this is an acceptable burden\. Moreover, once transfrontier
collaboration has been well established, Lesotho can enjoy the benefits of having good access to training
facilities and the impressive experience in conservation management available across the border\.
Through investment in ecological, social and institutional sustainability financial sustainability becomes a
possibility\. The potential of nature-based tourism can be harnessed\. The opportunity to ensure
sustainability comes from tapping the source of large tourism-flows adjacent to Lesotho, and encouraging a
portion of those visitors to venture a bit further by enhancing the "package" of experiences offered, and by
marketing this jointly with efforts made in South Africa\. Entrance fees to PAs, camping fees and
community levies will be instituted and will contribute to financial sustainability\. The establishment of an
overall conservation management fund is being investigated by the UNDP-funded conservation project in
Lesotho\. This would build on the considerable royalties that accrue from the LHWP, and could also
contribute to the financial sustainability of conservation in Lesotho\.
- 32 -
In South Africa, there are already well developed institutions for nature conservation, but their short-term
sustainability is undermined by severe cuts in the provision of subsidies from central and provincial
governments\. This tendency can be expected to continue, given the changes in political priorities that
necessitate urgent investment in the provision of social services to previously disadvantaged communities\.
This political reality has forced the re-thinking of conservation management in South Africa, and an
opening up of collaboration with the private sector, including surrounding communities, to a new degree\.
The project will assist in establishing such partnerships, on the basis of financial sustainability\. Private
sector capacity is already strong in RSA, and there is high interest in investing in nature-based tourism
development\. The exceptional biodiversity assets in RSA, and strong technical and managerial skills
available in the country, bode well for the future sustainability of nature conservation\.
The investments made in staff and consultant services are not necessary to maintain at the same level after
five years of implementation\. The same applies to some of the equipment (e\.g\. computers) hat the project
will fund\. Other items equipment will be gradually phased out as they become obsolete, and the
strengthened institutions will have to replace them, but probably to a lesser extent\. Plans developed and
agreed on should have a considerable lifetime beyond the project and could be implemented with fewer
staff\.
One could also approach the issue of sustainability from another angle: without interventions like the
current project, development would continue on a non-sustainable path\.
- 33 -
2\. Critical Risks (reflecting the failure of critical assumptions found in the fourth column- of Annex 1):
Risk Risk Rating Risk Mitigation Measure
From Outputs to Objective
1\. Bilateral and domestic administrative M 1\. Recruitment of SC and PCCs with wide
dissonance representation
2\. Disagreement on conservation M 2\. Thorough technical surveys as basis for
priorities among stakeholders priorities; and consultative process
3\. Legal and administrative process H 3\. Continued efforts to enhance the dialogue
stalled with concemed parties
4\. Disagreement on area designations S 4\. Consultative process with local stakeholders
and planning authorities
5\. Ineffective conservation management M 5\. Capacity building & local ownership
6\. Community participation ineffective S 6\. Consultative process based on local
experience
7\. Main stakeholders disagree on benefits M 7\. Strong communication program
of project
8\. Ineffective leadership for domestic and M 8\. Strict and consultative selection procedure
intemational coordination
9\. Discontinued constructive bilateral N 9\. Steering Committee leadership
relationships
From Components to Outputs
I\. Disagreement on data storage, access N 1\. Demonstration of joint benefits
to information, supply of data and surveys
2\. Incompatible regional land-use plans M 2\. Consultation with relevant agencies
3\. Skilled staff not available for N 3\. Adequate marketing
employment
4\. Alien control technically ineffective N 4\. Building on best practice from Cape
Peninsula Project and Working for Water
projects
5\. Lack of acceptance of effective grazing S 5\. Community dialogue and mobilization
protection and anti-poaching measures
6\. Benefit transfer to community M 6\. Strict financial procedures
ineffective
7\. Non-acceptance of institutional models N 7\. Dialogue to achieve local ownership
8\. Lack of interest in participating in N 8\. Adequate marketing
training
Overall Risk Rating M
Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk)
3\. Possible Controversial Aspects:
The determination of financial allocations among executing agencies may become controversial, but is best
resolved within the framework of national PCCs and the bilateral SC\.
- 34 -
G\. Main Conditions
1\. Effectiveness Condition
* RSA and Lesotho have executed the MOU
* RSA has adopted the PIP, in form and substance acceptable to the Bank
* The Subsidiary Agreement has been executed by the Recipient and KZNNCB
* KZNNCB has adopted a financial management and accounting system and Financial Procedures
Manual, acceptable to the Bank
* KZNNCB has appointed: (i) the Project Accountant; (ii) the project Coordinator; and (iii) the auditors
referred to in Section 4\.01 (b) to the Grant Agreement, all in accordance to the provisions of Section II
of Schedule 3 to the Grant Agreement
2\. Other [classify according to covenant types used in the Legal Agreements\.]
Dated Covenants:
* The Project Accountant in place not later than 2 months prior to effectiveness\.
H\. Readiness for Implementation
O 1\. a) The engineering design documents for the first year's activities are complete and ready for the start
of project implementation\.
0 1\. b) Not applicable\.
O 2\. The procurement documents for the first year's activities are complete and ready for the start of
project implementation\.
3 3\. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory
quality\.
Z 4\. The following items are lacking and are discussed under loan conditions (Section G):
Acceptable Project Implementation Plan\. Agreed MoU between RSA and Lesotho\. Agreed Project
Agreement (RSA)\. Agreed TORs for the PCCs\. Relevant staff appointments for the PCUs and financial
management arrangements\. SNP National Park Proclamation (Lesotho)\.
- 35 -
1\. Compliance with Bank Policies
3 1\. This project complies with all applicable Bank policies\.
El 2\. The following exceptions to Bank policies are recommended for approval\. The project complies with
all other applicable Bank policies\.
tJan P~ Bojo Agi KissFayez S\. OmaBrK
ta~ Leader \Sector Mana er/Director Country Manager/Director
- 36 -
Annex 1: Project Design Summary
SOUTH AFRICA: Maloti-Drakensberg Transfrontier Conservation and Development Project
Key Performance
Hierarchy of Objectives Indicators Monitoring & Evaluation Critical Assumptions
Sector-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goal to Bank Mission)
l\. Ensure environmental 1\. Red Data classification 1\. National State of the 1\. Poor benefit the most from
sustainability Environment Report better environmental quality
2\. Promote growth and higher 2\. Real GDP growth and 2\. National Accounts: Real 2\. Poor people gain
employment labor force growth GDP growth and labor force employment
data
3\. Enhance sub-regional 3\. Export - import data 3\. Trade statistics 3\. Poor regions benefit
integration
GEF Operational Program:
Global Objective: Outcome I Impact Project reports: (from Objective to Goal)
Indicators:
GEF Global Objectives: Endemic species maintained\. State of the Environment Sustained financing and
To conserve globally Viable populations of Reports\. Survey reports\. Red political commitment
significant biodiversity in the threatened species\. Data Reports
Maloti-Drakensberg Improvement in terms of
mountains within a IUCN categories of threat
transfrontier conservation and
development area framework
Stakeholders work together to Protected area system in Project progress reports, Bilateral political harmony;
realize nature-based place, benefit transfers in $ supervision missions Continued growth in
development opportunities\. terms, number of people international tourism to
employed as a result of project Southern Africa;
increased, number and size of Stable energy prices
entrepreneurial activities in
response to project initiatives
Output from each Output Indicators: Project reports: (from Outputs to Objective)
Component:
1\. Project Management and 1\. Bilateral Memorandum of 1\. Minutes of meetings of I\. Bilateral and domestic
Transfrontier Collaboration Understanding\. Steering Steering Committee, PCCs, administrative coherence
Committee established\. and PCUs\.
Project Coordination Minutes of quarterly FMC
Committees, Project meetings to consider the
Coordination Units and PMRs\.
Financial Management Project Annual Reports\.
Committees constituted\. Disbursement Reports\.
Recruitment of senior PCU Audit Reports\.
Staff\. Timely delivery of Evaluation Reports,
- 37 -
Project milestones\. Supervision Missions,
Endorsement of Cash Mid-term Review\.
Forecasts\. Financial
Management System in place\.
2\. Conservation Planning 2\. Completed biodiversity 2\. Survey Reports\. Protected 2\. Compatible regional
surveys in priority areas\. area maps\. Local knowledge land-use plans\. Local
New PAs identified and on biodiversity documented agreement to supply data and
delineated\. Biodiversity through participatory allow surveys\.
conservation program involvement
finalized and implemented
3\. Protected Area 3\. Revised Development and 3\. Development, Zonation, 3\. Agreement on conservation
Management Planning Zonation plans for PAs\. Management and Business priorities among stakeholders\.
Conducted Initiated process of plan documents Agreement on area
development and zonation designations, and effective
planning for the identified conservation management
proposed conservation areas\. institutions in place\.
Completed Management and Competent technical
Business plans for PAs, using leadership\.
a participatory approach\.
4\. Conservation Management 4\. No populations of 4\. Implementation Agency 4\. Effective conservation
in PAs threatened species in decline, Reports\. Patrol logs, visitor management institutions in
extent of alien plant invasion statistics per area, rescue place\. Competent technical
reduced significantly, reports, stock counts\. leadership supported with
sustainable range Supervision missions adequate local representation\.
management in key areas\.
Cultural sites protected\.
Significant rehabilitation of
eroded paths and tracks\.
Effective anti-poaching,
visitor management and
rescue service, prevention of
illegal grazing,
institutionalized social
fencing
5\. Conservation Management 5\. Improved range condition 5\. Results of vegetation 5\. Agreement on area
ex-PAs and basal cover in focus areas\. surveys undertaken every two designations, and effective
Education program on years in areas of intervention\. conservation management
grazing management Education program report\. institutions in place\.
implemented\. Resource management plan Competent technical
Resource management plan and survey of implementation leadership supported with
for improved range condition adequate local representation\.
and animal productivity in
place within two years of
project implementation\.
6\. Community Involvement 6\. Recruitment of I social 6\. Recruitment records\. 6\. Community interest\.
ecologist/country\. Creation of Existence of community Political stability\.
3 community conservation centers\. Forum records\.
centers by end of year 2\. Training programs and
- 38 -
Recruitment of community evaluation reviews
extension officers (EOs) for
the centers as completed\. Not
less than 10 community
facilitators per community
center, before the end of year
2\. Preparation of training
materials, visual aids within
12 months\. Annual training of
trainers' workshops for EOs
and community facilitators\.
Workshops with at least 50
community members p\.a\. At
least I training workshop for
community leaders and
livestock owners p\.a\.
7\. Nature-based Tourism 7\. At least 200 people 7\. Local tourism plans, 7\. Communities and private
employed in local records from workshops\. commercial sector derive
nature-based tourism Trail maps & verification benefits from investment in
enterprises by end of year 2 walks/drives\. Nursery visits nature-based tourism and
and additions of 300 p\.a\. and accounts\. Local respond well to the enabling
Nursery output\. Local tourism employment surveys\. Visitor environment\.
plans for community areas counts and client feedback
finalized\. At least 100 surveys\.
community entrepreneurs and
10 civil servants trained each
year starting in year 2\.
No\. of km hiking & 4x4 trails
installed p\.a\. At least 2 village
nurseries installed by end of
year 2, with additions of 2
every year thereafter\.
8\. Institutional Development 8\. Establishment of 8\. Community Conservation 8\. Agreement about
Community Conservation Forums documents\. Gazetted institutional models and staff
Forums\. Support development establishment of national interest in training\.
of national and local conservation institution in
institutions for nature Lesotho\. Training programs
conservation and land use reports\.
planning measures in priority
areas\. Staff training program
implemented\.
- 39 -
Key Performance
Hierarchy: of ObjeCtve inYicators Monitoring & Evaluation Critical Assumptions
Project Components / Inputs: (budget for each Project reports: (from Components to
Sub-components: component) Outputs)
1\. Project management & $3\.1 Million 1\. SC and PCC minutes\. 1\. Bilateral harmony
transfrontier cooperation: PCU Coordinators' progress Institutional commitment at
Bilateral MoU, PCCs & PCUs reports national and provincial levels\.
with FMCs, GIS capacity Agreement on storage &
access to information\.
2\. Conservation planning: $1\.9 Million 2\. Strategy Plan 2\. Compatible regional
Design of protected area Participation Plan\. Survey land-use plans\. Local
system\. Conceptual reports\. agreement to supply data and
development planning\. allow surveys\.
Participatory planning
Comprehensive biodiversity
surveys\. Participatory data
collection
3\. Protected area management $1\.9 million 3\. Strategy documents and 3\. Institutional basis
planning progress reports from established in Lesotho
implementing agencies
4\. Strengthening of PA $18\.2 million 4\. Conservation Agency 4\. Acceptance of effective
management, including alien Reports grazing protection and
plant control, erosion control, anti-poaching measures
fire management, security and and inter-agency support
wildlife management
programs
5\. Conservation management $1\.7 million 5\. Project annual reports 5\. Alien eradication and
Addressing threats and erosion control technically
impacts posed by alien plants, effective, and community
soil erosion and unsustainable cooperation in enforcing
range management agreements\.
6\. Community conservation $3\.5 million 6\. Strategy plan 6\. Benefit transfer to
program: Community Extension staff installed\. community effective
conservation centers, Forum agreements\. Local community acceptance
Conservation Forums and of local forums and programs\.
Local Boards
7\. Nature-based tourism $2\.0 million 7\. Records from training 7\. Synergy between the
development: Community courses\. project and other nature-based
training and entrepreneurial tourism promotion exercises\.
development
8\. Institutional development $1\.0 million 8\. Regulations and bylaws for 8\. Agreement on institutional
including comprehensive conservation institutions\. reforms and counterpart
nature conservation staff Progress reports funding\.
development program
effective\.
-40 -
Annex 2: Detailed Project Description
SOUTH AFRICA: Maloti-Drakensberg Transfrontier Conservation and Development
Project
The project has eight interrelated components\. Justification for their inclusion is given here, and
supported by the preparatory studies listed in annex 8\.
By Component:
Project Component I - US$3\.10 million
The first component is project management and transfrontier cooperation\. This component consists of
(i) a bilateral collaboration forum ("Steering Committee"; SC), (ii) coordination offices with full-time
coordination, financial management and procurement staff, (iii) domestic coordination committees with
wide stakeholder representation, (iv) joint working groups for technical work on topics of common interest,
(v) joint workshops to present results and achieve consensus work plans, (vi) a GIS-based Knowledge
Management system served by trained staff, and (vii) joint activities with respect to marketing, booking,
visitor planning, fire protection, rescue service and so forth\. In addition, part-time support will be provided
for a long-term consultant to enhance the oversight function of the DG of DEAT, and to strengthen
strategic conservation planning for the project area\.
Proposals for improved project management and transfrontier cooperation were derived from several
sources, including the experience of the coordinators of the preparation phase over the past year, the
suggestions of the bilateral steering committee, the workshops which have been held with the various
government agencies in both Lesotho and South Africa, and the suggestions made in the report on legal and
institutional issues prepared by EnAct Intemational (1999)\. Because of the large number of stakeholders,
both in government and in community-based and non-governmental organizations, the domestic
coordination committees and an extensive communication program using Intemet, radio, newsletters and
community outreach will ensure that stakeholders are informed and involved in project activities\.
An essential component is the derivation of an overall strategy for the transfrontier conservation and
development area, a process which was strongly recommended in several of the preparatory studies,
including Richard Davies and Associates (1999), Loxton, Venn and Associates (1999) and ECRA (1999)\.
In addition, a firm basis for decision-making using information at an appropriate accuracy and resolution
will be provided by enhancing the GIS which has been a product of the preparation phase (Environmap,
1999)\.
Project Component 2 - US$1\.90 million
Conservation planning forms the second component\. Annex 13 provides greater detail on the hierarchical
nature of conservation planning from the landscape level to focused business plans for individual protected
area\. The preparatory studies generated extensive documentation and data regarding resources in the study
area, including physical, biological, social and economic resources and uses\. The project concept is for a
transfrontier conservation and development area, which needs to be planned and zoned to ensure that areas
of global and national biodiversity importance are protected and managed appropriately\. This requires that
a vision and strategy are prepared following further stakeholder consultation and with the involvement of
the relevant authorities on both sides of the border\. Conceptual proposals for compatible land-use zonation
derived in the preparatory phase need to be negotiated and action plans prepared for implementation\. This
implies conservation planning at the landscape level, and is designed to be facilitated by appropriate
professionals with the full involvement of the staff of the respective Ministries and Departments in both
-41 -
countries\. At this scale, there is also a need to harnonize, to the greatest degree possible, the approaches
and activities of the five nature conservation management agencies which have a responsibility in parts of
the area, namely the Conservation Division of the Lesotho MoA, South African National Parks, the
KwaZulu-Natal Nature Conservation Board, Eastern Cape DEAT and Free State DEAET\.
Deficiencies in data, particularly for biodiversity, were identified in preparation (e\.g\. CSIR, 1999), and
these will be addressed by focused data collection and further analysis to confirrn priority areas\. A
participatory biodiversity monitoring system will also be designed to ensure that data on trends can be
derived for areas across the landscape\. Habitat and species data collected under the assessments will
provide the baseline for monitoring activities to determine project impact\. Field assistants recruited from
local communities will also be trained to assist in surveying as a precursor to ongoing monitoring of key
components\. A core professional support team for biodiversity conservation will be assembled under this
component\. The project interventions will support the current process whereby posts for specialized
functions are being established and filled, especially within the Conservation Division of the MoA in
Lesotho, and will complement the competent but thinly stretched staff in the South African agencies\. By
building a solid foundation, it will be possible for these agencies to maintain effectiveness beyond the
project lifetime, including, in some cases the continuation of employment of specialist staff, for which
provision is being made in future planning\.
The project components will supplement the resources of the nature conservation agencies to eliminate the
backlog of conservation planning, and ensure a sound foundation for further planning and action\.
Project Component 3 - US$ 1\.90 million
Protected Area Planning is the third component\. There are two sets of areas where further detailed
planning is required, namely (i) existing protected areas and (ii) proposed conservation areas\. Planning is
carried out in a number of phases, beginning with the overall development and zonation plans for each area,
then preparing detailed management programs and finally addressing business planning and sustainability\.
These phases are described in more detail under each sub-component below\.
Sub-component 3\.1 Protected area development planning and zonation
The nature conservation management agencies have been unable to obtain the resources, particularly of
manpower, to complete overall detailed conservation development plans for protected areas\. In the
uKhahlamba-Drakensberg Park, the assignment of nature conservation management to the provinces
enabled the consolidation of several separately proclaimed and managed provincial protected areas, state
forest nature reserves and wilderness areas into a single entity\. Management was rationalized accordingly,
but a long-outstanding component has been an overall concept development and zonation plan for the park,
which would ensure that protected area development takes place in an orderly way, that management
infrastructure is correctly placed, and to provide a basis for the elaboration of management programs\. This
exercise will entail the appraisal of all previous plans, the conduct of workshops with management staff
and with adjacent communities and the drafting of the appropriate maps and documentation\. The statutory
requirement for this planning to undergo a public participation process demands expert facilitation\.
In other parts of the study area, there are existing protected areas where no overall development planning
and zonation has been conducted, and where there are insufficient skilled staff in the nature conservation
agencies to address the deficit\. These include Ongeluksnek and Ntsikeni in the Eastern Cape and
Sterkfontein Nature Reserve in the Free State\. The conceptual development plan for Sehlabathebe National
Park requires revision\.
- 42 -
Through this process, managers will build an understanding of the vision for the protected areas in the
landscape, and the opportunities and constraints for management\. The zonation plan and associated
schedules, which describe the limits of acceptable change, become the basis for all future management and
development activities\. It is usually unnecessary to revisit this level of planning at the same detail, because
the recurrent nature of operational management plans ensures adaptation of the conceptual planning and
zonation to emerging circumstances\. The intervention will therefore overcome a significant hurdle to
effective conservation management\.
Sub-component 3\.2 Protected area management planning
The preparation and continual update of protected area management plans is an essential component to
guide the operational management of protected areas in an adaptive way\. The protected area management
team including the specialist input of an ecologist and other professionals usually undertakes this exercise\.
It is designed to determine the priority management programs for the effective management of the resource
and the activities that occur there, and encompasses:
e Management to conserve biodiversity
v Community conservation programs
3 Visitor facilities management
3 Protected area administration (security, infrastructure, conununications etc\.)
3 Research and information
Objectives are determined for each within the policy framework and zonation established in 3\.1 above\.
Management options are detailed and discussed, action plans for implementation are developed, monitoring
programs are devised and implemented and essential research is conducted\. This allows the management
team to adaptively implement management programs in pursuit of the protected area objectives and vision\.
Once the first version of the management plan is in place, it is the management team that will implement
and adaptively develop the plan further\. The preparatory work for developing this project concept
document identified several deficiencies in the existing plans\. New areas which are being developed
together with communities will required more extensively facilitated planning processes, once the earlier
consultations have been conducted\.
In Lesotho, the SNP Management Plan will be revised and updated, involving both park staff and local
communities\. In the identified priority areas, including Phofung-Mont-aux Sources, Senqu Sources, and
Thabana Ntlenyana-Sani Top, the process will be more extensive, beginning with extensive consultation
with stakeholders\. As a first step, the areas are likely to be managed as Managed Resource Areas, and
initial management plans will be drafted, with ecological and planning experts working with and being
guided by social ecologists, extension workers and community facilitators\.
In the RSA, deficiencies in management plans for component parts of the uKhahlamba-Drakensberg Park
will be addressed, and in accordance with the statutory requirements, with the full involvement of Local
Boards which are being established\. New management plans will be prepared for Ongeluksnek, Ntsikeni
and Sterkfontein Nature Reserves\. In the priority areas of QwaQwa and the Upper Thukela, a similar
process to that envisaged for Lesotho will be adopted, involving local communities, community-based
organizations and some active NGOs and other organizations\.
- 43 -
Sub-component 3\.3 Protected area business planning
Nature conservation management agencies have traditionally managed areas on the basis of budgets derived
from government subsidies\. Whereas, it is likely that subsidies will continue to provide core funding for
biodiversity management, there is an increasing requirement to develop alternative sources of conservation
funding, preferably through the sustainable use of the resource base and the leverage of funds in other
ways\. It is therefore essential that business plans be prepared for each managed area\. Business plans also
encompass the human resources and organizational systems that need to be in place to ensure effective
management\. Areas of interest for this activity include the need to optimize the retums from the use of the
resource base e\.g\. by tourists, to make contributions to both biodiversity management and community
development\.
A key strategy adopted in KwaZulu-Natal has been to ensure that nature-based tourism generates sufficient
revenues for this, but this has also required the development of appropriate business models to incorporate
private sector investment and community equity in developments based in or adjacent to protected areas\.
The business-planning component of the project activities will investigate all possible options for
sustainable financing, and provide a basis for the effective management of these resources to meet
performance targets\. In the context of new protected areas, it will also be necessary to demonstrate that the
option of conservation/nature-based tourism will generate greater benefits than the current subsistence
land-uses\.
For Sehlabathebe National Park, it will be necessary to fulfill promises that the protected area will generate
greater benefits than the former use of the rangeland for cattle production\. Business planning expertise will
be required to supplement the conservation planning and management teams to achieve this greater level of
sophistication in planning\. This component is likely to develop many options that have the potential to
inform nature conservation management, community involvement and tourism planning in other protected
areas in the Southern African sub-region and beyond\.
The planning will be conducted by the core biodiversity conservation support team (Component 2) together
with a core planning support team established under this component, and with the assistance of the social
ecologists, community extension workers and facilitators (see Component 6)\. In South Africa, it is
envisaged that one team will be established and based near the Upper Thukela component of the study area\.
To ensure greatest interaction and effectiveness, the biodiversity conservation and planning support teams
(I ecologist, I planner, I technician) will be based together with the Social Ecologist\.
In Lesotho, it is envisaged that two teams will be necessary to span the geographic area and achieve the
planned activities\. One team will be based in Sehlabathebe National Park in the south, and one team will
possibly be based in the town of Mokhotlong, a central point accessible to both the Phofung/Mont-aux
Sources and Senqu areas and the Thabana-Ntlenyana/Sani top areas\.
It will be possible to reduce the level of staffing once the initial planning has been conducted\. In Lesotho,
the first ecologist in the Conservation Division is about to be appointed, and the envisaged core team will
provide substantial support for ecological advice in the early stages of this appointment\. It is anticipated
that Lesotho will require at least two ecologists to provide an acceptable level of support for long-termn
conservation management, but it will be possible to scale down the remainder of the support team following
the project implementation\.
- 44 -
Project Component 4 - US$18\.20 million
Conservation management in existing protected areas forms the fourth major project component\. The
threats to biodiversity and the management interventions required were identified in several preparatory
reports including CSIR (1999), Davies and Associates (1999), ECRA (1999), Loxton, Venn and
Associates (1999)\. These include alien plant infestations, soil erosion, inappropriate fire management
regime, inadequate security, over-grazing, poor waste management and poor management of cultural
resources\. Dealing with threats requires the formulation of a strategy, and the design and implementation of
appropriate management programs for each threat, and the tailoring of these in accordance with the
capacity and specific context\. The approach which will be adopted is to use these interventions as a
participation learning and action program for both protected area managers and communities alike, with
recruitment and training of local community members to carry out the bulk of the work\. In South Africa,
the primary focus will be on the design and implementation of an alien invading species control program,
which has been enhanced by the successful Working for Water model currently applied in some parts of the
study area\. The hallmarks of this approach are the employment and capacity-building of local communities
and the development of entrepreneurial opportunities using the materials that result from the clearing\. It
also concems the rehabilitation and maintenance of management roads, paths and tracks through conserved
areas to repair historical damage\. Finally, wildlife management programs, e\.g\. management for priority
species, will be developed for selected areas\.
The major activity in Lesotho concems Sehlabathebe National Park\. This includes the construction of a
new office building, a new nature interpretation facility, a dormitory for school groups, upgrading of skills
among its staff, the employment of a resident ecologist, improvement of administrative, communication and
power facilities, implementation of a fire management program, upgrading of fencing, and acquiring
necessary vehicles for park management\.
Project Component 5 - US$1\.70 million
Conservation management outside of existing protected areas is the fifth component\. Focusing on areas
outside the existing protected areas which have been identified during the preparation as being of high
biodiversity value, the approach will be to establish and work with community conservation forums to
understand concems and problems, and to devise appropriate solutions\. Of primary concem is the issue of
overgrazing\. Rather than promoting the exclusion of the existing land-uses, the community conservation
program will draw on local expertise and employment to build capacity to implement conservation
measures\. As within PAs, this entails the design and implementation of an alien invading species control
program\. It also concems establishment, rehabilitation and maintenance of paths and tracks through
conserved areas to minimize damage to biodiversity under the pressure of increasing visitor flows\.
Conditions for sustainable livestock management in conservation areas will be determined jointly with local
communities\. Cultural heritage management forms a part of this component\. It entails the development of
teaching materials and displays, restoration of sites and selective development to attract visitors, staff
training and community education related to cultural heritage, particularly rock art\. The identification of
priorities, approaches, methods has been derived from the preparatory studies, especially those dealing with
threats and impacts (CSIR, 1999), cultural resource management (Amafa, 1999) and the reports on
land-use planning and zonation (Metroplan, 1999; Loxton, Venn and Associates, 1999), informed by the
studies which have identified stakeholders and socio-economic issues (ECRA, 1999; Kiepiel and
Associates, 1999)\.
- 45 -
Project Component 6 - US$3\.50 million
Community involvement is an element that runs through several components, but it is also one component
in its own right\. The analysis of stakeholders has reinforced earlier findings of a complex socio-economic
context\. Contemporary approaches to participatory learning and action suggest that enhanced natural
resource management involves the community at all levels and stages\. Building on the highly successful
community conservation programs in KwaZulu-Natal and around the Golden Gate Highlands National
Park, the proposed activities will expand and strengthen these programs into new areas in RSA and in the
focal areas of Lesotho\. The core of this is the development of an expanded community conservation
program, supported by community conservation units in each country\. The program in each country will be
supported and coordinated by a professional social ecologist with a support team of conservation extension
staff\. These will in turn employ community facilitators drawn from the local communities and who will be
the focus of the training of community members involved in other conservation management and tourism
activities\.
These units will require infrastructure, equipment and means of transportation to fulfill their function\. A
partnership forum will be established to engage local communities, and the component will fund frequent
meetings with all community members, and targeted training to develop skills related to conservation and
nature-based tourism\. Possible areas are support for the establishment of pony trekking stations,
development of local guides for nature and cultural heritage (e\.g\. rock art) interpretation services, training
in basket weaving, pottery and other craft production and marketing advice for sale to visitors, and sale of
medicinal and omnamental plants\. Community conservation programs are often described as an open
starting point for any or all of communication, conflict resolution and development programs, where
building and maintenance of trust is a critical component, and which results in enhanced awareness of
environmental problems and demonstrated capacity to devise and implement solutions\. The vision for this
activity is that the consistent engagement of communities in these programs in their areas will engender
sustainable approaches to natural resource management with the continued support of the community
conservation units\.
Primary sources of information regarding the design and costing of these activities was obtained from the
reports prepared by ECRA (1999), Kiepiel and Associates (1999) and the ongoing successful models being
applied in nature conservation management in the region\.
Project Component 7 - US$2\.00 million
Nature-based tourism planning forms the seventh major component\. While the actual investment in
tourism facilities will almost entirely be left to the private sector, there is a legitimate role for the public
sector, supported where appropriate by this project, to attend to planning, environmental assessments,
marketing, and training of both agency staff and communities\. Specific components of this component are a
sizable training program directed to community leaders and emerging entrepreneurs in order for local talent
to adequately capture commercial opportunities through small-scale enterprises\. An awareness program
for nature-based tourism, and a training program for community members with a declared interest in
participation, will be conducted\. PA management staff will also be trained to manage tourism flows\.
An important component will be the development of models and capacity to support the involvement of
local communities in tourism developments associated with existing protected areas and proposed
community conservation areas\. In KwaZulu-Natal, the use of community tourism levies is generating
sufficient funds for communities to invest in equity in planned tourism developments in the
- 46 -
Ukhahlamba-Drakensberg Park\. In addition to the increased number and diversity of employment
opportunities created, this facility also creates an enhanced opportunity for the involvement of local
communities in economic opportunities based on sustainable and local biodiversity conservation\. The high
social costs of private sector developers including communities in new projects will be addressed by the
capacity-building and empowerment activities supported by this project\. Private sector developers will also
be encouraged to partner communities and the conservation agencies to build the necessary capacity\. The
design and costing of the activities prepared in this component of the project were derived principally from
the reports and workshop inputs of AfED (1999)\.
Project Component 8 - US$1\.00 million
Institutional development is the eighth component\. The achievements of the project will not be
sustainable if there is an inadequate institutional structure to "inherit" the results, and to ensure their
long-term sustainability\. In the baseline, Lesotho is likely to see some improvement on the national level,
thanks to support from the GEF-funded UNDP-implemented project focusing on southern Lesotho\.
Localized support in the LHWP area is also forthcoming from a project funded by the AfDB\. In South
Africa, the core institutions at the provincial and national level are already well established, but local
activities would be very limited in the project area, and coordinated landuse planning would remain weak in
the Free State and Eastern Cape Provinces\.
In the GEF alternative, the projec would support the emergence of local boards and forums representing
communities around conservation areas\. Community conservation forums established in Lesotho will
require further support and formalization\. In KwaZulu-Natal, the initiation of the program to establish
Local Boards for protected areas will be strengthened, at a cost of about $0\.4m for both countries\. An
approximately equal amount would be spent on coordinating landuse planning across agencies and
stakeholders\. Lesotho would upgrade its conservation management capacity to adequately manage not only
the SNP, but also several areas that will be handed over to government from the Lesotho Highlands
Development Authority during 2001\. National level support would be limited (less than $0\. lm) as it would
build upon already available GEF-support through UNDP\.
- 47 -
Annex 3: Estimated Project Costs
SOUTH AFRICA: Maloti-Drakensberg Transfrontier Conservation and Development Project
Local Foreign Total
Project Cost By Component US $million US $million US $million
Project Management 1\.96 0\.76 2\.72
Conservation Planning 1\.20 0\.46 1\.66
PA Management Planning 1\.17 0\.44 1\.61
Conservation Management: PAs 11\.48 4\.33 15\.81
Conservation Management\.: Ex-PAs 1\.05 0\.40 1\.45
Community Involvement 2\.21 0\.83 3\.04
Nature-based Tourism 1\.24 0\.47 1\.71
Institution Building 0\.60 0\.23 0\.83
Total Baseline Cost 20\.91 7\.92 28\.83
Physical Contingencies 1\.05 0\.39 1\.44
Price Contingencies 2\.09 0\.79 2\.88
Total Project Costs 24\.05 9\.10 33\.15
Total Financing Required 24\.05 9\.10 33\.15
Local Foreign Total
Project Cost By Catry US $million US $mil1ion US $million
Goods 3\.07 1\.19 4\.26
Works 4\.79 2\.06 6\.85
Services 11\.02 4\.54 15\.56
Training 3\.67 0\.93 4\.60
Operational costs 1\.50 0\.38 1\.88
Total Project Costs 24\.05 9\.10 33\.15
Total Financing Required 24\.05 9\.10 33\.15
Identifiabie taxes and duties are 0 (US$m) and thc total project cost, nct of taxes, is 24\.72 (US$m)\. Thereforc, the project cost sharing ratio is 32\.05% of
total project cost net of taxcs\.
- 48 -
Annex 4
SOUTH AFRICA: Maloti-Drakensberg Transfrontier Conservation and Development Project
Incremental Cost Analysis
1\. Baseline Scenario
The project area contains biodiversity of global significance\. The principal vegetation type is Austral
Afro-alpine vegetation, which is floristically distinct from mountainous areas to the north\. It is species
rich, and the entire Maloti-Drakensberg area contains at least 2153 plant species, 295 bird species, 60
mammal species, 49 species of reptiles and 26 species of amphibians\. It is also distinct, with a high degree
of plant, bird and invertebrate endemism, estimated at 30% for plants\. A substantial part of the area is
already listed as a Wetland of International Importance under the Ramsar Convention, and is also being
evaluated as a World Heritage Site under the applicable convention\. The area is attracting a considerable
number of visitors; around 300,000 registered visits per year on the South African side, while the Lesotho
side remains rather inaccessible and under-appreciated\. Therefore, its economic potential is not realized,
and the local population remains in poverty\.
This asset is under threat\. In the baseline altemative, the pressure on these resources from livestock
overgrazing, improper cultivation, invading alien species, and improper development and poaching will
continue to grow\. The potential for sustainable and economically beneficial use that this asset represents
runs the risk of being squandered\. There is significant deterioration due to both natural and human causes\.
Underlying factors are the pervasive poverty and lack of economic opportunities that most of the area's
population is facing\. It has been estimated that some 250,000 people are indirectly or directly dependent on
resource utilization within the Lesotho sections of the study area, while some 600,000 people live in the
RSA section of the study area\. Many of these lack alternatives to continued unsustainable use of the land\.
(See Annex 11)\. The threats to biodiversity are discussed further in annex 12\.
The Lesotho Government and the Basotho at large recognize that their natural environment is suffering
from considerable stress\. There is also general agreement that the country's natural beauty is a
considerable, but virtually untapped source of wealth\. It is also clear that current institutions and financial
arrangements do not adequately harness this potential, neither in terms of conservation nor in terms of
tourism development\. MEGYA does receive support from UNDP ($2\.5 million) through the GEF project
entitled Conserving Mountain Biodiversity in Southern Lesotho\. This amount will be spent roughly in
parallel with the current project, and is therefore entered as base case contributions\. Furthermore, EU is
funding the Drakensberg-Maloti project in a first Phase with some $0\.7 million\. However, this resource
will be exhausted by the time the current project is ready for implementation\.
Lesotho has one of the smallest protected areas in relative terms of any country in the world\. The only
legally protected area is the tiny Sehlabathebe National Park (SNP)\. SNP is located in the southeastern
corner of Lesotho in the Drakensberg Mountains i\.e\. along Lesotho's eastern border to South Africa\. It is
about 7,239 hectares of highland species-rich vegetation ranging from around 2,200 m to about 2,600 m
above sea level (Sub-alpine zone) with nearly 100 % short grass and no significant ground cover of tall
grass, or woody vegetation\.
There are also patches of marshlands and wet meadow at all altitudes, in addition to small areas of dwarf
shrub heaths on steep and rocky ground, which have been badly damaged by uncontrolled burning\. Aquatic
vegetation is also present in the Tsoelikane River, its Oxbow Lakes and in rock pools\. In addition there are
scattered tall shrubs of Polemannia montana, Rubus ludwighi, Rhus spp\., Leucosidea sericea, Euryops
- 49 -
spp\. and Helichrysum spp\. on cliffs, rocky grounds and other places protected from fire and browsing
animals\. Rocklands constitute about 13%, wetlands 11%, and grasslands 76 % of the area\.
Even this tiny piece of protected area is under threat from persistent grazing encroachment, poaching and
loss of biodiversity, related to deficient management, poor community relations, decaying fences and lack
of funds, training and equipment\. The 4-km road from the unmarked gate to the lodge takes one hour to
travel by terrain vehicle\. With a regular car, it is impassable\. Capacity utilization at the lodge is below
5%\. In the baseline alternative, decay will continue\. No significant external support to SNP has been
identified in the base case\. The responsibility of managing PAs rests with the Conservation Division of the
MoA, which only has 3 staff members at Headquarters to attend to conservation management in the
country\. In the baseline therefore, PA management will continue to be neglected\.
UNDP is already offering support to MEGYA through its recently started project: Conserving Mountain
Biodiversity in Southern Lesotho\. The long-term project objective is to ensure the conservation and
sustainable utilization of unique alpine and montane landscapes in Lesotho\. There are two immediate
objectives, namely to establish a planned and rational network of small protected areas which adequately
protects the full range of Lesotho's mountain biodiversity, and to create an environment supportive of
improved resource management systems such that the rate of biodiversity loss outside of formal PAs is
reduced\. About $1 million of the LJNDP-GEF funds of the program are earmarked for PAs and related
activities in the southern part of Lesotho, i\.e\. in an area that is separate from the one included in the study
area of this project\. The remaining approximately $1 \.5 million are set aside for the creation of a
"supportive environment\." This entails a policy review, economic valuation of biodiversity studies, support
to RMAs, building of community capacity and institutional support\. This support is valuable, but will only
allow a partial approach to biodiversity conservation in Lesotho, with a focus on the southern part of the
country\. It will not provide sufficient resources for transfrontier collaboration, and establishment of new
PAs in the Maloti chain\.
Another project is under preparation by the African Development Bank: the Highlands Natural Resources
and Rural Income Enhancement Project: The area of intervention coincides with Phase IA and 1 B of the
LHDA\. The objective of the project is to generate revenues at the grass roots level, for private enterprises
as well as for the central government to alleviate poverty, while protecting the environment\. The project is
envisaged to contain four components (i) ecotourism development in the LHDA area, (ii) conservation and
natural resource management, (iii) rural enterprise development, and (iv) institutional strengthening\. The
latter is particularly focused on LHDA, private sector interests, the Lesotho Tourist Board and the Ministry
of Tourism\. Total project cost is in the order of $11\.4 million, with a five-year implementation period,
starting mid-2000\. LHDA is the proposed overall project executing and coordination agency\. The
proposed Steering Committee includes a representative of MEGYA\. The clearly specified geographical
and institutional focus of this project facilitates coordination with the current project\. This project can
provide an important boost to baseline activities in tourism management\. Its focus, however, is not in the
Maloti chain, and institutionally it is addressing tourism more than biodiversity\.
The baseline alternative for RSA looks rather different\. South Africa has already had listed the
uKhahlamba-Drakensberg Park as a Wetland of International Importance under the Ramsar Convention,
and the uKhahlamba-Drakensberg Park is currently being evaluated as a World Heritage Site\. The
nominated site covers an area of approx\. 243,000 ha\. It comprises almost equal proportions of Wilderness
Areas and National Park and equivalent reserve\. The Park is the largest protected area established on the
Great Escarpment of the southern African subcontinent\. The rock art of the Drakensberg is regarded as
being the best preserved of any region in Sub-Saharan Africa\. The number of sites is about 600, and the
number of individual images is estimated to at least 35,000\. The Park can accommodate 2,000 persons per
- 50 -
night\. In addition, about 2,200 beds are provided by private enterprises outside the Park, but in close
proximity\. The number of visitors in 1996/97 was 288,200\. These are tremendous assets, but there are
also threats: an area of about 2,500 ha is described as infested with alien plants, and a costly clearing
program is needed to address this\. There is a need to expand the participation of local communities in both
protected area management and in deriving economic benefits from sustainable nature-based tourism\.
The country has several very large park systems\. The South African National Parks agency manages 16
parks covering 3\.1 million hectares\. In 1997/98 these sites catered to 1\.5 million visitors, of which 31%
were foreigners\. The KwaZulu-Natal Nature Conservation Service manages 80 sites, covering almost 0\.7
million hectares\. In 1997/98 they serviced 1\. 1 million visitors, of which 13\.2% were foreigners\. The Free
State DEAET manages 16 PAs comprising a total area of 191,440 hectares\. There are an estimated 300
private game lodges in South Africa, with about 9,000 rooms and 18,000 beds\. These private lodges cater
to a variety of levels in terms of price and service level, including the most exclusive\. The parks, in general,
cater to a modest level of price and service\. Many of the private game reserves are located adjacent to
government-owned parks\. The private reserves take advantage of the ecological benefit obtained from being
near the parks, and provide significant levels of additional environmental protection by providing wildlife
habitat\.
In terms of nature-based tourism, South Africa has excellent natural assets\. It has a very good range of
natural-environment types, from ocean shores to mountain heights\. It has a solid set of national parks and
other types of protected areas, run by both national and provincial agencies, that provide experiences,
tourism infrastructure and site management at world class levels\. The transportation infrastructure,
international airports, regional and local roads are the best in Africa\. But rmost importantly, South Africa
has a sophisticated and modem tourism business system that enables the country to penetrate international
markets to a significant degree\. Further details are contained in Annex 14\.
In summary, there is every reason to assume that South Africa has good prospects for financial
sustainability in the tourism industry\. However, the picture for nature conservation is rather different, at
least for the next few years\. Relatively generous subsidies in the past have been cut drastically in the last
few years\. This is not surprising, as the apartheid era has left a heritage of vast unmet social needs\. These
have now advanced to the top of the political agenda, and nature conservation is under severe stress to
accommodate the new demands\. A transition through commercialization, out-sourcing and staff reductions
is taking place, but if this is driven too far, the core values of conservation will be compromised\. There are
clear signals that reductions in subsidies to nature conservation agencies will continue; with or without
GEF, this is a given baseline scenario\.
In the baseline alternative, research on biodiversity would still go on in RSA, but mostly confined to
universities, with very limited resources to carry out directly management-relevant studies for conservation
implementation\. There would also be continued efforts to enhance tourism planning in the region\. Road
investment would also be considerable\. For example, the areas south-east of the Lesotho border around
Matatiele have long been neglected, although they hold a substantial population\. This upgrading, however,
would stop at the border, and tourism flows would be discouraged by the sharp decline in road standard on
the Lesotho side\. Small-scale community programs would continue, but would lack resources to branch
out in the northern and southern parts of the study area in South Africa\.
- 51 -
2\. Global Environmental Objectives
The objective of the project is to protect the globally significant biodiversity in the Maloti-Drakensberg
mountains through a two-pronged approach: (i) identifying, zoning and protecting biodiversity areas of high
significance, and (ii) establishing alternative livelihoods for the affected population so as to change the
incentives from degrading to enhancing from a biodiversity perspective\. This will be done through an
integrated program outlined in detail in the next section\.
3\. GEF Alternative
In a previous section, the general threats against the biodiversity assets in the project study area were
discussed\. Annex 14 discusses some general remedies, and proceeds to outline specific project
components\. In responding to the identified threats, and building a set of opportunities for altemative
livelihoods for local communities, the project has been designed as eight inter-related components that
together serve to conserve globally significant biodiversity, and to develop opportunities for nature-based
tourism in the area\. Annex 2 above provides considerable detail, but the current annex summarizes the
incremental costs and provides some further details in this respect, and in terms of co-financing\.
This GEF project has eight inter-related components that together serve to conserve globally significant
biodiversity, and to develop opportunities for nature-based tourism in the area\. These components also
serve to complement activities in Lesotho funded by UNDP ($2\.5 million; ongoing) and AfDB ($8\.4
million), as well as significant domestic contributions, particularly in RSA\. Capacity building is a theme
that runs through the entire project components in an integrated manner\.
Project Components
The summary tables at the end of this annex show both the baseline costs and the incremental costs per
component and country, as well as total costs per component for the entire transfrontier project\. The costs
have been derived through detailed consideration of unit costs and activity proposals, much of it contained
in the preparatory consultant report listed in annex 8\. Unit cost data from the preparatory phase
implementation has also been used\. The detailed cost break-downs are available in the project file, but for
the purposes of this annex, they are grouped together in functional aggregates\.
1\. The first component is project management and transfrontier cooperation\. The contribution to global
benefits of this component is to provide "the glue" that keeps the entire project together as a transfrontier
concept, ensures implementation in accordance with GEF objectives through its monitoring and evaluation
reporting, and lays the foundation for long-termn sustainability\.
In the baseline alternative, Lesotho would spend a minimal amount (as shown in the table below) over five
years to maintain a core environment data unit and to participate in ad-hoc international meetings\. South
Africa would be spending closer to $300,000 over five years in the baseline option\. There would be no
full-time staff dedicated to transfrontier collaboration\. The GIS capacity would be sufficient to serve the
needs of KZNNCB, but there would not be institutional links to the other implementing organizations in
South Africa or Lesotho\.
In the GEF alternative, this component consists of (i) coordination offices with full-time coordination,
financial management, procurement staff, support staff, office equipment and vehicles, domestic
coordination committees with wide stakeholder representation, and an external communication program
($ 1 \.8m); (ii) a GIS-based Knowledge Management System, including new hardware and software extended
- 52 -
into all the main implementing organizations, served by increased core staff with new external technical
support ($ lm); (iii) A bilateral Steering Committee (SC) meeting four times per year, and associated
strategic planning workshops, and joint working groups for technical work on topics of common interest,
such as marketing, booking, visitor planning, fire protection, and rescue service\. The meetings are
expected to take place ten times per year, at a cost of $0\.35 million\.
2\. Conservation planning formns the second component\. In the baseline alternative, Lesotho would have
limited capacity to undertake such planning\. South Africa, especially KZNNCB and SANParks would
have capacity to undertake some biodiversity surveys and conservation planning, while activity in the Free
State and Eastern Cape Provinces would be minimal\.
Annex 13 provides greater detail on the hierarchical nature of conservation planning from the landscape
level to focused business plans for individual protected area, and the derived needs for staffing\. The
preparatory studies generated extensive documentation and data regarding resources in the study area,
including physical, biological, social and economic resources and uses\. The project concept is for a
transfrontier conservation and development area, which needs to be planned and zoned to ensure that areas
of global and national biodiversity importance are protected and managed appropriately\. In the GEF
alternative, biodiversity assessments ($1\.6m) would be possible to undertake to thoroughly document
biodiversity assets of global interest The detailed costs have been derived in the framework outlined in
annex 13, and with teams of one ecologist in Lesotho (two in RSA), two technicians in Lesotho (one in
RSA) and three field assistants in each country\. Local community members would be trained in
biodiversity data collection: 60 in Lesotho and 40 in RSA\. These efforts also require two vehicles per
country, computer and other office equipment\. Designing a protected area system is the other main
sub-component, (SO\.3m) which would require a set of workshops organized by the same staff, in
collaboration with overall project coordination staff\. Annual unit cost per staff type is available in the
project file\.
3\. The third major component of the project is Protected Area Planning\. In the baseline alternative,
Lesotho would not have any financial means at all to undertake this type of activity\. No new areas could
be added to the system, and the existing area would not benefit from any enhancement in planning\. In
South Africa, most of the funds available would pertain to KwaZulu-Natal and SANParks which already
have good planning capacity, with limited capacity in the Eastern Cape and Free State Provinces\.
There are two sets of areas where further detailed planning is required, namely existing protected areas and
proposed conservation areas\. Planning is carried out in a number of phases, beginning with the overall
development and zonation plans for each area, then preparing detailed management programs and finally
addressing business planning and sustainability\. See annex 13 for further detail\. In the GEF alternative,
Lesotho and the weaker provinces in RSA would be able to benefit from experience learned in the other
institutions\. They would also enjoy a new level of resources to build their own capacity directly\. RSA
would also benefit from building on the experience in Lesotho with respect to grazing management on
communal lands\. Using the results of the preliminary biodiversity survey in the preparatory phase and the
priority areas identified in the main text of this document (four areas in Lesotho and five in RSA) and the
staffing plan and approach outlined in annex 13, the cost for PA planning was derived as almost $0\.5m for
Lesotho and approximately $0\.6m for RSA\. In Lesotho, about $70,000 would be spent on a business plan
for the SNP and four other identified priority areas\. In RSA, close to $0\.2m would be spent on similar
plans for six priority areas under provincial management, and the community management area in Upper
Thukela, QwaQwa Highlands, and East Griqualand
- 53 -
4\. Conservation management in existing protected areas forms the fourth major project component\.
The threats to biodiversity and the management interventions required were identified in several preparatory
reports including CSIR (1999), Davies and Associates (1999), ECRA (1999), Loxton, Venn and
Associates (1999)\. These include alien plant infestations, soil erosion, inappropriate fire management
regime, inadequate security, over-grazing, poor waste management and poor management of cultural
resources\. See annex 12 for further discussion\.
In the baseline alternative, the MoA would maintain an annual level of about $100,000 for the funding of a
small conservation management unit and the upkeep of Sehlabathebe National Park (SNP)\. As described,
in the main text, SNP is degrading environmentally, and is utilized only to a fraction of its potential\. This
would not change in the baseline\. In South Africa, significant resources would be available to KZNNCB
and in relation to areas covered, to SANParks\. Resources in the other two provinces would be very limited\.
Even in the case of KZNNCB, the declining path of public subsidies would put a strain on management
capacity, that can only be alleviated by investing now for long-term financial viability in partnership with
the private sector and local communities\.
In the GEF alternative, The Sehlabathebe National Park would get a complete overhaul as described in
detail in annex 2, for an incremental cost of close to SIm\. In South Africa, the most costly incremental
component would be alien invasive clearing ($1 m) based on area estimates from preparatory studies and
unit cost data from the Working for Water Project\. The erosion control sub-component would be as costly
as $0\.9 million, including compensating for past neglect of erosion control around tracks and paths in
conservation areas\.
5\. Conservation management outside of existing protected areas is the fifth component\. In the
baselines altemative, Lesotho would have no resources at all to spend for conservation purposes in the
areas identified as priorities outside of SNP\. Limited capacity would continue to exist in South Africa,
with an accumulated spending in the order of $0\.2m over five years, mostly in KwaZulu-Natal\.
Focusing on areas outside the existing protected areas which have been identified in the main text of this
document as being of high biodiversity value, the approach will be to establish and work with community
conservation forums to understand concerns and problems, and to devise appropriate solutions\. Of primary
concern is the issue of overgrazing\. Rather than promoting the exclusion of the existing land-uses, the
community conservation program will draw on local expertise and employment to build capacity to
implement conservation measures\. It also includes measures to enhance altemative livelihood activities,
such as capitalizing on the cultural heritage\. The project's success with communities hinges on its ability to
deliver tangible benefits from activities that are environmentally sustainable\. Hence, activities which are
not immediately related to biodiversity conservation, but indirectly serve to underpin that goal, are
necessary to achieve the overall objective of conserving globally significant biodiversity\.
In the GEF alternative, erosion control would be the most expensive sub-component ($0\.7m), followed by
fire management, range management, and alien invading plant clearing (all in the range of $0\.2m)\. Smaller
sums have been allocated to office infrastructure in support of the community management work, and to
cultural heritage activities (about SO\. Im each)\.
6\. Community involvement is an element that runs through several components, but it is also one
component in its own right\. In the baseline alternative, a limited program would be undertaken in Lesotho
under the auspices of the Conservation Division of the Ministry of Agriculture, but it would not have
dedicated staff for the program, sufficient transportation, or locally recruited facilitators In RSA, a
successful model already exists, but it is constrained in its coverage by lack of funds\.
- 54 -
Building on the highly successful community conservation programs in KwaZulu-Natal and around the
Golden Gate Highlands National Park, the proposed activities in the GEF alternative will expand and
strengthen these programs into new areas in RSA and in the focal areas of Lesotho\. The core of this is the
development of an expanded community conservation program, supported by community conservation units
in each country\. The program in each country will be supported and coordinated by a professional social
ecologist with a support team of conservation extension staff (three in each country)\. These will in turn
employ community facilitators drawn from the local communities (36 in each country) and who will be the
focus of the training of community members involved in other conservation management and tourism
activities\. Each team will need four vehicles to adequately reach out to communities\. In total, the
community support teams as defined here, would cost about $1 m for Lesotho, and $1\.1 m for South Africa\.
Capacity building measures, including workshops for community members, establishment of community
fora, and support to locally managed conservation activities (erosion control, fire management, alien plant
species clearing) would require about $0\.3m in Lesotho and $0\.5m in RSA\.
7\. Nature-based tourism planning forms the seventh major component\. While tourism developmentper
se is not a GEF objective, the level of domestic benefits from tourism development in the project area is not
on a level that attracts private sector investment without the creation of an enabling environment\. Without
this component, the project would be more constrained in the incentives it can offer to communities for their
interest and collaboration\.
In the baseline alternative, Lesotho would have some resources (approx\. $0\. tlm) to spend on nature-based
tourism planning on a more general scale, but without the possibility to target training and development
activities to the eastern Highlands\. South Africa would have about twice as much resources than Lesotho
for this particular area, and the indirect support of an already vibrant private sector\. However, it would not
have amy resources for community-based training\.
While the actual investment in tourism facilities will almost entirely be left to the private sector, there is a
legitimate role for the public sector, supported where appropriate by this project, to attend to planning,
environmental assessments, marketing, and training of both agency staff and communities\. The most
sizable sub-component is a training program directed to community leaders and emerging entrepreneurs in
order for local talent to adequately capture commercial opportunities through small-scale enterprises
(approximately $0\.7m for both countries)\. In Lesotho, there is a need for basic product development,
development of a forum that gathers the main stakeholders, and marketing efforts ($0\.5m)\. PA
management staff will also be trained to manage tourism flows, and some training will be directed towards
provincial and national level staff in order to create the necessary linkages between them and the emerging
local capacity for tourism ($0\.3m)\. In Lesotho, a modest infrastructure will be designed and installed:
hiking trails, 4x4 tracks, basic trail shelters and so forth ($0\.3m)\. In both countries, village-level nurseries
for the propagation of indigenous, commercially attractive species will be established and community
members trained ($0\. 1m)\.
8\. Institutional development is the eighth component\. The achievements of the project will not be
sustainable if there is an inadequate institutional structure to "inherit" the results, and to ensure their
long-term sustainability\. In the baseline, Lesotho is likely to see some improvement on the national level,
thanks to support from the GEF-funded UNDP-implemented project focusing on southern Lesotho\.
Localized support in the LHWP area is also forthcoming from a project funded by the AfDB\. In South
Africa, the core institutions at the provincial and national level are already well established, but local
activities would be very limited in the project area, and coordinated landuse planning would remain weak in
the Free State and Eastern Cape Provinces\.
- 55 -
In the GEF alternative, the project would support the emergence of local boards and forums representing
communities around conservation areas\. Community conservation forums established in Lesotho will
require further support and formalization\. In KwaZulu-Natal, the initiation of the program to establish
Local Boards for protected areas will be strengthened, at a cost of about $0\.4m for both countries\. An
approximately equal amount would be spent on coordinating landuse planning across agencies and
stakeholders\. Lesotho would upgrade its conservation management capacity to adequately manage not only
the SNP, but also several areas that will be handed over to government from the Lesotho Highlands
Development Authority during 2001\. National level support would be limited (less than $0\. Im) as it would
build upon already available GEF-support through UNDP\.
4\. Incremental cost matrix ($US million)
Component Base case GEF alternative Incremental cost
1\. Project management & 0\.49 3\.13 2\.64
transfrontier collaboration
2\. Conservation planning 0\.50 1\.91 1\.40
3\. PA management 0\.50 1\.85 1\.35
planning
4\. Conservation 14\.90 18\.18 3\.28
management\. PAs
5\. Conservation 0\.20 1\.67 1\.47
management\. Ex-PAs
6\. Community 0\.45 3\.50 3\.05
involvement
7\. Nature-based tourism 0\.31 1\.96 1\.65
8\. Institutional 0\.54 0\.95 0\.41
development
Totals 17\.89 33\.15 15\.25
Note: Figures may not add up exactly due to rounding errors\.
Incremental Costs per Country
Component Lesotho GEF RSA GEF Co-financing Co-financing
(US$M) (US$M) Lesotho RSA
1\. Project management & transfrontier 1\.3 1\.4 0\.2 0\.3
collaboration
2\. Conservation planning 0\.6 0\.8 0\.5
3\. PA management planning 0\.5 0\.8 0\.5
4\. Conservation management\. PAs 1\.1 2\.2 0\.6 14\.3
5\. Conservation management\. Ex-PAs 1\.0 0\.4 0\.2
6\. Community involvement 1\.4 1\.6 0\.2 0\.3
7\. Nature-based tourism 1\.2 0\.5 0\.1 0\.2
8\. Institutional development 0\.2 0\.2 0\.5
Total Project Costs 7\.3 7\.9 1\.1 16\.8
- 56 -
Annex 5: Financial Summary
SOUTH AFRICA: Maloti-Drakensberg Transfrontier Conservation and Development Project
Years Ending
IMPLEMENTATION PERIOD
Year 1 Year2 Year3 Year 4 Year 5 Year 6 1 Year 7
Total Financing
Required
Project Costs
Investment Costs 1\.8 3\.0 4\.9 6\.2 5\.6 0\.0 0\.0
Recurrent Costs 1\.0 1\.7 2\.7 3\.3 3\.0 0\.0 0\.0
Total Project Costs 2\.8 4\.7 7\.6 9\.5 8\.6 0\.0 0\.0
Total Financing 2\.8 4\.7 7\.6 9\.5 8\.6 0\.0 0\.0
Financing
IBRD/IDA 1\.0 2\.0 4\.0 5\.0 3\.3 0\.0 0\.0
Government 1\.8 2\.7 3\.6 4\.5 5\.3 0\.0 0\.0
Central 0\.3 0\.4 0\.5 0\.7 0\.8 0\.0 0\.0
Provincial 1\.5 2\.3 3\.0 3\.8 4\.6 0\.0 0\.0
Co-financiers 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0
User Fees/Beneficiaries 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0
Others 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0
Total Project Financing 2\.8 4\.7 7\.6 9\.5 8\.6 0\.0 0\.0
Main assumptions:
Services approximately 47% (recurrent) works approximately 20% (investment), goods approximately 13%
(investment), training approximately 14% (recurrent), operational cost approximately 6% (recurrent)\.
- 57 -
Annex 6: Procurement and Disbursement Arrangements
SOUTH AFRICA: Maloti-Drakensberg Transfrontier Conservation and Development Project
Procurement
General: Procurement of goods, works, and services will be carried out following Annual Procurement
Plans agreed with the Bank as part of the Annual Work Plan\. Procurement of goods and works will be in
accordance with the Bank's "Guidelines for Procurement under IBRD Loans and IDA Credits" (January
1995, revised in January and August 1996, September 1997 and January 1999) and procurement of
Consulting Services will be in accordance with the Bank's "Guidelines for Selection and Employment of
Consultants by World Bank Borrowers" (January 1997, revised September 1997 and January 1999)\. The
Bank's Standing Bidding Documents (SBD) will be used for all International Competitive Bidding (ICB)
and Bank's Standard Request for Proposals (RFP) will be used for Consulting Services under QCBS\.
Civil works: This category consists of erosion control works, alien clearing and fixed infrastructure\. The
erosion control refers to rehabilitation of wetlands, paths and management tracks that have degraded due to
past neglect\. The alien clearing program will be substantial in South Africa, but very limited in Lesotho\.
The built infrastructure mainly concerns Lesotho, where the SNP will be upgraded in terms of the entrance
gate, reception, administration and research center, water supply, power, environmental education center
and staff accommodation\. Limited infrastructure is also planned for Sani Top\. New trails for hiking and
small huts along these will also be constructed\. The total for both countries is $6\.8 million, of which $3\.15
million will come from GEF\. No ICB is foreseen, as all contracts will be below $0\.5 million\. NCB is
expected to amount to about $0\.4 million of the GEF financed activities, primarily related to the works in
SNP\. A major part will consist of Small Works, where the experience from the Cape Peninsula in terms of
training local, small-scale contractors will be utilized\. Small Works estimated to cost less than $50,000
equivalent per contract, up to an aggregate amount not to exceed $2\.75 million equivalent, may be procured
under lump-sum, fixed-price contracts awarded on the basis of quotations obtained from three (3) qualified
domestic contractors in response to a written invitation\. The invitation shall include a detailed description
of the works, including basic specifications, the required completion date, a basic form of agreement
acceptable to the Bank, and relevant drawings, where applicable\. The award shall be made to the contractor
who offers the lowest price quotation for the required work, and who has the experience and resources to
complete the contract successfully\. All procurement documents relating to Small Works will be properly
filed and retained by the main coordinating agencies for post review and audit by the Bank\.
Goods: This category includes several vehicles (2 cars and 19 4WDs) and office equipment such as PCs,
printers, faxes and so on, and GIS hardware, software and peripherals\. This investment is necessary to
underpin the objectives of community involvement, biodiversity surveying and coordination in a very
inaccessible environment and over a large project implementation area\. Some of these purchase can be
lumped together for ICB (about $0\.6 m), while others will have to be staggered to coincide with the
demands of staff\. NCB is expected to amount to $0\.8 m\. Smaller items will be handled through Shopping,
and all procurement documents relating to Shopping will be properly filed and retained by the main
coordinating agencies for post review and audit by the Bank\.
Services: This category refers mainly to individual, long-term consultant who will be engaged in assisting
the implementing agencies, and who will also build capacity among long-term staff to continue their work
after project implementation\. The PCUs in each country will be staffed with a Coordinator, a Financial
Manager, a Procurement Specialist and support staff\. Specialists in ecology, park planning, field
technicians, social ecologists, community facilitators, cultural heritage specialists, tourism consultants,
- 58 -
micro-enterprise consultants, marketing consultants, and legal expertise will also be engaged\. A few large
contracts (e\.g\. for GIS services) are expected to fall under QCBS ($ 1\.0 m), while most of the services
pertain to small, individual contracts ($6\.2 m)\. Where contracts are not prior reviewed by the Bank, all
procurement documents will be properly filed and retained by the main coordinating agencies for post
review and audit by the Bank\.
Training: This category includes numerous workshops, training courses and study tours\. The training
program will be submitted annually to the World Bank, and reviewed every 6 months as part of the
supervision missions\. As for services, the type of selection method will depend on the size of the contract\.
A total of $2\.1 million is earmarked for training\.
Procurement methods (Table A)
Table A: Project Costs by Procurement Arrangements
(US$ million equivalent)
Procurement Method
Expenditure Category ICB NCB Other2 N\.B\.F\. fTotal Cost
1\. Works 0\.00 0\.40 2\.75 3\.69 6\.84
(0\.00) (0\.40) (2\.75) (0\.00) (3\.15)
2\. Goods 0\.60 0\.80 0\.56 3\.31 5\.27
(0\.60) (0\.80) (0\.56) (0\.00) (1\.96)
3\. Services 0\.00 0\.00 7\.16 8\.40 15\.56
(0\.00) (0\.00) (7\.16) (0\.00) (7\.16)
4\. Training, workshops, study 0\.00 0\.00 2\.12 2\.50 4\.62
tours
(0\.00) (0\.00) (2\.12) (0\.00) (2\.12)
5\. Miscellaneous 0\.00 0\.00 0\.86 0\.00 0\.86
(0\.00) (0\.00) (0\.86) (0\.00) (0\.86)
Total 0\.60 1\.20 13\.45 17\.90 33\.15
(0\.60) (1\.20) (13\.45) (0\.00) (15\.25)
" Figures in parenthesis are the amounts to be financed by the Bank Grant\. All costs include contingencies\.
2' Includes civil works and goods to be procured through national shopping, consulting services, services of
contracted staff of the project management office, training, technical assistance services, and incremental
operating costs related to managing the project\.
- 59 -
Table Al: Consultant Selection Arrangements (optional)
(US$ million equivalent)
F I Selection Method
Consultant Services
Expenditure Category j QCBS QBS SFB LCS CQ Other N\.B\.F\. I Total Cost
A\. Firms 1\.00 0\.00 0\.00 0\.00 0\.00 0\.00 1\.68 2\.68
(1\.00) (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) (1\.00)
B\. Individuals 0\.00 0\.00 0\.00 0\.00 0\.00 6\.16 6\.72 12\.88
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00) (6\.16) (0\.00) (6\.16)
Total 1\.00 0\.00 0\.00 0\.00 0\.00 6\.16 8\.40 15\.56
(1\.00) (0-00) (0\.00) (0\.00) (0\.00) (6\.16) (0\.00) (7\.16)
1\ Including contingencies
Note: QCBS = Quality- and Cost-Based Selection
QBS = Quality-based Selection
SFB = Selection under a Fixed Budget
LCS = Least-Cost Selection
CQ = Selection Based on Consultants' Qualifications
Other = Selection of individual consultants (per Section V of Consultants Guidelines),
Commercial Practices, etc\.
N\.B\.F\. = Not Bank-financed
Figures in parenthesis are the amounts to be financed by the Bank Grant\.
- 60 -
Prior review thresholds (Table B)
Table B: Thresholds for Procurement Methods and Prior Review '
Contract Value Contracts Subject to
Threshold Procurement Prior Review
Expenditure Category (US$ thousands) Method (US$ millions)
1\. Works >500 ICB 0\.0
50 - 500 NCB 0\.5
<50 Small Works Prior review first 3
contracts
2\. Goods >100 ICB 0\.6
30 - 100 NCB Prior review first 3
<30 contracts only\.
Shopping Post review
3\. Services >100 QCBS 1\.0
50 - 100 QCBS/CQ/Other All contracts >$50,000 for
individual consultants and
< 50 QCBS/CQ/Other >$100,000 for firms\.
<50 QCBS/CQIOther ~~~~Post review
4\. Training, Workshops >100 (firms) Other 2\.0
and study tours* >50 (indiv\.)
5\. Operating Expenses N/A N/A Post review
Total value of contracts subject to prior review: $4\.1 m\.
Overall Procurement Risk Assessment
High
Frequency of procurement supervision missions proposed: One every 6 months (includes special
procurement supervision for post-review/audits)
* Review of training proposals will be carried out on the basis of IDA-approved annual training programs that
would identify the nature of training/study tours/workshops, institutions were training/study tours/workshops
would be conducted (selection of institutions and justification thereof), cost estimates, and contents of the course\.
These will be reviewed by IDA on an annual basis
- 61 -
The following major findings and actions were identified as part of the Procurement Assessment in South
Africa:
Procurement regulations differ between implementing agencies, and some aspects of provincial
procurement regulations in the Free State are problematic from a World Bank perspective\. There is no
procurement capacity available for this type of project within National DEAT, and limited capacity within
DEAET in Eastern Cape and DEAT in the Free State\. The KZNNCB manages most of the geographical
area of the project on the RSA side, and is expected to spend most of the grant within its provincial
boundaries\. Hence, it is agreed that:
1\. All procurement activities, including procurement planning, for this project should be centrally managed
by KZNNCB, under contract with National DEAT\. This should be done in coordination with all the other
beneficiary agencies\. Minor procurement of goods could be delegated to the other beneficiary agencies
within agreed authority limits (i\.e\. all orders/contracts for goods below R15,000\. However, monthly
reports on such procurements should be submitted to the PCU for consolidated reporting under the project\.
2\. KZNNCB will fill the vacant procurement officers' positions with qualified and experienced personnel\.
Rigorous training on the Bank's procurement procedures is required\.
3\. The PCU will submit a procurement procedures and implementation manual, and a standard bidding
document for National Competitive Bidding for review and acceptance by the World Bank\.
4\. The World Bank will organize a procurement workshop to all the key personnel who are involved with
this Project prior to or at the time of launching the projects\.
Thresholds generally differ by country and project\. Consult OD 11\.04 "Review of Procurement
Documentation" and contact the Regional Procurement Adviser for guidance\.
- 62 -
Disbursement
Allocation of grant proceeds (Table C)
The proposed GEF Grant of $15\.25 million, of which $7\.92 million will go through RSA, would be
disbursed over five years with an expected Project Completion Date of December 31, 2006 and a Closing
Date of June 30, 2007\. The proposed allocation of Grant proceeds for RSA only is shown in table C\.
Table C: Allocation of Grant Proceeds
Expenditure Category Amount in US$million Financing Percentage
Goods 0\.82 80% local, 100% foreign
Works 1\.27 80% local, 100% foreign
Services 3\.37 10(%
Training 1\.17 100%
Operating Expenses 0\.51 80%
Unallocated 0\.78
Total Project Costs 7\.92
Total 7\.92
Use of statements of expenditures (SOEs):
All applications to withdraw proceeds from the Grant will be fully documented, except for: (a) expenditures
of contracts with an estimated value of $50,000 each or less for works and (b) $100,000 or less for goods
and consultants' services provided by firms; and (c) $50,000 or less for individual consultants; and (d) all
operating costs, which may be claimed on the basis of certified statements of expenditure (SOEs)\.
Documentation supporting expenditures claimed against SOEs will be retained by PCU and will be made
available for review when requested by World Bank supervision missions and project auditors\. All
disbursements are subject to the conditions of the Development Credit Agreement and the procedures
defined in the Disbursement Letter\.
Special account:
To facilitate disbursements of eligible expenditures for works, goods and services, the Government will
open a Special Account in a comrnercial bank to cover the part of GEF's share of eligible expenditures to
be managed and administered by the PCU\. The Authorized Allocation of the Special Account would be
$0\.5 million covering an estimated four months of eligible expenditures financed by GEF\. Initially, the
authorized allocation will be limited to an amount of $0\.25 million until the aggregate amount of
withdrawals from the Credit account plus the total amount of all outstanding special commitments entered
shall be equal to SDR 1\.5 million\. The PCU will be responsible for submitting monthly replenishment
applications with appropriate supporting documents for expenditures\. To the extent possible, all of GEF's
share of expenditures should be paid through the special account\.
- 63 -
Annex 7: Project Processing Schedule
SOUTH AFRICA: Maloti-Drakensberg Transfrontier Conservation and Development Project
Project Schedule Planned Acal
Time taken to prepare the project (months) 18 47
First Bank mission (identification) 09/01/1997 09/01/1997
Appraisal mission departure 01/10/2000 01/09/2000
Negotiations 03/15/2000 05/04/2000
Planned Date of Effectiveness 12/31/2001
Prepared by:
Jan Boj6, Team Leader, and Caroline Guazzo, Task Team Assistant
Preparation assistance:
Eagles, Paul, Ecotourism Everson, Terry, Rangeland Management
McFoy, Cyrus, Biodiversity McNeely, Jeffrey, STAP review
Pomela, Emmanuel Motebang, Project Preparation Coordination Sandwith, Trevor, PA Management
Stewart, Greig, Project Preparation Coordination Thomson, Cheryth, Project Administration
Bank staff who worked on the project included:
Name Speciality
Adu, Elizabeth Country Legal Matters
Bojo, Jan Team Leader
Brandon, Carter Peer Reviewer
Crepin, Christophe GEF Regional Coordinator
Falloux, Francois Project Conceptualization
Fisiy, Cyprian Social Scientist
Gaginis, Steve Disbursement
Guazzo, Caroline Processing
Hegarty, Anthony Financial Management
Janeiro, Jose Disbursement
Kiss, Agi Peer Reviewer
Krishnakumar, V\. S\. Procurement
Mackinnon, Kathy Peer Reviewer
Marke, William Disbursement
Mpoy-Kamulayi, T\. Country Legal Matters
Ninio, Alberto Environmental Law
Seth, Subhash Roads
Sugar, Marcos Disbursement
Warner, Christopher Post-Negotiations Processing
*Note on the Actual Negotiation Date: Post-negotiations with the Government of RSA continued until June 2001\.
- 64 -
Annex 8: Documents in the Project File*
SOUTH AFRICA: Maloti-Drakensberg Transfrontier Conservation and Development Project
A\. Project Implementation Plan
Draft for negotiations, April 21, 2000\.
B\. Bank Staff Assessments
Financial Management Assessment
Procurement Assessment
C\. Other
Report from Project Identification Workshop (September, 1997)
Minutes from PCD Review Meeting (April, 1999)
Aide-meinoire from Preparation Mission (May, 1999)
STAP review
Minutes from Decision Meeting (December, 1999)
Aide-memoire from Appraisal Mission (January-February, 2000)
Progress reports from Project Coordinators
Minutes from Steering Committee Meetings
Nomination Proposal for the uKhahlamba Park, to be listed as World Heritage Site\.
Spreadsheets with detailed cost break-downs for each project component
GEF CEO sign-off (April 24, 2000)
Minutes from negotiations (May 4-5, 2000)
Revised Grant Agreement from DEAT, October 12, 2000
Consultant reports (available on CD-ROM) (see table)
DEAT Approval of revised legal documents, June 5, 2001
- 65 -
Task Title Date Consultancy Firm
1 Infonnation Management Standards and Dec\.99 Enviromap GIS Consultants
Guidance
2 Biodiversity Assessment Dec\. 99 Environmentek CSIR, Pretoria
3 Assessment of threats and impacts, priorities Dec\. 99 Environmentek, CSIR, Pretoria
and necessary management interventions\.
4 Road Feasibility Assessment Dec\. 99 Muir Associates, Consulting Engineers
5 Economic Assessment & Development Dec\. 99 Associates for Economic Development
Planning
Conclusions and recommendations with cost
estimates for inclusion in the Project Concept
Document
6RSA Social Assessment - South Africa Dec\. 99 Kiepiel & Quimlan
6LES Social Assessment Dec\. 99 ECRA Consulting (Pty) Ltd
7 Cultural Heritage Audit Dec\. 99 Amafa aKwaZulu-Natali
Heritage / Erfenis KwaZulu-Natal
8RSA Transition Management & Development Dec\. 99 Metroplan Development Consultants
Planning - Rep\. of S\.A\.
8LES Lesotho Transition Zone Management & Dec\. 99 Loxton, Venn & Associates
Development Planning
9 The legal and institutional framework for Dec\. 99 EnAct International
conservation and natural resource
management in the proposed
Maloti-Drakensberg Transfrontier
Conservation and Development area
10 Protected area management and development Dec\. 99 Richard Davies & Associates
planning
11 International Recognition Dec\. 99 Environmentek, CSIR, Durban
Volumes I-III
Including electronic files
- 66 -
Annex 9: Statement of Loans and Credits
SOUTH AFRICA: Maloti-Drakensberg Transfrontier Conservation and Development Project
May-2001
Difference between
expected
Original Amount in US$ Millions and actual
disbursements'
Project ID FY Purpose IBRD IDA GEF Cancel\. Undisb\. Orig Frm Rev'd
P035923 1997 CAPE PENINSULA 0\.00 0\.00 12\.30 0\.00 2\.36 9\.83 0\.00
P048606 1997 IND\.COMPET&JOB CREAT 46\.00 0\.00 0\.00 21\.53 18\.69 30\.89 17\.81
Total: 46\.00 0\.00 12\.30 21\.53 21\.05 40\.72 17\.81
SOUTH AFRICA
STATEMENT OF IFC's
Held and Disbursed Portfolio
May-2001
In Millions US Dollars
Committed Disbursed
IFC IFC
FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic
0 AEF Bulwer 0\.00 0\.00 0\.19 0\.00 0\.00 0\.00 0\.19 0\.00
1996 AEF Carosa Farm 0\.00 0\.09 0\.13 0\.00 0\.00 0\.09 0\.13 0\.00
2000 AEF DBS 0\.00 0\.00 0\.75 0\.00 0\.00 0\.00 0\.75 0\.00
1999 AEF Dargie Timbr 0\.30 0\.00 0\.00 0\.00 0\.30 0\.00 0\.00 0\.00
1997/98 AEF E\.R\. Medical 0\.00 0\.18 0\.00 0\.00 0\.00 0\.18 0\.00 0\.00
1997 AEF Erand Hotel 0\.00 0\.40 0\.65 0\.00 0\.00 0\.40 0\.65 0\.00
1999 AEF FOXTROT MEAT 0\.66 0\.00 0\.00 0\.00 0\.33 0\.00 0\.00 0\.00
1998 AEF Green Chare 0\.00 0\.09 0\.00 0\.00 0\.00 0\.09 0\.00 0\.00
1999 AEF IHS Techno 0\.49 0\.00 0\.65 0\.00 0\.49 0\.00 0\.65 0\.00
1998 AEF Lesedi Hosp 0\.16 0\.00 0\.00 0\.00 0\.16 0\.00 0\.00 0\.00
1998 AEF NSAPIC 0\.00 0\.00 0\.30 0\.00 0\.00 0\.00 0\.00 0\.00
1998 AEF Roodepoort 0\.00 0\.00 0\.34 0\.00 0\.00 0\.00 0\.34 0\.00
1998 AEF Sordale 0\.33 0\.00 0\.00 0\.00 0\.33 0\.00 0\.00 0\.00
1996 AEF Wip Motors 0\.00 0\.33 0\.00 0\.00 0\.00 0\.33 0\.00 0\.00
1995/96/99 AFLIFE 0\.00 5\.94 0\.00 0\.00 0\.00 5\.94 0\.00 0\.00
1996/98 Cashbank 8\.16 0\.00 0\.00 0\.00 8\.16 0\.00 0\.00 0\.00
1999 Energy Afr Ltd 0\.00 38\.02 0\.00 0\.00 0\.00 38\.02 0\.00 0\.00
0 FRBI 30\.00 0\.00 0\.00 0\.00 30\.00 0\.00 0\.00 0\.00
2000 KIWANE 0\.00 0\.00 9\.28 0\.00 0\.00 0\.00 3\.78 0\.00
1995 SACGF 0\.00 2\.61 0\.00 0\.00 0\.00 2\.61 0\.00 0\.00
1995 SAFCF 0\.00 2\.06 0\.00 0\.00 0\.00 2\.06 0\.00 0\.00
1995 SAFFM 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00
2000 SAHL 0\.00 2\.47 0\.00 0\.00 0\.00 1\.41 0\.00 0\.00
1999 SAPEF 0\.00 35\.00 0\.00 0\.00 0\.00 15\.99 0\.00 0\.00
Total Portfolio: 40\.10 87\.19 12\.29 0\.00 39\.77 67\.12 6\.49 0\.00
- 67 -
Approvals Pending Commitment
FY Approval Company Loan Equity Quasi Partic
2001 Printability 3\.21 2\.46 1\.56 0\.00
1999 SABIC 0\.00 0\.00 1\.00 0\.00
2000 SAHL-LF 11\.77 0\.74 0\.00 0\.00
2001 SpierEstate 10\.00 7\.50 2\.00 0\.00
2000 ABSA 100\.00 0\.00 0\.00 100\.00
2000 AEF Tusk 1\.91 0\.00 0\.12 0\.00
2000 EDU LOAN 1\.62 1\.62 0\.00 0\.00
2000 KIWANE ASSET MGT 0\.00 0\.00 0\.44 0\.00
Total Pending Commitment: 128\.52 12\.31 5\.12 100\.00
- 68 -
Annex 10: Country at a Glance
SOUTH AFRICA: Maloti-Drakensberg Transfrontier Conservation and Development Project
Sub- Upper-
POVERTY and SOCIAL South Saharan middle- _ _ _ _ __ _
Africa Africa Income Development diamond*
1999
Population\. mid-year (millions) 421 642 573 Life expectancy
GNP Per capita (Alias method, US$) 3170 500 4,900
GNP (Atlas method, US$ billions) 133\.5 321 2,811
Average annual growth\. 1093-99
Population /%) 1\.9 26 1\.4 GNP Gross
Labor force M% 2\.4 2\.6 2\.1 Gpe Grossr
Most recent estimate (/htott year available, 1993-99) capita enrollment
Poverty (% of pDoulation below national poverty line)
Urban Population (% of total population) 52 34 76
Life expectancv at birth (vears) 55 50 70
Infant mortality (per t 000 live births) 51 92 27
Child malnutrition (% of children under 5) 9 32 7 Access to safe water
Access to improved water source (1 of poPutation) 70 43 78
Illiteracy /X of population ape 15+) 15 39 10
Gross primary enrollment (% of school-apre Population) 133 78 109 South Afnca
Male 135 85 -- Upper-middle-income group
Female 131 71
KEY ECONOMIC RATIOS and LONG-TERM TRENDS
1979 1989 1998 1999 - - - --
Economic ratio$*
GDP IUS$ billions) 559 96\.0 133\.9 131\.1
Gross domestic investment/GDP 17\.6 16\.5 16\.2 15,7 Trd
Exports of qoods and services/GOP 35\.0 26\.2 25\.7 2S\.4 rade
Gross domestic savinosJGDP 27\.1 21\.5 17\.4 18\.2
Gross national savinostGDP 22\.8 1810 14\.6 15\.3
Current account balancelGDP 6\.2 16 -1\.6 -04 Domes
Interest Pasments/GDP 0\.6 0 7 Doetic - ; Investment
Total debt/GDP 17,1 19\.0 S
Total debt service/exports 9\.9
Present value of debtlGDP 18\.0
Present value of debt/exports 67\.7
Indebtedness
1979-89 1989-99 1995 1999 1999-03
faveraqo annuslt rrowth)
GDP 1\.4 1\.6 0\.6 1\.2 3\.3 - South Africa
GNP per capita 0\.9 -0\.4 1 2 -0\.5 1\.8 Upper-middle-income group
Exports of goods and services 1\.2 4\.9 2,3 0\.0 3\.8
STRUCTURE of the ECONOMY
1979 1989 1998 1999 Growth of investment and GOP (%)
(% of GDP) 20
Agriculture 6\.0 5\.4 3\.8 3\.8
Industry 45\.5 40\.7 32\.0 32\.4 rs
Manufacturing 21\.7 23\.5 19\.1 19\.2
Services 48\.5 53\.8 64\.2 63\.7 o
94 vs s9 sr s
Private consumDtion 57\.8 59\.3 62\.8 62\.6 \.,:\.-
General qovernment consumption 15\.0 19\.2 19\.8 19\.2 - GDI -O-GDP
Imports of goods and services 25\.4 21\.2 24\.4 22\.9
1979-89 1989-99 1998 1999 Growth of exports and imports (%)
(average annual growth)
Aqriculture 2\.6 0\.2 -3\.1 4\.3 20
Industry 1\.0 0\.6 -0\.9 -0\.2
Manujfacturing 1\.5 0\.6 -1\.8 0\.2 15
Services 2\.7 2\.2 1\.9 1\.9
Private consumption 2\.7 2\.4 1\.3 0\.7 - 4 55 a 97 5I a 8
General qovernment consumption 3\.9 0\.8 -0\.5 -1\.9
Gross domestic investment -3\.9 1\.5 -1\.0 -3\.5 -10
Imoorts of qoods and services -0\.4 7\.4 2\.1 -7\.0 -Exports Imports
Gross national Droduct 1\.5 1\.7 0\.5 1\.3
Note: 1999 data are preliminary estimates\.
The diamonds show four kev indicators in the countrv (in bold) compared with its income-groun averae\. If data are missing, the diamond will
be incomplete\.
- 69-
South Africa
PRICES and GOVERNMENT FINANCE
1979 1989 1998 1999 Inflation (%)
Domestic prices 1
(% change)
Consumerprices 13\.1 14\.7 6\.9 5\.2 10
Implicit GDP deflator 15\.5 17\.3 7\.6 6\.9
Government finance
(r of GDP, includes current qrants) o
Current revenue 21\.9 27\.0 28\.6 30\.6 94 95 96 97 98 9
Current budget balance 2\.2 0\.6 -2\.3 0\.3 GDP de6ator -CPI
Overall surplus/deficit -4\.2 -1\.2 -5\.1 -4\.7
TRADE
1979 1989 1998 1999 Export and import levels (USS mill\.)
(USS millions)
Total exports (fob) 19,560 22,949 29,116 26,169 40,000
Gold 7,129 6,653 4,685 4,116 \.
Chemicals 2,295 1,593 2,496 2,516 3000_
Manufactures 2,861 5,694 10,170 4,622
Total imports (cif) 14,215 17,642 27,269 27,042 20\.000
Food 623 966 1,632 1,585 -10\.000
Fuel and energy 4,855 6,511 10,929 2,877
Capital goods \. \. \. 11,830
93 94 95 96 97 99 99
Exportpnceindexf1995=100) 52 108 111
Import prce index (1995=100) 52 99 100 a Exports o Imports
Terms of trade (1995=100) 100 109 111
-ALANCE of PAYMENTS
(UIS$ millions) 1979 1989 1998 1999 Currert account balance to GDP (%)
Exports of goods and servces 19,922 25,129 34,385 33,321 2
Imports of goods and services 14,288 20,465 32,733 30,009
Resource balance 5,633 4,664 1,652 3,312
Net income -2,331 -3,286 -3,018 -2,852
Net current transfers 143 186 -738 -927 0 -+ ,l
Current account balance 3,445 1,564 -2,104 -467 1 9 14
Financing items (net) -2,978 -1,650 2,830 -3,506 1 1 1
Changes in net reserves -466 86 -726 3,973 -2
Memo:
Reserves including pold (US$ mnillions) 5,088 2,633 7,627 9,857
Conversion rate (DEC, locallUS$) 0\.8 2\.6 5\.5 6\.1
EXTERNAL DEBT and RESOURCE FLOWS
1979 1989 1998 1999
(USS millions) Composition of 1999 debt (USS mill\.)
Total debt outstanding and disbursed \. \. 22,851 24,901
IBRD 0 1 A: 1 D: 10
IDA \. \. 0 0
Total debt service \. \. 3,531
IBRD \. 0 0 0
IDA \. 0 0 0 G: 10,928
Composition of net resource iows F: 13,962
Official grants \. \. 246
Official creditors \.
Private creditors \. 0 0 0
Foreign direct investment -488 8 550
Portfolio equity \. 619
World Bank program
Commitments 0 0 0 A - IBRD E- Bilateral
Disbursements 0 1 1 B - IDA D - Other multilateral F - Private
Principal repayments 0 0 0 c - IMF G - Short-term
Net flows 0 1 1
Interest payments 0 0 0
Net transfers 0 1 1
Development Economics
- 70 -
Additional
Annex 11
Community Consultation and Social Assessments
Introduction
The Maloti-Drakensberg Transfrontier Project supports a conservation and development program, whose
primary goals are i) to protect globally significant biodiversity and ii) to facilitate development initiatives
for the communities in the program area\. Involvement of these communities is central to the design and
implementation of the project\. As part of project preparation, the coordinators carried out extensive
consultations with the communities in the study area\. In addition, social assessments were commissioned
for both South Africa and Lesotho to assess project impacts and to map out the processes for community
involvement in the long-term biodiversity conservation program\.
The key elements in the preparation of these social assessments include the analytical components that
address i) stakeholder analysis and ii) institutional analysis; and the process components, which address
long-term participatory aspects\. The process components deal with the mode of engagement of stakeholder
in the project (i\.e\. their consultation and participation) and the framework for monitoring (participatory
monitoring, program monitoring and impact monitoring) and evaluation\. The analytical aspects in this
project clarify the different stakes involved and the stakeholders, as well as the institutional arrangements
underpinning existing relationships\.
It is on this basis of this framework that the social assessments for South Africa and Lesotho are presented\.
Although this is a transfrontier project, this distinction between the two countries is relevant because the
social issues and trends are not the same and different consultants carried out the studies\.
Part 1: Social Assessment - South Africa
The South African social assessment was carried out in four areas, as follows:
(i) The Maluti area of the Eastem Cape Province is dominated by service delivery activities\. The
service sector accounts for about 57\.8% of all employment according to the 1991 DBSA census data\.
Apart from the employment opportunities provided by the service sector, the overwhelming majority of the
households rely on subsistence agriculture practiced on communal lands\. Most of the villages in this study
zone are located in the montane zone and are therefore dependent on the project area for their livelihoods\.
(u) St\. Bernard's Peak in KwaZulu-Natal is characterized by commercial farmlands, and private
property holdings\. There is a high rate of unemployment and male absenteeism for the few jobs that exist\.
Most of the properties adjoining the project area are privately owned, and subsistence use poses little
pressure on the biodiversity of these areas\. However, existing and potential land-uses including commercial
afforestation have resulted in significant impacts on the mountain environment and need to be addressed
through effective land-use planning\.
- 71 -
(iii) The Upper Thukela area, also in KwaZulu-Natal, is a traditional rural area with high levels of
unemployment\. Even where opportunities exist, there is also a high level of male absenteeism\. This is a
locality where NGOs, such as Bergwatch, are involved in community conservation\. The Rand Water
Mnweni Trust has also initiated greater community participation in conservation activities\.
(iv) The QwaQwa area in the Free State was fornerly a self-governing territory under the apartheid
regime\. This economy of the area is dominated by employment in the mining sector, albeit a declining
activity in the Free State\. Having been subjected to self-government, the power of traditional authority is
omnipresent and is manifested in the control of land allocation\. Unfortunately, the area has high
unernployment, stock theft, random burning of the rangelands, and overgrazing\. These negative trends
consequently exert undue pressure on natural resources to sustain the livelihoods of people and livestock\.
In summary, the four study zones are characterized by a high level of unemployment, an unusually high
proportion of females and children which negatively affects decision making in livestock management, and
in most cases reliance on natural resources for sources of livelihood\. In those areas where common property
resources are still managed by local chiefs and their agents, free rider problems associated with overgrazing
are predominant\. For a population of approximately 600,000 (excluding St\. Bernard's Peak) the
employment profile is as follows:
_ Formal employment 34\.0%
- Informal sector 13\.1%
e Marginal sector (subsistence) 26\.7%
- Unemployed 26\.2%
These figures show significant levels of poverty\. It is therefore not surprising that most stakeholders
expressed the following needs and concerns:
* Unemployment was seen as the main concern and priority should be given to job creation in the project;
* Stock theft, uncontrolled burning of rangelands, and livestock trespassing negatively affects the
biodiversity of the study area;
- Overgrazing, especially on communal land, was widely reported to negatively impact tourism;
i Infrastructure investments, including water supply, roads, and telecommunications, were identified as
factors that will increase the tourism potential of the area;
* Finally, there was a strong interest in training and capacity building (e\.g\. biodiversity assessments, tour
guides)\.
Given these concerns, and the natural beauty of the landscape, the overriding view of stakeholders was that
nature-based tourism development, which emerged as a key component in the resolution of the huge
problem of unemployment, would be a major force behind rural economic restructuring\. The project was
therefore visualized as setting the stage for an expansion of livelihoods and bringing about the convergence
of conservation and development (e\.g\. rehabilitation of thatch-producing grasslands for income generation)\.
Institutional Issues
On institutional analysis, there is a list of the different government, parastatal, provincial, and local level
institutions operating in the four study areas (Kiepiel & Quinlan 1999)\. This list describes the attributes of
these organizations but does not provide an adequate basis to assess their efficiency and effectiveness\. It is
generally noted that areas under common property regimes are subjected to high levels of resource
- 72 -
degradation\. This has prompted communities to take their own initiative in the implementation of resource
conservation in their areas\. Consequently, the lessons of such initiatives as Landcare and Working for
Water are cited as models worthy of further studies during implementation\.
Further institutional analysis will be required during the early phase of program implementation to clarify
the institutional platform (rules, regulations, normative systems, etc\.) on which various actors stand to
articulate their claims\. That analysis should further provide insights into those actors who can deliver on
project outcomes, other actors who have veto power in the system, and how to engage these groups of
actors to move in the desired direction\.
Also worth mentioning as part of the institutional and cultural landscape of the project area is the existence
of historically dated and culturally significant San rock paintings\. These rock art resources, which provide
us with glimpses of other times, are of global cultural significance\.
Consultation and Participation
On the consultation process, it is obvious that no viable conservation approach can achieve any long-term
success in any of the four regions without the involvement of local communities\. The social assessment
therefore advocates community involvement in the planning and implementation of the project\.
Although the South African study relied mainly on secondary data sources, a strong case has been made for
involving the communities in biodiversity conservation\. It is highly recommended that intensive
consultations be carried out with various stakeholders during the entire implementation of this program\.
Monitoring and Evaluation
Finally, benchmarking the social assessment, as a process, needs to carried out\. This phase of both
program and impact monitoring is critical in the design and implement of the different components of this
project for each of the biodiversity hot spots\.
Social Safeguard Issues
The possibility of project-induced involuntary resettlement in South Africa is not envisaged in any of the
areas identified as hot spots that require immediate investments\. Agricultural pressure, which is the
common form of economic displacement, is not an issue in the afro-alpine reaches of the project area\.
However, the project aims to work with the communities outside the project zone as a strategy to enhance
conservation efforts within afro-alpine biodiversity areas\.
At first sight, the prevalence of rock art resources within the project area might suggest that issues of
cultural property might become topical\. But in view of the fact the project aims at conservation of
biodiversity and setting the stage for nature-based tourism, these cave paintings stand a much better chance
of conservation with the project than without the project\.
There is no question of indigenous peoples' policy being triggered, as the stakeholders are all indigenous to
the region\. When an analysis of vulnerability was carried out, no particular ethnic or social group could be
said to suffer undue impacts as a result of project implementation\.
- 73 -
Part II: Social Assessment - Lesotho
A key challenge for project design and implementation in Lesotho is the fact that the rangeland is a
commnon property resource, whose management regime is a mixture of the traditional system of maboella
and the state sponsored system of the range management area (RMA)\. The local perception that rangeland
can be exploited for free, challenges concepts of conserving biodiversity that is of global significance\. It is
in search for common ground, which blends conservation with development that necessitated the
commissioning of a social assessment for the project\. The underlying assumption is that the success of the
project is contingent on a community-driven approach, which involves the stakeholders during the initial
planning phase as well as the implementation phase\.
Stakeholder Analysis
Pursuant to this goal, the four districts of Qacha's Nek, Thaba Tseka, Mokhotlong and Butha Buthe were
targeted for social analysis\. A sample of 36 villages and 790 respondents were included in the participatory
land-use planning surveys\. Workshops in Makanyaneng, Mashai and Linakaneng were conducted to
identify the principal environmental concems and perceptions of the users\. All these groups were within the
Thaba Tseka District and use the Sani and Sehlabathebe summer grazing areas\. The groups' composition
included chiefs, headmen, livestock owners, women's group, Stock Theft Control Unit members and
members of the Village and District Development Councils\.
In the field, proven social science research tools, including participatory rural appraisals, participatory
stakeholder workshops, participatory land-use planning, and institutional surveys were carried out to elicit
the relevant information as well as engage the stakeholders in the assessment of the issues\. This
consultation process laid the foundation for long-term engagement of the stakeholders in the management of
the resource base\. Furthermore, the National Environment Secretariat of Lesotho commissioned a
participatory rural appraisal of six villages in the Mokhotlong District to determine the perspectives of the
people in conserving the ecosystem of the area\. The concems of the communities will be addressed in this
project\.
The stakeholder analysis identified three levels of stakeholding: i) individual actors, ii) households, and iii)
communities\. Although the household emerged as the primary unit of analysis, with an average size of 5\.8
persons in the project area, other institutional actors such as chiefs, principal chiefs, VDCs, etc\. were
identified as significant actors in the project context\. Approximately 250,000 people depend on natural
resources from the area\.
A generalized finding of poverty and unemployment, expressed in terms of lack of cash (monemetrics), was
identified as a serious problem facing most households\. This situation has recently been compounded by the
retrenchment of Basotho men from the mines in South Africa\. This has significant consequences on
household incomes and the living standards in the study areas\. To cope with these hardships, many
households have resorted to beer brewing, an occupation carried out primarily by women\. Other sources of
income include livestock products (wool and mohair), cattle sales during auctions, herders wages, sale of
firewood, sale of vegetables, etc\. The vast majority of these beneficiaries rely on rangelands for their
livelihoods\.
The data also show that 79% of the households are male-headed, and that most of the female-headed
households are those occupied by old widows\. Educational attainment in the study area is significantly
below the national average of 78%; 31% of people surveyed had no formal education\. Livestock herding
kept most of the boys out of school\.
- 74 -
When viewed from the standpoint of the rangeland resources, 93% of the households surveyed utilize these
resources as their primary source of livelihood\. Farming pressures on the land are not reported, the main
source of pressure on the range is overgrazing\.
Consultations during the preparation of the social assessment produced the following conclusions:
* All communities were aware that rangelands particularly in the summer grazing areas are seriously
degraded;
* Stock theft is a major concern of these communities;
* Communities are aware that wetlands in the area are severely damaged and are drying up;
* There are problems in the administration the areas due to disagreements between headmen and chiefs\.
Other Forums for Stak-eholder Consultations
In addition to the consultations carried out by the social assessment team, the project carried out multiple
sessions of consultations with institutional stakeholders as part of the project preparation effort\. These
included:
(i) NGOs: At an NGO meeting held on October 13, planned project activities were discussed and
views from the various groups will be incorporated into the planned activities\. The following NGOs were
present: Lesotho Red Cross, Lesotho National Wool & Mohair Growers Association, World Vision
International (Lesotho), Lesotho Durham Link Office, Church Action Group (an advocacy group), Plenty
Lesotho, Christian Council of Lesotho, Helvetas Swiss Development Corporation, GROW - Mokhotlong,
Community Legal Resource and Advice Center, Development for Peace Education, Transformation
Resource Center, Highlands Church Action Group\. NGOs in Lesotho, having understood the project
objectives are now keen to contribute to implementation\.
(ii) Local Government: Several meetings have been held with District Secretaries of the affected
districts\. In the districts of Butha-Buthe Mokhotlong and Thaba Tseka, the District Management Teams
also attended the meetings with the District Secretary\. The District Management Teams comprise the
District Senior sectoral and departmental Officers: Agriculture, Tourism, Health, Roads and Planning\. The
major conclusions from the meetings were:
* careful participatory planning of the transfrontier area must be undertaken;
* grazing in the RMAs must be controlled;
* mechanisms to protect the wetlands should be developed and implemented;
* community involvement in the management of resources within the RMAs is critical\.
(iii) National Government and Parastatal Organizations: Consultations with the national
Government leaders have been with the senior officials of the Ministry of Works, Roads Department,
Ministry of Tourism, Sports and Culture, and the Lesotho Tourism Board\. Officials from these ministries
have also been taken to the project study area\. Since parts of the project study area are within the LHDA
jurisdiction, consultations took place with the Authority Nature Conservation Officers, the Infrastructure
and engineering officers, Tourism Officers, LHDA Environment and Social Services Group and the LHDA
Contract 604 (design of nature conservation areas in LHDA areas)\. These consultations complemented our
understanding of the institutional issues\.
- 75 -
Institutional Issues
The institutional analysis for Lesotho highlighted a complex web of relationships relating to rangeland
management (see Annex 12)\. The function and role of these institutions must be determined if interventions
in range management are to be successful\.
The introduction of range management areas and grazing associations has been met with mixed feelings\.
Proper range management rotations have been ignored for fear of livestock theft\. In fact, the fear of
livestock theft is a major threat to rational rangeland management\.
Emphasis on de-stocking has been met with resistance on both cultural and marketing grounds\. First, on
cultural grounds, local livestock owners perceive cattle as a store of value, not as an economic factor of
production\. According to local registers of value, owning large heads of cattle enhances a person's status in
the community\. Second, markets are said to be inaccessible in the highlands for those livestock owners who
want to de-stock\. Access to adjoining markets in South Africa has been restricted and owners are obliged to
take their livestock to markets in the lowlands or the foothills of Lesotho\. These issues need to be during the
project design and implementation phase, if globally significant biodiversity is to be conserved\.
Implications for the project
Both the analytical and processing aspects of the social assessment emphasize community engagement
during the design and implementation of this project\. The following implications are derived from the
Lesotho study where there was ample consultation of stakeholders during the survey\.
(i) Preparatory workshops undertaken during the social assessment will provide a sound basis for
future participatory work with the relevant stakeholders\. The identification of the relevant institutions and
their relative power should form the basis for future planning of activities\.
(ii) The main needs identified by the communities were the need for income generating activities
(including nature-based tourism) and training\. These should be given top priority in proposed project
activities\.
(iii) The social assessment discussed four models for sustainable land management:
* total exclusion;
* formation of range management areas;
* traditional range management involving resting of certain areas (maboella);
* mixed use\.
The model that was favored by most communities was an adapted range management area model\. If this
model is adopted it should be legitimized by the govemment\. The communities stated the need for strict law
enforcement to support the model\.
(iv) The social assessment identified the need to train communities in grazing management\. It is
apparent from the detailed description of the traditional maboella system that livestock managers have a
sound understanding of the principles of grazing management\. The reasons for the breakdown of the system
(both political and social) need to be identified and solutions sought\.
- 76 -
(v) The identified need for education on the hydrological cycle and importance of wetlands should be
highlighted as a project activity\.
(vi) The social assessment recommended the promotion of abattoirs and markets to encourage
de-stocking\.
(vii) The central tenet of the social assessment is the involvement of communities at all levels of project
design and implementation\. The request for the fonnation of community committees (e\.g\. community
conservation forums) and their participation in regular meetings and follow-up session should be
institutionalized and monitored\.
The same framework for monitoring and evaluation proposed above for the South African version applies
to Lesotho\.
Social Safeguard Issues
No specific social safeguard issues have been identified in Lesotho\. However, due to rapid emergence of
unplanned settlements close to govemment offices, especially at Sani Pass, a decision may be taken during
the implementation phase to move out the residents from these unplanned settlements\. If that scenario were
to take place in any of the project areas not visited by the appraisal mission, resettlement planning
consistent with world Bank guidelines on involuntary resettlement, must be followed and a plan submitted
to the Bank for approval\.
- 77 -
Additional
Annex 12
Rangeland Management and Biodiversity
An assessment of the biodiversity content of the Maloti-Drakensberg area, which is considered to be an
area of high regional plant endemism, shows some significant deterioration due to both natural and human
causes\. Factors contributing to such resource deterioration include: (i) overgrazing of communal lands, (ii)
out of season burning regimes and uncontrolled wild fires, (iii) increased cultivation on steep slopes of the
mountain, (iv) livestock trespassing across borders, and (v) the invasion of alien plant species\. The aim of
this section is to identify some of the underlying causes of biodiversity loss and to propose ways of
addressing such root causes within the project components\.
(i) Overgrazing of communal lands
In Lesotho and South Africa rangeland is a communal resource to which every community member has the
right of use, but not ownership\. Prior to the 1900's there was little pressure on the rangelands and people
could graze their animals wherever they liked\. However, increased population growth and their dependence
on livestock have resulted in greater pressure on the natural resource base and degradation of the
rangelands\. Increased stock theft has also constrained some stockowners to keep animals close to their
homesteads for long periods, further engendering overgrazing of the rangeland\.
In South Africa many of the communal areas were subject to "Betterment" planning by the government in
the 1950's\. The areas were divided into three zones (grazing camps, villages and croplands) which were
fenced to control livestock movement\. During summer, livestock were kept in grazing camps in the higher
lying areas, but had open access to the rangeland and crop residues near the villages during winter\.
Although this system still operates in many communal areas today, lack of consultation with the
communities led to the breakdown of the fences and uncontrolled use of the rangelands\.
The government of Lesotho has put considerable effort and resources into developing management
strategies to address the problem of overgrazing in communal areas\. Although it is apparent from the long
history of govemment and donor aid programs that there is no simple solution, there are a number of
lessons that can be leamt from these interventions\.
A review of these interventions (Hartley 1999) illustrates Lesotho's strong history of grazing management\.
Under the traditional transhumance grazing system there is a seasonal migration of livestock from the
pertnanently settled arable areas to the pastoral summer grazing areas in the high mountains\. In winter the
grasses are dormant and have low forage value so that it is necessary for the livestock to feed on crop
residues close to the villages\. During the growing season (summer) the livestock are moved up into the
mountains when the grazing value of natural grasslands is high and livestock damage to crops is minimized\.
Traditionally, chiefs were responsible for managing grazing by controlling stock numbers in certain grazing
areas and setting aside areas for protection of thatch grass, reed beds, tree planting and rotational grazing\.
Historically, chiefs were powerful and effective administrators, but today their effectiveness in regulating
grazing control has been eroded (Motsamai 1991)\. The main contributing factors to this are diminishing
range resources, expansion of settlements, increased stock theft and lack of administrative capacity (e\.g\.
manpower, support services)\. Several state interventions (e\.g\. the establishment of Village Development
Councils) were subsequently initiated to address these problems\. However, the transfer of power from
Chiefs to Village Development Councils has caused serious tensions and conflicts within many
- 78 -
communities and has hampered the effective management of rangeland resources (Loxton, Venn &
Associates 1999)\.
Livestock owners and mangers in Lesotho currently operate under two institutions:
1) Chieftainship which comprises traditional leaders, and
2) Central government, which enacts legislation and operates through professional civil servants and
elected bodies (Tshabalala 1995)\.
Although the statutory regulations were meant to provide a means of regulating land use their
implementation has failed, largely due to lack of proper institutions to administer them (Loxton, Venn &
Associates 1999)\. Another problem is that responsibility and jurisdiction over natural resources is scattered
across many government ministries and departments as well as across several local structures\. Consultation
and collaboration with all these ministries will be crucial for successful range management policy
formulation and implementation\.
One of the most substantial interventions in Lesotho has been the Range Management Areas (RMAs)
Program initiated in 1982 by the Range Management Division with donor assistance from USAID (Hartley
1999)\. Areas were set aside for the exclusive use of a set number of communities, whose livestock keepers
were members of a legally registered Grazing Association\. The main principles of RMAs are:
* increase the productivity and income of rural livestock producers;
v facilitate commercialization of the extensive livestock industry, while at the same time satisfying the
subsistence needs of rural households and
* initiate management of renewable resources in a manner that is sustainable and socially acceptable to
rural Basotho\.
Perceptions on the success of RMAs range from "considerable success" in some areas (Weaver 1991) to its
rejection in Mokhotlong (Hartley 1999)\. Indicators of the success of the Sehlabathebe RMA (Weaver &
Sekoto 1991) were:
* increased livestock productivity;
* a decrease in percentage bare ground from 26\.8% to 20\.3%;
* an 16% increase in range condition; and
* a 33\.8% increase in species diversity\.
In the Pelaneng/Bokong RMA, that was initiated by the Range Management Division under the
USAID-supported Community-based Natural Resource Management Project, within the Lesotho Highlands
Water Project catchment area, the main achievements have been an increase in community income
generation through tourism, the initiation of planted pastures for livestock and an increase in the number of
livestock auctions\.
Social and political issues appear to be the main reasons for dissatisfaction of RMAs (e\.g\. election of
political members on to committees, lack of community input in decision making, poor communication,
lack of perception of benefits)\. These issues need to be addressed through the project if future interventions
are to be successful\.
In conclusion, a number of factors that must be addressed by the project to achieve sustainable
management of communal resources in the study area are:
- 79 -
* the development of community conservation forums to ensure the participation of all the people who
depend on the resources\.
* facilitation of the development and implementation of a resource management plan by the community
to control the manner and rate of resource exploitation\. This can be achieved through consultation and
participation of all the stakeholders and by supporting and strengthening the institutions involved\.
* the employment and training of extension staff and the provision of adequate resources and incentives
to support them\.
* employment and training of community facilitators to implement the management of the resources\.
* education of herd boys to support livestock management plans\.
* facilitation of legislation to support local government structures and implementation of resource
management plans\.
* facilitation of market-based tourism opportunities to support the people's need for income generation\.
* introduction of alternative fodder programs\.
* build on transfrontier co-operation between Lesotho and South Africa so that livestock owners have
ready access to markets and auctions\.
(ii) Out of season burning of the rangelands
Fire management is a critical and time-tested mechanism for range rejuvenation and environmental
management in the locality\. However, when mismanaged, it can cause serious damage to the rangelands\.
Two factors account for the uncontrolled wild fires in the Maloti-Drakensberg area\. Firstly, out of season
burning (e\.g\. summer burning) reduces the high quality grazing species resulting in the encroachment of
low quality forbs and unpalatable grasses\. Secondly, the unchecked actions of conimunity members,
especially the herd boys, who put in fires during the dry winter period to promote new flushes of growth
often results in uncontrolled wild fires that are a threat to property and biodiversity\.
The project aims at dealing with uncontrolled fires through the implementation of better fire management
practices (e\.g\. seasonal burning programs, firebreaks, etc\.) and as part of the educational aspects of the
community outreach program\. Communities will also be associated with the fire fighting strategies that the
project will develop\.
(iii) Increased cultivation on the slopes of Maloti-Drakensberg Mountains
Rapid population increase in the highlands has exerted undue pressure on limited land resources\. Moreover,
dam construction, especially the Katse dam in Lesotho, has attracted more migrants into the highlands and
further has increased the need for cultivable lands\. This increase in population trend has undoubtedly
brought into agricultural production more marginal and fragile lands along the slopes of the mountain
range\.
A land use planning exercise, with the involvement of the communities, will complement some of the
initiatives being implemented by the Lesotho Highland Development Authority along the margins of the
project area\.
(iv) Livestock Trespassing across Borders
Given the transhumance nature of cattle management in the highlands, stock owners tend to see land in
terms of territory for grazing purposes, unmindful of national borders\. In some cases, these transhumance
corridors predate the establishment of national boundaries\. Hence, South Africa conservation authorities
have been registering cases of cattle trespassing across the borders into protected areas\.
- 80 -
The effective organization and enforcement of rules within the RMA will institutionalize more structured
grazing practices in the program area\. The project's contribution to this process will consist of revamping
the RMAs or the creation of new RMAs\. In addition to project-level intervention, bilateral discussions on
the enforcement of border controls might be required, if community-level intervention fails to work
(v) Alien plant species
The invasion of most alien plant species, as a result of overgrazing and human settlement, is a major threat
to biodiversity and water resources in the catchment areas\. The major problem plants are Acacia dealbata,
and Pinus patula, which have invaded approximately 44,000 ha of the project area\. The removal of these
species in the Maloti-Drakensberg area is necessary if biodiversity of the project area is to be conserved\.
Project activities that will address this problem include an alien clearance program, where local
conmmunities will be trained and employed to manually remove the problem plants\. This will be combined
with an education program on land management and rehabilitation\. Herbicides will be used sparingly, and
only by trained staff on species that coppice aggressively without such treatment\. Direct application will
be used, as opposed to general spraying\. The alien eradication program will be used as a springboard to
train emerging entrepreneurs from previously disadvantaged communities\. Through training in
management skills, including accounting, tendering procedures, group leadership and so forth, these
entrepreneurs will be ready to take on increasingly sophisticated tasks\.
MANAGING RANGELAND IN THE COMMUNAL AREAS OF SOUTH AFRICA
In South Africa, communal rangelands support approximately a quarter of the human population and half
the livestock population of the country\. These high population pressures have resulted in degradation of
natural resources and decreased productivity\. In the past, development initiatives aimed to achieve
sustainability through the control of excessive livestock numbers\. These efforts failed because they clashed
with the basic reasons for which people were keeping cattle (milk, draft, security etc\.)\. Following the 1994
democratic elections in South Africa, a number of new resource conservation and land management
programs have been initiated to deal with the problem of resource degradation\. This report is an overview
of current issues (historical, social, ecological, and institutional) that need to be addressed to achieve
sustainable land management in communal areas\.
1\. Historical issues
Traditionally the response of African pastoral societies to variable forage availability was to retain a high
degree of mobility (nomadic pastoralism)\. Increased population pressure and political changes have
contributed to the breakdown of this type of pastoralism\.
With the implementation of the 1913 Land Act, rural people were settled into "homelands" and forced to
subsist either on marginal agricultural land or on high potential land which required large amounts of
capital and an in-depth knowledge of intensive production systems in order to use it effectively\. Livestock
numbers began increasing beyond the carrying capacity of this rangeland and signs of over-utilization
became evident\. In 1932 a Commission of Enquiry into the Agricultural Economy of "Bantu Reserves"
wamed that accelerated soil erosion through over-grazing was turning developing areas into deserts\. This
led to the proclamation of "Betterment" Areas in 1939\.
- 81 -
"Betterment" Planning
Many communal areas in South Africa were subjected to "betterment", which was implemented in the
1950's\. Communal areas were divided into three main resource areas by planners who sought to impose a
"scientific" resource management regime\. Each resource area had unique tenure arrangements and rules
(Von Maltitz 1998)\.
The homestead area
The traditional settlement pattern of scattered homesteads was replaced by villages\. Each family was
allocated land on which to build their homestead\. Tenure for this land was generally secure\. It was common
for this area to be fenced and used for kraaling livestock, keeping poultry and growing fruit and vegetables\.
The fields
Households had usage rights to specific fields\. Tenure of this land was relatively secure and was allocated
by the "tribal authority"\. Rights to exclusive use of the fields was reserved for the summer months\. In
winter the fields were used for communal grazing\. All maize stalks (stover) were considered to be part of
the communal winter grazing resource\. Fields could be reallocated under specific conditions such as
continued non-use\. In some cases land was rented out\.
Rangeland
This area was designated largely for summer grazing, but was also used for other resources such as water,
thatch grass, fuel wood, timber and medicinal plants\. All members had access to this area, and use patterns
were controlled by local regulations\. There was no limit to the number of livestock that an individual could
keep\. In some areas permits were required to keep livestock, but these were not used to control numbers\.
Although some communal areas still operate under the "betterment" system, it is no longer functioning in
many areas\. The main reason for this was the top-down approach and lack of consultation with the people
on key issues such as fence boundaries\.
Intervention in communal rangelands must focus on the people and make production an integral part of
sustainable land management\.
Land reforrn in South Africa is currently underway to address the past history of unequal land distribution\.
Many planners have called for privatization of land to stop overgrazing\. However, in many cases resource
productivity per unit area is not high enough to guarantee the individual or group the retums needed to
sustain private property regimes\. In addition, resource poor people that have been allocated private
property regimes may not be able to bear the cost that these systems impose\. Turner (1995) suggests that
the solution to natural resource management problems in southem Africa is to be found in a combination of
institutional arrangements that combine the best attributes of private, common and state property\.
New land policy therefore needs to take into account the diversity of conditions under which rangelands
are used in South Africa, the range of stakeholders involved and the variety of socio-economic conditions
under which rangelands are managed\.
- 82 -
2\. Social issues
Past failures of development initiatives to solve the problems of environmental degradation in South Africa
have been attributed to the lack of consultation and involvement of the rural population\. In the past, the
top-down approach to implementing management strategies excluded the local people from decision
making\. Participation will empower people and give them a sense of ownership in managemrent decisions\.
New conservation policies are based on the need to adopt more socially responsible methods of
conservation management\.
Participatory methods must play a central role in development work in rural communities\. Extension
officers must receive appropriate training in participatory methodology to work with the people in
participatory partnership\.
3\. Ecological issues (range and livestock management)
When "betterment" was first initiated a destocking campaign was implemented by the government, but after
strong opposition this was discontinued\. Traditionally, livestock management was the responsibility of the
men and herding was carried out by young boys\. Today women play a major role in livestock management\.
As men migrate to industrial and mining sites in search of jobs, women are left in rural areas as heads of
households\. Although women's interactions with cattle have increased over the years, decisions on issues
such as slaughtering and selling are still vested with the men\.
During the 1950's when "betterment" was implemented, the grazing area was fenced off from the cropping
area and individual grazing camps were also fenced\. However, the fencing system has collapsed largely
through theft and lack of maintenance\. It is clear that any cattle and rangeland management strategy will
require some mechanism to control cattle movement\. Cattle movement can be controlled by physical
fencing or 'social' fencing such as herding\.
Management of individual livestock herds on communal rangelands is largely exercised by herders and the
level of herding varies\. Over much of South Africa the absence of young boys, who now attend school,
imposes a major limitation to livestock management, though in Lesotho large numbers of herders guard
access to grazing\. Increased social development, including increased schooling, effects a breakdown in the
traditional herding system\. This results in losses through the theft of stock and conflict between crop and
cattle owners when crops are destroyed by untended cattle\. One solution to this may be a system based on
the Lesotho model whereby herders are paid, either in money or livestock, to look after livestock\.
The grazing system in comnmunal rangelands closely follows the cropping cycle\. During the cropping
season in sunmmer the cattle are moved away from the crop fields to graze on the surrounding natural
grasslands\. Milk cows and calves are usually kept in the vicinity of the homesteads\. In winter, following
harvest of the crops, the cattle graze on the maize stalks in addition to rangeland\. Fodder shortage,
especially during the dry winter season, is one of the main constraints to livestock production\. Agroforestry
species have the potential to provide an affordable fodder supplement for increasing cattle productivity\.
Another problem that will have to be addressed by rangeland managers is the very skewed ownership of
livestock (De Bruyn 1998) and the tendency for a large proportion of the livestock to be in the hands of
absentee members employed in industry outside the communal area\. The livestock which such individuals
accumulate in the communal area, primarily for the purpose of storing their wealth, denies the local
inhabitants of a large proportion of the resources of the rangeland\.
- 83 -
* Unequal livestock ownership must be recognized when planning range management strategies\.
* Alternatives to destocking (e\.g\. control of animal movement) need to be investigated\.
* Recognized agroforestry systems that are successful in other African countries should be adapted
for South African rangelands\. The potential of alternative fodder crops needs to be investigated\.
4\. Institutional issues
Communities dependent on comrnon property resources have adopted various institutional arrangements to
manage these resources\. The varying degrees of success that have been achieved is dependent largely on the
effectiveness of the Tribal elders managing the communities under their control\.
Local institutions are likely to be the key to future sustainable range management
In South Africa the protection and conservation of biodiversity has been carried out largely through the
creation of national parks with patrolled perimeters (Dikeni, Moorhead & Scoones 1996)\. Local
communities generally did not receive significant benefits from these areas and often had no access to the
resources\. The KwaZulu-Natal Conservation Services is currently investing considerable financial and
manpower resources into involving local people and communities in the running of parks and in policy
decisions on how they should be managed\. Processes are currently taking place whereby local boards are
created and community members can be appointed onto these boards to promote more effective regulation
of protected areas\.
Communities surrounding protected areas should have the opportunity to benefitfrom such resources
(e\.g\. product harvesting, employment opportunities and revenue sharing) and be represented on
management bodies of such areas\. The capacity of these communities needs to be built in areas of
conservation management and tourist development\.
When the apartheid administration came to an end with South Africa's first democratic elections in 1994 a
niumber of studies were initiated to identify major environmental policy issues surrounding rangeland use\.
The comerstone of development policy for the new South African Government is the Reconstruction and
Development program\.
UJnder the current conditions of rapid change in South Africa, there is an urgent need to develop a local,
provincial and national policy framework based on continued input and negotiations amongst all
stakeholders in rangelands\. The Maloti-Drakensberg Transfrontier project should play a key role in the
initiation of environmental projects and policy development surrounding rangeland use\. It should work
within the framework of the Reconstruction and Development Program\.
- 84 -
REFERENCES
Anon\. 1990\. National livestock policy implementation plan\. The Lesotho National Livestock Task Force,
Maseru\.
Anon\. 1991\. Ha Moshebi/Ha Ramatseliso vegetation analysis for transects 1-10 & 1-23 1987 vs\. 1991\.
Range Management Division, Ministry of Agriculture, Cooperatives and Marketing, Maseru\.
Artz NE 1993\. Local participation, equity and popular support in Lesotho's Range Management Area
Programme African Journal of Range and Forage Science 10:54-62\.
Bainbridge WR, Motsamai B & Weaver LC 1991\. Report of the Drakensberg/Maluti Mountain Catchment
Conservation Programme\. Natal Parks Board, Pieternaritzburg\.
Buzzard RF 1994\. Assessing the sustainability of grazing associations in Lesotho\. Presented at the second
Symposium of the Developing Areas Branch of the Grassland Society of Southern Africa, Maseru,
Lesotho\.
De Bruyn T 1998\. The condition, productivity and sustainability of communally grazed rangelands in the
central Eastem Cape Province\. In: Proceedings of symposium on policy-making for the sustainable use of
southern African communal rangelands\. University of Fort Hare, Alice: 248-257\.
Dikeni L, Moorhead R & Scoones 1 1996\. Land use and environmental policy in the rangelands of South
Africa: case studies from the Free State and Northern Province\. LAPC Working Paper No\. 38\.
Dobb AJ 1985b\. The organization of range use in Lesotho, Southern Africa: evaluation of attempted
modifications and case study\. MSc thesis, Washington State University, Pullman\.
Erskine JM 1993\. Creating the right conditions for optimal management of grazing livestock and
sustainable use of grasslands in the less developed areas of southern Africa\. Proceedings of the first
Developing Areas Symposium of the Grassland Society of Southern Africa, pp\. 16-26\.
Hartley D 1999\. Final draft synthesis report of the Drakensberg/Maloti Mountains Conservation
Programme\. Drakensberg/Maloti Mountains Conservation Programme\. EDF Project (No\. ACP LSO 024
& 031)\.
Ivy D & Turner S 1996\. Range management areas and grazing associations - experience at Sehlabathebe
Lesotho\. In: successful natural resource management in southern Africa\. Gamsberg Macmillan Publishers,
Windhoek, Namibia\.
Lyne MC & Nieuwoudt WL 1990\. The real tragedy of the commons: livestock production in Kwazulu\. The
South African Journal of Economics 58:88-96\.
Morris CD 1994\. Grazing management options for Lesotho Highlands - a brief review\. Unpublished report\.
Motsamai B 1991\. Management of Conimunal Range Resources in Lesotho\. In Portillo EM, Weaver LC &
Motsamai B (Eds)\. Planning for Management of Communal Natural Resources Affected by Livestock\.
Range Management Division, Ministry of Agriculture, Cooperatives and Marketing, Lesotho\.
- 85 -
National Livestock Development Study 1999\. Phase 1 report\. Government of Lesotho, Maseru\.
National Forestry Action Programme 1995\. Literature review and recommendations for future
interventions\. Sechaba consultants, Maseru\.
Sechaba Consultants (1999)\. Report on A Rapid Rural Appraisal of Six Villages in the District of
Mokhotlong\. Drakensberg/Maloti Mountains Conservation Programme\. EDF Project (No\. ACP LSO 024
& 031)\.
Sekoto M 1990\. Report on the Status of the Implementation of Mokhotlong/Sanqebethu Range
Management Area\. Unpublished report, submitted to the Chief Range Management Officer, Range
Management Division
Shoup JA 1987\. Transhumant pastoralism in Lesotho: case study of the Koeneng-Mapoteng ward\. Range
Management Division, Ministry of Agriculture, Cooperatives and Marketing, Maseru\.
Tshabalata MT 1994\. The social organisation of range utilization and livestock production in Lesotho\.
Presented at the second Symposium of the Developing Areas Branch of the Grassland Society of Southern
Africa, Maseru, Lesotho\.
Tumer SD 1995\. Common property resources and the rural poor in sub-Saharan Africa\. International Fund
for Agricultural Development, Amsterdam\.
Von Maltitz G 1998\. Communal rangeland management options for the Okhombe community\. In
Proceedings of symposium on policy-making for the sustainable use of southern African communal
rangelands\. University of Fort Hare, Alice: 68-74\.
Weaver LC 1987\. Sehlabathebe Range Management Area: grazing management plan\. Land Conservation
and Range Development Project, Ministry of Agriculture, Cooperatives and Marketing, Maseru\.
Weaver LC & Sekoto MG 1991\. Community-based natural resource management in Lesotho\. Presented at
the International Congress of the Grassland Society of Southern Africa "Meeting Rangeland Challenges in
Southern Africa in the 1990s"\. Pretoria, South Africa\.
- 86 -
Additional
Annex 13
Conservation Planning
A key component of the project is the provision of technical support for addressing the backlog of
conservation planning which serves as the framework for future management action\. Building on
contemporary best practice in bioregional planning, and protected area management planning, the planning
process is a phased but also adaptive progression from the broad scale strategic plans to more detailed and
focused action plans\.
Project activities dealing with conservation planning are divided into a nested hierarchical sequence of
conservation planning levels, encompassing the following components, but with crosscutting relevance to
all other project components:
Component 2: Landscape level conservation planning for the Transfrontier Conservation and
Development Area;
Component 3: Protected area planning for component protected areas and priority areas;
including
Sub-component 3\.1 Conservation development planning and zonation;
Sub-component 3\.2 Management planning;
Sub-component 3\.3 Business planning;
Component 2: Landscape level conservation planning for the Transfrontier Conservation
and Development Area
The preparatory studies generated extensive documentation and data regarding resources in the study area,
including physical, biological, social and economic resources and uses\. The project concept is for a
transfrontier conservation and development area, which needs to be planned and zoned to ensure that areas
of global and national biodiversity importance are protected and managed appropriately\. This requires that
a vision and strategy are prepared following further stakeholder consultation and with the involvement of
the relevant authorities on both sides of the border\. Conceptual proposals for compatible land-use zonation
derived in the preparatory phase need to be negotiated and action plans prepared for implementation\. This
implies conservation planning at the landscape level, and is designed to be facilitated by appropriate
professionals, and with the full involvement of the staff of the respective ministries and departments in both
countries\. Deficiencies in data, particularly for biodiversity, were identified in preparation, and these will
be addressed by focused data collection and further analysis to confirm priority areas\. At this scale, there
is also a need to harmonize to the greatest degree possible the approaches and activities of the five nature
conservation management agencies which have a responsibility in parts of the area, namely the
Conservation Division of the Lesotho MoA, and SANParks, KZNNCB, EC-DEAET, andFS-DEAT in
RSA\.
Component 3: Protected area planning for component protected areas and proposed
protected areas
There are two sets of areas where further detailed planning is required, namely existing protected areas and
proposed conservation areas\. Planning is carried out in a number of phases, beginning with the overall
development and zonation plans for each area, then preparing detailed management programs and finally
- 87 -
addressing business planning and sustainability\. These phases are described in more detail under each
sub-component below\.
Sub-component 3\.1 Protected area development planning and zonation
The nature conservation management agencies have been unable to obtain the resources, particularly of
manpower, to complete overall detailed conservation development plans for protected areas\. In the
Ukhahlamba-Drakensberg Park, the assignment of nature conservation management to the provinces
enabled the consolidation of several separately proclaimed and managed protected areas and state forest
nature reserves and wilderness areas into a single entity\. Management was rationalized accordingly, but a
long-outstanding component has been an overall concept development and zonation plan for the park,
which would ensure that protected area development takes place in an orderly way, that management
infrastructure is correctly placed and to provide a basis for the elaboration of management programs\. This
exercise will entail the appraisal of all previous plans, the conduct of workshops with management staff
and with adjacent communities and the draffing of the appropriate maps and documentation\. The statutory
requirement for this planning to undergo a public participation process demands expert facilitation\. It is
through this process that managers build an understanding of the vision for the protected area in the
landscape, and the opportunities and constraints for management\. The zonation plan and associated
schedules, which describe the limits of acceptable change become the basis for all future management and
development activities\. It is usually unnecessary to revisit this level of planning, because the recurrent
nature of operational management plans ensures adaptation of the conceptual planning and zonation to
emerging circumstances\.
Sub-component 3\.2 Protected area management planning
The preparation and continual update of protected area management plans is an essential component to
guide the operational management of protected areas in an adaptive way\. This exercise is usually
undertaken by the protected area management team including the specialist input of an ecologist and other
professionals\. It is designed to determine the priority management programs for the effective management
of the resource and the activities which occur there, and encompasses:
* Management to conserve biodiversity
* Community conservation programs
* Visitor facilities management
* Protected area administration (security, infrastructure, communications etc\.)
* Research and information
Objectives are determined for each within the policy framework and zonation established above,
management options are detailed and discussed, action plans for implementation are developed, monitoring
programs are devised and implemented and essential research is conducted\. This allows the management
team to adaptively implement management programs in pursuit of the protected area objectives and vision\.
Once the first version of the management plan is in place, it is the management team which will implement
and adaptively develop the plan further\. The preparatory work for developing this project concept
docurnent identified several deficiencies in the existing plans\. New areas which are being developed
together with communities will require more extensively facilitated planning processes, once the earlier
consultations have been conducted\.
- 88 -
Sub-component 3\.3 Protected area business plans
Nature conservation management agencies have traditionally managed areas on the basis of budgets derived
from government subsidies\. Whereas, it is likely that subsidies will continue to provide core funding for
biodiversity management, there is an increasing requirement to develop alternative sources of conservation
funding, preferably through the sustainable use of the resource base and the leverage of funds in other
ways\. Business plans also encompass the human resources and organizational systems, which need to be in
place to effective management\. Areas of interest for this activity include the need to optimize the returns
from the use of the resource base e\.g\. by tourists, to make contributions to both biodiversity management
and community development\. A key strategy adopted in KwaZulu-Natal has been to ensure that
nature-based tourism generates sufficient revenues for this, but this has also required the development of
appropriate business models to incorporate private sector investment and conmmunity equity in
developments based in or adjacent to protected areas\. The business planning component of the project
activities will investigate all possible options for sustainable financing, and provide a basis for the effective
management of these resources to meet performance targets\. In the context of new protected areas, it will
also be necessary to demonstrate that the option of conservation/nature-based tourism will generate greater
benefits than the current subsistence land-uses\. For Sehlabathebe National Park, it will be necessary to
fulfill promises that the protected area will generate greater benefits than the former use of the rangeland
for cattle production\. Business planning expertise will be required to supplement the conservation planning
and management teams to achieve this greater level of sophistication in planning\.
Envisaged methods, activities and costs, and sustainability
The preparatory studies considered and costed these planning steps as a series of specialist consultancies\.
The project preparation has preferred to adopt the approach of building capacity in the respective agencies
by establishing and managing a conservation planning support team to work interactively with park
managers and communities through each phase in the planning process, and so build capacity through
participatory learning and action\. Specialist expertise, e\.g\. for cartography, will be needed, but the whole
effort will be supported by the envisaged team, including protected area managers, ecologist, conservation
planner, social ecologist, technical support and information management expertise\. A preliminary
breakdown of the roles and responsibilities of these support teams is provided in Table 1 below\. For each
major activity, it is envisaged that any additional specialist skills required, will be sourced through
consultant services\.
In terms of sustainability after the end of the project period, it is considered that there will be a continuing
need for ecological advice to protected area management and specialist expertise for community
conservation programs in Lesotho\. Planned appointments in the Conservation Division of the Ministry of
Agriculture (1 ecologist) will partially meet this need, but there will be a need for a further ecologist at least
to ensure long-term sustainability\. This is within the capacity of Lesotho to put in place\. In MEGYA,
there will be a need for the Community Outreach program to include at least one Social Ecologist\. The
foundations of this support are already in place in the Ministry and will be sustainable after the completion
of the project\.
In South Africa, there will be long-term need to sustain the additional community conservation activities in
the Upper Thukela, Eastern Cape and Qwaqwa sections of the study area\. In the Upper Thukela, the
KZNNCB has agreed in principle to expand the community conservation program and has already
expanded the professional support unit based in Pietermaritzburg\. There will be a need for continued
support from NGOs who are already active in the Eastern Cape and Upper Thukela areas, but revenues
- 89 -
from water use of these catchments is already being used to support community conservation action, and
will be sustained\.
The other support units will not be required after the project activities are complete as a firm strategic and
management planning framework will have been achieved\. The conservation agencies will be able to
maintain the ongoing activities with existing resources\.
Table 1\. Project components and specialized support unit composition and responsibilities
Project component Biodiversity Planning support Social ecology Counterpart
conservation team support team resources
support team
Team composition ecologist (I LS, I conservation planner social scientist (1 ecologist (I LS, 6
RSA); technician (I LS, 2 RSA); LS, 1 RSA); RSA)
(2 LS, I RSA); technician (I Les, 1 extension staff (3 conservation planner
field assistants (3 RSA) LS, 2 RSA); cty\. (1 RSA); social
Les, 3 RSA) facilitators (18 scientist (I RSA);
LS, 18 RSA) extension staff (2
RSA)
Component 2: Address Integrate Continue Biodiversity,
Landscape-level information biophysical, social consultation with ecological advice
conservation planning deficits & economic info\. key stakeholders and planning staff
Spatial analysis of Derive opportunities Contribute to (KZNNCB)\.
biodiversity & constraints\. design of Community
components and Cartography community based conservation team
processes data collection (SANParks,
KZNNCB)
Management staff
(all agencies)\.
Ecologist (LS)
Component 3:
Protected area planning
3,1 Identification of Undertake resource Conduct public Protected area
Development planning priority analysis and involvement management is fully
and zonation components strategic program involved
environmental
assessment
3\.2 Design of Facilitate mngmt\. Integrate local All protected area
Management planning appropriate planning workshops\. boards & other managers
monitoring Set standards & stakeholder
programs review interests\. Training
documentation workshops
- 90 -
3\.3 Specialist advice
Business planning required
Component 4: Ecological advice Planning advice Social scientist All protected area
Conservation advice managers
management in PAs
Component 5: Ecological advice Planning advice Social scientist All protected area
Conservation advice\. Extensive managers
management in consultative
proposed protected process planned &
areas implemented
Community trg\.
Component 6\. Community Community
Community conservation pgm\. conservation team
conservation designed, trg\. (KZNNCB)
conducted & cty\. Social ecology team
consultation (SANParks)
effective Community outreach
(NES)
Component 7\. Ecological advice Planning advice and Cty\. consultation Conservation
Nature-based tourism and review of review of plans & involvement planner (KZNNCB)
planning plans Community trg\.
Contribute to &
review social
impact assessment
Component 8\. Support for local Community
Institutional boards & other conservation team
development cty\. conservation (KZNNCS)
forums
- 91 -
Additional
Annex 14
Nature-based Tourism in Lesotho and South Africa
Lesotho
The Ministry of Tourism has decided to elaborate a national tourism policy\. This is seen as a necessary
precursor to the passing of the Tourism Development and Incentives 2000 Bill\. The Bill provides for the
establishment of the Lesotho Development Corporation as a body corporate\. All income to the Corporation
is applied to the promotion of tourism, with no dividend paid to the, shareholder (GoL)\. The Lesotho
Tourist Board will be abolished once the Bill is passed\. It also allows for the designation of specific areas
for tourism development, where land can be sub-let to entrepreneurs\. The Bill provides the legal basis for
incentives to the tourism sector\.
In 1994 a consultant report, commissioned by the European Union, outlining a comprehensive Tourism
Development Plan for the Kingdom of Lesotho was submitted to the Ministry of Tourism, Sports and
Culture\. In the absence of a formal policy, this document is often referred to as providing guidance\. The
report proposed an ambitious program of activities to develop the tourism industry in Lesotho\.
Unfortunately, little of the plan has been implemented\. The lack of plan implementation appears to flow
from several factors\. The national tourism bodies are small and poorly financed, and the tourism functions
of central government are fragmented\. The private business sector is particularly weak in tourism\.
The Lesotho Tourism Board statistics on tourist arrivals from 1981 to 1998 show that visitor arrival
increased over the period, peaked, then declined\. The highest arrival numbers occurred in 1992, with
416,882 arrivals\. The numbers dropped down to an estimated 225,000 in 1998\. The majority of arrivals
are traveling for visiting of friends and relatives, with South Africans constituting the vast majority of
foreign travelers\. Very small numbers of non-African international visitors arrive in Lesotho\. In 1998 only
1,016 came from the Americas, 4,266 from Europe and 1,053 from Asia and Oceania\. This is in stark
contrast to the explosive development of South African tourism\. Already existing visitor numbers to the
Drakensberg area is in the order of 300,000 per year\.
There are important constraints to the development and operation of tourism in Lesotho\. The
accommodation capacity is small\. As of 1998 there were only 24 hotels, 21 lodges and 8 hostels in the
country, providing 1500 rooms and 3800 beds\. This small capacity, and its concentration in Maseru,
severely limits travel in the country, and particularly in the Maloti-Drakensberg transfrontier region\.
Generally there is a poor standard of accommodation, with the majority of rooms being in small hotels with
only very basic standards\. Service in the industry is weak, with a lack of training in tourist service workers\.
Business management skills are weak, leading to tourism management problems\. The low tourism volumes
provide little incentive for an upgrading of the private business tourism sector\.
Through 1998 and into the first part of 1999 considerable effort was placed into the restructuring of the
legal structure governing tourism, tourism development and incentives\. A major consultancy report
recommended sweeping changes to the legislative framework governing tourism management in Lesotho\. A
total of 118 recommendations were made\. A new Tourism Development bill is recommended, and a draft
bill is included in the report\. This bill sets out expLicitly the functions of the Ministry of Tourism Sport and
Culture, and the relationships of this Ministry to other Ministries\. The report recommends that the Lesotho
- 92 -
Tourist Board Act be repealed and that a new Tourism Promotion and Development Corporation be
established\.
The documented problems reveal that in Lesotho the entire legal structure surrounding business
development, property law, insurance regulation, conflict resolution, loan guarantees and tourism
regulation must be upgraded if the private sector is to be enticed to fully contribute to tourism in Lesotho\.
Such legal restructuring is being considered in the country and must be encouraged to continue to
completion\. There can be a constructive role in this process for the World Bank\. The complementary
AfDB project will make a major contribution to tourism policy and implementation, particularly in the
LHWP areas\.
South Africa
A very high proportion (60%) of all foreign tourists to South Africa visit a game reserve or national park,
revealing the very important element that parks and game reserves play in the attraction and management of
foreign tourists\. The country has several very large park systems\. The South African National Parks
agency manages 16 parks covering 3\.1 million hectares\. In 1997/98 these sites catered to 1\.5 million
visitors, of which 31% were foreigners\. The KwaZulu-Natal Nature Conservation Board manages 80 sites,
covering almost 0\.7 million hectares\. In 1997/98 they serviced 1\.1 million visitors, of which 13\.2% were
foreigners\. The Free State DEAT manages 16 PAs comprising a total area of close to 0\.2 million hectares\.
There are an estimated 300 private game lodges in South Africa, with about 9,000 rooms and 18,000 beds\.
These private lodges cater to the upper level of the price and service levels\. The parks cater to a more
modest level of price and service\. Many of the private game reserves are located adjacent to
government-owned parks\. The private reserves take advantage of the ecological benefit obtained from being
near the parks, and provide significant levels of additional environmental protection by providing wildlife
habitat
In terms of nature-based tourism, South Africa has excellent natural assets\. It has a very good range of
natural-environment types, from ocean shores to mountain heights\. It has a solid set of national parks and
other types of protected areas, run by both national and provincial agencies, that provide experiences,
tourism infrastructure and site management at world class levels\. The transportation infrastructure,
international airports, regional and local roads are the best in Africa\. But most importantly, South Africa
has a sophisticated and modem tourism business system that enables the country to penetrate international
markets to a significant degree\.
Within the study area in South Africa, the nature-based tourism industry is mature\. The KwaZulu-Natal
parks have decades of experience, with a corresponding tourism market profile\. Golden Gate, managed by
South African National Parks, is also important\. There is a mature industry of hotels, farm stays, vehicle
rentals, guiding companies, information providers and voluntary groups in the area\. Within environmentally
significant areas that are not parks, important tourism feasibility studies and discussions with local people
are well advanced\. The work underway in the Mnweni Valley is a good example of such work\.
Economic Assessment and Development Planning
As part of the preparatory studies commissioned by the project preparatory phase, Associates for
Economic Development (AfED, 1999) carried out a study with the title as above\. Among the key findings
of this voluminous report is that "a nature based tourism industry can be developed in the
Maloti-Drakensberg region that can provide significant economic upliftment and biodiversity protection\."
- 93 -
However, the authors caution that ecotourism alone will be insufficient to meet the vast economic needs of
the population in the area\. They estimate that such tourism can bring about 10,000-15,000 visitors to the
project study area in Lesotho\. In order to reach much higher impacts, and attract in the order of 200,000
visitors per annum to the Maloti area, considerable investment in roads ($25 m) and supporting
infrastructure ($3m) is needed\. In addition, considerable private sector investment in bed capacity (around
600 beds for $14 m) would be needed\. Product club development and effective marketing are other
necessary ingredients\.
The project team takes note of these observations, but must shape its proposals within the mandate of GEF\.
Hence, only investment that supports biodiversity conservation through the development of nature-based
tourism that generates alternative livelihoods for local communities are included in the current project\.
Even a flow of 15,000 visitors to the Maloti mountain areas would imply considerable local economic
opportunities, in relation to what is currently available\.
- 94 -
Additional
Annex 15
Financial Management Action Plan (South Africa)
1- GENERAL
Reporting to the Chief Executive of KZNNCB and under the supervision of a Project Coordinator, a
Project Coordination Unit (PCU) will be established at KZNNCB with responsibility for ensuring that
financial management, procurement and reporting procedures will be acceptable to Government and the
World Bank\.
The PCU's financial management system (FMS) must support management in their deployment of limited
resources with the purpose of ensuring economy, efficiency and effectiveness in the delivery of outputs
required to achieve desired outcomes\. Specifically, the FMS must be capable of producing timely,
understandable, relevant and reliable financial information that will enable management to-plan, implement,
monitor and appraise the Project's overall progress towards the achievement of its objectives\.
For the PCU to deliver on the aforementioned objectives, its financial management system will be
developed in accordance with the Financial Management Action Plan presented in Section 2 below\.
2 - FINANCIAL MANAGEMENT ACTION PLAN
2\.1 Financial Management Committee (FMC)
A representative FMC will be appointed to review the Project Management Report (PMR) every quarter\.
The PMR will comprise:
Financial Statements, as discussed below\. Members of the FMC will review and approve Quarterly and
Annual Financial Statements; they will also examine material variances between budget/actual figures,
seeking remedial action as appropriate within an agreed timeframe\.
Project Progress, i\.e\., Output Monitoring Report (OMR)\. The format and details of the OMR will need to
be developed\. An important aspect of the OMR will be the accompanying narrative interpreting the
project's progress with agreed financial performance indicators and how costs to date relate to those
planned at appraisal, and the likely effect on the Project by completion\.
Procurement Management (including Goods, Works and Services)
2\.2 Staffing
A Project Accountant will be appointed to direct and guide the financial operations\. A Procurement
Specialist as well as administrative and support staff will be in place\. Varying levels of staff training will
be required in financial, management and government accounting; information systems and computer
applications; and procedures relating to utilization of funds (e\.g\., Special Accounts, SOEs, Special
Commitments, procurement, etc\.)\. On-the-job coaching will also be provided\.
- 95 -
Financial Procedures Manual/Internal Audit
The Project Accountant, in consultation with the Project Coordinator, will document the internal control
systems in a Financial Procedures Manual\.
Project activities will be reviewed by the Internal Audit Section of KZNNCB\.
2\.3 Accounting System and Information Technology
The Project Accountant will introduce a spreadsheet system (Excel) to facilitate timely accounting for the
GEF Grant and Counterpart Funds\.
Provision has been made in the Budget for hardware and software requirements\.
2\.4 Planning and Budgeting
Counterpart Funding will be approved in line with the Government's, KZNNCB and other executing
agencies budgetary processes\. The Project Accountant, in consultation with the Project Coordinator and
FMC, will be responsible for preparing the Project's Quarterly/Annual Cash Flow Forecast\.
Members of the FMC will review and approve Quarterly and Annual Project Financial Statements; they
will examine material variances between budgetlactual figures - seeking remedial action, as appropriate,
within an agreed timeframe\.
Arrangements for Non-cash Counterpart Contributions by Government, KZNNCB and other executing
agencies will be finalized during negotiations\.
2\.5 Government Accounting-Cash Versus Accruals
As the Project must meet the Governnent's requirement for cash accounting, Project funds will be
accounted for on a cash basis\. This requirement is not expected to change in the short to medium term\. In
due course, for management reporting purposes, the FMC will decide whether to convert to an accruals
basis of accounting\.
2\.6 Procurement of Goods, Works and Services
The Project will comply with World Bank and Government procurement regulations\. The Project
Accountant and support staff will be conversant with those procedures, as internal control issues and the
incurring of liabilities on behalf of the Project will be matters of concern to the financial management
function\.
A Procurement Management Report, showing procurement status and contract commitments, will be
prepared quarterly for consideration by the FMC (see above)\.
Procurement procedures will be documented in the Financial Procedures Manual\.
- 96 -
2\. 7 Banking Activities-Flow Of Funds
The PCU will maintain 4 accounts as follows:
(a) A Current A/C in Rand with Bank X (Part 1 Account) to which draw-downs from the Special A/C will
be credited for Project administrative expenses\.
(b) A Current Project Account in Rand with Bank X (Part 2 Account) to which Counterpart Funding will
be deposited\. Initially, a three months float should be provided and, thereafter, it should be replenished
monthly\.
(c) Special Account with Bank X in US Dollars/Rand, that will show:
* Dollar/Rand cost of transfers to Part I Account with Bank X;
* Dollar/Rand cost of direct payments to suppliers;
* Dollar advances (Rand equivalent cost) from the GEF Grant Account;
* Opening and Closing Balances\.
(d) GEF Grant Account (Washington) in US Dollars/Rand/SDR, that will show:
* Cost of transfers to Bank X;
* Cost of direct payments to suppliers;
* Opening and Closing Balances\.
Bank accounts will be reconciled monthly and will be approved by the Project Coordinator; identified
differences will be expeditiously investigated\. Control procedures will be documented in the Financial
Procedures Manual\.
2\.8 Withdrawals/Disbursements
By effectiveness, the PCU will not be ready for PMR-based disbursements (World Bank's Loan
Administration Change Initiative Handbook, LACI, September 1998)\. Thus, in the short tenn, existing
disbursement procedures as outlined in the World Bank's Disbursement Handbook will be followed, i\.e\.
Direct Payment, Reimbursement and Special Commitment\. However, the timely appointment of the Project
Accountant, coupled with the development of the PUC's financial management system, should facilitate the
introduction of PMR-based disbursements within 18 months of credit effectiveness\.
LACI/PMR integrates project accounting, procurement, contract management, disbursement and audit with
physical progress through the Project Management Report (PMR), as summarized above\. In due course,
the adoption of LACI/PMR by the PCU will enable it to move away from time-consuming
voucher-by-voucher disbursement methods to quarterly disbursements to the Project's Special Account,
based on the PMR\.
2\.9 Fixed Assets/Civil Works and Inventories
A Fixed Assets Register will be prepared using Excel, regularly updated and checked\. Regarding
Construction/Capital Work in Progress, controls will be established to ensure that payments are made only
for certified work (including physical verification)\. Contract Status Reports will be prepared quarterly for
consideration by the FMC as part of the PMR referred to above\.
- 97 -
2\.10 Financial Reporting (Monthly and Quarterly/Annually)
Monthly Cash Reporting
The Project Accountant will be responsible for the timely preparation of a Monthly Status of Funds Report
for submission to the National Accountant General, the Project Coordinator as well as the Financial
Accountant of KZNNCB\.
Quarterly/Annually
The Financial Statements, following determination by the FMC, are likely to include:
* A Statement of Sources and Uses of Funds by Loan Category/by Activity;
* Project Balance Sheet as at the reporting date;
* Notes on significant accounting policies and accounting standards adopted by management when
preparing the accounts; and on any supplementary informnation or explanations that may be deemed
appropriate by management to enhance the presentation of a "true and fair view";
* Special Account Statement/Reconciliation showing deposits and replenishments received, payments
substantiated by withdrawal applications, interest that may be earned on the account and the balance at
the end of the fiscal year;
* SOE Withdrawal Schedule, listing individual withdrawal applications relating to disbursements by
the SOE Method, by reference number, date and amount;
3 A Cash Forecast for the next two quarters\.
Indicative formats for Financial Statements are outlined in a number of World Bank publications -
Financial Accounting Reporting and Auditing Handbook (FARAH, January 1995), The Loan
Administration Change Initiative Handbook (LACI, September 1998) and the Draft Project Financial
Management Manual (February 1999)\.
2\.11 External Audit
An Extemal Auditor will be appointed in consultation with the Office of the Auditor General (Public
Finance Management Act 1999, Part 4, Section 58) on terms of reference acceptable to the World Bank
(including the preparation of a separate Management Letter giving observations and comments, and
providing recommendations for improvements of accounting records, systems, controls and compliance
with financial covenants)\.
- 98 -
IRRG 30852
15- 201~~~~~~~~~~~~~~To80c
ROADS B~OTS WANA' / -
NATIONAL CAPITAL T 8520
- -PROVINCE BOUNDARIES Serow OR2
INTERNATIONAL BOUNDARIES 'TA V~A -AFR- -
-25' ~~~~~~~~~~~~~T\. oooc- -
OCEAN~~~~~~~~~~~~~~~~~CA THK
___ Of BaA 8~~~~~~~~~~~L 1?0 250 300 KILOMETERS
5' 'J"~~/29''~ lko -
SOUTH AFRICA Aroo of mop---------- I SOUTH AFRICA,/ LESOTHO8 - --r-2''
MALOTI-DRAKENSBERG 0
rAc ~ ~ X~~'t CONSERVATION AND -'~> ""
OF'- -"-Of' ~~~~~~~~~~~~~~~~~~~~~~~~Son, ToP IOIODVERDITYPPRORITY AREAS iaeiIe
TO _ ~~~~~~~~~~~ ~~~~ "~~~~~~ ~COMMERaAL AGRICULTURE, FORESTRY & GRAZING -
Saa hb V ELD/GRAZING
- F~~~~~~~~~~~~ROJECT FROTECTED AREAS
' % -'! f<-~~~~~~~~~ ~~~"~~" I ~~~ COIMMERCIALINDUSTRIALIeor
SshkboA,he - ~~~~~~SUBSISTENCE AGRICULTURE & GRAZING ee30D
* - _____________ - iso' -,~~~~~~~~~~~~~ RANGE MANAGEMENT AREAS
T\.-)rA\\.~- GRAING cOUNDARIES
9r\. NIOOrO\.I YAA I - - F~~~~~~~~~PEPARATORY FHASE FOCUS AREANiiolVi
&Qod,icc L,cL-- ROADS ~ ~ ~ ~ ~ ~ ~ MAN RAD
AScaI rdooh \ \. 0 NAZI~~~SONADS APA Source: EcriroMap
0,ono' To ~~~~7m'E¾ 5 0 S~~ELECTED) TOWNS AND CITIES -'-K-RIVEES YE600-5o'doh nA
INTERNATIOA ONAIS--- PROUINCIAL cOUNRDARIES cMo, D0 0,0 M cd I6, WoolS co-k
RIVERS INT~~~~~~~~~ERNATIONAL ROUNDARESadr'ArAF,ao lao
SOUTH AFRICA G'aanclono -> RIYERS~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~,,- d ,l 6 \.
0 05 5E KILOMETERS T\.Wl - -
6 E~ ~~~~~~~~~~ ~~~ 1 0 2E 30 40 50 \R ol oo ooo o5--r\.r
MILdEESY 3r7 cdorI Io\.I or -o\.to oF
27 29SI BKLOMETERS MATb2000
21'~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~MY20 | APPROVAL |
P001312 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 19210
IMPLEMENTATION COMPLETION REPORT
KENYA
FOURTH POPULATION PROJECT
[Credit no\. 2110-KE]
April 22, 1999
Africa Human Development Group I
Eastern and Southern Africa
Africa Region
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties\. Its contents may not otherwise be disclosed without
World Bank authorization\.
CURRENCY EQUIVALENTS
Currency Unit = Kenya Shilling
Appraisal: US$ 1 = KSH 22\.0
Project Closing: US$ 1 = KSH 59\.7
WEIGHTS AND MEASURES
Metric System
FI[SCAL YEAR OF BORROWER
July 1 - June 30
ABBREVIATIONS AND ACRONYMS
AIDS Acquired Immune Deficiency Syndrome
CMASK Crescent Medical Aid Society of Kenya
CPR Contraceptive Prevalence Rate
DfID Department for Intemnational Development (U\.K\.)
FP Family Planning
FPAK Family Planning Association of Kenya
FPLMS Family Planning Logistics Management System
GOK Govemment of Kenya
GTZ Deutsche Gesellschaft fur Technische Zusammenarbeit
HIV Human Immuno-deficiency Virus
ICR Implementation Completion Report
IDA International Development Association
IEC Information, Education and Communication
KCS Kenya Catholic Secretariat
KDHS Kenya Demographic and Health Survey
MCH Maternal and Child Health
MOH Ministry of Health
MOPW Ministry of Public Works
MPND Ministry of Planning and National Development
MSCU Medical Stores Coordinating Unit
NCPD National Council on Population and Development
NGO Non-Govermment Organization
PA Payment Application
SAR Staff Appraisal Report
SDA Seventh Day Adventists
SDR Special Drawing Rights
TFR Total Fertility Rate
UNFPA United Nations Family Planning Agency
USAID United States Agency for International Development
VSCU Voluntary Surgical Contraception Unit
Managers and Staff Responsible
Vice-President: Callisto Madavo (AFR)
Country Director: Harold Wackman (AFC05)
Sector Manager: Ruth Kagia (AFTH1)
Task Teamn Leader: Andrew Follmer (AFTHI)
TABLE OF CONTENTS
FOR OFFICLAL USE ONLY
PRE1FACE \.I\.
EVALUATION SUMMARY \. ii
INTRODUCTION \. ii
PROJECT OBJECTIVES \. j
IMPLEMENTATION EXPERIENCE AND RESULTS \.u\. U
FuTuRE OPERATIONS AND KEY LESSONS LEARNED \.V
PART I: PROJECT IMPLEMENTATION ASSESSMENT \.1
INTRODUCTION AND BACKGROUND \. 1
PROJECT OBJECTIVES \.1\.
ACHIEVEMENT OF PROJECT OBJECTIVES \. 3
IMPLEMENTATION EXPERIENCE \.4
MAJOR FACTORS AFFECTING THE PROJECT \.8
PROJECT SUSTAINABILITY \.9\.9
BORROWER PERFORMANCE \.9
BANK PERFORMANCE \.9
ASSESSMENT OF OUTCOME \. 10
FUTURE OPERATIONS \. 11
KEY LESSONS LEARNED \. 12
IMPLEMENTATION COMPLETION REPORT \. \. 13
PART II: STATISTICAL ANNEXES \. 13
TABLE 1: SUMMARY OF ASSESSMENTS \. 13
TABLE 2: RELATED BANK CREDITS \. 14
TABLE 3: PROJECT TIMETABLE \. \. \. 15
TABLE 4: CREDIT DISBURSEMENTS, ESTIMATED AND ACTUAI \. 16
TABLE 5: KEY INDICATORS OF PROJECT IMPLEMENTATION \. \. 18
TABLE 6: KEY INDICATORS FOR PROJECT OPERATION \. \. 19
TABLE 7: STUDIES CONDUCTED \. 20
TABLE 8: PROJECT COSTS - STAFF APPRA1SAL REPORT ESTIMATES AND ACTUAL EXPENDITURES \. \. 2 1
TABLE 9: PROJECT FINANCING \. 21
TABLE 10: STATUS OF LEGAL COVENANTS \. 22
TABLE 1 1: COMPLIANCE WITH OPERATIONAL MANUAIL STATEMENTS \. 24
TABLE 12: BANK RESOURCES: ACTUALI STAFF INPJTS \.2\. 25
TABLE 13: BANK RESOURCES: MISSIONS \. 26
TABLE 14: TRENDS IN USE OF FAMILY PLANNING METHODS \. 28
TABLE 15: SOURCE OF StUPPLY FOR MODERN CONTRACEPTIVE METHODS(°/O) \. 29
FIGURE 1: TOTAL FERTILITY RATE AND CONTRACEPTIVE PREVALENCE RATE (1979-1998) \. \. 30
FIGURE 2: CHILD HEALTH INDICATORS IN KENYA (1979-1998) \. \. 30
APPENDICES
APPENDIX A: COMPLETION MISSION'S AIDE MEMOIRE
APPENDIX B: CIVIL WORKS REPORT
APPENDIX C: BORROWER'S EVALUATION REPORT
APPENDIX D: BORROWER'S COMMENTS ON DRAFT ICR
APPENDIX E: MAP OF KENYA
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties\. Its contents may not otherwise be disclosed without
World Bank authorization\.
IMPLEMENTATION COMPLETION REPORT
KENYA
FOURTH POPULATION PROJECT
(Cr\. 2110-KE)
PREFACE
This is the Implementation Completion Report (ICR) for the Kenya Fourth Population Project, for
which Credit 21 10-KE in the amount of SDR 26\.3 million (US$35\.0 million equivalent at the prevailing
exchange rate) was approved on March 27, 1990, and made effective on September 25, 1990\.
The credit closed on June 30, 1998, after a one-year extension of the original closing date\. The last
disbursement was made on January 22, 1999\. An undisbursed balance of SDR 5\.19 million (US$ 7\.05
million at the prevailing exchange rate) was canceled on March 15, 1999\. Co-financing in the amount of
FIM 5\.1 million was made available by FINNIDA\. These funds were 88 percent disbursed, and the
undisbursed balance of FIM 595,885\.65 was canceled on March 11, 1999\.
The ICR was prepared by Mr\. Andrew Follmer, the Human Development Group I, Eastern and
Southern Africa; with support from Wacuka Ikua, Operations Officer, AFMKE, and Bert Voetberg,
Public Health Specialist, AFTHI\. The report was reviewed by Mrs\. Ruth Kagia, Sector Manager,
AFTH1, and Mr\. Harold Wackman, Country Director for Kenya\. The borrower reviewed the draft report
before it was finalized\.
This report was prepared during an ICR mission in December, 1998, comprising Mr\. Andrew
Follmer (Team Leader), Mr\. Dick Coppinger (Civil Engineer, Consultant), Ms\. Wacuka Ikua (Operations
Officer), Mr\. Dahir Warsame (Procurement Specialist), and Mr\. John Ogallo (Financial Management
Specialist)\. This report is based on information collected during that mission and material from the project
files\.
Tlhe borrower contributed to the preparation of the ICR by contributing views as reflected in the
Completion Mission's Aide Memoire (Appendix A), by preparing its own Project Completion Report
(Appendix C), and by providing detailed comments on the parts of the ICR as it evolved and formally
responding to the draft ICR (Appendix D)\.
IMPLEMENTATION COMPLETION REPORT
KENYA
FOURTH POPULATION PROJECT
(Cr\. 2110-KE)
EVALUATION SUMMARY
INTRODUCTION
1\. The Kenya Fourth Population Project (Population IV) was undertaken by the Government of
Kenya (GoK) to provide for needs not anticipated under the Third Population Project (Population III)\.
Population III (Cr\. 1904-KE, 1988-1996) became effective based on the following assumptions: (i)
prospects for fertility control in Kenya were bleak; and (ii) fertility rates would remain high due to
opposition to family planning and widespread lack of interest in family planning\. However, the 1989
Kenya Demographic and Health Survey (KDHS) revealed surprising progress in population indicators -
including significant unmet demand for contraceptives\. This information, combined with the shortfall of
funding available from donors at the time, led the GoK and The World Bank to develop Population IV,
with a principal focus on providing for the country's contraceptive needs and strengthening the
infrastructure of the population sector\.
PROJECT OBJECTIVES
2\. The objectives of the Fourth Population Project were: (i) to further increase the availability,
accessibility, and quality of family planning services provided by the Government and non-government
organizations (NGOs); (ii) to further strengthen the demand for FP services through expansion of
Information Education and Communication (IEC) programs to additional government ministries and
NGOs; and (iii) to further strengthen the capacity of the National Council on Population and
Development (NCPD) to plan and monitor the expanding national population program\. While the project
development objectives should not have proven to be overly-ambitious, given the history of GoK-Bank
collaboration in this sector, they proved to be out of reach largely due to capacity and financial
management constraints which were not identified as risks in the Staff Appraisal Report (SAR)\. Despite
the improvement in fertility indicators, the project did not achieve its objectives\. This is explained not by
a lack of progress in the population sector, but rather by the project's failure to significantly contribute to
that progress\. While a case can be made that the cumulative investments under the first three population
projects continue to yield returns, the incremental impact of this project was small\. Population I-III
provided a framework that could have formed a strong foundation for a well-designed, well-implemented
project\. However, with much of implementation and nearly two-thirds of total disbursements taking
place within the last year, the accomplishments to date in the population sector, as measured by the 1998
KDHS, owe little to Population IV\.
IMPLEMENTATION EXPERIENCE AND RESULTS
3\. Implementation progress was unsatisfactory throughout the project life, albeit with significant
improvement during the one-year extension\. While many factors contributed to this unsatisfactory
experience, the major causes were (i) weak procurement capacity; (ii) weak financial management; and
Evaluation Summary Page iii of vi
(iii) a failure to address known implementation constraints, both during the design of the project and
again when unfinished activities from Population III were subsumed under this credit\.
4\. Procurement: The project was to provide for the sector's needs in terms of contraceptives and
contraceptive supplies, as well as civil works\. Thus, the success of the project hinged largely on
successful procurement, and this was not accomplished until the last year\. While some smaller
procurements did take place earlier in the project, the only contraceptives supplied prior to the original
closing date were Norplant (procured on a single source basis) and an emergency procurement of
condoms, for which IDA procurement guidelines were waived\. It was agreed during the February, 1997,
supervision mission that GTZ would be contracted as the procurement agent for all ongoing and future
procurements\. The impact of this decision was an easing of the procurement bottleneck, as a
procurement plan was developed and 10 tenders (contraceptive supplies and medical equipment) were
successfully floated, with contracts awarded totaling US$16\.6 million\. Among these were 5 tenders for
contraceptives and contraceptive supplies totaling $8\.64 million\.
5\. Disbursements and Financial Management: This project had no disbursements until a year
after effectiveness due to GoK delay in fulfilling the conditions of disbursement\. Subsequently,
disbursements proceeded so slowly that only 30 percent of the credit had been disbursed by the original
closing date\. Due to the progress in procurement made possible by GTZ's involvement as procurement
agent, MOH's efforts to address the payment backlog, and intensified supervision by IDA, the one-year
extension resulted in disbursement of an additional 50 percent of credit proceeds\. In addition to the lack
of procurement capacity, inordinate delay on the part of the GoK in processing payment applications
(PAs) was a significant factor in implementation delays\. In addition, financial management within the
Project was inadequate, and audit performance was quite poor\. No audit report was submitted on time
during the life of the project, and unresolved audit qualifications dating back several years and applying
to MOH, MPND, and Ministry of Home Affairs indicate that US$1\.3 million in withdrawals cannot be
supported and should be refunded to IDA\. Repayment of this amount was requested in a letter from the
Country Director on March 25, 1999\.
6\. Civil Works: While many of the civil works originally planned under this project--the
construction of a national headquarters for NCPD and 14 District Population Offices--were cancelled as
part of the restructuring following the mid-term review, works remaining unfinished from Population III
were transferred to Population IV upon that project's closing\. Thus, the 13 Voluntary Surgical
Contraceptive Units (9 carried over from Population III) and 21 project-financed NGO clinics comprised
the civil works under this project\. Less than half of the VSCUs were fully operational at the time of the
ICR mission, though all but one were 80-90 percent complete with work continuing, financed by GoK\.
Only five of the NGO clinics were completed, with mixed prospects for the completion of the rest\.
7\. NCPD: Most of the activities planned to be undertaken by NCPD under this project were not
implemented\. The project did finance a massive amount of training under Part C of the Project
(Strengthening of NCPD)\. While the trained staff are undoubtedly of benefit to the country as a whole,
the minimal retention of the staff by NCPD (15% of those trained) means that there was little positive
impact in terms of the desired institution building within that agency\.
Major Factors Affecting the Project\.
8\. The Factors Beyond the Government's Control were: (i) an economic downturn since 1992/93
which led to high inflation and a depreciation of the Kenyan shilling, resulting in cost variations, as well
as constraining counterpart funds; (ii) the difficulties of some NGOs in mobilizing the required
community contribution contributed to delays in the NGO-administered works, and (iii) Bank supervision
iii
Evaluation Summary Page iv of vi
lacked diligence in addressing implementation problems and in transferring unfinished activities from
Population III to this project without addressing the issues behind the implementation delays\. Those
Factors Under the Government's Control included: (i) inordinately slow processing of payment
applications; (ii) liquidity problems resulting from the slow release of funds from Treasury, (iii) lack of
ministerial counterpart funds; (iv) slow clearance by the GoK Clearing Agent of exempted items through
the Ports Authority that resulted in lengthy delays and additional costs; and (v) poor performance of the
Ministry of Public Works (MOPW) in supervising civil works\. Finally, the Factors Under the
Implementing Agency's Control were:-(i) poor procurement planning and weak donor coordination; (ii)
though slow payments were partially attributable to Ministry of Finance, the MOH's own processes and
inefficiencies were responsible for the larger share of delays; (iii) non-compliance and/or slow
compliance with IDA procurement guidelines, with the implementing agencies demonstrating a weak
commitment to address procurement capacity constraints; (iv) delays in fully adopting use of the Special
Account; and (v) weak financial management\.
Borrower Performance
9\. Borrower performance at preparation was unsatisfactory\. The project was prepared in response
to emerging needs in a collaborative fashion with IDA and donors\. However, the failure to establish
mechanisms to address longstanding problems with regard to financial management, civil works
supervision, and procurement condemned the project to failure\. Overall, Borrower performance during
Implementation was highly unsatisfactory\. Though some progress was made in streamlining the MOH
payment procedure, there was a lack of commitment to ensuring proper financial management and
accountability\. The lack of supervision of civil works, by MOPW, MOH, and NCPD, and the
unwillingness of the GoK to satisfactorily address the issue most responsible for delays in civil works
(e\.g\. unreasonably slow payment procedures) were the main causes of so many works being left
incomplete\. Finally, while MOH cooperation with GTZ in procurement during the final year was
impressive, its management of procurement during the previous years was poor, and its commitment to
developing its own capacity under the capacity-building component of the contract with GTZ was weak\.
Bank Performance
10\. Bank performance at Identifcation was unsatisfactory\. While a project concept resulted which
was both consistent with the strategies of GoK and the Bank and responsive to the situation in Kenya's
population sector, the decision to develop a project to be implemented concurrently with an existing
project, instead of restructuring the existing project, doubled the administrative burden, led to projected
annual disbursements beyond the financial and administrative capacity of the Borrower, and over-
stretched the implementation capacity of the Borrower\. The performance of the Bank during
preparation was also unsatisfactory\. The failure to incorporate measures to address issues which had
emerged in previous projects in the sector proved to be a serious oversight\. Given that the Bank failed to
address problems that had emerged regarding financial management, procurement capacity, and
administrative capacity, and also failed to identify the risk these issues posed to the project, performance
at Appraisal was deficient\. Performance during supervision was also deficient\. From the start,
supervision missions failed to acknowledge the seriousness of implementation problems\. Until late in the
project, ratings for the development objectives seem to have been based solely on the achievement of the
objectives within the sector, without regard to the project's contribution to these accomplishments\.
Further, ratings and decisions regarding the continued implementation of this project were consistently
based on expectations rather than demonstrated performance\. The shortcomings extended beyond the
task team--from disregarding Bank guidelines in sending the project to the board in spite of overdue
audits in the sector to looking the other way when a series of supervision reports indicated serious
problems, regional management was complicit in the Bank's failures\. Finally, the Bank made poor
iv
Evaluation Summary Page v of vi
decisions in giving "no objection" to award contracts for civil works when there was insufficient time to
complete them\.
11\. Project sustainability is unlikely, and the project's outcome was unsatisfactory, with the improved
performance of both the Borrower and the Bank in the final year ameliorating the highly unsatisfactory
outcome that would have resulted had the project closed on the original closing date\. The primary
purpose of the project had been to provide for the population sector's needs in terms of contraceptive
supplies and civil works, so the failure to procure contraceptives until the final year and the fact that most
of the civil works were left incomplete clearly indicate an unsatisfactory outcome\. However, the
concentration of expenditures at the end of the project makes it impossible to evaluate the impact of those
expenditures at this time\.
FUTURE OPERATIONS AND KEY LESSONS LEARNED
12\. A focus on reproductive health should be an integral element in future IDA support to the health
sector\. Such support should not only focus on providing for the country's growing contraceptive needs,
as Population IV sought to do, but should also attempt the following: (i) to more closely integrate
reproductive health strategies and activities under the Division of Family Health with STI/AIDS
strategies and activities under the National AIDS/STD Control Program; and (ii) to invest in
interventions, such as the reform of MSCU, that will increase the sustainability of the reproductive health
program, and (iii) facilitate decentralization and capacity-building at the level of health service delivery
points\. Future operations will also need to focus more heavily on the reproductive health of adolescents
and on reducing geographic disparities in health services\. However, IDA would be negligent to not
attach the following preconditions to any future IDA support to Kenya's health sector: (i) the
introduction of a streamlined payment procedure and increased accountability measures in the payment
system; (ii) the contracting of an independent procurement agent for all IDA-financed procurement; and
(iii) the enactment of measures to improve accounting and record-keeping\. The Govemment should also
be strongly encouraged to complete at least those unfinished civil works under its direct control--the
VSCUs\.
13\. Numerous key lessons can be drawn from the experience of this project\. It is worth noting the
similarity and overlap between these and the lessons extracted in the ICR for Population III\.
(i) When previous projects have shown weaknesses in areas of financial management and accounting,
administrative capacity, procurement capacity, and/or project monitoring, new projects should not
be approved until these weaknesses have been addressed\.
(ii) Where appropriate, the use of an independent procurement agent should be considered at appraisal,
particularly for the procurement of items such as contraceptives and STI drugs which require a high
degree of technical expertise, comprehensive logistics capacity, and forecasting capacity\.
(iii) Through Population III and Population IV, the construction of facilities under IDA financing has
not contributed significantly to the achievement of project objectives, and has generally proven to
be a wasteful and inefficient use of scarce resources\. No civil works should be undertaken in future
IDA-financed health sector operations until sufficient measures are enacted to prevent yet another
repeat of this outcome\. Such measures should include avoiding the involvement of the Ministry of
Public Works, whose performance in supervision of works has been consistently unsatisfactory\.
v
Evaluation Summary Page vi of vi
(iv) It is important that the Bank place greater emphasis on proper financial management\. Projects for
sectors in which audits are overdue on other projects should not be submitted for Board approval\.
The Bank should discontinue the practice of allowing audit qualifications in Kenya to be addressed
in the subsequent year's audit\. Finally, it is questionable whether new disbursements systems that
reduce the amount of financial oversight by the Bank, such as LACI, are appropriate for countries
with a history of financial management problems such as those experienced in this project\.
(v) Realistic, proper Bank supervision is essential to a project's progress\. Project ratings should be
realistic and based on actual results rather than expectations or promises\. The experience of this
project affirms the relationship between intensified supervision and implementation progress\.
(vi) Donor coordination should be maintained throughout project implementation, particularly with
regard to procurement planning, policy, common implementation constraints, and project
restructuring\. This should include a diligent effort on the part of the Borrower to coordinate IDA-
financed goods and services and those provided by other donors, thus ensuring an efficient,
prioritized response to the country's needs\. There must also be sufficient communication and
consultation within the relevant Ministry regarding the goods and services to be procured\.
(vii) Large investments in training for central level staff do little to accomplish project development
objectives if the vast majority of trained staff are lost through attrition\. Future training programs
should be much more limited and prioritized, with both staff and courses selected through a
rational, transparent process\. Counterpart funding should be required to ensure rational use of
training funds, and measures should be taken by the benefiting agency to retain staff\.
(viii) Before unfinished activities are transferred from a closing project to another project, the problems
that prevented the activities from being completed in the first place should be addressed\. At a
minimum, such a transfer should be contingent upon a commitment from the Borrower to complete
the activities, even if use of the Borrower's own resources would be required\.
vi
IMPLEMENTATION COMPLETION REPORT
KENYA
FOURTH POPULATION PROJECT
(Cr\. 2110-KE)
PART I: PROJECT IMPLEMENTATION ASSESSMENT
INTRODUCTION AND BACKGROUND
1\. Since 1979 Kenya has experienced dramatic improvement in fertility-related indicators\. The
Total Fertility Rate (TFR) has decreased from 7\.9 to 4\.7 children per woman, and the Population Growth
Rate has declined from 3\.6 to 2\.6 percent\. In addition, the Contraceptive Prevalence Rate (CPR) among
married women has increased from 7 to 39 percent (31 percent for modern methods)\. However, given
the resources availed through the four IDA-financed projects, the Kenyan population program could have
achieved greater impact\. Socio-economic factors undoubtedly played a role in the change in population
indicators\. In addition, soaring AIDS mortality is impacting population projections and is likely playing a
role in household fertility/contraceptive decision-making and behavior\. Alarmingly, most other health
indicators have significantly worsened since 1989, including a 46 percent increase in child mortality\.'
2\. The Kenya Fourth Population Project (Population IV) was undertaken by the Government of
Kenya (GoK) to provide for needs not anticipated under the Third Population Project (Population III)\.
Population III (Cr\. 1904-KE, 1988-1996) was a follow-up to two preceding population projects financed
by IDA\. Population I (Cr\. 468-KE, 1974-1979), with a credit of US$12 million, created the physical and
institutional base to provide family planning (FP) services in Kenya\. Population II (Cr\. 1238-KE, 1983-
1990), with a credit of US$23 million, aimed to create demand for FP services in rural areas and continue
reduction in morbidity and mortality\. Population III (US$ 12\.9 million) became effective based on
assumptions that prospects for fertility control in Kenya were bleak, and that fertility rates would remain
high due to opposition to family planning and widespread lack of interest in family planning\. However,
the 1989 Kenya Demographic and Health Survey (KDHS) revealed surprising progress in population
indicators, thus also revealing challenges such as significant unmet demand for contraceptives\. This,
combined with the shortfall of funding available from donors at the time, led the GoK and IDA to
develop Population IV, which became effective just two years after Population III, with a principal focus
on providing for the country's contraceptive needs and strengthening the infrastructure of the population
sector\. The implementing agencies were the Ministry of Health (MOH) and the National Council for
Population and Development (NCPD) in the Ministry of Planning and National Development (MPND)\.
PROJECT OBJECTIVES
3\. The objectives of the project were: (i) to increase the availability, accessibility, and quality of
family planning services provided by the Government and non-government organizations (NGOs); (ii) to
further strengthen the demand for FP services through expansion of Information Education and
Communication (IEC) programs to additional government ministries and NGOs; and (iii) to further
Kenya Demographic and Health Survey 1998 Preliminary Report\. National Council for Population and
Development, MPND; Central Bureau of Statistics, MPND; and Macro International\. September, 1998\.
PARTI: Implementation Assessment Page 2 of 12
strengthen the capacity of NCPD to plan and monitor the expanding national population program\.
4\. The objectives were to be fulfilled through the implementation of the following activities:
(a) Increasing Availability and Accessibility of Contraceptives (US$13\.8 million):
(i) Contraceptive Supplies\. Provision of vaginal spermicides and injectable contraceptives to
supplement contraceptives supplied by donors; (ii) Norplant\. Introduction of Norplant (a
subdermal implant) as a method of contraception in the population program through provision
of training, technical assistance and supplies; (iii) Logistics System for Contraceptives\.
Strengthening of the existing MOH logistics system to provide contraceptives for MOH
facilities through upgrading of warehousing, provision of vehicles, technical assistance and
training; and (iv) Surveillance of Clinical Contraception\. Establishment of systems to monitor
the side effects of clinical contraception through technical assistance, training, and monitoring\.
(b) Promotion of Family Planning Services (US$9\.0 million): (i) Ministry of Health\.
Construction and equipping of 6 voluntary surgical contraception units (VSCUs) in Nairobi;
equipment for provision of FP services in 300 health facilities; (ii) Introduction of Surgical
Contraception Services through the Private Sector\. Provision of equipment and supplies,
qualified personnel and renting of facilities for a private clinic inNyeri to introduce surgical
contraceptive services; (iii) Income Generation Activities for Women's and Men's Groups\.
Introduction of income generating activities, FP, IEC and contraceptive distribution to
women's and men's groups through provision of technical assistance, training and development
of small scale projects; (iv) Family Planning, IEC and Services through NGOs: Family
Planning Association of Kenya (FPAK)\. Development of IEC programs in Western and Coast
provinces; Kenya Catholic Secretariat (KCS): Upgrading of 40 clinics to provide integrated
Maternal and Child Health (MCH) and natural FP services; development of IEC programs in
Western province; Seventh Day Adventists (SDA): Upgrading of 10 clinics to provide MCHIFP
services, construction and equipping of two VSCUs in Nyanza; Crescent Medical Aid Society
of Kenya (CMASK): Expansion of MCH/FP services in 8 peri-urban areas of Nairobi,
upgrading and equipping of one VSCU and for the development of IEC programs in those
areas; Northeastern Province: Development of IEC programs in Northeastern Province\.
(c) Strengthening the National Council for Population and Development (US$12\.5 million):
(i) NCPD Headquarters\. Construction and equipping of a national headquarters building for
NCPD and FPAK; (ii) District Focus: Establishment and construction of 14 additional District
Population Offices, including office equipment, furniture, vehicles, technical assistance and
training; (iii) Long-term Manpower Development: Development of a manpower development
plan for NCPD staff, and for a coordination of staff development and training activities
throughout the population program; and (iv) IEC Activities: Development of a national IEC
strategy and implementation plan, including mass media activities\.
(d) Research (US$1\.5 million): (i) Research on reproduction through the Institute of Primate
Research; (ii) a feasibility study for the local manufacture of injectable and oral contraceptives;
and (iii) technical assistance, supplies and research costs for operations research including
evaluation of the first phase of the district population program and KAP studies\.
5\. Evaluation of Project Objectives: The objectives were responsive to the emerging needs in
Kenya's population sector\. However, the large civil works component to build Voluntary Surgical
Contraceptive Units is questionable, given the demand for this type of service\. Undue attention was
2
PART I Implementation Assessment Page 3 of 12
given to central level institutional development compared to support for health service delivery points,
and the lack of district focus limited the potential impact of the project\. Furthermore, while the project
development objectives should not have proven to be overly-ambitious, given the history of GoK-Bank
collaboration in this sector, they proved to be out of reach largely due to capacity and financial
management constraints which were not identified as risks in the Staff Appraisal Report (SAR)\.
ACHIEVEMENT OF PROJECT OBJECTIVES
6\. Overall Objectives: Despite the improvement in fertility indicators and the fact that many of the
specific targets established in the SAR were met even earlier than planned, the project did not achieve its
objectives\. This is explained not by a lack of progress in the population sector, but rather by the project's
failure to significantly contribute to that progress\. While a case can be made that the cumulative
investments under the first three population projects continue to yield returns, the incremental impact of
this project was small\. Population I-III provided a framework that could have formed a strong foundation
for a well-designed, well-implemented project\. However, with much of implementation and nearly two-
thirds of total disbursements taking place within the last year, the accomplishments to date in the
population sector, as measured by the 1998 KDHS, owe little to Population IV\.
7\. The ICR for Population III cited the draft Population Policy as a noteworthy achievement of the
sector and a key factor in the sustainability of that project's investment in NCPD\. This policy outlined a
multi-sectoral approach to population and recognized that successful implementation depended on the
effectiveness of the institutional framework\. It clarified the role of NCPD and recommended it be
granted autonomy\. Unfortunately, this Population Policy never passed Parliament due to the Family Life
Education issue and opposition to the distribution of contraceptives to youth\. After negotiations between
NCPD and opponents of the Policy, changes have been agreed upon, and it is expected to be re-submitted
to Parliament in 1999\. The Population III ICR also pointed to the DflD-financed Reproductive Health
Strategy, and its Population IV-financed implementation plan, as a positive institutional outcome of the
investments by IDA and donors\. Dissemination of this strategy began in a series of Population IV-funded
zonal workshops, and its continued implementation is expected to complement the country's health sector
reform program and is now being implemented in the districts with UNFPA support\.
8\. Specific Objectives: The project had little success in achieving its specific development
objectives, though there is potential for additional impact to be realized through the recently-completed
country-wide distribution of pharmaceuticals and equipment procured at the end of the project, as well as
through the GoK-financed completion of some project activities\.
9\. Increased Availability and Accessibility of Contraceptives\. The project achieved only a small
part of this objective\. A notable success is that, with co-financing from FINNIDA, the project financed
the introduction of Norplant as a contraceptive method\. While Norplant has been available on a limited
basis thus far, the significant unmet demand should be addressed by a planned expansion in its
availability\. An advanced logistics system was also developed, but as explained in para\. 24, the project
played no role in this success\. Furthermore, the envisioned clinical contraception surveillance system
was not established\. Finally, while contraceptives became increasingly available and accessible during
the project life, as demonstrated by the CPR, very few project-financed contraceptives arrived in the
country until shortly before the closing date, thus making it impossible to attribute gains measured thus
far to the project\. While the large amount of contraceptives procured in the final year will maintain the
current levels of supplies through the year 2000, the donors' history of supplying contraceptives when
this project failed to do so - resulting in very few stock-outs - suggests that these needs might possibly
3
PARTI: Implementation Assessment Page 4 of 12
have been met with grant funds had the project not procured these goods\.
10\. Promotion of Family Planning Services: Progress towards this objective was disappointing\. As
detailed, in para 21, less than half of the VSCUs were completed\. The income generation activities were
never implemented, and neither were the IEC activities under NCPD\. The effort to introduce surgical
contraceptive services through the private sector was successful in its limited support to a single facility\.
Unfortunately, practically none of the planned NGO IEC and training activities were completed due to the
NGOs' difficulty in accessing project funds, and most project-financed NGO clinics were not completed\.
Between the VSCUs and NGO clinics, civil works at 23 of 34 sites were left incomplete by the project\.
11\. Strengthening the NCPD: There was no significant realization of this objective\. The planned
civil works were cancelled at the Mid-Term Review, and no manpower plan was developed\. While a
large amount of project funds were spent to train NCPD staff, attrition resulted in little capacity being
gained (see para\. 27)\. A national IEC strategy was finally developed in 1996 with UNFPA funding\.
IMPLEMENTATION EXPERIENCE
12\. Implementation progress was unsatisfactory throughout the project life, albeit with significant
improvement during the one-year extension\. While many factors contributed to this unsatisfactory
experience, the major causes were (i) weak procurement capacity; (ii) weak financial management; and
(iii) a failure to address known implementation constraints, both during the design of the project and
again when unfinished activities from Population III were subsumed under this credit\.
13\. Procurement: The impetus of the project from inception was to provide for the population
sector's needs in terms of contraceptives and contraceptive supplies, as well as civil works\. Thus, the
success of the project hinged largely on successful procurement, and this was not accomplished until after
the original project lifespan was over\. From the first year, when there were repeated problems with MOH
and NCPD not complying with IDA procurement procedures, weak procurement capacity in the
implementing units stymied implementation progress and increased costs\.
14\. While some small procurements did proceed prior to the extension period, there was no major
procurement of contraceptives until after the original closing date - except for Norplant on a single
source basis and an emergency procurement of condoms for which IDA procurement guidelines were
waived\. As under Population III, the final costs of goods were unreasonably high\. While the contracts
were awarded at fair prices, the costs became inflated due to the long period of time required to clear the
goods into the country - a result of an inefficient Government clearing agent and slow payment processes
through MOH, Treasury, and Central Bank of Kenya\. An independent procurement audit of this project
found that, while the Medical Stores Coordination Unit (MSCU) collected data that revealed significant
leakage of drugs from its stores, no action was taken\.2 The finding that, in some cases, IDA procurement
guidelines had not been followed led the Bank to provide an IDF grant for Public Procurement and
Enhanced Capacity\. In addition, it led to a separate audit of one of the project activities\.3
2 The Third and Fourth Population Projects in Kenya were among several Bank projects for which a procurement
audit by SGS Government Programs, Inc\. was commissioned by the World Bank Board of Directors in 1996\.
Between 1996 and 1998, two audits were performed on the contract between Moi University, Kenya, and Johns
Hopkins University, USA, (one by the GoK Controller and Auditor General, and the other by an independent
auditing finn)\. These audits made no conclusive findings to support those of the SGS audit\.
4
PART I: Implementation Assessment Page 5 of 12
15\. Prior to the granting of a project extension, it was agreed during the February, 1997, supervision
mission that GTZ would be contracted as the procurement agent for all ongoing and future procurements\.
The impact of this decision was an easing of the procurement bottleneck, as a detailed procurement plan
was developed and ten tenders (contraceptive supplies and medical equipment) were successfully floated,
with contracts awarded totaling US$16\.6 million\. In addition, GTZ managed the logistics and the
distribution of these goods, with planning support from the Family Planning Logistics Management
System (see para\. 24)\. The contraceptives, contraceptive supplies, and medical equipment procured made
it possible for the project to close with its development objectives fulfilled to a greater degree\.
16\. Disbursements and Financial Management: This project had no disbursements until a full year
after effectiveness due to GoK delay in fulfilling the conditions of disbursement\. Subsequently,
disbursements proceeded so slowly that only 30 percent of the credit had been disbursed by the original
closing date of June 30, 1997\. Due to the progress made possible by GTZ's involvement as procurement
agent, MOH's efforts to address the payment backlog, and intensified supervision by IDA, the one-year
extension resulted in disbursement of an additional 50 percent of credit proceeds\. In addition to the lack
of procurement capacity, inordinate delay on the part of the GoK in processing payment applications
(PAs) was a significant factor in implementation delays\. Though it remains a serious problem, the final
few months of implementation did benefit from some improvement in this regard: a PA Tracking
System--based on the one used in Treasury--was introduced in the Ministry of Health at the Bank's urging
in late 1997, accompanied by a reduction in the number of steps in the PA process\. The average time
required for payment fell from 140 days to 50, still much greater than MOH's target of 30 days\.
17\. In addition to the unnecessarily complicated payment process, financial management within the
Project was inadequate\. Record-keeping was poor, and the implementing agencies relied on IDA to
monitor expenditures and commitments vis-a-vis the category allocations and total credit amount\. The
GoK had difficulty processing payments under the credit within the four-month disbursements grace
period after project closing because planned expenditures had not been sufficiently provided for in the
budget and the necessary Authority to Incur Expenditures (AIEs) had not been obtained\. The discovery
that three students sponsored by NCPD benefiting from project-financed training had submitted falsified
documents as a basis against which to be provided subsistence expenses, and delay by the GoK in
addressing this matter, led IDA to suspend disbursements from Part C of the project (Strengthening of
NCPD) for the final 8 months of implementation\. While IDA and GoK agreed on steps to resolve the
issue, this was not accomplished until after the close of the disbursements grace period\. IDA will
continue to follow up with the Ministry of Finance to ensure that the funds are repaid to IDA and that the
other agreed remedies are implemented\.
18\. Audit Performance: Audit performance was quite poor\. No audit report was submitted on time
during the life of the project, even though difficulties with previous projects had led IDA to provide in the
DCA for a relaxed deadline for submission of audits of nine months after the end of the fiscal year, rather
than the usual six months\. Despite the fact that IDA had received neither overdue audit reports for the
Second Population Project for FY1987, FY1988, and FY1989 nor those for the Third Population Project
for FY1989 (the first year of that project), this project was approved by the Board in March, 1990\. The
majority of all audits were qualified\. Finally, unresolved audit qualifications dating back several years
and applying to MOH, MPND, and Ministry of Home Affairs and National Heritage indicate that US$1\.3
million in withdrawals cannot be supported and should be refunded to IDA\. Repayment of this amount
was requested in a letter from the Country Director on March 25, 1999\.
19\. Government Contribution: At appraisal, the Office of the Vice President and the Ministry of
Finance gave assurances that Government counterpart funds would be made available as required, and-the
5
PART I: Implementation Assessment Page 6 ofL2
SAR estimated the GoK contribution to total project costs would be US$4\.1 million or 10 percent of total
project costs (Table 8)\. However, the required counterpart funds were frequently unavailable, and the
Govemment's inability to finance recurrent costs led to situations in which implementation was stymied
by the implementing agencies' inability to finance basic operating expenditures such as fuel for vehicles
to supervise activities in the field\. IDA amended the Development Credit Agreement in November, 1997,
to allow for financing of incremental operational costs from the credit proceeds; however, this was a
short-term solution to facilitate implementation of the existing project\. Successful implementation of
future projects will require a further rationalization of the GoK's portfolio of projects and a sufficient
counterpart funds requirement to indicate GoK commitment to project objectives\.
20\. Civil Works: While many of the civil works originally planned under this project--the
construction of a national headquarters for NCPD and 14 District Population Offices--were cancelled as
part of the restructuring following the mid-term review, works remaining unfinished from Population III
were transferred to Population IV upon that project's closing\. Thus, the 13 Voluntary Surgical
Contraceptive Units (9 carried over from Population III) and 21 project-financed NGO clinics comprised
the civil works under this project\. In addition to mobilizing funds for emerging needs in the sector, the
need for NCPD to narrow its focus to its intended functions and the subsequently implied decrease in the
number of staff were the justifications for canceling the planned construction of NCPD headquarters\.
The Mid-Term Review also expressed concern that, while district population officers required ongoing
support, the construction of permanent offices might send the wrong message, indicating
institutionalization rather than the need to innovate and discover responsive and adaptive roles\.
21\. The completion status of the civil works under this project are as follows:
(a) VSCUs: These works suffered severe delays over several years, mainly due to inordinate
delays in payment by the GoK\. Less than half of these units were fully operational at the time
of the ICR mission, though all but one were 80-90 percent complete with work continuing,
financed by GoK\. The last unit is less than 50 percent complete, and no work has been done
since the contractor abandoned site in 1996 due to non-payment\. As has been noted with other
IDA-financed civil works in the sector, the performance of the Ministry of Public Works
(MOPW) in supervising these works was poor\. GoK commitment to complete these works is
uncertain\.
(b) NGO Clinics: Four NGOs [Family Planning Association of Kenya (FPAK), Crescent Medical
Aid Society of Kenya (CMASK), Kenya Catholic Secretariat (KCS), and Seventh Day
Adventist Church (SDA)] received financing through NCPD and this credit for completion of
civil works\. These works also suffered due to inordinately late payments by GoK, causing
severe financial hardship and legal difficulties for the NGOs\. Only FPAK managed to
complete their works under the project\. The CMASK works are expected to be completed in
early 1999, though the facility will be unable to open until financing can be mobilized to equip
the facility\. It is expected that SDA resources will prove sufficient to complete their facilities\.
Of the 9 facilities under construction for KCS, less than half are completed and operational\.
KCS informed the ICR mission that prospects for completion of the remaining sites were poor\.
22\. While a considerable amount of progress was made during the one-year extension period (none
of the works was complete by the original closing date), the fact that most of the works were not
completed is one of the most disappointing aspects of this project\. Especially given that it is unclear to
what degree the completed works contributed toward fulfillment of the project's development objectives,
the costs of civil works under this project vis-t?-vis the benefits cannot be justified\.
6
PARTI: Implementation Assessment Page 7 of 12
23\. Supply of Contraceptives: The 1989 KDHS revealed a high, unmet demand for contraceptives
at a time when there was a shortfall of donor funds to supply these contraceptives\. Therefore, one of the
main purposes of the project was to provide for the majority of the country's contraceptive needs
throughout implementation\. The only contraceptives supplied by the project prior to the hiring of GTZ as
a procurement agent were Norplant (procured on a single source basis) and an emergency procurement of
condoms, for which IDA procurement guidelines were waived\. During the last year of the project, 5
tenders for contraceptives and contraceptive supplies totaling $8\.64 million were floated and successfully
awarded Though some stock-outs did occur, donors stepped in to fill the gaps left by procurement
problems in IDA projects (Population III was being implemented concurrently)\. Most contraceptives
were procured on an ad hoc and often emergency basis by whichever donor had funds available, and the
large procurements undertaken by the project in its final year have revealed a need for IDA-financed
supplies to be better coordinated by the MOH with those provided by other donors\.
24\. The project design included support, along with parallel financing from USAID, for logistics\.
Ultimately, no funds from the project were used for this purpose due to the impressive progress of the
USAID-assisted Family Planning Logistics Management System (FPLMS)\. This is a cutting-edge
logistics management system that has been effectively distributing contraceptive supplies to districts since
1991, and it now has the capacity to forecast the country's needs versus expected supplies, facilitating
MOH's procurement planning\. The FPLMS maximizes routing efficiency, provides up-to-date
information on stocks, and has reduced the amount of time required to process and ship deliveries
through the MSCU from 7-10 days to l/2 day\. While the sustainability of this system once USAID
support ends in 2000 is uncertain, DflD has been financing the use of the same system for STI drugs\.
25\. NCPD: Most of the activities planned to be undertaken by NCPD were not implemented\. In
addition to the cancellation of the civil works, the manpower development plan was not done\. Among the
research financed by the project was an assessment of the staffing needs of NCPD, but the next step of
developing the plan was not completed\. The planned IEC activities were contingent on the development
of an IEC strategy, a condition of disbursement for this credit\. Though the condition of disbursement was
lifted after delaying implementation for approximately a year, the strategy was not actually finalized until
1996 (financed by UNFPA)\. No project-financed IEC activities were undertaken by NCPD\.
26\. As detailed in the Population III ICR, NCPD's effectiveness had been undermined by its low
profile relative to the mainstream of national development policy and its problematic relationship with its
then-parent ministry, the Ministry of Home Affairs and National Heritage\. NCPD's role had become
unclear, as it strayed from policy-making to undertake implementation\. Its impact was improved after the
Mid-Term Review, when it was transferred to the Ministry of Planning and National Development,
received a larger budget allocation, and had its role as a program and policy consultative body clarified\.
27\. Training: This project financed a massive amount of training under Part C of the Project
(Strengthening of NCPD)\. Though the SAR estimated only US$ 0\.3 million would be spent on overseas
training, most of the training expenditures were for overseas degree programs\. Individual training was
sponsored for 48 NCPD staff, with nearly 80 percent of these attending 1-4 year overseas degree
programs\. By the close of the project, 7 of these individuals (15 percent) remained in the employment of
NCPD\. Another 6 (13 percent) were again on extended study leave, despite the fact that most had already
been sponsored for 3-4 year degree programs under the project\. While the trained staff are undoubtedly
of benefit to the country as a whole, the minimal retention of the staff by NCPD--mostly trained overseas
at high cost--means that there was little positive impact in terms of the desired institution building within
that agency\. The selection process was neither transparent nor organized around the institution's needs,
and it largely focused on central level staff\. Thus, the selection of both individuals for training and-the
7
PART I Implementation Assessment Page 8 of 12
courses to be attended should be more objective; and transparency, accountability, and traceability with
regard to Bank-financed training needs to be improved\. Redress should be required of employees who
benefit from training and subsequently leave the agency before a minimum period of time has elapsed\.
28\. Project Restructuring and Extension of Closing Date: The project restructuring subsequent to
the Mid-Term Review was both appropriate and responsive to the situation within Kenya's population
sector; however, it did not address the major factors hindering implementation\. The allocation of Credit
proceeds to civil works was reduced more than 70 percent, with some smaller reductions in other
categories, thus enabling the allocation to goods and equipment to be increased by more than 110 percent
to support increased emphasis on service delivery and ensuring adequate supplies of commodities\. The
extension of the closing date for an additional year did contribute to significantly greater achievement of
the project development objectives than would have otherwise been the case, largely due to the progress
in civil works and the successful procurement of goods totaling nearly 50 percent of the total credit\.
Without this extension, the project outcome would have been highly unsatisfactory\. While the intensified
collaboration between the Borrower and the Bank did result in impressive achievements during the
extension period, confusion and uncertainty over whether the project would be extended caused some
stagnation in the planning and implementation of activities in the months leading up to the extension\.
However, the Borrower's delayed submission of overdue audit reports (a condition of the extension)
prevented the extension from being granted until just a few days before the closing date\.
MAJOR FACTORS AFFECTING THE PROJECT
29\. Factors Beyond the Government's Control: The major factor which lay outside GoK control
and negatively affected the project was an economic downturn since 1992/93 which led to high inflation
and a depreciation of the Kenyan shilling, resulting in cost variations, as well as constraining counterpart
funds\. In addition, the difficulties of some NGOs in mobilizing the required community contribution
contributed to delays in the NGO-administered works\. Finally, Bank supervision lacked diligence in
addressing implementation problems and in transferring unfinished activities from Population III to this
project without addressing the issues behind the implementation delays\.
30\. Factors Under the Government's Control: Factors that contributed to delays that were within
GoK control included (i) inordinately slow processing of payment applications; (ii) liquidity problems
resulting from the slow release of funds from Treasury, (iii) lack of ministerial counterpart funds; (iv)
slow clearance by the GoK Clearing Agent of exempted items through the Ports Authority that resulted in
lengthy delays and additional costs; and (v) poor performance of MOPW in supervising civil works\.
31\. Factors Under the Implementing Agency's Control: Finally, implementation of this project
was hindered by the following factors which were under the control of MOH and/or NCPD: (i) poor
procurement planning and generally weak donor coordination; (ii) though slow payments were partially
attributable to Ministry of Finance, the MOH's own processes and inefficiencies were responsible for the
larger share of delays; (iii) non-compliance and/or slow compliance with IDA procurement guidelines,
with the implementing agencies demonstrating a weak commitment to address procurement capacity
constraints; (iv) delays in fully adopting use of the Special Account; and (v) weak financial management\.
8
PART I: Implementation Assessment Page 9 of 12
PROJECT SUSTAINABILITY
32\. Project sustainability is unlikely\. The supply of contraceptives is wholly donor financed, with
needs projected to double over the next 15 years\. The exclusive, and poorly-managed, involvement of
the public sector in supplying contraceptives has undermined development of private commercial supply,
though the recent exponential growth in condom sales through commercial firms and social marketing
schemes suggests the potential exists\. With uncertain plans for the completion of a majority of the civil
works, and no preventive maintenance plans for the limited number of facilities that were completed, the
prospects for sustainability of the project's investment in these works is unlikely\. The only significant
incremental impact of this project on NCPD was the massive training program, and attrition has already
resulted in that investment not being sustained\. However, the project's contribution towards the National
Reproductive Health Strategy (i\.e\. the project-financed implementation plan and zonal workshops) is
likely to be sustained, given that implementation of this strategy in the districts is now underway\.
BORROWER PERFORMANC6E
33\. Borrower performance at preparation was unsatisfactory\. The project was prepared in response
to emerging needs in a collaborative fashion with IDA and donors\. However, the failure to establish
mechanisms to address longstanding problems with regard to financial management, civil works
supervision, and procurement condemned the project to failure\. Overall, Borrower performance during
Implementation was highly unsatisfactory\. Though some progress was made in streamlining the MOH
payment procedure, there was a lack of commitment to ensuring proper financial management and
accountability\. The lack of supervision of civil works, by MOPW, MOH, and NCPD, and the
unwillingness of the GoK to satisfactorily address the issue most responsible for delays in civil works
(e\.g\. unreasonably slow payment procedures) were the main causes of so many works being left
incomplete\. Finally, while MOH cooperation with GTZ in procurement during the final year was
impressive, its management of procurement during the previous years was poor, and its commitment to
developing its own capacity under the capacity-building component of the contract with GTZ was weak\.
BANK PERFORMANCE
34\. Bank performance at Identification was unsatisfactory\. While a project concept resulted which
was both consistent with the strategies of GoK and the Bank and highly responsive to a dynamic situation
in Kenya's population sector, the decision to develop a project to be implemented concurrently with an
existing project, instead of restructuring the existing project, doubled the administrative burden, led to
projected annual disbursements beyond the financial and administrative capacity of the Borrower, and
over-stretched the implementation capacity of the Borrower\. The performance of the Bank during
preparation was also unsatisfactory\. The failure to incorporate measures to address issues which had
emerged in previous projects in the sector proved to be a serious oversight, and the flaws in project
design have been detailed in para\. 5\. Given that the Bank failed to address problems that had emerged in
earlier projects regarding financial management, procurement capacity, and administrative capacity, and
also failed to identify the critical risk these issues posed to the project, Bank performance at Appraisal
was deficient\. Bank procurement and disbursement staff should have been more involved at appraisal\.
In addition, the assumption that the GoK could move effectively into this particularly difficult area of
procurement after years of dependency on donors, who did their own procurement to avoid the
weaknesses of GoK in this area, should have been questioned\.
9
PARTI: Implementation Assessment Page 10 ofl2
35\. Bank performance during supervision was also deficient\. If not for the significant improvement\.
during the one-year extension period, as evidenced in increased Borrower satisfaction and improvements
in implementation (see Borrower Evaluation Report, Appendix C), the performance of the Bank would be
rated highly unsatisfactory\. From the start, supervision missions failed to acknowledge the seriousness of
implementation problems\. The first supervision mission rated the project "1" (highly satisfactory) in all
areas, though this was inconsistent with the aide-memoire which showed less than one percent of the
planned funds had been included in the budget and no preparation for effectiveness on the part of NCPD
and NGOs\. Subsequently, all supervision reports until late 1994 included ratings of only "1" and "2"
(satisfactory) for implementation, despite worsening problems reflected in aide-memoires and severe
disbursement lags\. Ratings for the development objectives were based solely on the achievement of the
objectives within the Kenyan population sector, without regard to the project's contribution to these
accomplishments\. Further, ratings and decisions regarding the continued implementation of this project
were consistently based on expectations rather than demonstrated performance\. The shortcomings
extended beyond the task team -- from disregarding Bank guidelines in sending the project to the board in
spite of overdue audits in the sector to looking the other way when a series of supervision reports
indicated serious problems, regional management was complicit in the Bank's failures\.
36\. A noteworthy deficiency with regard to the Bank's fiduciary responsibilities relates to the case of
fraud described in para\. 17, in which the Bank both contributed to the initial problem and was deficient in
addressing the matter once it was uncovered\.4 As was also noted in the ICR for the Kenya Health
Rehabilitation Project, the Bank made poor decisions in giving "no objection" to award contracts for civil
works when there was insufficient time to complete the works\. Despite extremely poor progress on civil
works across the project and a history of problematic works under the Population III and Health
Rehabilitation projects -- both of which were implemented concurrently with Population IV and
supervised by the same task team, IDA gave "no objection" to proceed with 10 new NGO (SDA) clinics
for which the tendering process started in February, 1996\. The schedule allowed only 3 months between
the planned completion date and the original project closing date of June 30, 1997\. These were among
the works left incomplete at project closing\. Furthermore, despite unsatisfactory progress on the first
phase of the NGO clinics for KCS, the larger Phase II (also now incomplete) was allowed to proceed
even though the start of work had been delayed from June, 1995, and the works were only at the tender
stage in February, 1996\.
ASSESSMENT OF OUTCOME
37\. The project's outcome was unsatisfactory, with the improved performance of both the Borrower
and the Bank in the final year ameliorating the highly unsatisfactory outcome that would have resulted
had the project closed on the original closing date\. The primary purpose of the project had been to
provide for the population sector's needs in terms of contraceptive supplies and civil works, so the failure
to procure contraceptives until the final year and the fact that most of the civil works were left incomplete
4Early in the project, the original Bank Task Manager for the project sent NCPD a letter indicating that the
organization was requesting inadequate amounts of subsistence for training candidates and suggested an
amount to be used in the future which far exceeded the estimates of the training institutions\. When a
subsequent Task Manager, unaware of these instructions, questioned the amount of claims, the fraudulent
documentation was provided rather than the earlier instructions from the Bank\. Further, due to confusion
surrounding another subsequent change in task teams, most of the remaining funds from this category were re-
allocated to other purposes shortly before the suspension of disbursements was effected\.
10
PARTI: ImplementationAssessment Page 11 of 12
clearly indicate an unsatisfactory outcome\. While the large training program intended to support the
strengthening of NCPD was implemented, the failure of NCPD to retain the staff after this costly
investment also contributes to the unsatisfactory outcome\. However, the concentration of expenditures at
the end of the project makes it impossible to evaluate the impact of those expenditures at this time\.
Finally, as is evident in the Borrower Evaluation Report (Appendix C), the Borrower's assessment of
project outcome was significantly more positive\. This can, at least in part, be attributed to the Borrower's
tendency to treat IDA funds as grants, thus giving little weight to cost or waste in evaluating the outcome\.
FUTURE OPERATIONS
38\. The results of the 1998 KDHS demonstrate that the contraceptive and reproductive health needs
of Kenya are rapidly growing at a time when GoK resources are contracting\. Current provision for these
needs is wholly financed by donors, and a need for increased donor coordination is evident\. While it is
expected that such coordination will emerge from the joint efforts of donors and the Government in the
development of the country's health sector reform program, a focus on reproductive health should be an
integral element in future IDA support to the sector\. Such support should not only focus on providing for
the country's growing contraceptive needs, as Population IV sought to do, but should also attempt the
following: (i) to more closely integrate reproductive health strategies and activities under the Division of
Family Health with STI/AIDS strategies and activities under the National AIDS/STD Control Program;
and (ii) to invest in interventions, such as the reform of MSCU, that will increase the sustainability of the
reproductive health program, and (iii) facilitate decentralization and capacity-building at the level of
health service delivery points\. Future operations will need to target the reproductive health of
adolescents, as this is the only group for which the 1998 KDHS shows fertility has not decreased\. The
fact that the obstetric experience of this group also significantly contributes to overall maternal mortality
in Kenya further demonstrates a continued lack of access to reproductive health services by adolescents\.
The KDHS also shows that geographic disparities have not diminished; therefore, future operations
should also have a stronger focus on poverty\.
39\. Given the experience of this project and other recent projects in the sector, IDA would be
negligent to not attach the following preconditions to any future IDA support to Kenya's health sector:
(i) the introduction of a streamlined payment procedure and increased accountability measures in the
payment system; (ii) the contracting of an independent procurement agent for all IDA-financed
procurement; and (iii) the enactment of measures to improve accounting and record-keeping\. In addition,
recent allegations of corruption surrounding the Ministry's procurement practices increase concerns that
IDA and other donors are being asked to channel funds into a sector from which significant funds are
being drained through corruption\. Thus, prior to directing any future support to the health sector, IDA
and donors should require the contracting of an independent procurement agent for all Ministry
procurement, particularly given that procurement is not a core function of the Ministry\.
40\. The future role of NCPD is unclear; and its viability in the absence of project support, uncertain\.
Thus, the GoK should be encouraged to clarify its plans for the future role of this agency\. The GoK
should also be strongly encouraged to complete at least those unfinished civil works under its direct
control (the VSCUs)\. Given that the GoK reaffirmed its commitment to these works twice in recent years
- first in 1996 when requesting that they be transferred to Population IV from the closed Population III
project and again in 1997 when requesting this project be extended in order to allow their completion--the
completion of the VSCU facilities (except for the one site which is less than 50 percent complete) should
be a condition of appraisal of the next IDA credit to the health sector\.
11
PARTP ImplementationAssessment Page 12 of 12
KEY LESSONS LEARNED
41\. Numerous key lessons can be drawn from the experience of this project\. It is worth noting the
similarity and overlap between these and the lessons extracted in the ICR for Population III\.
(i) When previous projects have shown weaknesses in areas of financial management and accounting,
administrative capacity, procurement capacity, and/or project monitoring, new projects should not
be approved until these weaknesses have been addressed\.
(ii) Where appropriate, the use of an independent procurement agent should be considered at appraisal,
particularly for the procurement of items such as contraceptives and STI drugs which require a high
degree of technical expertise, comprehensive logistics capacity, and forecasting capacity\.
(iii) Through Population III and Population IV, the construction of facilities under IDA financing has
not contributed significantly to the achievement of project objectives, and has generally proven to
be a wasteful and inefficient use of scarce resources\. No civil works should be undertaken in future
IDA-financed health sector operations until sufficient measures are enacted to prevent yet another
repeat of this outcome\. Such measures should include avoiding the involvement of the Ministry of
Public Works, whose performance in supervision of works has been consistently unsatisfactory\.
(iv) It is important that the Bank place greater emphasis on proper financial management\. Projects for
sectors in which audits are overdue on other projects should not be submitted for Board approval\.
The Bank should discontinue the practice of allowing audit qualifications in Kenya to be addressed
in the subsequent year's audit\. Finally, it is questionable whether new disbursements systems that
reduce the amount of financial oversight by the Bank, such as LACI, are appropriate for countries
with a history of financial management problems such as those experienced in this project\.
(v) Realistic, proper Bank supervision is essential to a project's progress\. Project ratings should be
realistic and based on actual results rather than expectations or promises\. The experience of this
project affirms the relationship between intensified supervision and implementation progress\.
(vi) Donor coordination should be maintained throughout project implementation, particularly with
regard to procurement planning, policy, common implementation constraints, and project
restructuring\. This should include a diligent effort on the part of the Borrower to coordinate IDA-
financed goods and services and those provided by other donors, thus ensuring an efficient,
prioritized response to the country's needs\. There must also be sufficient communication and
consultation within the relevant Ministry regarding the goods and services to be procured\.
(vii) Large investments in training for central level staff do little to accomplish project development
objectives if the vast majority of trained staff are lost through attrition\. Future training programs
should be much more limited and prioritized, with both staff and courses selected through a
rational, transparent process\. Counterpart funding should be required to ensure rational use of
training funds, and measures should be taken by the benefiting agency to retain staff\.
(viii) Before unfinished activities are transferred from a closed project to another project, the problems
that prevented the activities from being completed in the first place should be addressed\. At a
minimum, such a transfer should be contingent upon a commitment from the Borrower to complete
the activities, even if use of the Borrower's own resources would be required\.
12
IMPLEMENTATION COMPLETION REPORT
KENYA
FOURTH POPULATION PROJECT
(Cr\. 2110-KE)
PART II: STATISTICAL ANNEXES
TABLE 1: SUMMARY OF ASSESSMENTS
A\. Achievement of objectives __ _
macro policies X
sector policies X
financial objectives L_ L __ _ __ X
institutional development X
physical objectives X
poverty reduction X
gender issues X
other social objectives X
environmental objectives X
B\. Project sustainability X
private ~ ~ ~ sacor sectoren development X
C\. Bank performance _ _ _ _
identification X
preparation assistance X
appraisal X
supervision x
D\. Borrower performance
preparation X
implementation X
covenant compliance X
operation X
E\. Assessment of outcome X
13
PART I: Statistical Annexes
Kenya
Fourth Population Project
TABLE 2: RELATED BANK CREDITS
Past Operations
1\. First Population Project The project objective was to significantly reduce the 1974 Closed
(US$ 12\.0 million) population growth rate\.
2\. Second Population Project The project objectives were to (i) reduce fertility, and (ii) 1983 Closed
(US$ 23\.0 million) improve accessibility and quality of rural health services\.
Parallel Operations
1\. Third Population Project The project objectives were to: (i) strengthen capacity of 1988 Closed June,
(US$ 12\.9 million) the National Council for Population and Development; 1996
(US$ 1\.9 million) (ii) create demand for Family Planning services through
IEC activities; and (iii) increase the availability,
accessibility, and quality of Family Planning services\.
2\. Health Rehabilitation The project objectives were: (i) support the GoK's 1991 Closed June,
Project program of health sector reform by (a) rehabilitating 1998
(US$ 3 1\.0 million) Kenyatta National Hospital; (b) improving health service
delivery in the Nairobi area; and (c) preparing for future
policy, managerial, and investment reform in health; and
(ii) to support the development of a National Household
Welfare Monitoring System\.
Following Operations
1\. Sexually Transmitted The project objectives are to: (i) strengthen the 1995 On-Going
Infections Project institutional capacity at the national and district levels to Closing
design, implement, monitor and evaluate interventions; December,
(US$ 40\.0 million) (ii) promote preventive measures to reduce the risks of 2000
STI transmission; and (iii) enhance both health sector
and community provision of physical and psychological
care and develop strategies to mitigate the socio-
economic consequences of STI/HIV\.
Planned Operations
1\. Health Sector Reform An APL which will support the Govemment of Kenya in Planned,
Project implementing its Health Sector Reform Program which 2000
focuses on (i) equitable allocation of government
resources; (ii) increased cost effectiveness of resource
allocation; (iv) continued management of population
growth; (iv) enhanced regulatory role of he government;
(v) increased private sector and community involvement
in the health sector; and (vi) increased and diversified per
capita flows to the health sector\.
14
PARTIP Statistical Annexes
Kenya
Fourth Population Project
TABLE 3: PROJECT TIMETABLE
Identification 1988
Preparation April, 1989 April, 1989
Appraisal October, 1989 October, 1989
Negotiations February, 1990 February, 1990
Board Presentation May, 1990 March 27, 1990
Signing May, 1990 May 21, 1990
Effectiveness August 20, 1990 September 25, 1990
Mid-Term Review December, 1992 August, 1993
Project Completion December31, 1996 June 30, 1998
Loan Closing June 30, 1997 June 30, 1998
15
PARTII: Statistical Annexes
Kenya
Fourth Population Project
TABLE 4: CREDIT DISBURSEMENTS, ESTIMATED AND ACTUAL
SAR Estimates Actual Actual Cumulative as
Yr/Quarter Quarterly CumuL Quarterly CumuL % of Credit
(US$ millions) (US$ millions)
FY1991 Ql 0\.50 0\.50 0\.00 0\.00 0\.0%
Q2 0\.50 1\.00 0\.00 0\.00 0\.0%
Q3 0\.50 1\.50 0\.00 0\.00 0\.0%
Q4 0\.50 2\.00 0\.00 0\.00 0\.0%
FY1992 Ql 0\.69 2\.69 0\.55 0\.55 1\.6%
Q2 0\.69 3\.38 2\.50 3\.05 8\.7%
Q3 0\.98 4\.36 0\.33 3\.30 9\.4%
Q4 0\.98 5\.34 0\.67 4\.05 11\.6%
FY1993 Ql 1\.17 6\.51 0\.28 4\.33 12\.4%
Q2 1\.17 7\.68 0\.43 4\.76 13\.6%
Q3 1\.32 9\.00 0\.00 4\.76 13\.6%
Q4 1\.32 10\.32 0\.24 5\.00 14\.3%
FY1994 Q1 1\.62 11\.94 0\.13 5\.13 14\.7%
Q2 1\.62 13\.56 0\.04 5\.17 14\.8%
Q3 1\.49 15\.05 0\.02 5\.19 14\.8%
Q4 1\.49 16\.54 0\.00 5\.19 14\.8%
FY1995 Q1 2\.15 18\.69 0\.00 5\.19 14\.8%
Q2 2\.15 20\.84 0\.53 5\.72 16\.3%
Q3 1\.57 22\.41 0\.00 5\.72 16\.3%
Q4 1\.57 23\.98 0\.00 5\.72 16\.3%
FY1996 Q1 1\.56 25\.54 0\.79 6\.51 18\.6%
Q2 1\.56 27\.10 1\.10 7\.61 21\.7%
Q3 1\.41 28\.51 0\.24 7\.85 22\.4%
Q4 1\.41 29\.92 0\.45 8\.30 23\.7%
FY1997 Q1 1\.41 31\.33 1\.13 9\.43 26\.9%
Q2 1\.41 32\.74 0\.25 9\.68 27\.7%
Q3 1\.13 33\.87 0\.28 9\.96 28\.5%
Q4 1\.13 35\.00 0\.66 10\.62 30\.3%
FY1998 Ql 0\.41 11\.03 31\.5%
Q2 0\.09 11\.12 31\.8%
Q3 0\.00 11\.12 31\.8%
Q4 5\.48 16\.60 47\.4%
FY1999 Q1 8\.84 25\.44 72\.7%
Q2 4\.80 28\.88 82\.5%
16
PARTF i: Statistical Annexes
SAR Estimates and Actual Disbursements
40
035
co25
:3~~~~~~~~~3A
a~~~~~~~~~~~~~~~~~ 2M Actual|
10
Quarters
17
PART 11: StatisficalAnnexes
Kenya
Fourth Population Project
TABLE 5: KEY INDICATORS OF PROJECT IMPLEMENTATION
A\. Increasing Availability and Accessibility of Contraceptives
I\. Provision of Vaginal Tablets and Injectable Year of 7 2 Not procured until last year of project
Contraceptives Supply
2\. Introduction and Provision of Norplant Y/N Yes Yes Successfully introduced and supplied throughout project\.
3\. Strengthening of Logistics System Y/N Yes No No project funds used\. Wholly financed by USAID
4\. Establishment of Clinical Contraception Y/N Yes No Not implemented\.
Surveillance System - -
B\. Promotion of Family Planning Services
1\. Begin Construction and equipping of 6 VSCUs VSCU 6 4 Only 4 additional VSCUs undertaken
2\. Completion and equipping of 9 VSCUs from Pop\. VSCU 13 6 Six completed\. One is partially operational\. Five are 80-90% complete\.
III project, Completion and equipping of Pop\. IV And one was abandoned at less than 50% completion\. Equipment has been
VSCUs procured for the facilities\.
3\. Equipment for 300 MOH health facilities % 100% 100% Procured in final year of project
4\. Introduction of Surgical Contraceptive Services Y/N Yes Yes Successfully introduced
through Private Sector
5\. Introduction of Income Generating Activities for Y/N Yes No Canceled at time of project extension\.
Women's and Men's Groups
6\. Construction of 21 NGO clinics through 4 NGOS Clinic 21 5 Remaining were incomplete at project closing\.
7\. Financing of IEC and Training Activities through Y/N Yes No Practically none implemented due to NGOs' difficulty in accessing project
NGOs funds\.
C\. Strengthening NCPD
1\. Construction of NCPD National Headquarters Y/N Yes No Cancelled at Mid-Term Review
2\. Construction of 14 DPO Offices Office 14 0 Cancelled at Mid-Term Review
3\. Development of Manpower Development Plan YIN Yes No Not completed\.
4\. Implementation of IEC Activities Y/N Yes No Not implemented
D\. Research
1\. Research on Reproduction through IPR Y/N Yes Yes
2\. Feasibility study for local manufacture of Y/N Yes Yes
injectable contraceptives
3\. Various TA as per SAR YIN Yes Yes
Note: No performance indicators were provided in the StaffAppraisal Report\. These indicators have been developed from the staff appraisal report\.
18
PARTII: StatisticalAnnexes
Kenya
Fourth Population Project
TABLE 6: KEY INDICATORS FOR PROJECT OPERATION
Increasing Availability and Accessibility of Contraceptives
1\. Supply of Contraceptives Donors providing goods Unsustainable situation, leakage (i) Reform of MSCU
and wastage from MSCU
2\. Introduction of Norplant Availability being expanded Sustainability of supply\.
country-wide\.
Promotion of Family Planning Servces
1\. Construction of 13 VSCUs Work at most incomplete sites 7 facilities are incomplete\. GoK Completion of works\.
continuing with GoK funding commitment to complete is
uncertain\.
2\. Equipping of VSCUs and other facilities Goods being distributed at time Possible need for training on None\.
of ICR mission proper use\. Need for proper
maintenance\.
3\. Construction of NGO Clinics NGOs attempting to mobilize Most sites are incomplete\. None by GoK\. NGOs to attempt
resources to complete works\. Mixed prospects for completion\. to mobilize needed funds\.
4\. Preparation of Implementation Plans for Implementation in districts with Need for integration with To be addressed under Health
Reproductive Health Strategy funding from UNFPA STlIAIDS Strategy\. Sector Reform Program\.
Strengtening of NCPD
1\. Training Program None\. Most of the trained staff have None\.
l_____________________________ _ 0been lost through attrition\.
Note: Indicators were not provided in the SAR or in the President's reports\. The above indicators have been developed from the SAR-
19
PART IP: StatisticalAnnexes
Kenya
Fourth Population Project
TABLE 7: STUDIES CONDUCTED
'S'''''''''H'"'''''''''R''""('"'''\."\."''\.'';\." "'**>\.' X ^\. '~''>v t ' ' L ''6
Research Agenda Dr\. J\. Kekovole Completed Basis for Research Agenda of the Population
Program
National Population Program Prospects for Sustainability K\.K\. Consulting Completed Basis for future planning of Population
Associates Program and NCPD\.
Assessment of Manpower Needs for the Population Program P\.M\. Nkikwe Completed Laid groundwork for uncompleted
Manpower Development Plan for NCPD
Re-Evaluation of Population Policy Implementation at the District Prof\. John Oucho Completed Used in planning social marketing schemes
Level currently under implementation and
development\.
Evaluation of Chania VSC Project Dr\. Kimani Completed Basis for planning of further extension of
Murungaru VSC services to private sector\.
Evaluation of Safe Motherhood Component of Family Health David Ojakaa Completed Benefit planning of future MCH programs\.
Foundation of Kenya
Evaluation of Fertility Regulation Methods Prof\. Richard Mwangi Completed Contributed to Population Program research\.
(IPR)
Manual of Molecular Biology Protocols and Evaluation of the Rashid Aman (IPR) Completed Contributed to Population Program research\.
Molecular Biology Research Programs on Reproduction by IPR
Photochemistry Study on Neem Oil and Khat Prof\. Richard Mwangi Completed Contributed to Population Program research\.
(IPR)
Immunological Responses, Mode of Action and Delivery Systems on Prof\. Emmanuel 0\. Completed Contributed to Population Program research\.
Male Reproduction Wango (IPR)
20
PART I1: Statistical Annexes
Kenya
Fourth Population Project
TABLE 8: PROJECT COSTS - STAFF APPRAISAL REPORT ESTIMATES AND ACTUAL EXPENDITURES
(US $ Millions)
Appraisal Estimates Actual
Expenditure Category Local Foreign Total Local Foreign Total
Costs Costs Costs Costs Costs Costs
1\. Civil Works 1\.0 7\.9 8\.9 0\.3 2\.2 2\.5
2\. Goods, Equipment, Supplies 0\.7 17\.4 18\.7 3\.6 21\.1 24\.7
and Vehicles
3\. Consultant's Services, 5\.8 5\.8 5\.6 5\.6
Research, and Training
4\. Incremental Operational 2\.4 2\.4 0\.2 0\.1 0\.3
Costs
Total Project Cost 4\.1 31\.1 35\.8 4\.1 28\.6 33\.1
Source: Government of Kenya/Ministry of Health
Notes: USAID expenditures were unavailable
Kenya
Fourth Population Project
TABLE 9: PROJECT FINANCING
(US $ Millions)
IDA | 35\.0 |28\.9l
FINNIDA | 0\.0 |1\.0l
USAID | 2\.2 |N/Al
Government of Kenya | 4\.1 |3\.2l
TOTAL l 41\.3 33\.1l
Source: SAR and Ministry of Health
Note: Expenditure Data from USAID was not available\.
21
PARTII: Statistical Annexes Table I0: Status of Legal Covenants
Kenya
Fourth Population Project
TABLE 10: STATUS OF LEGAL COVENANTS
Article III Para\. 3\.04 Preparation of a comprehensive IEC strategy and plan of 5,10,12 CD 9/5/90 5/31/97 Draft strategy submitted for comment in June
action\. 1992;work plan submitted for 1993/94\.
Strategy finalized in 1996\.
Article IV Para\. 4 01 Submission of audited accounts to IDA not later than nine I CD N/A N/A Audits were submitted for every year, but
months after the end of the financial year\. with delay\.
Article IV Para\. 6\.01 As condition of credit effectiveness: (a) submission of an 5 CD N/A N/A (a) Submitted October 1990; (b) Appointed
organization structure for MOI{s Division of Family under USAID/JSI FPLM Project, October
Health and a plan of action for its implementation; 1990\.
Schedule I Para\. 3 (b) As a condition of disbursement: (b) for the district focus 10,12 C N/A N/A (a) Evaluation for Phase I conducted in
component, an evaluation of the first phase of the district 08/91; Implementation for Phase 2 submitted
population program, and agreement on the changes needed in 09/92\.
for the next phase; action plan for the Istyr; (c) for the
IEC component, a national IEC strategy and
implementation plan\. _
Schedule 4 Para\. 2 Modification of the Pop\. 111 Project Coordinating 5,12 C N/A N/A Submitted under Executive Committee of
Committee for implementation of Pop\. IV; the committee NCPD Council; met regularly\.
to meet each quarter\.
Schedule 4 Para\. 3 By March 31 each year submission of draft annual work 5,3,9 CD 03/31/1995 Complied with delay\.
plans and budgetary allocations\. \.
Schedule 4 Para\. 4 Not later than December 31, 1992, a mid-term review\. 9 CD 12/31/1992 8/93 Carried out in August 1993\.
Schedule 4 Para\. 6 NCPD to make funds available to women's groups as 3 NC N/A N/A Activity was cancelled at time of extension
grants\. in 1997\.
Art III Para\. 3\.03 By June 30, 1991 submission of research proposals for 10 C 06/30/1991 N/A Submitted annually\.
Institute of Primate Research for IDA\.
Schedule I Para 3 (c) As a condition of disbursement: (c) For the women's 10,12 NC 1990 N/A Activity was cancelled at time of extension
income generation component, submit an implementation in 1997
plan for the first year\.
22
PARTII: Statistical Annexes Table 10: Status of Legal Covenants
Schedule I Para 3(d) As a condition of disbursement: (d) For the IEC 10,12 CD 1990 1996 A draft IEC strategy was prepared, and the
component, a national IEC strategy and implementation condition was lifted\. The national IEC
plan\. \. strategy was not completed until 1996
Covenant types: Present status:
I = Accounts/audits 8 = Indigenous people C = covenant complied with
2 = Financial performance/revenue 9 = Monitoring, review, and reporting CD = complied with after delay
generation from beneficiaries 10 = Project Implementation not covered CP = complied with partially
3 = Flow and utilization of project funds by categories 1-10 NC = Not Complied
4 = Counterpart funding 11= Sectoral or cross sectoral budgetary
5 = Management aspects of the or other resource allocation
Project or executing agency 12 = Sectoral of cross-sectoral policy/
6 = Environmental covenants regulatory/institutional action
7 = Involuntary resettlement 13 = Other
23
PARTII\. StatisticalAnnexes
Kenya
Fourth Population Project
TABLE 1 1: COMPLLANCE WITH OPERATIONAL MANUAL STATEMENTS
OD 10\.60 Paras\. 26-27 of OD 10\.60 state tliat, as a minimw, financial reports should normally comprise a
Accounting, statement of receipts and payments, as well as total project costs and sources of financing, and that the
Financial supporting schedules of statements should disclose annual and supplemental budget allotments, actual
Reporting, and expenditures under each budget category for which Bank financing is furnished, and the actual
Auditing expenditures and amounts of Bank disbursements claimed\. In short, financial reporting should cover
all accounts pertaining to project expenditures, irrespective of sources of financing\.
OD 13\.10
Borrower Audits were submitted for all years, though they were always delayed (submitted after the due date)\.
Compliance Separate audit reports were submitted for the Special Account and for SOEs\.
with Audit
Covenants
OP 6\.30 The Bank usually expects the Borrower to demonstrate commitment to the project by making a 10%
Local Cost minimum contribution to project cost (net of taxes and duties)\.
Financing and
Cost Sharing The Borrower's contribution totaled 9\.7% percent of total project cost versus the estimated
contribution of 10% projected at appraisal\.
OD 13\.30 The Bank may approve for selected disbursements covering only part of a project to permit (a)
Extension of implementation of some mutually agreed, high priority contracts; (b) the extension of the validity of
closing dates letters of credit covered by a special commitment or (c) provision for retention payments, when the
conditions for release (e\.g\. completion of performance tests or expiration of a warranty period) are
met after the closing date\.
The Bank extended the closing date by one year and allowed an additional 4 months after the project
closing date for disbursements retention payments for a number of civil works contracts and
procurement contracts\.
01)13\.55 The borrower prepares and makes available to the Bank its own evaluation on the project's execution
and initial operation, cost and benefits, the Bank's and borrower's performance of their respective
ICR preparation obligations under the loan agreement, and the extent to which the purposes of the loan were achieved,
adopts a plan for the operational phase of the project and assists the Bank in ICR preparation\.
The Ministry of Health and NCPD prepared an evaluation of the project's achievements (the summary
of the report is attached to the ICR) and participated in the ICR preparation with the Bank team\.
24
PART I: Statistical Annexes
Kenya
Fourth Population Project
TABLE 12: BANK RESOURCES: ACTUAL STAFF INPUTS
Stage of project Weeks US$ 000's Weeks US$ 000's Weeks US$ 000's
cycle
Preparation to N/P N/P N/P N/P 26\.6 53\.6
appraisal
Appraisal N/P N/P N/P N/P 16\.9 35\.0
Negotiations N/P N/P N/P N/P 8\.4 19\.2
through Board
Approval
Supervisionl 134\.1 273\.8 176\.9 313\.8 187\.0 309\.6
Completion 17\.0 20\.0 18\.7 21\.5 15\.9 18\.7
TOTAL N/P N/P N/P N/P 254\.8 436\.1
Source: FACT Cost Report run on February 10, 1999
I Assumes FY1986-FY1995 actual expenditures were equal to planned (and revised planned)\. The World Bank
Information System did not retain the "planned" figures for those years\.
25
PARTII StatisticalAnnexes Table 13: BankResources: Mtfissions
Kenya
Fourth Population Project
TABLE 13: BANK RESOURCES: MISSIONS
Identificatio 1988I1 Aid-Meoir missing fro files/archivesl~
oy'J Pr ot T\."u
Identification 1988 Aide-Memoire missing from files/archives
Preparation 4/1989 Aide-Memoire missing from files/archives
Appraisal 10/1989 Aide-Memoire missing from files/archives
Supervision 10/1990 3 1 2 Population Specialist, Architect, IEC 1 I Insufficient budgetary allocation from GoK\. Delay
Specialist in meeting conditions of disbursement\. Little
preparation by NCPD and NGOs for project
effectiveness\.
3/91 3 8 Public Health Specialist, Population i I Failure of Borrower to comply with IDA procurement
Specialist, Architect\. procedures\.
9/91 3 11 Public Health Specialist, Population 2 1 Failure of Borrower to comply with IDA procurement
Specialist, Architect\. procedures\. Slow operating procedures in NCPD\.
Late audits\.
1/92 2 I Public Health Specialist, Population 2 1 IEC workplan not prepared\. Procurement delays\.
Specialist Delayed disbursements to NGOs\.
2/93 4 11 Population Specialist, Operations, 2 1 Insufficient GoK budget allocation\. Slow reporting
Architect, Public Health Specialist by NCPD\. Slow implementation\. Inability ofNGOs t
access funds\.
Mid-Term Review 8/1993 10 18 Public Health Specialist, Operations, IEC 2 1 Unsatisfactory compliance with legal covenants\.
Specialist, Population Specialist, Delays in release of funds and payments\.
Architect, Donor representatives Procurement delays\. Implementation delays\.
Supervision 3/94 4 10 Public Health Specialist, Operations, IEC 2 1 Slow disbursements\. Delays in NGO activities\.
Specialist, Donor representative\.
9/94 4 11 Public Health Specialist, Family Planning U HS Delays in finalizing IEC Strategy\. Delays in release
Specialist, Population Specialist of commodities from Port of Entry\. No progress on
implementation of income generating activities\.
Procurement delays\.
2/95 3 19 Public Health Specialist, Operations U HS Disbursement delays\. Civil Works delays\. Delays in
disbursements to NGOs\.
26
PARTI: StatisticalAnnexes Table 13: BankResources: Missions
10/95 7 12 Operations, Public Health Specialist, U S Delay in selection of procurement ag ent\. Failure to
donorrepresentatives\. comply with oDA procurement guidelines\. Overdue
audits\. Insuf'ficient GoK budget allocation\. Little
progress on IEC, income generating activities, and
wprocurement\. Civil works delays due to slow
payment by Treasury
2/96 4 __\. Operations, Architect, Public Health \. \. \. Major procurement problems\. Delays in
Specialist\. \. development of IEC strategy\. Delays in NCPD
workplan\.
9/96 6 18 Operations, Architect, Financial U S Overdue audits\. Delayed civil works\.
Management, Procurement
2/97 7 17 Operations, Accountant, Architect, HD U S Funding gap unless project extended\. Possible
Economist, Health Specialist, Economist misuse of funds under Moi-Hopkins contract\. Civil
works delays\.
6/97 3 7 HD Economists, Operations U U Extension issues\.
9/97 9 15 Public Health Specialist, Economist, U U Civil Works delays\. Outstanding audits\. Suspension
Operations, Architect of disbursements due to suspected fraud in NCPD
training component\.
2/98 4 19 Public Health Specialist, Operations, U U Civil works delays\. Outstanding audit qualifications\.
,-________ ___________ Architect, Suspension of disbursements\.
Completion 12/98 4 8 Operations, Procurement, Financial U U Unfinished civil works\. Poor financial management
Management and slow payment process\. Outstanding audit
qualifications\. Inability to process some final
disbursements\.
27
PARTII\. Statistical Annexes
Kenya
Fourth Population Project
TABLE 14: TRENDS IN USE OF FAMILY PLANNING METHODS
"Co~~~~fraeepti~~~~~~~01 Me\.o \.93\.
Any Method 26\.9% 32\.7% 39\.0%
Modern Method 17\.9% 27\.3% 31\.4%
Pill 5\.2% 9\.5% 8\.5%
IUD 3\.7% 4\.2% 2\.7%
Injection 3\.3% 7\.2% 11\.8%
Diaphragn/foam/jelly 0\.4% 0\.1% 0\.0%
Condom 0\.5% 0\.8% 1\.3%
Female Sterilization 4\.7% 5\.5% 6\.1%
Male Sterilization 0\.0% 0\.0% 0\.0%
Any Traditional Method 9\.0% 5\.5% 7\.5%
Periodic Abstinence 7\.5% 4\.4% 6\.1
Withdrawal 0\.2% 0\.4% 0\.6%
Other traditional methods 1\.3% 0\.6% 0\.9%
Source: 1998 KDHS
Note: Sample includes currently married women ages 15-49
28
PART II Statistical Annexes
Kenya
Fourth Population Project
TABLE 15: SOURCE OF SUPPLY FOR MODERN CONTRACEPTIVE METHODS (%)
Public 52\.8 66\.7 64\.0 51\.6 21\.2 64\.1 58\.0
Govt\. Hospital 18\.0 46\.2 24\.5 47\.1 5\.9 56\.3 29\.5
Govt\. Health Center 19\.7 16\.3 21\.3 4\.1 6\.7 5\.3 16\.1
Govt\. Dispensary 15\.1 4\.2 18\.3 0\.4 8\.7 2\.4 12\.3
Private Medical 30\.0 32\.6 35\.0 47\.3 24\.8 35\.9 33\.4
Mission, Church 3\.8 3\.3 9\.6 13\.7 1\.5 15\.5 8\.1
Hospital/Center
FPAK Health 3\.6 7\.4 2\.4 13\.2 7\.6 6\.4 4\.5
Center/Clinic
Other Private 0\.9 0\.5 0\.5 0\.0 0\.4 1\.5 0\.8
Service
PrivateHospitaU 9\.1 17\.2 19\.2 16\.8 2\.3 10\.8 13\.7
Clinic
Pharmacy 8\.8 0\.0 0\.1 0\.0 13\.0 0\.0 3\.2
Private Doctor 4\.2 4\.0 3\.2 3\.6 0\.0 1\.7 3\.0
Other Private Service 5\.3 0\.0 0\.3 0\.0 46\.3 0\.0 4\.5
Shop 1\.7 0\.0 0\.0 0\.0 33\.2 0\.0 2\.6
Friends/Relatives 3\.6 0\.0 0\.3 0\.0 13\.1 0\.0 1\.9
Mobile Clinic 0\.4 0\.2 0\.4 1\.1 1\.5 0\.0 0\.4
CBD Worker 10\.9 0\.6 0\.2 0\.0 3\.9 0\.0 3\.4
Other 0\.4 0\.0 0\.0 0\.0 2\.0 0\.0 0\.2
Don't Know/Missing 0\.2 0\.0 0\.2 0\.0 0\.3 0\.0 0\.2
TOTAL 100\.0 100\.0 100\.0 100\.0 100\.0 100\.0 100\.0
Source: 1998 KDHS
Note: Percent distribution of current users of modem contraceptive methods by source of method, according to specific
methods, Kenya 1998; CBD=-Community Based Distribution
29
PART I1: Statistical Annexes
Kenya
Fourth Population Project
FIGURE 1: TOTAL FERTILITY RATE AND CONTRACEPTIVE PREVALENCE RATE (1979-1998)
45
40 -
3 15111 gTotal Fertility
30 - Rate (children
25 - per woman)
20 - MContraceptive
15 - Prevalance Rate
10 (%)
5
0
1979 1989 1993 1998
Year
Kenya
Fourth Population Project
FIGURE 2: CHILD HEALTH INDICATORS IN KENYA (1979-1998)
120- _ -_ _ _ _ -
O 100 - _ _ _ U1 Infant Mortality
C)
&80 -Rt
* Child (1-5)
\. 60_ Mortality Rate
Cx 40 X T i _ T | _ T |_ 20 Under 5 Mortality
0) 20 -_ _ _ _
1979 1989 1993 1998
Year
30
Kenya
Fourth Population Project
Appendix A: Completion Mission's Aide Memoire
December 2-9, 1998
1\. A World Bank mission visited Kenya from December 2-9, 1998, for the purpose of preparing the
Implementation Completion Report (ICR) for the Kenya Fourth Population Project (Cr\. 2110-KE), which
closed on June 30, 1998, after a one-year extension\. The mission comprised Andrew Follmer (mission
leader, AFTH1), Wacuka Ikua (AFMKE), John Ogallo (AFMKE), Dahir Warsame (AFMKE), and Dick
Coppinger (Civil Works Consultant)\. The mission was postponed from its previously-scheduled dates to
allow the Ministry of Health to focus on the addressing the needs arising from the August 7 bomb crisis in
Nairobi and due to a change in team leadership by IDA\.
2\. The mission would like to express its appreciation to the representatives of the Ministry of Health,
National Council for Population and Development, Ministry of Finance, the Famnily Planning Logistics
Management Unit, and the GTZ Procurement Management Unit who worked with the Bank during the
mission, and the months leading up to the mission, to review the implementation of the project\. In addition,
representative from DflD, SIDA, FINNIDA, UNFPA, and The European Union participated in the
m-ission\. FINNIDA provided co-financing for the project\. USAID provided parallel financing for the
project, but was unable to participate in the mission; the Agency's comments on the draft ICR will be
solicted\. Finally, the mission would like to thank the following NGOs who received financing through the
Credit and who made representatives available to meet with the mission: Family Planning Association of
Kenya, Crescent Medical Aid, Kenya Catholic Secretariat, and the Institute for Primate Research\. Most of
the discussions during the mission are reflected in the Implementation Completion report\.
Borrower Contribution
3\. The degree of preparation for this mission by the Government of Kenya and NCPD was
impressive\. A comprehensive draft Borrower Evaluation report had been prepared prior to the mission's
arrival, and this report provided a solid basis for discussion\. The final Borrower Evaluation Report, of
which a 10 page Executive Summary will be attached to the ICR, will be submitted to the Bank by
December 23, 1998\. The Borrower will also submit to IDA formal comments on the draft ICR, which will
be sent by IDA no later than February 15, 1999\. The Borrower will submit comments to IDA by March 1,
1999\.
Procurement
4\. A procurement review is being conducted of the project by IDA\. This review is expected to be
completed by mid-January\. As found by earlier missions, the performance of GTZ as procurement agent
has been highly satisfactory and has resulted in a significant number of tenders being completed during the
project's final year\. These procurements comprised the majority of disbursements during the final year,
which totalled approximately 50% of the total credit\.
Disbursements
5\. The disbursements grace period for this project end October 30, 1998, and the final
disbursement applications were still being processed by the Bank at the time of the mission\.
Currently, approximately 16% of the credit is undisbursed\. In addition, a thorough Statement of
Expenditures (SOE) review is underway and is expected to be completed by mid-January\.
31
ApDendix A Completion Mission Aide Memoire
Outstanding Audits
6\. There are currently no outstanding audits for this project\. It was agreed that the Ministry of
Health and Ministry of Planning and Development shall seek to address all audit qualifications from
the most recent audits by Janary 30, 1999\. All SOEs shall be made available for review by IDA by
December 15, 1998\. The mission reminded the Government that 1997/98 audits for this project are
due March 31, 1999\.
Development Objectives
7\. The rnission notes that the one-year extension of the project granted by IDA resulted in
significantly greater fulfillment of the development objectives than would have been the case had the project
closed as originally planned on June 30, 1997\. A thorough discussion of the Achievement of Objectives,
and an Assessment of Outcome, is included in the draft ICR\.
Unfinished Civil Works
8\. The mission is disappointed to note that many of the civil works financed under this project
remain incomplete, and some have little prospect of completion\. These works comprise Voluntary
Surgical Contraceptive Units (VSCUs) and NGO Clinics:
a\. VSCUs: Of the 13 VSCUs under the Ministry of Health financed through this credit, 9
were started under the Third Population Project and transferred to this Credit when that project
closed in 1996\. All of these works suffered severe delays, mainly due to inordinate delays in
payment by the Government of Kenya\. Six of these 13 units are now completed and operational,
with a seventh that is partially operational\. Of the remaining 6 units, 5 are 80-90% complete, with
work continuing, financed through the Government of Kenya's own resources\. The last unit is less
than 50% complete and no work has been done since the contractor abandoned site more than 2
years ago due to non-payment by the Government\. After a long delay, the contractor was
subsequently paid, but has since refused to return to site despite a commitment to do so\. The draft
ICR will recommend that completion of these units be a condition of future IDA lending to the
Health Sector in Kenya\.
b\. NGO Clinics: Four NGOs (Famnily Planning Association of Kenya, Crescent Medical Aid,
Kenya Catholic Secretariat, and Seventh Day Adventist Church) received financing through the
NCPD and this credit for the completion of Civil Works\. These works also suffered major delays
due to inordinately late payments by the Government of Kenya, causing severe financial hardship
and legal difficulties for the NGOs involved\. Only one, FPAK, managed to complete their works
under the project\. The CMA works are expected to be completed by December 31, 1998, though
the facility will be unable to open until the necessary equipment can be procured (this has not
begun, and no financing has yet been made available for this procurement)\. The SDA works are
approximately 85% complete\. Though SDA was not available to provide the mission with details
on the plan for completion, it is expected that the organization will be able to mobilize sufficient
resources to complete the facilities\. Of the 9 facilities under construction for Kenya Catholic
Secretariat, 4 are completed and operational\. Two of the remaining units are 90% complete, and
the other 3 sites were abandoned due to late payment with works approximately 60% complete\.
Current information from KCS indicates that prospects for completion of any of these 5 sites are
poor\.
32
Appendix A Completion Mission Aide Memoire
Contraceptives and Contraceptive Supplies
9\. The mission attended a presentation by Mr\. John Wilson, the USAID-financed Logistics Advisor in
the Family Planning Logistics Management Unit\. While the SAR envisioned that support for logistics
would be jointly supported through the IDA Credit and the parallel financing made available from USAID,
this activity was wholly financed through USAID parallel financing\. This activity has achieved and
surpassed the project objectives\.
10\. Though the project was intended to provide for most of the country's contraceptive needs during its
lifetime, it provided for a very limnited percentage of these needs until its final year\. Though a couple of
stock-outs did result, the mission found that when the project failed to meet supply needs, donors
consistently stepped in to finance replenishment of the country's supplies\.
11\. The FPLM's logistics system provides excellent forecasting capability and is "multi-donor"
friendly, so the GoK has precise forecasts of future needs\. Current supplies of all contraceptives are
expected to last 2-3 years\. In the long-term, there are serious issues regarding sustainability, given that the
supply of contraceptives is currently 100% donor financed, with substantial unmet demand and a need that
is expected to double in the next 15 years\.
12\. The discussion of contraceptives with donors revealed a need for increased coordination among
donors and the World Bank-financed projects in MOH with regards to the quantity and timing of
contraceptive procurement\. The Division of Primary Health agreed to take the lead within the Ministry
toward achieving the required level of coordination\.
Financial Management
13\. It was agreed that Financial Management under this project was inadequate\. Particular areas of
concern were (i) poor functioning and inordinate delays in the unnecessarily complicated payment system;
(ii) poor record keeping and accounting within the project with the effect that documentation was often not
available for review by IDA and the Ministry relies on IDA to track commitments and ensure that
categories/credits are not overdrawn; and (iii) poor audit performance and timely submission of audits\. It
was agreed that the need for TA to assist the Ministry with implementation of satisfactory financial
management practices would be a topic of discussion among the Health Sector Reform Donor Coordination
Group\. Such TA would focus on systems strengthening and the implementation of practices recommended
by previous reviews of the system\. Further, it was agreed that such TA would be appropriately placed in
the Ministry given that the majority of delays in payments, etc\. are attributable to the Ministry's system
rather than the Treasury\.
Reproductive Health Strategy
14\. Subsequent to the development of the Reproductive Health Strategy in 1996 (financed by UNFPA),
the project financed development of the Implementation Plan\. Various delays resulted in no implementation
being able to be financed through the credit, and workshops with district personnel were conducted shortly
prior to project closing\. The MoH is currently working with Districts to finalize their plans for
implementation in a manner consistent with the country's Health Sector Reform Program\. UNFPA has
made some funds available for implementation of these plans, and discussions are planned to be held with
other donors in which they are given the opportunity to pledge support directly to districts and, hopefully,
provide support directly to those districts\.
33
Appendix A Completion Mission Aide Memoire
Conclusion
15\. For reasons which have been covered in the aide-memoire and which will be covered in greater
detail in the ICR, the outcome of this project will be rated unsatisfactory\. However, it is worth noting that
the final year did bring impressive improvement\. While this improvement was mostly due to the
introduction of the GTZ procurement agent-resulting in major procurements of contraceptives,
contraceptive supplies, and medical equipment under a project in which no major procurement had
previously succeeded-the additional year also resulted in the completion of some additional civil works\.
The frank discussions during the mission, the forward-looking orientation of these discussions, and the
constructive dialogue on how to avoid repeating the problems of this project in future projects provide a
positive indication that both the GoK and the Bank have extracted lessons from the review of this project\.
Action By Whom Date
Discussion of Financial Management TA for MOH at HSR Donor Next meeting
next meeting of Health Sector Reform Donor Coordination
Coordination Group Group
All SOEs to be made available to IDA for review MOHINCPD Dec\. 15, 1998
Final Borrower Evaluation Report to IDA MOH/NCPD Dec\. 23, 1998
(as of Jan\. 6, 1999: not received)
Borrower to address all outstanding audit qualifications MOH/NCPD Jan\. 30, 1999
Draft ICR to Borrower IDA Feb\. 15,1999
Borrower Comments on Draft ICR submitted to IDA MOHI/NCPD Mar\. 1, 1999
1997/98 Audits due to IDA MOHINCPD Mar\. 31, 1999
34
Kenya
Fourth Population Project
Appendix B: Civil Works Report (October, 1998)
I\. Voluntary Surgical Contraceptive Units\.
II\. NGO Clinics
A\. Crescent Medical Aid
B\. Family Planning Association of Kenya
C\. Kenya Catholic Secretariat
D\. Seventh Day Adventist Church
I\. VOLUNTARY SURGICAL CONTRACEPTIVE UNITS\.
Completion Status\. The completion status can be summarized as follows: (i) 3 units are physically
complete and operational; (ii) 1 unit was recently completed and will shortly be operational; (iii) 3 units are
80 - 90% complete and are currently being worked on; (iv) 3 units have been substantially complete for
some time but are not yet operational; (v) one unit is 70% complete and work is currently stalled; and (vi)
one unit is less than 50% and work abandoned\.
Considering that all the above projects with the exception of one were initiated in the early 90s the
completion status is extremely disappointing\. Although the progress over the last two years has been poor
by any standards the effect of decentralizing the administration and project management responsibilities to
the districts has been positive\. At the time of preparing the report, completion work had recently restarted
at 3 sites, but this restart followed a period of several years when the situation was dormant\.
Design of Units\. The design, layout and location of the units is considered to be appropriate and when
operational they will generally enhance the existing hospital facilities\.
Quality of Workmanship\. The quality of workmanship and materials used on the units visited was
generally found to be acceptable\. The deficiencies noted were generally of a minor nature\. Although the
above defects are minor it was disturbing to note the lack of attention paid to the correction of these
defects\. These problems should be addressed by ensuring that the original contractors remedy their
construction defects in accordance with their contracts and that once the units are in operation the Hospital
have the resources to implement their own preventive maintenance\.
Implementation and Project Management\. The reason for the overall failure of the VSCU works
program can be attributed to poor project management, institutional procedures and payment delays\. The
management structure is cumbersome and involves an unnecessary large numbers of organizations: the
Ministry of Health, Division of Family Health, Ministry of Public Works, Consultants, Contractors and the
local District Hospitals\. This management structure together with changing personnel within the various
organizations has resulted in a dilution of responsibilities and a consequent lack of interest in the project\.
The genuine efforts made in the last few years by the Division of Family Health have been frustrated by the
cumbersome procedures involved in dealing with such a large and bureaucratic management teamn\. During
the supervision missions the MOPW were not able to provide accurate up to date infornation on the
contractual, financial and physical status of the various units\. The level of supervision at site level
provided by the MOPW Nairobi has been minimal\. Similarly the role of the Consultants engaged at the
early stages of the project is questionable and evidence of their impact is not visible\. An improvement was
noted when the completion and the construction of units were handled at District level\. The effect of-this
decentralization has been that the local administration have a greater responsibility for and control over the
35
AppendixB Civil Works Report
project and are therefore now motivated to see the Project through to a successful conclusion\.
Financial Aspects\. It was not possible to get clear information from either MoH or MOPW regarding the
financial status\. In most cases the estimated final contract sum considerably exceeds the original contract
value and does not take into account all Contractors Claims, The MoH has not completed the formalities
on the final accounts on any of the units, even on those that are complete and operational\. Throughout the
project has been effected by delays in payment\. To some extent the problem was alleviated in recent years
when the project management was decentralized and payment was made at district level\. This system has
however also failed at 2 sites where funds have not been available at District level and payment has had to
be made in Nairobi\.
Impact and Sustainability\. Generally the units would have a positive impact on health services at the
District Hospitals where they are located\. The extent to which they will be used for contraceptive
operations is questionable\. In all the units visited the number of these operations currently being performed
is mininmal\. The units are all located within the District Hospitals, most of which have existing theatres
which will be phased out when the new ones are ready\. The hospitals should therefore have the resources
necessary to operate and maintain the units effectively\.
-I\. NGO CLINICS
A\. CRESCENT MEDICAL AID KENYA: MATERNAL AND CHILD HEALTH CENTRE,
PANGANI NAIROBI\.
Completion Status\. The building is approximately 85% complete\.
Construction Period\. The official contract period of 6 months commenced on 27th May 1996\. The
original completion date was 27th November 1996 and therefore the project is currently almost 2 years
behind schedule and not yet complete\. The reasons for the delay are as follows: (i) the evaluation of the
tenders by the original architect was poorly done and the contractor chosen was not capable of executing
the contract; (ii) the original contractor did not perform and has subsequently been terminated--arbitration
procedures are currently in progress; (iii) the original architect performed poorly and has had to be
changed\. The original designs have been altered and this has caused delays to the Project\. The project has
suffered from severe cash flow problems as a result of payment delays\. In order to keep the work going,
the Client (Crescent Medical Aid) have had to intervene and make supplementary payments from their own
resources\. Work is currently in progress and completion time is now dependent on the continued
disbursement of funds\. It was estimated at the time of the ICR mission that the construction phase of the
project could be completed by the end of 1998\.
Design of the Unit\. The original design of the unit was not suitable and the original architect had to be
decommissioned\. The final design of the unit however is satisfactory and it will fulfill its function\.
Quality of Workmanship\. The quality of workmanship and materials used on the project are both
acceptable\.
Implementation and Project Management\. The original architect was not competent and the design was
not suitable\. The project therefore got off to a poor start\. The problems were compounded by long
payment delays and the selection of an unsuitable contractor\. When the project started to falter CMA
changed the Project Management assigning this duty to the original Quantity Surveyors\. The original
architects were decommissioned and the contract with the original contractor was termiinated\. The
36
Appendix B Civil Works Report
subsequent project management has been more effective but the initial problems of poor design, disputes
with the original contractor and payment delays have continued to have an adverse effect on the project\.
Financial Aspects\. Of the cost overrun of Shs 2\.2 M which represents 18% of the original contract value
the World Bank has issued a No Objection for an additional Shs 1\.6 M\. The balance of the cost overrun of
0\.6 M is made up from claims due to delayed payments\.
Impact and Sustainability\. The new unit has been constructed adjacent to an existing unit being
operated very effectively by Crescent Medical Aid\. When the new unit is completed, furnished and fully
equipped it is likely to have a very positive effect on health services in the area\. With the combined
resources of NCPD and Crescent Medical Aid the sustainability of the unit should be assured\.
B\. FAMILY PLANNING ASSOCIATION OF KENYA: MODEL CLINIC AND TRAINING
CENTRE\.
Completion Status\. The building is fully complete and has been built to a high standard\. All services are
connected and the building is operational\. The building has been furnished by FPAK and equipment was
received in September 1998\. FPAK anticipates that the complete unit will be fully operational by 1st
January 1999\.
Construction Period\. Delays were experienced due to the fact that no site investigation was done prior to
the commencement of construction and it was necessary to amend the foundation design\.
Design of the Unit\. The unit has been well designed and is considered appropriate and suitable for the
function it is intended to fulfill\. It is conveniently located to serve the surrounding population and is
situated adjacent to a main arterial road\.
Quality of Workmanship\. All work has been executed to a high standard\.
Implementation and Project Management\. The project has been generally well managed and the
implementation has proceeded smoothly\. The technical support throughout the project has been adequate\.
The only criticism that can be leveled at the project consultants is the fact that a site investigation was not
done prior to the start of construction\. At the commencement of construction it was discovered that the
actual foundation conditions were different from those originally assumed\. This necessitated a change in
the foundation design which resulted in increased costs (Shs 1\.2 Million) and a delay in the implementation
program\.
Financial Aspects\. Variations during the course of the contract were issued totalling Kshs 5,447,873
(approx 14% of the contract value)\. The variations issued are considered reasonable on a contract of this
nature and the World Bank has given a No Objection for Kshs 5\.0 Million\.
Impact and Sustainability\. The unit is well designed, well built and fully furnished and equipped\. The
unit will be fully operational by 1st January 1999\. It is well placed to have a very positive impact and an
assessment should be made after 1 year of operation\. It is unlikely that maintenance of the facility should
be a problem\.
C\. KENYA CATHOLIC SECRETARIAT\.
Completion Status\. The completion status can be summarised as follows: (i) 4 of 9 units are
physically complete and operational; (ii) 2 Units are approximately 90% complete but not yet operational;
and (iii) 3 units have been abandoned at approximnately 60% completion\. The units that are 90% complete
37
Appendix B Civil Works Report
are likely to be completed very slowly by the local communities\. The units that are abandoned are unlikely
ever to be completed\. In the last few months 2 communities have started to try and complete their units\.
Other than these there have been no developments on the project over the last 2 years\.
Design of Units\. All the units are of a relatively simple design and are considered appropriate for the
functions they are intended to fulfill\.
Quality of Workmanship\. The workmanship and quality of materials used on the sites was generally
satisfactory\.
Implementation and Project Management\. A competent Consultant was engaged by NCPD to manage
the project\. The project has not succeeded due to the severe payment delays on all the projects and in some
cases the failure of the community to participate and make their financial contribution\.
Financial Aspects\. The main reason for the failures in this project have been the paymnent delays\. A
breakdown is attached from which it can be seen that the payment delays are excessive, this is
representative of the delays experienced by the other NGOs\. Not one payment was paid within the
contractually stipulated 45 days, and in numerous cases the payment delays on individual certificates
exceeded the entire contract period\. On small contracts of this nature it is impossible for contractors to
perform under these conditions\. Work at all units was scheduled for completion by June 1995 but due to
the delays in honoring payment certificates, work at some of them was abandoned in October 1995 while
others were completed 2 years later\.
The contractors have lodged claims totaling Kshs 6\.06 M for payment delays which are contractually
legitimate\. Some of the contractors have notified their intention to take legal action against KCS to demand
their outstanding certified payments\. The longer this situation persists, the bigger the claims become and
the more serious the consequences are for KCS\.
Impact and Sustainability\. The four units that are complete and operational are having a positive impact
on their local communities\. Two additional units are likely to be completed and will have a positive impact\.
Unfortunately it is unlikely that the other units will be completed\.
Schedule ofActual Payments (the Contractual payment period was 45 days)
Unit Certificate No\. Certificate Value Certificate Date Date Paid Payment Delay
(days)
1\. Kevote 1 603,600\.00 2/2/95 22/6/95 96
2 201,129\.60 713/95 25/9/95 158
3 55,388\.15 1/9/95 18/1/96 94
2\. Chuka 1 804,242\.40 2/2/95 23/6/95 97
2 212,075\.20 9/3/95 25/9/95 156
3 371,124\.00 1/9/95 18/1/96 95
4 164,331\.35 16/10/95 18/1/96 49
3\. Riiji 1 739,486\.40 2/2/95 23/6/95 97
2 387,013\.60 8/3/95 14/7/95 83
3 351,441\.85 1/9/95 18/1/96 95
4 177,804\.70 16/10/95 18/1/96 49
38
Appendix B Civil Works Report
Unit Certificate No\. Certificate Value Certificate Date Date Paid Payment Delay
___________ -______ _ (days)
4\. 1 604,655\.20 2/2/95 23/6/95 97
Kerugoya 2 99,432\.90 10/4/95 4/9/95 102
3 152,437\.70 1/9/95 18/1/96 94
4 652,415\.75 16/10/95 18/1/96 49
5 114,308\.15 26/2/96 16/9/96 159
6 380,877\.10 28/5/96 19/11/96 131
7 103,827\.45 27/6/97 29/10/97 90
5\. Makueni 1 550,839\.20 31/1/95 23/6/95 98
2 169,501\.60 23/2/95 27/7/95 109
3 255,477\.70 1/9/95 18/1/96 83
4 301,045\.30 21/9/95 18/1/96 75
5 281,663\.90 9/11/95 12/4/96 105
6 119,824\.55 6/3/96 7/1/96 168
7 165,744\.00 24/7/96 21/1/97 133
6\. Bura 1 421,647\.20 31/1/95 29/6/95 104
Taita 2 63,024\.00 23/2/95 14/7/95 98
3 29,030\.10 1/9/95 17/2/96 125
4 53,226\.00 21/9/95 17/2/96 105
5 19,867\.70 9/11/95 6/5/96 133
6 155,042\.60 25/4/96 27/9/96 108
7 225,514\.10 19/12/96 17/10/97 248
7\. 1 479,632\.00 3-1/1/95 29/6/95 104
Kikambala 2 129,781\.60 23/2/95 14/7/95 98
3 256,609\.50 1/9/95 17/2/96 125
4 43,121\.50 21/9/95 17/2/96 105
5 19,867\.70 13/5/96 6/5/96 133
6 155,042\.60 25/4/96 27/9/96 108
7 225,514\.10 19/12/96 7/10/97 248
8\. Maralal 1 1,408,908\.80 9/3/95 4/7/95 72
2 248,394\.40 10/4/95 5/9/95 102
3 958,464\.10 1/9/95 19/1/96 95
4 542,328\.70 16/10/95 19/1/96 50
5 350,131\.10 20/12/95 31/5/96 118
6 423,209\.45 16/8/96 21/1/97 115
D\. SEVENTH DAY ADVENTIST CHURCH: 8 CLINICS, 2 VSCU THEATRES AND 2
STAFF HOUSES
Completion Status\. Although none of the sites are fully complete the average completion status is
approximately 85%\. At the time of the site visits two of the units were being worked on, and it is likely
that they will be fully complete before the end of November\. Work at the other units is at a standstill
because of payment delays\. The completion periods have all overrun by more than 18 months\.
Design of Units\. All the clinics and staff houses were well laid out and appropriately designed for their
respective locations\. The layout of the 2 VSCU theatres was identical but the inclusion of shelving and a
sink/wash hand basin in the actual theatre was questionable\. These items are an unnecessary source of
contamination and they may have to be removed before the theatres are operational\. In all other respects
the theatre design is considered appropriate\.
39
Appendix B Civil Works Report
Quality of Workmanship\. The general quality of workmanship and materials used was good to
satisfactory\. Minor defects were noted on door and window frames and plumbing fittings\.
Implementation and Project Management\. The SDA engaged a competent Consultant who has
managed the project satisfactorily\. The fact that the Consultant was not officially approved by the World
Bank until very late in the project, and was therefore not paid, was the cause of some distress\. Better
liaison between the NCPD and the World Bank could have resolved this problem at an earlier stage\. The
initial stages of the project proceeded relatively smoothly although delays due to late payments hampered
progress\. The later stages of the project have suffered due to the fact that SDA have not paid their local
contribution\. The NCPD should have been more insistent in their demands to SDA to meet their
commitments in this regard\. The NCPD were at fault for not making SDA and the Consultant aware of
the period required for payment procedures and all three contracts were signed with a specified payment
period of 14 days\.
Financial Aspects\. The original contract sums have been exceeded by a total of Kshs 1\.8 M which
represents approximately 8% of the overall total of the original contract sums on the 3 contracts\. These
variations are due almost entirely to omissions in the original Bill of Quantities\. They are all legitimate\.
Payment delays have been considerable and made worse by the fact that they are calculated on the basis
of a 90 day payment period when in fact the payment period stipulated in the contracts was only 14 days\.
Payment delays of the magnitude experienced on this project have a devastating effect on small
contractors cash flow\. The payment delays have meant that the project has not been completed to date
and also all the contractors have significant claims for the late payment\. The World Bankhave refused to
fund these claims and it is unlikely that GoK will fund them\. The claims are all legitimate under the
terms of the contracts and the longer they remain unattended to the larger they will become\. Although the
SDA are committed in their Memorandum of Understanding to make a contribution of 20% of the
contract value this 20% portion to date has been paid possiblymisguidedly by GoK\. Because this portion
has been paid by GoK, SDA have not made any financial contribution at all to the project to date\.
Impact and Sustainability\. It is considered that all units will ultimately be completed by SDA and that
they will have a positive impact on the local communities\. The SDA have a very strong presence in the
areas where the clinics and VSCU theatres are being constructed they are capable of allocating the
necessary resources and operating the units to a good standard\. The equipment for the units has already
arrived in Nairobi and is awaiting transportation to the units as soon as construction is complete\.
40
Kenya
Fourth Population Project
Appendix C: Executive Summary of Borrower's Evaluation Report
Background: The Population IV Project was developed by the GOK and IDA in 1990 to run concurrently
and follow the Third Population Project which had started earlier\. The main reasons for developing the
Population IV project was the realization that there were some gaps in Population III that had been
identified by KDHS I\. It was realized that although the population program had made remarkable
achievements in terms of increasing CPR from 17% to 27%, the TFR from 7\.7 to 6\.7, family planning
knowledge to 86% and reduced the population growth rate from 3\.8% to 3\.3% in 1989, there was a serious
risk that further progress would be jeopardized by shortage of contraceptive supplies and weak demand in
the areas which were identified as having low contraceptive rates\. There was also fear that unless new
incentives were introduced into the program, contraceptive use would reach a plateau of about 25-30% as
evidenced from Asian population programs\. Kenya could therefore, not afford a break in contraceptive
supplies, notably injectables\. There was also the wide gap between knowledge of family planning and use
among the women of reproductive age (Use 27%, knowledge 80%)\. Under these circumstances, Pop IV
was designed with four major components each addressing a critical area in the population program\.
Project Objectives: The Fourth Population Project had three main objectives: (i) to further increase the
availability and quality of family planning services provided by the Government and NGO's; (ii) to further
strengthen demand for family planning services through expansion of IEC programs to additional
government ministries and NGOs; and (iii) to further strengthen the capacity of the NCPD to plan and
monitor the expanding national population program\. The project consisted of the following parts:
These objectives were to be achieved by mobilizing and coordinating the resources of Both government and
NGOs and through close collaboration with donor assisted on-going population projects, particularly the
IDA-financed Third Population Project\. Demand Generation activities were undertaken by NGOs in those
areas where the 1989 KDHS showed low contraceptive prevalence rates\. To address the issue of
plateauing, the project also supported Women's income generating and IEC activities which were expected
to result in substantial fertility decline in the medium and long term\. On the issue of supply, the project
ensured a steady supply of contraceptives to meet growing demand while planning services through NGOs\.
To achieve these objectives the project undertook the following core activities:
Increasing the Availability and Accessibility of Contraceptives: Activities included (i)
Acquisition and distribution of contraceptive Supplies including inter alia oral pills, IUDs,
Condoms and injectable contraceptives; (ii) Introduction and expansion of Norplant (a subdermal
implant) as a method of contraception in Kenya's population program through training of Health
sector workers and provision of supplies (Norplant implants and trocars); (iii) Strengthening of the
MOH Logistics Systems for supplying to MOH facilities through upgrading of warehouses;
acquisition of vehicles; staff training and introduction of a computer based "Contraceptive
tracking" system; and (iv) the establishment of systems to monitor the side effects of clinical
contraception and training to monitor such effects\.
Promotion of Family Planning Services: Activities included (i) Construction and equipping of 12
Voluntary Surgical Contraception Units (VSCU's) in selected Districts and Sub-districts
throughout the country and acquisition of FP commodities, equipment, appliances, instruments and
supplies for provision of MCH/FP services in 7 provincial hospitals, 51 district hospitals and 42
sub district hospitals and 6 NCPD Family planning clinics constructed with IDA funds and NGO's
FP facilities; (ii) Acquisition of equipment and supplies, provision of qualified medical personnel
41
Appendix C Borrower Evaluation Report
and the renting of facilities for clinic in Nyeri to undertake surgical contraception services; (iii)
Assistance to the following NGOs: (a) Family planning association of Kenya (FPAK) for
development of IEC programs in the western and coast provinces; (b) Kenya Catholic Secretariat
for upgrading of about 40 clinics to provide integrate MSCH family planning services and the
development of IEC programs in the western province; (c) Seventh Day Adventist for upgrading 10
clinics to provide MCH/FP services and construction of two voluntary Surgical contraception units
in Nyanza; and (d) Crescent Medical aid Society of Kenya for expansion of MCH/FP services in
eight provincial areas of Nairobi, and development of IEC programs in these areas\.
Strengthening of the National Council for Population and Development (NCPD): Under this
component the following activities had been panned and funded: (i) Construction and equipping of
a national headquarters building for NCPD; (ii) Establishment and construction of 14 additional
District Population Offices, including acquisition office equipment, furniture and vehicles and
training of staff, (iii) Establishment of a Manpower development plan for NCPD staff, and
coordination of staff development and training activities throughout the population program; and
(iv) Preparation of a comprehensive IEC strategy\.
Research: Activities under this component included: (i) Carrying out research on reproduction at
the Institute of Primate Research if the National Museum of Kenya; (ii) Carrying out a feasibility
study for the local manufacture of injectable and oral contraceptives; and (iii) Carrying out
operational research activities including inter alia, the evaluation of the first phase district
population program\.
Involvement of Other Donors: Kenya's population program has been strongly supported by external
donors\. UNFPA has been playing a key role in donor coordination and has developed mechanisms for
regular consultations between donors and the Government\. USAID has been the largest bilateral donor in
the population sector\. It is involved in virtually all aspects of Kenya's Population Program\. NORAD,
DfID (ODA) and SIDA have also strongly supported the population program\. In addition FINIDA
supported the NORPLANT Expansion Component and helped in firmly establishing the method in Kenya\.
Project Design and Expected Benefits: The project was designed along the same lines as the Population
III Project but aimed at filling crucial gaps resulting from an acceleration of the demand for contraceptives
that was not anticipated at the appraisal of the Third Population Project\. During the implementation of the
Third Population Project, the KDHS identified several emerging gaps in the Kenya population program\.
Specifically, the KDHS revealed that demand for contraceptives was not only higher than the figures used
for appraisal of Population III Project but that the trend showed a likelihood of continued increase in
demand\. As a result, the requirements for contraceptive supplies estimated during appraisal of the Third
Population Project were surpassed by far\.
The survey also pointed out that there were specific regions of the country (Western and Coast Provinces)
where Contraceptive Prevalence Rates (CPRs) were very low and required targeted IEC activites\. The
broad objectives of the Project were to fill these newly identified gaps as well as to address the issue of
CPR plateauing\. Indeed the Project continued to build on efforts begun under previous IDA lending
operations, in institution building, strengthening of NCPD and expansion of NGO population programs\. It
is expected to improve effectiveness of the population program and expand its coverage\. In addition, the
Project laid the groundwork for addressing longer-term sustainability levels and future financing of the
program\.
42
Appendix C Borrower Evaluation Report
Achievement of Project Objectives:
Kenya has made some remarkable strides in the Population program particularly if one were to use
demographic indicators as a measure\. While some of the successes could be attributable to efforts in the
other sectors of the economy, it is undeniable that the substantial investments in the population and health
sector must have contributed in no small measure to the success\.
OBJECTIVE ONE: INCREASING AVAILABILITY AND ACCESSIBILITY OF CONTRACEPTIVES\. Bearing
that the procurement, delivery and distribution of FP equipment and supplies and appliances that have been
procured with proceeds of Credit 2110-KE over the last 23 months exceeds any that has been undertaken in
any single operation financed by either the Bank or any other donor and the fact that the equipment and
supplies received will benefit the entire country, and that the FP commodities procured will ensure
availability of supplies up to the year 2000, this component of the project was highly successful\. The
Norplant Method of contraceptives is now fully established in the country\.
The MOH FP Loan system for supplying contraceptives to the MOH facilities has been strengthened and is
fully operational\. It will be further expanded and be integrated into broader MOH-Logistics systems for
supplying pharmaceuticals; non-pharmaceuticals, Sera and vaccines over and above its current coverage
commodities as the Ministry transforms the Medical Suppliers Coordinating Unit into "an automatic legally
mandated Body Corporate independent of day to day management by the Ministry of Health, with capacity
to plan; procure and distribute drugs and other Medical Supplies to Public Health Facilities\." It has been
proposed that the Body Corporate's initial capitalization be provided by GOK, NHIF and other interested
development partners\. The experience gained by the MOH in operation a FP Logistics Management Unit
has been a useful input in this effort\.
OBJECTIVE 2: PROMOTION OF FAMILY PLANNING SERVICES: Over all the objective of promoting
Family Planning Services has been achieved\. The Preliminary 1998 Kenya Demographic and Health
Survey (KDHS) Report presents evidence rates and an increase in the use of famnily planning methods since
the 1993 KHDS\. The report also shows an increase in infant and under five mortality during the 1990's\.
The 1998 KHDS data shows that the Total fertility rate for the three years before the current survey is 4\.7
children per woman, down from 5\.4 children per woman based on the 1993 KHDS (NCPD, CBS, and MI
1994) and 6\.7 children woman based on the 1989 KHDS (NCPD and IBD/Macro, 1989)\. Fertility has
fallen recently at every age except amongst the youngest women, age 15-19\.
The 1998 KHDS shows that there has been a steady rise in contraceptive prevalence rates among those
aged between 1-49 years\. Nearly two-thirds (64%) of currently married women in Kenya have had
experience in using family planning methods at some time in the past; up from 55% in 1993 KHDS\. The
pill (33%); injectables (25%) and periodic abstinence (19%) are the most commonly used methods\.
Overall, 39% of married women in Kenya are currently using a contraceptive method\. Modem methods
are much preferred over traditional methods\. Contraceptive use, especially use of modem methods, has
risen sharply since the early 1980s and is probably the principle cause of the sharp fertility decline during
the period 1989 to 1998\. As a result of these demographic changes population growth rate has declined
from 3% in 1993 to 2\.8% in 1998/99\.
Civil Works: For both the MOH and the NCPD, the planned construction/renovations and commissioning
of VSCU had modest success\. For the MOH; out of the 14 facilities that were planned, seven (7) VSCUs
are complete and operational\. One (1) VSCU/OPD is partially operational with the OPD fully functional
and VSCU awaiting installation of theatre lamps and power connection\. Four (4) are 95% complete and
(1) VSCU is 80% complete\. The Government undertakes to complete these facilities and make them
functional\. Delays in completing the projects were caused extremely high rates of inflation in 1992/93
43
A,pendix C Borrower Evaluation Report
immediately after the contract awards were made and demand by contractors for revision of rates and
claims for extra preliminaries which took the MOPW a long time to evaluate before recommendations for
revisions were forwarded to the client Ministry for review and action by IDA\.
NCPD/NGO Component: For the NCPD component the first sub-component dealing with the introduction
of surgical contraceptives has been relatively successful\. A substantial number of female sterilization and
a small number of vasectomies have been performed around the Mt\. Kenya region through the efforts of
Chania clinics\. This however, was supported by a variety of IEC activities within the catchment area which
has gradually improved access of VSC\. The sub component of Family Planning IEC and services through
NGOs has been moderately successful\. The planned construction/ renovation of clinics by Crescent
Medical Aid (K) and Seventh Day Aid are at advanced stages of completion\. However, only nine (9) of the
dispensaries planned under KCS are either complete or almost complete\. Construction of the rest could not
commence since the local communities could not raise 20% of the cost required in time\. A model clinic and
training centre approved later in the project cycle, FPAK, is now complete\. Equipment is also to be
supplied to all units expected to be ready except CMAK whose equipment needs were not received in time\.
The IEC portion of this sub component has been below average since the method adopted for releasing
funds has been extremely cumbersome leading to long delays in implementation\. Still the SDA met most of
its IEC objectives, including development of suitable reproductive health messages and production of IEC
materials\. Implementation of IEC activities by FPAK CMAK and KCS has been inadequate\.
OBJECTWE THREE: STRENGTHENING OF NCPD: On the planned strengthening of the NCPD, only
training was implemented, although even this was affected by an audit exercise demanded by IDA\. The
planned construction of NCPD headquarters as well as expansion of the district program did not take place
due to shift in IDA focus\. Support for research on reproduction through the Institute of Primate Research
has been moderately successful although the scheduled procurement could not take affect on time\. While
the envisaged long-term manpower development plan was not prepared, a study was undertaken to
determine manpower needs for the population program\. The IEC subcomponent was not implemented due
to delay in completing national IEC Strategy which was a condition for implementation\. The IEC strategy
and implementation plan was subsequently completed under UNFPA funding and USAID technical
backstopping\.
Major Factors Affecting the Project: For the main stream activities conducted by the MOH, the
following major factors affected implementation of this project\.
1\. Inadequate capacity by the Borrower to effectively undertake International Competitive Bidding for the
large quantities FP commodities; Medical Equipment; Instruments and materials required for project
implementation\. This shortcoming was addressed by the Borrower through the appointment of M/S
GTZ as the Procurement Agent for the project\. This action enabled the Borrower to turn
implementation around and manage to affect procurement of items worth over US$ 16 million in a
record 18 months\.
2\. Macro economic factors beyond the Borrower's control such as high inflation rates; exchange rate
fluctuations against the Kenya Shillings and declining allocations per Capita for the MOH affected
implementation of the Civil Works Component\.
3\. Initially, visiting WB supervision Mission did not undertake effective supervision of Project activities\.
This partly contributed to slow implementation pace\. Also at the time of project appraisal no attempt
was made to define performance indicators/ standards of performance\.
44
Appendix C Borrower Evaluation Report
4\. Preparation of realistic annual work plans; procurement plans and training plans were not a
requirement for approval of requests for 'No Objection' until 1995/96\.
5\. Up to 1995 there was very little involvement of the stakeholders in the implementation of the project\.
This changed when the new WB Task Team took over the management of the project\.
6\. There was no recurrent expenditure category in the original DCA\. This adversely affected project
supervision, particularly the supervision of the many Civil Works Projects that were going on in
various parts of the country\. This shortcoming was addressed during the one year extension with a
very big difference to the implementation outcomes of the project particularly as they related to Civil
Works\.
7\. The continuing spread of HIV/AIDS among people in the active reproductive bracket during the 1990's
has resulted in increasing Infant Mortality Rates (IMR) as well as under - 5 Mortality rate\. The
Epidemic threatens to wipe out the gains that have been made by the MCH/FP Program over the last
three decades\.
For the NCPD/NGO components of the Project the following six (6) major factors have been cited:
1\. Although project implementation was meant to start immediately after the credit was signed, some
components could not start immediately\. This was mostly due to delay in signing the Memorandum of
Understanding (MOU) between the GOK and NGOs and fulfillment of Certain conditionalities\.
2\. At the initial stages there was considerable delay in disbursing the first up-front allocation\. NGOs had
a lot of difficulties in accounting for the funds expend before they could get reimbursement of the
special Account system was put in place, it proved to be quite cumbersome due to man power involved\.
Sometimes payments tool as long as three months\.
3\. IDA Procurement procedures and GOK requirements are often different hence occasional delay trying
to harmonize the two\.
4\. The IDA requirement that a no objection must be obtained before the activity takes place affected the
projects in that at times IDA takes time to grant no objection\.
5\. NCPD was supposed to build a Headquarters\. This activity which was going to be very beneficial was
cancelled\. The same was done for the DPO offices in the Districts\. The IEC component of the projects
was also cancelled and funds reallocated\.
6\. Project Components did not have well defined objectives with targets which could guide
implementation\. It was, therefore, not easy to determine achievement at any one time\.
Sustainability of Project Objectives: The Kenya population program still relies heavily on donor
financing\. As we look ahead, we see a real focus on a program that will gradually isolate those who are
willing and able to pay for FP services and so\. This can be achieved by setting up in strategic areas
starting with urban areas, amenity MCH/FP centers where charges for services will be levied\. These
should gradually be introduced in government health institutions as the idea gets accepted by more clients\.
This will ensure sustainability of the MCHIFP and for the Public Health Sector\. In this regard, the DPHC
in collaboration with GTZ is piloting one study on fee for services and as willingness and ability to pay has
been conducted by FHI in collaboration with the Ministry of Health and Moi University\. Data analysis is
in progress\. Social Marketing of condoms has registered significant success and some of the condoms
procured under the 4th population project will be used for this activity\.
45
Appendix C Borrower Evaluation Report
For the NCPD/NGO components of the project, sustainability of project activities after funding by IDA is
being seriously considered\. Introduction of user fees by various organization for the various services have
been implemented or considered\. Various studies indicate that the majority of clients are will to pay a
minimum amount for the various contraceptive services\. The social marketing survey conducted in Kenya
showed that with the proper planning and implementation, contraceptives can be bought by clients at an
agreed fee\. This, however, will vary from area to area depending on the income level of the communities\.
There is need to develop a comprehensive plan and time schedule to implement a nationwide Social
Marketing Scheme and other cost recovery programs\. The private sector will be encouraged to participate
more in the marketing of contraceptives\. This should be done through availing the commodities in their
shops: factories or any other area of operation\.
Borrower Performance: Given the factors that affected Project Implementation that have been outlined
above the Borrower's Perfortnance was satisfactory\.
Bank Performance: Initially, the performance of the Bank was below expectation, particularly with
regard to the utility of Supervision Missions\. However, with the new Task Team that came in 18-24
months before the project closed on 30/6/1998 the performance rose way above average in terms of
tackling and resolving implementation bottlenecks and providing an enabling environment for better
performance\. The improvement of Bank performance applied both to Nairobi and Washington offices\.
T'he impact of the good performance is clearly reflected in the implementation progress and disbursement
made during the later 18 months of the project's life\.
Assessment of Outcome: Given the projects objectives as spelt out in the Staff Appraisal Report and in
the Legal Agreement signed on May 21, 1990, the outcome of the 4th Population Project was satisfactory
for the following reasons: (i) Kenya has experienced substantial decline in fertility rate since 1989 to date\.
Total Fertility Rate (TFR) declined from 6\.7 to 5\.4 in 1993 and it is expected to decline further to 4\.8 in
1998; (ii) The annual population growth rate has declined from 3\.3% in 1989 to 2\.8% in 1998 and is
expected to decline further to 2\.5% by the year 2000\.
Future Operations: Future operations in the population sector will focus on the wider area of
Reproductive Health which include Adolescent Reproductive Health and Safe Motherhood initiatives over
and above the traditional MCH/FP activities\. Contraceptive prevalence has increased from 27% in 1989 to
33% in 1993 and is expected to increase by the year 2000\. There is however, a big gap between knowledge
of family planning which stands at 97% of actual use at 33%\. This unmet demand for FP accounts for 4\.5
million of projected 10 million increase in population between 1995 and 2010\. There is, therefore, need to
put in place during future operations, programs that will further address this issue and bridge the gap\.
Key Lessons Learnt: The key lessons learned during implementation of the Fourth Population Project
include the following:
1\. In order to foster ownership of the project by the borrower, it is essential to involve key stakeholders in
the stages of project formulation, preparation, appraisal and implementation\.
2\. Clearly defined performance indicators/standards have to be agreed upon at the time of the project
appraisal in order to ensure effective and timely implementation\.
3\. Before commencement of project implementation clear process/modalities for accessing project funding
should be spelt out between IDA and GOK\. This is particularly so in cases where a third party is
involved in the implementation process\.
4\. The number of planned civil works projects in any operation should be few to facilitate effective
46
Appendix C Borrower Evaluation Report
supervision and completion\.
5\. Adequate procurements capacity is a pre-requisite for effective project implementation\.
6\. Future operations should include an expenditure category of Operations and Maintenance to facilitate
regular supervision project activities particularly civil works\.
7\. Preparation of realistic annual work plans; Procurement and Training Plans is an integral part of
effective project implementation and should be a pre-requisite for granting of IDA 'No Objection' for
activities to be financed under future IDA operations\. This will ensure timely project implementation
and completion\.
8\. The Working relationships between IDA and GOK did not always reflect common interest/comnmon
goal approach due to a set up which subordinates genuine GOK positions\. Regular consultations at
program level are necessary to promote common understanding\. Review mnissions should take more
seriously any changed circumstances and not merely insist on adherence to project documents\.
9\. There was need to have strengthened the financial and monitoring systems of the NCPD before
commencement of the project\.
10\. There should have been adequate field visits by NCPD staff to monitor implementation activities\.
47
Kenya
Fourth Population Project
Appendix D: Borrower's Comments on Draft ICR
48
MAP SECION
IBRD 21992
SUDAN KENYA
DISTRICT POPULATION PROGRAMS
TURKANA |,1
RIFT MANODRA
<: S A~~~LLEY EASTERN NORT
s~~ ~~~~~~~~ \0 100 15 2 Kioetr
~~ ~ 0 50 100 MilesSTER
tN NRZAO&W^iGAS XIRIAIYArm 1999
~~~~~~~~~NKR 8ARINCSA<
'5 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~GA8\CA155A
S RIFT \ tAIROBR KITUI
\ ) d XACHAKOSX ~~~~~~~~~~~~~~~~~~TAiNA RIVER
< KA/IADnVALLJ IAMu r
Population IV Districts / ik\ < e
Population III Districts a t
o Province Capitals
(i National Capital¢ AT/r
Rivers SUDA|N9 7 , t
District BoundariesMO S: /
Province Boundaries K A OM
International BoundaTles to 0 20Kimers R nda
on/) rrt~~F~~l~ :3t & - ° SD too Miles I_\.
December 1989 | APPROVAL |
P000466 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No\.: 16799
IMPLEMENTATION COMPLETION REPORT
CENTRAL AFRICAN REPlTBLIC
Economic Management Project
(1971-CA)
June 26, 1997
Country Department 7
Africa Region
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties\. Its contents may not otherwise be disclosed without
World Bank authorization\.
CURRENCY EOUIVALENTS
Currency unit = CFA Franc (CFAF)
US$1\.00 = CFAF 515\.5 (1996)
CFAF I million = US$1,940
WEIGHTS AND MEASURES: METRIC
Metric = U\.S\. Equivalent
1 meter (in) = 3\.28 feet (ft\.)
I kilometer (km) = 0\.62 mile (mi\.)
I square kilometer (km2) = 0\.39 square mile (sq\.mi\.)
I hectare (ha) = 2\.47 acres (A\.)
I metric ton (t) = 2,205 pounds (lb\.)
I kilogram (kg) = 2\.2 pounds (lb\.)
FISCAL YEAR
January I - December 31
ABBREVIATIONS AND ACRONYMS
BECDOR Office for Evaluation of Diamond and Gold Production
CAADE Debt Amortization Agency
DGFP General Directorate of Civil Service
EMP Economic Management Project
ERDP Enterprise Rehabilitation and Development Project
HCPE High Commission for Public Enterprises
MCI Ministry of Commerce and Industry
MCS Ministry of Civil Service and Administrative Reform
MEM Ministry of Energy and Mines
MFPCI Ministry of Finance, Plan and International Cooperation
MTAC Ministry of Transport and Civil Aviation
MTPAT Ministry of Public Works
PE Public Enterprise
PMC Project Management Committee
PMU Project Management Unit
SAC Structural Adjustment Credit
SAR Staff Appraisal Report
SEP State Secretariat of Planning
TA Technical Assistance
TA ll Second Technical Assistance Project
TSP Transport Sector Project
UNDP United Nations Development Programme
Vice President: Jean-Louis Sarbib
Director: David Berk, Acting
Technical Manager: Roger Sullivan
Staff Member: Ellen Cohen
FOR OFFICIAL USE ONLY
TABLE OF CONTENTS
Page
Preface
EVALUATION SUMMARY \. i-iii
PART I: PROJECT IMPLEMENTATION ASSESSMENT
A\. Statement and Assessment of Objectives \.I
B\. Achievement of Objectives \.I
C\. Major Factors Affecting the Project \.3
D\. Project Sustainability \.5
E\. Bank Performance \.6
F\. Borrower Performance \.7
G\. Assessment of Outcome \.8
H\. Future Operations \.8
I\. Key Lessons Learned \.9
PART II: STATISTICAL ANNEXES
APPENDICES
A\. Borrower Assessment of Economic Management Implementation \. 21
B\. Map
This document has a restricted distribution and may be used by recipients only in the
performnance of their official duties\. Its contents may not otherwise be disclosed without
World Bank authorization\.
IMPLEMENTATION COMPLETION REPORT
Central African Republic
Economic Management Project (Credit 1971-CA)
Preface
I\. This is the Implementation Completion Report (ICR) for the Economic
Management Project in the Central African Republic (CAR), for which Credit 1971-CA
in the amount of SDR 10\.3 million was approved on December 13, 1988 and made
effective on October 5, 1989\. The credit was closed on March 31, 1997, 27 months after
the original closing date of December 31, 1994\. Final disbursement took place on May 5,
1997, at which time a balance of SDR 1,312,087\.55 was cancelled\. Co-financing for the
project was envisaged by UTNDP but not provided\.
2\. The ICR was prepared by Ellen Cohen from the Institutional Development and
Social Policy Division of the Africa Region and reviewed by David Berk, Acting Country
Director, AFCD7\. The Borrower did not provide comments\.
3\. Due to the socio-political unrest in CAR during 1996, a completion mission did
not take place\. Preparation of the ICR was done at HQ and is based on material in the
project file\. The Borrower contributed to the preparation of the ICR by preparing its own
assessinent of the Economic Management Project implementation, a summary of which is
attached as Appendix A\.
Economic Management Project (Credit 1971-CA)
Central African Republic
EVALUATION SUMMARY
Introduction
I\. IDA free-standing TA projects to CAR began with an emergency operation, Cr\.
1150-CA, approved in FY81 to help Government get the economy moving and increase
external financing and absorptive capacity\. The Second TA Project (Cr\. 1581-CA) was
approved in FY85 to help Government design and implement a national economic
rehabilitation program in major sectors and the civil service and train nationals to
implement it\. IDA provided support to the CAR adjustment program through three
structural adjustment credits from 1986 through 1994 (SAC I, Crs\. A023-CA and 1732-
CA, approved in FY87; SAC II, Cr\. 1916-CA, approved in FY88; and SAC III, Cr\. 2162-
CA, approved in FY90)\. The Economic Management Project (Cr\. 1971-CA), approved in
FY89, was designed to support implementation of the Government's adjustment program\.
Project Objectives
2\. The principal objective of the Economic Management Project (EMP) was to
strengthen the core ministries responsible for managing the country's economy and for
implementing the structural adjustment program\. Objectives were also to upgrade
technical skills of local staff, inter alia, through promotion of on-the-job training\. (Paras
1-3)
Implementation Experience and Results
3\. Institutional objectives were partially met\. Five technical advisors were recruited
to work with teams of nationals\. However, only two teams worked in a coherent manner:
the team trained in diamond evaluation and the one in administrative reform\. Only the
team which appraises diamonds is likely to be sustainable, since Government pays the
team bonuses to keep them from leaving\. In all components, about 1,300 people benefited
from short-term training which should reinforce performance in their current jobs or
contribute to capacity elsewhere in the Administration (Paras 10, 21-22)
4\. The project was implemented during a period of difficult political transition,
which continues to the present\. Factors not subject to Government control which affected
implementation included political instability and civil disturbance, co-financiers'
performance and Bank performance\. The life of the project was punctuated by prolonged
i
civil servant strikes and violence\. UNDP was to provide funds to recruit a technical
assistance coordinator, but this never materialized\. which partially affected achievement
of objectives\. France provided advisors in Treasury, Budget, Customs and Fiscal
departments who were essentially substitution TA and when they left, no replacements
were recruited\. The Bank sent the wrong message to Government by extending the EMP
credit closing date twice when it was clear that objectives were not being met and
Government was not making serious efforts to carry out reforms\. (Paras 14-15)
5\. Factors subject to Government control included Government commitment,
macreconomic policies and conditions, appointment of key staff, provision of counterpart
funds and administrative procedures\. Lack of political will was the key reason that the
reforms envisaged in the SAC III program were not implemented under the EMP\.
Macroeconomic policies contained in the civil service statute, public enterprise
rehabilitation program and Budget law were agreed but never implemented\. Lack of
payment of counterpart funds was a continuous challenge throughout project duration\.
And slow and cumbersome administrative procedures often delayed more than a year
recruitment of consultants and procurement of goods\. (Paras 1 6-19)
Summary of Findings, Future Operations and Key Lessons Learned
6\. Both the political situation and the credibility of the State had deteriorated
progressively by the early 1990s\. For more than two years, implementation of the
program supported by the SAC III and financed by the EMP was no longer a serious
concern for the Government\. Even in the upbeat conditions that prevailed in 1994, after
the devaluation of the CFAF franc and the improved economic prospects of CAR,
notably the increase in world prices of its major exports, cotton and coffee, and the
increased revenue generated from livestock exports, Government did not carry out
promised actions in public enterprise privatization/liquidation, day-to-day management of
Treasury operations or the new law reforming the civil service\. The situation has
deteriorated drastically and since 1996 was marked by three Army mutinies, accompanied
by civilian violence and looting\. With the benefit of hindsight, it would have been
preferable to close the EMP credit earlier, by not extending the closing date twice\. (Para
31)
7\. Bank Performance\. Overall, the Bank's performance was uneven\. Identification
correctly focused upon the need for the Administration to put in place procedures and
systems and staff trained to manage them\. Preparation was deficient: the Bank had
recognized the Government's institutional weaknesses and problems encountered in TA
II, yet it helped Government to design a complicated operation which overburdened the
Administration's capacity\. Bank performance in appraisal was also deficient\. It does not
appear that lessons learned from TA II were translated into concrete appraisal steps to
avoid the pitfalls of previous TA\. There is no record that discussions were held with all
the beneficiary departments, which could have signaled risks of weak capacity at those
levels and provided incentives for beneficiary participants to buy-into and sustain the
project\. Supervision was mostly satisfactory\. T'ask managers provided continuity, since
ii
Bank management did not: six division chiefs and six directors in six years\. Despite poor
indicators, Bank management did not close the project and upon Government's request,
twice extended the credit closing date by 12 months each time\. With the turnover in Bank
management, it appeared that no manager wanted to take responsibility to close a project
that was clearly not meeting objectives\. (Paras 23-27)
8\. Borrower Performance\. Overall Borrower performance was mostly deficient\.
From project start-up, there was lack of ownership of the operation\. In addition,
incompetence of the project management team in the first two years of implementation
led to suspension of disbursements due to non-compliance with IDA procedures\. From
end-1991 onwards, project management was very good, but lack of political will at the
highest levels stifled EMP progress\. Turnover at the ministerial level--six ministers in six
years--and their political interference delayed or reversed operational decisions made in
all components, particularly in PE reform, Finance and Civil Service\. (Paras 28-30)
9\. The Borrower did not prepare a plan for the project's future operation\. Yet there
is still an unfinished reform agenda\. Should the Bank design a future institutional
development operation, it should do so when there exists an environment conducive to
change, switching from "business as usual" to earnest capacity-building, with clear
political will on the side of the Borrower\. Any future operation should be simple in
design and limited in focus to one or two key areas, such as budget management and
disengagement of the State from productive activities\. (Para 32)
10\. Lessons Learned\. When the Economic Management Project was prepared, it was
expected that a solution to the political situation was imminent\. Even under this
assumption, which did not materialize, project design was over-ambitious and unwieldy
for the weak CAR administration\. Lessons learned for the Bank are to design the project
to fit both country realities and Borrower capacity\. A third lesson is to ensure that project
objectives are consistent with instruments, since long-term institution-building objectives
cannot be matched to a short-term lending operation\. A fourth lesson is that continuity in
Bank management is essential to ensure responsibility on the Bank side\. Bank
management turnover resulted in successive managers "passing the buck" to avoid taking
a decision to close the credit\. (Paras 33-36)
11\. A fifth and most important lesson is for the Bank to adjust to realities\. The CAR
institutional reality was staff turnover and lack of incentives for the national teams\. The
CAR political reality was lack of Government commitment at the highest level to
implement the program supported by SAC III\. When these realities became clear, Bank
management should have closed the Economic Management Project, or at the very least,
supported technical (task manager) recommendations to not extend the credit closing
date\. Successive governments took advantage of the laxity in Bank management and,
with Bank complicity, disregarded project objectives and used EMP funds for studies in a
desperate attempt to put in place a medium-term economic program which ultimately
failed\. (Para 37)
iii
A\. STATEMENT AND ASSESSMENT OF OBJECTIVES
Credit Objectives
1\. The project's principal objective was to strengthen the core ministries responsible
for managing the country's economy and for implementing the structural adjustment
program\. Objectives were also to upgrade technical skills of local staff, inter alia,
through promotion of on-the-job training\. Through an integrated package of assistance
and training, the project aimed to put in place organizational structures in which tasks and
resource requirements were clearly specified, methods and procedures for carrying out
these tasks were developed, codified and applied, and in which functional linkages among
and within these institutions were delineated and understood\.
Assessment of Objectives
2\. The project's principal objective was not met\. It was wide in scope and over-
ambitious, given the social, poitical and institutional environment\. Project design did not
fit: it was too complex for the weak administrative capacity of the Borrower, who was to
implement four main components in 7 beneficiary departments (MFPCI, CAADE,
MTAC/MTPAT, MEM, MCS, MCI, HCPE)\. This was foreseen, since the pre-appraisal
review meeting had expressed concern about the extent of sectoral disperson of the
project, as it could make the project unduly complex and difficult to manage\. The same
point was made by the Senior Operations Advisor, prior to appraisal, who wondered
about the enthusiasm regarding successful implementation and impact of the Economic
Management Project (EMP), given the considerable problems encountered under the
Second TA project (TA II)\. He also queried how organization and information solutions
could overcome problems of leadership and management\.
3\. Implementation of the EMP was characterized by a weak administrative
apparatus, lack of trained personnel, continuous turnover of demotivated staff--the same
problems encountered in TA II execution and the same risks acknowledged in the EPS in
FY88--plus lack of political will\.
B\. ACHIEVEMENT OF OBJECTIVES
4\. The degree to which the project may be judged concerning achievement of
objectives is evaluated in the context of the socio-political situation and according to two
categories: (i) macroeconomic policies and (ii) institutional development\.
Macroeconomic Policies
5\. The EMP had virtually no effect on implementation of the Second Structural
Adjustment Credit (SAC II, Credit 1916-CA), which was approved by IDA on June 9,
1988\. The second tranche of SAC II was released in February 1990, four months after
the EMP was declared effective\.
l
6\. The EMP began operating amid a climate of optimism, in March 1990, after the
Party Congress (RDC, CAR's sole political party) had engendered hope of an imminent
opening up in the country's political arena\. SAC III was approved by IDA in June 1990,
and its first tranche released two months later\. In the absence of a clear position by
President Kolingba on the awaited economic and political measures, optimism gave way
to impatience\. Protests erupted--sometimes violent--along with strikes, some of which
severely paralyzed day-to-day activities across the country during 1990-93\.
7\. The country experienced a brief respite following election of President Patasse in
September 1993, the devaluation of the CFA franc in January 1994, the agreement with
the IMF on a Stand-by arrangement in March 1994 and the release of the SAC III second
tranche in April 1994\. However, after the Stand-by arrangement expired in March 1995,
the situation deteriorated markedly, and Government desperately began to design a
medium-term economic program to be supported by an IMF ESAF arrangement\.
Discussions were interrupted by army mutinies in April and May 1996, followed by
widespread violence and massive looting\. When another agreement was reached in
November 1996 with the IMF and the Bank on a PFP covering the period 1997-99, a
third mutiny erupted, and the reform agenda remains unfinished\.
8\. In this setting, it is not surprising that the macroeconomic policy objectives of the
EMP were not achieved\. OED rated the outcome of SAC III as highly unsatisfactory,
with sustainability unlikely and institutional development impact as negligible\. OED
noted that "the majority of SAC III objectives were not met\. GDP declined, the fiscal
situation worsened and human resource development came to a virtual standstill\. The
time required to implement the reforms was underestimated, priorities were not clearly
set and the conditionality package focussed too much on action plans and not enough on
actions\. The deterioration in the country's political situation, due to delays in an
anticipated transition to democracy, compounded the problem\."
Institutional Development
9\. Despite the new approach to TA, which consisted of assigning experts to teams of
nationals to carry out a unit work program, institutional development was only partially
achieved\. The EMP-financed actions to support SAC III included macroeconomic
management (with emphasis on resource mobilization, expenditure control, debt
management and investment planning), civil service and public enterprise reform,
financial management and promotion of private sector expansion\. Capacity-building in
these areas was a key focus of the EMP, which was to lay the foundation for development
of sustainable and efficient institutions in charge of economic policy formulation and
management\. Activities involved on-the-job training, study trips abroad (including a
program twinned with a public administration school in Canada and specialized diamond
training in Belgium) and in-country seminars, complemented by purchase of office
equipment and vehicles\.
2
10\. Five technical advisors were recruited to work with teams of nationals, who were
mostly preoccupied with the socio-political situation, demotivated by arrears in salary
payments and not keen to work during civil servant strikes\. Frequent turnover among
trained nationals was another problem\. However, there were two notable cases of groups
which worked well as teams: the team trained in diamond evaluation and the one in
administrative reform\. These results were likely due to the dynamic personalities of the
technical assistants, stability of the teams, technical competence of the team members and
the training perks offered in CAR and abroad\.
11\. Statistics from BECDOR, the government office responsible for evaluation of
diamond and gold production, show an increase in diamond exports from 1990-92 to
1993-95: an increase in value of 50 percent and in volume of 20 percent between the two
periods\. However, statistics on diamond taxes collected do not show a measurable
increase in revenue\. Nevertheless, since the BECDOR technical assistant left CAR in
1992, transfer of skills was likely achieved, as the nationals have continued work on their
own\. In the civil service ministry, a technical assistant trained ten nationals to prepare to
implement the new civil service statute, covering remuneration, recruitment, promotion,
training and career management\. However, one cannot judge either his or the national
team's effectiveness, since lack of political will has prevented implementation of the
policy\. Apart from these teams, none is working in a coherent manner in other
departments which benefitted from the EMP\. (See Tables 5 and 6 for TA inputs and
project accomplishments\.)
12\. A 1993 evaluation of technical assistance provided under the EMP concluded
that the project suffered from lack of internalization by its beneficiaries\. The evaluation
noted that the EMP was perceived as a source of funds for office materials rather than
reinforcement of institution-building in targetted ministries, which probably influenced
delivery of long-term TA and impact of TA on project implementation and performance\.
C\. MAJOR FACTORS AFFECTING THE PROJECT
13\. Affecting achievement of project objectives were: (a) factors not generally
subject to government control; and (b) factors generally subject to government control\.
Factors Not Subject to Government Control
14\. Four important factors fall under this category: political instability, civil
disturbances, performance of co-financiers and Bank performance\. Political instability
and civil disturbances substantially affected implementation of the project\. During the
life of the project, there were civil servant strikes punctuated with violence and looting,
due to non-payment of salary arrears, the bumpy transition to democracy and even since
the Presidential election, continued exclusion of those outside the President's circle from
decision-making and overt corruption\. The country went through numerous cabinet
shuffles, a military dictator, a transitional legislative body and a democratically-elected
3
president during EMP execution\. Government policies were implemented at an uneven
pace, often interrupted and delayed, particularly during 1990-93 and 1995-96\. CAR has
not had a formal program with IDA since 1994, after release of the second tranche of
SAC III, or with the IMF since 1995, when the Stand-by arrangement expired\.
15\. Regarding co-financiers, it was envisaged that UNDP would provide funds to
recruit a technical assistance coordinator but this never materialized, which partially
affected achievement of objectives\. France provided parallel financing with advisors in
Treasury, Budget, Customs and Fiscal departments who were essentially substitution TA
and when they left, no replacements were recruited\. Regarding Bank performance, IDA
sent the wrong message by extending the EMP credit closing date twice when it was clear
that project objectives were not being met and Government was not making a serious
effort to carry out reforms\.
Factors Subject to Government Control
16\. Government commitment, macroeconomic policies and conditions, appointment
of key staff, provision of counterpart funds and administrative procedures were five
factors subject to Government control that affected achievement of objectives\. Although
Government commitment appeared firm during project preparation, its lack of
commitment to execute the reform agenda substantially impeded attainment of the
project's goals\. Macroeconomic policies contained in the civil service statute, public
enterprise rehabilitation program and successive Budget laws were agreed but never
implemented\. The uneven performance of the economy during the early years of the
EMP partially affected project progress\. However, Government did not take advantage of
the economic conditions that prevailed following the CFAF devaluation, i\.e\., the increase
in the world price of major exports, coffee and cotton, plus increased revenue from
livestock exports, to carry out overdue reforms\.
17\. Regarding key staff, IDA suspended credit disbursements of the EMP for 3
months in 1991, due to poor project management and consistent non-compliance with
loan covenants, non-respect of IDA procurement and disbursement procedures and non-
payment of counterpart funds\. In late-1991, a newly-appointed project director began to
improve project management, but was faced with turnover of five different ministers
responsible for EMP implementation during the past five years\. Turnover of staff in
teams appointed to work with technical assistants was a continuous challenge; although
the issue was raised numerous times with Government, it was never corrected\. Lack of
payment of counterpart funds toward operating costs was a persistent problem\. At
Government request in 1993, IDA agreed exceptionally to increase from 50 to 100
percent IDA coverage of operating costs for 12 months, and in 1994 extended the
amendment through December 1995\. Faced with a liquidity crisis in early 1996,
Government requested and IDA agreed to amend again the credit agreement, raising IDA
coverage of operating costs to 90 percent\. Finally, slow and cumbersome administrative
procedures often produced extreme delays in consultant recruitment and procurement of
goods\.
4
18\. All of the above factors contributed substantially to implementation delays in
project execution\. While the SAR estimated five years from signature to project
completion, actual supervision amounted to 7\.25 years\.
Other
19\. During the mid-term evaluation in 1991, the project scope was reduced, given
delays in execution and the coming on-stream of two complementary IDA credits\. It was
agreed to drop two EMP components--strengthening the transport sector and promotion
of private sector activities--since the Transport Sector Project (TSP) and the Enterprise
Rehabilitation and Development Project (ERDP) began to provide assistance in FY90 and
FY91, respectively, in institution-building and training as envisaged under the EMP\.
D\. PROJECT SUSTAINABILITY
20\. Project sustainability is unlikely\. In the current context of on-going civil strife,
political uncertainty and security risks, the policy environment for economic dialog and
activities is fragile\. In terms of economic and financial management, a strong foundation
is missing\. It could be set up only with political will and transparent decision-making at
the highest levels\. Effective, unambiguous leadership would ensure adherence to
existing-but-not-respected Treasury procedures, application of the civil service statute,
closure in PE privatizations and development of an in-service training policy\. Only in
1994, after the CFAF devaluation, was CAR able to meet its revenue targets and control
its expenditure program\. Borrower commitment at present cannot be gauged, since each
new government has professed to carry forward the unfinished reform agenda but does
not deliver\.
21\. Moreover, as identified by civil servants in seminars highlighting problems in
seven departments, administration personnel lack incentive to work: they are
demotivated by nepotism and ad-hoc recruitment, fraudulent work practices, lack of
sanctions and arrears in salary payments\. Only the team which appraises diamonds is
likely to be sustainable\. Government has an interest in collecting diamond tax revenue,
so it pays the team bonuses to keep them from leaving\. Work program preparation by
beneficiary departments had developed into a useful monitoring tool\. But this exercise
was discontinued when Government and IDA, in late-1995, agreed to finance priority
actions required to produce a medium-term economic program with little consultation
from the beneficiary departments\. Given CAR's severe cash constraints, it is doubtful that
resources for maintenance of the office equipment will be allocated\.
22\. But there are several elements of institution-building which might be sustained if
proper incentives are put in place: (a) PMU personnel trained in Bank procurement and
disbursement procedures should help their ministries implement future IDA operations,
when Bank assistance resumes\. (b) Staff who received specialized training in diamond
appraisal and in administrative reform regulations and the nearly 100 who received
5
computer training should be able to contribute effectively to their work anywhere in the
administration\. (c) About 1,300 people benefited from short-term training under the
EMP; even if transferred elsewhere in the administration, they should also be productive\.
(d) National consultants and experts, recruited to carry out the Treasury audit and various
studies, provide facilitation and training and fill gaps in the administration have acquired
experience that should earn them future contracts and help develop the local consulting
profession\.
E\. BANK PERFORMANCE
23\. Overall, the Bank's performance was uneven\. According to the SAR,
identification was carried out in November 1987, although no identification mission
report is in the files\. Project identification per se was satisfactory, correctly focusing on
the need for the Administration to put in place procedures and systems and staff trained to
manage them\. The approach to team TA with nationals to work as a group was
innovative in the late-1980s\. Preparation was deficient\. The Bank had recognized the
Government's institutional weaknesses and the problems encountered in TA II\. And yet it
designed a complicated, multi-faceted operation which overburdened the capacity of the
Administration\. In addition, there is no evidence that the Borrower was a real participant
in project preparation\. In fact, a 1993 evaluation of project technical assistance noted that
the EMP was perceived as a 'Bank' project and not a CAR Government operation\.
Preparation was driven by the pressure to put in place quickly a TA operation to support
the structural adjustment program\. Had this not been the case, the Bank might have taken
the time required to prepare more thoroughly such a labor-intensive operation--which
usually requires 12-18 months--instead of only five months\.
24\. Bank performance in appraisal was deficient\. It does not appear that lessons
learned from TA II were translated into concrete appraisal steps to avoid the pitfalls of
previous TA\. There is no record that discussions were held with all the beneficiary
departments, which could have signaled risks of weak capacity at those levels and
provided incentives for beneficiary participants to buy-into and sustain the project\. On
the other hand, the appraisal team recognized and noted project risks, took into account
on-going and proposed donor contributions and prepared a matrix implementation plan
although the performance indicators were not quantifiable\. But the Bank had only a
partial plan to offset project risks\. For example, the SAR did not address the weak
motivation and mobility of staff\. Given the Government's absorptive capacity, the credit
amount was too high and the implementation period was too short\.
25\. Supervision, carried out by three task managers over seven years, was mostly
satisfactory\. Task managers provided continuity, since Bank management did not, with a
turnover of six division chiefs and six directors\. On average, two supervision missions of
two weeks each took place annually\. Supervision staffweeks are high, because seven
beneficiary departments required labor-intensive supervision in specialities of diamonds
and mining, debt management, public finance, parastatal reform and civil service
management\.
6
26\. In the early years, the Bank did not pay attention to the qualified SOE audits
submitted by project management and only 2-3 years later was the project accounting
system revamped and the auditors able to certify the early SOE accounts\. The Bank was
sometimes slow in responding to the Borrower, with instances of 4-5 months' delay in
providing non-objections on consultant terms of reference and contracts\. Supervision
missions collaborated well with co-financiers (France and UNDP), identified
implementation problems (counterpart funds, lack of progress in studies, project
management) and gave appropriate ratings, noted when legal covenants were not
enforced, showed flexibility and pragmatism in reducing EMP scope (dropping two
components covered by new IDA credits), and persisted in signaling management
attention to poor development impact and implementation progress indicators\.
27\. Despite poor indicators, Bank management did not close the project and upon
Government's request to make up for lost time, twice extended the credit closing date by
12 months each time\. The first extension was in the wake of the CFAF devaluation, when
the Bank was buoyed with optimism about economic prospects in CAR and the project
was rated Satisfactory\. The second extension was granted despite an Unsatisfactory
rating\. The third extension covered three months, to allow Government to prepare its
contribution to the ICR and to carry out audit of 1996 project accounts\. With the
turnover in Bank management, it appeared that no manager wanted to take responsibility
to close a project that was clearly not meeting objectives\.
F\. BORROWER PERFORMANCE
28\. Overall Borrower performance was mostly deficient\. Although the SAR stated
that Government commitment was firm during preparation, it was not demonstrated
during project implementation\. From EMP start-up, there was lack of ownership of the
project\. In addition, incompetence of the project management team for the first two years
of implementation led to a crisis of confidence between the PMU and the Bank and
between the PMU and the beneficiary departments\. This situation deteriorated into a 3-
month suspension of disbursements due to non compliance with IDA procedures\. From
end-1991 onwards, project management was very good\. However, PMU success
depended to a considerable extent upon senior authorities\. And lack of political will at
the highest levels was the root cause of the dismal results of the adjustment program and
the EMP whose aim was to support SAC implementation\. Turnover at the ministerial
level--six ministers in six years--and their political interference delayed or reversed
operational decisions made in all components, most notably in PE reform, Finance and
Civil Service\.
29\. Added to obstacles faced by the project management team was limited
institutional capacity elsewhere in the Administration, hampering Borrower performance
and resulting in: (a) delays in submission of audit/accounting reports; (b) extreme delays
in evaluating bids for consultant services and procurement of goods; (c) insufficient
7
payment of counterpart funds; (d) inordinate delays, sometimes over one year, in
commenting on studies to authorize final payment to consultants; and (e) TA recruited to
train teams of nationals attempting to do so in a context where work incentives for
nationals did not exist\. During most of EMP's execution, Borrower performance was
adversely affected by political unrest and violence which continue to this day\.
30\. Of the original studies identified in the SAR and actually completed, there was
very little follow-up by Government (see Table 7)\. One output, the mining plan, is a
valuable, scientific document which is available to promote investment in the mining
sector\. Drafting of the privatization law, not originally envisaged in the SAR, was carried
out with Bank Legal Department technical assistance\.
G\. ASSESSMENT OF OUTCOME
31\. The assessment of the project's outcome is unsatisfactory\. Both the political
situation and the credibility of the State had deteriorated progressively by the early- I 990s
and has continued to this day\. In such a context, successful implementation of the EMP
was virtually impossible\. Strengthening of the core ministries responsible for managing
the country's economy was negligible\. On-the-job training took place and some technical
skills were upgraded\. But there were no performance indicators by which to judge skills
transfer so one cannot judge impartially the outcome of this objective\. With the benefit of
hindsight, it would have been preferable to close the EMP credit earlier, by not extending
the closing date two times\.
H\. FUTURE OPERATIONS
32\. The Borrower did not prepare a plan for the project's future operation\. There is
still an unfinished reform agenda\. Should the Bank design a future institutional
development operation, it should do so when there exists an environment conducive to
change, switching from "business as usual" to earnest capacity-building, with clear
political will on the side of the Borrower\. Any future operation should be simple in
design and limited in focus to one or two key areas, such as budget management and
disengagement of the State from productive activities\.
8
1\. KEY LESSONS LEARNED
33\. When the Economic Management Project was prepared, it was expected that a
solution to the political situation would be imminent\. Even under this assumption, which
did not materialize, project design was over-ambitious and unwieldly for the weak CAR
administration\. A lesson learned for the Bank is to base design on country realities, not
upon hopes that the political situation would improve or that staff would have incentives
to work\.
34\. The creation of the PMU added to the bureacracy of an already overburdened
Ministry of Plan, even though the PMU was set up precisely because the Administration
did not have capacity to handle complex project coordination and execution across
ministries\. A second lesson for the Bank is to design the project to fit capacity of the
Borrower\. Perhaps a PMU could be set up as an agency to serve several IDA operations\.
Procurement and accounting functions could be contracted out to the private sector\.
35\. A third lesson for the Bank is to ensure that project objectives are consistent with
instruments\. Institution-building is a long-term endeavor, yet the lending instrument time
frames to implement SAC III and the EMP were short and medium-term, 18 months and
5 years, respectively\.
36\. A fourth lesson for the Bank is that continuity is essential to ensure management
responsibility on the Bank side\. Bank personnel changes resulted in successive managers
"4passing the buck" to avoid taking a decision to close the credit\.
37\. A fifth and most important lesson learned is for the Bank to adjust to realities\.
The CAR institutional reality was staff turnover and lack of incentives for the national
teams, which discouraged learning on their part and sustainable transfer of skills and
capacity-building by the TA\. The CAR political reality was lack of Government
commitment at the highest level to implement the program supported by SAC Ill\. When
these realities became clear, Bank management should have closed the Economic
Management Project, or at the very least, supported technical (task manager)
recommendations to not extend the credit closing date\. The Bank did not adapt to
changing circumstances and by not taking firm action, undermined its credibility\.
Successive governments took advantage of the laxity in Bank management and, with
Bank complicity, disregarded project objectives and used EMP funds for studies in a
desperate attempt to put in place a medium-term economic program which ultimately
failed\.
9
PART II: STATISTICAL ANNEXES
Table 1: Summary of Assessments
Table 2: Related Bank Credits
Table 3: Project Timetable
Table 4: Credit Disbursements: Cumulative Estimated and Actual
Table 5: Key Indicators for Project Implementation
Table 6: Key Indicators for Project Operation
Table 7: Studies Included in Project
Table 8A: Project Costs
Table 8B: Project Financing
Table 9: Economic Costs and Benefits
Table 10: Status of Legal Covenants
Table 11: Compliance with Operational Manual Statements
Table 12: Bank Resources: Staff Inputs
Table 13: Bank Resources: Missions
10
PART II -- STATISTICAL TABLES
Table 1: Summary of Assessments
A\. Achievement of Objectives Substantial Partial Negligible Not Applicable
Macro Policies /
Sector Policies _/
Financial ObJectives \.
Institutional Development \.
Physical Objectives /
Poverty Reduction V/
Gender Issues /
Other Social Objectives \./
Environmental Objectives /
Public Sector Management /
Private Sector Management V
Other /
B\. Project Sustainability Likely Unlikely Uncerain
Economic Management Project j[ /
C\. Bank Performance Highly Satisfactory Satisfactory Deficient
Identification _/
Preparation Assistance _ _ _
Appraisal _
Supervision _
D\. Borrower Performance Highly Satisfactory Satisfactory Deficient
Preparation /
Implementation /
Covenant Compliance /
Operation NA
E\. Assessment of Outcome Highly Satisfactory Satisfactory Unsatisfactory Highly
Unsatisfactory
Economic Management Project /
11
Table 2: Related Bank Credits
Credit Title Purpose Year Status
of Approval
Preceding operations
1\. TA II, Cr\. 1581-CA Technical Assistance FY85 closed
2\. SAC II, Cr\. 1916-CA Structural adjustment FY88 closed
Following operations \.
1\. PST, Cr\. 2126-CA Transport Sector Project FY90 closed
2\. SAC III, Cr\. 2162-CA Structural adjustment FY90 closed
3\. ERDP, Cr\. 2254-CA Enterprise Rehabilitation & FY91 open
Development
12
Table 3: Project Timetable
Steps in Date planned Date actual/
project cycle latest estimate
Identification (Executive November 1987 FEPS -June 1988
Project Summary)
Preparation __February 1988
Appraisal July 1988 July 1988
Negotiations September 1988 October 1988
Letter of development N\.A\.
policy (if applicable)
Board presentation November 1988 December 13, 1988
Signing February 6, 1989
Effectiveness February 1989 October 5, 1989
First tranche release (if N\.A\.
applicable)
Midterm review (if applicable) November 1991
Second (and third) tranche N\.A\.
release (if applicable)
Project Completion December 31, 1993 December 31, 1996
Credit Closing December 31, 1994 March 31, 1997
Table 4: Credit Disbursements: Cumulative Estimated & Actual
(US$ millions)
FY89 FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97
Appraisal Estimate \.20 2\.3 5\.9 9\.5 11\.9 13\.2 13\.2 13\.2 13\.2
Actual 1\.4 4\.8 5\.5 7\.2 8\.1 9\.6 11\.1 11\.3
Actual as % of estimate 61% 81% 58% 61% 61% 73% 84% 86%
Date of final disbursement: May 1997 (see Preface)
13
Table 5: Key Indicators for Project Implementation
Key Implementation Indicators Estimated Actual
in SAR
A\. Strengthlen Macroeconomic
Mgt\.
1\. Investment Planning & - Recruit macroeconomist for planning in Not achieved
Programming new macroeconomic unit
- Recruit economist for project analysis Achieved
- Develop public investment and budgeting Not achieved
mechanism and train staff
- Install project monitoring system Not achieved
- Develop methodologies for project Not achieved
evaluation and analysis
2\. Financial Management - Carry out diagnostic study and install in Not achieved
MFPCI a comprehensive computerized
financial management and accounting system
3\. External Debt Management - Recruit debt advisor and develop and install Not achieved
debt monitoring system
- Train local staff Not achieved
4\. Strengthening of Ministries of - Provide training in maintenance, Training provided
Transport and of Public Works management and planning of Public Works & until TSP approved in
Transport Ministries FY90
5\. Institutional Strengthening of - Recruit geologist and train evaluators in Achieved
Diamond Sector Valuation Office
B\. Reform Civil Service
1\. Strengthening Institutional - Recruit civil service specialist, analyze Civil Achieved
Performance Service Code
- Analyze wage structure and define revised Not achieved
wage system
- Develop systematic approach to training Not achieved
2\. Strengthening Personnel - Set up new administrative and institutional Not achieved
Administration and Financial structures, procedures and data processing
Management systems in DGFP and sectoral ministries
C\. Reorganization of Public - Recruit PE advisor, Achieved
Enterprise Sector - Reform legal and institutional framework, Not achieved
- Prepare certified accounts for 7 PEs Not achieved
- Implement rehabilitation plans for 4 PEs Not achieved
D\. Promotion of Private Sector - Recruit advisor to MCI Achieved
Activity - Define institutional and regulatory Not achieved
framework
E\. Macroeconomic, Sector and - Carry out studies to improve PIP pipeline, Not achieved
Pre-in vestment Studies define sector strategies
14
Table 6: Key Indicators for Project Operation
Key Operating Indicators in Estimated Actual
SAR
A\. Strengthen Macroeconomic
Mgt\.
1\. Investment Planning & - Establishment of a macroeconomic unit to Not achieved
Programming monitor resource flows and expenditures,
development of forecasting and planning tools,
improvement of PIP pipeline and proposals
and train staff
2\. Financial Management - Establishment of integrated budget and Not achieved
financial control framework and formal
operating procedures\. Improvement in
interministerial coordination\.
- Reduction of wage bill, reduction of fiscal Achieved in 1994
deficit, restructure recurrent expenditures only
3\. External Debt Management - Improvement of accounting and debt Not achieved
monitoring procedures
4\. Strengthening of Ministries of - Improvement in sector planning and Dropped when TSP
Transport and of Public Works personnel management to monitor investments approved in FY90
in road and river transport
5\. Institutional Strengthening of - [mprovement in valuation system Achieved
Diamond Sector - Improved performance in collecting budget Not achieved
revenues from taxation of diamond exports
B\. Reform Civil Service
1\. Strengthening Institutional - Improvement in civil service efficiency and Not achieved
Performance reduction in wage bill
- Review of benefits policy and improvement Not achieved
in financial and personnel management
2\. Strengthening Personnel - Establishment of procedures, personnel Partially achieved
Administration and Financial database
Management - Establishment of system linking personnel Not achieved
and payroll management
- Development of in-service training policy Not achieved
C\. Reorganization of Public - Improved efficiency of parastatal sector and Not achieved
Enterprise Sector reduction of financial burden of PEs on
national economy
D\. Promotion of Private Sector - Strengthening of regulatory and institutional Dropped when
Activity framework, liberalization of incentive ERDP approved in
structure FY91
E\. Macroeconomic, Sector and - Improved PIP pipeline and sector strategies Not achieved
Pre-investment Studies
15
Table 7: Studies Included in Project
Study Purpose as defined at Status Impact of study
appraisal/redefined
Diagnostic of To install After 1990 audit of
budget and financial comprehensive Treasury, CAR did
control framework computerized financial not implement
management and recommendations
accounting system to set up manual
procedures
required before
computerization
Analysis of civil To define revised civil Finished in 1993 Civil service
service code and service statute and statute
wage structure wage system promulgated in
1993 but never
implemented
Definition of private To encourage and Dropped when
sector institutional facilitate investment ERDP was
and regulatory approved in FY91
framework
Analysis of PE To rehabilitate PE Bank consultant
sector legal and sector prepared strategy
institutional paper in 1993
framework
Preparation of To prepare for next Not done
certified accounts steps of rehabilitation,
for 7 PEs privatization or
liquidation
Computerization To evaluate human Done in 1993 Premature to set
Master Plan resource and up computerized
equipment needs in 4 systems; manual
key departments/ procedures not yet
ministries defined
Mining Sector To establish base line Done in 1995 Government did
Development Plan document on geology not distribute
potential of CAR to document to
attract investors potential investors
Cross-debts Study To analyze cross-debt Done in 1994, No action taken by
data, set calendar and updated in 1995 Government
recommend measures
to settle arrears
16
Table 8A: Project Costs
Appraisal estimate (US$M) Actuallatest estimate (US$M)
Local costs Foreign Total Local Foreign Total
costs costs costs
N\.A\. N\.A\. N\.A\.
Item 2\.8 6\.4 9\.2
Macro Management 0\.2 1\.0 1\.2
Civil Service Reform 0\.0 1\.2 1\.2
State Enterprise 0\.5 0\.9 1\.4
Reform
Economic & Sector 0\.0 2\.0 2\.0
Studies
Project Management 0\.2 0\.1 0\.3
Unit
Contingencies 0\.3 1\.0 1\.3
Total 4\.0 12\.6 16\.6 0\.2 11\.3 11\.5
N\.B\. Details of actual costs are available only by Credit category, not by components as listed in the SAR
Table 8B: Project Financing
Source Appraisal estimate (US$M) Actual/latest estimate
(US$M)
Local Foreign Total Local Foreign Total
costs costs costs costs
IDA 1\.6 11\.6 13\.2 - 11\.3 11\.3
Government 1\.4 0\.0 1\.4 0\.2 - 0\.2
UNDP 1\.0 1\.0 2\.0 -
TOTAL 4\.0 12\.6 16\.6 0\.2 11\.3 11\.5
Table 9: Economic Costs and Benefits
NOT APPLICABLE
17
Table 10: Status of Legal Covenants
Agreement Section Covenant Present Original Revised Description of Comments
Type Status Fulfillment Fulfillment Covenant
Date Date
Credit 3\.01(b) 4 NC Feb\., 1989 NC Quarterly, Borrower to Continuous Borrower liquidity crisis made
restore counterpart fund adherence difficult; IDA covered 100
to initial level, to cover percent of operating costs 1993-95 and 90
50 % of operating costs percent in 1996
Credit 3\.03 (a) 5 C Feb\., 1989 Dec\., 1991 Borrower to maintain Following credit suspension (1991), new
PMU and PMC with project director improved PMU manage-
__________ __________ well-qualified staff ment; PMC staff adequately qualified
Credit 3\.03(b) 9 CP Aug\., 1991 continuous Detailed draft work Done yearly, although execution of w6rk
programs and budgets programs was slow\. In 1995, Bank and
to be submitted for Government abandoned work programs to
Bank approval prepare a medium-term economic program
Credit 3\.03(c) 13 CP 1991 Assignment of qualified Teams were established in 1990-91, but
local staff to work as only worked well in civil service and
team with resident diamond sector components; sustainable
expert who will train results only likely in diamond sector\.
Credit 3\.03(d) 13 NC Maintain within SEP a Unit was never set up\. Since UNDP
unit to coordinate TA funding did not materialize, IDA agreed to
and develop strategy to finance national aid cooperation expert, but
reduce need for long- Government did not finalize terms of
term TA reference
Credit 3\.04 10 NC Sept\. 30, Examination of new New compensation and benefits scheme
1989 compensation and prepared but scenarios never validated and
benefits scheme, draft thus never implemented\. In-service training
Dec\. 31, in-service training policy and PE sector training program never
1989 policy and PE sector prepared\.
training program and
implement promptly
Credit 4\.01 1 C continuous Maintain adequate Computerized accounting system installed
records of project accts; to facilitate maintenance and audit of
annual audit by project accounts\. Yearly audits prepared,
independent auditors\. satisfactory to IDA\.
C = covenant complied with
CD = complied with after delay
CP= complied with partially
NC = not complied with
18
Table 11: Compliance with Operational Manual Statements
Statement number and title Describe and comment on lack of compliance
1\. N/A
2\. N/A
3\. N/A
Table 12: Bank Resources: Staff Inputs
Stage of Planned Revised Actual
Project Cycle Weeks USS Weeks US$ Weeks US$ '000
Preparation to N\.A\. N\.A\. N\.A\. N\.A\. 25\.8 53\.0
Preappraisal
Appraisal 35\.8 86\.0
Negotiations through 9\.9 24\.5
Board
Supervision 319\.3 918\.3
Completion _ 8\.0 19\.8
TOTAL N\.A\. N\.A\. N\.A\. N\.A\. 398\.8 1,101\.6
19
Table 13: Bank Resources: Staff Missions
Stage of Month/ No\. of Days in Specialized Performance Rating Types of
Project Cycle Year Persons Field Staff Skills Implementation Dev\. Objectives Problems
Through Appraisal N\.A
Appraisal through Board 7/88 4 14 PSM,TA, Mines
Supervision 5/89 l 13 TA I I Before
effectiveness
11/89 3 14 TA,PSM,PE I I CP funds
7/90 1 7 TA 2 2 Proj\. mgt\., studies
2/91 3 23 TA,PSM,PE 2 2 Proj\. mgt\., CP
funds, studies
11/91 4 18 CO,PSM,PE,EC 3 3 Proj\. mgt\., legal
covenants, CP
funds, studies,
procurement, trg\.
7/92 __19_CO 2 2 Studies
3/93 4 14 CO,TA,PE, Mines 3 3 Studies, TA
6/93 I 10 CO 3 3 CP funds, studies,
TA
12/93 2 20 CO,EC 3 3 CP funds, studies,
TA
5/94 2 24 CO,PSM 2 2
12/94 1 16 CO S S
7/95 l 14 CO U U No progress in
12/95 1 9 CO U U carrying out
7/96 I 5 CO U U reform agenda
Completion none
Specialized Staff: Mines = mining/diamond specialist Performance ratings: I = No problems
TA = technical assistance officer 2 = Moderate problems
PSM = public sector management specialist 3 = Major problems; solution in view
EC = economist 4 = Major problems; no solution in view
PE = public enterprise specialist S = Satisfactory
CO = country officer U = Unsatisfactory
20
APPENDIX A: Borrower Assessment of Economic Management Implementation
(Summary)
IMPLEMENTATION OF THE EMP PROJECT
Context
1\. The Economic Management Project (EMP) experienced a succession of difficulties
throughout the entire period of its implementation\.
2\. Over the period 1990-1993, as the country embarked on a difficult process of
democratization, the Government found itself in a state of virtual paralysis, economic
activity fell off substantially, and the public finances collapsed\. This situation resulted in
the accumulation of large volumes of arrears in payments to both domestic and external
creditors\.
3\. In 1994, in agreement with governments in the CFA franc zone, the Central African
Republic proceeded to devalue its currency by 50 percent, and gave a commitment to take
certain measures to overcome the serious economic and financial difficulties inherited from
the past\. It reopened its dialogue with the IMF and the World Bank, and adopted an
adjustment program supported by a standby arrangement approved by the IMF during
consultations in March 1994\.
4\. This program focused principally on the public finances, and was designed to
eliminate the primary deficit through rehabilitation of the tax administration and expansion
of the tax base, in addition to measures designed to keep the wage bill at its 1993 level\.
5\. UJnfortunately, a number of slippages occurred during implementation of this
program, preventing the Government from bringing it to completion\.
6\. It was during this time that the EMP was suspended for the second time for failure
to make its repayments to the World Bank Group\.
7\. In 1995, the Government unsuccessfully attempted to reopen negotiations with the
IMF and the World Bank, and the country had no assistance from the international
community\.
8\. In 1996, the country experienced a period of crisis, marked by a series of revolts in
April, May, and November, which jeopardized continuation of the EMP and resulted in the
closure of IDA Credit 1971-CA\.
9\. Thus the outcomes of this project should be seen as reflecting the political and
economic context within which it was implemented\.
21
FINANCIAL IMPLEMENTATION OF THE EMP
10\. The sociopolitical context within which this project was executed had very
unfavorable repercussions on its financial implementation, and to a large extent explains the
results obtained\.
11\. As of completion of the EMP, a total expenditure of FCFA 4,227,572,078 had been
incurred, representing a consumption rate of 76\.98 percent\. This leaves an available
balance of FCFA 1,264,127,902, which it is proposed to cancel\.
EX-POST EVALUATION OF THE PROJECT
Medium- and long-term objectives
12\. The results obtained by the Government in terms of achievement of the project's
medium- and long-term objectives are inadequate, except where the Ministry of Mining and
the Ministry of Civil Service are concemed\.
13\. The EMP program has had a major impact on the mining sector, and a less
significant but still substantial impact on civil service reform\. Its effects on the Ministry of
Finance and Planning are negligible, however\.
Government performance
14\. The weaknesses of the Government's performance took the form of poor
management resulting from bending of the World Bank's rules and procedures, as reported
by the February 1991 supervision mission, the difficulties of releasing the local counterpart
contribution, the incomplete or inaccurate identification of areas to be submitted for EMP
financing, shortfalls in the estimated budgets for the work programs relative to certain
components, partial or total disregard of the findings of the consultant's reports that were
intended to guide the Government's actions, delays in certification of services performed or
works carried out causing needless extensions of contract deadlines, and disruption of
certain of the project activities caused by civil servant mobility and transfers\.
World Bank performance
15\. Within the framework of this project the World Bank made every effort to enable
the Government to successfully complete the relevant programs through the activities of its
resident mission, which served as liaison between the EMP and Bank headquarters, through
its supervision missions, which provided the Bank with reports on progress made, helped to
solve difficulties encountered and steer the project activities, and offered recommendations
for the enhancement of project performance, and through the reorganization of the EMP's
administrative and accounting management by Fiduciare Audit Afrique (FAA) in 1992
following the February 1991 supervision mission\.
22
16\. On the other hand, while the World Bank was able to identify the needs submitted
for EMP financing, it was not able to cope with the consequences of the Government's
limited absorption capacity, the weakness of its administrative apparatus, and the low
productivity of its human resources\.
17\. Furthermore, the World Bank often takes a very long time to respond to notices of
procurement submitted to it for approval\.
RECOMMENDATIONS
Recommendationsto the Government
18\. With a view to ensuring better performance in the future, it is essential that the
Government make every possible effort to improve the country's absorption capacity, with a
view to withdrawing all of the funds placed at its disposal under a World Bank project, and
that it honor its own financial commitments, make provision for recurrent costs upon
project completion, and create an interministerial and muldisciplinary unit responsible for
systematically taking action on consultants' reports and studies, so that their findings can be
used to enable the Government to properly steer its activities or make choices, define
performance criteria, and assign to the project or project component managers the task of
producing reports and the obligation to ensure results\.
Recommendations to the World Bank
19\. It is clear that ignorance of procedures and of Bank rules was at the root of the
problems encountered during implementation of the EMP\. Consequently, it is
recommended that the Bank organize seminars for project managers in order that they may
become completely familiar with those procedures and rules and able to explain them to
others\.
CONCLUSIONS
20\. Despite the extension of IDA Credit 1971 -CA, the Government was unsuccessful in
implementing all of the programs linked to the reforms that were to result from the EMP\.
Most of the objectives set were not achieved\. The economic reforms did not contribute to
the establishment of a short-term forecasting tool that would allow the Government to
obtain an overview of the entire Central African economy\. Nor did they contribute to any
improvement where the public finances are concerned\.
21\. However, certain of the EMP components did successfully implement their
programs and obtained results enabling them to achieve their assigned objectives\. One of
these was the mining component, which succeeded in completing its program to improve
23
the capabilities of BECDOR and implement the mining plan, of which the
recommendations will guide the Government's actions in promoting the mining sector and
making it more attractive to both domestic and international investment\. The same applies
to the civil service component, which enabled the Govemment to complete its reform
program, even though this did not bring about any substantial improvement in public sector
productivity or a reduction in the wage bill, despite retrenchment of the civil service staffs\.
22\. The EMP is an essential project that should enable the Government to implement
reforms designed to strengthen the capacities of the institutions responsible for economic
management, improve public sector productivity, and create conditions conducive to
development of the private sector, an essential factor in ensuring that the overall demands of
economic and social development are adequately met\. Unfortunately, the events that have
shaken the country, as well as the poor productivity of the Central African Government,
have affected the project outcomes\. This situation is proof that a country's stability, and the
determination and expertise of its senior civil servants, are determining factors in ensuring a
project's success\.
24
IBRD 18095RI
, 000 L\.Ch 2'o- ~ CENTRAL AFRICAN REPUBLIC
N-S ,--G - REPUBLIQUE CENTRAFRICAINE
-'-_'u'~<\ C A % ¢ a - R - a X J0 TRANSPORTATION AND POPULATION DENSITY
X - A2 D tf sUDA 1 \. t 't % t --- TRANSPORT ET DENSITE DE POPULATION
N G E R I A DENSITY INHABITANTS PER SO KA\.
A ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~DENSITE\. HABITANT PAR KM\.'
AFRICAN REPUBLIC 5 ,/,@s , \f70+
) C A hE E R so N v < I F sJ \. t - < I \. ,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ \.339 ROUrfS Ptl~~~~~~LES TAN SI RANS ES
X ~ ~~~~~~~~~~~ iI VA3>v> A GA URA ZOEPPLAO 5\.30CD,D --OHRODsUE2
ZLI-~~~~~~~~~~~~~~~~~~~~~~~-
\.'\. CENTARIAL ( 4/ _ POPU2'L\.ATIOA A/JURSXA/NE4/ 3 1\.5ni r+srR0^ro~rsr
\.COAO'INE ~ BAMINGI BNGOR~AN V \.
f CONGOo A 4Al-
DELE~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ETR,rC A E*RUI,R---
0\.~~~~~~~~~~~~~dd\. ~ ~ ~ ~ ~ ~ ~ ~ ~ POvMeRFRCROE An/a/
\~~~~~~~~',' U\.ITU 055 o5 -7VWC > ~ ~ < U ddi -dl5afm ESPtEF
CAMEROON I Z DR A u rE*
A E ~ JHA
</f~~~~~~~~~~~~~~~~~~~ t/~ /226 Cl-23/YG/ 550 AI8OgX X\ X AE s2
r~~~~~~~~~~~~~~,AC sr MhA804fou k ANOO }J g / ) X fstAUT
am0T _0H 4
A~~~~~~~~~~~~~~~~~~~~~~~~~~ZJR
|~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~354 LA NOL I R E\
H 4~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~4
SOURCE BASED ON GENERAL POPULATION CENSUS OF 1975
SOURCE EASEES SUR LE RECENSEMENT GENERAL DE LA POPULATION DE 1975
CAMEROON /3A\. 50 1C0 /50 200 250 300
JI I~~~~~~~~~~~~~~~~~~~~ILC\.ETEAS \.easa,,otaN/IR,R50S0t/WDADJ8RO0~55l
0 QC i ) j / / J 5C I 0 0 250 2G0 r" L- s A A ol Ara-Snl r 500 "Ar C '01
|0 b\.01,05 AR YJ 20- 0/C- APRIL 105 ICONs/C CO C//C s/ARARCa\.SCT/I ~r~I AA I 988
IMAGING
Report No\.: 16799
Type: ICR | APPROVAL |
P110729 |  PROJECT INFORMATION DOCUMENT (PID)
CONCEPT STAGE
Report No\.: 70560
Project Name CENTRAL ASIA SOUTH ASIA REGIONAL ELECTRICITY AND
TRADE (CASA-1000) PROJECT
Region EUROPE & CENTRAL ASIA AND SOUTH ASIA
Sector Power (100%)
Project ID P110729
Borrower(s) Islamic Republic of Afghanistan; Kyrgyz Republic; Islamic Republic of
Pakistan; Republic of Tajikistan
Implementing Agencies Power Utilities of Afghanistan; Kyrgyz Republic; Pakistan and
Tajikistan
Environment Category [X ] A [] B [ ] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared June 19, 2012
Estimated Date of 07/18/2013
Appraisal Authorization
Estimated Date of Board 12/03/2013
Approval
1\. Key development issues and rationale for Bank involvement
The Central Asian Republics, with large energy resource potential relative to their domestic needs, have
been pursuing energy export-led growth strategies since their independence in 1991\. Kazakhstan, with its
significant oil and gas resources, has been the most successful followed by Turkmenistan and Uzbekistan
with their gas resources, while the hydro-rich Kyrgyz Republic and Tajikistan have not been able to
realize their potential\. This is in part due to: (a) significant financial resources and capital needed to
develop hydropower plants and associated transmission lines; (b) limited regional cooperation; (c) the
surplus power available predominantly in summer months; and (d) the lack of clarity, up until recently, on
the electricity export market\. On the other hand, countries of the neighboring region of South Asia,
mainly Afghanistan and Pakistan, are energy deficient and their demands for energy are increasing\. The
growing deficit between the energy demand and the available domestic supply could potentially be
covered, in part, by imports of electricity and gas from the Central Asia region\.
The Central Asia-South Asia Regional Electricity Market (CASAREM) is a concept for developing
electricity trade among the countries of the two regions through a set of projects and concomitant
investments, underpinned by the relevant institutional arrangements and legal agreements\. The
development of the first phase of CASAREM, which is to establish the necessary transmission and
trading infrastructure and systems to enable a trade of about 1,300 megawatts (MW) of summer surplus
electricity between the Kyrgyz Republic and Tajikistan in Central Asia and Afghanistan and Pakistan in
South Asia, is referred to as âCASA-1000\.â? It is envisaged that other countries may join the initiative as
the trade expands\.
The proposed Project has several benefits as it would:
ï Make efficient use of surplus hydropower that is currently being wasted during the summer
months;
ï Assist some of the poorest regions in the world including conflict and post-conflict countries
(Afghanistan and Tajikistan);
ï Enhance trade and regional cooperation in a region where it is sorely needed, underpinning
economic growth and creating opportunities for greater cooperation in other sectors such as
creating transport and/or telecommunication corridors; and
ï Encourage private sector participation in the operation of large multi-regional infrastructure
projects\.
An updated techno-economic feasibility study for CASA-1000 was prepared in February 2011\. The
feasibility report confirms the soundness of the considerations that led to the CASAREM initiative of
developing a regional market\. Those are:
ï Sufficient quantities of summer surplus electricity are available in the Central Asian countries
(Kyrgyz Republic and Tajikistan) even without any new power generation;
ï Significant demand for electricity exists in South Asia (largely in Pakistan); and
ï Difference in the cost of electricity between the importing and exporting countries potentially
provide a justifiable rationale to undertake investments in transmission networks in order to
support electricity trade\.
The primary criterion adopted for the study was that only the residual surplus electricity, after serving the
domestic demand in the Kyrgyz Republic and Tajikistan, would be available for export\. Projections of
domestic demand in the exporting countries were based on a wide range of factors including growth rates
in Gross Domestic Product (GDP), income elasticity, tariff increases, price elasticity, and technical loss
reductions, etc\. The base case uses a conservative assumption that no new generation capacity is added to
the Kyrgyz and Tajik systems over the life of the CASA-1000 Project\. The base case analysis assumes
that power flowing through the CASA-1000 transmission system would be supplied by existing power
plants only\.
However, the hydro-dominant systems in the exporting countries experience winter power deficits in the
months when river flow is reduced or stopped due to freezing temperatures\. Therefore, it is expected that
they will likely need to add some new generation capacity to meet existing winter deficits as well as
overall demand growth over the years\. Any additional power would then contribute to increased available
summer power for exports\. Though not required for the successful realization of the CASA-1000 Project,
such additional power also could contribute to its increased economic benefits\.
The study concludes that by 2016 the available annual surplus will be about 6 Terawatt-hours (TWh) in
the Kyrgyz and Tajik systems combined\. The available surplus has significant volatility in dry and wet
years and will be concentrated in the period from May to September\. The exportable surplus will be
constrained by the transmission capacity of the Alternate Current (AC) to Direct Current (DC) convertor
stations for the CASA-1000 Project, estimated at about 4 TWh in 2016 for a 1,300-megawatt (MW)
transmission line\.
Risks and Risk Mitigation\. In view of the multi-country nature of the Project and especially as the
proposed route of the transmission line crosses locations that are perceived to be high risk areas, the task
of risk mitigation and management is one of the most crucial to the successful realization of the Project\.
The initial screening identifies the following potential risks: power supply; market risks; counterparty
(especially payment) risks; timely completion of construction; operational risks such as technical outages
to the line; price and tariff risks; political risks; legal risks; fiscal/macroeconomic risks; regulatory risks;
environmental risks; and force majeure\. International experience on independent power projects and
cross-border energy corridors shows that measures to mitigate these risks can be and would be devised for
this Project\.
In addition, the Project faces the specific risks of war and civil unrest in some of the Project areas,
particularly in Afghanistan and northwestern Pakistan\. Project preparation would involve identifying and
quantifying the risk and developing robust, internationally acceptable risk mitigation mechanisms\. A
detailed analysis of the various risks as well as the development of an appropriate mitigation strategy
during construction phase and the operations phase is being carried out for the Project\. Solutions are
likely to include a combination of social measures (including consultation-based community benefit-
sharing schemes); technical/operational measures (including dedicated repair crews and security
personnel); and financial measures (including a special fund that may be established to compensate for
loss of revenue possibly bolstered by third-party guarantees)\.
2\. Proposed objective(s)
The objective of the Project is to promote clean hydroelectricity exports from Tajikistan and the Kyrgyz
Republic to Afghanistan and Pakistan\. The project outcome will be measured by the amount of electricity
(in Gigawatt-hours) exported via the transmission system to be constructed under the Project\.
3\. Preliminary description
The CASA-1000 Project would comprise of:
(a) around 750 km High Voltage Direct Current (DC) transmission system between Tajikistan and
Pakistan via Afghanistan;
(b) a DC to Alternate Current (AC) converter station in Kabul to supply Kabul area;
(c) an AC transmission link between the Kyrgyz Republic and Tajikistan to supply the Kyrgyz
electricity to South Asia via Tajikistan; and
(d) the concomitant institutional and legal framework to enable such electricity trade\.
4\. Safeguard policies that might apply
The World Bank policy on Environmental Assessment (OP4\.01) is triggered and the proposed Project is
designated as Category A for the purposes of OP4\.011\. Policies on Involuntary Resettlement (OP4\.12)
and on Physical Cultural Resources (OP4\.11) are also expected to be triggered in view of the land
acquisition needs of the Project as well as the rich cultural history of the areas through which the
transmission line will pass, although it is not envisaged that significant land acquisition will take place\.
An assessment will be made on the applicability of the policies on Natural Habitats (OP 4\.04) and Forests
(OP4\.36) during the preparation of the Project\.
5\. Tentative financing
Source: (US$ million)
To be determined Approximately 950
1
Electricity Transmission Projects are normally Category B projects for the purposes of OP4\.01\. However, since
Afghanistan may not have an environmental assessment policy of its own, it was decided to make this a Category A
project and undertake a full environmental assessment\.
6\. Contact point
Contact: Mr\. Sunil Kumar Khosla
Title: Senior Energy Specialist, Europe and Central Asia Region
Tel: (202) 473-4011
Email: skhosla1@worldbank\.org
or
Contact: Mr\. Abdulaziz Faghi
Title: Energy Specialist, South Asia Region
Tel: (202) 473-2236
Email: afaghi@worldbank\.org | APPROVAL |
P132751 |  PROJECT INFORMATION DOCUMENT (PID)
APPRAISAL STAGE
Report No\.: 89898
Project Name Cambodia SP Cash Transfer Pilot Project
Region East Asia & Pacific
Country Cambodia
Sector(s) Social Protection
Theme(s) Social Protection, Health, Nutrition
Lending Instrument RETF Small Grant
Project ID P132751
Parent Project ID
Borrower(s) Kingdom of Cambodia
Implementing Agency National Committee for Sub-National Democratic
Development Secretariat (NCDD-S)
Environmental Category { }A {X}B { }C { }FI
Date PID Prepared July 29, 2014
Estimated Date of Appraisal August 5, 2014
Completion
Estimated Date of Board N/A
Approval
Decision Project authorized to proceed to negotiations upon
agreement on any pending conditions and/or assessments\.
I\. Country Context
1\. Cambodia has witnessed rapid economic growth accompanied by an impressive reduction in
poverty in the past decade\. Poverty reduction accelerated in the last decade, dropping from
53 percent in 2004 to 20\.5 percent in 2011, equivalent to 3 million people, and from 59 to 24
percent in rural areas over the same period\.1 At the same time, there have been corresponding
improvements in some human development indicators in this period, as well\. Education-
related indicators, such as literacy rates and net primary enrollment rates, also improved\.
2\. However, for the case of health, progress has been limited\. According to the 2011 MDG
Progress Report, under 5 child stunting decreased by only three percentage points, from 43 to
40 percent, between 2005 and 2010; if this trend continues, it is unlikely that the target of 25
percent would be met by 2015\. Children 0-5 years old underweight have not shown any
progress (remaining stagnant at 28 percent), while the percentage of children wasted actually
increased from 8 to 11 percent during this period\.2 These trends put Cambodia off track to
achieve the children nutrition related targets of Cambodiaâs Millennium Development Goals
(CMDGs), compromising its present and future human development potential\. The long-term
consequences of child malnutrition are severeâleading to poorer cognitive developmentâ
1
World Bank (2013), "Where Have All the Poor Gone? Cambodia Poverty Assessment 2013"\.
2
RGC (2011) Achieving Cambodiaâs Millennium Development Goals, pp\. 7 -8\.
which affects both human capital formation and economic growth\. Similarly, over 45 percent
of women reported that they had received vitamin A and iron and folic acid supplements in
the six-week period following the delivery of their last-born child, which may reflect the fact
that only over 60 percent of women received comprehensive antenatal care or post-natal care\.
Persistent inequalities remain: 21 percent of women in the lowest wealth quintile did not
receive antenatal care compared with only 1\.5 percent of women in the highest quintile\.3
Only a third of women in the lowest quintile delivered their babies in health facilities,
compared to 88 percent of women in the highest quintile\. Inadequate contact with the health
system prevents poor women from acquiring information on breastfeeding, complementary
feeding practices, management of diarrhea, and hygiene practices, all of which are directly
related to nutrition\.
3\. The Royal Government of Cambodia (RGC) has introduced several measures aimed at
improving the coverage and quality of health and nutrition services through the public health
system\. The governmentâs Rectangular Strategy prioritizes the provision of free health care
for the poor, and the promotion of maternal and child health\. However, with the exception of
Health Equity Funds (HEF), supply-side interventions do not necessarily address barriers to
access faced by poor households\. As a result, utilization of these services among poor women
and children remains low\.
II\. Sectoral and Institutional Context
4\. International research shows that investing in maternal and child health and nutrition
programs helps prevent future productivity losses and makes investments in education at later
stages of the life cycle more efficient, by decreasing the probability of drop-out and
repetition\. Stagnant (and even declining) nutritional indicators among poor Cambodian
women and children suggest that more needs to be done to promote healthier nutrition-
related behaviors\.
5\. Cash transfers targeted to poor mothers and children can help address the demand-side
constraints faced by poor Cambodian women to access health and nutrition services\. This
tool has been proven successful in many countries (e\.g\., Brazil, Mexico, Colombia,
Philippines, and Indonesia) as one to encourage utilization of health services and to promote
good health and nutritional practices\.4 They provide the flexibility to be tied to conditions
that address specific demand-side issues (e\.g\. payments linked to compliance with prenatal
and postnatal care)\. In doing so, these programs not only help reduce current poverty but also
promote the accumulation of human capital\. The way payments are made, or conditions
attached to receiving payments, can be used to provide incentives to households to change
their behavioral practices\. This has been already demonstrated in the Cambodian context as
well: the Scholarship for the Poor program, which, by paying a scholarship conditional on
attending school, is a form of CCT, was found to have significantly increased enrollment\.5
3
World Bank (2013)\.
4
Various evaluations of these programs are available\. See for instance Fiszbein and Schady (2009), â Conditional
Cash Transfers: Reducing Present and Future Poverty,â? World Bank\.
5
Filmer and Schady (2008), âGetting Girls to School: Evidence from a Scholarship Program in Cambodia,â?
Economic Development and Cultural Change 56: 581-617\.
6\. In turn, increased utilization of health services can in some cases lead to improved nutrition,
often due to complementary provision of nutritional education and supplements\. For
example, in Nicaragua, it has been shown that height-for-age for 0-5 year-old CCT
beneficiary children increased by 17 percent; while in Mexico, the CCT has had an estimated
impact on child height of approximately 1 cm for children between 12 and 36 months of
age\.6 In fact, international research shows that investing in maternal and child health and
nutrition programs helps prevent future productivity losses and makes investments in
education at later stages of the life cycle more efficient, by decreasing the probability of
drop-out and repetition\.
7\. Social protection (SP) has emerged as a priority for the RGC with the endorsement of the
National Social Protection Strategy (NSPS) in December 2011\. The NSPS, which is fully
aligned with Cambodiaâs National Strategic Development Plan update 2009-2013 (NSDP),
provides a coherent framework for social protection provision in Cambodia that seeks to
reduce vulnerability and promote human capital development\. The NSPS recognizes the
importance of building human capital early in life through demand-side interventions
targeted to poor and vulnerable women and children, which can complement existing social
service provision\. In this context, cash transfers are identified by the RGC as one of the main
instruments for implementing the NSPS\.
III\. Project Development Objectives
8\. The project development objective (PDO) is to help increase the utilization of essential
health services by pregnant women and children (0 to 5 years of age) in targeted districts, and
enhance the readiness of delivery mechanisms of the social protection system\.
IV\. Project Description
9\. The Project comprises the following three components:
ï Component 1: Support to the National Social Protection Strategy ($100,000): This
component will be implemented by CARD\. The component's main activities include: 1)
updating the National Social Protection Strategy, 2) developing a unique registry of
beneficiaries of social programs, 3) undertaking research activities, among them
collaboration with the impact evaluation of the CCT Pilot (to be financed through a Bank
executed TF), and 4) coordinating actors at the national level, including outreach events
to disseminate information about the program and its impact evaluation\.
ï Component 2: Cash transfer and bonuses ($530,000): This component will be
implemented by the National Committee for Sub-National Democratic Development
Secretariat (NCDD-S)\. The componentâs main activities include: 1) basic cash transfers
to enrolled beneficiaries through a âthird partyâ? financial institution, 2) cash bonuses for
beneficiaries based on specific co-responsibilities relating to health service utilization and
attendance to learning workshops; 3) financial institution fees for cash transfers, and 4)
6
Fiszbein and Schady (2009)\.
provision of nutrition and sanitation workshops for enrolled beneficiaries\. A basic cash
transfer of $5 per month will be delivered regularly after enrolment to pregnant women or
families with children aged 0-5 years that are categorized as IDPoor 1 or 2\. Enrolment of
pregnant women will be subject to establishing contact with the health center for
antenatal care\. Enrolment of children will be subject to presenting a birth certificate or
vaccination card\.
ï Component 3: Strengthening of SP implementation systems ($220,000): Activities in
this component include: 1) strengthening NCDD-Sâ management information system
(MIS) to support implementation and monitoring and process evaluation; 2)
strengthening the capacity of commune councils and district level staff to interact with
service providers, respond to program needs including grievance redress, and monitor
program implementation; and 3) other project administration costs\.
V\. Financing
Financing Source Amount
BORROWER/RECIPIENT
IBRD
IDA: New
IDA: Recommitted
Others (AusAID financed RETF) $ 850,000
Financing Gap
Total $ 850,000
10\. The Project will be financed by a AusAID (DFAT) Trust Fund, with a Project closing date of
April 30, 2016\.
VI\. Implementation
11\. NCDD-S is designated as the implementing agency and will provide national level
management and leadership to support sub-national implementation\. The proposed
arrangements for the implementation of the CT pilot are designed to be consistent with
overall ongoing institutional development reforms in order to build a sustainable foundation
for Cambodiaâs future SP system\. NCDD-S will be responsible for facilitating overall
implementation of the programmatic components of the CT pilot and will carry fiduciary
responsibility for all components\. NCDD-S has agreed to use its existing systems, which
emphasize the role of decentralization, to coordinate with administrative districts, commune
councils, and health centers at the selected pilot locations\.
12\. CARD will provide overall coordination and oversight for the implementation of the CT
pilot, and will also be responsible for defining and implementing activities in Component 1,
in its role as policy coordinator\.
VII\. Safeguard Policies (including public consultation)
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment (OP/BP 4\.01) X
Natural Habitats (OP/BP 4\.04) X
Pest Management (OP 4\.09) X
Physical Cultural Resources (OP/BP 4\.11) X
Involuntary Resettlement (OP/BP 4\.12) X
Indigenous Peoples (OP/BP 4\.10) X
Forests (OP/BP 4\.36) X
Safety of Dams (OP/BP 4\.37) X
Projects in Disputed Areas (OP/BP 7\.60)* X
Projects on International Waterways (OP/BP 7\.50) X
VIII\. Contact point at World Bank and Borrower
World Bank
Contact: Pablo Ariel Acosta
Title: Senior Economist, GSPDR
Tel: 202 473 1206
Email: pacosta@worldbank\.org
Borrower/Client/Recipient
Contact: H\.E\. Aun Pornmoniroth
Title: Minister of Economy and Finance (MEF)
Tel: 855 023 724 664
Email: admin@mef\.gov\.kh
Implementing Agencies
Contact: H\.E\. Ngan Chamroeun
Title: Deputy Director of the NCDD Secretariat
Tel: 855 012 489993
Email: ngan\.chamroeun@ncdd\.gov\.kh
IX\. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-4500
*
By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the
disputed areas
Fax: (202) 522-1500
Web: http://www\.worldbank\.org/infoshop | APPROVAL |
P031828 | Report No\. PIC1271
Project Name Haiti-Emergency Economic Recovery Credit
Region Latin America and the Caribbean
Sector Non-Sectoral
Project ID HTPA31828
Borrower Government of Haiti
Implementing Agency Phillipe Rouzier
Chef de Cabinet
Bureau de Premier Ministre
Port-au-Prince, Haiti
Tel: 011509-2-557
Fax: 011509-2-32121
Date PID Prepared November 18, 1994
Projected Appraisal Date September 1993
Post-Appraisal Date November 1994
Projected Board Date January 1995
1\. Background\. In the aftermath of a coup d'etat in September 1991,
in which elected President Jean Bertrand Aristide was forced from
office, Haiti has experienced a dramatic deterioration in economic and
social conditions\. Three years of military dictatorship have led to
increased economic mismanagement and an international embargo, resulting
in a dramatic decline in living standards, particularly for the most
vulnerable sectors of society\. During this period, Haiti did not
service its external debt and IDA suspended its operations\. In July
1993, the Governor's Island Agreement was signed to pave the way to a
political resolution of Haiti's constitutional crisis\. The breakdown of
this agreement in October 1993 led to a renewed period of
unconstitutional rule in Haiti\. On September 18, 1994, following United
Nations Resolution 940, a negotiated solution was reached which finally
allowed President Aristide to return to Haiti on October 16, 1994\. It
is expected that Haiti's arrears to the multilateral agencies will be
cleared soon, creating the conditions to effectively address the
emergency\.
2\. Today, Haiti is in a state of economic and social emergency\. Over
the last three years, the country's economic performance and social
indicators have worsened dramatically, accentuating the downward trend
of the 1980s\. Haiti is characterized by pervasive poverty, alarming
social indicators, debilitated institutions, strong macroeconomic
imbalances, a severely dilapidated infrastructure and depleted
productive assets\. Already during 1980-91, the population had suffered
a continuing decline in its standard of living, with real GNP per capita
falling by about 2 percent per year\. Between 1992-93, Haiti's real per
capita income declined at a multiple of this rate, and is currently
estimated to have fallen well below US$0 -- making Haiti by far the
poorest country in the western hemisphere\.
3\. Project Objective, Description and Financing\. The objective of the
Emergency Economic Recovery Credit (EERC) is to provide urgently needed
balance of payments support to reactivate Haiti's economy and initiate
the economic recovery process in the context of the implementation of
the Government's Emergency Economic Recovery Program (the Program)\. The
Program was identified in June 1993 and was re-appraised in November
1994 by the International Development Association, the Inter-American
Development Bank, International Monetary Fund, the specialized agencies
of the United Nations, and USAID\. The proposed US$40 million EERC is
designed as a quick-disbursing emergency operation which would finance
the CIF value of imports based on a positive list identified as
necessary to the Program\. The imports would support emergency
activities in all sectors covered by the Program, as described in detail
in the October 1993 Joint Mission Report on an Emergency Economic
Recovery Program and a November 1994 Updated Report\.
4\. Project Implementation\. The EERC would be implemented under the
auspices of an emergency implementation unit (EIU) linked to the Prime
Minister's office\. The EIU would consist of a Central Coordination Unit
(CCU), and include specialized staff for agriculture, economic and
social infrastructure, and power\. The Prime Minister, supported by a
Steering Committee, comprised of several Cabinet members, would provide
general oversight of the EERC\. The Steering Committee, the CCU, and
donors will meet periodically to review progress\. A mid-term review of
the Project will be carried out in June 1995\.
5\. Project Sustainability\. The EERC is an emergency operation to
foster the conditions which would lead to a sustainable economic
recovery in Haiti and lay the foundation for addressing the country's
medium-term development objectives\.
6\. Lessons Learned from Other Emergency Operations\. The current
crisis in Haiti is comparable to other emergency situations involving
war or civil disturbances for which the World Bank Group has provided
support through emergency recovery operations\. The lessons learned from
these operations suggest the need for: (i) simple project design; (ii)
strong government commitment; (iii) frequent communication between the
Borrower and the World Bank Group; (iv) simplified procurement and
disbursement procedures; and (v) maximum use of existing functioning
institutions\. Although emergency recovery operations should be designed
with some view to long-term development objectives, reconstruction
itself should not be seen as a mechanism to achieve those objectives\.
Countries suffering from disasters have limited institutional and
absorptive capacity, and the focus needs to be on the most immediate
needs\. These lessons are incorporated in the design of the proposed
operation, complemented by restructuring of the existing portfolio to
address basic emergency needs in infrastructure rehabilitation, health,
education, and employment creation\. Medium-term development issues
would be addressed in follow-up operations, once the critical emergency
needs are met\.
7\. Environmental Aspects\. As a quick-disbursing operation, the EERC
has an environmental rating of C and requires no special environmental
assessment\. Provision has been made for environmental services to be
funded by UNDP for the implementation of the Program\.
- 2 -
8\. Program Objective Category\. The EERC is an emergency operation as
defined in Operational Directive 8\.50\.
Contact Point: Public Information Center
The World Bank
1818 H Street N\.W\.
Washington D\.C\. 20433
Telephone No\.: (202)458-5454
Fax No\.: (202)522-1500
Note: This is information on an evolving project\. Certain components
may not necessarily be included in the final project\.
- 3 - | APPROVAL |
P000358 | Document de
La Banque Mondiale
A N'UTILISER QV'A DES FI~S OFFICIELLES
\. Rapport No\. 3455-CH
RAPPORT D'EVALUATION
CAMEROUN
PROJET DE DEVELOPPEMENT URBAIN
16 fevrier 1983
De?artement Des Projets De L'Afrique De Lt~~est
TRADUCTION NONOFFIGELLE A TITRE D'INFORMATiON
Le present document fait I'objet d'une diffusion restreinte, et n~ petit etre utilis~ par ses
destinataires que dans I'exercice de leurs fooctions officieHes\. Sa teneur ne peut etre
aut:ement divulguee sans fsutodsation de is B~nque Mondialc\.
TAUX DE CHANGE
L'unite monetaire nationale est Ie franc CfA (fCfA)
1 million de francs CfA = 3700 dollars EU
1 dollar EU = 270 francs crA
POIDS ET MESURES SYSTEME METRIQUE
ABREVIATIONS ET SIGLES
ARAN Agence de restructuration et d'amenagement de Nylon
BCD Banque camerounaise de developpement
BIRD Banque internationale pour la reconstruction et Ie developpement
CAPME Centre d'assistance aux petites at rncyennes entreprises
CfC Credit foncier du Cameroun
CPN Caisse populaire de Nylon
DDIf - Departement du developpement industriel at des financements
DUH Direction de l'urbanisme at de l'habitat
fEICON - Fonds special d'equipement et d'intervention intercommunal
MAETUR - Mission d'amenaycment at d'equipement des terrains urbains et ruraux
MINED Minist~re de l'~ducation nationale
tHNUH - Minist~re de l'urbanis@6 et de l'habitat
tUNAS ~iinistere des affaires sociales
MINE? Ministere de l'economie et du Plan
MINfIN Ministere des finances
MINSAN Ministere de la sante
MINJ&S Ministere de la jeunesse et des sports
ONCPB Office national de commercialisation des produits de base
PME Petites et moyennes entreprises
PMI Protection maternelle et infantile
SIC - Societe immobiliere du Cameroun
SNEC Societe nationale des eaux du Ca~eraun
SONEL - Societe nationale d'electricite
UCpy Union des ceieses populaires de Yaounde
UNC Union nationale camerounaise
USAID United States Agency for International Developement
Itt\. N'UTlLISEll QU'Itt\. DES FINS OFFlCIELLES
CAMEROUN
PRO JET DE DEVELOPPEMENT URBAIN
RAPPORT D'EVALUATION
Table des matieres
Pages
I\. Contexte sectoriel
A\. La geographie urbaine 1
B\. Douala et yaounde :;
c\. Institutions, politiques et programmes 7
II\. Description du projet 12
A\. Objectifs\. 12
B\. Principaux elements\. 13
c\. Description detaillee et normes de conception\. 13
III\. Estimations du cout et modalites de financement 19
A\. Estimations de cout\. 19
B\. Plan de financement\. 19
C\. Flux financiers et conditions de retrocession\. 22
D\. Passation des marches\. 25
E\. Preparation et execution du projet\. 26
F\. Decaissements\. 26
IV\. Execution et gestion du projet 30
A\. Or§anes d'execution 30
B\. Execution du projet 35
C\. Verification des comptes, suivi et supervision 38
V\. Analyse financiere 39
A\. Introduction 39
B\. Ventilation des couts 39
C\. Recouvrement des couts 41
D\. Accessibilite 43
E\. Possibilite de repetition 43
Le present rapport a ete etabli sur la base des conclusions et
recommandations d'une mission d'evaluation composee de B\. Veuthey (chef de
mission), H\. Boldrick et S\. Snell (BIRD) aides par D\. Ossen et D\. Alatzas
(consultants) qui s'est rendue au Cameroun en novembre-decembre 1980\.
Le present document fait l'objet d'une diffusion restreinte\. Il ne peut etre
utilise par ses destinataires que dans l'exercice de leurs fonctions
officielles et sa teneur ne peut etre divulguee sans l'autorisation de la
Banque Mondiale\.
Table des matieres (suite)
Pages
VI\.
\. \.
Analyse economl\.que 46
A\. Justification et avantages du projet 46
B\. Calculs des taux de rentabilite 47
C\. Repartition des avantages et incidence sur la
pauvrete \. 48
\.
D\. Risques 48
VII\. Recommanda ti ans 49
PHOTOGRAP HIES i
TABLEAUX
1\. Croissance de la population dans les zones urbaines,
1967-2000 \. 2
2\. Resume des couts du projet 20
Plan de financement du projet 21
Sources de financement des principaux elements
du projet 21
Sources de financement, intermediaires et conditions
de retrocession 24
6\. Calendrier estimatif des decaisssments 29
7\. Repartition des couts 40
8\. Prix des parcelles, taux d'interet et accessibilite 44
GRAPHIQUES
Graphique Flux financiers 23
{ Graphique Calendrier d'execution 28
ANNEXES
Annexe Tables detaillees 50-54
Annexe 2 Documents a disposition dans les dossiers
du projet\.
55
CARTES
Nylon, situation sanitaire preoccupante due au debordement d'egouts a ciel ouvert\. \.
11
\.
'\.
iii
"
\.
CAMEROUN
PROJET D'URBANISME
RAPPORT D'EVALUATION
I\. CONTEXTE SECTORIEL
A\. La geographie urbaine
1\.01 Avec 2,6 millions de citadins sur une population totale de 8,4 mil
lions en 1980, soit 31 %, Ie Cameroun vient au quatrieme rang des pays d'Afrique
de l'Ouest pour sa population urbaine et occupe, apres Ie Congo-Brazzaville, Ie
Ghana et la Cote d'Ivoire, la quatrieme place parmi les pays les plus urbanises
de la region\. Le secteur urbain s'est caracterise par une croissance rapide et
une structure polycentrique\. Le taux annuel de croissance de la population ur
baine est passe d'un maximum d'environ 10 % dans les annees 60 a environ 7 % en
moyenne dans les annees 70; on prevoit qu'il continuera de diminuer pour se
maintenir aux alentours de 6 % dans les annees 90 et tombera a 5 % en l'an 2000\.
Ceci signifie que la moitie des Camerounais seront des citadins d'ici a 1990,
que 65 % Ie seront d'ici a l'an 2000 et que les villes absorberont 80 % de
l'augmentation totale nette de la population entre 1980 et l'an 2000 (environ
6,3 milions sur un total de 7,6 millions) (voir Ie Tableau 1)\.
1\.02 Contrairement a plusieurs aut res pays d'Afrique de l'Ouest comme la
Cote d'Ivoire, au une seule grande ville domine, on peut diviser en gros Ie
Cameroun en trois spheres d'influence economique correspondant approximative
ment aux trois principaux groupes ethniques\. Douala, avec une population qui
atteignait 600 000 habitants en 1980, est Ie premier port, Ie premier centre
industriel et la plus grande ville du pays\. C'est aussi Ie centre economique
des provinces de la region ouest, Ie coeur commercial et agricole du pays, et
Ie lieu au la densite de population est la plus forte (voir Cartes 15562,
15625)\. La deuxieme grande ville, Yaounde (420 000 habitants en 1980), qui
est Ie centre economique des regions du Centre-Sud et de l'Est, est egalement
la capitale du pays\. Les vi lIes de moindre importance, Garoua et Maroua (avec
respectivement 90 000 et 85 000 habitants en 1980), situees a 500 km au nord
du pays, servent de centres aux savanes peu peuplees du nord qui constituent
la troisieme sphere d'influence economique\. A cote de cette structure poly
centrique, Ie secteur urbain du Cameroun est egalement remarquable par l'impor
tance de ses centres secondaires, dont Ie role dans l'absorption de l'immi
gration urbaine est aussi important que celui des deux villes principales
reunies\.
1\.03 L'agriculture camerounaise produit 30 % du PIB, 70 % des recettes
d'exportation et emploie les trois quarts de la population active\. Bien qu'il
n'y ait pas d'estimation proprement dite du pourcentage du PIB produit dans
- 2
Tableau 1 CROISSANCE DE LA POPULATION DANS LES ZONES URBAINES,
1967-2000
Po~ulation Taux de croissance annuelle
(en milliers)
1967 1976 1980 2000 67-76 76-80 80-2000
(Recen- (Recen- (Est\. ) (Est\.)
sement) sement)
Douala 230 460 600 1 900 8 % 7 % 6 %
Yaounde 150 310 420 1 500 8,4 '0 Of
7,6 % 6,5 %
Centres urbai?s
secondaireS!-i! 150 430 630 2 600 12 ra 10 % 7,5 Of
,0
Autres ce?tres
urbainSL\.!! 520 900 1 000 3 000 6 % 5 % 5 %
Population
urbaine 1 050 2 100 2 650 9 000 8 % 7 Of
'0 6 roI\.£
(en pourcen
tage du total) (17 %) (27 %) (31 %) (56 %)
Population
rurale 5 100 5 560 5 780 7 000 1 % 1 % 1 %
Ensemble du
Cameroun 6 150 7 660 8 430 16 000 2,4 % 2,4 % 3,2 %
la Centres urbains de 30 000 a 300 000 habitants\. Chiffres arrondis d'apres les
estimations\.
Ib Centres urbains de 2 a 30 000 habitants\.
Ic Selon les evaluations qualitatives actuelles quant aux lieux de la croissance
urbaine future\.
les zones urbaines, la main-d'oeuvre urbaine en represente probablement plus de
45 % (ou de 50 % si l'on inclut Ie petrole), etant donne que la productivite de
la main-d'oeuvre industrielle des villes est plus elevee que celIe de la main
d'oeuvre agricole\. L'industrie et la fonction publique representent a elles
seules 17 % du PIB et une partie non negligeable du commerce (16 %), des trans
ports, des communications et aut res services est egalement situee dans les
villes, comme l'est Ie nouveau secteur petrolier qui se developpe rapidement,
avec des puits offshore dans la region de Douala, et une nouvelle et impor
tante raffinerie dans la ville proche de Victoria\. Dans une structure econo
mique en plein developpement, qui se caracterise par une expansion de l'in
dustrie manufacturiere et transformatrice tournee vers l'exportation et Ie
remplacement des importations par des produits de l'industrie locale, les
villes du Cameroun ont un r6le important a jouer\.
- 3
1\.04 Un approvisionnement en eau, un drainage et une evacuation des eaux
usees adequats, un cadastre et un regime fancier satisfaisants ainsi que l'ame
nagement des terrains periurbains necessaire pour repondre 8 cette nouvelle
croissance sont les grands problemes communs 8 toutes les zones urbaines\.
Quarante-cinq pour cent des citadins nlont pas acces 8 l'eau sous canalisations
et m@me cette eau, 18 au elle existe, est rarement salubre, surtout dans les
quartiers pauvres\. Plus de 90 ra des citadins ne detiennent pas d'acte officiel
leur conferant la propriete du terrain qu'ils occupent et ils doivent payer des
droits d'occupation au proprietaire coutumier\. La densification des zones re
sidentielles traditionnelles tres insuffisamment viabilisees et datant d'avant
l'independance a atteint Ie niveau de saturation\. Des terrains situes 8 la
peripherie des villes et depourvus d'equipements collectifs sont Ie the~tre
d'une urbanisation sauvage\. L'extension progressive des infrastructures est
mal coordonnee, mal planifiee et prise de vitesse par la construction spontanee
de logements\. Clest 8 Yaounde et 8 Douala que ces problemes sont les plus vi
sibles et qu'il est Ie plus facile d'y remedier\. Clest aussi dans ces deux
villes que se trouve Ie siege des principales institutions de l'Etat qui s'oc
cupent de ces secteurs\.
B\. Douala et Yaounde
1\.05 Environ 38 ra des citadins, soit 12 ra de la population camerounaise,
resident actuellement 8 Douala ou 8 Yaounde\. 5i lIon part de l'hypothese d'un
taux de croissance annuel de 6 % 8 Douala et 6,5 % 8 Yaounde, ces deux villes
franchiront la barre du million d'habitants en 1990 et 1995, respectivement\.
Douala, qui est situee 8 1 'embouchure du Wouri sur Ie golfe de Guinee, est Ie
centre industriel, commercial et financier du pays\. Depuis l'arrivee des Por
tugais au XVle siecle, elle a toujours ete un grand centre commercial et son
port re~oit aujourd'hui pratiquement la totalite du trafic d'importation et
d'exportation ainsi que les marchandises 8 destination au en provenance des
deux pays enclaves que sont le Tchad et la Republique centrafricaine\. Yaounde
est Ie centre administratif du pays depuis 1915\. 5ituee en bordure de la for~t
cOtiere, 8 la lisiere de la savane du nord, elle a d'abord ete un petit lieu
d'etape fonde par les Allemands 8 la fin des annees 1880 et elle est devenue
ensuite la plaque tournante du pays\.
1\.06 Les perimetres de ces deux villes, qui ne renfermaient 8l ' origine
que les centres administratifs et commerciaux, se sont progressivement etendus
vers l'exterieur, pour englober les nombreuses zones d'habitat des groupes so
ciaux 8 faible revenu, qui s'etaient formees spontanement de chaque cOte des
routes principales (voir Cartes 15292R et 15293R)\. La population de Douala
represente une fois et demie celIe de Yaounde mais la surface construite
(4 800 ha) est 8 peu pres la m@me pour les deux villes, la densite etant
plus elevee 8 Douala\. Le terrain plat du bassin fluvial de Douala se pr~te
davantage 8 la construction que les collines de Yaounde\. Les travaux visant
- 4
a actualiser Ie plan d'urbanisme de Yaounde avec l'assistance technique de la
France sont en cours depuis 1960, mais aucun projet n'est pr~t et aucun travail
n'a commence pour actualiser celui de Douala\. Des plans ont ete recemment ela
bores pour l'amenagement d'une grande zone appelee Douala nord et celui d'un
terrain plus petit a Yaounde sud\. II faut donc pour cela pouvoir disposer de
plans d'occupation des sols qui soient complets et a jour, ce qui oblige a
choisir une fois pour toutes entre plusieurs types de croissance\.
Emploi et pauvrete
1\.07 L'industrie et Ie commerce emploient chacun un quart de la population
active de Douala alors que c'est l'administration et Ie secteur tertiaire qui
dominent a Yaounde (48 %)\. Les salaries representent environ les trois quarts
de la population active a Yaounde et les deux tiers a Douala, Ie reste etant
compose surtout de travailleurs independants et d'artisans\. Des etudes appro
fondies du secteur parallele ont revele qu'il remplissait plusieurs fonctions
importantes : voie d'acces a un emploi pour les nouveaux venus sur Ie marche du
travail, il est aussi une source de revenu qui vient s'ajouter au salaire mini
mum et il fournit une large gamme de biens et de services aux groupes sociaux
a faible revenu\. Sa productivite s'est trouvee limitee par l'impossibilite
d'avoir acces au credit pour Ie materiel et Ie capital, Ie manque d'informa
tions sur Ie marche, et l'absence de cadres qualifies\. La demande pour ses
produits et ses services, qui sont exposes a la concurrence de produits manu
factures et de services importes de meilleure qualite, pourrait augmenter s'il
ameliorait ses techniques de production, et plus particulierement au stade
de la finition et s'il ameliorait son mecanisme de distribution et de
commercialisation\.
1\.08 Avec un revenu de 36 300 francs CFA par foyer et par mois, soit
290 dollars par personne et par an, 25 % des foyers de Douala, soit
150 000 habitants sur 600 000, vi vent au-dessous du se~il de pauvrete abso
lue\. Le seuil de pauvrete est plus eleve a Yaounde parce que les foyers y
sont un peu plus importants et que Ie coOt de la vie y est d'environ 10 %
superieur a celui de Douala\. Un quart de la population de Yaounde, soit
105 000 personnes sur 420 000, vivent au-dessous du seuil de pauvrete qui, a
Douala, est d'environ 40 000 francs CFA par foyer et par mois, soit 320 dol
lars par personne et par an\. La moyenne des revenus cache les differences
existant entre les quartiers, en particulier a Douala : Ie pourcentage des
foyers qui vivent au-dessous du seuil de pauvrete est de 55 % a Nylon, zone
d'habitat spontane de Douala, at de 33 % a Yaounde, dans les quartiers tradi
tionnellement habites par les groupes a faible revenu\. Le PNB par habitant
au Cameroun est de 668 dollars (1979)\. D'apres des etudes recentes, la re
partition des revenus a Yaounde, Douala et Nylon est la suivante :
- 5
Re~artition des revenus - Yaounde et Douala
(francs CFA 2 1981)
Pourcentage Revenu inferieur a
des foyers Yaounde Douala Nylon
10 26 200 23 100 12 300
25 38 900 36 300 20 800
50 61 700 57 000 34 700
75 97 600 94 000 53 200
Infrastructure et services urbains
1\.09 A Douala comme a Yaounde, les deux tiers de la population vivent dans
les quartiers surpeuples, nes des avant 1960 Ie long des arteres principales
qui menent au centre de la ville\. New-Bell a Douala et la Briquetterie a
Yaounde sont des exemples de ces quartiers traditionnels aux prises avec les
mAmes problemes : l'evacuation des eaux usees, la distribution d'eau et l'en
levement des ordures sont defectueux et les occupants des sols ne possedent
pas de titres de propriete forme Is et permanents\. Le reseau de collecte des
eaux est loin d'Atre adapte au debit\. A Douala, une grande partie de la ville
qui ne se trouve quIa un metre environ de la nappe phreatique est inondee pen
dant la saison des pluies; a Yaounde, la stagnation des eaux provoque l'erosion
du lit des cours d'eau et des routes, et l'inondation des basses terres\. Les
deux tiers environ des habitants disposent de colonnes d'alimentation et de
quelques canalisations privees, mais les fuites et Ie debordement des la
trines et des fosses septiques ont pollue la nappe phreatique, ce qui affecte
en particulier Ie dernier tiers des habitants qui puisent leur eau dans les
puits et cours d'eau\. Le nombre insuffisant de depots d'ordures a entratne une
accumulation constante des dechets dans les cours d'eau, dans les egouts et
entre les maisons\. II est indispensable, pour resoudre ce probleme, de mettre
sur pied des plans de distribution et d'evacuation des eaux, de proceder a des
investiasements importants pour pallier lea insuffisances des infrastructures,
ameliorer la desserte routiere et developper les services municipaux d'enleve
ment des ordures\.
1\.10 Les installations de premiers soins et d'education primaire dans les
deux vi lIes sont dans l'ensemble bien reparties et accessibles, sauf a la peri
pherie\. La frequentation scolaire au niveau prima ire est d'environ 90 % c~ntre
une moyenne nationale qui est de 60 %\. Mais ces services ne sont fournis
qU'incompletement par Ie secteur public et l'education privee et les frais me
dicaux peuvent rep resenter une charge financiere tres lourde pour les groupes
a faible revenu\. II faut donc augmenter dans les quartiers excentriques la
participation du secteur public dans ces domaines et multiplier progressivement
les services mis a la disposition des populations pauvres\.
- 6 -
Le logement
1\.11 Au Cameroun, la plupart des maisons d'habitation sont construites par
des tres petits entrepreneurs ou par les proprietaires eux-m~mes avec l'aide de
t~cherons\. L'industrie locale du b~timent est bien developpee et les entre
prises privees ant reussi a repondre a la demande\. Aucune contrainte majeure
ne pese sur la fourniture de materiaux produits localement et n'a de reper
cussions sur leur coat\. Une construction provisoire faite de clayonnages re
v~tus de boue d'argile (poto-poto) a Yaounde, ou en dechets de bois a Douala
et generalement recouverts d'un toit de tOle, coate environ 25 dollars Ie
metre carre a construire, lorsque Ie proprietaire fait une partie du travail,
ou 30 dollars dans Ie cas contraire (prix de 1981)\. Une construction semi
permanente et en poto-poto crepi ou en planches coate deux a trois fois plus
et une construction permanente en parpaings cinq a six fois plus (environ
140 dollars au metre carre)\. Un jeune menage economise jusqu'au tiers de son
revenu pour se construire une maison et nombreux sont les citadins qui sont
proprietaires de leur logement\. Mais les constructions sont de qualite me
diocre et les deux tiers environ du parc immobilier des quartiers tradition
nels sont faits de constructions provisoires\. La faiblesse des revenus n'en
est pas seule en cause : la precarite du regime foncier fait que les citadins
hesitent a investir dans de la construction permanente\.
Le regime foncier
1\.12 Entre 40 et 60 % des menages sont proprietaires de leur logement,
mais environ 10 % seulement detiennent des titres de propriete officiels du
terrain qu'ils occupent\. II s'agit pour la plupart des familIes les plus ai
sees\. Dans les quartiers traditionnels, la moitie du terrain appartient offi
ciellement au domaine public, certaines parties etant reservees a la municipa
lite, au Ministere de l'education, de la sante, ou a d'autres services sociaux,
1 'autre moitie appartenant a quelques proprietaires coutumiers a qui les ~esi
dents versent des droits d'occupation qui reviennent souvent aussi cher que
l'achat du terrain, ne les protegent pas d'une expulsion et dont ils ne peuvent
se prevaloir ni pour contracter des emprunts a la construction ni pour obtenir
des permis de construire\. II existe egalement un marche actif de parcelles
sans titre de propriete ou dont les titres n'ont aucune valeur legale\. Le per
sonnel et l'organisation du cadastre au Ministere de \.l'urbanisme et de l'habi
tat (MINUH) n'arrivent meme pas a traiter les quelques transactions dont ils
sont saisis et encore moins a regler les problemes plus importants\. Pour pou
voir s'acquitter de leur t~che, ces services ont besoin de plus de moyens et
doivent appliquer des methodes de travail plus efficaces\.
Le guartier de Nylon a Douala
1\.13 Ce qui precede s'applique en general aux quartiers traditionnels les
plus anciens ou habitent la plupart des habitants de Yaounde et de Douala\. Les
equipements collectifs ont ete etendus peu a peu aux zones peripheriques, qui
- 7
se sont creees apres l'independance et qui sont moins peuplees; les routes et
l'eau viennent en priorite, les ecoles et les installations sanitaires bien
loin derriere\. II existe toutefois a Douala une banlieue importante qui a ete
completement negligee et OU l'on trouve des conditions qui n'ont pas leur equi
valent a Yaounde\. La banlieue de Nylon, creee dans les annees 50 pour reloger
les habitants de la banlieue voisine de New-Bell obliges de partir pour laisser
place a une nouvelle route, a pris une grande extension en l'espace de dix ans
avec l'afflux de nouveaux arrivants, surtout des Bamilekes connus pour la soli
dite de leur tissu social\. Quatre-vingt-dix mille personnes, soit 15 % de la
population de la ville ou Ie tiers de la population urbaine pauvre (voir la
Carte 15298), habitent ce quartier qui s'etend maintenant sur 600 ha et est si
tue a 3 ou 4 km a l'ouest du centre ville sur la route de l'aeroport\. Pendant
des annees, la municipalite de Douala, dominee par Ie groupe ethnique des
Doualas, a pris pretexte du fait que cette zone de basses terres marecageuses
avait ete designee dans Ie plan directeur de 1968 comme reserve ou espace vert
pour refuser l'installation d'infrastructures ou d'une trame d'accueil\. Tou
tefois, depuis 1975, dans Ie cadre d'une politique nationale de developpement
urbain, Nylon a ete classee comme zone a assainir en priorite par les autori
tes aussi bien municipales que nationales, qui reconnaissent qu'il importe de
commencer a mettre un tel programme en train\.
1\.14 A l'heure a~tuelle, Ie quartier est desservi par une seule canalisa
tion d'alimentation en eau et une seule ligne de basse tension, et ses rues ne
sont pas eclairees\. Ses routes qui ne sont pas revetues ne sont accessibles
ni aux autobus ni aux bennes a ordures\. Bien qu'il y ait deux dispensaires et
20 ecoles primaires prives, il n'y avait aucun etablissement scolaire public
avant 1979 et il n'y a toujours pas d'etablissements publics de soins\. Les
vendeurs de produits alimentaires et de boissons sont legion, mais il n'existe
aucun marche puisque ceux-ci sont construits et geres par la ville et que les
camions ne pourraient pas y acceder\. La desserte routiere interieure et l'eva
cuation des eaux constituent les problemes materiels les plus graves pour cette
agglomeration, puisque Ie reseau rudimentaire dont elle dispose re~oit les ef
fluents et les dechets de la zone industrielle adjacente\. Ainsi, contrairement
a son homonyme qui seche rapidement, Nylon n'est jamais seche pendant la saison
des pluies\. Son plus grand atout reside dans l'existence d'un systeme efficace
et bien organise de 13 comites de quartier qui, depuis 10 ans, organisent des
equipes de travail pour combler les terrains marecageux et pour effectuer la
construction et l'entretien des ponts, des canaux de drainage et des routes\.
C\. Institutions, politigues et programmes
Institutions urbaines
1\.15 Traditionnellement, trois niveaux d'autorite se partagent les fonc
tions de gestion, d'administration et d'investissement : les bureaux centraux
de ministeres et des institutions parastatales; leurs bureaux provinciaux et
- 8
les municipalit~s qui sont Ie troisieme ~chelon du Ministere des affaires ter
ritoriales apres les provinces\. En general, la definition des orientations
politiques et la preparation sur la base des projets locaux du budget qui sera
soumis au Ministere des finances et du Plan sont la prerogative des bureaux
centraux; les bureaux provinciaux administrent au plan local les programmes
parraines par Ie Gouvernement central, les municipalites s'occupant principale
ment de l'entretien et du fonctionnement d'installations comme les marches\.
1\.16 La politique urbaine, la planificationet l'habitat urbains sont
l'apanage du Ministere de l'urbanisme et de l'habitat (MINUH)\. Alors qu'il
faisait d'abord partie du Ministere des travaux publics, Ie MINUH est devenu
un ministere distinct en 1977, et s'est vu egalement confier peu apres la te
nue du cadastre, ainsi que des fonctions de politique et de planification re
gionales, qui avaient ete confiees jusque-la a d'autres ministeres\. Le MINUH
est aide de trois institutions parastatales creees par decret presidentiel :
la SIC (Societ~ immobiliere du Cameroun), la MAETUR (Mission d'amenagement
et d'equipement des terrains urbains et ruraux) et Ie CfC (Credit fancier du
Cameroun)\. La SIC, dont la creation remonte aux annees 60, construit des 10
gements de luxe, destines a la location, a la vente au a la location-bail pour
des fonctionnaires et autres personnes a revenu eleve\. En 1977, Ie Gouverne
ment a cree la MAETUR et la SIC pour financer et executer de grands pro jets
de financement d'amenagement du territoire et la construction de logements\.
La MAETUR est un organisme national d'amenagement de tertains en zone urbaine
et rurale, investi des pouvoirs necessaires pour effectuer ses propres amena
gements de terrains residentiels, de m~me que ceux qui feront l'objet de 10
tissements ulterieurs par la SIC\. Le Credit fancier, CfC, finance ses activi
tes au moyen d'un impot preleve sur taus les salaires; il accorde des pr~ts
a la MAETUR pour des travaux d'infrastructure, et a la SIC ainsi qu'a des par
ticuliers pour la construction de maisons individuelles\.
1\.17 Une quatrieme institution parastatale, Ie fEICOM (fonds special
d'equipement et d'intervention intercommunal), a vu Ie jour en 1978 sous la
double direction du Ministere des finances et du Ministere des affaires terri
toriales\. II a pour fonction de canaliser certaines ressources speciales des
pouvoirs locaux et du pouvoir central vers des investissements municipaux a
objectifs precis tels que la construction de marches et vers des programmes de
formation pour Ie personnel local\. Les autres organismes responsables des ser
vices urbains sont la SNEC (Societe nationale des eaux du Cameroun) et la SONEL
(Societe nationale d'electricite), societes semi-etatiques, financierement au
tonames , qui construisent et gerent leurs reseaux, sous la direction du Minis
tere des mines et de l'energie\. Les Ministeres de l'education, de la sante,
des affaires sociales, et de la jeunesse et des sports construisent et gerent
des equipements collectifs\. Le s~cteur de la petite entreprise beneficie de
credits de la BCD (Banque camerounaise de developpement) et de l'assistance
technique du CAPME (Centre national d'assistance aux petites et moyennes entre
prises), qui reIeve du Ministere du Plan\.
- 9
1\.18 Les municipalites de Yaounde et de Douala ont a leur tete des maires
nommes par la presidence, assistes de conseils municipaux et elles ont toujours
limite leurs activites a la construction et a l'entretien des marches et des
routes (a l'exception des parties urbaines du reseau national), a l'enlevement
des ordures, a l'alimentation en eau, et a l'eclairage public\. Yaounde a aussi
construit recemment une nouvelle mairie et un marche municipal\. Environ 30 %
des recettes municipales proviennent d'imp8ts et de commissions locaux, et
70 % des taxes urbaines per~ues par l'Etat qui sont'ensuite restituees aux mu
nicipalites\. II n'y a pas d'imp6t sur la propriete au Cameroun\. Bien que
Yaounde et Douala gerent relativement bien les budgets limites dont elles dis
posent, ces budgets sont trop petits pour assurer ne serait-ce que des niveaux
suffisants de service : ils representent environ 10 millions de dollars par an
a Yaounde, et 20 millions de dollars a Douala (1960)\. Les rues de Douala, qui
absorbent la moitie du budget de la ville, font exception a la regIe et sont
en general en bon etat (voir para\. 5\.04)\.
Politigues et programmes du Gouvernement
1\.19 Le Gouvernement camerounais a commence a s'interesser activement au
secteur de l'habitat a la fin des annees 70\. Auparavant, il avait surtout in
vesti dans Ie secteur de l'eau et dans l'infrastructure portuaire et routiere\.
La Banque et l'IDA y avaient participe, avec Ie premier projet d'adduction
d'eau, Ie projet SME, Ie projet portuaire, ainsi qu'une serie de projets rou
tiers\. L'initiative en matiere de construction et de financement de nouveaux
logements etait laissee au secteur prive et, dans ce secteur, l'Etat s'etait
limite a la construction par la SIC de quelques centaines de logements de luxe
et de prets a la construction de logements pour des groupes a revenu eleve par
l'entremise de la BCD\. Chaque annee, la municipalite de Yaounde avait aussi
mis 45 ha de terrain non viabilise a la disposition des familIes deplacees au
cours des annees 70 par les travaux de renovation du centre ville\.
1\.20 C'est dans les documents de planification et les documents de travail
ministeriels prepares pour Ie Quatrieme Plan (1976-1980) qu'ont d'abord ete
exposes les principaux objectifs de l'Etat sur Ie plan institutionnel\. La
MAETUR et Ie CFC ont ete crees en 1977 et ont commence a fonctionner l'annee
suivante, annee OU Ie CFC a per~u les premieres rentrees de l'imp6t sur Ie
logement\. La MAETUR a commence ses travaux de genie civil vers la fin des an
nees 80 et s'emploie actuellement sur cinq chantiers a Yaounde et a Douala qui
representent un total de 350 ha, dont 35 sont prets a etre attribues\. L'Etat
tient deja des reserves de terrain pour un programme a long terme et l'approba
tion du projet de budget du MINUH pour la periode du Cinquieme Plan (1981-1986)
permettrait de financer la viabilisation de 2 500 ha de parcelles de trame
d'assainissement pour la MAETUR et la construction de maisons SIC sur 350 ha
au cours de la periode du Cinquieme Plan\. On peut dire par consequent que Ie
Programme national des trames d'accueil du Cameroun a bien demarre et que ce
programme une fois realise permettra dans une large mesure de repondre a la
demande au-dela du 50eme percentile de revenu au cours de la periode du plan,
avec un impact moindre entre les 25eme et 50eme percentiles\.
- 10
1\.21 On n'attend pas de changement dans Ie r6le des municipalites au
cours de la periode du Cinquieme Plan puisque Ie MINUH estime que leurs moyens
financiers les obligeront a limiter leurs activites aux services publics et aux
travaux d'entretien\. La municipalite de Yaounde a l'intention de continuer a
mettre a la disposition des residents deplaces par la renovation du centre
ville des terrains pourvus du minimum de viabilites et Douala a mis sur pied
un programme semblable\. Ce sont toutefois des programmes tres limites dont
Ie seul but est de liberer des terrains a des fins autres que d'habitation\.
1\.22 La Banque joue un r6le consultatif dans Ie domaine de l'urbanisation
et du logement depuis 1975, annee OU Ie Gouvernement camerounais l'a invitee a
envoyer une mission specialisee dans Ie secteur urbain\. Certaines conclusions
importantes de cette mission ont ete utilisees pour elaborer les volets du Qua
trieme Plan portant sur l'urbanisation et Ie logement\. Le dialogue entre Ie
Gouvernement et la Banque sur les problemes de politique et les programmes
d'investissement s'est poursuivi grAce aux missions chargees de l'elaboration
des projets et avec Ie concours de la mission residente et d'un conseiller du
Directeur de l'urbanisme et de l'habitat, designe par Ie MINUH de 1979 a 1981
dans Ie cadre du Premier pro jet d'assistance technique\. Les problemes deja
soulignes par Ie passe et qui continueront a Stre importants dans Ie cadre du
projet et peut-Stre mSme ulterieurement sont les suivants : renforcer les
institutions capables d'apporter leur soutien a des programmes a long terme
d'amenagement des sols, financer Ie logement, et assainir les quartiers; re
chercher des solutions aux problemes d'administration fonciere; adopter des
normes et des mecanismes d'attribution des depenses et de recouvrement des
coOts, de maniere a permettre a l'Etat de faire des investissements d'infra
structure qui engendrent un programme positif qui soit a la portee de tous
les groupes de revenus\.
1\.23 Dans l'ensemble, Ie Gouvernement a reagi tres favorablement aux con
seils de la Banque; 1 'organisation, la composition du personnel et Ie finance
ment des nouvelles institutions ont ete etudies avec soin, et Ie programme de
demarrage indique qu'il a ete tenu compte des preoccupations concernant les
normes et Ie recouvrement des coats\. Le programme actuel des trames d'accueil
de la MAETUR comprend des options financierement accessibles jusqu'au 25eme
percentile; les prix de vente des parcelles de la MAETUR sont calcules pour
couvrir les coOts d'infrastructure et de terrain; la location de parcelles de
la MAETUR donne aux beneficiaires des droits de propriete temporaires qui leur
permettent d'obtenir des prets du ere a la construction et, une fois que leur
maison est construite, d'etre titulaires d'un titre de propriete permanent\. Le
Gouvernement se rend compte de ce que Ie financement d'infrastructures hors
zone implique pour Ie programme de la MAETUR, et l'on prevoit que la croissance
des recettes de l'Etat, en particulier lorsque la production d'energie aura de
marre, permettra de poursuivre l'execution d'un important investissement public
dans l'infrastructure urbaine primaire, qui est l'un des domaines d'investisse
ments prioritaire\. Le Gouvernement se rend aussi parfaitement compte que Ie
secteur prive doit continuer a financer et a effectuer la plus grosse partie
- 11
de l'amenagement des terrains, m@me apres que la MAETUR aura atteint son but
qui est de viabiliser 700 ha par an\. Pour que ce soit plus facile, Ie MINUH
se propose de depenser 35 millions de dollars au cours de la periode du Cin
quieme Plan pour simplifier et accelerer les procedures d'administration fon
ciere, et elaborer des plans d'utilisation de terrains viabilises et de re
seaux d'infrastructure\. Le Deuxieme projet d'adduction d'eau, qui beneficie
de l'aide de la Banque, comprend egalement des fonds pour l'execution des
plans directeurs de distribution et d'evacuation des eaux 8 Yaounde et 8
Douala\.
1\.24 Trois grands programmes sectoriels ont ete elabores et vont necessi
ter une attention particuliere : la base financiere et technique des municipa
lites est limitee si on la compare 8 leur r81e potentiel dans Ie developpement
urbain; des difficultes de circulation commencent 8 se faire jour, alimentees
par une motorisation croissante et l'insuffisance des transports publics; enfin
la penurie de techniciens et de cadres capables d'appliquer les programmes
naissants du MINUH\.
1\.25 La strategie de la Banque dans ce secteur est de continuer 8 soutenir
la politique et Ie programme du MINUH gr~ce 8 un conseiller 8 plein temps, et
de fournir un appui specifique aux projets, appui qui complete Ie programme de
l'Etat et Ie renforce 18 ob c'est necessaire\. Pour Ie premier projet, i l
s'agit de renforcer les mecanismes institutionnels, financiers et fanciers des
tines 8 ameliorer l'urbanisme\. A supposer que les progres soient suffisants,
les operations qui suivront pourraient se baser sur l'experience acquise gr~ce
au premier projet, et pourraient egalement s'attaquer aux besoins en logements
des centres secondaires, ainsi qu'apporter un appui specifique destine 8 ren
forcer Ie potentiel technique des municipalites et leur capacite de mobilisa
tion des ressources locales\.
- 12 -,
II\. DESCRIPTION DU PROJET
A\. Objectifs
\.
2\.01 Ce projet a pour principaux objectifs de lancer un important effort
de rehabilitation pour porter l'infrastructure a un niveau acceptable et de
renforcer la base institutionnelle necessaire a l'execution d'un programme con
tinu d'amelioration et de logements economiques au Cameroun\. Ce pro jet est
con~u pour atteindre ces objectifs : a) en elevant a un niveau minimal accep
table les conditions d'hygiene de Nylon, Ie quartier spontane Ie plus mal ame
nage de Douala, et les voies d'acces a ce quartier; b) en procedant pour la
premiere fois au Cameroun a une rehabilitation complete d'une partie de ce
quartier; c) en renfor~ant un mecanisme institutionnel pour la rehabilitation
qui puisse ~tre transforme par la suite de maniere a permettre de poursuivre
les activites de rehabilitation dans d'autres quartiers; et d) en renfor~ant
d'autres institutions existantes dont depend l'avenir de l'urbanisme, et en
particulier les services des domaines et du cadastre du MINUH\. L'objectif se
condaire d'accroitre la productivite des artisans independants des quartiers
du pro jet sera atteint par une aide aux artisans des sites du pro jet con~ue
pour completer un projet de petites et moyennes entreprises mene parallelement
par Ie DDIF (Deuxieme projet de PME)\.
- 13
B\. Principaux elements
2\.02 Le projet comprend les elements suivants
CoOt
total Pourcentage
(millions du coOt
Elements de dollars) total
a) Amenagement de la zone Nylon (Douala) 39,7 72 %
Infrastructure primaire pour l'ensemble de la super
ficie de 600 ha (90 000 residents); rehabilitation
detaillee, prets au logement et securite d'occupation
pour une zone de 50 ha (13 000 habitants); equipe
ments collectifs, programme pilote d'education sani
taire, marche et assistance technique aux artisans\.
b) Equipements collectifs a Yaounde nord-ouest 4,3 8 %
Ecoles, dispensaires, marche, centre d'artisanat;
assistance technique pour les artisans\.
c) Assistance technique, etudes 10,7 20 %
Assistance technique pour l'execution du projet
au MINUH et a l'ARAN; etudes diverses comprenant
preparation du deuxieme projet d'urbanisme et d'un
projet de transports urbains; etudes de programma
tion des investissements\.
COUT TOTAL 54,7 100 %
C\. Description detaillee et normes de conception
Amenagement de Nylon (Douala)
2\.03 L'etude de faisabilite du projet comprend un plan a long terme d'ame
lioration des 600 ha de la zone Nylon, qui commence par de grands travaux d'in
frastructure a realiser en priorite afin de porter rapidement la voirie d'ac
ces, les conditions d'environnement et les equipements collectifs au minimum
acceptable\. Ces travaux seraient suivis d'un processus beaucoup plus lent
d'achevement de l'amelioration par l'amenagement d'une infrastructure secon
daire et tertiaire et la regularisation du regime fonciere Seul un programme
- 14
pilote initial d'amelioration complete d'un quartier sera execute dans Ie cadre
du projet envisage\. Celui-ci constituera la premiere etape de l'amelioration
de l'ensemble de la zone Nylon qui devrait se prolonger au-dela de la periode
d'execution du projet, peut-etre sur dix ans\. Le processus en deux temps ap
plique a Nylon permettra egalement de demontrer la faisabilite de cette methode
pour d'autres quartiers qui disposent deja d'une certaine infrastructure de
base\. Les elements du projet decrits ci-dessous sont representes sur la
Carte 15298\.
2\.04 Infrastructure urbaine de base a Nylon\. Des voies principales, un
reseau de drainage, des bennes a ordures, un eclairage public et l'alimentation
en eau seront fournis a 1 'ensemble des 600 ha comme infrastructure de base et
permettront notamment de resoudre les principaux problemes de drainage et d'en
levement des ordures et d'accroitre l'acces a l'eau potable\. Quelque 20 km
de chaussees revetues (17 km de chaussee de 12 m d'emprise et 3 km de chaus
2
see de 30 m d'emprise); 17 km de canaux de drainage (de 7 a 35 m de section,
dont 14 km en terre et 3 km en beton); 39 bennes a ordures (d'une capacite de
3
7 m ); 9,4 km de lignes electriques a moyenne et a basse tension equipees de
transformateurs pour l'eclairage public, avec d'eventuels branchements indi
viduels; et 10 km de canalisations d'eau (de 100 a 300 mm de diametre) et
40 bornes-fontaines publiques constituent les equipements prevus\. Une zone
voisine de 30 ha (900 parcelles) sera egalement amenagee pour accueillir des
habitants occupant actuellement des terrains sur lesquels seront construits
les infrastructures et equipements collectifs\. Ces gros travaux, avec les
coats eleves qu'ils comportent, sont necessaires en raison de la situation
exceptionnelle de Nylon\. Situe tres en contrebas, ce quartier re~oit les eaux
de drainage d'une large partie des quartiers voisins, et il est souvent inonde\.
Le reseau de drainage de Nylon, qui est Ie plus gros element du projet, sera
donc utile a une partie import ante de la ville de Douala au-dela du quartier
de Nylon lui-meme\. Les travaux de voirie sont egalement tres etendus en rai
son de l'etat extremement mauvais des voies d'acces existantes\. Ces amenage
ments profiteront a 1 'ensemble des 90 000 habitants du quartier pour un coat de
base de 14,5 millions de dollars, soit de 161 dollars par habitant (850 dollars
par menage)\.
2\.05 Drainage du Mgoua\. Le Mgoua est Ie principal canal de drainage de
Nylon\. II ne pourra absorber les eaux qui se deverseront d'un reseau de drai
nage ameliore a Nylon que si de grands travaux sont executes\. Le projet pre
voit des fonds pour financer Ie dragage et Ie redressement du cours du fleuve
en aval de Nylon et Ie renforcement du passage sous la voie d'acces a 1 'aero
port\. Le coOt de base de cet element est estime a 4,6 millions de dollars\.
2\.06 Rehabilitation d'un guartier pilote a Nylon\. Comme premiere tranche
d'un ensemble complet de travaux de rehabilitation, il a ete retenu une super
ficie de 50 ha (13 000 habitants), correspondant a un quartier\. Le quartier
choisi est l'un des plus anciens et des mieux organises des 13 quartiers de
Nylon, et son amelioration servira de modele pour les autres quartiers\. II y
- ~
sera amenage une infrastructure secondaire et tertiaire pour montrer comment
devrait se faire une amelioration complete, avec transfert de propriete\. Cette
infrastructure porte sur quelque 2 km de chaussees revatues (12 m d'emprise),
4,2 km de routes en laterite (12 m d'emprise), environ 6 km de canaux de drai
nage (5 km en terre et 1 km en beton), environ 3 km de conduites d'eau en CPV
(diametre 80-150 mm), et 30 bornes-fontaines publiques; 10,5 km de lignes elec
triques a moyenne et a basse tension pour l'eclairage des rues sur l'axe prin
cipal de ce quartier et une capacite suffisante pour assurer par la suite des
branchements prives pour la totalite de la population; et 24 bennes a ordures
3
de 7 m de capacite\. Le coOt de base est de 1,2 million de dollars, soit de
90 dollars par habitant (490 dollars par menage)\.
2\.07 Credits a l'habitat pour la rehabilitation du guartier pilote\. Pour
l'amelioration de la zone d'action pilote de Nylon, a Douala, il sera accorde
600 prats pour l'achat de parcelles et l'amelioration des logements, ainsi
que pour la construction de latrines a fosse et, pour les familIes qui en
auront les moyens, la pose de branchements individuels a l'electricite et a
l'eau\. Ces prats permettront de repondre a la demande prevue d'environ la
moitie des occupants de parcelles de la region\. Ces prats varieront selon
les moyens financiers des beneficiaires\. Le prat moyen devrait atre de l'ordre
de 1 370 dollars (2 371 dollars pour l'acquisition de la parcelle et la cons
truction d'une maison); les montants devraient aller d'environ 750 dollars
(1 200 dollars avec acquisition de la parcelle) a environ 1 860 dollars
(3 740 dollars avec acquisition de la parcelle)\. Le montant total reserve
pour ces prats sera de 800 000 dollars\. Les prats a la construction et a
l'amelioration seront garantis par Ie titre de propriete de la parcelIe (voir
Chapitre IV pour plus de details sur les questions de regime foncier)\.
2\.08 Eguipements collectifs\. La fourniture, dans Ie cadre du projet,
d'un montant de 1,2 million de dollars pour la construction et l'equipement de
deux ecoles primaires de 18 classes chacune permettra de ramener l'effectif
moyen de chaque classe de 80 a 65 eleves sans augmentation du nombre de classes
alternees, et de faire passer de 18 a 30 % la proportion des salles de classe
d'etablissements publics\. Grace au projet, Nylon sera dotee de ses premiers
etablissements de sante publigue : un dispensaire et un centre de ~rotection
maternelle et infantile, qui auront chacun une superficie de 250 m et un coOt
de base, equipements compris, de 123 000 dollars\. Des sites supplementaires
seront reserves pour la construction de futures ecoles et centres de sante\.
Une somme de 75 000 dollars est prevue pour couvrir les coOts de demarrage
d'un programme d'education en matiere de sante et de nutrition, qui comprendra
des demonstrations sur la construction de divers types de latrines a fosse ame
liorees, preparees par les services provinciaux de sante et d'affaires sociales\.
Le financement de ce programme pourrait se poursuivre dans Ie cadre du Deuxieme
projet d'alimentation en eau\. Cinq petits centres communautaires de quartier
2
(de 200 a 300 m ) seront construits par les habitants a l'aide de materiaux
finances par Ie projet et ils seront equipes; Ie pro jet financera notamment
- 16
l'achat d'un vehicule pour l'assistant social residant a Nylon (coOt total
165 000 dollars)\. En plus des terrains de sport des ecoles primaires destines
aux el~ves, Ie projet financera l'amenagement de trois terrains de sport commu
nautaires, dont l'un sera complete par un petit centre de jeunesse (coOt total
123 000 dollars)\.
2\.09 2
Marche de detail\. Un grand marche de detail de 10 000 m sera cons
truit sur un terrain utilise actuellement pour un marche en plein air, et com
prendra un marche couvert, un parc de stationnement, des etals pour la viande
et Ie poisson, moyennant un coOt de base de 2,8 millions de dollars\. Des etals
mobiles en bois seront construits par les commer~ants pour les autres produits\.
2
Sur les 20 000 m de superficie totale de ce marche, il sera prevu des espaces
pour Ie stationnement de taxis, d'autobus et de vehicules particuliers\. Un
2
terrain supplementaire de 16 000 m au sud de ce marche sera reserve pour son
expansion a venire
2\.10 Aide aux artisans\. Les artisans et les petites entreprises de Nylon
recevront une assistance technique et une assistance en mati~re de gestion pour
un coOt de base de 0,6 million de dollars qui leur seront dispensees par Ie fi
nancement a) de materiel, d'approvisionnements et de personnel pour les bureaux
de Nylon qu'ouvrira Ie Centre national d'assistance aux petites et moyennes en
treprises (CAPME), et b) de 48 hommes-mois de traitement d'un gestionnaire ca
merounais experimente et d'un comptable qualifie pour la Caisse populaire de
Nylon (CPN)\. Cette assistance technique propre a ce site s'accompagnera d'une
mise a disposition aux artisans d'une ligne de credit existante de 1 million
de dollars (offrant des prets d'un maximum de 25 000 dollars) a la Banque
camerounaise de developpement (BCD), financee dans Ie cadre du Deuxieme projet
d'aide aux petites et moyennes entreprises approuve en novembre 1980\. Le con
tenu et les modalites d'execution de cet element ont ete definis pendant la
preparation du projet, en etroite collaboration avec les services du DDIF de
la Banque qui ont prepare Ie Deuxieme projet d'aide aux petites et moyennes
entreprises (voir para\. 4\.17)\.
Eguipements collectifs et aide a l'artisanat a Yaounde nord-ouest
2\.11 Comme i l a ete indique ci-dessus, l'infrastructure de base et la
rehabilitation d'un quartier pilote de Yaounde nord-ouest, inscrites dans
l'etude de faisabilite du projet, ont ete abandonnees lors de la preevaluation,
mais il a ete decide d'inclure Ie financement de certains equipements collec
tifs dans ce quartier ainsi qu'une aide aux artisans\. Les eguipements collec
tifs suivants seront construits et equipes dans Ie cadre du pro jet : 24 salles
de classe d'ecole primaire, un centre de PMI, un dispensaire, un centre de
jeunesse avec terrain de sport, et la renovation d'un centre social\. Le
coOt de base total de ces equipements sera de 1,2 million de dollars\. La
construction d'un marche simple et d'un centre d'artisanat, moyennant un coOt
de 1,0 million de dollars, est egalement prevue Ces installations seront
situees sur des terrains appartenant soit a l'Etat, soit a la municipalite de
- 17
Yaounde, qui a accepte de transferer les terrains necessaires aux ministeres
concernes (voir Carte 15293R)\. Une aide a l'artisanat du type de celIe dispen
see dans la zone Nylon de Douala sera offerte a Yaounde nord-ouest par l'Union
des caisses populaires de Yaounde (UCPY) moyennant un coOt de base de
570 000 dollars, et sera dispensee par des agents de vulgarisation bases dans
de petits bureaux du CAPME installes sur Ie site\.
Etudes, assistance technique et formation!!
2\.12 II sera fourni un total de 20,5 annees de services de consultants
afin : a) d'aider a l'execution du projet; et b) d'accroitre la connaissance
du secteur de l'urbanisme et de preparer des nouveaux projets\. Le coOt de base
total de cet element est de 6,8 millions de dollars, y compris Ie coOt du mate
riel, des vehicules, des deplacements au Cameroun et une somme forfaitaire pour
Ie projet d'execution du deuxieme projet\. Le coOt moyen par homme-mois compre
nant les honoraires, les charges sociales, les voyages a l'etranger et les in
demnites de logement est estime a 11 000 dollars\.
2\.13 Assistance technique pour l'execution du projet\. II est propose de
fournir un total de 96 hommes-mois d'assistance technique pour completer l'as
sistance technique actuelle et aider Ie Gouvernement a renforcer ses institu
tions d'urbanisme et a executer Ie projet\.
a) MAETUR!ARAN - 36 hommes-mois de services d'un directeur technique
adjoint ayant l'experience de la gestion de projets de rehabilita
tion, pour faire fonction d'homologue au directeur general camerou
nais; et 200 000 dollars pour equiper les bureaux de l'ARAN et
37 000 dollars pour l'outillage et Ie materiel necessaires a la
poursuite du programme de travail des comites de quartier de Nylon\.
b) (MINUH!DUH) - 24 hommes-mois de services d'un economiste urbain
ayant l'experience de la gestion de projets pour aider Ie MINUH
a coordonner et a superviser Ie projet, et 12 hommes-mois d'expert
comptable pour verifier les comptes des agences d'execution du pro
jet conformement aux clauses d'audit\.
11 Outre l'assistance technique decrite ici, d'autres elements d'assistance
technique qui faisaient initialement partie de ce pro jet seront mainte
nant finances dans Ie cadre du Deuxieme projet d'assistance technique
(Credit No 1168 CM) et ne figurent donc plus dans la description du pre
sent pro jet ni dans les estimations de coat\. II s'agit de 24 hommes
mois de services d'un expert en formation professionnelle et de la four
niture de materiel pedagogique, de vehicules et d'equipement pour les
bureaux regionaux du MINUH\.
- 18
c) MINUH/Service du cadastre - 24 hommes-mois de services d'un expert
en systeme de gestion fonciere pour les services provinciaux du ca
dastre de Yaounde et de Douala, afin de reorganiser les bureaux du
cadastre responsables des zones du projet; i l est egalement prevu
un montant de 310 000 dollars pour l'achat de mini-ordinateurs et
d'autres materiels necessaires pour convertir les bureaux du cadastre
a l'emploi de machines\. Cette aide sera utilisee au debut pour assu
rer la realisation des objectifs sur Ie plan foncier dans les zones
de trames assainies et de rehabilitation du projet, mais elle four
nira ensuite la base a une amelioration du fonctionnement des ser
vices du cadastre a l'echelle des deux villes\.
2\.14 Etudes\. L'echelonnement de l'execution des etudes sera defini avec
precision en collaboration avec Ie Gouvernement pour permettre d'optimiser
l'utilite de ces etudes pour Ie programme de formation et la preparation de
projets a venir\.
a) Une etude de faisabilite qui necessitera 60 hommes-mois de services
pour la preparation d'un Deuxieme pro jet urbain portant a la
fois sur Douala et Yaounde et sur certaines villes secondaires et
provision de 1,8 million de dollars pour les etudes d'execution de
ce projet\.
b) Trente hommes-mois de services pour une etude de faisabilite en vue
de la preparation d'un projet de transports urbains pour Douala
et Yaounde; Ie coat de base total de cet element s'61eve a
370 000 dollars\.
c) Trente-six hommes-mois de services afin d'aider a definir un pro
gramme gUinguennal d'investissement et de depenses de fonctionnement
pour Douala et Yaounde a un coat de base de 440 000 dollars\.
d) Vingt-quatre hommes-mois pour l'execution d'etudes d'urbanisme et
des services d'assistance technique qui devront etre definis pen
dant l'execution du projet, a un coat de base de 293 000 dollars\.
- 19
III\. ESTIMATIONS OE COUT ET MOOALITES DE FINANCEMENT
A\. Estimations de coat
3\.01 Le coat total du projet, y compris les imprevus, est estime a
14 769 millions de francs CFA (54,7 millions de dollars) dont 51 %, soit
7 493 millions de francs CFA (27,8 millions de dollars), en devises\. Les
estimations de coat sont recapitulees au Tableau 2 et presentees de fa90n
detaillee a l'Annexe 1\. Les estimations des coOts de base s'entendent en
prix decembre 1981 et sont fondees sur :
a) les avant-projets pour les travaux de genie civil necessaires
a la rehabilitation (para\.3\.l2);
b) les coats unitaires de travaux du m~me ordre entrepris recemment
et de travaux de construction de marches et aut res b§timents;
c) les prix communiques par Ie MINUH, la MAETUR et les ministeres res
ponsables des equipements collectifs;
d) les coOts actuels des services de consultants au Cameroun\.
3\.02 Les imprevus pour depassements de quantites ont ete estimes a 15 %
pour les travaux de genie civil et les travaux de construction et a 10 % pour
les autres elements\. Les provisions pour hausse des prix pour les coats en
monnaie nationale sont fondees sur l'inflation prevue dans l'industrie du b§ti
ment pendant la periode d'execution du projet, estimee par la mission a 15 %
pour l'annee budgetaire 1982 et pour les annees suivantes\. Le taux d'inflation
en ce qui concerne les coats en devises a ete estime a 12,6 % pour 1982, 9,5 %
pour 1983, 1984 et 1985 et 8 % pour 1986, ce qui represente la meilleure esti
mation de la mission d'evaluation des hausses de prix escomptees sur l'element
en devises du projet, calculee d'apres l'inflation actuelle et prevue en France,
principal fournisseur de biens et services du Cameroun\. Le coat estimatif
d'acquisition de terrains est de 88 millions de francs CFA (330 000 dollars),
y compris l'indemnisation des occupants actuels\.
B\. Plan de financement
3\.03 Le pret de 20 millions de dollars envisage par la BIRO (y compris
la commission initiale capitalisee de 1,5 %) financera 36 % du coat total du
projet (44 % du coat total, net d'imp6ts)\. Un financement parallele de
5,5 millions de dollars du Gouvernement suisse devrait couvrir 10 % du coat
total du projet et financer les marches de detail et les equipements collectifs
de Nylon, de meme que Ie programme d'education sanitaire et nutritionnelle de
Nylon\. Le Gouvernement camerounais financerait Ie solde des coats du projet,
soit 29,5 millions de dollars ou 54 % du coOt total\. Le plan de finance
ment est recapitule au Tableau 3 ci-dessous\.
CAMEROUN
PROJET DE DEVELOPPEHENT URBAIN
Tab1~: RECAPITULATION DES COUTS DU PROJET
(CoOts de base en decembre 1981)
(1 dollar ~ 270 FCFA)
Millions de FCFA Millions de dollars
Mannaie Mannaie
nationa1e Taxes Devisea Total Taxes Devises Total
A\. AHENAGEHENT DE NYLON
- Achat de terrains 88 88 0,33 0,33
- Gros travaux de drainage - Mgoua 330 202 718 1\.250 1,22 0,75 2,66 4,63
- Infrastructure urbaine 1\.108 688 2\.103 3\.899 4,10 2,55 7,79 14,44
- Rehabilitation quartier pilote 80 65 181 326 0,30 0,24 0,67 1,21
- Marche 222 147 380 749 0,82 0,54 1,41 2,77
- Aide a l'srtisanat 89 24 59 173 0,33 0,09 0,22 0,64
- Equipements co11ectifs 145 102 277 524 0,54 0,38 1,03 1,94
- Credits logement 99 33 88 ~ ~ ~
SOllS total 2\.161 1\.261 3\.807 7\.229 8,00 4,67 14,10 26,77
'"
0
B\. EQUIPEMENTS COLLECTIFS - YAOUNDE
NORD-OUEST
- Eqllipements co11ectifs 90 65 171 326 0,33 0,24 0,63 1\.21
- Marche et centre artisana1 82 53 148 283 0,30 0,20 0,54 1\.05
- Aide a l'artisanat 22 52 154 \.JhlQ\. 0,08 ~ ~
SOllS total 252 140 371 763 0,93 0,51 1,37 2,83
C\. ETUDES ET ASSISTANCE TECHNIgUE
- Execution de projet 531 113 433 1\.077 1,97 0,42 1,60 3,99
- Etudes 577 770 ~ ~ ~
Sous total 608 229 1\.010 1\.847 2,26 0,85 3,74 6,84
TOTAL COUTS DE BASE 3\.021 1\.630 5\.188 9\.839 11,19 6,03 19,21 36,43
DEPASSEHENT DES QUANTITES (lllPREVUS) 412 232 747 1\.391 1,53 0,86 2,77 5,16
HAUSSE DES PRIX 1\.274 707 1\.558 3\.539 4,72 2,62 5,77 13,11
COUT TOTAl\. DU PROJET 4\.707 7\.493 14\.769 17 ,44
COMMISSION INITIAJ,E SUR PRET DE I\.A =
BANQUE 81 81 0,30 0,30
TOTAl\. FONDS NECESSAIRES 4\.707 7\.574 14\.850 17 ,44 ~
* Les chiffres ayant ete arrondis, les totaux peuvent etre differents de 1a somme des elements\.
- 21
Tableau 3 : PLAN DE FINANCEMENT DU PROJET
Millions de francs CFA Millions de dollars
Monnaie Monnaie
nationale Taxes Devises Total nationale Taxes Devises Total
BIRD 5 400 5 400 20,0 20,0
Financement para 1
H:lle (Suisse) 565 937 1 502 2,0 3,5 5,5
Cameroun 4 142 2 569 1 237 7 948 15,4
TOTAL 4 707 2 569 7 574 14 850 17,4 9,5 28,1 55,0
Le Tableau 4 indique les sources de financement des principaux elements du projet\.
Tableau 4 : SOURCES DE FINANCEMENT DES PRINCIPAUX ELEMENTS DU PROJET
(millions de francs CFA)
CoOt Cameroun
Elements total r
~
I
Etat CFC BIRD Suisse
I
,
j
A\. Amenagement de Nylon
Infrastructure 8 335 5 124 3211
Marche 1 057 215 842
Equipements collectifs 831 171 660
Aide a l'artisanat 262 191 71
Pr~ts au logement 220 220
B\. Eguipements collectifs
Yaounde nord ouest
Equipements collectifs 940 469 471
Aide a l'artisanat 234 172 62
C\. Assistance technique
Assistance technique,
etudes 2 890
-386
1
- 1 504
Total 14 769 7 728 220 5 319 1 502
D\. Commission initiale
sur Ie pr~t de la
Banque 81 81
TOTAL 14 850 7 728 220 5 400 1 502
100 % 52 % 2% 36 % 10%
- 22
3\.04 Le CFC assurera Ie financement a long terme de l'acquisition de par
celles et accordera les pr@ts a la construction ou a l'amelioration de 10
gements sur ses propres ressources selon ses conditions actuelles (voir
para\. 5\.08)\. Pour assurer que les ressources necessaires seront disponibles
pour les elements du projet devant ~tre finances par Ie CFC, Ie Gouverne
ment et Ie CFC ont, au cours des negociations, convenu d'un programme d'in
vestissement 1982-86, qui vise a utiliser toutes les ressources identifiees
dont dispose actuellement Ie CFC\.
C\. Flux financiers et conditions de retrocession
3\.05 Les flux financiers sont decrits au Graphique 1\. Le Gouvernement
camerounais retrocedera aux organes d'execution du pro jet Ie montant du pr@t
de la BIRD, Ie montant du financement parallele et sa propre contribution sous
la forme de pr@ts s'il est prevu un recouvrement des coats, ou sous forme de
dons dans Ie cas contraire, conformement a ses usages actuels\. Pour tous les
travaux de genie civil, dont les coats sont a recouvrer aupres des benefi
ciaires, Ie financement se fera par Ie biais de l'intermediaire financier: Ie
CFC, qui assumera Ie risque de change pour cet element\. Pour les travaux du
projet a Nylon dont les coats ne sont pas recouvres (infrastructure primaire,
equipements collectifs et assistance technique), Ie financement se fera direc
tement a l'agence concernee, c'est-a-dire MAETUR/ARAN\. Le financement de la
promotion de la petite entreprise ira du ministere concerne (Ie MINEP) directe
ment a l'organisme interesse (CAPME)\.
3\.06 Les conditions de retrocession des fonds du pro jet aux intermediaires
financiers et organes d'execution sont presentees au Tableau 5 ci-dessous telles
qu'elles ont ete convenues au cours des negociations\. Les conditions pour Ie
financement des coats d'infrastructure a recouvrer sont fondees sur Ie taux
applique au secteur du logement economique (5,5 ro)\. Dans Ie cas de l'infra
structure, la duree est celIe requise pour achever les travaux de construction
et vendre les parcelles viabilisees (4 ans)\. Les conditions consenties a l'in
termediaire financier (Ie CFC) sont fondees sur la marge necessaire pour cou
vrir les risques et les coats de fonctionnement : 2 %\. Une periode de rembour
sement de 20 ans est recommandee pour permettre Ie recyclage des fonds de la
BIRD dans Ie secteur par cette institution afin d'assurer Ie financement
d'autres projets\.
3\.07 En plus des accords entre la BIRD et les institutions interessees au
premier chef par Ie projet (MAETUR et CFC), des accords d~ pr@t subsidiaire
seront signes entre Ie Gouvernement et Ie CFC et entre Ie CFC et la MAETUR\. Un
autre accord sera signe entre Ie Gouvernement suisse, MAETUR/ARAN, FEICOM et
la municipalite de Douala pour Ie marche de Nylon\.
- 23
GRAPHIQUE 1
CAMEROUN - PROJET DE DEVELOPPEMENT URBAIN
FLUX FINANCIERS
r---------~r-----~~ {
ucpy
Artisanat
CPN Assistance Technique
MINUH r-----~~{ Assistance Technique
BIRD ~ ________~ Etudes
ETAT
CAMEROUNAIS
,~____~
k-------------------------\. { Prets ii l' acquisition de terrains
Prets ii la construction de maisons
SUISSE
Yaounde Nord-Ouest
- Marche, centre artisanal
- Equipements collectifs
MAETUR
Nylon
_ Infrastructure urbaine
_ Rehabilitation quartier pilote
- Marchi!
_ Equipements collectifs
_ Etise1gnement sanitaire
World S\.k - 23332
Tableau 5: SOURCES DE FINANCEMENT, INTERMEDIAIRES ET
CONDITIONS DE RETROCESSION
Inter
Sources Condi- Condi- mediaires Condi- Agences
Elements du Projet Etrangeres tions Etat tions Financiers tions d'execution
-
Infrastructure primaire (Nylon) (11,6%) Credits
BIRD 20 ans Etat budge- dons MAETUR/ARAN
Equipements co11ectifs Yaounde differe taires
NordOuest 5 ans (dons)
($12,5 millions)
0 [) [)
Assistance technique, etudes, (11,6%) Credits MINUH
BIRD Etat dons
plans 20 ans budge MAETUR/ARAN
($6,2 milHons) [) differe
5 ans 0 taires
(dons) [) CAPME
Rehabilitation quartier pilote de (11,6%) 3,5% 5,5% MAETUR/ I
BIRD Etat CFC
Nylon infrastructure recuperab1e 20 ans 20 ans 4 ans ARAN N
~
($1,0 million) differe differe differe
0 5 ans [) 3 ans [) 2 ans
I
Marche du Nylon SUISSE 0,75% Etat 0,75% FEICOM 5,5% Municipalite
50 ans 50 ans 20 ans de Douala
($3,1 millions)
differe differe differe (ARAN)
0 10 ans (> 10 ans [) 2 ans
Equipements co11ectifs de Nylon SUISSE 0,75% Etat Credits
50 ans budge dons MAETUR/ARAN
($2,4 millions)
0 differe
10 ans
(> taires
(dons)
[)
- 25
D\. Passation des marches
3\.08 Les marches d'un mont ant global equivalant a 16,7 millions de dol
lars (coOt de base) relatifs aux grands travaux de genie civil (15,2 millions
de dollars) et aux fournitures d'equipement (1,5 million de dollars) seront
attribues par appel a la concurrence internationale selon les directives du
Groupe de la Banque\. Dans la mesure du possible, ces marches seront groupes
pour permettre les achats par quantites et la realisation des objectifs d'exe
cution\. Lors du depouillement des soumissions, il sera accorde une marge pre
ferentielle egale a 15 % ou au mont ant applicable des droits de douane, la
plus faible de ces deux valeurs etant retenue, pour les achats de materiaux et
d'equipements fabriques au Cameroun\.
3\.09 Un certain nombre de petits marches d'un montant inferieur a
0,5 million de dollars pour les travaux et 0,1 million de dollars pour les
biens representant un total equivalant a 6,4 millions de dollars et ayant peu
de chances d'attirer les fournisseurs ou entrepreneurs etrangers seront attri
bues par appel d'offres faisant l'objet d'une publicite locale, mais seront
egalement accessibles a des soumissionnaires sans representation locale\. Ces
marches porteront sur : a) Ie materiel de bureau, Ie mobilier et les fournitu
res pour l'ARAN et les bureaux du cadastre; b) Ie marche de detail et les
equipements collectifs de Nylon finances par la Suisse; et c) les travaux de
genie civil de la zone pilote a ameliorer, a l'exception des travaux de drai
nage (200 000 dollars) qui pourront etre executes en regie par des groupes
d'habitants de Nylon organises par des comites d'action de quartier, comme ils
Ie font depuis des annees (voir paras\. 4\.18 et 4\.24)\.
3\.10 L'acquisition de petits elements d'un coOt inferieur a 50 000 dol
lars chacun, qui ne devraient pas representer un total de plus de 1 million de
dollars, pourra se faire apres demande de devis a trois fournisseurs au moins\.
Le montant des prets pour l'achat de materiaux de construction, qui ne seront
pas finances par la BIRD, sera remis en especes aux emprunteurs qui seront char
ges de se procurer eux-memes les biens et services necessaires\. Les services
de consultants pour l'assistance technique et pour les etudes (representant un
total d'environ 7,6 millions de dollars) seront contractes selon des procedures
jugees acceptables par la BIRD\.
3\.11 II etait urgent de demarrer certains travaux de dragage avant la sai
son des pluies (qui commence en juillet)\. Ces travaux comprennent : a) la cons
truction d'une zone de recasement (30 ha) et 2,5 km de caniveaux a travers Ie
quartier de Nylon pour l'evacuation des eaux d'une zone industrielle recemment
construite en amont du quartier Nylon et b) Ie drainage/dragage du Mgoua\. Etant
donne Ie caractere urgent de ces travaux, une procedure speciale a ete suivie :
la zone de recasement et Ie canal d'evacuation des eaux de la zone industrielle
(coOt 1,1 million de dollars) ont ete attribues apres appel d'offres limite a
trois entreprises ayant l'habitude de travaux similaires; les prix sont compe
titifs par rapport aux travaux similaires de recasement executes a Douala\. La
partie "dragage ll des travaux de drainage du Mgoua necessite un materiel special
- 26
dont Douala dispose deja pour Ie drag age de son port\. Comme il serait plus
coOteux de faire venir un autre materiel pour cet element, un contrat de
1,6 millionsde dollars a ete negocie directement avec la societe proprietaire
du materiel sur la base des coats unitaires indiques pour Ie contrat du dra
gage du port qui etaient competitifs\. Un avenant de ce contrat est actuelle
ment negocie pour un montant de 0,87 million de dollars\.
E\. Preparation et execution du projet
3\.12 Les travaux de genie civil dans la zone de recasement et les travaux
de dragage du Mgoua a Douala sont acheves\. L'execution de l'ensemble du
projet prendra environ six ans a compter de l'exercice 82 (voir Graphique No\.2)\.
F\. Decaissements
3\.13 Les decaissements du pret de la BIRD se ferant sur la base de :
a) 50 % des depenses totales pour les travaux de genie civil et de cons
truction relatifs a 1 'element "rehabilitation";
b) 60 % des depenses totales afferentes aux achats de materiaux et
d'eguipement pour l'assistance technique; et
c) 70 % des depenses totales afferentes aux services de consultants
et aux etudes\.
Taus les decaissements devront s'accompagner de toutes pieces justificatives
a l'exception des decaissements des depenses en monnaie nationale pour les tra
vaux en regie effectues par Ie comite d'action de quartier de Nylon so us la
supervision de la MAETUR!ARAN (voir para\. 3\.09), pour lesquels les decaissements
se feront sur presentation d'etats de depenses, car il ne serait pas pratique
d'exiger l'etablissement de pieces justificatives completes pour ces depenses\.
Ces etats de depenses seront conserves par l'emprunteur et tenus a la disposi
tion de la BIRD pour examen lors des missions de supervision\. Conformement
aux directives provisoires concernant les decaissements selon cette procedure,
les dispositions jugees satisfaisantes par la BIRD pour l'affectation de per
sonnel a la section de comptabilite de la MAETUR!ARAN et pour son systeme de
comptabilite devront ~tre prises avant que les decaissements ne puissent com
mencer pour cet element\. En outre, les dispositions relatives a la verifica
tion des comptes de la MAETUR!ARAN par des experts-comptables independants
devront inclure une reference particuliere a la verification des etats de
depenses\.
- 27
3\.14 Le ca1endrier estimatif des decaissements du pret envisage par 1a
BIRD est presente au Tableau 6 ci-dessous\. Le rythme de ces decaissements
est conforme a ce1ui des projets finances au Cameroun et en Afrique de l'Ouest
en general dans tous 1es secteurs\.
CM-IEROUN
PROJET DE DEVELOPPEMENT URBAIN
CALENDRIER DtEXECUTION
1981 1992 1983 1984 1986 1986
Component
1 2 3 4 1 2 \. 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 :I 4
A\. AMENAGEMENT DE NYLON
- Acquisition des terrains
- Gros trav\. de drain\. /drag\. du Mgoua Ir-" \. r_\.
~ Infrastructure urbaine Ir'-" ~I'"
,\. RehabiHtation quartier pilote
- Marche et centre artisanal r_\. r_\. ""'- ~II'"
IF\. 1111 N
Q)
I
- Aide a l'artisanat
- Equipements collectifs
- Credits au logement
1-'-'" r_\. \.
- Assistance technique
\. \.- - _\._- f--- -\. - -- _e\. \. - - --- \."- \.-
B\. EgUIPEMENTS COLLECTIFS - YDE N-O
-
-
-
Equipements collectifs
Marche\. centre artisanal
Aide a l'artisanat (assist\. techn;)
r_\. \.
w_\.
C\. ASSISTANCE TECllNIgUE ET ETUDES
- Assist\. techno - Execution du proj\.
- Assist\. techno gen\. et formation
~
- Etudes
\. -- - \. - \. -\.-~ \. -
\. Projet d'execution
\. Appel dtoffres
-,Construction/execution World B\. k 23033
- 29
Tableau 6 CALENDRIER ESTIMATIF DES DECAISSEMENTS
Decaissements de la BIRD Montant cumulatif Pourcentage
Exercice Trimestre par trimestre des decaissements cumule
BIRD s'achevant au (millions de $) (millions de $) des decaissements
1983 30 juin 1983 0,3 0,3 1
1984 30 septembre 1983 0,6 0,9 4
31 decembre 1983 0,7 1,6 8
31 mars 1984 0,9 2,5 12
30 juin 1984 1,2 3,7 18
1985 30 septembre 1984 1,6 5,3 26
31 decembre 1984 2,0 7,3
36
31 mars 1985 2,2 9,5 47
30 juin 1985 2,1 11,6 58
1986 30 septembre 1985 1,8 13,4 67
31 decembre 1985 1,5 14,9 74
31 mars 1986 1,2 16,1 80
30 juin 1986 0,9 17,0 85
1987 30 septembre 1986 0,7 17,7 88
31 decembre 1986 0,7 18,4 92
31 mars 1987 0,6 19,0 95
30 juin 1987 0,4 19,4 97
1988 30 septembre 1987 0,2 19,6 98
31 decembre 1987 0,2 19,8
99
31 mars 1988 0,1 19,9 99
30 juin 1988 0,1 20,0 100
- 30
IV\. EXECUTION ET GESTION DU PROJET
A\. Organes d'execution
4\.01 L'execution du pro jet utilise au maximum les organes en fonctionne
ment, les mecanismes de financement du logement et les procedures de recouvre
ment des coats existants\. La responsabilite generale de l'execution du pro
jet incombera au Ministere de l'urbanisme et de l'habitat (MINUH) qui a nomme
un coordinateur du projet qui sera responsable de sa coordination et de sa su
pervision, au sein de la Direction de l'urbanisme et de l'habitat (DUH) du
MINUH\. L'organe d'execution des elements "infrastructure primaire" et "reha
bilitation", la MAETUR, releve du MINUH\. Celui-ci executera egalement l'ele
ment "assistance technique" du projet\. En bref, un ensemble d'elements repre
sentant 97 % des coats totaux du pro jet seront executes par Ie MINUH au par
des organes relevant de ce ministere\. Pratiquement taus les travaux seront
executes par des entreprises supervisees par les or ganes d'execution mentionnes
ci-dessous\.
4\.02 Voici une recapitulation des responsabilites de l'execution du projet
par element :
Elements du projet Organe d'execution
1\. Coordination et supervision generales Coordinateur du projet
du projet (MINUH)
2\. Amenagement de Nylon
Infrastructure primaire, rehabilita
tion pilote et equipements collec
tifs, y compris un grand marche
de detail MAETUR/ARAN
3\. Eguipements collectifs a Yaounde
nord-ouest MAETUR/ARAN
4\. Pr@ts au logement pour les elements
"rehabilitation" CFC
5\. Assistance technigue aux artisans CAPME
6\. Etudes et assistance technigue MINUH
- 31
II a ete estime que ces institutions seront en mesure, avec l'assistance
technique qui leur sera fournie dans Ie cadre du projet, d'executer les ele
ments proposes\. Les principaux organes d'execution sont decrits dans les
paragraphes ci-apres\.
MINUH
4\.03 Comme il a ete mentionne precedemment, les fonctions ci-apres re
levent directement de l'autorite ou de la supervision du MINUH : l'acquisition
des terrains et leur utilisation pour Ie developpement urbain et industriel, la
planification urbaine, l'amenagement des terrains a usages industriel et resi
dentiel, Ie logement et Ie financement de l'amenagement de quartiers d'habita
tion, y compris l'octroi de pr@ts hypothecaires individuels\.
4\.04 Dans Ie cadre de sa reorganisation recente, Ie MINUH s'est dote d'une
sous-direction des etudes et pro jets au sein de la DUH\. Le coordinateur du
projet fera partie de cette sous-direction\. Avec l'assistance de l'expert en
urbanisme dont les services seront fournis dans Ie cadre du pro jet (voir
para\. 2\.13), ce coordinateur sera responsable de la supervision et de la coor
dination generale de tous les aspects de l'execution du projet ainsi que de
la liaison avec toutes les institutions et tous les ministeres qui participe
ront a l'execution du projet : les organes qui relevent du MINUH ainsi que les
municipalites de Douala et de Yaounde, Ie FEICOM, la SNEC et la SONEL et les
institutions chargees de la promotion de la petite entreprise et de l'organi
sation communautaire\.
4\.05 En plus de ce role de coordination generale, la DUH sera respon
sable de toutes les etudes d'urbanisme financees par Ie projet, a savoir a) la
preparation d'un Deuxieme projet d'urbanisme; b) la preparation d'un projet de
transports urbains; et c) des etudes de programmation des investissements a
Douala et a Yaounde\.
MAETUR
4\.06 La MAETLIR comprend actuellement quatre divisions: l'administration
et les finances, la construction, la commercialisation et la programmation\.
Elle est dotee d'un effect if de 40 personnes, dont cinq expatries et neuf archi
tectes et ingenieurs camerounais\. La Division de l'administration et des fi
nances est chargee du personnel et des questions administratives, de la gestion
financiere, des paiements, des recouvrements et de la comptabilite\. La nou
velle Division de la planification est chargee de planifier et de programmer
chaque operation, de delivrer les autorisations necessaires et d'assurer la
liaison avec les autorites locales et les autres organismes interesses par
chaque operation, et d'etablir les plans types pour l'amenagement des diffe
rentes parcelles et de fournir l'assistance technique necessaire aux acquereurs\.
La Division de la construction sera chargee de superviser les travaux qui se
ront executes par des entreprises\. La Division commerciale a pour t~che d'as
surer la publicite des ventes de parcelles, de recevoir et d'instruire les
- 32
demandes a soumettre au Comite de selection et d'encaisser les paiements effec
tues au titre des ventes au comptant\. Actuellement, la MAETUR a son siege a
Yaounde, et une agence a Douala\.
MAETUR/ARAN
4\.07 Generalites\. La notion de trames assainies est relativement bien
comprise et acceptee au Cameroun; Ie pays possede deja une certaine experience
dans ce domaine et Ie cadre institutionnel necessaire est en place\. Tel n'est
pas Ie cas de la rehabilitation de quartiers existants, qui n'a jamais ete
tentee auparavant\. Pendant la preparation du pro jet, plusieurs formules ont
ete envisagees sur Ie plan des institutions : a) confier cette tAche aux muni
cipalites; b) creer une nouvelle institution; ou c) etendre Ie mandat de la
MAETUR a l'amelioration des quartiers existants et a l'amenagement de l'infra
structure necessaire aces quartiers\. La municipalite de Douala a un service
technique, mais celui-ci n'a pas suffisamment de personnel et son r8le se li
mite essentiellement a passer des contrats pour les services municipaux avec
des societes privees\. D'autre part, la municipalite a admis qu'elle ne dispo
sait pas des competences necessaires et elle se montre reticente a trop s'en
gager a gerer des activites d'amelioration, encore qu'elle ait demande a avoir
voix au chapitre et a jouer un rOle dans les elements concernant la zone Nylon\.
Au depart, il avait ete prevu une institution entierement nouvelle, car il a
ete estime que Ie programme de trames assainies etait deja suffisamment lourd
pour une jeune institution et qu'il ne fallait pas detourner la MAETUR de son
role dans ce domaine ou courir Ie risque de la surcharger en lui confiant un
programme trop ambitieux\.
4\.08 Toutefois, il a ete finalement decide de limiter Ie plus possible
la creation de nouvelles institutions au Cameroun et de confier la responsa
bilite de cet element du projet a la MAETUR\. La solution proposee est donc la
creation a Douala d'une agence de la MAETUR adaptee aux besoins des interesses
et qui sera designee sous Ie nom d'Agence de restructuration et d'amenagement
de Nylon - ARAN)\.
4\.09 Creation, rOle et responsabilite en matiere de supervision\. L'ARAN
sera Ie premier service fonctionnel de la MAETUR\. Elle aura pour rOle d'assu
rer la planification et la conception de l'infrastructure de base et des tra
vaux d'amelioration de Nylon, y compris des equipements collectifs et du mar
che, et de proceder aux passations des marches et a la supervision des travaux\.
L'ARAN assurera egalement la vente des parcelles viabilisees de la zone de re
habilitation pilote a leurs occupants et aidera ceux-ci a ameliorer leur loge
ment\. Pour que ses objectifs et la portee de ses activites restent modestes
et realisables, sa duree d'existence se limitera a la periode d'execution du
projet de Nylon\. Si cette formule institutionnelle reussit, son existence
pourrait etre prolongee pour lui permettre de poursuivre l'amelioration des
reseaux secondaires, comme dans la zone pilote, dans d'autres quartiers de
Nylon et dans d'autres parties de la ville de Douala\.
- 33
4\.10 Responsabilites\. L'ARAN sera administree par un directeur camerou
nais assiste d'un comite de direction\. Si Ie Directeur general et Ie Conseil
d'administration de la MAETUR restent responsables de cette agence et de ses
activites, Ie Ministre de l'urbanisme et de l'habitat (qui est egalement Ie
President du Conseil d'administration de la MAETUR) a nettement l'intention -de
veiller a ce que Ie Conseil de la MAETUR delegue certaines responsabilites au
Comite de direction et a ce que Ie Directeur de la MAETUR delegue certaines
responsabilites au chef de l'ARAN\. Le Comite de direction comprendra : Ie
Maire de Douala; des representants des ministeres suivants : Ie MINUH, l'Inte
rieur et les Affaires sociales; deux representants de la population de Nylon
et Ie Directeur de la MAETUR\. Ainsi, toutes les parties interessees auront
voix au chapitre et pourront participer a l'examen des propositions concernant
Nylon ainsi qu'au fonctionnement de l'ARAN\. Le Chef de l'ARAN sera charge des
activites au jour Ie jour, tandis que Ie Comite de direction sera responsable
de l'approbation du programme de travail et des budgets de ce service\. La
MAETUR fournira a l'ARAN un appui technique et financier ainsi que des ser
vices financiers, comptables et administratifs\.
4\.11 Organisation interne de l'ARAN\. Le Chef camerounais de l'ARAN sera
assiste d'un adjoint, qui sera un ingenieur VRD experimente\. L'ARAN compren
dra trois sections et un secretariat\. La section de l'infrastructure, qui
traitera de tous les travaux d'infrastructure de Nylon, comprendra un ingenieur
VRD camerounais et un ingenieur hydraulicien expatrie\. La section des equipe
ments collectifs sera responsable du marche central et des equipements collec
tifs finances par la cooperation technique suisse\. Elle comprendra un archi
tecte expatrie et un ingenieur chef de chantier (Assistance technique suisse)
ainsi que deux architectes/ingenieurs camerounais\. La section des relations
communautaires sera chargee de maintenir les rapports avec la population bene
ficiaire, dont elle s'efforcera de recueillir l'avis et d'obtenir la coopera
tion, et d'assurer la representation des institutions qui participeront a
l'amenagement du quartier de Nylon, et la coordination entre ces institutions\.
Elle aura un rOle particulierement important a jouer a l'egard des familIes
qui seront delogees par les travaux d'infrastructure et en ce qui concerne la
regularisation de l'occupation fonciere dans Ie quartier pilote a rehabiliter\.
Elle comprendra un coordinateur (de l'Assistance technique suisse) et un spe
cialiste des questions foncieres engage a temps partiel, ainsi que les enque
teurs necessaires pour mener les interviews\.
Credit foncier du Cameroun (CrC)
4\.12 Les recettes procurees au CFC par la contribution sur les salaires
au cours de l'anneebudgetaire 1979-80 se sont elevees a environ 5,2 milliards de
francs CFA, soit 21 millions de dollars\. Ce montant devrait augmenter de 10 a 15%
par an\. L'utilisation de cet impot par Ie CFC se limite a des prets pour les
logements sociaux soit a la MAETUR et a la SIC, so it a des particuliers\. Au
milieu de 1980, Ie CFC avait accorde environ 150 prets a des particuliers pour
- 34
l'achat de parcelles et/ou la construction de logements pour un total de
1,5 milliomde dollars, et elle avait pr@te 14,6 millions de dollars a la
MAETUR et a la SIC pour 1 650 parcelles ou logements\. Le CFC n'exerce pas
encore ouvertement la fonction de caisse d'epargne, mais il ouvre des comptes
d'epargne sur lesquels les emprunteurs accumulent la somme necessaire a leur
propre mise de fonds\. Depuis la fin de 1980, la nouvelle direction du CFC a
decide d'etendre ses activites dans les directions suivantes :
Activites ouvertes d'epargne;
Recherche de sources supplementaires de financement exterieur a
combiner au produit de l'imp6t immobilier pour accroltre l'am
pleur des programmes futurs du CFC\.
4\.13 Organisation\. Le CFC a a sa tete un directeur general et un direc
teur general adjoint, et il se divise en deuxdepartements : finances et opera
tions\. En plus de son siege, situe a Yaounde, il a ouvert une succursale a
Yaounde, une a Douala et une a Garoua au cours de l'annee budgetaire 1979-80\.
Ces succursales sont situees dans les principaux centres d'activite de la
MAETUR\. L'an prochain, une nouvelle succursale s'ouvrira a Bamenda\. Actuel
lement, Ie CFC a un effectif de 57 personnes dont 16 cadres qualifies\.
4\.14 Le CFC retrocedera Ie montant du pret BIRD a la MAETUR/ARAN pour des
travaux d'infrastructure secondaire et tertiaire\. Le CFC consentira egalement
des prets a des particuliers de la zone de rehabilitation pour l'achat de par
celles a la MAETUR/ARAN et pour la construction ou l'amelioration de leurs 10
gements\. Les prets pour la construction de logements sont prevus par Ie projet,
mais ne sont pas finances par la Banque Wara\. 3\.04)\. Lors des negociations,
des assurances ont ete obtenues que des fonds suffisants seront prevus a cet
~ffet\.
4\.15 II a ete estime que Ie CFC sera en mesure de s'acquitter de sa part
du projet\. Depuis sa creation, Ie CFC a beneficie d'une assistance technique
du Credit foncier fran~ais, qui a pourvu ses postes de directeur et de chef de
son departement des finances\. Cette aide devrait se poursuivre encore plu
sieurs annees\. Le CFC tient convenablement sa comptabilite et etablit regulie
rement et dans les delais voulus les etats financiers necessaires\. D'une fa~on
generale, il est bien gere et il ne compte pas actuellement d'arrieres de paie
ment de plus de six mois dans son portefeuille d'hypotheques\.
Autres institutions participantes
4\.16 Dans l'element "rehabilitation", l'installation de conduites et de
reservoirs d'eau ainsi que celIe du reseau electrique et de l'eclairage public
seront effectuees par des entreprises sous la supervision de la MAETUR, la
Societe nationale des eaux du Cameroun CSNEC) et la Societe nation ale d'elec
tricite (SONEL) examinant et approuvant la conception et la supervision des
travaux\.
- 35
4\.17 L'aide qui sera fournie aux artisans des zones du pro jet a ete iden
tifiee en collaboration avec Ie personnel du DDIF et devrait tirer profit de
l'experience du DDIF et completer son action dans les domainesdes petites en
treprises et du secteur artisanal au Cameroun, telle qu'elle est decrite dans
les premier et deuxi~me projets de PME au Cameroun\. Cette assistance sera
dispensee principalement par Ie Centre national d'assistance aux petites et
moyennes entreprises (CAPME), institution autonome qui reIave du MINEP et qui
a pour mandat tr~s large la promotion de l'artisanat et des petites et moyennes
entreprises\. Le CAPME a participe au premier projet et jouera un rOle plus
grand dans Ie second\. La Caisse 0 ulaire de N Ion (CPN) et l'Union des caisses
populaires de Yaounde (UCPY aideront egalement les artisans des zones du pro
jet 8 obtenir du credit\. Ces deux institutions pr~tent de petites sommes aux
artisans depuis plusieurs annees\.
4\.18 Les comites d'action de quartier de Nylon, bien qu'ils n'aient pas
de statut officiel, participeront a l'amelioration du quartier pilote, a la
creation d'emplois et 8 la construction de centres communautaires\. Chacun des
13 quartiers de Nylon a son comite d'action qui est represente au sein des co
mites de niveau plus eleve qui coordonnent les projets de travail communautaire\.
Au cours des dix derniares annees, ces comites ont reussi tr~s efficacement a
mobiliser des ressources locales et 8 les canaliser vers les activites de deve
loppement communautaire\. Le MINED, Ie MINSAN, Ie MINAS et Ie MINJ&S devront
approuver les plans des equipements collectifs et leur fournir Ie personnel et
l'entretien necessaires, et Ie bureau de Douala du MINAS sera charge d'executer
Ie programme d'education sanitaire et nutritionnelle\.
B\. Execution du pro jet
Acquisition de terrains
4\.19 La totalite des 50 he de la zone pilote a ameliorer a Nylon, a l'ex
ception d'un terrain de 3,8 ha en voie d'acquisition, appartiennent egalement
au domaine public\. Dans la zone pilote a ameliorer, la MAETUR!ARAN, avec la
participation des residents, sera chargee du remembrement des parcelles (nou
velle delimitation des parcelles et attribution de titres provisoires de pro
priete) ainsi que de l'indemnisation et de la reinstallation des occupants ac
tuels deplaces par Ie remembrement et par l'installation de l'infrastructure
et des equipements collectifs\. L'Etat a egalement achete et amenage 30 ha ou
seront recases les habitants deloges de Nylon et un terrain supplementaire est
disponible pour etendre cette zone a mesure des besoins\. Ce point a ete con
firme au cours des negociations\.
- 36
Infrastructure urbaine de base et rehabilitation
4\.20 Le cadre institutionnel necessaire a l'infrastructure urbaine de
base et a la rehabilitation (MAETUR/ARAN) sera adapte a la situation particu
liere de Nylon\. La MAETUR/ARAN sera chargee de l'amenagement des terrains,
c'est-a-dire de la passation de contrats de sous-traitance avec des bureaux
d'etude pour la preparation des pro jets d'executionet des dossiers d'appel
d'offres et la supervision de cette preparation; elle lancera les appels d'of
fres et depouillera les soumissions, puis preparera les documents necessaires
en vue de l'attribution des marches par la Commission centrale des marches\.
Pour accelerer Ie demarrage du projet, Ie MINUH a deja attribue certaines etu
des techniques detaillees et a commence les travaux dans la zone de recasement
et sur Ie Mgoua\. La MAETUR/ARAN sera egalement chargee de fournir l'assistance
technique aux familIes pour l'amelioration de leurs maisons et aux groupes com
munautaires pour les travaux de voirie et les travaux de drainage a effectuer
en commun et pour Ie ramassage des ordures menageres\. Par ailleurs, une equipe
d'assistance technique suisse, rattachee a la MAETUR/ARAN, sera responsable de
la construction d'un grand marche de detail et des equipements collectifs a
Nylon ainsi que de la coordination et de la supervision de toute l'assistance
technique fournie a la communaute de Nylon\.
Achat de parcelles et prets a la construction de logements
4\.21 Dans la zone d'action pilote de 50 ha de Nylon, les occupants des
parcelles seront encourages a ouvrir des comptes d'epargne au CFC afin d'accu
muler un montant suffisant pour verser l'acompte necessaire a l'achat de la
parcelle a l'achevement des travaux, car certains occupants ne pourraient vrai
semblablement pas repondre aux conditions d'attribution de pret du CFC\. Les
divisions de l'organisation communautaire et des ventes de la MAETUR/ARAN in
formeront les occupants de la necessite de ce programme d'epargne et du montant
mensuel a epargner\. En outre, Ie CFC a entame des negociations avec la commu
naute et la Caisse populaire de Nylon afin de definir des criteres et proce
dures particuliers pour ce quartier\. Certains occupants de parcelles auront
deja construit un logement susceptible de leur donner droit a un certificat
d'amenagement de leur parcelle et a un titre de propriete a part entiere, une
fois qu'ils auront achete la parcelle a la MAETUR/ARAN\. La plupart d'entre
eux devront effectuer des travaux d'amelioration\. Les demandes de pret seront
soumises au CFC a titre individuel par les occupants ou a titre collectif par
l'intermediaire de la Caisse populaire qui aidera les occupants a prouver leur
solvabilite et la stabilite de leurs revenus\. Lorsque les prets auront ete
approuves, Ie CFC en versera Ie montant par tranches aux emprunteurs, comme
dans les zones de trames assainies\. A l'achevement des travaux de construc
tion, les occupants presenteront une demande de certificat d'amenagement de
parcelle et une demande de titre de propriete\. Lors des negociations, des
assurances ont ete obtenues que les criteres et procedures d'allocation de
parcelles et de prets seront conformes a la description ci-dessus\.
- 37 -
Eguipements collectifs et marches
4\.22 Les modalites de construction et d'amenagement des equipements col
lectifs ont ete elaborees en etroite collaboration avec les ministeres tech
niques selon Ie principe consistant a utiliser les moyens les plus rapides et
les plus efficaces pour assurer la construction tout en laissant Ie soin d'exa
miner la conception au personnel competent des ministeres interesses (education,
sante, affaires sociales, jeunesse et sports)\. La decision prise a ete de con
fier la construction de tous les equipements collectifs de Yaounde nord-ouest
a la MAETUR, etant entendu que Ie personnel de la MAETUR procederait a des con
sultations approfondies aupres des ministeres techniques et des municipalites
et solliciterait leur approbation pour l'implantation et la conception de ces
equipements\. A Nylon, ou tous les equipements doivent ~tre finances par la
Suisse, celle-ci a l'intention dans Ie cadre d'un programme de promotion de
l'emploi supervise par la MAETUR/ARAN de faire appel a de petites entreprises
de quartier et a des tftcherons en formation\. Les ministeres seront charges de
pourvoir ces equipements en personnel et d'assurer leur entretien, et toutes
les implications du point de vue du personnel et du budget devront ~tre exami
nees avec eux\. II a ete estime qu'ils sont pleinement capables d'assumer leurs
responsabilites pendant l'execution des travaux\.
Aide a l'artisanat
4\.23 Le projet vise a mettre l'assistance technique et l'assistance en ma
tiere de gestion a la disposition des artisans des deux zones interessees par
l'entremise des services du CAPME\. II s'agit d'attirer plus d'artisans de Nylon
et de Yaounde nord-ouest vers les caisses populaires et de les aider a profiter
de cette assistance ainsi que du credit disponible gr§ce a la ligne de credit
de la BCD pour les petites entreprises (voir aussipara\. 4\.17)\.
Participation communautaire
4\.24 Les comites d'action de Nylon, qui ont ete consultes a tous lea
stades de la preparation du projet, continueront de participer a l'execution du
projet par Ie biais de leur representation au Comite d'administration de la
MAETUR/ARAN\. lIs continueront d'organiser des projets de travaux communau
taires qui completeront les travaux de genie civil de grande ampleur finances
dans Ie cadre du projet, notamment dans la zone d'amelioration pilote, et ils
choisiront les emplacements des cinq centres communautaires dont ils assureront
la construction\. lIs travailleront egalement avec Ie personnel de la MAETUR/
ARAN a l'elaboration d'un plan detaille pour les procedures de ramassage des
ordures du quartier\.
Entretien
4\.25 La responsabilite de l'entretien des elements du projet sera assumee
selon les modalites actuellement appliquees au Cameroun\. Les equipements col
lectifs seront pourvus en personnel et entretenus par les ministeres techniques
- 38
interesses; les reseaux d'alimentation en eau et d'electricite seront entrete
nus respectivement par la SNEC et la SONEL; et la voirie et Ie reseau de drai
nage, par les municipalites\. Le Gouvernement etudie actuellement un nouveau
cadre institutionnel et financier pour l'entretien du reseau de drainage
primaire\.
C\. Verification des comptes, suivi et supervision
Verification des comptes
4\.26 Les comptes du pro jet seront tenus separement par chaque agence
d'execution, et Ie coordinateur du MINUH tiendra un compte pour l'ensemble du
projet\. Ce coordinateur etablira des rapports trimestriels sur l'etat d'avan
cement des travaux, qu'il remettra a la Banque\. Lors des negociations, des assu
rances n'ont ete obtenues que dans un delai maximal de six mois a compter de
la clOture de chaque annee budgetaire, des etats financiers acceptables, avec
compilation des etats de depenses rend ant compte des operations financieres et
de la situation des principales entites du projet (MAETUR ET CFC), seront four
nis a la BIRD\. Ces etats financiers seront verifies par un expert-comptable
independant juge acceptable par la BIRD Wara\.2\.13) et seront soumis a la BIRD
au plus tard 12 mois apres la clOture de chaque annee budgetaire\. A la suite
de la clOture des decaissements, Ie Gouvernement etablira un rapport d'acheve
ment du pro jet\.
Suivi
4\.27 Le projet sera suivi par Ie coordinateur, qui a) verifiera si ses di
vers elements peuvent ~tre reproduits et sont a la portee des beneficiaires
vises, et b) recherchera les moyens de redresser les defauts constates pendant
son execution\. Etant donne notamment les particularites de la zone Nylon, la
MAETUR/ARAN sera chargee de suivre de pres cet element du projet (population,
revenu, remembrement, regime foncier)\. Lors des negociations, des assurances
n 'ont ete obtenues que les responsabilites en matiere de suivi seront definies
comme il est propose ci-dessus\.
Supervision
4\.28 La superv~s~on par Ie personnel de la Banque pendant les six annees
de la periode d'execution du pro jet necessitera environ 25 hommes-semaines
par an a compter de l'ete 1983\. Elle fera intervenir des specialistes des
travaux de genie civil, de l'urbanisme, de l'analyse financiere et de la ges
tion municipale ainsi que de la circulation et des transports urbains\.
- 39
V\. ANALYSE fINANCIERE
A\. Introduction
5\.01 Le pro jet sera l'occasion d'introduire la notion de rehabilitation au
Cameroun et, avec elle, la notion de recouvrement des coOts aupres des bene
ficiaires des zones ameliorees par la vente des parcelles en echange d'un titre
de propriete a part entiere\. Le projet sera egalement l'occasion d'instaurer
une participation municipale au financement de l'amelioration de la condition
des pauvres des villes dans les zones ameliorees\. La population visee par Ie
projet se situera dans la tranche des 5 % inferieurs de la fourchette des reve
nus, et Ie projet repoussera en fait de 20 % la limite inferieure du groupe de
revenu pouvant acceder aux services du secteur structure du logement\. Pour
pouvoir etre reproduit, Ie projet se fonde essentiellement sur Ie cadre ins
titutionnel existant tout en fournissant une assistance technique pour renfor
cer les points faibles de ce cadre\.
B\. Ventilation des coOts
5\.02 La ventilation des coOts entre les beneficiaires, les municipali
tes et Ie Gouvernement central resultant de l'application de la methode de
crite precedemment est recapitulee au Tableau 7 ci-dessous\. A Nylon, sur les
39,7 millions de dollars investis, 23,8 millions, soit environ 60 %, serviront
a couvrir les coOts de l'infrastructure primaire qui ne sont pas a la charge
des beneficiaires\. Quelque 81 % des coats totaux des travaux de Nylon, y com
pris les coOts de construction des routes primaires et les grands travaux de
drainage, ainsi que les autres coOts d'infrastructure non recouvrables aupres
des beneficiaires et tous les coOts des equipements collectifs, sont a la
charge du Gouvernement central\. Les coOts de construction du marche, qui re
presentent environ 11 % des coOts totaux de Nylon, sont a la charge des usa
gers de ces installations\. Quelque 2 % des coats, correspondant a l'eclairage
public, aux bornes-fontaines et aux decharges publiques, sont a la charge de
la municipalite de Douala\. Le solde, soit 5 % des coOts de Nylon, ou 2,0 mil
lionsde dollars, correspondant a la construction de routes, d'un reseau de
drainage et d'autres elements d'infrastructure de quartiers dans la zone pi
lote de 50 ha ainsi quIa l'octroi de pr@ts a la construction de logements,
sera recouvre aupres des beneficiaires par Ie paiement d'une somme globale
couvrant egalement la regularisation des droits d'occupation\. La forte part
du Gouvernement central est due aux lourdes depenses de drainage causees par
Ie fait que Nylon se trouve dans une zone marecageuse traversee par les eaux
de drainage d'une grande partie de la ville\. Par consequent, la ville tout
entiere profitera des depenses qui seront consacrees au reseau primaire\.
Comme l'infrastruture de base de Nylon desservira egalement d'autres quar
tiers de la ville et qu'elle est d'un type que les habitants des quartiers
aises de la ville n'ont pas a payer, cette formule est raisonnable tant du
point de vue de l'incidence des avantages que de celui de l'equite\.
- 40
Tableau 7 REPARTITION DES COUTS
Re artition des coats
Coat Etat
total Ministeres Municipalites Beneficiaires
(millions (millions (millions (millions
de FCFA) de FCFA) 10
CY
de FCFA) CY
10 de FCFA) CY
10
Gras travaux de
drainage et infra
structure primaire
Nylon 7 740 7 662 99 78 1
Rehabilitation quar
tier pilote - Nylon 507 30 6 45 9 432 85
Pr@ts au logement 220 220 100
Equipements col
lectifs 1 334 1 334 100
Marches 1 494 1 494 100
Aide a l'artisanat 496 496 100
Assistance technique 2 890 2 890 100
Terrains 88 88 100
TOTAL 14 769 12 412 84 123 1 2 234 15
dont :
Elements logement
Quartier pilote 815 30 4 45 5 740 91
Pr@ts au logement
Terrains
5\.03 Le Gouvernement central supportera egalement les coats de l'assis
tance technique pour l'execution du projet, de la formation et de l'aide aux
petites entreprises (qui sera fournie entierement so us la forme d'assistance
technique et de soutien operationnel) ainsi que la partie des coOts des ter
rains correspondant aux equipements collectifs et a 1 'infrastructure primaire\.
- 41
5\.04 La municipalite de Douala supporta les coats de l'eclairage public,
des bornes-fontaines et des decharges publiques\. La participation des munici
palites au recouvrement des coats d'equipement du projet et au financement des
coats d'entretien des zones et installations du projet sera assuree par Ie
biais des recettes decoulant de certaines mesures fiscales, et notamment des
taxes per~ues par Ie Gouvernement central et retrocedees en partie aux munici
palites (impdts sur Ie revenu, patentes, impdts sur Ie chiffre d'affaires des
entreprises, l'enlevement des ordures, Ie fonctionnement des ambulances et
l'eclairage public) et d'autres taxes per~ues par les municipalites (18 taxes
differentes, dont les plus importantes sont la redevance per~ue pour l'occupa
tion d'espaces sur les marches et la taxe de location, les permis de construire,
les taxes de stationnement et la taxe sur les loisirs)\. Dans l'ensemble, les
recettes fisc ales retrocedees par Ie Gouvernement central representent environ
70 % des recettes totales de la municipalite de Douala\. Le volume total des
recettes fiscales du Gouvernement central et de la municipalite permet de cou
vrir les coats de fonctionnement de cette derniere ainsi que ses petites acti
vites d'equipement\.
5\.05 Outre les coats imputables a l'infrastructure et aux terrains, les
beneficiaires des parcelles rehabilitees auront a payer l'inter~t pendant la
construction et Ie coOt total des travaux de construction de logements finan
ces dans Ie cadre du projet, y compris la construction de latrines a fosse et
les raccordements individuels a l'eau et a l'electricite (ces derniers travaux
etant laisses au choix du beneficiaire)\. Le total des coats des marches des
zones du pro jet (Nylon et Yaounde nord-ouest) sera a la charge des beneficiaires
de ces equipements : les boutiquiers, les petits commer~ants, les petits entre
preneurs et les artisans, par Ie biais des taxes de location et des boutiqueset
des redevances journalieres des marchands forains qui seront fondees sur des
baremes appliques a des commerces analogues\.
C\. Recouvrement des coOts
5\.06 Dans la zone de rehabilitation, les prix de vente des parcelles cou
vriront Ie coat d'acquisition du terrain (coats d'expropriation); les coats de
l'infrastructure secondaire; les frais de conception et de supervision et les
frais generaux de l'agence d'execution (MAETUR/ARAN); et l'inter~t intercalaire
au taux de 5,5 %\. Les prats a la construction ou a l'amelioration de logements
dans Ie quartier pilote de Nylon couvriront les coats des materiaux et de la
main-d'oeuvre (y compris la construction des latrines a Fosse et les raccorde
ments individuels facultatifs, compte tenu du travail qui sera fourni par les
beneficiaire~\. Le financement pour l'achat des parcelles et la construction de
logements sera consolide en un seul pr@t du CFC a chaque beneficiaire, rembour
sable en 15 ans (avec differe d'amortissement d'un an) et portant inter@t a
4,5 %\. Un acompte de 10 % devra ~tre verse a l'achat\.
- 42
5\.07 La Banque camerounaise de developpement prelevait recemment un inte
r@t de 8,5 % sur les prats remboursables en 7 a 10 ans qu'elle accordait pour
la construction de logements ou l'achat de terrains a usage residentiel ou de
logements a des particuliers dont Ie revenu depassait 200 000 francs CFA par
mois, c'est-a-dire appartenant a la tranche de 3 % la plus riche\. Les taux
d'interet sur les prets immobiliers applicables aux groupes a faible revenu
sont egalement comparables au taux actuel et prevu de l'inflation generaIe au
Cameroun, qui est de 10 %\.
5\.08 Les conditions d'octroi de prets immobiliers aux beneficiaires sont
celles qu'applique actuellement l'Etat\. Les taux proposes sont les plus eleves
qui soient actuellement accept abIes du point de vue politique, etant donne que
Ie CFC finance ces prats entierement sur ses propres ressources qui proviennent
de la taxe immobiliere qui lui est retrocedee gratuitement\. Cette taxe est un
impot sur Ie revenu preleve a la source sur les salaires de tous les employes,
a raison de 0,5 % de leur salaire et a laquelle vient s'ajouter une contribu
tion egale de l'employeur (a l'exception des services gouvernementaux qui ne
versent pas cette contribution)\. Le produit de cette taxe est alloue exclusi
~ement au CFC qui doit l'utiliser pour les logements sociaux et ne peut etre
prete a des personnes appartenant aux groupes a revenu plus eleve auxquels
est allee traditionnellement l'aide financiere au logement jusqu'a la creation
du CFC, en 1977\. Autrement dit, l'aide financiere au logement procuree par Ie
, CFC lui est fournie par Ie personnel salarie qui est egalement Ie groupe cible
de ses operations de pr@t\. Dans la mesure ou les emprunteurs du CFC appar
tiennent aux tranches a faible revenu et non salariees, ce systeme se traduit
par une forme de subvention profitant aux groupes cibles a faible revenUe Les
groupes a revenu plus eleve peuvent obtenir des prets a 8,5 % de la BCD (voir
para\. 5\.07)\. Si, a l'avenir, Ie CFC doit emprunter sur les marches financiers
du fait de l'accroissement de la demande, il risque de se trouver dans l'obli
gation d'appliquer des taux d'inter@t plus eleves\. La Banque a examine ce
point avec Ie CFC qui s'est declare pret a appliquer les conditions de pret
necessaires pour couvrir Ie coat de ses ressources et operations\.
- 43
D\. Accessibilite
5\.09 Dans la zone d'amelioration pilote de Nylon, pour les menages qui de
sireront obtenir un pr@t, Ie coOt total par parcel Ie (y compris lea coats
moyens d'infrastructure et les pr@ts a la construction) variera d'environ
1 300 a 3 500 dollars et sera accessible a des personnes se situant dans la
tranche des 10 % inferieurs de l'eventail des revenus, et les parcelles seules
seront egalement accessibles aux personnes dont Ie revenu se situera au cin
quieme percentile (voir Tableau 8)\. Dans l'hypothese peu probable ou, d'ici a
1984, Ie coat de la plus petite parcelle a Nylon aurait augmente de 45 % et
Ie revenu de 25 % seulement, elle resterait accessible a la tranche de revenu
des 5 % inferieurs\.
E\. Possibilite de repetition
5\.10 Le projet utilise Ie plus possible des institutions et modalites
d'execution existantes\. Tous les principaux agents d'execution recevront une
assistance technique, cette assistance aura pour objet de renforcer leur apti
tude a executer des projets du m@me ordre a l'avenir\.
5\.11 Le niveau eleve de recouvrement dans la zone d'amelioration de Nylon
justifiera la repetition des travaux d'infrastructure secondaire et tertiaire
et d'amelioration de logements dans les autres quartiers de Nylon\. Dans cette
zone, l'absence de recouvrement direct des coats de l'infrastructure primaire
pose un probleme, mais Ie fait que cette infrastructure sert une zone beaucoup
plus vaste de la ville de Douala et que l'investissement peut @tre traite comme
un transfert de ressources justifie la formule employee\.
5\.12 Le niveau de recouvrement des coats atteint avec l'element rehabili
tation du pro jet est juge suffisant pour un premier pro jet considere comme un
premier pas vers l'etablissement d'un programme continu de rehabilitation qui
sera marque par une amelioration progressive du recouvrement des coOts\. La
possibilite de repetition sera fonction de resultats effectifs de recouvrement
des coOts et de la regularisation de l'occupation fonciere, notamment pour
l'element rehabilitation\. C'est pourquoi Ie recouvrement des coOts et Ie ca
dastre feront l'objet principal de l'assistance technique pour la mise en place
de procedures rationnelles et applicables et pour la supervision de leur appli
cation\. La possibilite de repetition depend egalement, a long terme, de la vo
lonte et de la capacite du Gouvernement d'engager les fonds necessaires au
maintien d'un programme d'infrastructure primaire en expansion constante\. Les
demandes budgetaires du MINUH pour la periode du Cinquieme Plan (1981-86) sont
suffisantes a cet egard environ 120 millions de dollars, soit 20 % du budget
total du MINUH, devraient @tre alloues a l'infrastructure primaire au cours de
ces cinq annees\.
- 44
Tableau 8: PRIX DES PARCELLES, TAUX D'INTERET ET
ACCESSIBILITE
(Revenu de 1980)
Rehabilitation d'un quartier Pilote - Nylon
(FCFA)
Superficie de la parcelle (m2 )
100 150 200 300
Mensualites sur la parcelle 151\.100 226\.650 302\.200 453\.300
Parcelle seule- Plan d 'epargne
3 ans 4\.197 6\.296 8\.394 12\.592
Parcelle seule - Pret a 15 ans 1\.044 1\.567 2\.089 3\.133
Prix de la parcelle + pret de
200\.000 FCFA 2\.427 2\.949 3\.471 4\.516
Prix de la parcelle + pret de
500\.000 FCFA 4\.501 5\.023 5\.545 6\.590
Revenu mensuel minimum exige
Parcelle seu1e - Plan d'epargne
3 ans /1 13\.990 20\.987 27\.980 41\.973
Parce11e S'e"u1e - Pret a
15 ans /2 5\.220 7\.835 10\.445 15\.665
Prix de 1a-parce11e + pret de
200\.000 FCFA /j 12\.135 14\.745 17\.355 22\.580
Prix de 1a parce11e + pret de
500\.000 FCFA /l 22\.505 25\.115 27\.725 32\.950
Percentile inferieur de 1a population
atteint
Parce11e seu1e - Plan d'epargne
3 ans 15 30 40 60
Parce11e seu1e Pret a 15 ans 5 5 10 15
Prix de ia parce11e + pret de
200\.000 FCFA 10 15 20 30
Prix de 1a parce11e + pret de
500\.000 FCFA 30 40 40 50
-
/1
/2
Dans l'hypothese Oll 30% du revenu mensue1 pourraient etre consacres au
logement
Dans l'hypothese Oll 20% du revenu mensue1 pourraient etre consacres au
logement
Paiement comptant 10%, solde finance a 4,5% pour 15 ans\.
- 45
5\.14 A Douala, Ie projet de rehabilitation permettra de fournir des ser
vices de base a 25 % de la population pauvre (familIes vivant au-dessous du
seuil de pauvrete, voir para\.l\.OB), tandis que l'amelioration du quartier pi
lote beneficiera a 5 % de la population de la ville\.
- 46
VI\. ANALYSE ECONOMIQUE
A\. Justification et avantages du projet
6\.01 L'experience que ce projet permettra d'acquerir dans Ie domaine de
l'amelioration de quartiers devrait ouvrir la voie a des programmes publics
plus rentables dans ce secteur\. A plus longue echeance, Ie renforcement des
fonctions d'administration et d'enregistrement des terrains devrait contribuer
a accroltre l'investissement prive dans Ie logement, car l'absence de securite
d'occupation est l'un des principaux obstacles a l'investissement prive, tant
en ce qui concerne la construction de logements permanents dans les quartiers
traditionnels existants que pour la creation de nouveaux quartiers urbains\.
6\.02 Les avantages directs et tangibles qui seront procures pendant la pe
riode du pro jet sont :
a) de meilleures conditions d'environnement et un meilleur acces au re
seau routier, a l'eau et aux services de sante pour les 90 000 habi
tants de Nylon (14 300 menages);
b) la regularisation de l'occupation des parcelles et un niveau beaucoup
plus eleve de service pour les 13 000 occupants (2 200 menages) de la
zone d'amelioration pilote; et
c) la creation d'environ 5 400 places nouvelles dans des ecoles primaires
a Nylon et Yaounde nord-ouest\.
6\.03 Parmi les avantages indirects importants engendres par Ie projet fi
gurent l'amelioration de l'etat de sante des occupants de Nylon, oD la plupart
des problemes de sante sont dus aux mauvaises conditions d'hygiene, et la crea
tion d'emplois pour des ouvriers non qualifies dans la construction\. Compte
tenu de la proportion des coOts des travaux de genie civil du projet afferents
a la main-d'oeuvre non qualifiee et des niveaux actuels de salaire, Ie projet
permettra de creer environ 800 hommes-annees d'emploi non qualifie pour les
travaux d'amelioration\. On pense aussi que la rehabilitation de Nylon fera
naltre dans ce quartier une vague de travaux de consolidation de logements
que les familIes remettaient a plus tard en attendant la construction de l'in
frastructure et l'espoir d'une certaine securite d'occupation\.
- 47
B\. Calculs des taux de rentabilite
6\.04 Les taux de rentabilite economique interne ont ete calcules separe
ment pour a) l'amelioration generale de Nylon, et b) 1 'amelioration du quartier
pilote de Nylon\. Les coats afferents a tous les elements correspondent aux
travaux de genie civil entrepris sur les sites et hors-site, aux pr@ts pour la
construction de logements, a l'assistance technique liee au pro jet et aux de
passements de quantites (net d'imp6ts, evalues en prix de reference en devises)\.
Les coOts non couverts par Ie pro jet comprennent la valeur des terrains, les
depenses annuelles d'entretien de l'infrastructure et des logements (pour tous
les elements du projet), Ie coOt estimatif des ameliorations supplementaires
apportees aux logements sous l'influence du pro jet dans l'ensemble de la zone
Nylon et Ie coOt des raccordements aux reseaux d'alimentation en eau et en
electricite dans la zone pilote ainsi que Ie coOt de l'infrastructure du site
consacre a la reinstallation des menages de Nylon deplaces par les nouveaux
ouvrages d'infrastructure et les nouveaux equipements collectifs\.
6\.05 Les avant ages ont ete estimes sur la base des augmentations escomp
tees de la valeur locative des logements de Nylon, ces augmentations s'inspi
rant elles-m@mes des differences de loyer observees entre les logements selon
leur facilite d'acces, Ie niveau des services et les materiaux de construction
utilises\. On a considere que la valeur residuelle du terrain au cours de la
25eme annee serait nulle\.
6\.06 Le taux de rentabilite de l'element rehabilitation du projet est
estime a 18 %\. Le tableau ci-apres indique Ie taux de rentabilite interne de
l'infrastructure de base dans l'ensemble de la zone Nylon (16 %) ainsi que ce
lui de l'investissement supplementaire consacre a la zone pilote (64 ra)\. Le
taux de rentabilite interne de l'investissement total dans la zone pilote est
de 38 ra\. Ce dernier taux est Ie taux de rentabilite qui s'applique Ie mieux
au programme d'amelioration a plus long terme lance par Ie projet\. Cette forte
rentabilite des investissements supplementaires dans la zone pilote s'explique
par Ie bond considerable realise par la valeur des terrains et la valeur loca
tive du fait de la securite d'occupation\.
6\.07 L'analyse de sensibilite montre que les taux de rentabilite internes
des divers elements sont pratiquement aussi sensibles a une reduction de 20 %
des avantages qu'a une hausse de 15 ra des coats et que la justification du
pro jet n'est pas remise en cause par ce type de modification\. II est peu pro
bable que les coats augmentent de 15 ra, vu qu'ils se fondent sur Ie projet
d'execution pour les travaux de la premiere annee\. II est egalement peu pro
bable que les avantages diminuent de 20 %, puisqu'ils ont ete calcules tres
prudemment\. Les resultats de l'analyse de sensibilite montrent qu'en aucun
cas, Ie taux de rentabilite interne de l'ensemble des elements d'amelioration
ne descendrait au-dessous de 14 %\.
- 48 -
Taux de renta
bilite interne CoOt (+15) Avantages (-20)
Nylon, infrastructure
de base 16 14 12
Nylon, quartier pilote 64 54 49
Ensemble travaux
d'amelioration 18 15 14
C\. Repartition des avantages et incidence sur la pauvrete
6\.08 Comme environ 55 % des habitants de la zone Nylon vivent en-de9a du
seuil de pauvrete pour Douala, et que tous les habitants de cette zone profite
ront directement des investissements qui y seront apportes par Ie projet, on
peut considerer que 55 % du coat des travaux et des pr~ts accordes a Nylon
ainsi que du coat de l'assistance technique dispensee a la MAETUR!ARAN profi
teront directement a la population pauvre de la ville\. On estime que tous les
avantages qui seront procures par les marches et l'aide aux petites entreprises
et aux artisans iront aux pauvres des villes\. Dans ces conditions, environ la
moitie du total des coats de base procurera des avant ages directs aux popula
tions urbaines pauvres\.
6\.09 Le nombre total des beneficiaires appartenant au groupe de la popula
tion urbaine pauvre est de l'ordre de 35 000, c'est-a-dire de la totalite des
personnes de cette categorie vivant a Nylon, et 25 % des pauvres de Douala;
3 200 petits commer9ants, boutiquiers et marchands forains pour les marches; et
100 artisans pour Ie centre d'artisanat de Yaounde nord-ouest\.
D\. Risgues
6\.10 Le principal risque que comporte Ie projet a trait au caractere in
novateur de la rehabilitation\. De plus, la diversite des elements du projet
necessitera une coordination et une supervision minutieuses\. Pour minimiser
les risques, une assistance technique importante sera dispensee aux agences,
l'etablissement de puissants moyens d'execution et de coordination du projet
est prevu au sein du MINUH\. L'enregistrement et l'administration des terrains,
qui sont un autre point faible, seront assures (jusqu'a la delivrance d'un
titre provisoire de propriete) pour Ie compte du MINUH par les institutions
responsables de l'amenagement des sites du projet, en attendant que l'assis
tance technique renforce les moyens des divisions correspondantes du MINUH
d'exercer ces fonctions (voir?ara\. 4\.21)\.
- 49
VII\. RECOMMANDATIONS
7\.01 Pendant les negociations du credit, des assurances ont ete obtenues
sur les points suivants
a) Ie montant du prat de la BIRD sera retrocede aux intermediaires
financiers et aux agences d'execution selon des conditions jugees
satisfaisantes par la BIRD (para\. 3\.06)\. Le CFC consentira des
prats pour l'achat de parcelles et la construction ou l'ameliora
tion de logements pour toutes les parcelles prevuespar Ie projet,
comme il est decrit dans Ie present rapport (para\. 4\.14);
b) les fonds de contrepartie necessaires seront mis a la disposition
des institutions participantes ~ras\. 3\.03 et 4\.14), et ces institu
tions investiront ces fonds et recouvreront les coats comme il
est decrit dans Ie present rapport (paras~ 5\.06 a 5\.0R):
c) un coordinateur du projet juge acceptable par la BIRD sera nomme au
sein du MINUH (para\. 4\.04);
d) des zones de recasement seront prevues selon les besoins (para\. 4\.19);
e) les conditions d'occupation, les criteres d'allocation des parcelles
et les conditions et modalites de vente des parcelles et d'ameliora
tion des logements seront conformes aux indications du present rap
port (para\. 4\.21);
f) des rapports d'activite trimestriels seront etablis; et des etats
financiers et rapports de verification comptables pour les princi
pales agences d'execution seront etablis par des experts-comptables
juges acceptables par la BIRD, et soumis a la BIRD au plus tard
douze mois apras la c18ture de chaque annee budgetaire (para\. 4\.26);
et
g) les modalites de suivi du projet, en particulier pour l'element reha
bilitation de Nylon, feront l'objet de discussions et d'un accord
avec la BIRD (para\. 4\.27)\.
7\.02 L'entree en vigueur du credit sera subordonnee a la signature d'ac
cords de credit subsidiaire entre a) Ie Gouvernement et Ie CFC et b) entre
Ie CFC et la MAETUR (para\. 3\.07)\.
7\.03 Sous reserve des assurances et conditions mentionnees ci-dessus,
Ie projet justifie l'octroi par la BIRD d'un prat egal a la contre-valeur
de 20 millions de dollars au Cameroun\.
- so
ANNEXE 1
CAMEROUN Tableau 1
PROJET DE DEVELOPPEMENT URBAIN
ESTIMATION DETAILLEE DES COUTS
(millions de FCFA)
Local Taxes Devises Total
NYLON
INFRASTRUCTURE UBBAINE 1\.035 658 1\.863 3\.554
Routes 535 283 669 1\.487
Drainage 396 249 822 1\.467
Adduction dfeau 30 61 213 304
E1ectricte '4 15 36 55
Ramassage des ordures 7 8 18 32
Zone de recasement 63 42 105 209
REHABILITATION PILOTE 163 62 160 386
Terrain 88 88
Routes 50 26 62 138
Drainage 13 8 26 47
Adduction d'eau 2 4 15 21
Electricite 6 19 46 72
Ramassage des ordures 4 5 11 20
GRANDS TRAVAUX DE DRAINAGE - MGOUA 302 190 625 1\.118
Dragage de 1a partie ava1 119 75 246 440
Terrassement et talus de 1a partie amont 172 108 357 638
Passage aoua l'8Utoroute 11 7 22 40
MARCH! 216 144 361 722
Marche 216 144 361 722
EQUIPEMENTS COLLECTIFS ET EQUIPEMENT 138 99 249 483
Eco1es (2-36 classes) 94 65 163 321
Dispensaire (ll 9 7 17 33
C1inique (1) 9 7 17 33
Centres communautaires (5) 11 9 22 41
Enseignement sanitaire 5 3 12 20
Centre de j eunes se (1) 6 5 11 22
Terrains de sport (2) 4 3 7 13
PRETS DE LOGEMENTS
Pritspour l'amii1ioration (600) 99 33 88 220
AIDE AUX PETITES ENTREPRISES 89 25 59 172
Assistance technique 3 2 10 15
Conts des operation~ locales 79 5 7 91
Vehicules, equipements etc\. 7 18 42 66
PLAN ET SUPERVISION 121 53 402 575
TO'J:,AL CQUTS\. DE BASE 2\.163 1\.264 3\.807 7\.230
DEPASSEMENT DES QUANTITES (IMPREVUS) 284 177 539 1\.001
HAU~eE DE::: PRIX 848 530 1\.09\.1 2\.477
--
TOTAL
-
3\.295 1\.971
==
5\.443
--- 10\.708
----
----
- 51
ANNEXE 1
Tableau 2
CAMEROUN
PROJET DE DEVELOPPE~lliNT URBAIN
ESTIMATION DETAILLEE DES COUTS
(millions de FCFA)
Local Taxes Devises Total
EQUIPEMENTS COLLECTIFS - YAOUNDE N-O
EQUIPEMENTS COLLECTIFS ET EQUIPEMENT 86 63 157 305
Eco1es (1-24 classes) 51 35 90 176
Dispensaire (1) 9 7 17 33
C1inique (1) 9 7 17 33
Centres communautaires (i) 11 9 22 41
Centre de jeunesse (1) 6 5 11 22
\.
MARCHE, CENTRE D'ARTISANAT 76 51 127 253
Marche 26 18 44 88
Centre d'artisanat 50 33 83 165
AIDE AUX PETITES ENTREPRISES 81 22 53 154
Assistance technique 3 2 9 13
Couts des operations locales 72 4 7 83
Vehicu1es, equipement etc\. 6 16 37 58
PLAN ET SUPERVISION 10 5 36 51
TOTAL COUTS DE BASE 253 141 373 763
DEPASSEMENT DES QUANTITES (IMPREVUS) 37 21 56 114
HAUSSE DES PRIX 114 65 119 297
TOTAL 404 227 548 1\.174
- 52
ANNEXE 1
Tableau 3
CAMEROUN
PROJET DE DEVELOPPEMENT URBAIN
ESTIMATION DETAILLEE DES
COUTS
(millions de FCFA)
Local Taxes Devises Total
ETUDES ET ASSISTANCE TECHNIQUE
EXECUTION DU PROJET 532 114 433 1 077
Coordination du projet - MINUH (24 m1) 8 12 59 79
Cadastre - MINUH (24 HM) 16 23 117 156
Equipement - ARAN 5 15 34 54
Assistance technique - ARAN 20 30 149 198
Couts de fonctionnement - ARAN 479 28 44 550
Audit - MINUH (12 HM) 4 6 30 40
ETUDES 78 116 577 770
Preparation du second projet (60 HM) 20 30 149 198
Etudes d 'execution - 2 e projet 28 41 206 275
Preparationd'unproj\. sect\. trans p\. (30 HM) 10 15 74 99
Progr\. d'investissement urbain (36 HM) 12 18 89 119
Etudes diverses (24 HM) 8 12 59 79
TOTAL COUTS DE BASE 60S 229 1 010 1 847
DEPASSEMENT DES QUANTITES (I!1PREVUS) 91 34 152 277
HAUSSE DES PR1X 312 112 342 766
TOTAL 1 011
375 1 504 2 890
* Les chiffres ayant ete arrondis, les totaux peuvent etre differents de la
somme des elements\.
ANNEXE 1
CASH FLOU DU PROJET Tableau 4
(ANNEE BUDGETAIRE: 1 JUILLET - 30 JUIN)
(millions de FCFA)
An 1 ~An 2
I
An 3
,
An 4 An5
Total 1982 1983 1984 1985 1986 1987 1988 1989
RESSOURCES
Pret BIRD ~ 400 0 81 1 755 2 394 1 170 0 0 0
Cofinancement 1 502 0 ;n 514 764 193 0 0 0
Contribution du Gouvernement
Allocation du budget J 728 630 913 2 085 2 646 1 454 0 0 0
Impot immobi1ier 220 0 0 88 88 44 0 0 0
Vente au comptant 201 0 0 50 101 50 0 0 0
Acomptes 40 0 8 12 12 8 0 0 0
Repaiements du pret individual 97 0 0 0 3 11 23 -\.lQ 30
Ressources Tota1e~ 15 188 630 1 033 4 504 6 008 2 930 23 30 30
EMPLOI U1
w
Nylon 10 485 630 944 2 674 4 457 1 780 0 0 0
Yaounde N-O 1 174 0 0 235 480 459 0 0 0
Credits au logement 220 0 0 88 88 44 0 0 0
Assistance technique 2 890 0 0 1 445 867 578 0 0 0
Commission initia1e B1 0 81
Emploi Total 14 850 630 1 025 4 442 5892 2 861 0 0 0
Excedent (deficit) 338
0 8 62 116 69 23 30 30
Excedent accumule (deficit) 0
0 8 70 186 255 278 308 338
* Les chiffres ayant ete arrondis, 1es totaux peuvent etre differents de 1a somme des elements\.
- 54 ANNEX 1
Tableau 5
CREDIT FONCIER Page 1
PROGRAMMATION gUINQUENNALE DES RESSOURCES
ET EMPLOIS DES FONDS ~1982-1982l
(millions de FCFA)
82 83 84 85 86
RESSOURCES
Solde reportfi 13\.300 4\.470 260 0 0
Recettes fiscales (contribution) 5\.200 5\.500 5\.800 6\.000 6\.300
Reescompte - BEAC 2\.700 7\.000 8\.500 8\.500 8\.500
Emprunts internationaux
- BIRD 50 50 50 50 50
Sous Total 21\.250 17\.020 14\.610 14\.550 14\.850
Remboursements des prets (partie capita1e)
- SIC 50 500
- MA\.ETUR 2\.200 6\.000 6\.000 6\.800
- Acquisitions parcel1es (LEM) 10 70 200 400 700
- Constructions logements (LOGECOS) 40 100 200 500' 700
- Constructions logements (MOYENS) 20 -----Z2 100 --1Q2 -2QQ
Sous Total 70 2\.440 6\.500 7\.250 9\.200
Total
-_\. 21\.320 19\.460
--
21\.110
-- 21\.800
--
24\.050
--
EHPLOIS
- Programme SIC 10\.000 10\.000 7\.210 5\.500 5\.750
- Programme HAETUR 4\.500 5\.000 4\.500 6\.000 6\.000
- Acquisitions parce1les (LEM) 500 900 2\.500 2\.500 2\.700
- Constructions logements (LOGECOS) 900 1\.500 3\.000 3\.000 3\.500
- Constructions logements (MOYERS) 900 1\.500 3\.000 3\.000 3\.500
Sous Total 16\.800 18\.91)0 20\.210 20\.000 21\.450
Remboursement des emprunts
- Reescompte BEAC 50 300 900 1\.800 2\.600
- BIRD
Sous Total 50 300 900 1\.800 2\.600
Total 16\.850 19\.200 21\.110
-- -- ---\. 21\.800
--
\.
24\.050
--
Solde 4\.470 260 0 0 0
- 55
ANNEXE 1
Tableau 5
Page 2
Hypothese des previsions du CFC
Croissance annuelle de 5% du produit de la taxe en faveur du logement\.
Reescompte de la Banque centrale au taux de 5,5% pendant dix ans, dont
un differe d'amortissement de deux\.ans\.
Pret BIRD d'une contre-valeur d'un million de dollars retrocedeauCFC
a 3,5% d'interet pour une duree de 30 ans, dontun differe d'amortissement
de cinq ans\.
Prets du CFC a la SIC a 5,5% d'interet pour une duree de vingt ans, dont
un differe d'amortissement de deux ans\.
Prets LOGECOS (construction de logements) consent is aux particuliers a
4,5% d'interet pour une duree de douze ans, dont un differe d'amortissement
de six mois\.
Prets Moyen (construction de logements pour les menages a revenu eleve)
consent is aux particuliers a 5,25% d'interet pour une duree de quinze ans,
dont un differe d'amortissement de six mois\.
Octroi d'un financement pour la construction a ~JlliTUR a 5,5% d'interet
pour une duree de quatre ans, dont un differe d'amortissement de deux ans\.
Prets LEM (acquisition de parcelles assainies) consentis aux particuliers
a 3,25% d'interet pour une duree de dix ans, dont un differe d'amortisse
ment de six mois\.
ANNEX 2
- 56
CAMEROON URBAN DEVELOPMENT PROJECT
Selected Documents and Data Available in the Project File
A\. Background Reports
1\. Marguerat, Yves (OR~TOM), "Citadinit~ et ruralit~ des populations
urbainesauCameroun; note sur les caract~res sp~cifiques de la
population des villes selon Ie recensement de 1976\." Yaounde,
September, 1979\.
2\. Marguerat, Yves and Anne-Marie Cotten\. "Deux r~seaux urbains africains:
Cameroun et Cote d'Ivoire: la mise en place des syst~mes urbains"
Les Cahiers d'Outre-Mer, Oct/Dec\. 1976\.
3\. MlNUH/DUH\. Note sur les etudes en matiere d'assainissement eaux
pluviales et eaux a Yaound~ et Douala\. Yaounde, May 1978\.
4\. MlNUH/DUH\. Yaound~: Quartiers Nord-Ouest, pr~-Enquetes habitat,
foncier, revenus\. Cellule d'Urbanisme\. Yaounde, September 1977\.
5\. MAETUR\. Yaounde Household and Housing Characteristics (3 vols\.) Yaounde,
February 1978\.
6\. AFCA (Association pour la Formation des Cadres)\. Etude pr~liminaire
des couts de construction a Douala et Yaound~\. Yaounde, March
1980\.
7\. BCEOM and Cellule d'Urbanisme (MlNUH-DUH)\. Etude r~gionaledu developpe
ment de Douala\. Paris, June 1980\.
8\. MlNUH/DUH\. Pour la Conduite des Op~rations d'Habitat (Housing policy
paper)\. Yaounde, July 1978\.
9\. MlNUH/DUH\. Role et Missions\. (Policy, organization, training) F\. Amiot,
Yaounde, December 1979\.
10\. MAETUR\. Op~ration pilote de Lotissement a Yaound~\. Yaounde, January
1979\.
11\. PADCO\. Cameroon Low-Income Housing project\. Final Report\. (USAID
Technical Assistance Project) Washington D\.C\., January 1981\.
12\. SCET International and MlNUH/DUH\. Douala\. Extension Nord-Plan,
d'Am~nagement\. Yaounde, January 1980\.
13\. Service Provincial des Affaires Sociales du Littoral, Service Provincial
de l'Urbanisme et de I'Habitat du Littoral\. La Zone Nylon\.
,
Experience de D~veloppement Auto-Centr~\. Douala, August 1979\.
- 57 - ANNEX 2
Page 2
14\. Laffitte, Alain et Marie Roumy\. Enquete participation sur le secteur
artisanal de la zone Nylon\. Douala, September 1978\.
15\. MINUH/DUH\. Yaound~-Etude de Factibilit~ du plan de d~tail de la
Briquetterie\. Est: Inventaire et Note d'appr~ciation\. Equipe de
Formation\. Yaounde, April/May 1980\.
B\. Project Preparation Documents\.
1\. Halcrow Fox and Associates\. Etude de Factibilit~,Projet de D~veloppe
ment Urbain: Yaound~ et Douala\. Draft, May 1980; Final, September
1980\. 6 volumes plus maps\.
1: Le Contexte de D~veloppement Urbain
2: Pro jets de Trames Assainies
3: La Zone Nord-Ouest de Yaound~
4: La Zone Nylon de Douala
5: Promotion de l'Emploi
6: Montage Institutionnel et Analyse Financiere\.
2\. MINUH/DUH (Direction de l'Urbanisme et de l'Habitat)\. Notes de synthese,
Pro jet de D~veloppement Urbain: Op~rations programm~es d'Habitat a
Yaound~ et Douala; op~rations de restructuration; trames assainies;
promotion de l'emploi\. F\. Amiot (Advisor to MINUH, First Techncial
Assistance Project), May/June 1980\.
3\. MlNUH/DUH\. Synth~ses des observations de l'Administration, Pro jet
de D~veloppement Urbain Yaound~-Douala\. F\. Amiot, July 1980\.
4\. Nahmias, Isaac (Bank consultant--Arthur Andersen and Co\., S\.C\., Technical
and Administrative Training Services\. Geneva)\. Mission d'identifi
cation des besoins en assistance de la Commune de Douala\. February
1980\.
5\. Ossen, Dirk (Bank consultant, The Hague)\. Report on Findings: Engineer
ing Aspects\. Preparation mission, January-February 1980; Appraisal
mission, November 1980\.
6\. Hernandez, Andr~ (Bank consultant, SINORG, Paris)\. Rapport sur l'Orga
nisation Fonci~re et l'Organisation administrative du Cadastre et
des Domaines\. July 1980\.
7\. Alatzas, Dimitri (Bank consultant, Paris)\. Appraisal of Transportation
Problems in Douala and Yaounde, March 1980\. Appraisal of Urban
Transport Element\. Paris, December 1980\.
8\. Lazarevitch, M\. (Government consultant, SCET Cameroun)\. Rapport de
mission de conseil en organisation dans le cadre du pro jet de
d~veloppement urbain de Yaound~-Douala\. Yaounde, September 1980\.
- 58 ANNEX 2
Page 3
9\. SCET Cameroun\. Propositions institutionnelles pour la realisation
des operations d'amenagement des quartiers de Nylon a Douala et
Yaounde Nord-ouest\. Annexes: projets de dec ret et de convention\.
Yaounde, December 1980\.
10\. Dr\. Ballance, WHO\. Second Cameroon Water Supply Project, Health Educa
tion and Public Information\. Geneva, August 1980
C\. Working Papers
1\. Financial analysis
2\. Community facilities
3\. Terms of Reference
4\. Employment component
5\. Cost-Benefit Analysis
MAli j j r\.l 12' 16'
J NIGER / S' This map has been prepared by the
~ World Bank's staff exclUSIVely lor
\./" \.,\.-\.
\. Lake Chad t
t
5 U DAN the cOfilienience of the readers of
the report to wfJ/ch it is attached\.
UPPER'z'7 \./,-'\\./\.r\._\./ ''V) C HAD 't\. The denominations used and the
boundaries shown on th/s map
VOlTA y'-! \.i r""
J do not imp 'v- on the part of the
~ f \. / \ World Bank and its affiliates, any
_'"'t" \.C judgment on the legal st(Jtus of
') '~ENINI J ,-\ \.J"" C any territory or (iny endorsement
L " j N I G ER I A j '-\. ( _\. or acceptance of such boundaries
GHANA
~cx;p
\.
" \.
)\./
'\ 'v''-' l\.
i ! ) ~\.; I CENTRAL AFR ICAN
\. \ \. \.f \. { REP~BLlC ,"V'/\./ 12' 12'
) CAMEROON '\ ( , _ \.J KI LOMETERS 0 20 40 60 80 100 120 140 160
Gulf al 0\. " \,r"""''1
f MILES
GlJinsQ
EQUATORIAL
GUINEA
-'I"-I\. ~---, '-\
,-\.
!
Z A IRE
\.-" JCONGO>
<\. I
ATlANTIC OCEAN GABON i /" NIGERIA
C}\\. J
\.f"
1
la'
CAMEROON
URBAN DEVELOPMENT PROJECT
POPULATION DISTRIBUTION-URBAN CENTERS
(1976)
Project cities (Yaounde, Doualaj ® National capitals
10'
~ Provincial capitols 10'
Places with water supply systems ® <"
0
Bafa~g Places in Second Water Supply Project ® Division capitals '" 0
"'",
_ Paved roads, national 0 Subdivision capitals
-- Unpaved roads, national 0 District capitols
-- Unpaved roads, provincial o Other towns
- \. --- Unpaved roads, district + Airports
------ Railroads _ \. , Division boundaries
-----Rivers - -Provincial boundaries
\.;t\. Ports _ \. -International boundaries
Settlements with over 2,000 population
300-400,000
8' s
\.
",
- - - - - - - 3 0\. 75,000 \
\
\\. Tignire
,_-,0\.----
N G E R
6'
C E N T R A L
A F R I CAN
REPUBLIC
\.~\."
)
\
I
l
',\.
""
4 '" 4'
[) ~
"\
i
H\.AUT
EQUATORIAL
/
GUINEA
l B 0 U
(INSULAR GUINEA)
E T
''''''''-
ATlANTiC 'I\.
OCEAN I
2'
(I:)
ll: ;;0
l>
EQUATOR IAL GU IN EA C 0 N GO '"
('\
0
(CONTINENTAL GUINEA) :J:
;0
v:
<\.I>
10' 14- 0
~ p\.J
12' 14'
This map has been prepared by the ,
A
World Bank's staff exclusively for
the convenience of the readers of
the report to which it is attached\.
The denommatlons used and the
boundaries shown on this map
do not imply, on the part of the
World Bank and its affiliates, any
judgment on the legal status of
any territory or any endorsement
or acceptance of such boundanes
12'
KI LOMETERS 0
I
20 !
40 I
60,
80
!
100 120
! ,
140
I
160
!
t t t t t t
MILES 0 20 40 60 80 100
NIGERIA
Ie'
CAMEROON
URBAN DEVELOPMENT PROJECT
POPULATION DENSITY, 1976
10' o
®
Proiect cities (Yaounde, Douala)
National capital
10'
® Provincial capitals
@ Division capitals
~-- Rivers
_ \. _ \. - Division boundaries CHAD
_ \. - Provincial boundaries i
-\. - International boundaries i \
j
B f o U f
POPULATION DENS)TY, 1976
Inhabitants per square kilometer
i
("0
(_\.r"\!" 7
f--- More than 150 I MaYO
f---
100\.1 -150 r/ Mayo R\.y
50\.1-100
f\.-- )
20\.1-50
8 1---
f---
5\.1 - 20
(
\.I '\"
"\.
o 8
L -_ _ 0-5
/ ~
12 Inhabitants per square kilometer - by division
) i '\. \. \. \. \. \. -\.~\.;\.~?\
"',
J ( '"~~L /
/ '( @N d' \. \\.
f
~
gaoun ere ;\._\. \. /\. -J,'
NIGERIA
""0 \.,' 0",,,, \.f ) \ \.,\\. \.,\.-\., ('
-"""04/
0 \./\. _ \.,\. ) Q )
'"j \ A DAM A 0 U A ~"er' I\.
r-NO~~H(DONCA ~
30',MANTUNC
l\.
f' 5 ~ / ~
\ / ;/'
/ I @ k i - / ' " v~
~r~\.MENC;~:m ~ST,~\. a4te,,~-\.j "~fr / /
\. }',k'-\ \.,Y Kumbo '-\. ~ '~"l 0'" ~ / /\.1 C E N T RA L
~\.
rJ\ \.,
'c\.> /\.
j ;; '\. i\.,\. '7 BU/@ 62 c:'-'
Mbe'\ ~ \. -\. \. ( ?tI"J-"\\. \. \. ("\ 1, ,
1 ,\.-';
(
6 r~~J / MANYU/MOM'tj~ BAME,"J!?'Ar,\./oO\.) ~~ \\. _ \. _\.I\._ \. _ \. _ \. _ \. _ \.- \. r-r-S( " AFRICAN 6'
( {-- 15 "" 66(::ME~AMf~~J BAMOUN ;~ ~:\." r ' '-'1 \\.l
'( Mamfe 0 \._L:ra~rrP 26@Foumba1}/ -\.J l~, S)' REPUBLIC
) SOU T H M~~do@}~\.~ (( ~ \\. ::'0'
( \., y \. re~Ch?n~"OJ\.;;~(ljB/~~WUSESASMT J Q:- / " ~ ,\
!-\./ "'y:"",,/\, \.~~01~~~""r~~~\.&
)NDIAN( WE::>'lJ\.B;);;;;p\.,i1rP@Ba~ongt~\.f\.
/' MBAM"
5 /-\. -<\.
\. _/
WM
'I,
ET
,'\."'s
DJEREM
<:
('\
/Mundembci ~EME\.~ HA~ioJ ~
NDE '> [,",\. "'i 3 \. ,1 \./ \.l' \'
\. J @ ( N " \. , l b @ / V , : \. , \. \. 4 5 "\.- \. \. \. J \. < ; : \. - ' \ \. \. \. \. \. \. \. , - \. I t \.
\. \. I'ongsam a \. \. \. \./ \./\., I
,-/ 12 ; 30; ~K\.AMl<
\.I (P \.i ~afia t\.v (\. HAUTE -SA NACA ) ~\. \
,: : \. \. \. J -~",v \. \. "") 'c:' ) \., \
o~y ~"':"V1
0
;:;,:!Kumb!Y'" Y b /--""@NangaEbokoJBERTOUA:'''''
'\. '" '1 ~: a aSS1, "v (' G) 5 ,\.- \. _ \.-\. ®,\. ,
\.r - r"\ i ,,~ \ \.@- \. "1\.-\. \. / \. \.<'""\." '1' : '--'" < @ '"
<"') ~BUI~A 74} , LlTTO~AL\\\tl'f \\. 'f~~onat:i;'\.}-\. _,\. ~\. j\.,\.0\. \. \./ ~ >\._\.Batouri \\.
FAKO® t\.:-" \. J'\\. \.: tl'p\.'i1- \. ,\.)\.t lEK/E :\./ MEFOU) / ~0\.l \
76 \.),\./ ~~ '-"-"1-' \.-"- \\. 6 8 ) 30 \.:/\. 0J° \. \. / \.
4' ~('/ /' _/pUAL~~t'6 12 f"-;:;YONC '~fOUND{~OUNDE/ ~~ 12 \. @ 5' -<f KA ~E Y /~
4
WOURI\" \./ sP'@ \.",-\.,\ ET KELlE (-<\./\. ~50~ \. ~)' \\.~ ( Abong '-"'~\, roO' \\.
471 _\., Edea"'/ 14 :~Mfou@\." 0'" ~ :Akonohnga Mbang '" \. -r"'-"'''''' \
I @Eseka i \., ~:\Cj,\. 0 \.~ j , \. - "\. \.
r\.,\.: t\.;, :@ \./ ~(": ~ \./ \: S') Yokadouma "
: \ \. \., \.<\. f Mbalmayo" { I ; @ '
J " - \.- \. \. \. \. \. :\."\\.' '1:' ~(j \./""\-\. ; , "
/' \\. \.:::j"l 22{'1"0 r: l:J "\. HA U T- N YONC / \.'\\.
EQUATORIAL
GUINEA
\./ "'-"'-':'~'''-'''~'''i ') 3 \.)' '\\.'\\.
(INSULAR GUINEA) @6't
o Cl\.L(,,\
°Kribi " \. \. \. @ E b o l o angme lma
\\. w a @ S I\.,\.:\.r-\./\. \. , r o B'\. O M B A E C O O \
'\. , - \. \. U T N K j
OCEAN /J'-) \\., \., 2 \
\./ NT~M ""'--") DJA ET lOBO i ) \.I
,/ \.,\., 5 : \ /
"//
" J \. - ' -\. - i\. -\.~\.t(IiI"""'a\.-\.,\., \. _ \.",\."\._\.~\. I) ~ '\/'
\.__ \. r - ' - ' - ' - ' - ' - "
\. r'---'-'-'-" /'-
\. ' \.'-\.
r-'
2'
I \.) '1\., ,r\. {
EQUATORIAL GUINEA 'I GAB 0 N J\.) \. l\.r""""",\. \
(CONTINENTAL GUINEA) CON G 0 '-\. j
11\.-_ _ _ _ _ _ _ _ _ _ _ _ 1\.:\.°\._\.____ If' (1,4\. 1}'
CAMEROON
URBAN DEVELOPMENT PROJECT
DOUALA - PROJECT LOCATIONS
Project areas,
Nylon
Pilot upgrading zone within Nylon area
Douala North Development Area boundary
MAETUR sites,
Cite des Palmiers
Douala North
\. Main roads
Future Douala-Yaounde autoroute
,0, N(JRTH
'\I
, -+--+--+-;;;j;; Railways I stations
I Existing port zone
Extension of port zOne
/ Existing industrial areas
Extension of industrial area
/ Built-up areas
i Rivers, creeks, streams
/ Mangrove swamps
/ METERS 9 10,00 20,00 3090
/
/
/1 j
~
/
Il /~
o /
,//
~
-_/
,\.,\.,
OOCTEU,f'
a,
\.
jTo Dha/a To Ngl1ounderej\.
CAMEROON
URBAN DEVELOPMENT PROJECT
YAOUNDE - PROJECT LOCATIONS
~~~~
Community foci Iities in project -
N\. W\. Yaounde
~~~ Nsemiyong
Etoug-Ebe )
~:;::;;:~ B \. I MAETUR sites
~~~ Iyemassl
""""~:LL\.J Biyemassi II
-~- Main roads
-+---r,\.-L;,-Railways / stations
::--~ Rivers / streams
Built-up areas (1973)
oI~~_ _
400 800
-L'__~__~'__~__~'__-L~'
1200 1600
METERS
-"\
,
,\.'
\
UNIVERSITV
\ i
\ I
'---~NGOAEKELE
been prepiJred by the
staff excluSlvelt (Of
the of the leaders of
the repolt to which It IS attached
The denommatlons used and (he
boundanes shown tflrs map
do not Imply\. Oil of the
World Bank
Judgment On
any temtory
Of acceptance
~oounde
E)(ISTtNG INDUSTRIAL ZONE
(MAGZI)
®
®
CAMEROON
® URBAN DEVELOPMENT PROJECT
NEW INDUSTRIAL ZONE
DOUALA -NYLON BASIC INFRASTRUCTURE
(MAGZI)
Nylon study area boundary
, [-==:J Pilot upgrading lone
--' Resettlement area
ROADS (Map A)
====== EXisting roads
===== Future Douala-Yaounde autoroute
®DIBOM Project:
Primary rood
__ BasIc roods
Planned basIc roads
ELECTRICITY (Map A)
Existing:
Medium tension hlghwires
Private transformers
Public transformers
Prolect:
Medium tension highwlres
m Transformers
\. _\. Street lighting
B I LONGUE COMMERCIAL AND INDUSTRIAL
LA VIE
TRANQUILLE
c:::::J Mixed commercial and residential lonlng
~ Industrial areas
Mop A Ii] Madagascar market
"it: Reserved for market expansion
~ Artisan center
P Perking
COMMUNITY FACILITIES
E~~{~:~?J ~~~: Reserved for administrative use
® EXisting primary schools
® New primary schools (Min\. Education)
® New secondary schools (Mm\. Education)
® New prlmory schools
®T
NKOLMI~TAG
INDUSTRIAL ZONE
(MAGZI)
Reserved for additional school sites
~ EXisting dispensary
~ New dispensary
; \. Reserved for additional health sites
~
\ 113 New MCH center
i ® ,\. EXisting social center
\.6 Pion ned saciol center {Min\. Af\. Soc\.}
~ Sports fields; (j)New youth center
Open spaces
;: Cemetery
DRAINAGE (Map B)
Project:
NEW INDUSTRIAL ZONE
Main channel
(MAGZI)
_ \. _ \. _ Secondory channels
o Box culverts or timber bridges
WATER NETWORK (Map BI
EXisting:
~ Mains (diameters millimeters)
e
1n
ReserVOir
Project:
300mm mains, FD
------ 200mm mains, PVC
150mm mains, PVC
lOOmm moms, PVC
\.L\. Valves
Standpipes
Reservoir
~OJlCT ITE\.MS "'RINTED RED
DIBOM n
200
, 400 600 800
, 1000
METERS
Mop B | APPROVAL |
P148870 | INTEGRATED SAFEGUARDS OATASHEET
APPRAISAL STAGE
Report No\.: 84953
Date f3FeJ3ared/updatcd: January 16, 2014
I\. Basic Information
I\. Basic Project Data
Country India J rroject ID I PI48870
Project Name India Cyclone Risk Mitigation Project -Additional Financing
Task Team Leader Saurabh Suresh Dani
Appraisal Date November 30, 2009 Appraisal Date
January 10, 2014
Estimated Board Date March 31\. 2014 (Additional Financing)
Managing Unit SASOC Lending Instrument
Sector(s) General Water\. Sanitation and Flood Protection (I 00%)
Theme(s) Natural Disaster Management (80%); Other Urban Development (20%)
Is this project processed under OP 8\.50 (Emergency Recovery) or OP
Yes
8\.00 (Rapid Response to Crises and Emergencies)?
Project Financing Data (In USD Million)
Total Project Cost USD 137\.0 million Total Bank Financing USD 105 million
Financing Gap: -
Financing Source Amount
13orrower/Recipicnt USD 32 million
International Development Association (IDA) USD 105 million
EC European Commission -
Environmental Category A
Is thjs a Repeater project'! Yes
Is this a Transferred project? No
2\. Project Objectives
The Project Development Objective is "to reduce the vulnerability of coastal communities to cyclone
and other hydro meteorologicaJ hazards through (i) improved early warning and communication
systems, (ii) enhanced capacity of local communities to respond to disasters, (iii) improved access to
emergency shelter, evacuation, and protection against wind storms, flooding and storm surge in high
risk areas, and (iv) strengthening disaster risk management (DRM) capacity at central, state and local
levels in order to enable mainstreaming of risk mitigation measures into the overall development
agenda\." It remains the same as the original project\.
3\. Project Description
Background\. The National Cyclone Risk Mitigation Project I (P092217, Credit 4772-IN) has been the
first phase of an Adaptable Program Loan (APL) designed to assist the Government of India and the
vulnerable coastal states in mitigating cyclone related risks by focusing on ex-ante risk mitigation
interventions as part of a strategy to integrate disaster risk mitigation into the longer-term national
Page 1 of 12
development process\. About 5,700 kilometers of India's coastline is exposed to severe cyclones and
approximately 40 percent of its total population lives within 100 kilometers of the coastline increasing
potential natural disaster losses\. The first phase of this APL focuses on the states of Odisha and
Andhra Pradesh for early warning and cyclone risk mitigation infrastructure components while
technical assistance strengthening disaster risk management capacity has been made/is available for
all coastal states\. The original credit in the amount of US$255 million was approved by the Board of
Executive Directors on June 22 20 I 0, and became effective on March 30, 20 I I\.
The original project included four components:
Component A: Early Warning Dissemination System (EWDS) and Capacity building for Coastal
Communities (US$15 million from IDA)\. This component reduces the vulnerability of coastal
communities by addressing the existing gap in dissemination of warning to the communities\. The
component supports: (i) installation and operation of EWDS allowing the state and/or district/sub
district level control centre to send communication directly to the villages; and (ii) strengthening the
capacity of communities in disaster preparedness and response by preparing disaster management
plans and arranging mock drills\.
Component B: Cyclone Risk Mitigation Infrastructure (US$186 million from IDA)\. This component
improves access to emergency shelter, evacuation and protection against cyclone and other hydro
meteorological hazards such as wind storms, flooding and stonn surge in high risk areas\. Each of the
states reviewed the existing system and gaps and developed risk mitigation infrastructure portfolio\.
For emergency shelters, identification mechanism included assessment oftotal requirement, available
shelters including other government and private buildings and the gap\. The portfolio includes a broad
set of measures such as investments in multipurpose emergency shelters, up-grading of existing roads
and providing bridges suitable for evacuation, drainage improvement measures and repair and up-
grading of existing embankments, and creation of corpus funds for operation and maintenance of
cyclone shelters\.
Component C: Technical Assistance for National and State Level Capacity Building and Knowledge
Creation (US$6 million from IDA)\. This component provides assistance to help understand risk and
vulnerabilities better, and prepare the key institutions for addressing them effectively across all
coastal states and Union Territories\. This component consists of studies, assessments, training and
capacity building activities related to risk and damage assessments, development of training modules
and action plans and implementing them through identified partner agencies\.
Component 0: Project Management and Implementation Support (US$20\.7 million from IDA)\. This
component provides support for project management by financing incremental operating costs for
PMU, PlUs, nodal units in Line Departments and National institute of Disaster Management (NIDM),
office equipment, training and exÂposure visits and consulting services for specialist activities\.
Current Implementation Status\. Risk mitigation infrastructure is proving to be an important element
of disaster resilience under present circumstances: currently under NCRMP 1, 286 cyclone shelters are
being built (150 in Odisha and J 36 in Andhra Pradesh), more than 1000 kilometers of evacuation
roads and 23 bridges to enhance connectivity and evacuation and around 200 kilometers of existing
coastal/saline embankments are being strengthened\.
Despite a slow start, the project achieved significant progress in its two and half years of
implementation : it currently has 89 percent of its program committed and is on its way to achieve its
project development objective\. In terms of cyclone risk mitigation infrastructure under component B,
the state agencies awarded 95 percent of the planned work contracts, including the majority of multi-
purpose shelters and road contracts\. The construction of nine shelters as well as 150 kilometers of
evacuation roads and 7 bridges has already been completed; saline embankment works have been
contracted in Odisha while one contract for similar works has been delayed in Andhra Pradesh\.
Capacity building contracts under component C have also been awarded including the hazard and
vulnerability assessment and technical consultants to support the PMU within the National Disaster
Management Authority (NDMA) and to develop Post-Disaster Needs Assessment (PDNA) Guidelines
Page 2 ofl2
with NLDM\. Project Implementation Performance was upgraded from Moderately Unsatisfactory to
Moderately Satisfactory in October 2013 given recent progress\.
Cyclone Phailin\. The project was on course to achieve its Project Development Objective before
cyclone Phailin\. On October 12 2013, Cyclone Phailin hit the states of Odisha and Andhra Pradesh
with wind gusts up to 220 kilometer per hour, heavy rains measuring up to 25 centimeter and storm
surge over 3 meters; the sea pushed in as much as 40 meters along parts of the coast\. It was the
strongest cyclone to hit the Indian coast in the past 14 years: a category 4 cyclone (Katrina in
comparison, was category 3 upon landfall) similar to the Super Cyclone 058 of 1999 to hit Odisha
and kill more than I 0,000, destroying 275,000 homes and leaving 1\.67 million homeless\. The cyclone
hit a densely populated area, with 4\.5 million people within the hurricane force wind path and
significant informal housing\.
Reports however came of a death toll of 44, 0\.5 percent that of the 1999 cyclone\. The state
governments, in collaboration with the National Disaster Management Authority (NOMA) evacuated
over 900,000 people from low-lying coastal areas in ttie states of Odisha and Andhra Pradesh - the
target states of the NC RMP - the largest such operation in India's history\. The NCRMP contributed to
this enhanced resilience\. State authorities set-up over I ,200 relief camps and stocked over 500
cyclone shelter with adequate food, water and supplies\. Over 2,300 officers from the National
Disaster Response Force and 600 personnel from the Indian Army fanned out to provide relief and
assess the damage across 14,500 affected viII ages\.
Despite limited loss of life, the impact on the lives of coastal residents is still massive\. In the Ganjam
District of Odisha alone, about 90,000 homes were partially or fully damaged along the coastal areas,
many of them mud homes belonging to poor fishermen and farmers\. Crops in over one million
hectares of agricultural land have reportedly been destroyed\. Power and communication lines were
also severely affected across Odisha with estimates of over 6,000 k\.m of power lines and 7,500
telephone poles damaged; over 30 km of water line and 10,000 km of roads were also severely
damaged\.
In response to a request for assistance from the Government of India dating November 16 2013, a
Rapid Disaster Needs Assessment was conducted revealing a totaJ damage of US$1\.45 billion\. This
same request also solicited an additional assistance under the existing NCRMP I project, which
prompted the proposed additional financing\.
Additional Financing
Given the particularly vulnerable coastal states of Odisha and Andhra Pradesh with large exposed
populations and the observed increase in hazard frequency to cyclones of high intensity in the region,
the Government of IJ1dia considers resilient infrastructure worthwhile investments and is requesting to
scale-up the project 's impact and development effectiveness by increasing the amount of risk
mitigation works under component B\. In particular, it is requesting tl:rte construction of 162 additional
multipurpose cyclone shelters with related 185 km of evacuation roads and bridges in Odisha
and 150 additional shelters and 270 km of evacuation roads and bridges in Andhra Pradesh\.
For this, the Government of India has requested the proposed additional credit in the amount of USD
105 million, which would be complemented by additional counterpart financing in the amount of
USD 32 million equivalent\. The proposed additional financing would further the engagement of the
state of Odisha and Andhra Pradesh in mitigating cyclone related risks by focusing on additional risk
mitigation interventions\. It would provide improved access to emergency shelter and evacuation
against wind storms, flooding and storm surge in high risk areas cur\.-ently not covered by the original
project\.
D\. Project location and salient physical characteristics relevant to safeguard analysis
Like the parent project, the NCRMP l's additional financing proposes to support targeted
interventions as ment ioned above in the coastal areas of two Indian states, namely Odisha and Andhra
Pradesh\.
Page 3 of 12
AndlnÂa Pradesh: The 974 kms long coastline of Andhra Pradesh, a very productive stretch along the
Bay of Bengal on the cast coast of India, supports a variety of economic activities\. Multifarious
industrial complexes, human settlements, fisheries, tourism, are all coming up along the coastline\. The
areas proposed for investment under Additional Financing are the same as those under component B
of the parent project\. The sub-projects will be located in the coastal areas of the districts of
Srikakulam, Vizianagaram, Visakhapatnam, East Godavari, West Godavari\. Krishna, Guntur, Ongole,
Prakasam and Neltore\.
Odisha: The Odisha coast, which is 480 km long and I 0 to I00 km in width, forms a part of east coast
of India\. The coastal territory is drained by a number of rives like Mahanadi, Brahmani, Baitarani,
Devi, Budhabalanga, Subarnarekha and Rushikalya\. The areas proposed for investment under
Additional Financing are the same as those under component B of the parent project\. The sub-projects
will be located in the coastal areas of the districts of Ganjam, Khurda, Puri, Kendrapara,
Jagjitsinghpur, Bhadrak and Balasore\.
5\. Environmental and Social Safeguards Specialists on the Team
Neha Vyas, Senior Environment Specialist, SASDI
Venkat Rao Bayana, Social Development Specialist, SASDS
6\. Safeguard Policies Triggered
Safeguard Policies Triggered Yes No TBD
Environmental Assessment (OPIBP 4\.01)
While the project interventions arc likely to have an over-all positive impact in mitigating risks from
disasters\. specific interventions envisaged under the project such as upgrading/expansion of access/local
roa<\.ls if designed without a<\.lequatc drainage provisions or due to poor siting of cyclone shelters may have
some potential a<\.lverse environmental impacts in the local context\. On the whole\. such impacts may include:
(i) direct/indirect impact\.'> resulting due to poor site selection for sub-projects; (ii) impact on the drainage
pattern of the area; (iii) felling of trees and clearance of vegetation for sub-project construction; (iv) impacts
on water resources used by the people such as ponds, river/streams, canals \.and hand pumps; (v) occupational
health and safety concerns during the construction stage: (vi) impacts due to construction material (such as
sand\. water\. earth\. aggregate) sourcing and transportation and: (vii) issues associate<\.! with improper disposal
of debris and construction wastes\.
More so\. like the parent project\. the most environmental concern pertains to avoiding the highly sensitive
ecological areas and/or environmental features in the vulnerable coastal environs\. which is possible by using
the screening mechanisms (including use of GIS) diligently\. OP 4\.01 has been triggered to facilitate
creation/strengthening of mechanisms whereby sub-projects can be planned, designed and maintained in an
environmentally sound manner through integration or appropriate approaches into the over-all decision
making process of the pr~ject- as was done for the parent project\.
~tural Habitats (OP/BP 4\.04) I \.__\.~
__ \.J\.__ _ _ -1
OP 4\.04 is not being triggered for this project as no interventions arc envisaged in natural habitats\. including
those defined as Âcritical" under the policy\.
forests (OP/BP 4\.36)
OP 4\.36 is not being triggered for this project as no interventions arc envisaged in forest areas and therefore
no conversion/dcgra<\.lation of this natural resource is expected to occur\. The screening mechanism that has
been formulate<\.! for the project enables in early identification or such issues\. 13ased on the screening result\.
site assessment and the availability of alternative sub-pr~ject sitc/s, further decision about inclusion/exclusion
arc made\.
Page 4 of 12
Safeguard Policies Triggered Yes No TBD
Pest Management (OP 4\.09) \./
OP 4\.09 is not being triggered for this project as biological/environmental control methods or reliance on
synthetic chemical pesticides is not envisaged\.
Physical Cultural Resources (OP/BP 4\.1 1) \./
The implementation of the project/program is not likely to affect religious structures of local signil'icance or
other physical cultural resources\. Impacts, if any would be addressed through design interventions\. Chance-
found cultural properties\. if any will be addressed through contract requirements and project's due diligence
process set forth in ESMF\.
Indigenous Peoples (OP/BP 4\.10) \./
Assessment on tribal population both in parent project and for Additional Financing indicates that there arc
no tribal populations with unique socio cultural identity vis-a-vis the main stream population in the sub-
project locations\. However, the ESMF outlines the provisions to follow as and when any sub-project comes
across tribal population unique to the features stated in the Bank's OP 4\.10 - as was done for the parent
project\.
Involuntary Resettlement (OP/BP 4\.12) \./
Almost all the road infrastructure sub-projects would usc the existing alignments and therefore arc unlikely to
involve land acquisition except for widening/up-grading where required by design\. The new multi-purpose
shelters arc also planned either within the existing school premises or on other vacant government land or on
lands donated by the community/gram panchayat\. The land acquisition will therefore be not there\. except in
very exceptional cases\. The policy however\. has been triggered to allow required mechanisms to be put-in
place in cases where land may be required in such exceptional circumstances\.
Safety of Dams (OP/BP 4\.37) \./
OP 4\.37 is not being triggered for this project as there is no construction of new dams or activities that arc
concerned with safe functioning of existing dams\.
Projects on International Waterways (OP/BP 7\.50) \./
OP 7\.50 will not be triggered for this project as there arc no interventions planned/ proposed over or around
an international waterway that could cause a po(cntial conflict\. There are also no activities that may affect the
usc or pollute such a waterway\.
Projects in Disputed Areas (OP/BP 7\.60) \./
OJ> 7\.60 is not being triggered as U1e project is not proposed in any disputed area\.
Piloting the Use of Borrower Systems to Address Environmental
and Social Safeguard Issues in Bank-Supported Projects (OP/BP \./
4\.00)
II\. Key Safeguard Policy Issues and Their Management
A\. Summary of Key Safeguard Issues
1\. Describe any safeguard issues and impacts associated with the proposed project\. Identify
and describe any potential large scale, significant and/or irreversible impacts\.
Creation of cyclone risk mitigation infrastructure has the potential to have both positive as well as
some adverse environmental and social impacts, particularly in the construction of cyclone shelters,
widening/improvement of roads, provision of bridges and drainage improvement measures\. The
planned investments under Additional Financing primarily involve either construction of
multipurpose cyclone shelters and repair/ improvement of the existing evacuation roads providing
Page 5 of 12
connectivity to cyclone shelters \. Under Additional Financing, it is proposed to construct about 162
additional multipurpose cyclone shelters with related 185 kms of evacuation roads and bridges in
Odisha and ISO additional shelters and 270 km of evacuation roads and bridges in Andhra Pradesh\.
These sub-projects will have positive impacts on the community as a whole as these will help them to
be better prepared to face the challenges of cyclone and other disasters\. Community participation in
disaster management at local level will also help in making the efforts sustainable\. All the sub projects
under the Additional Financing will come-up in the same geographical area where the sub-projects
under the parent project are located\.
As part of project preparation for the parent project, National Cyclone Risk Mitigation Project, the
likely social and environmental impacts (both positive and adverse) associated with the project
activities were identified in the Environment and Social Management Framework\. The key issues
identified then have been re-confirmed during the on-going implementation of the parent project\.
These are summarized below:
Environmental Issues: While the project interventions are likely to have an over-all positive impact
in mitigating risks from disasters, specific interventions envisaged under the project such as
upgrading/expansion of access/ local roads if designed without adequate drainage provisions or due to
poor siting of cyclone shelters may have some potential adverse environmental impacts in the local
context\. On the whole, such impacts may include: ( i) direct/indirect impacts resulting due to poor site
selection for sub-projects; (ii) impact on the drainage pattern of the area; (iii) fe lling of trees and
clearance of vegetation for sub-project construction; (iv) impacts on water resources used by the
people such as ponds, river/streams, canals and hand pumps; (v) occupational health and safety
concerns during the construction stage; (vi) impacts due to construction material (such as sand, water,
earth, aggregate) sourcing and t ransportation and; (vii) issues associated with improper disposal of
debris and construction wastes\. The activities per se are not likely to have any significant and/or
irreversible adverse environmental impacts and can be managed/mitigated by adopting the
standard/typical management measures\.
More so\. like the parent project, the most environmental concern pertains to avoiding the highly
sens itive ecological areas and/or environmental features in the vulnerable coastal environs, whic h is
possible by using the screening mechanisms diligently\. In the case of the parent project, the
application and use of GIS based tools, particularly by Odisha helped in not only avoiding
unwarranted environmental impacts but also significantly helped in managing project's requirement
of regulatory clearances\. By and large, the nature, scale and level of interventions, however will
continue to remain contextual and will vary between and sometimes, even within the state\.
Socifll lmpacts/l\."i\.m es: Almost all the road infrastructure sub-projects would use the existing
alignments and therefore are unlikely to involve land acquisition except for widening/up-grading
where required by design\. The new multi-purpose shelters arc also planned either within the existing
school premises or on other vacant government land or on lands donated by the community/gram
panchayat\. The land acquisition will therefore be not there, except in very except ional cases, which so
far going by field assessment has not identified till date\. Assessment of Phase I sub projects (part of
parent project) in both states reveals no land acquisition requirement with the exception of a small
private land that was required for a n approach road in Andhra Pradesh\. Further, no livelihood
disturbances have been observed in the parent project\. The adverse impacts, if any, will therefore be
largely restricted to a modest loss of land from the construction of new infrastructure that too at only a
few locations\.
Assessment on tribal population both in parent proj ect and for Additional Financing indicates that
there are no tribal populations with unique socio cultural identity vis-a-vis the main stream population
in the sub-project locations\. However, the ESMP outlines the provisions to follow as and when any
sub-project comes across tribal population unique to the features stated in the Bank's OP 4\.1 0\.
There is also a very little possibility of impacting cultural properties in the project as the project
interventions and construction activities arc relatively flexible in nature\. Chance-found cultural
properties will be addressed through contract requirements and project's due diligence\.
Page 6 ofl2
2\. Describe any potential indirect and/or long term impacts due to anticipated future activities
in the project area\.
The long-term impacts will be generally positive as the project will help in bringing economic and
social development in the targeted areas\. Most significantly, the reduction in the vulnerability of
coastal communities, in the two participating coastal states of Odisha and Andhra Pradesh, to the
adverse impacts of cyclones and climate related hazards will be a desirable long term impact from the
project\. Considerations of environment and social dimensions in operation and maintenance cycle of
assets would help in ensuring the soundness and sustainability of the program from an environmental
perspective\.
Further, the experience gained during the project implementation would help the implementing
agencies, both at the central and state level, to address environmental and social issues more
systematically in their regular disaster risk reduction operations as well\. The project's treatment of
environmental and social issues specifically with regard to the approach used for screening sub-
projects (which is based on a robust and scientific methodology) has a potential to set an important
precedent for non-project activities/areas now and in the future\. At the same time, long-term/indirect
adverse environmental and social impacts may result if road infrastructure is designed and
implemented without due considerations to local environmental and social features, including
drainage and safety aspects\.
3\. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse
impacts\.
The environment and social screening tool developed as part of the Environment and Social
Management Framework (ESMF) for the parent NCRMP project has been used effectively for early
identification of key environmental and social issues associated with sub-projects, which are not only
many in number but also spread across a wide geographical coastal realm of two states\. This exercise,
carried out in parallel with the project identification/engineering feasibility study, has also helped in
precisely identifying the location for a sub-project (primarily multi-purpose cyclone shelters and
associated access roads)\. For locationls falling within the Coastal Regulation Zone (CRZ) line, an
alternative site was identified in Odisha\. For sub-projects with significant social issues, land
acquisition and displacement issues and the ones fal ling within the CRZ with no alternative sites,
were either dropped or considered for Phase II, depending on the nature and scale of issues\. The
already established methodology for environment screening exercise, supported by use of scientific
tools such as GIS and remote sensing techniques, has helped in avoiding/ minimizing adverse
environmental impacts on sensitive habitats and in finding alternatives, wherever possible\. This
system adopted for the parent project will be followed for the Additional Financing project as wei I\.
4\. Describe measures taken by the borrower to address safeguard policy issues\. Provide an
assessment of borrower capacity to plan and implement the measures described\.
E11virollme111al ami Social Manageme111 a11d Safeguards lflslrume111: Safeguard policy issues were
considered by applying OP 4\.0 I, OP 4\.11, OP 4\.10 and OP 4\.12\. This had resulted in preparation of a
Âdistinct safeguard instrument for the parent operation - the Environment and Social Management
Framework (ESM F)\. It includes: (a) Environment and Social Screening approach and methodology
and (b) Environment and Social Assessment for certain type of sub-projects (such as saline
embankments while these were supported under the parent project, such type of works are not
included under Additional Financing)\.
Manageme11t of E11viro11melllal and Social Issues/Risks: The ESMF prepared by the National
Disaster Management Authority (NOMA) and endorsed/accepted by the State Governments ofOdisha
and Andhra Pradesh for NCRMP, the parent project, remains valid for the Additional Financing
project as well\. The document, finalized in November 2009 serves as a comprehensive guide covers
policies\. procedures and provis ions, which are being/will be integrated within the over-all project
cycle to ensure that the environmental and social aspects are systematically identified and addressed
in all the sub-projects\.
Page 7 of 12
The implementing agencies will carry out an environmental and social screening of the individual
sub-projects, based on methods described in the ESMF, prior to inclusion of sub-projects in the final
list of works to be supported under the Additional Financing project - a system that has been
successfully applied to the parent project\. Based on screening results, if a sub-project does not require
an EA, the generic/standard activity-specific EMP, developed as part of the ESMF, will apply\. These
generic/standard activity-specific EMPs provide over-all guidance on avoidance, minim ization and/or
mitigation measures to be adopted during the planning, design, implementation and operation stages
of the concerned sub-project\.
As in the parent project, environmental and social issues identified during such screening exercises
will be integrated in the sub-project design and implementation, as required\. In case significant
impacts are identified or in case there are time constraints with regard to completing Additional
Financing project, either the sub-project in question will be dropped or sub-project specific social and
environmental management plans will be prepared in accordance with the ESMF\.
The ESMF identifies the potential adverse environment and social impacts (such as land take,
partial/full displacement, livelihood disturbances) and describes the measures that need to be taken to
avoid/ reduce/ mitigate these impacts\. These adverse impacts will be addressed following the already
developed ESMF for NCRMP (parent Project) based on Bank' s safeguard policies and also Central
and State government's R&R policies\. The framework has provisions to compensate the Joss of land
and structure at replacement cost and the vulnerable will be assisted with additional support measures
over and above the compensation\. Wherever appropriate, the better and enhanced provisions of the
new Act - Right to Fair Compensation and Transparency in Land Acquisition and Resettlement and
Rehabilitation Act (RFCT- LARRA), 2013 will be followed for the Project\. The new Act though has
become effective, will have to be adopted formally by Project States (Andhra Pradesh and Odissa) by
forming appropriate rules and regulations\. The provisions of new Act are largely in conformity with
the provisions of the Project's R&R policy, except in case of non-titleholders (NTHs)\. ln addition to
the better provisions under the new Act, the R&R provisions of parent project on NTH will be
adhered for all components under the Additional Financing\.
Institutional Ammgements: The NOMA will continue to provide technical and monitoring support
and will coordinate the over-all program\. The preparation of safeguard documents and
implementation ofthe RAPs and EMPs is the responsibility of the State PIUs and will be monitored
by the concerned SDMA/nodal department\. The state Project Implementation Unit in each state will
have nodal Social and Environmental Experts to continuously review the ESMF implementation in
the project\. These experts will be responsible for ensuring proper preparation and implementation of
safeguard documents/instruments\. All the Detailed Project Reports prepared by the line/implementing
agencies will be certified by the Environment and Social Development Experts of the State PIUs\. The
project also has a provision for Third Party Audit covering technical, environmental and social aspects
to support NDMA/SDMA/Nodal Department in attaining quality and safeguard compliance
objectives\. All arrangements and staff positions would continue during the Additional Financing
phase of' the project\.
In case of grievances, the matter will be brought to the notice of local tehsildar/Sub Divisional
Magistrate (SDM)\. He/she shall hear the case in presence of all concerned and will try to reach an
amicable solution\. In case ofnon-satisfactory solution, the matter will be brought to the notice ofthe
District Collector and he is the final authority to decide the case\. As and if required, certain cases will
be referred to State Steering Committee which would examine and address the grievances\. The Social
Management Specialist from the PIU/SDMA will be responsible for maintaining a record of the
proceedings and the final decisions\.
\.Borrower Ct~pacity: The NOMA and the State implementing agencies now have the experience of
implementing Bank financed NCRMP project\. Lnsights into typical issues/problems have been
developed at most levels, reporting and , other monitoring mechanisms have been
developed/standardized, sensitization/ awareness among implementers in the field (consultants,
contractors and line agency staff) has been gradually built and the over-all institutional capacity to
manage the program, including planning and implementation of actions to meet social and
environmental needs and safeguards has improved\.
Page 8 of 12
While the Borrower's performance in Odisha has by and large remained satisfactory, there were a few
institutional challenges at the national level and in Andhra Pradesh, particularly in the first two years
of project implementation\. The most pertinent issue was related to the staffing deployment and
continuity (and also some capacity issues in case of Andhra Pradesh) required for systematic
planning, integration and execution of environmental management measures as part of the over-all
engineering works\. However, with deployment of the Environmental and Social Experts in NOMA,
integration of standard EHS conditions in the Bidding documents and some sensitization/training of
the field staff, improvements have been noted, particularly after a close monitoring following slow
progress ofthc over-all project since mid-term review\.
Currently, Andhra Pradesh, where staff turn-over continues to be an issue, the PIU is in advanced
stage of filling-in the vacant Environment Expert's position\. It has already recruited Social Officer at
PMU level\. In addition to the market based experts, a govt\. officer also is being given additional
responsibilities to manage the safeguards aspects during staff transition/turn-over\. Also, a firm (being
competitively selected) will help in discharging the safeguard responsibilities, including those
pertaining to screening and its documentat ion and capacity building of field personnel\. Andhra
Pradesh is in the process of recruiting Social Mobilisers to assist the implementation of the safeguard
aspects of the project\.
The current set-up of OSDMA in Odisha needs at least one additional Environmental and Social
Specialist each to support implementation of activities under Additional Financing\. This staff
augmentation is required as OSDMA is vested with the responsibility for preparing and implementing
ODRP, another Bank assisted project and safeguards documentation, including conducting of
screening exercises for this project\. For the field work, however Odisha has recruited about fifteen
number of Social Mobilisers to assist the implementation of the safeguard aspects of the project\.
With these, the borrower would have adequate capacity to manage the safeguard issues in the project\.
The Bank continues to regularly follow-up these issues on the institutional arrangements and capacity\.
5\. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on
safeguard policies, with an emphasis on potentially affected people\.
Stakeholders: The primary stakeholders include the local residents/villagers living along the coastline
in the two states of Odisha and Andhra Pradesh and being supported by targeted interventions under
the proposed operation\. The secondary stakeholders include officials from NOMA, OSDMA,
Revenue Disaster Management Department in Andhra Pradesh, local governments/village
Panchayats; local NGOs; and selected government departments such as Public Works, Irrigation and
other administrative officials/staff in the two said states associated with the planning and
implementation of the NCRMP\.
Consultatio11s: Stakeholder consultation, information dissemination and social mobilization have
remained integral part of NCRMP's planning and implementation\. [n accordance with the applicable
Bank policies, public consultations (in areas where specific investments were proposed) have been
carried out for investments funded under NCRMP (the parent project) in both Odisha and Andhra
Pradesh\. The public consultation process for the parent project was designed in a way that: (i) affected
people are included in the decision making process; (iii) public awareness and information sharing on
project alternatives and benefits are promoted; and (iii) views on designs and solutions from the
communities are solicited\. This process included a state level workshop that was organized (both in
Odisha and Andhra Pradesh) to obtain inputs on the draft ESMF and to seek views the approach
towards minimization/mit igation of potential negative impacts on people and the environmental
resources\.
The approach involved communities and local level institutions in identification, planning,
implementation, operation and maintenance (in case of multi-purpose cyclone shelters) of the sub-
projects\. During the preparation of the ESMF for the parent project and planning of sub-projects,
extensive consultation have been carried out with communities, intended beneficiaries, implementing
departments, experts (as needed), local NGOs and other stakeholders\. The outcomes of these
consultations have been integrated in the ESMF and are also documented in the screening reports\.
Beneficiary consultations and participatory planning have continued through the implementation
Page 9 of 12
period as well\. The same approach and mechanisms will continue for sub-projects/interventions
proposed under the Additional Financing project\.
Disclosure: The Environment and Social Management Framework (November 2009 version) has
been made public through NDMA (http://ncrmp\.gov\. in/ncnnp) and SDMA (www\.osdma\.org and
http://disastermanagement\.ap\.gov\.in) websites\. The document and its executive summary have also
been made available in the districts where major sub-projects were proposed and at concerned sub-
project offices during the construction stage, including those of the project consultants\. This document
continues to remain valid for the Additional Financing project too\.
Environment Screening Reports for investments supported under the parent project are also in public
domain (in the statc/SDMA websites)\. Similar mechanism will be adopted for disclosing for
safeguard documents (such as Screening Reports) for the project interventions proposed under
Additional Financing project\.
B\. Disclosure Requirements
Environmental Assessment/Audit/Management Plan/Other
Date of receipt by the Rank November 20, 2009
Date of submission 10 lnfoShop December 15\. 2009
"In country" Disclosure November 12, 2009
For category 1\ projects, date of distributing the December 15\.2009
Executive Summary of the EA to the Executive Directors
Resettlement Action Plan/Framework/Policy Process/Social Assessment
Date of receipt by the Bank November 20\. 2009
oShop
Date of submission to lnf December 15\. 2009
"In country" Disclosure November 12, 2009
Indigenous Peoples Development Plan/Framework (as part of SA)
Date of receipt by the Bank November 20\. 2009
Date of submission to lnfoShop December 15\. 2009
"In country" Disclosure November 12\. 2009
If the project triggers the Pest Management and/or Physical Cultural Resources policies, the respective
issues are to be addressed and disclosed as part of the Environmental Assessment/AudiUor EMP\.
Pest Management Not Applicable/ Policy Not Triggered\.
Physical Cultural Resources- Done- Covered under E/\\.
If in-country disclosure of any of the above documents is not expected, please explain why:
Not Applicable
C\. Compliance Monitoring Indicators at the Corporate Level
OP/BP/GP 4\.01 -Environment Assessment
Docs the project require a stand-alone EA (including EMP) report? Yes I \.J I No I J NA [ J
If yes\. then did the Regional Environment Unit or Sector Manager
(SM) review and approve the EA report?
Yes L-41 No I J NA I 1
Arc the cost and the accountabilities for the EMP incorporated in
the credit/loan?
Yes I \.J I No I J Nl\ rl
Page 10 of 12
OP/BP 4\.04 - Natural Habitats
Would the project result in any significant conversion or
Yes L J No [\.,II NA [ 1
degradation of critical natural habitats?
If the project would result in significant conversion or degradation
of other (non-critical) natural habitats\. does the project include Yes r1 No [ ] NA I \.J J
mitigation measures acceptable to the Bank?
OP 4\.09 - Pest Management
Does the Ei\ adequately address the pest management issues? Yes I I No L1 Ni\ I \.J J
Is a separate PMP required? Yes I 1 No L\.JI NA I1
-
Arc PMP requirements included in project design? Yes fl No LJ NA r\.t1
OP/BP 4\.11 - Physical Cultural Resources
Docs the EA include adequate measures related to c ultural
property?
Yes 1\.,11 No [ ] NA l 1
Docs the credit/loan incorporate mechanisms to mitigate the
potential adverse impacts on cultural property?
Yes  I \.J J No I I NA r 1
OP/BP 4\.10- Indigenous Peoples
-
!las a separate Indigenous Peoples PlanfPianning Framework (as
appropriate) been prepared in consultation with affected Yes l \.J J No L J NA LJ
Indigenous Peoples?
If yes\. then did the Regional unit responsible for safeguards or
Sector Manager review the plan?
Yes r\.J 1 No [ ] Ni\ r1
If the whole project il> designed to benefit IP\. has the design been
reviewed and approved by the Regional Social Development Unit Yes I I No [ 1 NA I \.J J
or Sector Manager?
OP/BP 4\.12 - Involuntary Resettlement
Has a rcsculement plan/abbreviated plan/policy framcworkf
process framework (as appropriate) been prepared?
Yes L \.J J No I I NA r I
If yes, then did the Regional unit responsible for safeguards or
Sector Manager review the plan?
Yes I \.J I No r1 NA l1
OP/BP 4\.36 - Forests
Has the sector-wide analysis of policy and institutional issues and
constraints been carried out?
Yes I J No I J NA I \.J J
Docs the project design include satisfactory measures to overcome
Yes L] No I ] NA t\.JJ
these constraints?
Does the project finance commercial harvesting\. and if so\. docs it
Yes L 1 No [ 1 NA [ \.J]
include provisions for certification system?
OP/BP 4\.37- Safety of Dams
I lave dam safety plans been prepared? Yes l ] No l J NA r\.J 1
I lave the ToRs as well as composition for the independent Panel of
Experts been reviewed and approved by the Bank?
Yes l J No l J NA r\.,~ J
lias an Emergency Preparedness Plan (EPP) been prepared and
arrangements been made for public awareness and training?
Yes l J No I J NA l \.J J
OP/BP 7\.50 - Projects on International Waterways
Page 11 of 12
I lave the other riparians heen notified of the project? Yes I J No r I NA I \.J J
If the project falls under one of the exceptions to the notification
requirement\. has this been cleared with the Legal Department, and Yes I ] No l I NA r \.J 1
the memo to the RVP prepared and sent?
What arc the reasons for the exception? Please explain: Yes [ 1 No [ 1 NA r \.J J
lias the RVP approved such an exception? Yes [ 1 No I 1 NA I \.J I
OP/BP 7\.60- Projects in Disputed Areas
Ha~ the memo conveying all pertinent information on the
international aspects of the project\. including the procedures to be Yes [\.J[
[ ] No L ] NA
followed, and the recommendations for dealing with the issue, been
prepared
Ooes the PAD/MOP include the standard disclaimer referred to in Yes
the OP?
r J No I I NA I \.J I
The World Bank Policy on Disclosure of Information
I lave relevant safeguard policies documents been sent to the World
Dank's lnfoshop?
Yes I \.J 1 No II NA I J
llave relevant documents been disclosed in-country in a public
place in a form and language that are understandable and accessible Yes [ \.J J No 1'1 NA I J
to project-affected groups and local NGOs?
All Safeguard Policies
I lave satisfactory calendar\. budget and clear institutional
responsibilities been prepared for the implementation of measures Yes [ "'J No I I NA I ]
related to safeguard policies?
--- - ---
I lave cosl~ related to safeguard policy measures been included in Yes l ]
the project cost?
I \.J J No I I NA
Docs the Monitoring and Evaluation system of the project includes
the monitoring of safeguard impacts and measures related to Yes r\.J 1 No [ j NA L 1
safeguard policies?
Have satisfactory implementation arrangements been agreed with
the borrower and the same been adequately reflected in the project Yes I \.J l No rl NA I J
legal documents?
D\. Approvals
Sig11ed a11d submittetl by Name Date
Task Team Leader Saurabh Suresh Dani Jan\. 21\.2014
Environmental Specialist Ncha Vyas Jan\. 20, 2014
Social Development Specialist Vcnkat Rao Bayana Jan\. 20\.20 14
Approved by
Regional Safeguard~ Coordinator rfv-\.rF'rancis V\. Fragano raJ?\. c\.,~ ao1Cj
Comments C--t\.~( A At"' ~ Jl- ~,
Sector Manager ~;;ni'~e K \. y~n B~onrhors'( "'
-:h (' " â¢I
L- 111 '\.LA~- ~\.t r-_ \. IV, "l/V/1-t
Comments _,\. -+1" 'VJl( 0
jl t tf\iJ\.
I(\.' J\.-'\.
Page 12 of 12 | APPROVAL |
P099043 | Page 1
PROJECT INFORMATION DOCUMENT (PID)
APPRAISAL STAGE
Report No\.: AB1993
Project Name
NWFP-OFWM - Earthquake Additional Financing
Region
SOUTH ASIA
Sector
Irrigation and drainage (67%); Flood protection (21%); Other
social services (11%);Central government administration (1%)
Project ID
P099043
Borrower(s)
GOVERNMENT OF PAKISTAN
Implementing Agency
Mr\. Sher Afzal Khan
Project Director, OFWM Project
Agriculture Department
Pakistan
Tel: 92-91-9216985
Fax: 92-91-9216984
Environment Category
[
]
A
[X] B [ ] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared
November 28, 2005
Date of Appraisal
Authorization
November 17, 2005
Date of Board Approval
December 1, 2005
1\. Country and Sector Background
The North Western Frontier Province (NWFP) is one of the four provinces of the Islamic Republic of
Pakistan\. It is the smallest province by area (10\.17 million ha, 12\.8% of Pakistans 79\.61 million ha) and
the second smallest, by population (24\.46 million, 16\.4 % of Pakistans 148\.72 million\. The terrain of the
province is characterized by small flat areas in the southern and central parts of the province with rugged
high mountains occupying the north\. The elevation of the southern tip is a mere 250 m above sea level,
rising steeply, within a space of a few hundred kilometers, to an average height of 3,000 m comprising the
Hindukush and Karakorum mountains\. Trichmir peak, located in Chitral district, is the highest with an
elevation of 7,708 m\.
The province experiences extremes of climate
average annual temperatures ranging between 60
degree Centigrade (Dir district) and 31 degree Centigrade (D\.I\. Khan district) and annual rainfall
ranging between 227 mm in Peshawar and 1,240 mm in Dir district\. Permanent snow is found
above 4,800 m\. Main rivers traversing the province are Indus, Swat and Kabul\. The Kabul river
trifurcates into Adezai, Naguman and Shat Alam rivulets downstream of Warsak Dam and
becomes one again before joining the Swat and eventually the Indus river near Nauhshera city\.
Flooding in the smaller rivers and hill torrents is a regular feature and takes place periodically\.
Major floods have in the past occurred in 1956, 1973, 1976, 1988, 1992, and 1994, causing
extensive damage to life and property\.
There are earthquakes and active faults in northern Pakistan and adjacent parts of India and
Afghanistan\. These are the direct result of the Indian subcontinent moving northward at a rate of
about 40 mm/yr (1\.6 inches/yr) and colliding with the Eurasian continent\. This collision is
Page 2
causing uplift that produces the highest mountain peaks in the world including the Himalayan,
the Karakoram, the Pamir and the Hindu Kush ranges\. As the Indian plate moves northward, it is
being subducted or pushed beneath the Eurasian plate\. Much of the compressional motion
between these two colliding plates has been and continues to be accommodated by slip on a suite
of major thrust faults that are at the Earths surface in the foothills of the mountains and dip
northward beneath the ranges\. These include what is called the Main Frontal thrust, the Main
Central thrust, the Main boundary thrust, and the Main Mantle thrust\. These thrust faults have a
sinuous trace as they arc across the foothills in northern India and into northern Pakistan\. In
detail, the modern active faults are actually a system of faults comprised of a number of
individual fault traces\. In the rugged mountainous terrain, it is difficult to identify and map all of
the individual thrust faults, but the overall tectonic style of the modern deformation is clear in the
area of the earthquake; north- and northeast-directed compression is producing thrust faulting\.
Near the town of Muzaffarabad, about 10 km southwest of the earthquake epicenter, active thrust
faults that strike northwest-southeast have deformed and warped Pleistocene alluvial-fan surfaces
into anticlinal ridges\. The earthquake that hit Northern Pakistan and India, and parts of
Afghanistan is thus compatible with the strike and dip direction of these thrust faults\.
2\. Objectives
A
new Part Z: Emergency Flood and Earthquake Recovery and Mitigation Program would be added to the
NWFP On-Farm Water Management and NWFP CIP II Projects\. The main objective of the restructured
project activity and the associated component activities is to assist the GoNWFP in implementing a
program to restore vital economic and social infrastructure damaged by the earthquake of October 2005
and flooding in summer 2005\. The activities of the restructured projects would be mainly carried out in
the five earthquake hit districts, but the other eight flood hit districts will also be covered\. The
rehabilitation and reconstruction will include all economic and social sectors such as health, education,
agriculture, irrigation, roads, power, communications, as well as safety net measures that are targeted at
households who lost properties and livelihoods\.
3\. Rationale for Bank Involvement
The recent earthquake of October 8
th
resulted in widespread damage in five districts (Abbotabad,
Mansehra, Battagram, Kohistan, and Shangla) of the North West Frontier Province (NWFP)\. Earlier
during the year, in February-March 2005, the NWFP experienced unusually heavy rains and snowfall\. In
Nathiagali area, it rained and snowed for 17 and 15 days in the months of January and February 2005,
respectively\. Rainfall amounted to 558 mm in Dir and 614 mm in Kalam in these few days\. This heavy
rain and snowfall caused flooding of rivers, landslides, inundation of agricultural lands, destruction of
private and public buildings, loss of human and cattle lives, and destruction of roads, irrigation channels
and seepage drains, and telephone and electricity networks\. With the advent of summer season and as the
temperature increased in the northern areas during the months of June and July 2005, large scale melting
of accumulated snow on the top of mountains caused very high floods in the rivers Indus, Kabul and
Swat\. Again, several districts of the province suffered damage to public and private property\. Whereas
damage was witnessed in all the 24 districts of the province, the Provincial Relief Commissioner declared
the following districts as most affected - Chitral, Dir Upper, Dir Lower, Swat, Shangla, Abottabad,
Mansehra, Battagram, Kohistan, Peshawar, Nowshera, Charsadda, and D\. I\. Khan\. It is worth mentioning
that five districts affected by the heavy snowfall, rainfall and floods were also hit by the earthquake\.
Page 3
The damages caused by floods were also extensive\. Human deaths in all the 24 districts of the province
were 432 and the number of injured 641\. Houses totally destroyed numbered 29,260 while those partially
damaged were 105,600\. Cattle and goats killed were 2,230 and 10,000 respectively\. Landslides caused
complete or partial washing away or collapse of retaining and breast walls, bridges, culverts and
causeways\. A total of 588 roads were reported damaged in 20 districts\. The irrigation and drainage
infrastructure reported as damaged consisted of 284 flood protection sites, 56 government canals, and 7
civil canals\. Other than the roads and canals, the reported flood damages consist of government office
buildings, school buildings, health buildings and water supply schemes\.
4\. Description
The additional activities of the restructured project will be carried out under the following
components:
a)
Restoration of Economic and Social Infrastructure
- reconstruction and/or repair of damaged
roads, road embankments, pavements, culverts, bridges, retaining walls, and other ancillary works;
repair and/or reconstruction of residential and non-residential public buildings including schools,
health facilities and buildings; repair to damaged pipelines, pumping equipment, and other ancillary
works of water supply systems; repairs of breaches in canal embankments, removal of debris
deposited in canal prisms, control structures, canal cross drainage structures and outlet structures and,
water storage infrastructure\.
b)
Strengthening of the Safety Nets
-
support cash transfers and in-kind assistance to the affected
communities and households\.
c)
Project Management and Monitoring Support
-
finance project management and monitoring\.
5\. Financing
Source: ($m\.)
BORROWER/RECIPIENT 0
INTERNATIONAL DEVELOPMENT ASSOCIATION
10
Total
10
6\. Implementation
Under the leadership of the Planning and Development Department (P&DD), concerned departments will
be involved in the preparation and appraisal of the new activities\. Regarding institutional arrangement for
implementation, it is agreed that a new Project Coordination and Monitoring Unit (PCMU) would be set
up under P&DD to assume responsibility for day-to-day follow up, coordination and monitoring of
implementation and, to organize technical assistance as needed\. A Provincial Steering Committee (PSC)
headed by the Additional Chief Secretary (ACS), would oversee the project by providing policy
guidelines, approving overall annual budgets and implementation plans, and ensuring vertical and
horizontal coordination for smooth implementation of the project\. Members of the PSC would be the
Secretaries of the departments of Finance, Planning and Development, Agriculture & Livestock, Works
and Services, Irrigation and Power, Social Welfare, and any other department which the ACS, P&DD
might like to co-opt\. GoNWFP will appoint a full-time Project Coordinator (PC)\.
Page 4
District governments would be the lead implementing agencies for this project\. District Coordination
Committee (DCC) headed by the District Nazim (Co-chaired by DCO), would be established in each
district to oversee the implementation of the project activities\. Private sector activities such as consultants,
construction firms, NGOs will be used as appropriate to complement the government departments
capacity\.
Given the multitude of activities involved, a small multi-disciplinary team of consultants as well as NGOs
would assist the coordinating and implementing agencies\. The consultants would be responsible for: (i)
assisting PCMU and district governments with overall coordination, sub-project selection and
preparation, supervision and progress reporting; (ii) providing assistance to project authorities in sub-
project preparation, PC-I preparation and procurement; (iii) assisting in monitoring progress, and
certifying payments; (iv) preparing material required for mid-term review of sub-project portfolios; and
(v) assisting PC in the preparation of the project completion report\.
PCMU would monitor and supervise implementation of project activities through a system of reporting
which would include submission of monthly and/or quarterly and annual progress reports, and spot-
checking of works by its team of experts (or consultants)\. PCMUs role would be that of a facilitator who
would help remove bottlenecks and advise on corrective measures where necessary\. Progress reports
would be initiated by each implementing department (EDOs and Irrigation Engineers) and consolidated at
the district level by the DCO and at the provincial level by the PC\. During the start-up phase of the
project, first six months, progress reporting would be on monthly basis\. Thereafter, a quarterly reporting
regime would be adopted\. A uniform progress-reporting format focusing on physical and financial
progress and outcomes achieved would be adopted\. The PC and DCOs would agree on a set of outcome
indicators for each type of intervention\. Progress reports would be shared with IDA within one month of
the end of the reporting period and reviewed by the PSC on a regular basis\.
7\. Sustainability
The project, although an emergency operation, has elements that would help sustain its benefits\. It
provides for training of the communities in disaster preparedness that would enable the people to better
cope with such disasters in the future\. An early warning system would be designed and people trained in
its implementation\. An effort will be made to employ the disaster affected people in the infrastructure
restoration works to the extent possible\. Furthermore, while designing the restoration works, it would be
kept in mind that the designs cater for improvements which would enable the structures to better
withstand any future hazards\. All these elements of the project would help ensure the sustainability of the
gains accruing from the implementation of this project\.
8\. Lessons Learned from Past Operations in the Country/Sector
The Bank has learned many lessons from past flood and drought emergency operations that would be
relevant for this project, even though this is the first time for the Bank to be involved in earthquake
emergency in Pakistan\. These include:
Special Account(s) should be established promptly and the number of special accounts
should be such as would meet the requirements of multiple agencies that would implement
project activities;
The quality of sub-project documents for restoration works was found to be generally
poor\. A standard format would need to be developed and quality of sub-project preparation
enhanced\. Suitable arrangements for supervision need to be in place for preparation of design of
restoration works and sub-project documents;
Page 5
Award of contracts is often delayed\. A system of cut-off dates for award of contracts
improves the situation;
The sub-project design should be flexible and demand-driven and eligibility criteria
should be performance based;
Project coordinators at the provincial and district level should be full-time workers with
adequate powers; and
Implementing agency staff involved in contract management should be provided training
in contract management techniques\.
9\. Safeguard Policies (including public consultation)
The project will not have any significant or irreversible environmental impacts and is classified
as Environmental category B\. Short term impacts will be taken care of as part of good
engineering practice by contractors and adequate monitoring and quality control\.
As part of the preparation of a fourth national OFWM project, which was designed to include
institutional reform and rehabilitation/investment activities, a general review of potential
environmental and social issues was conducted\. This review also benefited from a detailed
sector environmental assessment (SEA) of irrigation and drainage issues in Pakistan Indus Basin
Irrigation System (IBIS)\.These studies were supplemented by a rapid appraisal mission and
consultation with key stakeholders, in order to identify issues specific to the proposed NWFP-
OFWM project and to propose a framework for mitigating potential negative impacts and
enhancing positive ones\. Given that sites and specific interventions have not been identified and
their selection is demand-based, and that this approach is the main vehicle for identifying priority
areas of interventions, environmental and social issues are being handled as an integral part of
the overall Framework for Identifying, Preparing, and Monitoring Sub-Projects (FIPMSP)\. The
objective of developing such a framework is to ensure and put in place a clear road map, with
clear and measurable screening criteria and a transparent process and procedures\.
For this purpose, a FIPMSP was prepared by the project executing agency, approved by the
Project Steering Committee, a body that oversee overall project implementation, and reviewed
and cleared by the Bank\. Adequate capacity for the implementation of FIPMSP has been created
and resource made available through the project to mitigate social and environmental concerns\.
The additional activities of the restructured project involves mainly beneficial reconstruction and
restoration works of irrigation schemes, water supply schemes, roads, bridges, culverts and
residential houses that have low and manageable environmental impact and therefore is classified
as Category B under the Banks OP 4\.01 similar to the original project\.
Since Project activities will be applicable to specific geographic areas affected by the floods and
earthquake, Social Assessment will be carried out to identify the affected communities/ persons,
the types of interventions required and identify any Safeguard Policies that may be triggered, and
provide mitigation measures (if required)\. Accordingly, the FIPMSP will be reviewed by the
Government and applied where required\.
Page 6
Safeguard Policies Triggered by the Project
Yes
No
Environmental Assessment
(
OP
/
BP
/
GP
4\.01) [X]
[
]
Natural Habitats (
OP
/
BP
4\.04)
[
]
[X ]
Pest Management (
OP 4\.09
)
[
]
[X ]
Cultural Property (
OPN 11\.03
,
being revised as OP 4\.11)
[
]
[
X]
Involuntary Resettlement (
OP
/
BP
4\.12)
[
]
[X ]
Indigenous Peoples (
OD 4\.20
,
being revised as OP 4\.10)
[
]
[X ]
Forests (
OP
/
BP
4\.36)
[
]
[X ]
Safety of Dams (
OP
/
BP
4\.37)
[
]
[X ]
Projects in Disputed Areas (
OP
/
BP
/
GP
7\.60)
*
[
]
[X ]
Projects on International Waterways (
OP
/
BP
/
GP
7\.50)
[
]
[X ]
10\. List of Factual Technical Documents
11\. Contact point
Contact: Tekola Dejene
Title: Lead Operations Officer
Tel: 5722+162
Fax: (92-51) 9090140
Email: Tdejene@worldbank\.org
Location: Islamabad, Pakistan (IBRD)
12\. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-5454
Fax: (202) 522-1500
Web: http://www\.worldbank\.org/infoshop
*
By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the
disputed areas
Page 7 | APPROVAL |
P119363 | Page 1
PROJECT INFORMATION DOCUMENT (PID)
CONCEPT STAGE
Report No\.: AB5976
Project Name
Integrated Fisheries Livelihoods
Region
SOUTH ASIA
Sector
General agriculture, fishing and forestry sector (100%)
Project ID
P119363
Borrower(s)
GOVERNMENT OF BANGLADESH
Implementing Agency
Department of Fisheries, Ministry of Fisheries and Livestock
(MOFL)
Matsya Bhaban, Ramna, Dhaka
Bangladesh
1000
Tel: (880-2) 956-2861 Fax: (880-2) 956-6393
dg@fisheries\.gov\.bd and pcd@fourthfish\.org
Environment Category
[
X] A [ ] B [ ] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared
September 25, 2010
Estimated Date of
Appraisal Authorization
October 22, 2011
Estimated Date of Board
Approval
March 15, 2012
Concept Review Decision
Following the review of the concept, the decision was taken to
proceed with the preparation of the operation\.
1\.
Key Development Issues and Rationale for Bank Involvement
Country Context
Bangladesh has achieved steady economic growth of about 6 percent annually, relatively low
inflation, and fairly stable domestic debt, interest, and exchange rates\. Yet, around 40% of the
total population of 160 million lives in poverty, with two-thirds of them in extreme poverty\.
Inequality may be rising\. Adult illiteracy and general malnutrition remain persistent and are
falling only slowly\. Nearly half of all households in interior flood-prone regions (inland water
areas) suffer from food insecurity\.
Sectoral and Institutional Context
Bangladeshs fisheries sector consists of four sub-sectors: inland freshwater capture fisheries;
freshwater aquaculture; brackish water shrimp/prawn culture; and marine fisheries\. The fisheries
sector is crucial to Bangladesh achieving its Millennium Development Goal of 50 percent
reduction of poverty in 2015 because of potential contribution to nutrition, exports and
employment\. Sector performance needs to advance, especially with inland freshwater capture
fisheries
\.
Bangladesh has already piloted community-based co-management through several
projects with proven benefits for equity, fishery productivity, and ecosystem health; the time is
right to scale this up at policy and implementation levels\. The marine sub-sector
is dominated by
small-scale fishers and is characterized by overcapacity relative to sustainable fishing limits and
declining catches per unit of effort\. Sector reform needs to be initiated, including co-
management approaches\. A number of cross-cutting issues also need to be addressed, including,
Page 2
a) strengthening research, technology transfer and extension; b) improving market access for
higher valued fish products; c) strengthening capacity in key government agencies to support
service delivery; and d) developing better mechanisms for coordination and collaboration among
principle stakeholders\.
The proposed operation would support key priorities within the 2006 National Fisheries Strategy
and Action Plan\. For inland fisheries, the project will scale up community-based fisheries
management, restore habitats and productivity, and strengthen market linkages\. For marine
fisheries, the project will review and reform government policy, establish a register of fishers and
vessels, and pilot co-management programs based on stronger resource access rights for
communities\. The project will also support livelihood diversification for poor fishers; and
develop an improved system of technical extension, research and development, fisheries
statistics, water body mapping, and monitoring and evaluation\.
Relationship to CAS
The project will improve agricultural production and food security, through increased fish
production, particularly from inland, open water capture fisheries, as described in the CAS for
FY11-14, dated July 30, 2010\.
2\. Proposed Objective
Proposed Project Development Objective
The proposed Project Development Objective
(PDO) of the Integrated Fisheries Livelihood
Project is to
increase the incomes of inland freshwater capture and marine capture fishing
communities and the availability of fish products for domestic consumption and local sale\.
Key Results
The project is expected to have the following outcomes:
(a)
For inland open water capture fisheries, 400 (+/-) existing CBOs for fisheries
management are consolidated and strengthened, and up to 600 new CBOs established
(approximately 1,000 CBOs in total), all with secure access to inland fishery water
bodies;
(b)
Restored ecosystem health and productivity of up to 1,000 inland waterbodies, with
freshwater capture fisheries yields increased by 50 percent from baseline values,
benefiting subsistence fishers as well as full and part time fishers;
(c)
Average net incomes are increased by a minimum of 50 percent above baseline values for
approximately 250,000 poor rural households that primarily fish for income and are
dependent on inland freshwater capture fisheries;
(d)
A
national reform process is established for the marine fisheries sub-sector, characterized
by a functioning fishing vessel registration system and a functioning co-management
system established and operating in at least 5 local inshore fisheries management units
(with a minimum of 50 fisher management groups);
Page 3
(e)
An improved inventory of inland and marine-coastal fisheries resources and their status,
and a functioning information system that generates up-to-date reliable and useful
national statistics on their productivity, sustainability, biodiversity and related
livelihoods\.
3\. Preliminary Description
Component 1\. Sustainable Development of Inland Capture Fisheries
(US$75 million)\.
The
project will support the development of sustainably managed fisheries in up to 1,000 inland
water body-wetland areas through community-based fisheries management organizations, to
cover about 300,000 ha of waterbodies and floodplain monsoon water area\. This component will
invest in appropriate infrastructure to facilitate more effective local fisheries administration and
community-based management\. It will include: several new district offices for the fisheries
department to improve monitoring and extension services, and small community centers for local
meetings of fisheries CBOs and technical training\. The component will also improve water body
ecosystems and associated fish stocks by restoring silted-up waterbodies and creating fish
sanctuaries for up to 1,000 CBOs\.
Component 2\. Sustainable Development of Marine and Coastal Fisheries (US$12 million)\.
This component will initiate a process of policy and regulatory review and reform underpinned
by raising awareness of issues around marine fisheries management, particularly for artisanal
fishers and associated communities, and broad stakeholder consultations\. The component will
support specific fisheries management measures that will enable co-management in the coastal-
inshore artisanal fishery in five pilot areas\. It will help finance hygienic fish landing centers and
a
new testing facility for fish products to improve market access and product quality\. The
component will support improved monitoring, surveillance and enforcement of marine fishing
through investment in appropriate infrastructure such as harbor check stations\. The component
will also support a vessel registration system for inshore artisanal fishers, wider stock assessment
and other analytical work\.
Component 3\. Capacity, Institutional and Technical Development (US$5 million)\.
This
component will improve institutional linkages and capacities, strengthen fisheries research and
development across all fisheries sub-sectors, and support development of management
information systems, GIS-based mapping and inventory of open water bodies, fisheries statistics
generation, and policy and planning\.
Component 4\. Livelihood Support for Fishing Communities (US$60 million)\.
The
component will improve rural livelihoods in fishing communities by strengthening local
capacities and institutions, creating alternative income generating activities throughout the year
and facilitating better access to credit\. It will support social mobilization and group formation,
training and market development for the promotion of livelihood activities, and providing skills
development and employment assistance\. Revolving funds will support small loans to user
groups for fisheries and non-fisheries livelihoods, based on best practice models from other Bank
projects\.
Page 4
Component 5\. Project management (US$4 million)\.
This component would finance project
management, including robust monitoring and evaluation (M&E) supported by a 3rd-party
agency\.
4\.
Safeguard Policies that might apply
The project could potentially
trigger the Banks environmental safeguard policies on
Environmental Assessment (4\.01) and Natural Habitats (4\.02)\. The project aims to boost fish
production through better management practices and application of new technologies in more
than 300,000 ha of water spread\. Of this, approximately 80 percent of project activity could be
directed towards capture fisheries in open waters, primarily rivers, wetlands and beels\. However,
the proposed components for inland capture and aquaculture fisheries would bring positive
improvement to both the Environment and Natural Habitats through the establishment of fish
sanctuaries and increased sustainability of fishing operations\. No new ponds are proposed to be
developed for improving fish productivity in ponds and only existing ponds would be subjected
to better fishing practices and management\. Based on the Banks safeguard requirements, it is
expected that the project could be categorized as A\.
A
full Social Assessment would be needed for the proposed project to determine the most
effective structure and strategy for a community-based, participatory and inclusive approach to
fisheries management that would deliver the project objectives\. It would also determine if
indigenous people (OP/BP 4\.10) and involuntary resettlement (OP/BP 4\.12) safeguards apply\.
The social and environmental assessment would include elements of strategic social and
environmental assessment, such as review of policies, program and plans that may influence the
environment and social management aspects of inland fisheries (e\.g\. land tenure; fish stocks and
diversity; water availability for fisheries; industrial and municipal pollution of water used for
fisheries; issues of equity, gender, livelihood, tribal community, etc), as well as an
Environmental and Social Management/Assessment Framework that will include environment
and social screening, management and monitoring procedures for each site specific interventions\.
5\. Tentative Financing
($m\.)
BORROWER/RECIPIENT 31
International Development Association (IDA)
125
Total
156
6\. Contact Point
Contact: Grant Milne
Title: Senior Natural Resources Management Specialist
Tel: (202) 458-8425
Fax: (202) 614-0515
Email: gmilne@worldbank\.org
Page 5 | APPROVAL |
P010346 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No\. 8178-PAK
STAFF APPRAISAL REPORT
PAKISTAN
SINDH PRIMARY EDUCATION DEVELOPMENT PROGRAM (Fi91-95)
FEBRUARY 6, 1990
Country Department I
Population and Human Resources Division
Europe, Middle East and North Africa Region
This document has a restricted distribution &-W may be used by recpients only In the performance of
,be ' ' ' ' I I
CURRENCY EQUVALIENTS
Currency Unit - Rupees (Rps\.)
US$1\.00 - Rps 21\.15 (October 89)
FISCALY
July 1 - June 30
ABBREVIATIONS AND ACRONYMS USED
ADB Asian Development Bank
ADP Annual Development Plan
AESPC Additional Education Secretary for Planning and
Coordination
AIOU Allama Iqbal Open University
AKU Agha Khan University
CIDA Canadian International Development Agency
DEEW Director of Education Engineering Works
DEO District Education Officer
EEC Education Extension Center
GCET Government College for Elementary Teachers
GNP Gross National Product
GOP Government of Pakistan
GOSindh Government of Sindh
GPR Gross Participation Rate
ICB InternatPsnal Competitive Bidding
IDA International DevelopmcnF Association
LC Learning Coordinator
LM Learning Modules
MOE Ministry of Education
NIPA National Institute of Public Administration
NORAD Norwegian Agency for International Development
NWFP Northwest Frontier Province
ODA Overseas Development Administration
PCR Project Completion Report
PEP1 First Primary Education Project
PEP2 Second Primary Education Project
PEDP The Primary Education Development Program
PFP Policy Framework Paper
PIU Project Implementation Unit
PTC Primary Teacher Certificate
PWP People's Work Program
Rps Rupees
SOE Statement of Expenses
SPE Supervisor of Primary Education
TA Technical Assistance
UNICEF United Nations Children's Fund
USAID United States Agency for International
Development
FOR OMCAL USE ONLY
BIUD PfINKRY IDUCXTION DZWPNT PNODg= (IO91-95)
8Th?PPIPfhISAL RIPORT
Table of Contents
EXECUTIVE SIMARY\. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. i
CHAPTER I *\. \. 1
INTRODUCTION \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 1
Overview of Primary Education in Pakistan \. \. \. \. \. \. \. 1
Primary Education in Sindh \. \. \. \. \. \. \. \. \. \. \. \. \. \. 1
THE FINANCING OF PRIMARY EDUCATION \. \. \. \. \. \. \. \. \. \. \. \. \. 3
Overview of Pakistan \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 3
The Province of Sindh \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 4
IDA'S ROLE, LESSONS LEARNED, AND SECTOR STRATEGY \. \. \. \. \. \. \. \. \. 6
IDA'S Role \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 6
Lessons Learned \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 8
Sector Lending Strategy \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 8
OTHER EXTERNAL FINANCING OF PRIMARY EDUCATION IN PAKISTAN \. \. \. 8
CHAPTER II \.1\.0\. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. lo
THE PRIMARY EDUCATION DEVELOPMENT PROGRAM (PEDP) \. \. \. \. \. \. \. \. \. 10
Program Objectives \.1\.0\. \. \. \. \. \. \. \. \. \. \. \. \. \. lo
Program Priorities \. \. \. \. \. \. \. \. \. \. \. \. \. \. 11
IMPROVE PARTICIPATION OF CHILDREN IN PRIMARY EDUCATION \. \. \. \. \. \. 11
Access, Facilities and Maintenance \. \. \. \. \. \. \. \. \. \. \. \. \. 11
Incentives to Improve Enrollment and Retention \. \. \. \. \. 14
=\.-10VE THE DELIVERY OF PRIMARY EDUCATION \. \. \. \. \. \. i \. \. \. \. \. \. 17
Recruitment, Deployment and Retention of Female Teachers \. \. 17
Teacher Training and Supervision \. \. \. \. \. \. \. \. \. \. \. \. \. \. 19
Planning, Management and Implementation \. \. \. \. \. \. \. \. \. \. \. 21
MPROVE STUDENT ACHIEVEMENT \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 24
Quality, Production and Distribution of Learning Modules \. \. 24
Textbooks and Supplementary Materials \. \. \. \. \. \. \. \. \. \. \. \. 25
CHAPTER III \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 29
PROGRAM COSTS, FINANCING, DISBURSEMENTS AND IMPLEMENTATION\. \. \. \. \. 29
Program Costs \.29
Program Financing \.32
Program Implementation and Disbursements \. \.34
Procurement Arrangements \.38
CHAPTER IV \. 42
BENEFITS AND RISKS \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 42
Benefits \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 42
Risks \. \. 42
CHAPTER V \. \. \. \. \. \. \. \. \. \. \. \. \. \. i \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 43
CONDITIONALITIES AND RECOMMENDATION \. \. \. \. \. \. \. \. \. \. \. \. \. 43
Agreements Reached at Negotiations \. \. \. \. \. \. \. \. \. \. \. \. 43
Condition of Board Presentation \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 44
Conditions of Credit Effectiveness \. \. \. \. \. \. \. \. \. \. \. \. \. 44
Recommendation\. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 44
This document has a restricted distribution and may be used by recipients only in the performance
of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
Annex 1, Table 1 : Fvolution of Enrollment at Lovels in Pakistan
Between 1975-76 and 1988-89\. \. \. \. \. \. \. \. \. \. \. 46
Table 2 : Evolution of Primary Schooling Enrollment in Sindh
Between 1981-82 and 1986-87\. \. \. \. \. \. \. \. \. \. \. \. 47
Table 3 : Evolution of Primary Schooling Enrollment in Sindh
Between 1981-82 and 1986-87\. \. \. \. \. \. \. \. \. \. \. \. 48
Table 4 : Gross Transition Rates Between Grades and
Between Primary and Secondary Levels in Sindh\. \. \. 49
Table 5 : Projected Population Growth Rate by Milieu in Sindh 53
Table 6 : Effect of Population Growth on Participation in
Primary Education by Milieu and By Sex to
the Horizon 1995 \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 54
Annex 2, Table 1: Evolution of Public Expenditure on Education by Level
and Type Between 1975 and 1987 \. \. \. \. \. 55
Table 2: Evolution of Public Expenditures in Sindh By Level of
Education and Type of Expenditure Between 1983
and 1989 \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 57
Annex 3, Matrix : Sindh Primary Education Development Program\. \. \. \. \. \. 60
Annex 4, Table 1: Evolution of Primary Schooling Enrollment Between
1987-88 and 1995-96\. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 66
Table 2: Annual Teacher Requirements and Incremental
Recurrent Costs \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 68
Annex 5 : Technical Assistance Summary \. \. \. \. \. \. \. \. \. \. \. \. \. 69
Annex 6 : A Pilot School Nutrition Program \. \. \. \. \. \. \. \. \. \. \. 71
Annex 7 : Review of the Role of Supervisors/Learning
Coordinators\. \. \. 77
Annex 8 : Planning, Management and Implementation\. \. \. \. \. \. \. \. 79
Annex 9 : Upgrading the Operations of the Sindh Textbook Board \. 100
Annex 10 : Evaluation of Free Textbook Distribution to Rural
Girls, Upgraded Production Specification/Subsidy
Scheme, and Supplementary Readers Scheme\. \. \. \. \. 106
Annex 11 : Semi-annual Information to be Supplied by
GOSindh to IDA\. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. 108
Annex 12 : Schedule of Disbursements \. \. \. \. \. \. \. \. \. \. \. \. \. \. 109
Annex 13 : Documents for Project File\. \. \. \. \. \. \. \. \. \.1 \. \. \. \. 11
Map : IBRD\. No\. 22036
The Program was appraised by Julian Schweitzer (Mission Leader), Sverrir
Sigurdsson (Implementation Specialist) and Bashir Parvez (Education Advisor,
Resident Mission Pakistan)\. In addition, Michael Wilson (Education
Specialist), Daniel Viens (Education Planner), Anthony Read (Consultant,
Textbooks Specialist), Halvard Kuloey (Consultant, Nutrition Specialist), and
Garth Glentworth (Consultant, Public Administration Specialist) contributed
substantively during preparation of the PEDP\.
ISLAMIC REPUBLIC OF PAKISTAN
SINDH PRInARY EDUCATION DEVELOPMENT PROGAM (F!91-95)
,EwcuTns OwnZR
Borrower: Government of Pakistan
AMM: SDR 85\.2 million (US$112\.5 million equivalent)
Description: The objectives of the Sindh Primary Education Development
Program are to: a) iDr\.rease Rarticipation in schooling in
rural and urban slum areas, with emphasis on girls; b)
enhance deliveyy of primary education; and c) increase
student learning and achievement\. In summary:
Particination would be increased by: a) improving access,
facilities and maintenance\. Classrooms would be constructed
in rural and disadvantaged urban areas\. Sanitation, water
supply and boundary walls would be provided for girls' and
mixed schools\. Bldgets would be increased to improve school
maintenance and construction implementation capacity would
be strengthened; and b) providing incentives to improve
enrollment and retention of children in school\. The primary
school year would be changed to start after the hot season\.
A pilot school nutrition program would be introduced as an
incentive for parents to enrol children in school, to
improve children's health status and hence to enhance
student learning\. Scholarships would be provided to rural
girls who complete grade 5 to continue through secondary
education\. On an experimental basis and to be introduced
province wide after evaluation, promotion between grades 1-3
would be automatic except in exceptional cases, and school
uniforms would be abolished in rural areas\.
Delivey would be improved by: a) introducing measures to
enhance the recruitment, motivation and retention of
teachers\. These include localizing primary teacher
recruitment; increasing the age limits for female
entry/reentry into primary teaching; lowering the entrance
qualifications for female teachers where shortages persist;
giving preference to qualified primary teachers for
promotion; and expanding recognition and reward for
outstanding primary school teachers; b) improving the
supply, training and supervision of teachers\. The output of
new teachers would be increased, and qualified primary
teachers would be allowed to compete for teacher training
positions\. In-service training programs and supervision of
primary teachers would be enhanced; and c) improving
planning, management and implementation of primary education
by strengthening and reorganizing the management of primary
education at the secretariat, divisional and district
levels\.
Student achievement would be enhanced by: improving the
quality, durability, distribution and availability of
\. ii -
teaching - learning materLals, textbooks and supplementary
reading materials, including the provision of free textbooks
to rural girls\.
Benefits: The PEDP would increase primary school enrollments
particularly for rural girls, by improving access\. and
providing incentives for participation in school; imrove
learning by enhancing the quality of instruction, and the
availability and standard of educational materials; improve
efficiency through measures to increase retention and reduce
repetition and drop-out; and improve delivery of primary
education through better management and administration\.
Aggregate enrollments are expected to increase by 241
between 1990-91 and 1995-96\. Rural female enrollment would
more than double, enabling the participation rate to rise
from 141 to 231\. By supporting a least cost investment
approach and efficient planning, the PEDP would maximize the
benefits to be gained from primary educatior\. expenditures at
a time of severe resource constraints\.
Risks: The major risk is that cutbacks in government expenditures
on primary education would jeopardize the achievement of the
PEDP targets\. The consequences of rapid population growth
are such that the PEDP represents the minimum investment
needed to allow for growth in the rural participation rate,
essential improvements in efficiency, and enhanced quality
of instruction to ensure that children leave primary
education literate and numerate\. The government is firmly
committed to these objectives, and provided assurances at
negotiations that it would meet the necessary investment
targets\. A subsidiary risk is that the government lacks the
implementation capacity to carry out the physical and
institutional objectives of the program\. However, GOSind's
physical implementation capacity has improved during
implementation of previous IDA assisted projects, and would
be further strengthened in the proposed program\. To minimize
institutional constraints, the organization and management
of primary education would be improved\. In addition, the
PEDP would in the main consolidate and extend programs which
had been positively tested in previous operations, using and
strengthening existing line agencies\.
- iLL -
ISLUAIC REPUBLIC OF PAKISTAN
SINDH PRIMARY EDUCATION DEVELOPMENT PROGRAM (FY91 i5)
Fstimated Gosts and FYanMeng Plan
Estimated Costs LJcal £oraign Total
-------- - US $ MILLION --
Estimated Cost l/
_\.__________________
Improved Participation 114\.9 17\.4 132\.4
Improved Delivery 3\.7 3\.4 7\.1
Enhanced Student Achievement 8\.9 10\.7 19\.6
Total Base Costs 127\.5 31\.5 159\.1
Price Contingencies 29\.9 7\.5 37\.4
Total Costs 157\.4 39\.0 196\.4
Financing Plan: Local Foreign tal
- =-------------- US$ Million --------------
IDA 76\.7 35\.8 112\.5
Government of Sindh 75\.1 0\.0 75\.1
NORAD 5\.3 1\.3 6\.6
ODA 0\.3 1\.9 2\.2
157\.4 39\.0 196\.4
Estimated IDA Disbursements IDA Fiscal Year
=Y2 FY9 FY93 FY9 FY9 =Y6 F9 Y8 F9
Annual 7\.0 11\.0 16\.0 16\.0 20\.0 20\.0 12\.0 8\.0 2\.5
Cumulative 7\.0 18\.0 34\.0 50\.0 70\.0 90\.0 102\.0 110\.0 112\.5
Sindh PRIMARY EDUCATION DEVR LOPMENT PROGRAM (FY91-95
STAFF APPRAISAL REPORT
CHAPTER I
A\. INTRODUCTXIO
Overview of Primary Education in Pakistan
1\. Despite increased government attention to primary education during the
last decade, Pakistan's adult literacy rate (about 24X) and gross
participation rate (GPR) (about 501) remain amongst the lowest in the world;V\.
Rural - urban and male - female imbalances are stark\. Literacy rates range
from 51 for rural females, to 551 for urban males, and the GPR for primary
education from 14X for rural females, to 82X for urban males\. With a
population growth of over 3X p\.a\., the primary education system needs to
expand rapidly if participation rates are to increase: the number of children
born in 1981 was almost double the number of first grade primary school places
in academic year (AY) 1986-87\. The low educational level of much of the
population is a serious impediment to economic development\. Efforts to
improve maternal and child health and reduce fertility will be severely
hampered without increased attention to female education\.
2\. Two recent Bank reportsV have analyzed the shortcomings of primary
education in Pakiksan\. Key recommendations are: a) the need to increase
financial support, and b) greater emphasis on the delivery and quality of
primary education in order to improve internal efficiency and student
achievement\. Priority should be given to reducing drop-out and repetition
amongst those already in school as a means of improving participation in
primary education (the GPR would rise by 30X if drop-out could be eliminated)\.
Primary Education in Sindh
3\. The above education problems are equally acute in Sindh\. Because of
high population growth (para\. 6), an increase in primary enrollment of 331
between AY 1981-82 and 86-87 raised the GPR only marginally from 461 to 521,
with subsequent growth stagnation (Annex 1, Tables 1 and 2)\. Without
interventions, universal primary education would not be achieved for boys and
girls for at least 10 and 50 years respectively\.
1/ The GPR is the proportion of the age cohort (5-9) in primary school,
uncorrected for under, of over - aged children, or children who repeat grades\.
The GPR is considerably higher than the net participation rate, owing to the
presence of large numbers of under-age children in class one\.
3 Pakistan Education Sector Strategy Review, Report No\. 7110-PAK,
December 1988; Pakistan Third Primary Education Project, Staff Appraisal
Report No\. 6492-PAK, Nay 1987\.
- 2 -
4\. The low rural participation of girls in Sindh is a major problem\. Of
every 100 rural girls, only 17 enrol in grade 1, nine complete the five year
primary education cycle and fewer than 1X are still in school at age 14 (Annex
1, Table 3)\. The small number of rural girls in secondary education further
constrains any improvement prospects, because the stock of potential female
primary school teachers in rural areas is so low (para\. 55)\.
5\. Drop-out rates are universally high in Sindh\. Of every 100 urban
children who enter grade 1, only 74 complete grade 5\. Only 44X of first grade
entrants complete the five year primary education cycle in the prescribed
period (Annex 1, Table 4), and the majority of drop-outs occur in the first
three years of schooling - before literacy is attained\. Repetition rates,
although unrecorded in the aggregate, are also observed to be high\.
6\. Rapid population growth, with urban and rural age cohorts growing at
about 4\.62 and 2\.91 p\.a\. respectively, frustrates any efforts to increase
primary education participation\. Merely to keep pace with Sindh's school age
population growth between 1986-87 and 1995-96, an estimated 794,000 additional
school places, amounting to 411 of total AY 1986-87 primary enrollments in the
province, would have to be provided (Annex 1, Tables 5 and 6)\.
7\. The rapid urban population increase is placing particular strain on the
primary education system, resulting in gross overcrowding and impossible
\.Learning conditions in dilapidated, and unsafe buildings\. Class sizes of over
100 are not uncommon in Karachi, Hyderabad and other towns, and are also
evvideat ', peai-utban areas elsewhere\. in addition, whole urban slum
settlements (Katchi Abadis) are virtually without primary schooling\. The GPR
for urban boys and girls declined from a peak of 811 and 611 respectively in
AY 1984-85, to 761 and 561 in AY 1986-87\. The decline is explained by rapid
rural - urban migration (the population of Karachi is growing by about 71
p\.a\.) and the low levels of public investment in urban primary schools during
the Sixth Plan period V\.
8\. International research has demonstrated the critical impact of improved
school inputs on student achievement, particularly for students of lower
socio-economic status\. Issues of primary education financing in Pakistan and
Sindh are discussed in Section B below\. The equally critical issues of
participation, delivery, and student achievement in Sindh are addressed in the
context of the proposed Primary Education Development Program (PEDP) described
in Chapter II\.
I/ Part of the decline may be offset by unrecorded increases in private
school enrollments\. Private schooling appears to have grown rapidly in urban
areas in response to the poor supply of public schooling\.
- 3-
B\. THlE FINANCING Oit PROMAR! EOUCATION
Overview of Pakistan
9\. Starting from a low base, total public expenditures on education more
than tripled in real terms between FY76-89, with expenditures on primary
education rising by an average 91 p\.a\. (Annex 2, Table 1)\. Although the share
of actual education expenditures in GNP rose rapidly from 1\.6X in FY83 to 2\.4X
in FY88, it is far below the developing country average of 4\.4X\. Total
education expenditures as a share of total government expenditures rose from
6\.21 in FY83 to 9\.6X in FY88, compared to a developing country average of 171\.
10\. Primary education's share of total education expenditures averaged a
low 341 between FY83-88, compared with 441 for all countries of South AsiaJ\.
Despite increased emphasis in recent years, primary education investment
expenditures in Pakistan reached only about 50X of the Sixth Plan (FY83-88)
target\. There are two major reasons:
(a) Financial shortfalls\. The 1988 Education Sector Strategy Review
noted the need for the Government of Pakistan (GOP) to raise the
revenue base to permit increased expenditures on education
together with demand from other sectors\. The Review concluded
that recurrent and development expenditures on primary education
woul\.d need to continue to rise rapidly to improve participation,
quality and officiency, and Lo iake iLuL u"ouat rapid p-vrulation
growth\. At the same time, the government is facing increasing
fiscal difficulties with an FY89 fiscal deficit reaching 8\.61 of
GDP\. Within the FY89 Policy Framework Paper (PFP) agenda, GOP
intends to reduce this to below 5X by FY92 and has agreed with
the IMF and the Bank on means to increase revenues by July 1,
1990\. Under the PFP, GOP also agreed to raise education
recurrent and development expenditures by at least 8X and 6X p\.a\.
respectively in real terms over FY89 levels; and
(b) Critical Rlanning\. implementation and management problems\. These
include a cumbersome planning and approval process for new
investments, poor management, and perhaps most problematic,
shortages of female teachers in rural areas, which prevents girls
primary schools from being opened\. This is discussed further in
Chapters II and III\.
11\. Various crash development programs have been introduced by the Federal
Government to speed education development\. The Five-Point Program (1986-90)
included a large rural education program designed to increase enrollments of
f/ A different comparison shows Korea during the late '60s allocating over
82 of GNP to education\. About 752 of central government education
expenditures were allocated to primary education\.
- 4-
girls, and improve teacher deployment\. The Peoples Works Program was started
in 1989 to support invastinents in education, health, water supply and rural
roads\. Details of the Sindh portion of PWP are discussed in para 16\.
12\. The Five Point Program euccessfully focussed attention on the plight of
rural children, but was less effective in increasing participation rates,
because efforts to increase rural enrollments tended to slow down investments
in other areas, particularly urban slums\. Further, school location planning
and implementation was sometimes less than optimal\. Its r\.ocus on increased
coverage of out-of-school children, rather than on drop-out and learning
problems of enrolled children was also a major shortcoming\. By contrast, the
PWP has focussed on providing shelter for already enrolled children\.
13\. GOP Education Sector Strategy\. GOP's strategy for the education sector
during Thc_ Seventh Plan (FY88-93) reflects the dilemmas facing Pakistan's
education planners\. With meager resources to spend on an ever-increasing
population, and the backlog of the Sixth Plan, it is difficult to balance the
need for a rapid quantitative increase against investments in education
quality\. In the effort to improve rural primary education, other
disadvantaged groups, such as urban slum dwellers, are being neglected\.
14\. For all of Pakistan, the Seventh Plan allocates Rps\. 22\.7 billion for
investment in education and training (7X of total allocations), an increase in
real terms of about 60X over Sixth Plan expenditures\. The largest increase
(1811) is projected for primary education, which will receive 45X of
allocations\. Bv means of a large school trogr2r al\.-ed at
ensuring that no child is further than 1\.5 km from the nearest primary school,
the Plan targets a primary participation rate of 801 by 1992-93, an increase
of 30 percentage points over the Sixth Plan period\.
The Province of Sindh
15\. Between FY84-87, primary education recurrent and development
expenditures in Sindh rose by about 751 and 3751 in real terms (Annex 2, Table
2)\. The reasons for the relatively large rise during the latter period
include: a) an important decision in 1986 establishing a minimum of two
teachers per school to ensure continuity and prevent school closure in the
event of absenteeism,] which raised recurrent unit costs of primary
education; b) in FY88, civil servants, including teachers received major pay
increases (a nominal 341 for a starting primary school teacher); c) sharply
rising investments towards the latter part of the Sixth Plan period to offset
major shortfalls in earlier yearsW (the Five-Point Program); and d) increases
in construction costs faster than general inflation\.
The primary education student-teacher ratio is currently about 35:1\.
FY83 primary education investments were only Rps\. 62 million\.
\. 5 -
16\. The recurrent budget for primary education in Sindh continued to
increase by an average of about 10X p\.a\. in real terms in FY88 and 89,
reflecting the increased hiring of teachers as new schools came on stream\.
However, the development budget declined in real terms by 19% during the same
period, as the government encountered increasing fiscal difficulties (para\.
10\.(a))\. As a result of cutbacks in the FY89 Sindh development budget,
investment expenditures on primary education during the first year of the Plan
were only 71X of original projections\. GOSindh has recognized that at this
level of investment, enrollment growth would not keep pace with population
growth (para\. 17)\. The slackening of investment in Sindh has been offset by
the introduction of the Federally financed PWP (para 11), under which an
investment budget of about Rps\. 256 million for primary education in Sindh was
allocated in FY90, raising total investment expenditures for primary education
in Sindh to Rps\. 546 million\. The PWP program gives priority to constructing
about 590 two-room buildings for shelterless schools\. This coincides with the
investment criteria for the proposed PEDP (para\. 33)\. Including PWP, primary
education investments in FY90 represent a 58% real increase over PY89\.
17\. To keep pace with projected population growth during FY90-95, GOSindh
will need to invest about Rps\. 400 million (US$ 19\.0 million) p\.a\. in new
classrooms -- about equal in real terms to the average investment during the
past two years (Annex 2, Table 2)\. The proposed PEDP investment program
(Tables 3\.1 and 3\.5) would permit a further rise in development expenditures
averaging about 10 2 p\.a in real terms over the FY90 baseline V\. This would
be the minimum investment level needed to assure real participation growth
rates in rural aLeas of Slytas, includirig so=m acliroat1on ir\. the condition of
primary schooling in urban areas (para\. 7), urgently needed improvements to
existing facilities, and essential primary education quality improvements\.
18\. Despite rapid increases in primary education recurrent expenditures
(para\. 15), annual per student recurrent public expenditures on primary
education in Sindh are still very low, averaging about Rps\. 360 (US$18)
between FY84 and 89 W\. Of this amount, only a fraction (less than US$1 per
child per year) was spent on books, materials and consumablesV; the rest
being expended on salaries, allowances and overheads\. Amongst innovations in
V This compares with the average 131 p\.a rise in development expenditures
over the period PY86-90\.
I/ During this period, per capita recurrent expenditures rose in real
terms from a very low Rps\. 304 (US$15), to Rps\. 474 (US$23)\. However, salary
costs accounted for virtually all this increase\.
2I Recent Bank studies suggest that an expenditure of US$5 per child is
needed to establish minimum acceptable levels of quality\.
Sindh to help contain costs has been the rapid expansion of mosque schools,
which now enroll about 12X of all primary school children in the provincesU\.
19\. The costs of textbooks and school materials are in the main borne by
parents, but otherwise typical primary schools are devoid of any education
materials\. The effect of this textbook policy on poor parents is
considerable: the total private costs (books, uniforms, transport) of having
four children simultaneously in school has been estimated to equal 201 of the
income of a poor family with annual earnings of about Rps\. 10,000\.
Consequently, a textbook is often shared among 3 or more children in rural
schools, and femaie school participants are likely to be most at risk\.
20\. Primary teacher education has been neglected in the province\. In
particular, recurrent expinditures on teacher training were lower in real
terms in FY89 than in FY84 (Annex 2, Table 2)\. Recurrent funds for primary
in-service teacher training provide for only one week of training p\.a\. for
about 11 of the province's primary school teachers\. Consequently, most
teachers will spend their entire career without receiving any in-service
training\. Yet, the introduction of an integrated curriculum in grades 1-3,
and new teaching-learning materials will place a premium on such training\.
21\. International research has demonstrated that expenditures on books,
teaching materials and in-service teacher training have the highest payoff in
terms of improving student achievement\. Conversely, the lack of such
expenditures in Sindh (as well as elsewhere in Pakistan) has almost certainly
contributed to the low achievement and high number of dropouts and repeaters
in primary schools\. The proposed PEDP (Chapter II) would support efforts to
improve achievement and retain children already in school as part of the Sindh
Government's bid to increase participation in education\.
C\. IDA'S ROLE\. LESSONS LEARNED\. AND SECTOR STRATEGY
IDA'S Role\.
22\. IDA has been the largest external source of finance to education in
Pakistan, supporting the development of the sector with eight credits since
1964\. Credits during the last decade have supported two broad objectives:
meeting manpower needs, and improving primary education\. Primary education
has been supported with four credits\. The Third Education Project (Cr\. 678-
PAK) of 1977 for US$15\.0 million supported primary teacher training, as well
as university level agriculture programs and extension training\. The project
was completed in June 1984, two years behind schedule\. The PCR and PPAR
indicate that project objectives were only partially achieved\. Credit 892-PAK
MY/ These are usually small community schools with a single teacher
providing the standard curriculum for grades 1-3 under the direction of the
Pesh Imam\. Classes are often conducted in make-shift facilities provided by
the community\. The mosque schools have provided a low-cost alternative to
early conventional schooling in small scattered communities\.
- 7-
of 1979 for US$10\.0 million supported the First Primary Education Project
(PEPl) in certain districts in all four provinces, and was completed on time
(1985)\. This was an experimental project with the objectives of increasing
access, reducing wastage and costs, and improving the quality of instruction\.
The project assisted the central and provincial governments to provide
schools, improve teacher training, expand school supervision and improve
instructional materials\. The PCR, issued in June, 1987, indicated that: a)
the quality of instruction improved because of increased supervision, on-the-
job training of teachers by Learning Coordinators (LCs), and the provision of
instructional materials; b) costs were reduced through the employment of
female assistant teachers in rural areas; and c) female access was improved
through the provision of boundary walls at girls schools\. The PCR at the same
time pointed out that the overall school construction program was not
successful due mainly to the lack of supervision and clear lines of
communication between the Project Implementation Units (PIUs) and the
government departments which managed the civil works program\. The PCR also
noted that the in-service teacher training program was too complex as designed
and therefore unsuccessfully implemented; the major reason being the lack of
an institutional base\.
23\. The FY85 Second Primary Education Proiect (PEP2) (Cr\. 1602-PAK) for SDR
53\.0 million seeks to build zin the experiences gained under PEP1\. The project
is limited to certain districts in the Sindh, NWFP, and Balochistan\. It
continues to support the elements of the first primary education project which
were judged as successful (LCs, assistant teachers, and provision of teaching-
learning materials)\. New approaches were designed for civil works
construction (use of pre-fabrication) and in-service teacher training\. Aside
from construction, project implementation has been reasonably successful,
although slower than projected at appraisal\. There have been major delays in
the construction program, due to difficulties in contracting for
prefabrication, and the consequent need to revert to conventional
construction, first in Sindh and more recently in the other two provinces\.
Intensive supervision since FY87 has resolved a number of bottlenecks in
implementation, although major problems still remain in NWFP and Balochistan\.
The construction of 3,000 classrooms in Sindh under PEP2 commenced in
February, 1989, and is expected to be completed by July, 1990\.
24\. The FY87 Third Primarv Education Project (Cr\. 1821-PAK for SDR 113
million) is confined to the Punjab province, with some national aspects\. The
project became effective in April 1988, and seeks to improve institutional
capacity to plan, manage, and implement a large primary education investment
program by strengthening key agencies involved in the delivery of primary
education, implementing policy reforms affecting the recruitment and training
of female teachers, and supporting innovations in the delivery of primary
education\. The project supports a large rural school construction program\.
Project start-up has again been slow, largely due to the institutional
complexities of the project, which includes a large number of federal and
provincial agencies\.
- 8-
Lessons Learned
25\. A number of lessons have been learned during IDA's support for primary
education in Pakistan\. Items taken into account in the preparation of the
PEDP in Sindh include: a) the desirability of single province operations in
order to streanline project implementation; b) establishing clear management
systems and lines of communication for primary education which integrate
government and externally financed project components into an appropriate
system of management and technical implementation; c) the extended time
required to introduce and establish innovations in the system; d) the need for
testing and evaluation of new 'software" such as teaching materials during
development and dissemination; e) adopting construction methods and standards
which are realistic and familiar to the local authorities and contractors; and
f) establishing a financing and implementation mechanism which: i) improves
disbursements; and ii) provides flexibility to take into account experience
during implementation, as well as unforeseen outcomes\.
Sector Lending Strategy
26\. During the next few years, the main thrust of IDA's lending strategy
will be to assist the Government address the policy, institutional and fiscal
constraints to basic (primary and lower secondary) and secondary education
development\. The proposed support for the PEDP continues the deepening
dialogue on primary education\. Future operations would support the
development of basic and secondary education, with ,-articular emphasis on
increasing access and improving quality\. Recent sector work has also
highlighted the need for systemic reforms in higher education and its
interface with scientific research to ensure the country's supply of high -
level personnel, and a future operation in this area may also be considered\.
D\. OTHER EXTERNAL FINANCING OF PRIMARY EDUCATION IN PAKISTAN
27\. External financing of primary education in Pakistan is likely to
increase in the coming years\. UNICEF is supporting primary education through a
curriculum development project in selected districts throughout the country\.
USAID is financing a 10 year primary education assistance program for about
US$280 million in Balochistan and NWFP starting in FY89\. IDA and USAID have
collaborated closely in the design of complimentary programs in Balochistan
and NWFP (USAID) and the proposed operation in the Sindh, which build on the
experience gained in the First and Second Primary Education Projects\. The
Asian Development Bank (ADB) has recently approved an FY90 Rural Girls Primary
Education Project encompassing all four provinces\. The US$75\.0 million project
will be federally administered through a separate federal coordination unit,
which will direct provincial project implementation units with their own
technical staff\. Estimated unit construction costs are significantly higher
than those estimated by USAID in NWFP and Balochistan, or IDA in the proposed
PEDP\. The Sindh portion of the ADB project (US$16\.5 million over the period
FY90-95) would construct and equip, and provide associated quality
improvements for 140 five-room community model schools for rural girls\. The
European Economic Community and the Canadian International Development Agency
are cofinancing PEP3\. Other bilateral donors have financed major studies on
primary education, and are offering increased financial assistance in this
previously neglected area\. However, with a population growth rate of over 3X
p\.a\., with only 50X of the age cohort enrolled in primary school, and with
severe limits on internal resource mobilization, Pakistan will continue to
need major, external assistance to achieve real progress in primary education\.
-10-
CHAPTE II
THE PRIMARY EDUCATION DEVELOPMENT PROGRtA (PEDP)
28\. To address the issues discussed in Chapter I, GOSindh has, with
assistance from IDA, ODA and NORAD, prepared a Primary Education Development
Program (FY91-95)\. The PEDP includes all projected GOSindh investments in
primary education during this period, plus external financing as summarized in
Tables 3\.4 and 3\.5\. Financing from other sources, supplementary to the PEDP,
includes the ADB Rural Girls rrimary Education-project (para\. 27), and the
PWPWv (para\. 11)\. The priorities and objectives of the PEDP, as well as
means, targets and government actions are summarized in a matrix in Annex 3,
and detailed below\. Estimates of PEDP costs are provided in Chapter III\.
Program Obiectives
29\. The objectives of the PEDP are: a) to increase pgDaticiaptio-n in
schooling in rural and urban slum areas, with emphasis on girls; b) to enhance
delivery of primary education; and c) to increase student learning and
achievement\.
30\. Participation would be increased by: a) Improving access, facilities
and maintenance\. Classrooms would be constructed in rural and disadvantaged
urban areas\. Sanitation, water supply, and boundary walls would be provided
for girls and mixed schools\. Budgets would be increased to improve
maintenance and the GOSindh Department of Education Engineering Works (DEEW)
would be strengthened to cater for the increased construction and maintenance
activity; and b) providing incentives to improve enrollment and retention of
children in school\. The primary school year would be changed to start after
the hot season\. Initially in three districts and to be implemented province
wide following evaluation\. Promotion between grades 1-3 would be automatic
barring exceptional cases and school uniforms would be abolished in rural
areas\. A pilot school nutrition program would be introduced as an incentive
to enrol children in school, to improve children's health status and hence to
enhance student learning\. Scholarships would be provided to rural girls who
complete grade 5, to continue through secondary education\.
31\. Delivery would be improved by: a) introducing measures to enhance the
recruitment, motivation and retention of teachers\. These include localizing
primary teacher recruitment; increasing the age limits for female entry/
reentry into teaching; lowering the entrance qualifications for female
teachers where shortages persist; giving promotion preference to qualified
primary teachers for; and expanding recognition and reward for outstanding
primary -hool teachers; b) improving the supply, training and supervision of
teachers\. Teacher output would be increased, and qualified primary teachers
would be allowed to compete for teacher training positions\. In-service
training programs would be enhanced, and the role of supervisors of primary
IV See also footnote 28
-11-
education reviewed\. The mobility of supervisors would be increased; and c)
improving planning, management and Implementation of primary education by
strengthening and reorganizing primary education management at the
secretariat, divisional and district levels\.
32\. Student achievement would be enhanced by: improving the quality,
durability, distribution and availability of teaching - learning materials,
textbooks and supplementary reading materials\. The durability of textbooks
and teaching materials would be improved and unit production costs lowered\.
Free textbooks would be provided to girls in rural areas, and supplementary
reading materials provided to most schools\.
Program Priorities
33\. Because the needs greatly exceed available resources, the PEDP gives
equal priority to:
(a) investments in a minimum school infrastructure in areas with
unmet infrastructure demand, as unambiguously evidenced by
children's enrollment in shelterless or physically substandard
schools, or other equally clear indication of unmet demand from
the local community; and
(b) implementation of policies and measures, many with limited cost
implications, with a high potential for increasing the efficiency
of current investments by reducing drop-outsWv and increasing
learning\.
34\. The PEDP would complement the Second Primary Education Project (PEP2),
which covers eight districts in Sindh\. The PEDP would, on a province-wide
basis, consolidate and expand successful PEP2 components (e\.g\. teaching-
learning materials), expand the coverage of construction and rehabilitation,
and adapt and distribute the teaching-learning materials developed in PEP2\.
A\. IMPROVE PARTICIPATION OF CHILDREN IN PRINARY EDUCATION
35\. Efforts to improve participation of children in primary school
are constrained by lack of access, poor and overcrowded facilities, and a lack
of incentives to parents to send, and keep their children in school\.
Al\. Access\. Facilities and Maintenance(Estimated Base Cost, US$128\.6 million)
36\. Past underinvestment in physical facilities has left a very
inadequate primary education infrastructure in Sindh\. The major investment
needs are for the construction of new classrooms, rehabilitation of sub-
standard schools (Table 2\.1), and for maintenance\.
WU There is a 50X drop-out rate bet\.geen grades 1 and 2 in rural areas\.
-12-
37\. New Classrooms are needed for:
(a) Shelterless Schools\. Of a total stock of 21,000 schools in
Sindh, about 4,810, enrolling nearly 600,000 children are without
buildings, or in structurally unsafe buildings\. Teaching in these
so-called shelterless schools takes place in open spaces in
villages and towns\. Even where buildings exist, schools are
often grossly over-crowded, with class sizes, particularly in
grades one and two, exceeding 100 children\. Children spill out
into the courtyard or corridors\. The PEDP would construct about
8,800 classrooms for shelterless schools (about 80X of the total
stock)\.
(b) Increased access\. The PEDP would construct an estimated 8,000
additional classrooms in rural areas and the poorest urban areas
(Katchi Abadis) W\. This would allow male and female rural GPRs
to rise from 71X and 141 respectively in FY90, to 771 and 23X in
FY95 (Annex 4, Table 1)\. However, urban public primary school
construction will not keep pace with overall urban primary school
population growth (Annex 1, Table 5)\. In the absence of
additional investment, this gap will have to be met by the
private sector, which in recent years has expanded rapidly in the
more prosperous urban areas\.
38\. During negotiations, the government agreed to the following order of
priority and criteria for construction under the PEDP:-W
(a) reconstruction of dangerous school buildings;
(b) construction of classrooms for schools where no school building
exists, but where an unambiguous expression of demand exists as
evidenced by the enrollment of at least 50 children in existing
shelterless schools; and construction of an additional single
classroom to accommodate grades 4-5 girls in mosque schools
opened since 1982-83, where existing enrollments exceeds 50; and
(c) construction of new schools where no school (including a
shelterless school) is available within a distance of 2\.5 km\. for
boys and 1\.5 km\. for girls, and the population of 5-9 year olds
in the catcbment area exceeds lGO\.
iv The communities are responsible for providing primary school sites in
rural areas free of charge\.
MU The mix of construction for the various types of schools would be
agreed annually between the government and IDA at the time of the proposed
annual review (para\. 101\.(b))\.
-13-
(d) A further criterion applies to all construction escept for mosque
schools: the availability of a suitable site with space for
future expansian to at least five classrooms\.
39\. Rehabilitation oi Sub-Standard Schools\. Table 2\.1 highlights the lack
of basic school infrastructure in Sindh\. Boundary walls are important in
providing reassurance to parents that girls are belng properly protected
outside the home\. In addition, boundary walls or fences provide protection
against encroachment by livestock\. Other basic items, such as floor mats for
the students, and a storage cupboard (almlrah) to keep books and supplies are
also lacklng in most schools\. Children sit or squat on bare floors in
overcrowded, poorly lit and ventllated rooms, which adds to the difficulty of
learning\. The PEDP would provide: a) low cost sanitation and water supply
for about 2,100 girls and mixed primary schools; b) boundary walls for about
2,500 girls and mixed primary schools; and c) basic furniture (floor mats,
teacher desks and cupboards) for about 16,800 classrooms\.
Table 2\.1 Summary of Existing Primary School Deficiencies11
<- By Locale -> <---- By Gender ---> Total
Item ---- ---- --- ---- ---- of
urban Rural Boys Girls Mixed Schools
-- - - - -- - - - --- --- ---- \. - - \. ____
Shelterless Schools 450 4,360 3,800 1,010 - 4,810
No Boundary Wall 1,130 9,810 7,930 810 2,200 10,940
So Sanitation 880 9,880 7,770 1\.020 1,970 10,760
No Water Supply 840 8,010 6,520 970 1,360 8,850
40\. Scheol Maintenance\. Prior to FY87, the small school maintenance
budget (Rps\. 10\.0 million) was used to prevent catastrophes, and the stock of
dilapidated buildings increased rapidly\. During the past two years, annual
allocations and expenditures doubled to about Rps\. 20\.0 million per year\. The
number of primary schools receiving rehabilitative maintenance11 quadrupled
during this period, reaching about 800 schools in 1987/88\. In order to ensure
the sustainability of new investments, the PEDP would finance an increment to
the maintenance budget, which would permit: a) routine annual maintenance to
be carried out on demand (estimated at Rps\. 5\.0 million annually); and b)
rehabilitative maintenance of about 2,000 schools to be carried out each year
(Rps\. 25\.0 million annually)\. At full operation, the annual maintenance
iU Because many schools have a combination of deficiencies, it is not
possible to aggregate the data\.
11 Minor preventive maintenance is increasingly being carried out on
demand and consumes about 15X of the maintenance budget\. A more regular
maintenance is expected to result in a substantive reduction in maintenance
unit costs\.
-14-
budget for primary schools in Sindh would comprise at least Rps\. 30\.0 million,
or about 2X of FY89 recurrent expenditures on primary education\.
41\. Manajgmeat of the Construction and Maintenance Program\. The PEDP
would finance investments according to the priorities and criteria described
in para\. 38\. The construction targets, together with targets for increased
participation as a result of construction of new schools and improved internal
efficiency are shown in Annex 4, Table 1\.
42\. The Directorate of Education Engineering Works (DEEW) would
manage the construction and maintenance program\. DEEW uses appropriate
supervision procedures to ensure a balance between construction quality, cost
and basic training of village based contractors\. The Directorate's technical
skills are generally good, but to improve its drafting and design capabilities
(especially in matters of ventilation and sanitation designs), technical
assistance (TA) would be included to familiarize implementing staff with
current experience elsewhere (3 staff-months of specialist servicesWv and 3
staff-months of overseas study tours (Annex 5))\.
43\. To permit the Directorate to undertake the added responsibilities
of increased construction and added maintenance coverage, its staffing would
be increased by adding two sections to the now existing five sections\. During
negotiations, the Government provided assurances that the Directorate's role
would be maintained; and that an expansion, in accordance with an appropriate
staffing plan, would be carried out by June 30, 1991\.
A2\. Incentives to Imorove Enrollment and Retention\. (Estimated Base Cost,
US$3\.8 million)
44\. In addition to poor access and facilities, low primary school
enrollment in Sindh is also caused by systemic deficiencies which increase the
opportunity cost to poor parents of sending their children to school, and thus
adversely affect participation in primary education\. The PEDP would include a
number of measures and in\.entives to increase demand\.
45\. The School Calendar and Scbeduling\. The current academic year
extends from April to March\. Enrollment in Class I must be completed by end
April\. Academic work starts in May but is then suspended for vacation during
the hot months of June and July\. The closure of schools barely a month after
the start of the academic year adversely affects the motivation of pupils and
results in pupil attrition\. The mandatory requirement of completing the
enrollment of students in April also prevents latecomers from being enrolled\.
A more appropriate school calendar, from August 1 - May 30, would take into
account the hot season, and provide for a continuous school year\. During
negotiations, GOSindh confirmed its intent, in time for the beginning of AY
1990-91, to change the timing of the school calendar to August I-Nay 30\.
iU A job description has been prepared and is available in the PEDP files\.
-15-
46\. Primary schools in Sindh, whether urban or rural, observe uniform
school hours from 08:00 to 14:00, and a uniform summer, winter and spring
vacation schedule\. However, rural patterns of life place a heavy load of
daily family and farm chores on school age girls and boys, which are at their
peak during harvest\. In addition, the scarcity of local female teachers
(para\. 55), means that schools depend on urban teachers who must often commute
long distances from their home to school\. As a result, classes often start
late in rural schools, and during crop harvesting, school attendance drops
substantially\. District Education Officers (DEOs) therefore need flexibility
in determining school hours and vacation schedules to serve better the
interests of rural, schools and communities\.
47\. Promotion between Grades\. There is no set policy in Sindh to
provide formal end-of-grade examinations, and practice varies between
districts and individual schools\. Examinations are set by the schools, under
the supervision of the supervisor/learning coordinator (para\. 63)\. Children
who fail the examination must often repeat the grade, although there is no
uniform provincial standard or policy regarding grade-wise promotion13\. This
arbitrary use of examinations has a number of deficiencies: a) the
examinations are not standardized or pre-tested and therefore cannot be used
to test individual student achievement, or for cohort analysis; b) the lack of
standardization renders arbitrary the decision to pass, fail, or promote a
student; and c) international evidence demonstrates that repetition
demotivates students and parents, and increases the likelihood of a child
dropping out\.
48\. Abolition of School Uniform Requirement\. School uniform is
compulsory in Sindh, although the rule is not always applied in poor areas\.
School uniforms are the highest school expenditure item for parents, costing
over Rps\. 200 per child, and may act as a disincentive to parents to send
their children (particularly the girls) to school\.
49\. During negotiations the government agreed that it would, for a
period of two years, starting in the school year 1990-91, and in three
selected districts: a) experiment with flexilble school hours to suit local
conditions in a total of about 150 selected rural schools; b) abolish the
requirement for school uniforms for primary school children in rural areas;
and c) abolish the end of year examlnation for grades 1 and 2, provide
automatic promotion between grades 1 and 3, and develop and introduce
achievement testing as part of the curriculum to monitor individual and cohort
student achievement (para\. 119\.(d))\. GOSindh further agreed that it would, by
June 30, 1992, complete and furnish to IDA a atudy evaluating the impact of
these measures enrollment, attendance and retention of students, and following
18i Comprehensive data on grade-wise repetition in Sind are not available\.
Sample data from two districts in AY1983-84 shows the repetition rate as high
as 221 in grade 1\. There appears to be no correlation between repetition
rate, school locale (urban or rural), or gender\.
-16-
an exchange of views vith IDA, it would proceed with the Introduction of the
above measures In all districts of Sindh by the beginning of AY 1992-93, if
and to the extent such an introduction is warranted on the basis of the Study
and the exchange of vievs with IDA\.
50\. A Pilot School Nutrition Program\. Malnutrition remains widespread
in Pakistant3\. A recent survey of 1,600 children under five years of age in
Sindh revealed that 48X suffered from chronic malnutrition, 11 suffered from
acute malnutrition and only 361 were adequately fed\. Amongst young children,
caloric deficiency is more serious than protein deficiency\. Various child
feeding projects in Sindh during the last three years have improved
nutritional status, but have also demonstrated the complexity of nutritional
assistance programs, the importance of careful planning and implementation,
and the need to involve the local community\.
51\. The PEDP would pilot a school feeding program in three districts
in rural Sindh, by providing local foods, training parents/village workers and
school and other local staff, and a rigorous 3-monthly monitoring of impact,
and evaluation\.LJ The objectives would be to test whether a school nutrition
program can be used: a) as an incentive to increase enrollment, retention and
regular attendance; b) to improve the nutritional status of primary school
children and their younger siblings who often attend first grade; c) to
increase parental and community awareness of the importance of child nutrition
through local (school and union council level) community management of the
program; and d) to improve student achievement\.
52\. The Department of Community Health Sciences of the Agha Khan
University (AKU) will complete detailed planning of the pilot program by
March, 1990\. The program will emphasize the following principles: a)
wherever possible, local, nutritious foods, such as soaked gram, fish, raw
fruits and vegetables, would be used and b) the program would be managed
locally at the school or Union Council level, with assistance from the AKU or
other competent NGOs\. By July 1990, a total of 75 schools comprising
approximately 10,000 children would be ready for inclusion in the pilot phase\.
The program would be monitored quarterly at each school for changes in e\.g\.:
a) weight-for-height, b) skinfold thickness, c) health status, and d) school
attendance and retention\. The program design would be flexible to allow for
mid-course corrections, based on experience in implementation\. It would be
evaluated after two years of operation by GOSindh and IDA to determine success
in the following areas: local program management; food handling and
preparation; costs; impact on school attendance and retention; impact on
nutritional status, and on learning\. Continued financing including any
expansion would depend on the outcome of the evaluation\.
MYi National Nutrition Survey 1985-87 Final Report, National Institute of
Health, Government of Pakistan, 1988\.
M A more detailed description of the program is provided in Annex 6e
*17-
53\. Secondary School Scholarshits for Rural Girls\. Very few rural
girls complete primary education, and only a handful continue through
secondary school (Annex 1, Table 3)\. Undoubtedly, the high opportunity cost
to parents is a factor\. Given the crucial need to increase the numbers of
educated girls in rural areas, GOSindh has introduced a modest scholarship
program for rural girls who complete class 5 to assist their families to send
them to secondary school\. The PEDP would finance an additional 1,500
scholarships p\.a\. of Rps\. 100 per month for rural girls to attend middle and
secondary school\. This would represent a 121 income supplement to a rural
family with an annual income of Rps\. 10,000\.
B\. IMPROVE THE DELVERY OF PRIMRY E DUCATION
54\. The PEDP would address issues of recruitment, training,
deployment and supervision of primary school teachers\. These include: a) the
difficulty in recruiting rural female teachers and their inadequate conditions
of service; b) the use of most teacher training college places for uncertified
serving teachers, rather than new entrants to teaching; c) the absence of a
systematic in-service training program; and d) the need to improve pedagogical
supervision of teachers\. Pre-service training, which also needs upgrading to
make it more responsive to teaching conditions in the schools, would be
supported through planned operations by IDA, the ADB, ODA and other donors\.
3l\. Recruitment\. DegloZe_nt and Retention of Female Teachers (Estimated Base,
Cost, US$0\.2 million)
55\. Previous reportstJ have identified shortages ,f female teachers
in rural areas as one of the critical impediments to the development of rural
primary education in Pakistan\. The lack of female teachers is a strong
disincentive to parents sending their children to school\. Where female
teachers are available, co-educational primary education may be acceptable,
even in rural areas\.
56\. The supply problem of rural female teachers is acute\. Even with
new teacher training places available (paras\. 60, 62), only about 1,000 new
female teachers, or about 45X of the annual need in AY 1991-92 (Annex 4, Table
2), will receive formal Primary Teacher Certificate (PTC) training in AY 1990-
91, and most of these will be urban residents\. The total number of rural girls
in Sindh graduating from grade 10 (the minimum requirement for entry to the
PTC program) in 1987 was about 2,500\. This small stock has to supply all
rural employment demand for educated girls, including the health service's
growing needs for female paramedical workers\. Since many girls will not move
into the formal labor force, the pool of potential rural female teachers is
extremely small\. This is the main reason why GOSindh has moved cautiously to
extend the network of women's teacher training colleges, especially to the
smaller towns\.
£1 Reference 2, Ibid\.
-18-
57\. Most women teachers reside in towns and are reluctant to serve in
rural areas because: a) living and working conditions may be poor, and travel
to the rural school arduous and expensive; b) the structure of allowances
favors teachers in the three main cities of Karachi, Ulyderabad and Sukkar; and
c) customs make it difficult for female teachers to serve in communities other
than their own\. Some of these problems are insoluble in the near term\.
However, certain rdministrative regulations and practices which work against
women's participation in teaching can be changed\. These include: i) no entry
into the teaching service before 18 or after 25 (eliminating both the eighth
grade matriculate and mature entrants); ii) recruitment at the district level
(this works to the advantage of urban women but, once recruited, they are
often absent from rural posts because of travel and other difficulties); iii)
rigid re-entry regulations for mature women and; iv) poor career prospects\.
Promotion to supervisory grades is biased in favor of secondary school
teachers - only 25X of such positions in Sindh are allocated to primary
teachers; and v) there are few incentives for good performance (such as
advanced increments or accelerated promotion)\.
58\. During implementation of PEPI, the Government successfully
experimented with the employment of rural female assistant teachers, under the
supervision of a trained teacher\. These assistant teachers (typically eighth
grade graduates) lacked the minimum prescribed educational qualification
and/or teaching certificate\. Their motivation was high, attributable to the
unique opportunity for career advancement the post offered\. This finding
reflects international evidence that formal training alone does not determine
effective teaching\. GOSindh has therefore decided that whenever a qualified
local female teacher cannot be recruited, an unqualified matriculate or even
eighth grade graduate will be recruited and provided with in-service training\.
In addition, if shortages persist, the government would recruit educated
retired persons for teaching\. During negotiations, GOSindh informed IDA that
it had decided to introduce the following regulations, to improve recruitment,
deployment and motivation of rural female teachers; and to make primary
teaching a more attractive career:
(a) Recruitment of primary teachers would be localized at
taluka/union council level\. A policy would be implemented to post
teachers as near as possible to their home\.
(b) The permissible age range for entry to the primary teaching
profession would be amended to 16-45 years\.
(c) Where a girls school has been closed for more than eight weeks
for want of a qualified teacher, an unqualifled teacher
(matriculate or eighth grade) would be recruited as an assistant
teacher\. Assistant teachers would be given opportunities to study
for secondary school completion in the AIOU distance program for
rural women and, if successful, would be given preference either
for formal teacher training, or the AIOU PTC program\. If no
suitable candidate is available, a retiree would be contracted\.
-19-
(d) Preference would be given to recruit or promote qualified prlmary
school teachers with IA/B4d degrees to supervisory positions\.
59\. The PEDP would include about Rps\. 5\.1 million as prizes and
incentives to outstanding primary school teachers for developing new and
innovative low-cost teaching materials and measures to encourage parents to
send and retain girls at school\.
B2\. Teacher Training and Supervision (Estimated Base Cost, US$5\.2 million)
60\. Teacher training and gertification\. The Sindh Education
Department's Bureau of Curriculum and Fxtension Wing (the Bureau) is
responsible for primary and middle schoal teacher training, including in-
service training for Sindh's 45,000 primary teachers (16,500 female)\. Within
the province, the Bureau operates 19 Government Colleges for Elementary
Teachers (GCETs) (11 male; 6 female; 2 specialized) iith one year PTC
programs\. Only about 20X of GCET faculty have had working experience in
primary education; others are former senior secondary school teachers with
little relevant expertise\. The current 3,300 GCET places will increase to
3,850 in 1990 with the addition of one male and two female colleges\. About
2,300 places (810 female) are used for primary teacher training, the balance
being for middle school teachers\. The Allama Iqbal Open University (AIOU)
also offers a distance PTC program for serving teachers (about 1,700 graduates
p\.a\. in Sindh) for which the students pay fees\. In-service training is
offered at two Bureau extension centers\. It is poorly funded and provided
only about 200 staff-weeks of primary teacher in-service training in AY 1988-
89\.
61\. About 601 of the PTC places are used to upgrade serving primary
teachers who are nominated by their District Education Officers\. The teachers
receive full salary and are eligible on graduation for a salary increment and
pension status\. This is an expensive and inefficient way to upgrade teachers,
because the curriculum is designed for new, rather than serving teachers, and
it severely limits the output of new, trained teachers (para\. 56)\.
62\. To address the issues of inadequate output of new teachers and
recruitment of experienced faculty, GOSindh provided the following assurances
at negotiations:
(a) By the start of AT 1992, all GCET places would be assigned to new
entrants to the teaching profession; rind
(b) By December 31, 1991, GOSindh would amend the regulations to
allow those from the primary education stream with appropriate
qualifications and experience (e\.g\. supervisors of primary
education) to compete for all GCET faculty positions\.
63\. In-gSErLie training\. PEPs 1 and 2 upgraded in-service training
through: a) the preparation of structured training materials (the Learning
Modules (LUs)); and b) improved teacher supervision by Learning Coordinators
-20-
(LCs)\. The latter function is carried out by Supervisors of Primary Education
(SPEs) ir districts not covered by PEP2\. Each LC/SPE works at the smallest
administrative level (taluka), and supervises about 15 schools\.
64\. The PCR for PEP1 noted the positive impact of teacher supervision on
teaching quality, student achievement and teacher absenteeism\. Recent IM
evaluation has determined their in-service training potential\. The LMs focus
on curriculum concepts and related pedagogical methods, providing an input to
lesson-planning\. The LNs completed under PEP2 will need to be quickly
4isseminated beyond the schools where they were piloted (para\. 77)\. The
Government of Pakistan is gradually introducing the IM system throughout the
country\.
65\. Despite the above progress, in-service training is limited in scope and
under-funded\. Its improvement depends on: a) the design, development and
testing of an in-service training program in selected districts; b) completing
Sindh's share of the IMs and adapting LNs produced by the other provinces; c)
improving and standardizing IM tests of student performance; and d) training
supervisors and master teachers to use the -Is tor in-service training\.
66\. Under the PEDP, the Bureau would reinforce its extension wing for in-
service training with two extension officers to develop, implement and monitor
two pilot in-service teacher training programs, in one urban and one rural
district of Sindh\. Two major training themes would be: the use of the LNs;
and classroom organization and management for multi-grade teaching\. About
7,700 teachers (about 20X of all teachers in Sindh) would be trained during
the first two years of the PEDP through 8 four-week courses per year in 16
centers, with about 30 participants per course\. A further two extension
officers would be added to the Bureau's staff when the program is replicated
in other districts\. Training centers would be established in district schools
with adequate facilities\. About 100 master trainers selected from the ranks
of SPEs, LCs, and GCET faculty would be trained at the Curriculum Wiutg to
provide the training programs\. The program would be evaluated at the end of
the second year, and then replicated, with necessary modifications, in a
further nine districts during the third to sixth year of the program to reach
about 12,000 teacher p\.a\. Eighteen staff months of specialist services31
(Annex 5) would assist the Bureau: a) with the design and implementation of
the training programs; b) with evaluation of the pilot programs; and c) with
advice on classroom organization and management of multi-grade teaching\.
About 16 short (one month) fellowships would also be provided to enable senior
staff in the Bureau and Education Department to study developments in teacher
training and primary education abroad\. A steering group comprising the
IV Job descriptions for the specialist services have been prepared and are
available in the PEDP files\.
-21-
concerned District Education Officers (DEO), the Bureau and the AIOUWU would
provide general guidance\. During negotiations, GOSindh provLded assurances
that it would constitute a steering group for in-service teacher trainLag, and
by 30 September, 1990, and annually thereafter, the Steering Group would
provide a report on the activities and expenditures of the pilot program for
IDA review\.
67\. Teacher Supervision\. The PEDP would support a further review of
the work of supervisors to strengthen their role in areas such as: practlce
teaching for new teachers; organization and support of in-service training
(with special emphasis on identifying common classroom or curriculum-related
problems; and the monitoring of measures to improve the participation of rural
girls in primary education\. Details of the review, for which about 12 staff-
months of expert services and 6 staff-months of overseas fellowship would be
provided, are given in Annex 7\. To enable supervisors to visit schools
regularly, the PEDP would provide transport and associated running costs
(about 50 jeeps for women and 485 motorcycles for men) in districts not
covered by PEP2\. A similar arrangement under PEP2, works satisfactorily\.
B3\. Planning\. Management and Implementation (Estimated Base Cost, US$1\.8
million)
68\. The PEDP would have a major planning, coordination, and
implementation impact on six functional Directorates, on the offices of the
four Divisional Education Offices, and on the educational hierarchies in the
sixteen districts (A description of the current and planned organization of
primary education in the province, including job descriptions of key
management staff, is provided in Annex 8, Attachment 1)\. Two organizational
issues are critically impeding primary education development:
(a) Program Plannine and Management\. Given the size and complexity
of the PEDP, planning, management and implementation capacity of
the Secretariat (responsible for shaping and implementing policy)
is inadequate\. As a result, the many separate agencies, involved
in primary education can only be coordinated at the Education
Secretary level, who is overloaded with other responsibilities\.
The need to plan and coordinate the inputs of growing numbers of
external donors in the education sector is particularly acute\.
(b) An Effective Management Focus for Primary Education\. At the
district level, the District Education Officer (DEO) is
responsible for all primary and secondary schooling\. The DEO is
M/ A complementary NORAD assisted AIOU initiative will improve the
distance PTC program for uncertified teachers\. A strengthened AIOU program
will provide additional and flexible teacher training at low cost\. In
addition, the AIOU secondary school completion program provides opportunities
for improved participation of rural women in teaching\.
-22-
assisted by a hierarchy of Additional (ADEO), Deputy (DDEO), Sub-
divisional (SDEO) Education Officers, SPEs and LCs, who are
divided between male and female streams of education\. Above the
level of SDEO, these officials administer both primary and
secondary education\. The district administrative hierarchy is
usually recruited from the ranks of secondary and college
education and has little expertise in primary education\. There
has been a tendency to emphasize secondary over primary levels,
especially where larger schools combine primary and middle
grades, or where new middle and high schools are created\.
69\. An attempt to address these problems was made in PEPs 1 and 2 with the
creation of a provincial Project Implementation Unit (PIU)\. This has suffered
from the major defect that it created a parallel implementation structure for
curriculum, teacher training etc\. which has proved difficult to integrate with
existing provincial institutions\. The revised provincial management structure
described below incorporates the PIU in a manner which would increase its
effectiveness in implementing PEP2 and other tasks given it by GOSindh\. The
objectives of the new management structure are to: (a) strengthen the
Education Secretariat's capacity for planning and coordination with special
emphasis on primary education; (b) create an effective management and planning
focus for primary education at the divisional and district levels; (c)
strengthen program planning and monitoring capacity, including the education
data bdase; and (d) upgrade the management skills of administrators and
professionals\.
70\. The Education Secretariat's capacity for planning and
coordination would be improved by reorganizing and strengthening of the
Planning and Coordination Wing (PCW) (Annex 8)\. The PCW would have three
major functions: a) education planning, including the design of new programs;
b) coordinating the various line agencies involved in implementation; and c)
monitoring and evaluation of implementation\. The PCW would be headed by an
Additional Education Secretary for Planning and Coordination (AESPC) who would
report directly to the Secretary, Education (an incumbent was appointed in
October 1989)\. Two further positions: Deputy Secretary (Coordination) and
Section Officer (Disbursement), would be created to improve the coordination
between provincial and external agencies and the disbursement of funds\.
Other, existing posts would be redesignated to improve the planning function\.
71\. The revised PCW structure with key job descriptions is outlined
in Annex 8\. Incremental staff positions at the Secretariat level would be
financed by the IDA Credit during PEDP implementation\.
72\. An Effective Management Focus for Primary Education would be
achieved by:
(a) reorganization of the administrative staff at the divisional and
district level as described in Annex 8\. The major changes would
be: i) the provision of an Additional Director for Primary
Education at the divisional level; and ii) at the district level,
-23-
redesignation of duties and delegation of powers to the ADEOs to
give them the main responsibility for primary education\. The
proposed changes would not require the creation of new
administrative staff positions at the district level; sad
(b) improved supervision of primary schools: the supervisory roles
of the SPEs and LCs would be clarified to avoid duplication
(para\. 67)\.
73\. Revisions to the administrative structure at the Secretariat,
Divisional and District levels are shown schematically in Annex 8, page 3\.
During negotiations, GOSindh provided assurances that it would by December 31,
1990: a) complete the reorganization at the secretariat, divisional and
district levels; b) create all resulting staff positions as regular positions,
irrespective of initial sources of finance; and c) adequately staff the Pcy
and the divisional and district level positions in accordance with agreed job
descriptions and substantially as outlined above\.
74\. Strengthening program planning and monitorlng capacity\. including
the education database would be achieved through:
(a) improved collection and analysis of educational statistics; and
(b) strengthened investment programming and monitoring\.
A satisfactory reporting system for the collection of primary education
data has been developed and a proforma for monitoring investments has been
prepared (Annex 11)\. Improved collection and analysis of this data would
serve as the basis for enhanced planning and monitoring capability in the
office of the AESPC\. A semi-annual reporting system would provide senior
managers with information on program expenditures and implementation
(para\. 10l\.(b) and Annex 11)\. The proposed Credit would finance training costs
and decision support materials for the above activities, as described in Annex
8 and summarized in the TA schedule in Annex 5\.
75\. Upgrading Management Skills of Education Administrators\. PEDP includes
a plan to train about 100 senior education sector staff annually in management
techniques to better perform their tasks\. The target group includes senior
administrators in the Education Department, and officials at the divisional,
district and sub-district level\. The training programs would be organized by
the Education Extension Center (EEC) in Karachi, suitably strengthened with
the assistance of the Karachi branch of the National Institute of Public
Administration (NIPA)\. NIPA would act as consultants and executing agency for
the initial training, and would evaluate the initial two-year phase of the
program\. NIPA would work closely with the EEC, which would gradually take
over execution of the program as its skills develop\. About 18 staff-months of
expert services (Annexes 5 and 8) would be provided during the first 2 years
of implementation to assist NIPA in needs analysis, design, implementation and
evaluation of the first round of training programs\. About 54 staff-months of
-24-
fellowships would also be provided for Education Department staff to study
organization and management of primary education in other countries\.
C\. IHMP1V STUDENT ACBIE!
76\. The negative effect of poor quality, or lack of teaching materials,
textbooks and supplementary readers on student achievement is well recognized
in Sindh\. By consolidating and expanding initiatives in previous IDA
supported operations, the PEDP would address three issues in this area: a)
quality, production and dissemination problems with LMs developed under PEP2;
b) the low quality and durability of textbooks, and their cost to parents; and
c) the shortage of supplementary reading materials in schools\.
Cl\. Gualitv\. Production and Distribution of Learnina Nodules (Estimated
Base Cost, US$1\.8 million)
77\. Credit 1602-PAK for PEP2 is financing a first phase of preparation,
testing, publishing and printing of 280 LNs (para\. 63) for grades 1-5 in the
four main subject areas: language, mathematics, science and social science\.
Manuscripts have been developed in all the three participating provinces\. No
one province is concentrating either on a subject area or on a grade level,
and there is insufficient coordination of the work-program\. Nevertheless
initial pedagogic evaluations of the 80 completed LMs are positive in
improving the subject knowledge of teachers, presentational skills in the
classrooms, measurement of pupil achievement and general teacher motivation\.
However, because the PIU for PEP2 is not staffed or equipped to publish and
distribute large quantities of materials, the exercise in Sindh will not be
completed in the eight PEP2 project districts until mid-1990\. The production
standards of existing, completed modules in Sindh are poor and their life
expectancy would be short\. Production costs are high because of inefficient
procurement procedures\. To distribute the materials to all primary schools in
the province, the PEDP would therefore improve editing, printing, publishing
and distribution, including enhanced production specifications and controls,
to ensure: a) collation of the Lfs into 11 volumes representing the major
curriculum focus of the LMs in grades 1-5l'; b) improved durability; c)
efficient distribution; and d) lowering of unit production costs by about 50X\.
Tender procedures and documents have been prepared\. Contracts for printing,
publishing and distribution would be awarded to commercial publishers through
competitive bidding\. Further details of the production and distribution plan
are provided in a working paper in the PEDP files\.
78\. Achievement Tests\. Tests of student achievement as part of the
teaching process were developed in PEP1 and used together with LM materials in
PEP2\. Under the PEDP, the Curriculum Bureau would be supported in further
development of the tests, field testing, printing of test items and
dissemination\. Teachers would be trained to use the tests during the in-
14U Math, local language and English in grades 1-3; math, science, local
language and social science in grades 4 and 5\.
-25-
service training programs (para\. 66)\. To update Bureau staff, six staff-
months of fellowship training would be provided to review developments in
evaluation and testing, and education measurement (Annox 5)\.
C2\. Textbooks and Supplementarv Materials\. (Estimated Base Cost, US$ 17\.8
million)
79\. The Sindh Textbook Board (STBB), produces and publishes textbooks and
supplementary materials for primary, intermediate and secondary education, as
well as teacher handbooks and guides\. The STBB operates as a commercial
undertaking responsible to GOSindh\. It receives no subsidies and its profits
are ploughed back into future operations to maintain book prices at the lowest
possible level\. The professional staff have few relevant qualifications and
are in need of professional upgrading\. The STBB selects authors to write the
textbooks according to GOP guidelines\. Authorship skills also need
improvement\. In 1988, the STBB and its sub-contractors printed approximately
310 titles totalling 21\.5 million books, of which approximately 6 million were
produced in the STBB's own print shop\. Annual sales income from its own
publications, royalties and payments from publications sub-conttacted to the
commercial sector was estimated at Rps\. 46\.5 million\. A fuller description of
the operations of the STBB is provided in Annex 9\.
80\. There have been no detailed studies on the availability and ownership
of textbooks in Sindh\. However, low physical book production standards cause
books to disintegrate quickly, and there is evidence of students replacing
textbooks three or four times per year\. For poor families, this adds to the
cost of primary education, and many children are without textbooks for large
parts of the school year\. Despite the lack of detailed research data, which
would be remedied by a study in the PEDP (Annex 10), it is possible to
identify a number of key issues which can be addressed at this stage to
improve the quality and durability of textbooks\.
81\. Textbook Content\. Textbook content in Sindh generally suffers
from: a) poor language grading, from one level to another and even between
different subject books at the same level; b) lack of exercise material,
particularly in math, science and Urdu; c) inappropriate pedagogical level; d)
dull layout and design; e) poor co-ordination between subject textbooks at
different levels in the same series; f) inappropriate illustrations; g)
factual and grammatical text errors (indicative of poor copy editing); h) a
significant gap between the pedagogic requirements of the curriculum and the
teachers' abilities to perform; and g) an urban middle class and gender bias\.
82\. These problems can be attributed to: a) inadequate editorial and
artwork supervision; b) inexperienced writing teams; c) absence of pilot
testing of new manuscripts - particularly for rural situations; and d) poor
publishing skills\. The STBB lacks trained staff in publishing management,
editing, production or design\. There have been few in-house training courses\.
Similarly, the STBB's commercial sub-contractors lack education publishing
expertise; and e) poor communications between the STBB and key agencies such
-26-
as the Curriculum Bureau and the Directorates of Education; ani example of
which is the lack of pilot testing of new materials\.
83\. To address these issues, the PEDP would: a) support consultants
and staff training (Annex 9 and TA schedule in Annex 5), to upgrade the skills
of STBB staff and local commercial publishers in writing, editing, design,
illustration, production, publishing and financial management; and b)
encourage print technology development\. GOSindh would provide notice of
enhanced production specification requirements two years in advance to all
printers in the province who are currently, or who wish to be involved in
printing books for the STBB\. Additional equipment would also be provided to
the STBB to upgrade cover printing and binding operations, and to install
computer typesetting facilities\. The PEDP would support STBB pilot testing of
all new manuscripts (about 30 per year), in collaboration with the Curriculum
Bureau and the Divisional Directorates of Schools\. GOSindh agreed at
negotiations that all new primary education textbook manuscripts developed
during the PEDP would be pilot tested prior to publication\.
84\. Durability\. The basic STBB primary school textbook ia printed on
locally manufactured paper of poor quality\. The poor quality text and cover
paper and binding makes short book life inevitable in the hands of young
children in difficult environments\. The major reason for the low production
quality has been the legitimate and achieved goal of the STBB to provide
textbooks at very low cost to parents: a standard set of textbooks for a
Grade 1 student currently retails at Rps\. 14\.40 (about $0\.69)\. This price
includes all raw materials, manufacturing, first costs, royalties,
distribution cost and publishers overheads and profit\.
85\. Under the PEDP, physical production specifications would be
upgraded to keep textbooks in reasonable condition for at least a year (Annex
9)\. As a result, production costs would increase by about 40% (e\.g\. 28X of
the total cost would be attributable to tne use of superior materials)\. To
hold prices at 1989 levels in real terms, the PEDP would subsidize the cost
increase by payments to STBB on receipt of bills and invoices demonstrating
the use of the improved production specifications\. Almost all upgrading costs
are raw material costs for text and cover paper\. STBB buys in bulk and
supplies to sub-contracted printers\. A subsidy to STBB would therefore
automatically include these printers\. Existing production and distribution
systems would remain intact and parents would still contribute to the costs of
the books - an important factor taking into account the estimated recurrent
cost of free textbook distribution (about Rps\. 100 million p\.a\.)\. To influence
future textbook policy, the PEDP would include an evaluation of subsidized,
upgraded books and the pilot, free distribution to rural girls (Annex 10)\.
86\. Free Textbooks for Rural Girls\. To provide an incentive for
increased enrollments and reduced drop-outs, a program of free textbook
-27-
distribution to all rural girls in grades 1-5 would be introducedW\. The
number of children involved is relatively small (178,000 in AY 1990-91, rising
to 333,000 in AY 1995-96)\. Books would be purchased by the STBB, delivered
direct to the district education offices, and supplied via existing district
distribution channels\. About 12 staff-months of TA (Annex 5) vould be
provided to assist the Curriculum Bureau in an evaluation of the program over
the PEDP period\. The evaluation would provide information on the impact of
free textbooks on enrollment and drop-out and academic achievement, and assist
in the formation of textbook policy in the post-PEDP period (Annex 10)\.
87\. Sunlementary Reading Materials\. Few primary schools in Pakistan
have any books to supplement the prescribed textbooks\. International research
has demonstrated that functional literacy and numeracy is hard to achieve in
the absence of stimulating non-textbook materials\. Previous attempts to
provide schools with supplementary reading materials, including efforts by the
National Book Foundation, have foundered because of budgetary difficulties\. A
pilot experiment in PEP1 was not continued for this reason\. However, GOSindh
recognizes the crucial role of supplementary reading materials in achieving
literacy and numeracy, and attaches a high priority to their provision in
primary schools, as well as the training of teachers on how to use these
materials in association with other classroom activities\.
88\. The PEDP would finance a supplementary reading allocation of Rps\.
1,000 p\.a\. to schools with an enrollment less than 500, and Rps\. 2,000 p\.a\. to
schools with an enrollment greater than 500\. This would be sufficient to
purchase a collection of about 600 titles per school during the PEDP period\.
The supplementary materials program would be managed by the Curriculum Bureau\.
The book procurement budget would be held centrally at the Bureau\. This would
enable titles to be selected/developed in close conformity to curriculum
requirements and production specifications and would achieve the cost benefits
of bulk purchase\. Selected titles would be bought from commercial publishers,
adapted and translated by commercial publishers from overseas publishers or
would be developed locally\. This mechanism would remove the burden of
publishing, production and distribution from the Bureau, (which lacks the
capacity to handle these activities) and would allow the Bureau to focus on
selection, management, implementation and evaluation\. Storage would be
provided to maintain the collections in schools\. SPEs and LCs would supervise
usage of the collections in close harmony with the curriculum, the LMs and the
textbooks\. The selection, purchase, distribution, storage and intended usage
of the books is described in a working paper available in the PEDP files\.
During the period 1990-92 inclusive, the scheme would be piloted in three
districts\. It would be evaluated during 1992 as part of the wider book policy
study described in Annex 10, and expanded province-wide, starting in 1993,
taking into account the results of the evaluation\. The scheme would involve
M/ Ideally, other needy groups, such as poor rural boys, should be
included\. However, because of financial constraints, the difficulty of group
definition and targeting, and problems of textbook distribution, only rural
girls would be included in the PEDP\.
-28-
the purchase and distribution of about 2 million books p\.a\. when fully on
stream in 1993\. In full operation, the cost would be equivalent to about 2\.7X
of GOSindch's FY89 recurrent budget for primary education\.
-29-
CHAPTER III
ROGRAM COST8\. PIIANGING DISE1JRS811TS MA IMIAnKTIOR\.
A\. Ugkasz 8t8&
89\. Summary of the Costs of the Investment Program\. Table 3\.1
summarizes the total estimated financial requirements for the PEDP for the
period (FY91-FY95) by investment objective\. A summary of the costs of the
above program by category of expenditure is given in Table 3\.2\.
Table 3\.1: s!Atn 0? T! MPDP PROO COSTS BY !V T OIECT!W
Rupees million - - U8$ Million ----- t otal
I Foreign Base
Local Foreisn Total Local Foreign Total lRchans Costs
A\. Improved Participation in Primary Education\.
1\. Access, Facilities & Mlant\.
Shelterless and New Schools 2,065\.8 308\.7 2,374\.5 98\.4 14\.7 113\.1 13 71
Upgrade & Maintain Facilities 282\.2 42\.9 325\.1 13\.4 2\.0 15\.5 13 10
Sub-Tot, Access, Pacilities & aint\. 2\.348\.0 351\.6 2,699\.6 111\.8 16\.7 128\.0 13 81
2\. Incentives for Enrolmnt a Retention
Nutrition Program 38\.1 14\.5 72\.6 2\.8 0\.7 3\.5 20 2
Scholarship Program for Girls 7\.5 0\.1 7\.6 0\.4 0\.0 0\.4 1 0
Sub-Total, Incentives for Enr\. & Rat 65\.6 14\.6 80\.1 3\.1 0\.7 3\.8 18 2
Sub-Total, Participation in Primaty Ed 2,413\.6 366\.1 2,779\.7 114\.9 17\.4 132\.4 13 83
B\. Improved Delivery of Primary Educ\.
1\. Teacher Recruit\. Deploy\. & ketent 4\.0 0\.1 4\.1 0\.2 0\.0 0\.2 2 0
2\. Teacher Training and Supervision
_________________
Pilot Progrm 25\.7 17\.9 43\.6 1\.2 0\.9 2\.1 41 1
Dissemination Program 33\.1 32\.1 65\.2 1\.6 1\.5 3\.1 49 2
Sub-Total In-service Training\. 58\.8 49\.9 106\.7 2\.8 2\.4 5\.2 46 3
3\. Planning, Management & Impl\. 14\.8 22\.3 37\.1 0\.7 1\.1 1\.8 60 1
Sub-Total\. Iproved Delivery of Educ\. 77\.6 72\.3 149\.9 3\.7 3\.4 7\.1 48 4
C\. Student Achievements
1\. Learning Nodules/Achievement Testing 19\.6 17\.3 36\.9 0\.9 0\.8 1\.8 47 1
2\. Textbooks & Suyplement\. Materials 167\.3 206\.5 37N\.8 8\.0 9\.8 17\.8 55 11
Sub-Total Student Achievsents\. 186\.9 223\.8 410\.7 8\.9 10\.7 19\.6 54 12\.0
Total Baseline Costs 2,678\.2 662\.2 3,340\.3 127\.5 31\.5 159\.1 20 100
Price Contingenies 627\.0 157\.4 784\.4 29\.9 7\.5 37\.4 20 23
TOTAL PROWMA CO8TS 3,305\.2 619\.5 4,124\.7 157\.4 39\.0 196\.4 20 123
MI Costs of such a program include an estimated US$16\.9 million equivalent
in duties and taxes\.
-30-
Table 3\.2: PEDP PROGRAM COSTS BY CATEGORY OF EXPENDITUR9
--- Rupees Million---- -----US Million-----
I Total
I Foreign Baae
Local Foreign Total Local Foreign Total Exchate Cosats
1\. INIVESTHSUT COSTS
A\. Civil Works
____________
Rural schools 1,619\.0 241\.9 1,860\.9 77\.1 11\.5 68\.6 13 38
Urban Schools 446\.8 66\.8 513\.6 21\.3 3\.2 24\.5 13 15
School Improvenents 248\.0 37\.4 285\.4 11\.8 1\.8 13\.6 13 9
Sub-Total Civil Woaks 2,313\.8 346\.0 2,659\.8 110\.2 16\.5 126\.7 13 80
B\. Materials\. Books 6 Equi"pent
Furniture & quipyest 12\.0 24\.2 36\.2 0\.6 1\.2 1\.7 67 1
Vehicles 12\.7 12\.7 25\.5 0\.6 0\.6 1\.2 50 1
Printed materials 79\.6 163\.7 243\.3 3\.8 7\.8 11\.6 67 7
Food 58\.1 14\.5 72\.8 2\.8 0\.7 3\.5 20 2
Sub-Total Mater, Books & Bquirmt\. 162\.4 215\.1 377\.5 7\.7 10\.2 18\.0 57 11
C\. Techbical Assistance
Specialist Services 12\.5 30\.7 43\.2 0\.6 1\.5 2\.1 71 1
Fellowhips Training 1\.4 Z6\.1 27\.5 0\.1 1\.2 1\.3 95 1
Project Studies 0\.9 5\.4 6\.3 0\.0 0\.3 0\.3 65 0
Local Trainung 25\.4 3\.6 28\.9 1\.2 0\.2 1\.4 12 1
Sub-Total Technical Assistance 40\.2 65\.7 105\.9 1\.9 3\.1 5\.0 62 3
II\. RECBaERT COSTS
Admin\. Salaries & Allomwnees 23\.9 1\.5 25\.4 1\.1 0\.1 1\.2 6 1
Scholarships 7\.5 0\.1 7\.6 0\.4 0\.0 0\.4 1 0
Classroom Materials 130\.3 33\.7 164\.1 6\.2 1\.6 7\.8 21 5
Sub-Total Rocurrent Costs 161\.7 35\.3 197\.0 7\.7 1\.7 9\.4 18 6
-- - - - -- - - - -- -- -- - -- -- -- - -- -- -- - -- -- -- - -- -- -- - -- -- -- -- -
Total Baseline Costs 2,678\.2 662\.2 3,340\.3 127\.5 31\.5 159\.1 20 100
Price Contingencies 627\.0 157\.4 784\.4 29\.9 7\.5 37\.4 20 23
TOTAL PUOMAUM COSTS 3,305\.2 819\.5 4,124\.7 157\.4 39\.0 196\.4 20 123
Including Taaes and Duties of oSO Million: 16\.9
W/ See Previous footnote
-31-
90\. Basis of Cost Estimates\. Costs of the primary school
construction program are based on reviews of recently awarded contracts in
Sindh for similar facilities financed under PEP2 (Credit 1621-PAK)\. The cost
of latrines, water pumps and boundary walls are based on unit cost estimates
prepared by DEEW, UNICEF designs for low cost latrines, and mission and
GOSindh estimates\. Construction costs (including the above works and
blackboards) average a low US$163 per m2 and US$8,268 per classroom\. Costs of
storage cupboards and teacher desks, supplementary reading materials,
textbooks, vehicles, training costs and consumable classroom materials,
including floor mats are based on detailed analyses of unit costs and
requirements for the programs outlined in Chapter II\. Technical assistance
costs have been estimated on the basis of recent prices for comparable TA in
PEP2 (Credit 1602-PAK) and include housing, relocation costs, salaries,
subsistence, office services, fees, overheads and recruitment costs\. Costs of
salaries and allowances are based on current Government rates\. Base cost
estimates reflect prices at the time of negotiations, January, 1990\.
91\. Costs and Areas gar Student\. Construction costs per student
place are estimated at US$214 in urban areas and US$254 in rural areas, which
puts these unit costs into the lowest quartile of Bank financed education
projects\.ZI Furniture unit costs (US$15) are in the same comparison range\.
92\. Customs Duties and Taxes\. Costs of the PEDP program include an
estimated US$16\.9 million in indirect taxes on locally procured civil works
and goods\. Equipment and paper imported for textbook production would be
exempt from duties and taxes\.
93\. Contingency Allowances\. Because the numbers of classrooms and
other construction items (para\. 36) have not been precisely defined, physical
contingencies have not been provided for these items\. Physical contingencies
for non-construction items have been built into these items\. Price
contingencies between negotiations (January 1990) and the end of project
implementation are estimated at US$37\.4 million equivalent, or 19X of total
program costs\. Annual rates of price increases have been applied to all
categories as per Table 3\.3:
Table 3\.3: ANNUAL PRICE ESCALATION IN X
1989 1990 1991 1992 - 1994 Thereafter
Local Costs: 12\.0 9\.0 7\.0 5\.0 3\.5
Foreign Costs: 7\.0 6\.5 5\.0 5\.0 3\.5
w The comparison is made with the latest study on this topic - Unit Areas
and Unit Cost Estimates in Education Projects, dated November, 1983\.
-32-
94\. Foreign Exchange Component\. The foreign exchange component was
estimated as follows: a) construction, refurbishment and maintenance of
existing facilities - 13X; b); teacher modules and other classroom materials -
501; c) imported paper for improved textbooks - 90X; d) foreign specialists -
851; e) local specialists - 101; f) overseas training - 901; g) local travel
allowances - 101; h) vehicles - 50sr; i) food items - 201; and j) salaries -01\.
These percentages have been determined by: a) estimating the indirect foreign
exchange of construction related items; b) assuming that paper would be
imported; and c) assuming that vehicles would be locally assembled\. Including
contingencies, the resulting foreign exchange component is estimated at
US$39\.0 million, or about 201 of total program costs\.
95\. Recurrent Costs\. The incremental recurrent costs of the PEDP during
the five year period FY91-96 are estimated at Rps\. 1\.23 billion, of which Rps\.
733 million (591) is salary costs, Rps\. 407 million (33X) is for books and
classroom materials, and the remainder (8%) is for staff training, school
nutrition, administrative costs, maintenance and incidentals\. On an annual
basis, the FY96 incremental costs (Rps\. 189 million) are equivalent to 12\.61
of GOSindh's FY89 recurrent expenditures on primary education, and are below
the 161 average annual real increase in primary education recurrent
expenditures recorded in Sindh during the period FY84-89 (Annex 2, Table 2)\.
Incremental recurrent expenditures are relatively low, because a portion of
the PEDP is devoted to rehabilitation of existing facilities and construction
of shelterless schools, where teachers have already been hired\. The projected
incremental recurrent expenditures in the PEDP are reasonable, given the
urgent need to improve access, participation, delivery and student achievement
in this key sector\.
B\. Program Financing
96\. The proposed IDA Credit of US$112\.5 million would finance 921 of the
foreign exchange component of the investment program (US$35\.8 million and 491
of local costs (US$76\.7 million)\. The recurrent costs implications of this
investment program are discussed in para 95\. Additional financing for the
PEDP is likely to materialize as follows: a) cofinancing by the Norwegian
Government for girls' textbooks and the nutrition program (US$6\.6 million);
and b) parallel financing by the ODA for teacher training and management
training (US$2\.2 million)\. The GovernmentW would finance the balance of the
PEDP costs (US$75\.1 million)\. Other sources of financing, complementary to
the objectives of the PEDP are discussed in paras\. 11 (PWP) and 27 (PEP2 and
ADB)\. Project financing by disbursement category is shown in Table 3\.4\.
Further details of program financing are discussed in para 99\. In order to
facilitate further project preparation activities and accelerate initial
SU The Government of Sind would commit itself to this level of investment\.
During Annual Reviews (para\. 101) any firm contribution of the Government of
Pakistan through the People's Work Program would, at the minimum, enable
GOSindh to sustain its contribution, but could also supplement it\.
-33-
disbursements, retroactive financing equal to 9X of the proposed IDA Credit
would be included to: a) cover the cost of school construction between
January 1, 1990, and Credit signing (up to US$9\.6 million); and b) cover the
cost incurred after Oct\. 1, 1989) of office equipment and specialist services
necessary for timely project start-up (up to US$0\.4 million)\. During
negotiations, the Government confirmed its Intent to provide the necessary
invest,ent budget to meet its share of the PEDP investment program according
to the schedules in Tables 3\.4 and 3\.5, or as otherwise agreed between GOSindh
and IDA during the proposed annual reviews (para 101\.(b))\.
Table 3\.4: FUIR NCN PLAN BY DISBURSEMENT CATEGORY
----------------------o----
---- us$ i n
--------------_-----_______
International
Development Government of Government of Gkoernment of Total
Association Norway UK Sindh
Amount I AmoXt I Amount S Amount X
Civil Works 94\.0 59\.7 0\.0 0\.0 63\.6 40\.3 157\.6
Materials, Eqpt, Text & Vehicles
_______\.________________________
Text Related Item 12\.9 a7\.0 1\.9 13\.0 0\.0 0\.0 0\.0 14\.8
Equipment, Furn\. A Vebicles 1\.2 36\.5 0\.0 0\.0 0\.0 2\.2 63\.5 3\.4
Sub-Total, Mater\.Eqt, Text, Veh 14\.1 77\.6 1\.9 10\.5 0\.0 0\.0 2\.2 11\.9 18\.2
Incentives
=_________
Food 0\.0 4\.5 100\.0 0\.0 0\.0 4\.5
Scholarships 0\.0 0\.2 100\.0 0\.0 0\.0 0\.2
Sub-Total, Incentives 0\.0 0\.0 4\.7 100\.0 1 0\.0 0\.0 0\.0 4\.7
Technical Assistance 3\.9 63\.8 0\.0 36\.2 0\.0 6\.2
Salaries & SuppUes
=__________________
A*dmin Salaries & Allowances 0\.3 20\.2 0\.0 0\.0 1\.4 79\.8 1\.7
Classr\. Supplies 0\.0 0\.0 0\.0 8\.0 100\.0 3\.0
Sub-Total Salaries & Supplies 0\.3 3\.5 0\.0 0\.0 0\.0 0\.0 9\.4 95\.5 e\.7
Total Disbursements 112\.5 57\.3 6\.6 3\.4 2\.2 1\.1 75\.1 38\.2 195\.4
-34-
C\. Program Implementation and Disbursements
97\. Overview\. The PEDP would be implemented by suitably modified
line agencies of the Sindh Government, reinforced through TA\. The principal
implementation agencies would be: (a) the Planning and Coordination Wing (see
below &id para 52); (b) the DEEW (para 43, 107); (c) the Curriculum Wing (para
66); and (d) the Textbook Board (para 83)\. As described in Chapter II, two
substantial changes are being made to the existing management structure: a)
the strengthening of the proposed Planning and Coordination Wing (responsible
for monitoring, evaluation, statistics, disbursements and implementation of
the PEDP and future projects) under an Additional Education Secretary for
Planning and Coordination; and b) the separation of management
responsibilities for primary and secondary education at the Division and
District level\. Under the revised arrangement there would be separate
administrative units for: (a) planning, monitoring and evaluation of physical
progress; (b) budgeting and accounting; and (c) disbursements and Special
Accounts\. Further details of planning, management and implementation
arrangements are discussed in Annex 8, and include a chart, highlighting the
proposed changes in the administrative structure\.
98\. Earlier Project Implementation Exnerience\. Earlier IDA financed
education projects in Pakistan have comprised discrete, well defined, and ex-
AM clearly identifiable project items (para\. 21-23)\. Experience in the
implementation of projects in the primary education sub-sector has however
demonstrated severe shortcomings to the above approach because:
(a) implementation of these projects has generally been managed
through temporary project implementation units (PIUs), and the
subsequent financial and managerial integration of these enclaves
into the existing government structure has proved difficult
(para\. 69); and
(b) previous application of the Government's principal planning
instrument (PC-l)VW to primary education development in a
monolithic format did not meet the decentralized decision making
requirements of large and geographically scattered primary
education projects, which involve a plethora of Government and
other agencies in a large number of small and evolving decisions\.
Government drafting of the PC-1 in a manner consistent with the
decentralization and flexibility required of the PEDP is
MU With few exceptions, development projects in Pakistan must be presented
to the decision-making authorities in prescribed, highly detailed form
(PC-1), which becomes binding in every detail (with a 151 discretion)
on the implementing authorities\. Because of their size, IDA financed
projects require approvals for any amendment by the highest decision
making body of the Government (ECNEC)\. Smaller PC-ls can be approved
at provincial or lower levels\.
-35-
therefore important\. Prior to negotiations, GOSindh prepared a
draft PC-1 satisfactory to IDA\. Approval of the PC-1 by the
Executive Committee of the National Economic Council (ECUEC)
would be a condition of Credit Effectiveness\.
99\. Progosed Financial Arrangements\. In order to overcome the
difficulties experienced in implementing earlier, rigidly defined projects,
IDA financing would supplement GOSindh's Annual Development Program (ADP) for
primary education, including the associated initial recurrent costs as
follows: each year, IDA, the Norwegian and the British Governments would
finance an amount up to that indicated in the financing schedule in Table 3\.5,
which would be complemented by the Government's contribution to the ADP\. The
funds of each contributing financier would be viewed as a part of the ADP, but
held in a separate account to facilitate audits (para\. 105)\. Details of
investments in education in Sindh prior to the PEDP (Annex 2 - Table 2\.) show
that financing of primary education from all sources amounted to US$26\.0
million in 1988/89, or about 861 of the proposed 1990/91 investment level\.
Table 3\.5: FPi=wneln Reanirnenta b! eazU
_____ mm* nuu~~~~~~_
mmhe PM Period
1990/91 1991/S2 1992/93 1993/94 I994/95 1993/98 196/97 Total
G:v: t of La M 11\.7 12\.9 14\.9 14\.9 16\.3 2\.4 2\.1 75\.1
TnternatAal\. DLveloum\.t Asso\. 17\.7 29\.3 22\.9 22\.4 24\.0 2\.0 0\.2 112\.5
Goveszznut of Soway 0\.7 0\.8 0\.9 1\.0 1\.1 1\.2 0\.8 6\.6
Gvwenmt of UK 0\.0 0\.7 0\.8 0\.8 0\.0 0\.0 0\.0 2\.2
Totalas Fianning 3sqic it 30\.2 37\.6 29\.4 39\.0 41\.5 5\.6 2\.1 196\.N
100\. The advantages of the proposed financing arrangement are expected to be
at least the following: a) it would avoid dissipation of budget resources by
integrating IDA financing firmly into existing financing and implementation
structures of the Government; b) it would enable appropriately decentralized
decision making at the provincial and district levels by financing relatively
small decentralized sub-projects in support of an agreed annual program (para\.
100 (b)); and consequently; c) it would accelerate disbursements through
greatly increased reliance on well known, ongoing Government procedures\.
101\. Annual reviews of the implementation of policies and investments
would be held between the Government (both GOSindh and PWP representatives),
IDA and other donors wishing to participate in such review\. The parties would
review progress and agree the following year's ADP\. The details of the
proposed IDA financing mechanism would be as follows:
(a) During each of the five PEDP years, IDA would put its share of
the ADP budget at the disposal of the Government\. IDA funds
LV See also para 27 for assistance to primary education in Sind,
complementary to the PEDP (ADB and PWP)\.
-36-
would be disbursed into two Special Assignment Accounts to be
operated by the AESPC and DEEW (see para\. 104)\.
(b) During an appropriate time in each budget year (January/February)
the Government, IDA and other donors would conduct an annual
review to determine progress towards the agreed physical,
financial and policy targets and to review the adequacy of the
following year's budget allocations, to be supported jointly by
funds from the Government, IDA and cofinanciers\. To ensure: (i)
that GOSindh and IDA are well informed about progress; and (ii)
that the financiers of the various items are clearly identified;
a semi-annual reporting mechanism has been developed (Annex 11)\.
To facilitate adjustments in the use of IDA funds ancd to simplify
the keeping of accounts and audits, IDA financed items would be:
i) clearly identifiable under a separate account head; and ii)
100l financed from IDA funds\. Items to be supported during the
subsequent fiscal year would be firm, while budget allocations
for the remaining years would be indicative and would
subsequently be firmed up during the next joint annual budget
review\. During negotiations, the Government agreed to conduct
joint annual reviews with IDA in January/February each year to
review progress in achieving the objectives of the PEDP under the
ongoing ADP; and determine on the basis of such review, the
components of the PEDP to be carried out under the following ADP
and the financing requirements therefore (para\. 119\.(k))\.
102\. Disbursements\. The proposed program would be disbursed over a period
of about eight years\. Disbursements for the IDA supported account in the ADP
would be made against 1001 of the following expenditures:
(a) civil works, including rehabilitation;
(b) directly imported equipment, educational materials and books;
(c) ex-factory expenditures for locally manufactured or locally
procured equipment, educational materials, furniture, and books
(excluding vehicles which would be procured by the Government
under reserved procurement);
(d) incremental administrative salaries (for new administrative staff
at the secretariat and division level (para\. 72 (a)), studies,
consultant services and fellowships\.
103\. Disbursements, as a subsidy to the Textbook Board for using improved
materials for text paper and book covers in its textbook production, would be
made against 281 of the total expenditures of the Textbook Board against these
improved items, which represents the estimated production cost increase as a
result of using superior materials (para\. 85)\.
-37-
104\. Disbursements under the proposed program may be expected to follow a
different pattern from earlier projects because of its different nature:
about 80X of its value is in support of an ongoing construction program, which
is currently performing well\. However, in view of earlier experienced
implementation delays in education projects in Pakistan, and to build in a
time contingency buffer, disbursements from the proposed credit have been
conservatively estimated to take place on an average of about 18 months after
the scheduled availability of credit funds\. A disbursement schedule and
profile, reflecting this estimate and making a comparison with the country
education projects profile, is shown in Annex 12\. Disbursements are expected
to be completed by December 31, 1998\.
105\. Disbursements against contracts for goods and services exceeding
US$20,000 equivalent would be made against normal documentation\. Disbursements
against contracts below that level would be made on the basis of Statements of
Expenditures (SOEs), available for review by Bank missions\. To facilitate
program implementation, the Government would establish, maintain and operate,
under terms and conditions satisfactory to the Bank, two Special Accounts in
the National Bank of Pakistan: one operated b, the AESPC for all expenditures
other than for construction, rehabilitation and maintenance; and the other
operated by the DREW for construction, rehabilitation and maintenance
expendituresa\. Upon Program Effectiveness, IDA would make initial deposits
into the accounts, equivalent to about US$1\.0 million for the AESPC account
and US$6\.0 million for the DEEW account\. Each Special Account would be
replenished as appropriate when the undisbursed balance of the account falls
below an amount equal to 50X or less of the amount of the Special Account\.
Withdrawal applications would be supported by appropriate documentation\.
106\. ccounts and Audits\. The office of the AESPC would maintain separate
accounts for the IDA financed portion of the ADP and would prepare semi-annual
progress reports on physical and financial progress made in achieving the
objectives of the PEDP program (Annex 11)\. IDA financed program accounts
(which would be distinctly identifiable within the overall ADP) including the
Special Accounts (para\. 105) would be audited in accordance with the March
1982 Bank "Guidelines for Financial Reporting and Auditing of Projects
Financed by the World Bank"\. Monitoring and auditing of incurred expenditures
would continue for about two years after each budget year to allow for multi-
year expenditures, such as construction\. During negotiations, the Government
agreed to provide within nine months of the end of each fiscal year an audit
report of such scope and detail as the Association may reasonably request,
including a separate opinion by the auditor on disbursements against certified
statements of expenditures\.
The proposed procedure is similar to the now well functioning
arrangement in the Second Education Project where each project entity is
responsible for the operation of its Special Account\.
-38-
D\. Procurement Aan8menAts
107\. The DEEW would be responsible for procuring the largest part of
PEDP -- the construction program\. The DEEW has proven its capacity to
implement small school contracts, both in urban and remote rural areas and is
currently Imp\.t"e*ting over 2,000 contracts financed under PEP2\. The
administrative capacity of the Directorate grew from awarding 5 contracts in
1978/79, to 2,154 contracts with a budget allocation of Rps\. 790 million in
1987/88\. The accounting and auditing procedures at provincial, district and
sub-district level are designed to ensure that funds are well spent, and that
contractors are paid promptly\. Table 3\.6 below summarizes the proposed
procurement arrangements, and the reasons for exceptions to ICB are discussed
below the table:
Table 3\.6: PROCUREMENT ARRANGEMENTS a/
(Total Costs of Proposed Program Components Including Contingencies)
US$ Million
ICB LCB OTHER N/A TOTAL
Civil Works 157\.6 157\.6
(94\.0) (94\.0)
Printing and Publishing 6\.4 2\.2 1\.9 10\.6
(6\.4) (2\.2) (0\.0) (8\.6)
Supplementary Readers 4\.2 4\.2
(4\.2) (4\.2)
Equipment & Furniture 1\.2 0\.8 2\.0
(1\.2) (0\.0) (1\.2)
Vehicles 1\.4 1\.4
(0\.0) (0\.0)
Food Related Items 4\.5 4\.5
(0\.0) (0\.0)
Technical Assistance 6\.2 6\.2
(3\.9) (3\.9)
Incremental Rec\. Costs (Incl\. Scholarships) 9\.9 9\.9
(0\.3) (0\.3)
Total Financing Requirements 7\.7 160\.6 18\.2 9\.9 196\.4
Total IDA Financing (7\.7) (96\.3) (8\.2) (0\.3) (112\.5)
a/ Figures in brackets are the respective amounts financed by the IDA Credit
-39-
108\. Ongoing experience with PEP2 has shown that large scale
contractors have not been interested in bidding on the highly dispersed
construction programs in rural SindhV\. Therefore the DEEW would implement
the proposed primary school construction, renovation and maintenance program
as a series of small, individual school contracts\. However, to encourage the
participation of larger contractors, wishing to bid simultaneously on several
contracts (particularly in urban areas), all construction contracts would be
awarded once annually in district-wide lots under LCB procedures\.
109\. International Competitive Bidding (ICB) in accordance with the Bank's
"Guidelines for Procurement Under IBRD Loans and IDA Creditsu (Nay, 1985)
would be used for the procurement of paper and minor printing machinery for
textbooks5M\.
110\. The exceptions to ICB procurement would be as follows:
(a) Based on past experience with procure\.ment packaging (para\. 108),
all civil works and refurbishment contracts (totalling about
USS157\.6 million) would be awarded in accordance with competitive
bidding advertised locally, and in accordance with procedures
acceptable to the Association\. Bids would be invited in groups
as discussed in para\. 108\. There would be about 14,000 small
contracts, none of which would exceed US$75,000 equivalent in
value\.
(b) Contracts for printing and publishing, estimated to cost US$2\.2
million, would be awarded on the basis of competitive bidding
proceduxes advertised locally, and in accordance with procedures
acceptable to the Association\.
(c) The NORAD financed textbooks for girls (US$1\.9 million) would be
procured at invoiced cost from the Textbook Board, less the 28X
IDA subsidy of paper and cover materials (paras\. 85, 103)\.
(d) Contracts for supplementary readers, estimated to cost less than
US$100,000 equivalent each, which in the aggregate would not
exceed US$4\.2 millions, would be awarded after negotiations with
publishers for discount\.
Experience in the Second Education Project (where over 2,000 contracts
in rural ares are currently under execution) has shown that most contractors
bid on only one school\. It is an exceptional case where the same contractor
has implemented 3-4 schools at the same time\. Future contracts for schools in
urban areas (Karachi and Hyderabad in particular) may, however, follow a
different pattern, with the same contractor bidding for several schools\.
J4/ PEDP/IDA financing of this item would consist of a subsidy to the
Textbook Board as further discussed in paras\. 85, 103\.
-40-
(e) Vehicles (US$1\.4 million) would be procured under reserved
procurement by the Government\.
(f) Contracts for the nutrition program (US$4\.5 million - financed by
NORAD) would be awarded through prudent shopping\.
(g) Sundry items not exceeding US$50,000 in each contract and
estimated to cost about US$0\.8 million equivalent would be
purchased on the basis of local bidding, or through prudent
shopping procedures based on comparing price quotations from at
least three suppliers -- all in accordance with local procurement
procedures\.
(h) IDA financed Technical assistance, including fellowships and
studies (US$6\.2 million) would be procured through bid
solicitation and through ODA procedures (para\. 112)\.
111\. In comparison of bids to be procured through ICB, domestic
manufacturers would be allowed a preferential margin of 151, or the existing
customs duty payable by non-exempt importers, whichever is lower, over the
c\.i\.f\. prices of competing imports\.
112\. Procurement of Technical Ass1istance\. To ensure a coordinated TA
management, the NOE would obtain specialist services and fellowships as a
maximu of four TA contracts\. TA for teacher training and supervision, and
primary education management (Annex 5) would be provided by ODA\. For TA
financed out of the proceeds of the Credit (for construction management, and
books and supplementary materials (Annex 5)), unless otherwise agreed by IDA,
at least three qualified institutions would submit proposals for each package,
following a shortlisting of institutions acceptable to the Association\. The
consultants financed out of the proceeds of the Credit would be selected in
accordance with principles and procedures acceptable to the Association on the
basis of the "Guidelines for the Use of Consultants by World Bank Borrowers
and by the World Bank as Executing Agency"\. The signing of agreements for
the provision of the Technical Assistance would be a Condition of Credit
Effectiveness\.
113\. Contract Reviews\. Under ICB procedures, invitations to bid and
the proposed award of contracts would be reviewed by the Association prior to
final awards\. This review is estimated to cover all paper procurement
contracts financed by the Association (a subsidy, valued at US$6\.4 million
eqvuivalent and the cost of printing machinery (US$1\.2 million)\. All other IDA
financed contracts for goods procurement (US$100\.4 million equivalent) would
be subject to selective post award reviews\. All IDA financed TA contracts
would be subject to IDA review prior to execution\.
114\. Status of Program Freoaration\. The proposed program is in a
state of preparation that would permit timely implementation because: a) the
proposed construction program would be a continuation of an ongoing program
financed in part under PEP2, in which over 2,000 contracts were awarded
between March 1989 and September, 1989; b) about 301 of the construction under
-41-
the PEP2 contracts has now been completed; and c) the TA package has been
fully defined, and draft terms of reference are prepared\. Program completion
would be June 30, 1998 and the Closing Date would be December 31, 1998\.
115\. Enviro-nmental ImRact\. The environmental impact of the proposed
program is expected to be neutral\. On the one hand, there would be the
necessary emissions associated with the baking of bricks in wood fired kilns
and other unavoidable environmental disruptions associated with the
construction of a large number of small schools\. On the other hand the
program would seek to improve the sanitary environment of about 2,100 existing
schools, which currently lack basic sanitary necessities (para\. 39), and would
provide such basic facilities for all new construction\.
116\. IDA Supervision Requirements\. The PEDP would require intensive
IDA Supervision, particularly in the first three years of operation, to assist
GOSindh with start-up of PEDP components and implementation of the various
policy measures described in Chapter II\. Initial amnual supervision
requirements are therefore estimated at a minimum of 18 staff-weeks per year\.
-42-
OA=PTE IV
BENEFITS AD RISKS
A\. Beneflts
117\. The PEDP would increase primary school enrollments by improving
access, and providing incentives for participation in school; improve learning
by enhancing the quality of instruction, and the availability and standard of
educational materials; improve efficiency through measures to reduce
repetition and drop-out; and imDrove delivery of primary education through
better management and administration\. An experimental school nutrition
program would provide incentives for enrollment, and test the linkages between
improved nutritional status and learning\. Aggregate enrollments are expected
to grow by 538,000 between AY 1990-91 and 1995-96, an increase of 24X\. In
particular, rural female enrollment would more than double, from 173,000 to
339,000; enabling the participation rate to rise from 14X to 23X\. By
supporting a least cost investment approach and efficier\.t planning, the PEDP
would maximize the benefits to be gained from primary education expenditures
at a time of severe resource constraints\.
D\. Risks
118\. The major risk is that cutbacks in government expenditures on
primary education would jeopardize the achievement of the PEDP targets\. The
consequences of rapid population growth are such that the PEDP represents the
minimu investment needed to allow for growth in the rural participation rate,
essential improvements in efficiency, and enhanced quality of instruction to
ensure that children leave primary education literate and numerate\. The
government is firmly committed to these objectives, and provided assurances at
negotiations that it would meet the necessary investment targets\. A
subsidiary risk is that the government may be unable to carry out the physical
and institutional objectives of a program of the proposed scale\. However, the
Sindh Government's physical implementation capacity has been improved during
the implementation of previous IDA assisted projects, and would be further
strengthened in the proposed program\. To minimize institutional constraints,
the organization and management of primary education would be improved\. In
addition, the PEDP would in the main consolidate and extend programs which had
been positively tested in previous operations, using and strengthening
existing line agencies\.
-43-
CATR V
CONDITIONALZITE AND RECOMMENDATION
A\. AreeenIta Reached at 1enotiattons
119\. During negotiations, GOSindh provided assurances that it would,
during the period encompassed by the PEDP:
(a) Adhere to the priorities and criteria for construction described
in para\. 38\.
(b) Maintain the role of the Directorate of Engineering Works, and
that an expansion, in accordance with an appropriate staffing
plan, would be carried out by June 30, 1991 (para\. 43)\.
(c) In time for the beginning of AY 1990-91, change the timing of the
school calendar to August 1 - May 30 (para\. 49)\.
(d) For a period of two years, starting in the school year 1990-91,
and in three selected districts:
(i) experiment with flexible school hours to suit local
conditions in a total of about 150 selected rural
schools;
(ii) abolish the requirement ior school uniforms for
primary scbool children in rural areas;
(iii) abolish the end of year examination for grades 1 and
2, provide automatic promotion between grades 1 and 3,
and develop and introduce achievement testing as part
of the curriculum to monitor individual and cohort
student achievement\.
(e) by June 30, 1992, complete and furnish to IDA a study evaluating
the impact of the measures described in paras\. 49, 119\.(d) on
enrollment, attendance and retention of students\. Following an
exchange of views with IDA, GOSindh would proceed with the
introduction of the above measures in all districts of Sindh by
the beginning of AY 1992-93, if and to the extent such an
introduction is warranted on the basis of the Study and the
exchange of views with IDA (para\. 49)\.
(f) By the start of AY 1992, assign all GCET places to new entrants
to the teaching profession\. By December 31, 1991, amend the
regulations to allow those from the primary education stream with
appropriate qualifications and experience to compete for all GCET
faculty positions (para\. 62)\.
-44\.
(g) Constitute a steering group for in-service teacher training, and
by September 30, 1990 and annually thereafter, provide for IDA
review an annual report on the activities and expenditures of the
in-service training program for primary teachers (para\. 66)\.
(h) By December 31, 1990: a) complete the reorganization at the
secretariat, divisional and district levels; b) create all
resulting staff positions as regular positions, irrespective of
sources of finance; and c) adequately staff the PCW and the
divisional and district level positions in accordance with agreed
job descriptions (para\. 73)\.
(i) Pilot test all new primary education textbook manuscripts
developed during the PEDP prior to publication (para\. 83)\.
(j) Provide the necessary investment budget to meet its share of the
PEDP investment program according to the schedule in Table 3\.5,
or as otherwise agreed between GOSindh and IDA during the
proposed annual review (para\. 96)\.
(k) conduct joint annual reviews with IDA in January/February each
year to review progress in achieving the objectives of the PEDP
under the ongoing ADP; and determine on the basis of such review,
the components of the PEDP to be carried out under the following
ADP and the financing requirements therefore (para\. 101\.(b))\.
(1) Provide within nine months of the end of each fiscal year an
audit report of such scope\. and detail as the Association may
reasonably request, including a separate opinion by the auditor
on disbursements against a certified statement of expenditure
(para\. 106)
C\. Condition of Board Presentation
120\. During negotiations, GOSindh informed IDA of its agreement to introduce
the various measures to improve recruitment, deployment and motivation
of rural female teachers, and to make primary teaching a more
attractive career, outlined in para\. 58; thus satisfying the condition
for Board presentation\.
D\. Conditions of Credit Effectiveness
121\. (a) Approval of the PC-1 by the Executive Committee of the National
Economic Council (para\. 98\.(b))\.
(b) The signing of an agreement with one or more qualified firms for
the provision of technical assistance (para\. 112)\.
-45-
122\. Recommendation, Subject to the above, the proposed operation provides
a suitable base for a US$112\.5 million Credit to the Government of Pakistan\.
Staff Appraisat Report Atwex I - Table I
Sindh Primary Education Development Program
Evolution of Enrollment at All Levels in Pakistan
Between 1975-76 and 1988-89
(Figures Expressed in Thousand Except Otherwise Noted)
I Anvmia
Level Grades 1975-76 76-7? 77-78 78-79 79-80 80-81 81-82 82-63 83-84 54-85 85-86 86-87 87-88 88-89 inrrease
1/ I/ 21 1975-1988
PRIMARY 1-5 5\.319 5,611 5,015 5,131 5,213 5,474 5,741 6,179 6,860 6,828 7,094 7\.445 7\.606 7\.768 3\.01
(Index: 1975=100) 100 105 94 96 98 103 108 116 129 128 133 140 143 146
(X feamtes) 291 28% 32X 32X 321 33X 33X 33X 321 33X 33X 331 331 331
SECONDARY
Nidd(e Staoe 6-8 1,247 1,296 1,304 1,301 1,391 1,412 1,494 1,494 1,730 1,805 1,910 2,051 2,134 2,216 4\.51
NHgh Stoge 9-10 493 509 506 479 476 509 543 578 606 645 66? 682 698 715 2\.91
Vocationat 9-10 31 29 26 29 35 40 45 49 53 57 59 61 63 64 5\.71
Total Secondary 3/ 1,771 1\.836 1,836 1,809 1\.902 1,961 2,082 2,121 2,3B9 2,507 2,636 2,794 2,805 2,995 4\.11
(Index: 1975=100) 100 104 104 102 107 111 118 120 135 142 149 158 163 169
(Z Females) 231 241 241 251 25X 25 26 25 24X 241 271 271 27X 28
POST-SECONDARY
Cotteges (Arts&Sc\.) 11-14 211 223 221 233 253 270 283 297 355 373 400 411 425 439 s\.ax
Prof'nal Colleges 13-16 56 57 62 67 72 56 58 59 56 59 6B 72 77 80 2\.81
t*niversfties 13-20 23 38 41 39 42 43 48 49 50 54 60 61 65 69 8\.91
TotaL Post-Secondary 3/ 290 318 324 339 367 369 388 404 462 486 528 545 568 589 5\.6X
(Index: 1975=100) 100 110 112 117 127 127 134 140 159 168 182 188 196 203
(1 Females) 23X 271 281 271 261 281 291 291 281 28 28X 291 291 29M
1/ Revised Estimates\. 2/ Estimates\. 3/ Detal led figres mmay not add up to totals because of roundings\.
Source: Goverment of Pakistan, Economic Survey of Pakistan - 1989\.
c:\anxltabl \.wk1
- 47 -
Staff Aepralsl Rport Ax I - Table 2
Sl,dh Priwry Education Detopent Proram
Evolution of Priry Schooring Enrollment In Sifi
Betwen 901 -2 nd 19t6-87 t/
(Figures Expreosed In Thousad Except Otherwise Noted)
S Anmjat
Xilieu Gender 1981-82 1982\.83 1983-86 1964-85 198-86 1986-87 Growth
1981/1916
ENROLLMENT AT PRIMARY LEVEL 2V
Urbn soy 515 540 S53 585 59? S99 3S
Girts 338 s5? 382 410 615 410 4S
\. \. \. \. ---\. I\. \. \.
Total 853 897 93 994 t,012 1\.00t 33
Rural ost 528 64 0 64 S 723 781 9n
Girls 87 91 126 121 138 t54 12X
\. \. \. \. \. \. \.
Total 604 619 766 766 861 935 9S
TOTAL soys 1\.032 1,068 1,194 1,230 1,320 1,380 6S
Girls 425 *48 508 530 553 56 63
Total 1\.458 1,S16 1\.701 1,760 1,873 1,943 6S
Of Which:
Mosque Boys NA NA 75 76 114 167 KA
Schools Girls NA NA 33 33 47 60 KA
\. \. \. \. \.
Total NA NA 108 110 160 227 KA
Private "S hA NA IA 130 139 183 NA
Schools Girls KA KA KA 15S 13t 14? NA
\. \. \. \. \. \. \. \.
Total LA A IUA 284 276 332 KA
ESTIMATED POPULATION (AGE-GROUP 5-9) 3/
Urban Boys 630 658 688 719 752 786 4\.5S
Girts 589 616 644 673 704 736 4\.61
Total 1,219 1,274 1,332 1,392 1,656 1,522 4\.51
Rural soy 976 1004 1,034 1,064 1,096 1,128 2\.9S
Girts 946 974 1,003 1,033 1,063 1,095 3\.03
Total 1,922 1,978 2,037 2,097 2,159 2,223 3\.01
GROSS PARTICIPATIN RATE (in percentage) 4/
Urban Boys 823 82S 80X 81X 79S 76X
Girtls 57S 58S 59S 613 59S 56X
\. \._\. \. \. \. \. \.
Totat 703 703 703 713 693 661
Rural Soya S33 53X 623 613 663 693
Girts 9S 9S 131 121 133 143
\. \. \. \. \. \. \.
Totat 313 313 383 37S 401 42X
Province-wide 463 *73 50 O5 52X 523
1/ Detalted figures my not add up to totats because of rodings\.
2/ Source: Bureau of Statistics, Planiing and Davelorint DepWrtnt, Goverenit of
Sind: Sch,ot Edecation Statistics in Slnd (1984-85, 1986-86 arnd 1986-87)\.
3/ Source Burau of Statistics, Plarwinin and Dvelopuent Department, Gover,nt of
Sfnd: Sind Poputation Statistics, Aprit 1966; Mission estimtas\.
Note: Population estimtes for age-$roap 5-9 crputed by milieu nd by sex on the
basis of 1981 Census figrs at district tevet and growth rates by mitieu\.
4/ The Gross Participation Rate is dfifned as the prortion of the age cohort (5-9)
vhich is fn sdchot\. The data Inctude over arnd wder-age chltdren wnd repeaters\.
c:%snx1tab2\.kIi
- 48 -
Anmex I - Toabe 3
Staff Appraisal Report
sindh Primary Education Development Program
Evolution of Secondary Schooling Enroltlment in Slndh
Between 1981-82 and 1986-87 1/
(Figures Expressed in Thousand Except Otherwise Noted)
1986-87 X Annual
1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 -- of tAich -- Grouth
Total Total Total Total Total Total Urban Rural 1981/86
ENROLLNENT AT SECONDARY LEVEL 2/
A\. Middle School Level (Grades 6-8)
Boys 255 279 294 305 314 321 243 79 4\.7X
Girls 131 136 144 153 157 157 152 5 3\.72
Total 387 415 438 458 471 479 395 84 4\.42
B\. High School Level (Grades 9 and 10)
Bays 108 eS 121 125 125 129 106 23 3\.7X
Girls 54 56 58 59 60 61 61 0 2\.4X
Total 162 171 179 184 185 191 167 23 3\.32
Total (Grades 6-10)
BOys 363 393 415 430 439 451 349 102 4\.42
Girls 186 193 202 212 217 219 214 5 3\.32
Total 549 586 617 642 656 669 562 107 4\.0X
ESTIMATED POPULATION (AGE-GROUP 10-14) 3/
Boys 1,294 1,340 1,387 1,436 1,487 1,540 690 850 3\.52
Girls 1,090 1,128 1,168 1\.210 1,253 1,297 617 680 3\.52
Total 2,384 2,468 2,556 2,646 2,740 2,837 1,307 1,530 3\.52
GROSS PARTICIPATION RATE (in percentage) 4/
Boys 28\.12 29\.32 29\.92 29\.92 29\.52 29\.32 50\.52 12\.02
Girls 17\.02 17\.12 17\.32 17\.52 17\.32 16\.92 34\.62 0\.7X
Total 23\.0S 23\.72 24\.12 24\.32 23\.9X 23\.62 43\.02 7\.0X
1/ Detailed figures may not add up to totals because of rourdings\.
2/ Source: Bureau of Statistics, Planning and Levelopment Department, Goverrusent of Sind: School
Education Statistics In Slnd (1984-85, 1986-86 and 1986-87)\.
3/ Source: Bureau of Statistics, Planning and Development Department, Goverrment of Slnd: Sird
Population Statistics, April 1986; MIssion estimates\.
Note: Population estimates for age-group 10-14 computed by milieu and by sex on the basis of
1981 Census figures at district level and growth rates by milieu\.
4/ The Gross Participation Rate is defined as the proportion of the age cohort (10-14) which is
in school\. The data include over and under-age children and repeaters\.
c:\anx1tab3\.wkl
Staff Appraisal Report Amex 1 - Table 4
Sinui Primary Education Develtopmnt Program Page 1 of 4
Gross Transition Rates between Grades
and Between Primary and Secondary Levels in Sindh 1/ 2/
1980-81 1981-82 1982-83 1983-84 1984-85 1985-66 1986-87 Period 1980-1986
\._ \. \. \. \. \.
Enrol\. GTR Enrol\. GTR Enrol\. 6TR Enrol\. GTR Enrol\. GTR Enrol\. GTR Enrol\. GTR ArnMal Growth
(I000) (M) ('000) (M) ('000) (M) ('000) (1) ('000) (M) ('000) (X) ('000) (X) of Enrollment
PRINART SCHOOLING
Gradb I
Boy 329 345 352 369 384 392 401 31
Girls 131 135 138 144 155 156 152 2X
Totel 461 40 490 512 539 547 553 3X
Boys 206 227 691 235 60 246 701 257 70M 267 7 X274 701 5X
Girl 90 97 74 102 761108 78X114 79 117 75 116 751 4
Total 296 324 701 338 701 353 721 371 721 364 711 390 711 5S
Grade 3
169 185 901195 86S20386X210 85 222 86205 77 31
GeIrls 76 76 851 81 8 1 87 841 582X 93 82 93 801 41
otal245 261 X 276 851290 861296841 315 85129 781 3X
Grads 4
la" i9 149 SU 154 831 161 831 163 801 178 851 102 821 5X
G8rt1 6U 63 5 678 N 173 901 75 816 77 7 76 81X 3X
Total 204 211 86X 222 851 234 85M 238 821 254 851 258 821 4a
Grads 5
Boys 120 12 911 131 881 139 901 139 86S 148 91X 152 86t 41
Gfrls 54 54 851 60 961 64 95 65 891 65 661 65 851 3X
Total 174 181 891 191 901 203 9Z1 204 871 213 891 217 85S 41
Total (Gr\. I to 5)
Boys 964 1,032 1\.068 1,118 1,153 1,206 1,214 41
6Gils 415 425 448 475 497 507 503 3X
Total 1,3?9 1,458 1,516 1,593 1,651 1,713 1,717 4X
U
ft" m- ca em a ^ill il l l E l
*1 I - NN ^n\. B
t~~~~~~~~~ - - S - ¢
, I | O - 8o
t % a g nN " 1% , O
13g -
t ¢ i _ m \. _ m ~~~~~~~~~~~~~~~~\. * _
oe \. 5 zza___ # 1
,, ~ ~ ~ m - "# n* §#*§i§;l
--m* -1m*-
-~~ 05 -
Staff Appraisal Report Anrex 1 - Table 4
Sindh Primary Education Development Program Page 3 of 4
Gross Transition Rates (GTR) between Grades
and Between Primary and Secondary Levels in Sindh 1/ 2/
1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 Period 1980-1986
Enrol\. 6TR Enrol\. GTR Enrol\. GtR Enrol\. GTR Enrol\. GTR Enrol\. GTR Enrol\. GTR X Annual Growth
('000) (X) ('000) (X) ('000) (1) ('000) (X) ('000) (X) ('000) (X) ('000) (X) of Enrollment
SECONDARY SCNOOLING
Grade 6
loys 90 99 105 110 114 118 123 5S
Girls 48 52 54 55 58 61 61 4X
Total 138 151 158 164 172 179 184 5X
Grade 7
Boys 77 83 92X 91 921 97 921 100 91X 104 91X 106 89X 5X
Gfrls 40 42 87 44 84 47 87 50 91X 51 871 51 841 4X
Total 117 125 901 135 89% 143 91 150 911 155 901 157 88X 5X
Grade 8
Boys 68 74 96X 83 1001 88 971 91 941 92 92 89X 5X
Girls 35 37 93X 39 92X 42 97X 45 96X 45 911 45 891 41 'n
Total 103 110 951 122 97X 131 971 136 951 137 921 138 89X 5X
Grade 9
Boys 52 56 831 59 81X 62 75X 65 73X 64 70X 67 731 4X
Girls 27 29 2 30 801 31 79 31 741 32 711 32 711 31
Total 80 85 82 89 81 93 76 96 731 94711 99 731 41
Grodelo
Boys 47 52 1001 55 99 59 99 60 961 61 94X 62 971 5X
Gfrls 25 26 93127 931 38 931 28 921 29 91X 29 911 3X
Total 72 78 97X 82 971 86 971 88 95 89 93 91 951 41
Total (orades 6-10)
Boys 334 363 393 415 430 439 451 5X
Girls 175 186 193 202 212 217 219 41
Total 509 549 586 617 642 6S6 669 5X
Staff Appraisat Report Amex 1 - Table 4
Sindh Primary Education Development Program Page 4 of 4
Gross Transitils Rates tGTR) between Grades
and Between Primary and Secondary Levels in Sindh 1/ 2/
1960-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 Perfod 1980-1986
_ \. \. \. \. \. \. \. \. \. \. \. \.
Enrol\. GTR Enrol\. GTR Enrol\. GTR Enrol\. CTR Enrol\. GTR Enrol\. GTR Enrol\. GTR X Annal Growth
('000) (1) (9000) tX) t'000) (1) ('000) (1) ('000) (M) ('000) (%) ('000) (1) of Enrollment
OMORT PROFILES 3/
oTS Grade 6 90 100% 99 100% 105 100%
Grade 7 83 92% 91 92X 97 92%
Grade 8 83 92% 88 89% 91 87X
Grade 9 62 69% 65 65% 64 61%
Grade 10 60 671 61 61X 62 59X
GIRLS Grade 6 48 100% 52 100% 54 100X
Grade 7 42 87X 44 84% 47 87%
Grade 8 39 80% 42 11% 45 841
Grade 9 31 63% 31 60X 32 59%
Gradk 10 28 581 29 S5X 29 54%
BOYS & Grade 6 138 100% 151 100% 158 100%
GIRLS Grade r 125 90X 135 89% 143 91%
Grade 8 122 88% 131 87% 136 86X
Grade 9 93 67% 96 64% 96 61X
Grade 10 as 641 89 59X 91 58X
\.
1/ Detailed figures way not add up to totals because of roundings\.
2/ Source: Bureau of Statistics, Plnming and Development Department, Govermment of Sinjh: Sshool Education Statistics
in Sindh (1984-5\.8 1985-86 and 1986-87 Aeports)\.
3/ Cobort Profilts provido an estimate of the proportfon of pupIls enrolled In Grade 6 completIng secondary schooling
in the prescrihd 5-year perfod\.
c:%anx;1tab6\.wk1
- 53 -
Annex 1 - Table 5
Staff Appraisal Report
Sindh Primary Education Development Program
Projected Population Growth Rate by Milieu in Sindh 1/
1985-1990 1990-1995 1985-1995
Total Population 3\.5% 3\.5% 3\.5%
Age-Group 5-9 3\.6% 3\.7% 3\.6%
Urban Areas 4\.5% 4\.6% 4\.5%
Rural Areas 2\.9% 2\.9% 2\.9%
1/ Source: Bureau of Statistics, Planning and Development
Department, Government of Sindh: Sindh Population Statistics,
April 1986\.
c:\anxltab5\.wkl
44 4
Amex I - Table 6
Staff Appraisal Report
Sindh Primary Education Development Program
Effect of Population Growth in Sindh on Participation in Prinery Education
by Milieu and by Sex to the Horizon 1995
(Figures Expressed in Thousand Except Otherwise Noted)
AcadmDic Year 1986-87 1/ Academic Year 1995-96 21
Milieu Sex Level of Average Nuber of
Age-Group Actual GPR in Age-Group Enroll\. to Additional Anmual Add'l Enroll\.
5-9 Est'd Enrollees AY86-87 5-9 Est'd Naintain Number of Increase per 6PR Point
Population in AY86-87 CK) Population 86-87 GPR Enroltees (86-95)
Urban BOYs 786 599 76\.2Z 1,184 902 303 34 12 5-
Girls 736 410 55\.7X 1,108 617 207 23 11 I
Rural Boys 1,128 781 69\.2X 1,470 1,018 237 26 15
Girls 1,095 154 14\.1X 1,428 201 47 5 14
Urban Boys 1\.914 1,380 72\.1X 2,654 1,920 540 60 27
and Girls 1,831 564 30\.8X 2,536 818 254 28 25
Rural-\. \. \.
Total 3,745 1\.944 51\.9X 5\.190 2\.738 794 88 52
1/ Source: See Annex 1 - Table 2\.
21 This scenerfo is based on assuwption that the Cross Participation Rate is maintained at the 1966-S7 level\.
c:%anxItab6\.wk1
Staff Appraisal Report Amex 2 - table I
Sindh Primary Education Development Program Page 1 of 2
Evotution of Pubtic Expenditure on Education by Level and Type fn Pakistan
Between 1975 and 1987
(Figures Expressed in Mitlion Except Otherwise Noted)
S Annual
1975-76 76-77 77-78 78-79 79-80 80-81 81-82 82-83 83-84 84-85 85-86 86-87 87-88 88-89 Increase
1/ 11 1/ 1975-198B
IN CURRENT RUPEES
Total Expenditure 2,482\.2 2,802\.6 3,300\.7 3,875\.9 4,153\.5 4,619\.1 5,602\.0 6,469\.5 7,542\.3 10,224\.3 12,644\.8 14,880\.8 17,512\.2 21,425 18\.0X
By Level
- Primary 767\.3 853\.1 823\.6 1,305\.1 1,604\.4 1,570\.0 1,820\.0 2,092\.1 2,544\.0 3,284\.1 3,916\.0 4,564\.1 5,319\.6 6,505 17\.9X
- Secro\.dary 431\.3 577\.9 464\.7 731\.7 820\.4 918\.8 986\.9 1,256\.0 1,599\.0 2,375\.1 2,771\.0 3,406\.1 4,187\.3 5,123 21\.01
- Post-Secondary 782\.3 866\.2 1,312\.0 1,280\.5 1,403\.4 1,491\.2 1,937\.2 2,360\.5 2,642\.0 3,367\.9 4,268\.5 5,014\.5 5,896\.8 7,218 18\.6"
- Other 501\.3 305\.4 700\.4 558\.6 325\.3 639\.1 857\.9 760\.9 757\.3 1,197\.2 1,689\.3 1,896\.1 2,108\.5 2,580 13\.4X
By Type
- Development 751\.1 782\.3 855\.0 1,067\.0 1,060\.2 1,240\.5 1,687\.4 1,941\.5 1,715\.4 2,446\.1 3,255\.0 3,712\.0 4,233\.3 5,134 15\.9X
- Recurrent 1,731\.1 2,020\.3 2,445\.7 2,808\.9 3,093\.3 3,378\.6 3,914\.6 4,528\.0 5,826\.9 7,778\.2 9,389\.8 11,168\.8 13,278\.9 16,291 18\.8X
Deflator (1975-100) 100\.00 110\.66 120\.61 127\.26 140\.60 155\.82 169\.97 180\.11 197\.38 208\.87 219\.80 231\.73 253\.39 276\.76
IN CONSTANT 1975 RUPEES
Total Expenditure 2,482\.2 2,532\.5 2,736\.7 3,045\.8 2,954\.1 2,964\.5 3,295\.8 3,592\.0 3,821\.3 4,895\.0 5,752\.8 6,421\.7 6,911\.2 7,741\.4 9\.11
By Levet
- Prifary p67\.3 770\.9 682\.9 1,025\.6 1,141\.1 1,007\.6 1,070\.7 1,161\.6 1,288\.9 1,572\.3 1,781\.6 1,969\.6 2,099\.4 2,350\.2 9\.01
- Secondary 431\.3 522\.2 385\.3 575\.0 583\.5 589\.7 580\.6 697\.4 810\.1 1,137\.1 1,260\.7 1,469\.9 1,652\.5 1,851\.0 11\.9X
- Post-Secondary 782\.3 782\.7 1,087\.8 1,006\.2 998\.1 957\.0 1,139\.7 1,310\.6 1,338\.6 1,612\.4 1,942\.0 2,164\.0 2,327\.2 2,608\.1 9\.71
- Other 501\.3 456\.7 580\.7 439\.0 231\.4 410\.2 504\.7 422\.5 383\.7 573\.2 768\.6 818\.2 832\.1 932\.1 4\.9X
By Type
- Devetopment 751\.1 706\.9 708\.9 838\.5 754\.0 796\.1 992\.7 1,078\.0 869\.1 1,171\.1 1,48L09 1,601\.9 1,670\.7 1,855\.1 7\.2X
- Recurrent 1,731\.1 1,825\.6 2,027\.8 2,207\.3 2,200\.1 2,168\.3 2,303\.1 2,514\.0 2,952\.2 3,723\.9 4,271\.9 4,819\.8 5,240\.5 5,886\.3 9\.9X
Staff Appraisal Report Arnex 2 - Table I
Sindl Primary Education Development Program Page 2 of 2
Evolution of Public Expenditure on Education by Level end Type In Pakistan
Between 1975 and 1987
(Figures Expressed in Nillion Except Otherwise Noted)
1975-76 76-77 77-78 7B-79 79-80 80-81 81-82 82-83 83-84 84-85 85-86 86-87 87-88 88-89
1/ 1J 11
DISTRIBUTIONI BY LEVEL AND BY TYPE
By Level
- Primary 31% 30% 252 34% 39% 34% 32X 32X 34X 32% 31% 31% 30% 30%
- Serondary 17% 21% 14% 19% 20% 20X 18% 19X 21X 23X 22% 23% 24% 24%
- Post-Secondary 32% 31% 40X 33% 342 32% 352 36% 35% 33% 342 34X 34% 34X
- other 20% 18% 21% 14X 8% 14% 15% 12% 10% 122 13% 132 122 12%
By Type
-Development 30C 282 26X 28% 262 272 30% 30% 23% 24% 26% 25X 242 24%
- Recurrent 70% 72% 742 72% 742 732 70X 70% 772 76% 742 752 76X 76%
INDEX IN CONSTANT 1975 TERMS (1975 a 100)
Total Expenditure 100\.0 102\.0 110\.3 122\.7 119\.0 119\.4 132\.8 144\.7 153\.9 197\.2 231\.8 258\.7 278\.4 311\.9 c
By Level
- Primary 100\.0 100\.5 89\.0 133\.7 148\.7 131\.3 139\.5 151\.4 168\.0 204\.9 232\.2 256\.7 273\.6 306\.3
- Secondary 100\.0 121\.1 89\.3 133\.3 135\.3 136\.7 134\.6 161\.7 187\.8 263\.6 292\.3 340\.8 383\.1 429\.2
- Post-SeCondary 100\.0 100\.1 139\.1 128\.6 127\.6 122\.3 145\.7 167\.5 171\.1 206\.1 248\.2 276\.6 297\.5 333\.4
- Other 100\.0 91\.1 115\.8 87\.6 46\.2 81\.8 100\.7 84\.3 76\.5 114\.3 153\.3 163\.2 166\.0 185\.9
By Type
- Development 100\.0 94\.1 94\.4 111\.6 100\.4 106\.0 132\.2 143\.5 115\.7 155\.9 197\.2 213\.3 222\.4 247\.0
- Recurrent 100\.0 105\.5 117\.1 127\.5 127\.1 125\.3 133\.0 145\.2 170\.5 215\.1 246\.8 278\.4 302\.7 340\.0
If Estfmates\.
Source: Government of Pakistan, Economic Survey of Pakistan - 1989\.
c:Aanx2tab1\.wk1
- 57 -
Staff Appraisal Report Amex 2 Table 2
Sindh Primry Education Development Program Poep 1 of 3
Evolution of Pbthlc Expenditures in Sindh
By Level of Education and Typo of Expenditure
Between 1983 and 1989 1/ 2/
(Figures Expressed in Million Except ae Otherise Noted)
-- ------- Recurrent Expenditures --------------------------
SU8-SECTOR 1983-84 84-85 85-86 86-87 87-85 88-89
Primary Education 536\.2 612\.0 639\.6 1,061\.4 1,196\.6 1,507\.0
Secondary Education 321\.4 383\.9 424\.5 558\.9 708\.3 800\.9
Teacher Education 32\.4 34\.5 37\.3 43\.9 52\.8 38\.9
Technical Education 26\.0 29\.6 34\.9 39\.6 59\.4 68\.6
College Education 190\.0 215\.5 237\.9 288\.9 361\.7 358\.5
Scholarships 0\.0 0\.0 0\.0 2\.6 7\.5 7\.0
MisceLlaneous 6\.1 7\.6 9\.2 89\.3 133\.4 34\.2
Phys\.Ed\. Socia-cultural Activ\.
Special Education
Block Provision
Total 1,112\.3 1,283\.1 1,383\.4 2,084\.5 2,519\.7 2,815\.2
Deflators 3/ 1\.000 1\.045 1\.079 1\.128 1\.233 1\.346 1\.495
im CONSTANT 1983 R UPES
Primary Education 536\.2 585\.6 592\.5 940\.9 970\.5 1,119\.3
Secondary Education 321\.4 367\.4 393\.2 495\.4 574\.4 594\.9
Teacher Education 32\.4 33\.0 34\.5 38\.9 42\.8 28\.9
Technical Education 26\.0 28\.3 32\.4 35\.1 48\.2 50\.9
College Education 190\.0 206\.2 220\.4 256\.1 2 \.3 266\.3
Scholarships 0\.0 0\.0 0\.0 2\.3 6\.1 5\.2
Miscellaneous 6\.1 7\.3 8\.5 79\.2 108\.2 25\.4
Phys\.Ed\., Socio-cult 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0
Special Education 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0
Block Provision 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0
Total 1,112\.3 1,227\.9 1,281\.5 1,847\.9 2,043\.6 2,090\.9
INDEX AT CONSTANT 1983 TERNS (1983 u 100)
Primary Education 100\.0 109\.2 110\.5 175\.5 181\.0 208\.7
Secondary Education 100\.0 114\.3 122\.4 154\.2 178\.7 185\.1
Teacher Education 100\.0 101\.7 106\.5 120\.0 132\.1 89\.0
Technical Education 100\.0 108\.8 124\.3 134\.7 185\.0 195\.7
College Education 100\.0 108\.5 116\.0 134\.8 154\.4 140\.1
Scholarships
Niscellaneous 100,0 118\.9 138\.3 1,288\.0 1,760\.0 413\.0
Phys\.Ed\., Socio-cultural Activ\.
Special Education
Block Provision
Total 100\.0 110\.4 115\.2 166\.1 183\.7 188\.0
1/ Source: Governrent of Sindh, Departments of Finance and Education\. Recurrent expenditure
data unavailable for FY90\.
2/ Includes all sources of finance: e\.g\. GOSindh, GOP and foreign\.
3/ Source: Government of Pakistan: Economic Survey of Pakistan - 1989\.
- 58 -
Staff pprail Report Anex 2 - Table 2
Sind Primary Education Devetopsmnt Progrin Page 2 of 3
Evolution of Publ1c Exparditures In Sind
fy Level of Education and Type of Expenditure
Between 1983 and 1989 1/ 2/
(Figures Expressed in Million Except as Otherwise Noted)
\.---\.---\. ------Dovelopnent Expenditures -------------------------
SUB-SECTOR 1983-84 84-85 85-86 86-87 87 88 88-89 89-90 3/
Primary Education 62\.2 71\.6 240\.3 332\.4 311\.0 308\.6 546\.0 4/
Secondary Education 49\.3 94\.2 73\.5 117\.8 318\.0 282\.3 230\.0
Teacher Education 3\.0 8\.4 11\.1 11\.0 11\.0 8\.1 12\.0
Technical Education 12\.8 29\.3 26\.9 25\.9 26\.2 33\.5 37\.0
College Education 27\.9 41\.6 55\.4 50\.1 41\.0 42\.5 42\.0
Scholarships 5\.4 5\.4 4\.1 0\.2 0\.2 0\.3 0\.3
Miscellaneous 2\.3 1\.8 2\.2 3\.7 3\.2 11\.4 13\.5
Phys\.Ed\. Soclo-cult 2\.7 8\.0 5\.0 1\.0 2\.0 8\.8 12\.0
Special Education 0\.0 4\.7 5\.3 4\.9 6\.0 7\.5 8\.0
Block Provision 0\.0 0\.0 0\.0 0\.0 0\.0 2\.0 0\.0
Total 165\.7 265\.0 423\.9 547\.0 718\.6 705\.2 900\.8
Deflators S/
IN CONSTANT 1983 RUPEES
Primary Education 62\.2 68\.6 222\.6 294\.6 252\.2 229\.2 365\.2
Secondary Education 49\.3 90\.1 68\.1 104\.4 257\.9 209\.7 153\.8
Teacher Education 3\.0 8\.0 10\.3 9\.8 8\.9 6\.0 8\.0
Technical Education 12\.8 28\.1 24\.9 23\.0 21\.2 24\.9 24\.7
College Education 27\.9 39\.8 51\.3 44\.4 33\.3 31\.6 28\.1
Scholarships 5\.4 5\.2 3\.8 0\.2 0\.2 0\.2 0\.2
Niscellaneous 2\.3 1\.7 2\.1 3\.3 2\.6 8\.5 9\.0
Phys\.Ed\. Socio-cult 2\.7 7\.7 4\.6 0\.8 1\.6 6\.5 8\.0
Special Education 0\.0 4\.5 5\.0 4\.3 4\.9 5\.6 5\.4
Black Provision 0\.0 0\.0 0\.0 0\.0 0\.0 1\.5 0\.0
Total 165\.7 253\.6 392\.6 484\.9 582\.8 523\.8 602\.5
INDEX AT CONSTANT 1983 TERMS (1903 * 100)
Primary Education 100\.0 110\.2 357\.8 473\.6 405\.4 368\.4 587\.0
Secondary Education 100\.0 182\.9 138\.1 211\.8 523\.2 425\.3 312\.1
Teacher Education 100\.0 267\.9 343\.6 325\.9 298\.2 201\.4 267\.6
Technical Education 100\.0 218\.7 193\.9 179\.1 165\.6 194\.1 192\.8
Ctollege Education 100\.0 142\.5 183\.9 159\.2 119\.2 113\.2 100\.7
Scholarships 100\.0 95\.7 71\.1 3\.4 3\.0 4\.0 3\.6
Miscellaneous 100\.0 71\.6 87\.8 139\.3 109\.1 362\.7 385\.2
Phys\.Ed\. Soceo-cult 100\.0 283\.9 170\.0 31\.2 60\.1 241\.8 297\.3
Special Education
Block Provision
Total 100\.0 153\.0 237\.0 292\.6 351\.7 316\.1 363\.6
\.~~~~~~~
1/ Source: Government of Sind, Departments of Finance and Education
2/ Includes all sources of finance: e\.g\. GOSind, GOP and foreign\.
3/ Preliminary data from: Goverment of Sind\. Budget Proposal for FY90\.
4/ Includes Rps\. 256 million from Peopless Works Program\.
5/ Source: Government of Pakistan: Economic Survey of Pakistan - 1989\.
- 59 -
staff Appraisat Report AMex 2 Table 2
Sindh Primary Education Development Program Page 3 of 3
Evolution of Publ1c Expenditures in Slndh
By Level of Education and Type of Expenditure
Between 1983 and 1989 1/ 2/
(Figures Expressed in Iillion Except as Otheruise Noted)
\. Total Expenditures -----------------------------
SUB-SECTOR 1983-84 84-8S 85-86 86-87 87-88 88-89
Primary Education 598\.5 683\.6 879\.9 1,393\.7 1,507\.6 1,815\.7
Secondary Education 370\.7 478\.1 498\.0 676\.7 1,026\.3 1,083\.2
Teacher Education 35\.4 42\.9 48\.4 54\.9 63\.9 47\.0
Technical Education 38\.9 58\.9 61\.8 6s\.5 85\.6 102\.1
College Education 217\.9 257\.1 293\.3 339\.0 402\.7 401\.1
Scholarships 5\.4 5\.4 4\.1 2\.8 7\.7 7\.3
Miscellaneous 8\.5 9\.4 11\.4 93\.0 136\.5 45\.6
Phys\.Ed\., Soio-cult 2\.7 8\.0 5\.0 1\.0 2\.0 8\.8
Special Education 0\.0 4\.7 5\.3 4\.9 6\.0 7\.5
Block Provision 0\.0 0\.0 0\.0 0\.0 0\.0 2\.0
Total 1,277\.9 1,548\.1 1,807\.3 2,631\.5 3,238\.2 3,520\.3
Deflators 3/ 1\.000 1\.045 1\.079 1\.128 1\.233 1\.346
IN CONSTANT 1983 RUPEES
Primary Education 598\.5 654\.2 815\.2 1,235\.5 1,222\.8 1,348\.5
Secondary Education 370\.7 457\.6 461\.3 599\.9 832\.4 804\.5
Teacher Education 35\.4 41\.0 44\.9 48\.7 51\.8 34\.9
Technical Education 38\.9 56\.4 57\.3 58\.1 69\.4 75\.9
College Education 217\.9 246\.0 271\.7 300\.5 326\.6 297\.9
Scholarships 5\.4 5\.2 3\.8 2\.5 6\.2 5\.4
Miscellaneous 8\.5 9\.0 10\.6 82\.4 110\.7 33\.9
Phys\.Ed\., Socio-cuLt 2\.7 7\.7 4\.6 0\.8 1\.6 6\.5
Special Education 0\.0 4\.5 5\.0 4\.3 4\.9 5\.6
Block Provision 0\.0 0\.0 0\.0 0\.0 0\.0 1\.5
Total 1,277\.9 1,481\.5 1,674\.2 2,332\.8 2,626\.4 2,614\.6
INDEX AT CONSTANT 1983 TERMS (1983 * 100)
Primary Education 100\.0 109\.3 136\.2 206\.4 204\.3 225\.3
Secondary Education 100\.0 123\.4 124\.4 161\.8 224\.6 217\.1
Teacher Education 100\.0 115\.8 126\.6 137\.4 146\.2 98\.6
Technical Education 100\.0 145\.1 147\.3 149\.4 178\.6 195\.2
College Education 100\.0 112\.9 124\.7 137\.9 149\.9 136\.7
Scholarships
hiscellaneous 100\.0 105\.8 124\.4 971\.1 1,304\.5 399\.1
Phys\.Ed\., Socio-cultural Activ\.
Special Education
Block Provision
Total * 10U\.0 115\.9 131\.0 182\.5 205\.5 204\.6
1/ Source: Goverrnnent of Sindh, Departments of Finance and Education
2/ Includes all sources of finance: e\.g\. GoSindh, GOP and foreign\.
3/ Source: Government of Pakistan: Economic Survey of Pakistan - 1989\.
~\. * m -
-~ ~~ * :
\.
2 ,'8
* _ \. _ _ _\. * 4
\.* -i p_ '\. -\. -S 48s ,
* - 4 4
2_ ft 3 \. v9t,
: - d
* 2 |* U
* 4 f
: w \.:0
: ffi w ' :~~~~~~~~w \.s L :5
'' 58 0 5\.4 00-*t
* 9 - \.0 \. \.
- 61- Antae 3
Page 2 of 6
SIION PRINIRY ED TION DEWLWIIt PROGR"M
\. \.I\.------------------------\.------------------\.------------I I
OBJECTIVE/SUM-OJECYIVE | INEAS | INDICATORS/TRGETS | ACTIONS TAKEN/RESJIRE IBY OIVT
\. \. \. \. \.
*2\. Incentives to | CI) Change priery school academic | Reded dropout nd start of Action agreed\. lptleent by
Ilprove enrollment V yer to begin an Augut 1 wd end a * re regular and punctual A Y 1990-91 and evalute by
and Retention\. on Nay 31\. nd initially In 3 | pattern of school attendance Jure\. 1992\.
| districts eperimnt with flexiblel by poils and teachers\.
chool hours/calendar to suit locat
conditiom in two districts\.
(1I) Initially in 3 districts\. Redcd repetition nd | Introdeue at start of £19041\.
betwen grades 1-3 inclusive\. nrroed cohort In grade\. w d evaluate by June 1992\.
allow autotic prom otIon eprt
from exceptional cases\.
| (Mi) Initially in 3 districts, Redecd cost of schooling to | Introduce a start of A190-91,
Abolish school uniform requiremont i poor parents\. ard evaluate by uwn 1992\.
In rural areas\. I I
| (iv) Introduce a carefully designed and | Full coverage of about 75 Caeplete base-line survey in
rmanitorable pilot nutrition progral schools between July\. one district coapleted in
as an incentive to pupits and I 1990 and June 1992\. 1989\. Prepare lipltentation
their parents\. Neasurable declirne in plan by March 31, 1990\. Begin
malnutrition ihproved school i aplementation in July, 1990\.
participation nd achievement |
maosnst recipients\.
(v) Provide annual scholarship schem e Increased enrollment of rural Provide 1\.500 scholarships p\.a\.
| of RslOO/month for rural girls who | girls in secondary school\. for up to 5 years duratien per
coaplete grade S to enable thea to I I child\.
coaplete secondary education\. |
\. - I I
- 62 -
Annex 3
Page 3 of 6
SIMON PRIINRY EDUCATION EVELOP PROSAN
\.----------------------------------------- ----------\.--------------------\. I\. \. \. \. \.--------------\.I----------------\. \. \.
OBJECTIVE/SUS-OBJECTIVE | EANS INDICATORS/TARGETS ACTIONS TAKEN/REQUIRED BY GOVT
D\. IMIPROVE DELIVERY OF | | |
PRINARtY EDCTION\. | | |
S1\. Recruitment\. (i) Locatlie primry teaceMr | Actior agreed\. Implementation
motivation VW recrultmnt in rural areas at I I in proress\.
retention of I taltuWunion council level and
teachers\. | post near how\.
i1) Increase ge limits for nmaw Reentry of quatified oleIr Action agreed\. Iaplmentation
I entry/re-entry into primry school t teachers\. i in prograe\.
| teaching from 1 to 45yers\. y
| (Mii) Prmit Engagement of local retired I | Action agreed\. Ieplementation
persons as teachers on contract i in progress\.
basis\.
I ~I I
(iv) Where girts' school has remained Reduced ruaers of closed I Action agreed\. lrplementation
closed or oporttmities exist to I girls schools i in progress\.
open village schoot without
qualtified teacher being available
; recrult female teacher with lower
-educational qualifications, at
| lower initial salary(e\.g\.8PS 7) \. | |
I ~~~~~~~~~~~~~~~~~~~I I
(v) Give preference to qualified I Selection of suervisors I Action agreed\. I,plemsntatfon
primary school teachers for f from ranks of primary school I in proress\.
! promotion/recrultment to SPE\. I teachers e
(vi) Expend coverage and scope of Availability, Inter alla of i lmpleent ania' program,
system of recognition and reward prizeu\. advance increments, starting in AY 1990-91\.
I for outstanding primary school t rapid promotions and other
j teachers I linentives\.
---------- --------- --------- --------- ------- ------- ------- ------ ------- -------
II\.I\. \. \. \. \. \. \.I\. \. \. \. \.
- 63 -
Annex 3
Page 4 of 6
SINDN PRIIUY EDUCAtION DEVELOPlENI PRO"RN
\. \. \. \. \. \. \. \. I\. \. \. \. --- - --- -- --- ---- - --- - ----- -- - ---- - -- - ------------------------
OBJECTIfE/SM-OSJECTIVE lEANS | INDICATORS/TARGETS ACTIONS TAKENIREWJIRED SY GOV'T
*- * * - - I \.*\. *-* ---*-----*-*-I---I------------
n2\. Training ad |() Increase output of new teachers by About 1\.600 new teachers per | Coeplete lplteentation by the
Supervision of I devoting the OCETs to pro-service y yar\. start of AY 1992-93\.
Teachers I training ud by capleting the | |
district-level network of colleges
as currently ptmed\.
(if) Allow qualified persmns working In P Nore faculty with relevant | Amend regulations by December
the primry eidcation sector to I experience\. 31 1991\.
compete for all GCET faculty
positiis\. I I
I I I
| (Mii) Curricutus Bureau in collaboration A bout 8\.000 teachers trained lopleent in selected
| with DEOs to implemnt pilot In pilot progrm by end of AY districts between AT 90-91 and
in-service trainirg ptan using Lis 91-92\. Evaluation coapleted | 91-92\. Evaluate in AY 91-92
| in 2 districts which wiLl use f for replication in other | and replicate in succeeding
| existing trainers and facilitlos\. | districts by the end of AY | school years\.
Progrm will atso liprove and 91-92\. Thereafter about
| standardize existing LN student 12,000 teachers trained
achievemnt tests and apply them amualty\. |
In the 2 districts\. I I
|iv) set iwp steering committee to Anmuat progress report\. | Provide first report by 30
supervise pilot in-service I I Septeuer1 1991\.
training progrem\. I I
Cv) Review role of Supervisors and | Completed review\. | Coplete study by June 1991
| impltemnt workshops with focus on | and lplement recommendations
| in-service training\. and I | by Jurw 1992\.
| motivation of teachers\. I I
(vi) Provide mbitlity to SPEs\. A bout 50 jeeps and 485 Procure vehicles\.
motorcycles\. I
I I
,I
- 64 -
Annex 3
Page 5 of 6
SIMON PRIIARY EDUCATION DEVELOPMENT PRORM
\.-------------------------\.---------------- ------------------------------\. \.------------------------\. \.-\.
OBJECTIVE/SUB-OBJECTIVE EAMS I INDICATS/TARGETS I ACTIONS TAKEi/REQUIRED BY CWV'T
\. -----------------------------------------\. \. \. \. \. \. \. \. ---------------- -----------------------
S3\. loprove planming, I I
management and I I I
implementation\. I I
(i) Create effective (i) Appoint Additional Education Improved planming, and more | Job descriptions agreed\.
Plaming and Secretary (Pleming 8 I effective and efficient An incwubent has been appointed
Coordination Coordination) I Icplnentation capacity\.
capacity in I I
Education |ii) Create new DS (coordination) to | Inprovd ptlming, and more | Job descriptions agreed\.
Secretariat\. | coordinate all agencies o effective and efficient I Complete reorganization by
responsible for primary edcation implementation capacity\. I December 31\. 1990\.
develtapnt\. I I
(iii) Create an additional SO post for I lIproved planing, and more I Job descriptions agreed\.
Disbursements and reorganize exist-I effective and efficient I Complete reorganization by
irg positions for Budgets and I implementation capacity\. D Oecei*er 31, 1990\.
Accounts, Monitoring and Evatuationl
Statistics and imptementation\.
(ii) Establish |i) Reorganize ADs, DDs & Assistant | Improved plaming, and more N Mew organization and job
distinct management | Directors to provide separate I effective ard efficient j descriptions agreed\. Complete
focus for primary I focus on primary * secondary | implementation capacity\. reorganization by Decea bIr 31,
education at I education\. I I 1990\.
divisional level\. I I I
(iM) Establish | (i) Redefine ADEO duties and delegated | Improved ptaming, and more N weu organization and job
distinct manraement | poers to give post main effective and efficient I descriptions agreed\. Complete
focus for primary respansibility for primary implementation capacity\. I reorganization by December 31,
education at I edication at district level\. I I 1990\.
district level\. I I I
I (ii) Redefine SDEOs, SPEs & LCs Improved plarming, and more Mew organization and job
| relationship to incorporate now effective and efficient I descriptions agreed\. Complete
| ADEO role and define responi- | implementation capacity\. I reorganization by Decerber 31,
bility for PE at all levels\. 19°0\.
(iv) Strengthen I Ci) Improve data collection end I Effective data coltection, Reporting system for data
program pluming and | analysis\. I school pluming and program I cotlection, investment
monitoring capacity\. m | I monitoring and physical
| (ii) Strengthen investment programing j monitoring A evaluation | implementation prepared\.
I and monitoring\. I systems\. I
(v) Improve (i) Involve suitabte specialist train- About 100 staff trained duringl Outline agreement reached with
manag&Aent skilts of | ing agencies (Education Extension I first two years of program\. N MIPA\. Enpge hIPA by September
key staff\. Center with NIPA) in needs | Thereafter about 100 staff I 30, 1990\.
analysis, design and I trained per year\.
Implementation of magement
training for PCW\. PAN Cell,
Directorate staff, DEOs and SDEOs\.
\. ------*----*----*-*--I\.*\.*-*-*-*---------*--------------I-----*----------\.-----------------*----I\.-*-*----
- 65 -
Annex 3
Page 6 of 6
SINON PRIMRY EDLCTION DEVELOIMT PROGXM
~~~~~~~~~~~~~~~~ @-o\.----------------------\. \.------\.------------------------------,,, , \.-------------------------------\.
OBJECTIVE/SU-SJECTIVE NEAS | IUDICATORS/TARTS | ACTIONS TAXEN/REWIIRED BY *rOT
\. ----------------------\. I- \. \. ------------------------\. I-\.
C\. IMPROVE STWENT
ACNIEVEEVMt | | |
Cl\. lIrprove quality, (i) lmprove durebility\. Lrngr proxhct life\.
pr2duction &
distribution of
Learning Mockiles\. |ii) Lower unit prouction costs\. | | Ceptetive tendering
procedLres agreed\.
(iii) Bind mdules into 11 subject based I Irproved usability\.
I voluses\. I I
(iv) Distribute to all primary schools Introjiction and use in atl t Plan agreed for improved
in province\. I schools in Sind for teaching I prouetlon\. testing and
of languages, maths, science province-wide distribution\.
and socisl studies\.
I ~~~~~~~~~~~~~~~~~~~~II
!--------- --------------------------------1 --------------------------- -\.1 -\.
I ~~~~~~~I I
CZ\. Iaprove quality, | C) Upgrade physical production Grester durability\. Provide subsidy to STUB to
urabillty and I specifications\. | | maintain current textbook price
availability of I | |
textbooks snd ! C) Ixove textbook content\. | Improved text quality and | Pilot test all new primary
sppLemaentary t m learng education mawuacripts prior to
reading materials\. I I pablication (about 30 p\.s\.)\.
I ~~~~~~~~~~~~~~~~~~~~~I I
(fii) lamrove cost/performance ratios of Coetetive tenderinr
- completed products\. I I procojares agreed\.
I I I
(Iv) Provide free set of textbooks to F Free books distributed to Complete evaluation of textbook
all rural girls enrolled In gradet 330,000 rural girls arnually policy, including impact of
1-5\. by 1995I free textbook distribution on
| | | enrollment, by June 30, 1993\.
I (v) Provide suplep mntary reading Allocation of RstOCO to | Cplete evaluation
materials to all primary schools | schools with enrollment less | by Jure 30, 1992\.
in three distriets end evaluate | then 500; and RsaZ00 to |
their use for possible repileation a larger schools\.
In all districts\. |
\. \. \. \.,,,,, ,, ,,,, I --------------------------I
O2-Feb-90
Staff Appraisal Report
Sindh Primry Educaticn Development Progran Annox 4 - Table I
Page 1 of 2
Projection of Primary Schooling Enrollment
Between 1987-88 and 1995-96
(Figures Expressed In Thousand Except Otherwise Noted) Niwber of AdditionaL Nuber of
School Private Urban Places
Places to Needed to Restore
X Anmual Be Urban Enrollments In
\. Actual I/ -----------Growth -\. Projected ------------------- Cconstructed 1995-96 to Level of
NiLleu Gender 81-82 82-83 83-84 84-85 85-86 86-87 81-86 87-88 88-89 8W90 90-91 91-92 92-93 93-94 94-95 95-96 under PEDP 1986-87
ENROLLMENT AT PRINARY LEVEL 2/ 3/
Urban Boys 515 540 553 SB5 597 599 3 617 635 654 674 691 709 m 744 762 88 130
Girls 338 357 382 410 415 410 4 426 443 461 479 491 503 514 526 538 59 73
Total 853 897 935 994 1012 1008 3X 1042 1078 1115 1153 1182 1212 1241 1270 1300 147 203
Rural Boys 517 528 640 645 723 781 9X 828 853 879 905 952 999 1046 1093 1140 235
Girls 87 91 126 121 138 154 12X 163 169 176 183 214 245 277 308 339 156
Total 604 619 766 766 861 935 9X 991 1023 1055 1088 1166 1245 1323 1401 1479 391
TOTAL Boys 1032 1068 1194 1230 1320 1380 6X 1445 1488 1533 1579 1644 1708 1773 1837 1902 323
Girls 425 448 508 530 553 563 6X 589 612 637 662 705 748 791 834 877 215
Total 1458 1516 1701 1760 1873 1943 61 2034 2101 2170 2241 2349 2456 2564 2672 2779 538
Of Which:
NosqAe Boys NA NA 75 76 114 ¶67
Schools Girls MA NA 33 33 47 60
\.
Total NA MA 108 110 160 227
Private Boys NA MA MA 130 139 183
Schools Girls MA NA MA 155 137 149
\.
totat MA MA MA 284 276 332
Staff Appraisal Report Annex 4 - Table 1
Sindh Primary Educstion Developen Program Pae 2 of 2
Projection of Primary Sdwoling Fnrottment
Between 198t-88 and 1995-96
(Figures Expressed in Thousand Except Otherwise Noted)
X AnuiaL
-- ------ Actual IJ -------/---Growth --\.-----------\.-\. Projected------------------
Milieu Gender 81-82 82-83 83-84 84-85 85-86 86-87 81-86 87t88 88-89 89-90 90-91 91-92 92-93 93-94 94-95 95-96
ESTIIATED POPULATION (AGE-GRaJP 5-9) 4/
Urban Boys 630 658 688 719 752 786 5 822 859898 938 981 1025 1071 1120 1170
Girts 589 616 644 673 704 736 5X 770 805 841 880 9Z0 962 1005 1051 1099
Total 1219 1274 1332 1392 1456 1522 5X 1591 1663 1739 1818 1900 1987 2077 2171 2270
Rural Boys 976 1004 1034 1064 1096 1128 3X 1161 1195 1230 1266 1304 1342 1381 1422 1464
Girls 946 974 1003 1033 1063 1095 3X 1128 1161 1195 1231 1267 1305 1344 1384 1425
Total 1922 1978 2037 2097 2159 2223 32 2289 2356 2426 2497 2571 2647 2725 2806 2889
GROSS PARTICIPATION RATE (in percentage) S/
Urban Boys 822 822 80X 81X 792 76X -12 75X 742 732 722 712 690 68X 662 65X
Girls 572 5U S9X 612 592 56X -1X 552 552 55X 54X 532 522 51X 502 492
Total 702 702 702 71X 692 66X -12 66X 652 64X 63X 622 612 60X 59X 57X
Rural Boys 532 532 622 612 662 692 62 712 712 712 71X 732 742 762 772 782
Girts 92 9X 132 122 132 142 92 142 15X 152 15X 17X 192 212 222 242
Totat 312 31X 382 372 402 422 62 432 432 432 442 452 47X 492 502 51X
Province-wide: 46X 472 50s s50 522 522 2X 52X 52X 522 52X 532 532 532 542 54X
Public Schools
Only: I NA NA MA 422 44X 43
I/ Last evailable data on enrolaent is for AY1986-87\. Detailed figures ay not add up to totals becwse of rourdings\.
2V Source: Bureau of Statistics, Plaminng and Develomnt Department, Goernwent of Sind: School E&dcation Statist'es in Sirdh (1984-85\. 1986-86 and
1986-87); Directorate of School Education, Karachi Region: Educational Perspective 1987 and Facts wd Figures 1v88-1989\.
3/ Data do not includs enrollents tn uaigistered private schootls, Aich have grown rapidly in recent years\. Date on thEse enrotlawnts are unavailable\.
4/ Source: Bureau of Statisties, Plamning nd Development Department, Goverrwent of Sindh: Sindh Population Statistics\. April 1986: Nission estites\.
Note: Population estimtes for ge-groWp 5-9 coputed by mitieu and by sex on the bssis of 1981 Census figures at district level nd groth rates bv
milieu\.
5/ The Gross Participation Rate is defined as the proportion of the age cohort (5-9) utich is in schooL The data Include over wd wde-ae hildran
and repeaters\.
c:\anx4tabl \.wk
- 68 -
Ainnex 4 - Table 2
Staff Appraisal Report
Sindh Primary Education Developent Program
Anual Teacher Requirements and
Incremental Recurrent Costs
(Figures Expressed In Thousand Except as Otherwise Noted)
Milieu Gender 90-91 91-92 92-93 93-94 94-95 95-96 Total
Urban Nate 1\.0 1\.0 1\.0 1\.1 1\.1 1\.1 6\.4
Female 1\.3 1\.1 1\.2 1\.2 1\.2 1\.2 7\.1
\. \. \. ---- ----\. ---- ---- \. ----\. \. \. \.
Total 2\.3 2\.2 2\.2 2\.2 2\.3 2\.3 13\.5
Rural Nale 1\.8 2\.3 2\.4 2\.4 2\.5 2\.5 13\.9
Female 0\.5 1\.1 1\.2 1\.2 1\.3 1\.3 6\.5
\. ----\. ---- ---- \. \. \. \. \. ----
Total 2\.2 3\.4 3\.5 3\.6 3\.7 3\.9 20\.4
Total Mate 2\.8 3\.3 3\.4 3\.5 3\.6 3\.6 20\.2
Female 1\.8 2\.2 2\.3 2\.4 2\.5 2\.5 13\.7
_-= - f= = =
TOTAL 4\.6 5\.6 5\.7 5\.9 6\.0 6\.2 33\.9
Incremental
Recurrent Costs 98\.5 120\.4 123\.6 126\.9 130\.2 133\.5 733\.1
(Re million)
Source: Mission Estimates\.
Note: Teacher requirements and incremental recurrent costs are based on
the follouing assurptions:
(a) pupil:teacher ratios are estimated at 50:1 In urban boys' schools,
and 40:1 in urban and rural girls' schools and rural boys schools;
(b) recurrent costs estimates are based on an average salary of 21,624 Re
per year (mid-point of Basic Public Service Grade 7) multiplied by a
coefficient of 1\.7 for allowances and benefits; and,
(c) attrition rates for teachers are estimated at 7X and 5X p\.s\. for
female and male teachers, respectively\.
c:\anx4tab2\.wk1
- 69 -
Staff Appralsal Report ANNEX 5
Page 1 of 2
Slndh Primary Education Devotopoent Progran \.---------
Technicat Assistance Sumary
Experts --- --- Fetllowships ---
Total Totat
Subject No\. Months Staff-Months No\. Nonths Staff-Months
\.~\. \. \. \. \. \. \. \.
CONSTRUCTION MANAGEMENT
\. \.
Directorate of 1 3 3 3 1 3
Education Engineering
Works
TEACHER TRAINING &
SUPERVISION
esfign, Implement and 4 3 12 16 1 16
Evaluate Pilot
In-Service Teacher
Training Program
Achievement Testing 2 3 6
Study of role of 2 6 12 2 3 6
SPEs/LCs
~\. \. \. ------ \. \.
Subtotal Teacher 6 9 24 20 7 28
Training and
Supervision
PRIMARY EDUCATION
MANAGEMENT
PLan, Prepare, Deliver I 18 l8
and Evaluate Pilot
Programs\.
Management Training 27 2 54
(Overseas)
Subtotal Primary 1 18 18 27 2 54
Education management
- 70 -
Staff Appraisl Report ANNEX S
Page 2 of 2
S;ndh Primary Education Doelopment Program
Technical Assistance Sumiary
--- Experts --- --- Felltsthips \.
Total Total
Subject No\. Months Staff-Months No\. onths Staff-Months
\. \. \._\._\. \. \. \.
BOOKS & SUPPLEMENTARY
MATERIALS
Design/ Itlustration 6 2 12
Maths/Science Editorial 6 2 12
English Language 6 2 12
Editorial
Pilot Testing 2 3 6
Production Nanagement 5 12 60
Printing 2 12 24
Graphic Design 2 12 24
EditoriaL 5 12 60
Evaluation of Books 4 3 12
Policy
Contingency 4 1 4
_ \. _ \. _ _ _ \. _ _- -- \. -- \. -- \.
Subtotal Books & 28 13 58 14 168
Supp\. Materials
TOTAL STAFF MONTHS 103 253
(Total Staff Years) 8\.6 2111
- 71 -
Annex 6
Pa&2 I of 6
A PILOT SCHOOL UUTRITIO PROORAN
1\. Although data on the nutritional status of rural primary school
age children in Sindh are lacking, the situation for this target age group
can be inferred from recent national and provincial surveys of pro-school
children\. The pilot nutrition program also has secondary target groups:
younger siblings, some of whom may attend the school and be included in the
direct feeding; and those at home who might benefit from increased food
availability at home\. An increased understanding of the importance of
nutrition would also result from the pilot program\.
National Nutrition Surveys
2\. National nutrition surveys were conducted in 1965/66 (Nutrition
Survey of West Pakistan), 1976/77 (Micro-nutrient Survey), and 1985/87
(National Nutrition Survey)\. The surveys show that the scope and severity
of protein-energy malnutrition and anaemia has been essentially unchanged
over the past 10 years\. Province-specific data from the most recent survey
show that in Baluchistan only 271 of the children are normally nourished,
in NWFP 31X, in Sindh 361, and in Punjab 491\.
Recent Nutrition Survevs and Proiects in Sindh
3\. 1984 data (Table 1) included in the UNILCEF nutrition analysis
of women and children in Pakistan (1987/88) show that rural Sindh has child
nutrition problems second only to Baluchistan\. A 1988 weight by age survey
(Table 2) shows the degree of malnutrition in low-income areas of Karachi\.
The distribution pattern of malnutrition among oral children in Sindh is
indicated in weight by age data from Thatta (Tables 3 - 5), where about 301
of the children in the 0-5 age group were surveyed\. These may be the
relatively better off children whose parents responded to the request by
Community Health Workers to weigh children\. In respect of school-age
children, a 19&6-87 survey of about 17,400 children in Karachi by the Aga
Khan Health Service found that 201 out of those examir"d suffered from
varying degrees of malnutrition\.
4\. A recent UNICEF "Save The Children" project in the Thar desert
provided modest but systematic child feeding based on local foods\. Parents
quickly understood the importance of iLproved nutrition in improving the
health and liveliness of their children\. Some 841 of the malnourished
children under 5 years old participating in an AgA Khan University
(AK)IGOSindh nutrition program in Thatta (Table 5) improved within two
- 72 -
Annex 6
Pag2 2 of 6
months, with child feeding advice from Community Health Workers (mostly
elderly, illiterate women with 15 days training) as the sole input\. The
Thatta project focusses on: (a) involving the local community in
understanding and acting on nutrition education; and (b) the use of local
foods for the child nutrition programs\.
Table 1: WHO Infant Feeding Survey - 1984
Distribution of Sample According to Weight for Age
(Percentages rounded off)
NWFP Punjab Sindh Sindh Baluchistan
Rural Rural Urban
Slums
Over 90X of standard 281 36X 161 371 16X
90-75X of standard 441 411 311 391 331
75-601 of standard 221 171 361 181 311
Less than 601 of st\. 61 61 171 71 201
Table 2: Nutritional status of children 0-5 years in Urban Sindh
Number Percentage
Normal 2,832 52
1st degree malnutrition 1,961 36
2nd degree malnutrition 511 10
3rd degree malnutrition 98 2
Table 3: Nutritional status of children 0-5 years in Rural Sindh
Number Percentage
Normal 305 57
1st degree malnutrition 137 26
2nd degree malnutrition 59 11
3rd degree malnutrition 32 6
- 73 -
Annex 6
aI 3 of 6
Table 4: Nutritional Status by Sex of the Malnourished Children Table 3
Female Male
Number observed 259 275
Number malnourished 127 101
Percentage 49 37
Table 5: Improvement in weight between two weighings of 1-2 Months interval
(Home vislts by Community Health Workers between weighings)
Tot\. Norm\. 1st 2nd 3rd
% whose weight improved 84 82 87 80 95
% whose weight declined 11 11 7 17 5
I whose weight unchanged 5 6 6 2 0
B\. The Pilot Nutrition Proaram
5\. The objectives of the pilot nutrition program are to:
(a) Increase enrollment, retention, regular attendance and learning
by girls and boys;
(b) Improve the nutritional status of the students and younger
siblings; and
(c) Increase parental and community awareness of the importance of
child nutrition through local (school-level) community
management of the program\.
6\. ImplementatL would be based on the following:
- 74 -
Annex 6
Page 4 of 6
(a) Use of locally available foods wherever possible\. The most
nutritious and least costly combinations will be decided after
surveys (para\. 7\.a), and included in program design\. Foods
such as biscuits, which are often not nutritious, and encourage
bad food habits, would be avoided\.
(b) Local (school or Union Council level) management of the local
program;
(c) Program design and management based on facts obtained through
professionally conducted field surveys;
(d) Implementation by well - established NGOs in three accessible
areas in rural Sindh: Thatta; Badin; and Tharparkar\.
(e) The number of participating schools would be about 75,
depending on the final results of the surveys (para\. 7\.a),
project design, training and annual monitoring in the above
districts\. About 10,000 children would be included\.
(f) Overall program administration would be the responsibility of
the Education Department and its field staff\. A suitably
qualified NGO or NGOs would be contracted to manage the
program\. Funds would be dispersed to the NGO or NGOs by the
AESPC and would be audited in accordance with government
regulations\.
7\. There would be three phases:
(a) Phase I (March 1989 to July 1990): The initial NORAD funded AKU
survey in the Thatta district (para\. 8) will be completed by
December 1989, and a detailed implementation plan will be
prepared by March, 1990\. The plan will include inter-alia,
base-line data on current nutritional and health status,
details of program management, the monitoring and evaluation
instruments, detailed cost estimates and replication plans for
Badin and Tharparkar districts\. During this phase, an advisory
committee with participation from the GOSindh Education and
Health Departments would be established\. Between March and
July, 1990, the plans will be agreed with COSindh, IDA, and
NORAD\.
(b) Phase II (July 1990 to June 1992): Pilot program
implementation, and quarterly monitoring of the school-
children\.
(c) Phase-III (July 1992 to June 1995): After 2 years of operation,
there would be an evaluation to determine success in the
following areas; local program management, food handling and
preparation, cost, impact on school attendance and retention as
well as changes in enrollment pattern, impact on learning and
-75 -
Annex 6
Page 5 of 6
impact on nutritional status\. This evaluation would be carried
out jointly by IDA, NORAD and GOSindh\. Program
continuation/expansion would be depend on the outcome of the
evaluation\.
The AKU survey in Thatta
8\. Since February 1989, NORAD has been funding the preparation by
the AKU's Department of Community Health Sciences of the school nutrition
program in Thatta district to be funded by the PEDP\. The AKU has developed
a rigorous survey methodology (para\. 9), with close professional
supervision involving both the AKU staff and local school and health
personnel\. Efforts have been made to ascertain the local community's view
about local program management\. The local health, school and census bureau
staff, as well as community leaders, have played a key role in the surveys\.
The survey team's work in the villages has had an imediate impact in
raising the level of awareness of the importance of nutrition and schooling
in the local community\. The work on this first survey of about 2,500
children, of which about 70X are of school-going age, has resulted in
improved instruments and approaches and methods applicable to future
surveys\. Based on the work undertaken by the AKU in Thatta, it is likely
that the AKU will also carry out the surveys, program design, training and
help to local communities in organizing program and school-level monitoring
in the three pilot districts\.
9\. The AKU survey and program preparation in Thatta includes the
following:
(a) enrollment data by sex, age, etc\.;
(b) nutritional status of the school children and their
younger siblings, measured by weight-for-height and
skinfold thickness;
(c) types and price of food (cereals, fruits, vegetables,
fish, etc) available at different seasons;
(d) local feeding and food habits;
(e) the views of the villagers, parents, teachers, local
leaders and local staff, on how best such a school
feeding program could be implemented for the maximum
benefit to the children;
(f) program design at the school and Union Council level,
taking into account survey results, and the roles of
teachers, local leaders/union council members etc\.;
(g) development of local training, focussing on the following
(as well as on outcomes of the surveys): (i) local
organization and management; (ii) hygienic food
- 76 -
Annex 6
Page 6i of6
handling/food preparation (what to serve raw, how to get
maximum value out of local foods, soaked/fried "gram",
for example); and, (iii) simple accounting;
(h) quarterly monitoring of the following indicators: (i)
enrollment/ retention/regular attendance, especially of
girls; (ii) height/weight of students/siblings; (iii)
parental attitude changes, and other relevant items
emerging from the surveys\.
10\. Student achievement tests developed under PEP2 would be used to
establish the baseline and to monitor any improvements during the nutrition
program\.
- 77 -
Annex 7
Zag2 I of 2
REVIEW OF THE ROLE OF SUPERVISORS/LEARNING COORDINATORS
Backgron
1\. The Supervisors of Primary Education (SPEs) and Learning
Coordinators (LCs) have an important role as the first-line pedagogical
advisers to primary teachers in the Sindh\. The LCs appointed in the eight
districts included in PEP2 are now complemented in the other 8 districts by
SPEs\. These supervisors will play an essential role in the effective
introduction of measures designed to improve student achievement\.
2\. The PEDP is introtucing an array of measures to improve
achievement which will impact on the classroom teacher\. These include: the
improved provision of textbooks and classroom materials; the progressive
introduction of supplementary reading materials; the Learning Modules (UMs) to
assist the teaching of key curriculum concepts; and achievement testing\.
Making effective use of these inputs will require new knowledge and skills of
teachers, especially in the areas of lesson preparation and classroom
organization and management\. For this reason in-service training is emphasized
in the PEDP, to help teachers assimilate these new inputs\. The SPEs/LCs will r
be the backbone of this program\. They know classroom conditions intimately and
can ensure that the new inputs are introduced effectively\.
3\. The PEDP also seeks to introduce incentives and administrative
measures to facilitate the deployment and retention of female teachers in
rural areas where the majority of supervisors work\. The SPEs/LCs will have an
important role in monitoring these efforts\.
Obiective of Review
4\. The Review of the role of SPEs/LCs will seek to maximize their
potential by: a) appraising (by means of field observation and interviews)
their current skills, knowledge and work patterns and conditions; b) in this
light, assessing their training needs for the inputs described in para\. 2; and
c) designing and implementing short training programs (about three one-week
sessions) to meet the identified training needs\. The review and training needs
assessment will focus on a 10 per cent sample of supervisors of LCs and SPEs\.
All SPEs/LCs in the 16 districts will attend the training programs\.
Management and Implementation
5\. The Curriculum Bureau will manage and implement the program\. A
steering committee representative of school district management, the teacher
training colleges and the AIOU will provide guidance\. This would be the same
committee which would supervise the development of the pilot in-service
teacher training program (main text para\. 68)\. The PEDP would support TA to
- 78 -
Annex 7
, P~~~~~~~~~~age 2 of2
design field surveys, conduct training workshops and for evaluation (para\.7),
as well as operating and training costs\.
6\. The review and training needs assessment will be conducted in Year
1 of the PEDP so that the results can be utilized for the preparation of the
pilot in-service training program for teachers (in which SPEs/LCs in the pilot
program area will assist)\. These SPEs/LCs will participate in the staff
development workshops which will be conducted in Year 2 of the PEDP\.
Technical Assistance
7\. About 12 staff-months of TA would be provided by one specialist in
education administration and one specialist in the pedagogical supervision of
primary teachers with experience in the conduct of qualitative, field
research\. The specialists would: a) conduct a field survey of a 10 sample of
SPEs/LCs and assess their training needs (Year 1); b) design workshops for
supervisors (Year 1) and assist in and evaluate their implementation (Year 2);
and c) train staff in the Bureau to carry out follow up surveys\. The PEDP
would also support six staff-months of overseas fellowships for Bureau staff
to review educational administration and primary school supervision in analog
countries\.
MonitorinZ and Evaluation
8\. The Bureau will prepare a report on the results of the field study
and on the training program design (Year 1) and a progress report on the
implementation of the workshops (Year 2)\. During Years 3 and 4, the Bureau
will conduct a follow-up studv of the sample of supervisors\.
- 79 -
Annex 8
Page I of 9
PLANNING, NAN&GENENT AND IMPLENENTATION
Introd"ction
1\. The rapid increase in the size and complexity of the primary
education sector in Sindh in recent years is placing heavy demands on the main
agencies involved in policy, planning, coordination and implementation\. This
annex describes how these functions would be strengthened in the PEDP\.
The Current Administrative System\.
2\. Figure 1 below shows the current and planned organization of
primary education provincial, divisional and district levels\. The key
features of the current system are:
(a) The division in role between the Education Secretariat and the
technical and geographical directorates -- the staff-line division
at the heart of civil service organization in Pakistan\. The
Secretariat -- the Education Secretary, additional secretaries,
deputy secretaries and section officers - is responsible for
coordinating and directing departmental affairs and for advising
the Minister\. The technical and geographical directorates
(Curriculum Bureau, DEEW, Divisional Education Offices etc) are
responsible for implementing ministerial policies and decisions,
as well as for professional advise and guidance\.
(b) The functions of the technical directorates are self-explanatory,
as are those of the examination boards\. The Sindh Education
Department includes two Project Implementation Units -- for PEP2
and for the ADB supported Science Education Project -- plus the
DEEW which is responsible for school construction and maintenance\.
At present, the sole coordination point for all these agencies,
and for the divisional management structure (see below) is the
Education Secretary, aided by a small secretariat and the
Department's Planning and Monitoring Cell, but collectively not
providing adequate capacity for this task\.
(c) Uniquely amongst the four Provinces, Sindh maintains a
geographically based system of four divisional school directorates
in Karachi, Hyderabad, Sukkur and Larkana (the latter added only
in 1988); each having four education districts\. Divisional
Directors of School Education are assisted by Additional
Directors, Deputy Directors and Assistant Directors at divisional
level and by a similar hierarchy of District Education Officers
(DEO), additional DEOs (ADEO), Deputy DEOs (DDEO), Sub-Divisional
Education Officers (SDEOs) and Supervisors of Primary
Education/Lear-aing Coordinators (SPE/LC) at the district level and
- 80 -
Annex 8
Page 2 of 9
below (para\. 3)\. The separation into four directorates increases
the pressure on the Secretary Education and his staff in
coordinating and planning expansion\. In addition, there is little
separate management focus on primary education\. At all levels from
the Secretariat down to the office of the DEO, responsibility for
primary and secondary education is shared, with secondary
education receiving a disproportionate amount of management
attention\.
(d) The DEOs, who are divided into male and female streams, are the
key officials in managing the primary and secondary school systems
in each district\. ADEOs have been appointed recently in response
to the large increase in workloads at district level\. DEOs and
ADEOs are assisted in the office by DDEOs, and in the field at
sub-divisional level by SDEOs, SPEs and LCs\. Male and female lines
of officials are continued to LC level, though with fewer female
posts due to the much smaller numbers of girls' schools\.
(e) The DEO has comprehensive responsibility at district level for
professional and administrative control (including selection of
teachers for training), for planning and implementing expansion
programs, budgeting, personnel postings and promotions, and for
supplies\. The informal role of liaison with local communities and
dealing with local and national figures in a subject of intense
political interest is as onerous as the official duties\.
Responding to superiors in a system as centralized and
hierarchical as the Pakistan Civil Service, where delegated powers
frequently exist more on paper than in reality, is a further
source of work load\.
(f) Although staffing has increased, it has not kept pace with the
expansion of the edvcation system, or growth in the range of
responsibilities\. In addition, most Education Officers at
district and sub-divisional levels come from backgrounds in
secondary schools and colleges and may have little experience and
understanding of primary education\.
- 81 - Annex 8
PAKISTAN Page 3 ofL e 17 1989
PRIPAIY EDUCATIUN DEWLCNT PRMO IN SiiMh
PRCCD CGAIZATION SRUCTUMR
Secretary of
Education
in sinth
_ ~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ \.
Additl-at| Additional Additinalm
Eckication Education Ecation
Secretary Secretary Secretary
(Acadanic) PlamirV & Adkdnistr\.
Coordinetign
Existirg ExIstrig
Structure Struture
--T"
r\. \. Director of E
Deputy \.~~~ Denuty * Drector PUf(PFE;P20)~ _ C
Secretary r- \. Secretary \. r- PLsming 8 f R
Plami,u * * Coordination * * Nonitorlr
\.L \. Cell Dir\. Bureau T
\. \. of Curr & Ext A
Section Officer \. \. R
Primary Educ\. * r\. 1 * \.
* * Section * * Deputy Director Director, d\. A
r\. Officer * N\.nit\. & hEtit8 Eaug\. Works T
Section Officer \. Disbwrsants I \.
Secondary Educc\. \. J \. \.
\. \. Deputy Director Chai~n,a
* | \. I Statistics 9 Tetb\. Board
Section Officer * Section *
ColLeges/Tech\.Ed L| Di Offrert
* * BLulget & 1 * | Deputy Director | i Other Boards
| Accounts | L\. Ipemtentation w| Direct\.
Director Director Director Director T
I of School | |of of Scho of School of School
|E ation | |Educatien | |Educathnn Edeatin| D
| Karachi i | Hyderabad |wSukur Lerkane I
r"n"' ~~~r \.
As in de | As in d As in aI
0
r l \. I (Additional
* AD/DD * | | AD/DD | Deputy
* Primary * -Secodary Director)
Eckcation * |Educatlon |_\._\._
L \. LEGEND:
(District
I DEO t | DEO | EdicatfIn |T__\.
(MNle) (Fense Officer) | Provincial Authority
r \.1 r\. \. (Assistant I I
* ADEO DO * District | j Divisional Authority S
* (Primary) * * (Primary) * Education TI T
* Kale * * Female * Officer) r\.I R
L \. J LI T \. \. J | * * Prposed chawges I
r\.I\. \. -- \. \. seisu sors of I\. L--J C
* SPEs/L 1s [SPEs/LCs 1 Primary Eckcaticn T
\. \. * and Learn'r - Lie of Authority
\. T J L r JCoordinators)
r\.I\. r \. 1i\. I
* Schools * * Schols *\. Lin of iarged
* (Primary) * (PrPrimar) * Authority\. I
L\.J 1\. 4
- 82 -
Annex 8
Pag2 4 of 9
dmna;ement Chang2s in the PEDP
3\. Figure 1 outlines the proposed changes to improve the Education
Departmentts capacity to handle primary education expansion and to manage the
system better at divisional and district levels\. The proposed reforms take
into account the following factors:
(a) The administrative system depends on hierarchical control,
accountability, and administration by directives and instructions\.
The system is relatively static; new procedures can only be
introduced slowly\. Relatively meager resources are available,
their use must be considered carefully, must be sanctioned by a
higher authority, spent in accordance with agreed rules and
accounted for meticulously\. Although not ideal for large scale
expansion and innovation, there are some advantages in the
Pakistan context\. The rule-orientated, hierarchical environment
maintains control in a situation where resources are scarce and
uncertain, where demand for education far exceeds supply, and
where political and sectional pressures are very strong\.
(b) Because the system of education administration is part of a wider
national system, major variations and reforms to cater for the
special requirements of the PEDP would be very difficult to
introduce\.
(c) Therefore the focus should be on strengthening key institutions in
the present system to implement the PEDP and improve the overall
management of the education system\. Areas of focus include:
strengthening the policy-making, planning and coordination role of
the Education Secretariat; providing additional staff with an
exclusive focus on primary education in the divisions and
districts; and improving delegation of financial powers\.
Incremental changes of this type do not clash with the vivil
service structure, and can be implemented\.
(d) Finally, an important factor is the experience and capabilities of
education administrators and professionals\. The main distinction
is again between the Education Secretariat and the Technical and
Geographical Directorates\. Many secretariat officials are career
administrators selected on the basis of seniority and demonstrated
administrative ability\. Staff in the technical and geographical
directorates are usually professional educators and technical
professionals\. Secretariat officials tend to be isolated from
professional aspects of education, while Directorate staff have
little to do with policy, management and planning\. The
Secretariat exists to service the Secretary and Minister; the
skills requirud are primarily of policy formulation, problem
solving and "processing" of papers; frequent personnel moves
reduce the incentives and need to know the professional background
to the current assignment\. Centralized, hierarchical, rule-
- 83 -
Annex 8
Page 5 og 9
orientated administration provides limited scope for constructive
and innovative planning and management by directorate and district
education officials\. Backgrounds in teaching at different levels
supply no prior knowledge of these skills, which are often not
learned or practiced during entire careers\. To improve the
capabilities of staff in he sector, the requirement is for
educational awareness training for Secretariat officials and
management skills for the professionals\. Each group requires
specially tailored professional, planning and management training
geared to the needs of particular posts as they operate in
practice\. The priority is management training for district and
divisional staff, as this is currently the area of greatest
weakness\.
The Agenda and Guidelines for Reform\.
4\. The above analysis of the administrative system has resulted in
three areas for support under the PEDP:
(a) Strengthen the Education Secretariat's cagacity to supervise the
planning of educational expansion (especially primary education),
to coordinate the various agencies iwnolved (provincial, federal,
and external) and generally to act as a problem solving and
trouble shooting agency in the provincial system\.
(b) Strengthen administrative capacity at the divisional and district
level to provide a distinct planning and management focus for
primary education\.
(c) Upgrade the management skills and essential Rrofessional
educatiot J awareness of key administrators and professionals to
improve performance\.
The Education Secretariat
5\. The central appointment in strengthening the Educatior
Secretariat's planning and coordination capacity is that of Additional
Education Secretary (Planning and Coordination) (AESPC) in BPS20\. The post,
which has been in existence since 1987, (Figure 1), has been made permanent in
the FY90 recurrent budget\. A job description for the position is included in
Attachment 1\.
6\. Job descriptions for the Deputy Secretary (Planning) (DS(P)) and
Deputy Secretary (Coordination) (DS(C)) posts in the expanded Planning and
Coordination Wing (Figure 1) are included in Attachment 1, although only the
DS(C) post is new\. Duties will be redistributed between the existing DS(P)
position and the new post\. The DS(P) will continue to concentrate on the
processing of PC-ls for educational development projects and schemes, ensuring
that the Education Secretariat and other pro-vincial agencies involved give the
- 84 -
Annex 8
Pse 6 of 2
necessary approvals with minimum delays\. -The DS(C) will have tto Section
Officers (SO); one the existing post of SO(Budget and Accounts) transferred
from the DS(P) and the new position of SO(Disbursement)\. As the titles imply,
the DS(C) and the two SOs will concentrate on ensuring that the various
provincial and external agencies are properly coordinated in educational
expansion\. The main concern will be to speed up resource flows -- usually the
main source of problems in project implementation\.
7\. Technical support for the Secretariat is provided by the Planping
and Monitoring (P&M) Cell\. The Cell is responsible for: the Province's
educational statistics and information system; technical scrutiny and
processing of PC-ls; monitoring and evaluation; and the development of new
programs and projects\. It has an established strength of 22 headed by a
Director at Grade 19 and four Deputy Directors with 9 Assistant Directors and
8 Planning Assistants\.
8\. Key functions of the P&M cell which need upgrading are: a) the
collection and analysis of education data; and b) monitoring of project
implementation\. During preparation of the PEDP, a satisfactory proforma has
been prepared for the collection of education data, including enrollments,
drop-outs, age-by-grade etc\. A satisfactory proforma has also been prepared to
monitor the financial and physical targets of the PRDP\. The P&M cell is
adequately provided with computer equipment for data analysis, but software
and staff training are r\.eeded to improve performance\. These will be provided
under the PEDP\. The modalities of training are described in para\. 13\.
Divisional and District Directorates of Education
9\. These directorates will be provided with additional capacity to
handle the rapidly expanding primary e4it- ystem as follows:
(a) At the divisional level, a new position of Additional Director for
Pi\. ary Education (ADPE) will be created\. A job description for
the post is included in Attachment 1\. The ADPE will exercise the
powers of the Divisional Director of Schools in all aspects of
primary education -- planning and development, system management
and personnel administration\. The divisional directors of
education will decide with the Education Secretary whether the
ADPE will be created by redesignating an existing Additional
Director or by creating a new post\. The decision will vary
depending on existing workloads and the size of the Directorate\.
(b) At the district level, the existing posts of Additional District
Education Officer (ADEO) at the same grade 18 as the DEO will be
redesignated as ADEO(Primary Education) on both male and female
sides\. The job description in Attachment 1 emphasizes the ADEO's
full exercise of the powers of the DEO in primary education\.
Delegation of powers rules will be reviewed to strengthen the
ADEO's role\.
- 85 -
Annex 8
age 7 Of
(c) At the sub- divisional level, the duties and powers of assistant
DEOs will be refocussed to ensure that they can give full
attention to primary education -- already their main
responsibility\. Relationships between ADEOs and SDEOs, between
SDEOs and SPEs, and SPEs and LCOs (where Learning Coordinators
have been appointed) will also be clarified to consolidate the
administrative hierarchy for primary education\.
Management and Professional Trainlnk
10\. Planning and management capacity will also be strengthened by a
specially designed in-service program concentrating on management training for
key administrators and professionals\. There has been limited, almost random
access to such training in the past, with little impact\.
11\. There are three principal target groups:
(a) Officials of the Planning and Coordination Wing of the Education
Secretariat\. The needs are for planning and management training
integrated with professional awareness building on key issues in
the planning and delivery of education\. The PEDP would be used as
the starting point in the professional awareness program\.
(b) The staff of the Planning and Monitoring Cell: the requirements
are for training in project planning and appraisal, and the
specific fields of statistical data analysis, information systems,
school mapping, program monitoring and evaluation\.
(c) Directorate\. District and Sub-divisional officials: these officers
would be provided training to handle their expanded planning and
management responsibilities\. Most will have had no management
training and will have come from professional educational
backgrounds\.
12\. As well as directly providing training, a second priority will be
to develop the capacity of the Department's Curriculum and Extension Bureau to
offer management training at all levels up to Grade 18\. The training programs
would be organized by the Curriculum Bureau's Education Extension Center (EEC)
in Karachi, which has designated responsibility to provide management training
for the Education Sector\. However, because the EEC lacks expertise to design
and implement specialized management training, the Karachi branch of the
National Institute of Public Administration (NIPA) will be provided with
resources to act as consultants and executing agency for the initial training,
and will evaluate the initial two-year phase of the program\. NIPA will work
closely with the EEC, which will gradually take over execution of the program
as its skills develop\. About 18 staff-months of expert services (para\. 14 and
annex 6) will be provided during the first 2 years of implementation to assist
NIPA in needs analysis, design, implementation and evaluation of the first
round of training programs\. About 54 staff-months of fellowships will also be
_ 86 -
Annex 8
"ag 8 of 9
prov,ided for Eduwation Department staff to study organization and management
of primary education in other countries\.
13\. The sequence for planning, preparing and executing the training
program is as follows:
(a) During year 1 of the PEDP, an in-depth activity and needs analysis
will be completed of the work of the three main target groups\.
The analysis (over a four month period by a combination of time
logging and follow-up interviews of limited cross-sections of
officers) will establish training priorities, and identify the
natural groupings for different types and fields of training\.
(b) a combination of training courses would then be designed\. There
are likely to be requirements for: individual training and
attachment programs inside and outside Pakistan for key
Secretariat and P&H cell officials; and modular group training
programs in Pakistan for P&M Cell staff and for Directorate and
District officials\. All would be practically tailored to
different needs and working environments, include necessary
professional awareness training, and be directly geared to
performance improvement through project work and action plans
where these are appropriate\.
(c) A number of groups and training requirements have already been
identified (Attachment 2):
Secretariat officials (AESPC, DSs, SOs): professional awareness
and PEDP briefing, seminars, specialist study visits, individual
training and attachments in Pakistan or overseas;
Senior P&M Cell staff (Director, Additional Directors):
professional upgrading; PEDP briefing seminars (with the
Secretariat); specialist study visits, individual training in
Pakistan or overseas)\.
Middle level P&M Cell staff (Assistant Directors and Planning
Assistants): upgrading seminars in data analysis, planning and
monitoring techniques and PEDP familiarization\.
Divisional Directorate and senior District staff (ADPEs, DEOs
etc\.): PEDP familiarization, modular programs covering educational
planning, budgeting and general financial management, personnel
management and supply management;
Sub-divisional and supervisory staff (SDEOs, SPEs): PEDP briefing
seminars; modular programs on educational planning and school
management;
- 87 -
Annex 8
P4g 9 of 9
(d) Pilot testing and refinemert of courses is likely to oc-upy most
of the first two years of the PEDP\. About 100 staff would be
trained in pilot courses over this period;
(e) During the first two years of the PEDP, a major effort would be
made to build-up a small core of management trainers in the
Education Extension Centre, using NIPA as a training resource\.
14\. About 18 staff-months of expert services would be provided for the
planning, preparation and pilot delivery of courses during the first two years
of the PEDP (Attachment 3)\.
- 88 -
Annex 8
Attachment 1
Page 1 of 9
JOB DESCRIPTION
ADDITIONAL EDUCATION SECRETARY (PLANNING AND
COORDINATION)(AESPC)
MAIN RESPONSIBILITIES
1\. The AESPC will have overall responsibility for the following units and
functions within the Provincial Education Department:
ORGANIZATION
1\.1 Managing the work program of the Planning and Coordination Wing\.
1\.2 Supervising of the Planning and Monitoring Cell\.
PLANNING an DEVELOPMENT
1\.3 Developing the provincial educational data base covering basic
educational statistics and school maps\.
1\.4 Planning and appraising of all educational development programs and
projects in the Province
1\.5 Preparing provincial educational development plans covering physical and
financial aspects of expansion\.
1\.6 Monitoring and evaluation of progress in implementation
1\.7 Identifying problems and constraints in implementation, formulation of
solutions and removal of bottlenecks\.
1\.8 Availability and disbursement of provincial, federal and foreign
development and non-development funds;
COORDINATION
1\.9 Coordinating with the directorates of education including Engineering
WorKs, Textbook Board, etc\. in educational development;
1\.10 Coordinating between federal agencies involved in educational
development and the relevant provincial authorities, together with
external aid agencies;
1\.11 Collaborating with external aid agencies in the design of educational
development programs and projects;
- 89 -
Annex 8
IF Attachment I
page 2 of 9
POLICY FORMULATION FOR EDUCATIONAL DEVELOPNENT
1\.12 Designing new programs to expand education availabilitv and raise
quality\.
1\.13 Initiating and conducting action-oriented practical research to produce
qualitative and quantitative educational lmprovements\.
ADDITIONAL ASSIGNMENTS
1\.14 Completing other special tasks and duties that may be assigned by the
Department\.
SPECIAL RESPONSIBILITIES FOR PRIMARY EDUCATION
2\.0 The AESPC will have special responsibility for development and
management of primary education\.
2\.1 Overseeing the preparation and processing of all development schemes for
primary education\.
2\.2 Coordinating and managing the availability of development and non-
development funds for primary education\.
2\.3 Providing the focus of coordination for all Provincial agencies involved
in primary education, e\.g\. the Directorates of Education Engineering
Works, Curriculum and Extension, Textbook Board and the Project
Imlementation Units of the Second Primary Education Project and the
Science Education Project together with the Divisional Directoratas of
School Education\.
2\.4 Coordinating donor agency involvement in primary education developmena\.
2\.5 Ensuring the operation of a special account for external funds for
primary education\.
2\.6 Monitoring progress in development programs and removing obstacles to
primary education expansion and qualitative improvement\.
OUALIFICATIONS AND EXPERIENCE
2\.1 Master degree in physical sciences, social sciences, or humanities with
masters or bachelors degree in education\.
2\.2 Minimum of 15 years experience, preferably in education\.
2\.3 Additional training in relevant fields such as project planning,
development economics or education, desirable\.
JOB DESCRIPTION
- 90 -
Annex 8
Attachment 1
Pagg 3 of 9
DEPUTY SECRETARY (COORDINATION) -DS (C)
MAIN RESPONSIBILITIES
1\. The DS (C) will have the following responsibilities within the Planning
and Coordination Wing of the Department:
ORGANJZ&TION
1\.1 Managing the work programs of two section officers; budget and accounts,
disbursement\.
1\.2 Assisting the AESPC in his overall responsibility for the effective
working of the Planning and Monitoring Cell of the Department\.
COORDINATIQN
1\.3 Coordinating the work of provincial, federal and donor agencies involved
in the implementation of educational development programs\.
1\.4 Monitoring progress in development programs and in the existing
provincial education system, helping to solve problems and remove
bottlenecks\.
1\.5 Preparing proposals for distribution/redistributing budgetary
allocations among provincial education agencies\.
1\.6 Assisting in the maintenance and efficient operation of Special Accounts
for external credit funds\.
1\.7 Giving special attention to progress in primary education development\.
ADDITIONAL ASSIGNMENTS
1\.8 Completion of other special tasks and duties that may be assigned by the
Department\.
OUALIFICATIONS AND EXPERIENCE
2\.1 Masters degree in physical sciences, social sciences or humanities and
bachelors or masters degree in education\.
2\.2 Minimum of 10 years experience mostly in education\.
2\.3 Additional training in project planning and appraisal, planning,
development economics or educational fields desirable\.
JOB DESCRIPTION
- 91 -
Annex 8
Attachment 1
Page 4 of 2
DEPUTY SECRETARY (PLANNING) - DS (P)
MAIN RESPONSIBILITIES
1\. The DS (P) will have the following responsibilities within the Planning
and Coordination Wing of the Department\.
ORGANIZATION
1\.1 Managing work programs of three Section Officers responsible for Primary
Education, Secondary Education, Colleges and Technical Education\.
1\.2 Responsibility for the work of the P&M Cell of the Department\.
ELANNING
1\.3 Assisting AESPC in overall education planning for the Province\.
1\.4 Planning and appraising of all educational developmeut programs and
projects in the Province\.
1\.5 Scrutinizing non-development budget proposals for further processing at
higher levels\.
1\.6 Identifying bottlenecks and problems in processing of development
project plans and non-development proposals and devising and
implementing solutions leading to their removal\.
ADDITIONAL ASSIGNNENTS
1\.7 Completing other special tasks and duties that may be assigned by the
Department\.
OUALIFICATIONS AND EXPERIENCE
2\.1 Master degree in physical sciences, social sciences or humanities and
bachelors or master degree in education\.
2\.2 Minimum of 10 years experience mostly in education\.
2\.3 Additional training in project planning and appraisal planning,
development or educational fields desirable but not essential\.
- 92 -
Annex 8
Attachment 1
Page 5 of g
JOB DESCRIPTION
SECTION OFFICERS\. PLANNING AND COORDINATION WING
1\. Four Section Officer (SO's) - Primary Education Secondary Education,
Colleges and Technical Education, and Budget and Accounts - are already
part of the PCW and will continue their existing duties\.
2\. SO's - Primary, Secondary and Colleges/Technical Education will be
responsible to DS (Planning) as at present\. Two SO's - Budget and
Accounts and Disbursement will head sections under the new DS
(Coordination)\.
3\. The new post of SO (Disbursement) will concentrate on ensuring that
flows of funds to educational development programs are made available
smoothly when required, monitoring progress and expenditure, helping to
identify and remove any problems or bottlenecks\.
4\. Whenever possible the Province will appoint Section Officers with
experience in education\. Masters degree qualifications in physicae
sciences, social science or humanities plus master or bachelors in
education would be the minimum requirement with at least 5 years
experience\. Opportunities for further training and development would be
provided for SO appointees in return for guarantees of minimum tenure in
post for three years\.
- 93 -
Annex 8
Attachment 1
Pse 6 of 9
DRAFT JOB DESCRIPTION
ADDITIONAL DIRECTOR (PRIMARY EDUCATION)(ADPE) at Divisional Level
MAIN RESPONSIBILITIES;
1\. The ADPE will have the following responsibilities in the Divisional
Directorate of Schools:
GENL
1\.1 Substantively exercising the powers of the Divisional Director of School
Education in all matters of primary education management and development
in the Division\.
ORGANIZATIQK
1\.2 Managing the work programs of 2 Deputy Directors, 2 Assistant Directors,
and the Statistical Officer, as their duties relate to primary education
in zhe Divisional Directorate\.
PLANNING AND DEVELOPMENT
1\.3 Coordinating the planning of primary education development programs and
projects in the Division;
1\.4 Helping to develop the educational data-base for primary education and
supervising the data collection and school - mapping systems\.
1\.5 Helping to develop criteria for: i) provision of new primary schools and
additional classrooms in existing schools, ii) provision of improved
supplies of school furniture, teaching materials, textbooks and learning
modules\.
1\.6 Coordinating preparation of annual -hedules of new expenditures on
primary education for the Division\.
1\.7 Frocessing district development proposals (PC-I's) and submitting them
to the relevant Provincial authorities\.
1\.8 Identifying and resolving problems and bottlenecks that appear in the
implementation of development programs and projects in primary
education\.
MANAGEMENT
1\.9 Ensuring the efficient management of the Primary education system at
divisional, district and lower levels\.
- 94 -
Annex 8
Attachment 1
Pag2 7 of 9
1\.10 Regularly inspecting all district and sub-divisional education offices
concerned with primary education and personally inspecting a small
percentage of primary schools each year\.
1\.11 Checking on the maintenance and repairs of primary schools\.
1\.12 Ensuring adequate supplies of furniture, teaching materials, text books
and learning modules actually reach the primary schools\.
PERSEL
1\.13 Recommending selections for the posts of Sub-Divisional Education
Officer\.
1\.14 Recommending the selection, transfer and posting of Sub-Divisional
Education Officers\.
1\.15 Acting as the appointing authority for Supervisors of Primary Education\.
1\.16 Writing the Annual reports of Deputy Directors and Assistant Directors\.
1\.17 Supervising the work of the ADEO's (PE)\.
1\.18 Coordinating with the Director of Curriculum and Extension Bureau in
planning and administering teacher training in the Province, including
that carried out by SPEs/LCs\.
ADDITIONAL ASSIGNMENTS
1\.19 Completion of such other special tasks and duties that may be assigned
by the Divisional Directorate\.
OUALIFICATIONS AND EXPERIENCE
2\.1 Masters Degree in physical sciences, social sciences or humanities with
bachelors or masters degree in education\.
2\.2 Minimum of 10 years experience in education\.
2\.3 Additional in service training in educational fields desirable\.
- 95 -
Annex 8
Attachment 1
Page a of 9
JOB DESCRIPTION
ADDITIONAL DISTRICT EDUCATION OFFICER (PRIMARY EDUCATION) - ADEO(PE)
MAIN RESPONSIBILITIES
1\. The ADEO (PE) will have the following responsibilities in the Education
Department at district level:
1\.1 Exercising all the powers of the District Education Officers in all
matters of primary education management and development in the district\.
ORGANIZATION
1\.2 Management and work progrAms of Sub-Divisional Education Officers
responsible for primary education in the district\.
PLANNING AND DEVELOPNEN
1\.3 Preparing district plans (PC-l's) for primary education development
programs and projects\.
1\.4 Ensuring that the data collection and school mapping systems for primary
education work effectively in the district\.
1\.5 Developing and applying district wide criteria for the construction or
upgrading of schools; supply of school furniture, teaching materials,
textbooks and learning modules\.
1\.6 Preparing annual schedules of new expenditure on primary education for
the district\.
1\.7 Monitoring progress iff development and rehabilitation programs,
especially in construction and identifying and removing problems and
bottlenecks\.
1\.8 Ensuring the efficient management of the primary education system at
district, sub-divisional and grass-roots levels\.
1\.9 Regularly inspecting all sub-divisional education offices and personally
inspecting primary schools in the district every year\.
1\.10 Checking on the maintenance and repairs of primary schools\.
- 96 -
Annex 8
Attachment 1
Page 9 of 9
1\.11 Ensuring adequate supplies of furniture, teaching materials, textbooks
and learning modules in each school\.
PERSEL
1\.12 Posting SPEs\.
1\.13 Appointing and posting Learning Coordinators (where districts have these
posts)\.
1\.14 Writing the annual reports of SDEO's\.
1\.15 Arranging inter-taluka transfers of primary school teachers\.
1\.16 Coordinating with the Curriculum and Extension Bureau in implementing
programs of pre-service and in-service teacher training, including those
run by SPEs/LCs\.
ADDITIONAL ASSIGNMENTS:
1\.17 Completion of such other tasks and duties that may be assigned by the
Divisional Directorate or District Education Officer\.
QUALIFICATIONS AND EXPERIENCE
2\.1 Master or bachelors degree in physical sciences, social sciences or
humanities and masters or bachelors degree in education\.
2\.2 Minimum of 10 years experience in education\.
2\.3 Additional in-service training in educational fields desirable\.
- 97 -
Annex 8
Attachment 2
Pag2 I gf 2
IN-SERVICE TRAINING FOR PLINARY EDUCATION NAMBUES
Addl\. Secretary (AESPC) - I
Deputy Secretaries (P&C) - 2
Section Officers (Planning, Budgeting & Accounts,
and Disbursement) - 3
Divisional Directors of School Education - 4
Divisional Additional Directors of School Education - 4
Divisional Deputy Directors - 8
Divisional Assistant Directors - 12
Director P6M Cell -1
Deputy Director P&M Cell -3
Assistant Directors P6M Cell -6
Director Bureau of Curriculum -1
Extension Officers, Bureau of Curriculum - 6
Director PIU PEP II -1
Deputy Directors PIU -2
Assistant Directors PIU -3
District Education Officers (DE0s) - 32
Additional DEOs - 32
Sub-Divisional Education Officers (SDEOs) - 112
TOTAL 233
- 98 -
Annex 8
Attachment 2
pge 2 ofL
Training Plan (1991-1995)
No\. of Total
Training No\. of
Indicated Areas of TrAining Duratin Events Paticlsapts
1\. Project Induction 1 day 8 233
2\. Management and
Organizational Development 6 days 5 61
3\. Project Planning/Appraisal 3 days 8 82
4\. Praject Implementation and
Coordination 4 days 10 164
5\. Project Monitoring and
Evaluation 6 days 8 72
6\. Financial Management 3 days 3 40
7 Data Collection and
Management 3 days 10 196
8\. Policy Formulation 2 days 3 15
9 School Mapping 6 days 5 96
10\. School Supervision 3 days 8 216
11\. Personnel Management 3 days 6 60
12\. In-\.-,r-rice Training
Management 2 days 4 48
276 1283
Total Number of Training days 276
in 5 years
Average contact load of
management training per year 276/5 - 55 days
- 99 -
Annex 8
Attachment 3
TRAINING SPECIALIST IN EDUCATIONAL MANAGEMENT
1\.0 Duration of Assig=nent 18 months starting in March 1991
2\.0 Duty Station Karachi (Pakistan)
3\.0 Job Descriotion
3\.1 In collaboration with the National Institute of Public
Administration (NIPA), Karachi and counterpart project staff (a
team of one Management Trainer and one management Lnstructor), the
Specialist will analyze the job activities of primary education
managers at the provincial, the divisional, the district and the
sub-district levels (completion time: 3 months)
3\.2 Based on the activity analysis and in consultation with NIPA,
Karachi and Academy of Educational Plan-ing and Nanagunt (APX),
Islamabad as well as with the counterpart staff, he/she will: (i)
undertake an assessment of the training needs of different
categories of primary education managers; (ii) prepare training
plans; and (iii) develop training materials for the pilot training
phase (completion time: 3 months)
3\.3 In collaboration with NIPA, Karachi and counterpart staff, he/she
will: (i) deliver at NIPA the pilot training program for selected
groups of primary education managers; (ii) evaluate these
programs; and (iii) modify, where necessary and finalize various
training modules for regular in-service management training
programs (completion time: 6 months)\.
3\.4 In partial collaboration with NIPA, Karachi he/she will share and
oversee the delivery of the first batches of regular and recurrent
training programs of primary education managers at the Education
Extension Centre, Karachi (completion time: 6 months)
4\.0 Job Specifications (Oualifications and Experience Reauired)
4\.1 Master's Degree in Educational Management and Administration
4\.2 Ten years' experience in the management of a geographically spread
primary education system including specific work as management
trainer in planning and administering training systems\.
4\.3 Experience in educational management training in South Asia
desirable\.
- 100 -
Annex 9
Page I of A
UPMIMhING TUE OPEUATIONS OF TEE BIND! TEXTBOOK BOARD
Current Onerations
1\. The Sindh Textbook Board (STBB) was established in Hyderabad in
1971\. It is responsible for the production and publication of textbooks and
supplementary materials for primary, intermediate and secondary education,
teacher handbooks and literature for adults\.
2\. During the 18 years of its existence, many of the original
functions have fallen by the wayside\. For example, very few supplementary
readers are published and tsacher handbooks were last made available on any
scale in 1980\. As a commercial organization, the STBB produces only what it
can sell, and no funds have been made available since 1980 to publish and
distribute teacher handbooks\.
3\. The STBB operates as a commercial undertaking responsible to the
Sindh Board of Education\. It receives no subsidies of any kind and its
protits are pioughea back into future operations to maintain book ptice* at
the lowest possible level\. In 1988 its annual sales income from its own
publications and from royalties and payments from publications sub-contracted
to the commercial sector was estimated at Rps\. 6\.5 million\. The STBB and its
sub-contractors printed approximately 310 titles totalling 21\.5 million books,
of which approximately 6 million were produced in the STBB's own print shop in
Jamshoro\.
4\. The STBB currently maintains a staff of around 250, of whom 60 are
employed in the STBB's own printing factory\. A further 75 staff work on
editorial, design and production functions\. The balance of staff are clerks,
secretaries and manual workers\. None of the professional staff have formal
qualifications in printing, production, editing, design or management,
although short overseas training attachments have been arranged from time to
time\.
5\. The STBB is solely responsible for the selection of authorship
teams (or individual authors) to write the textbooks according to the
curriculum guidelines of the Federal Curriculum Wing\. Authors are advertised
for, or directly appointed by the relevant senior subject specialist in the
editorial wing of the STBB\.
6\. Nanuscripts(mss) are edited in-house, and, when completed, past ad
to the National Leview Board (NRB) in Islamabad for approval\. The NRB looks
particularly for conformity with the agreed national curriculum\. Comments or
amendments are provided back to the STBB, which is required to incorporate
them in the final version of the manuscripts\. The NRB does not normally
review corrected reprints of textbooks after publication\.
- 101 -
Annex 9
pse 2 of 6
7\. Once the manuscript is completed and approved, a detailed
production specification is drawn up by the STBB, which lays down precise
parameters in terms of extent, format, number of colors, number of
illustrations, type-size, paper weight, cover weight and binding style (in
Sindh either wire saddle stitch or wire side-stabbing)\. The costs of all of
these operations are controlled by costing and pricing formulae applied to
author's royalties (12\.5S), publisher's profit (151) and trade discount
(17\.51)\. These formulae form part of the contracts between the STBB and sub-
contracted publishers\.
8\. On completion of the specification, the STBB either undertakes
composing, illustrations, page design, lay-out, pre-press work, printing and
production control under its own imprint and in its own print shop (currently
about one third of total unit output), or sub-contracts these processes to the
50 or so local publishers registered with the Board as efficient\. The
majority are small companies - often one or two person organizations - or
printers, or booksellers\. The resulting work is supervised by STBB, but
supervision is inadequate since STBB staff are fully occupied with their own
publication programme\. A number of the sub-contracted books have been
observed to have inappropriate pre-press work\. The requirement to work within
a rigidly controlled cost and price formula with heavy penalty clauses leads
t^ c5r5-i^c coCt-cett'ing (e\.g\. cutting out illustrations from other books and
photographs rather than originating custom designed materials)\. The very
tight production specifications and the large number of publishers involved
diminishes the application (and thus the development) of real publishing
skills\. The Karachi Field Office of the STBB is largely responsible for the
sub-contracting and supervision since most of the registered sub-contractors
and printers are Karachi based\.
9\. All paper used by both the STBB printing press and sub-contracted
publishers and printers is purchased centrally by STBB from Pakistan paper
mills\. All printing appears to be on sheet fed presses and the paper is
therefore bought ready sheeted\. The current price (1989) for 56 gsm white
offset paper is around Rps\. 20,000 (about US$950) per metric ton, which
compares unfavorably with world paper prices for the same grade of around $650
p\.m\.t\. Printers are critical of the paper quality which tears easily and
requires large trim margins, leading to larger than desirable paper wastage
rates (currently 16X on the sheet, plus 3X machining wastage per color)\. On a
4 color book this would amount to a paper wastage rate of about 28X\.
10\. Sub-contracting publishers are unwilling to tie-up capital in
paper for very long and thus the majority of textbook manufacturing is
compressed into a three month period between December and February\. This leads
to heavy use of available machinery, over high machine running speeds, bottle
necks at critical points such as binding and an unwillingness by printers to
invest in new, automatic, integrated machine technology since it will
inevitably lay idle for 9 months of the year\.
11\. All textbooks produced by the STBB are sold\. There is currently no
free textbook distribution\. School book publishers combine in small consortia
- 102 -
Annex 9
Page 3 of6
to hire temporary storage for stock, which is then wholesaled to sales agents
(sometimes schools) throughout the province\. This system works reasonably
well\. Evidence indicates that if a child can afford a book there is generally
a copy available for sale\. However, publishers decide their own print runs
(STBB usually specifies a minimum and maximum print run requirement in their
contracts with sub-contractors), and are responsible for their own stock\.
There is thus a tendency to err on the side of caution\. The STBB can however,
intervene to require higher print runs if required v usually by offering
compensation for any overstocks\.
Issues to be Addressed by the PEDP
12\. Textbook durability\. The basic STBB primary school textbook is
printed on paper of poor quality (para\. 9)\. Many textbooks are already damaged
by the manufacturing process when supplied new\. The poor quality text paper
also makes short book life in the hands of young children in difficult
environments\. The cover paper is inadequate to provide protection to the book
block, and there is no protection against scuffing and damp\. The binding is
also poor\. This raises the real cost of textbooks to parents, who may need to
replace textbooks as often as three times per academic year\. At the same time,
there lp a politv mnve by the Rducatlon Department toward more color work\.
which increases the cost of the book block\. A more expensive product has
therefore not been given the advantage of increased book life by increasing
physical specifications\.
13\. The major reason for the low production quality has been the
legitimate desire of the STBB to provide textbooks at very low cost to
parents\. Sindh textbooks are cheap by any standards\. A standard set of
textbooks for a Grade 1 student currently retails at Rsl4\.40 (approximately
$0\.69)\. This price includes all raw materials, manufacturing, first costs,
royalties, distribution cost and publishers overheads and profit\. Of this
cost, 451 is for text paper\.
14\. Existing physical production specifications would be upgraded to
provide sufficient durability to keep a textbook in reasonable condition for
at least a year\. In particular the cover card would be upgraded to an
imported 240 gsm, one-sided, boxboard capable of taking a mechanical varnish
immediately\. Textpaper would be upgraded to at least a 60 gsm, imported,
Chinese offset quality\. The current wire saddle stitching for books up to 96pp
is satisfactory if the text paper is upgraded to 60 gsm\. Books over 96 pp in
extent would have section-sewn bindings, and drawn-on covers glued to sides
with hinges'\. The impact of these quality upgradings would be to increase
costs by an average of 40X\. To produce more durable books, but hold prices at
1989 levels, the PEDP would subsidize the cost increase by an annual payment
to STBB on receipt of bills and invoices demonstrating the use of superior
'Detailed specifications can be found in a working paper in the PEDP
files\.
- 103 -
Annex 9
Page 4 gf 6
material as described above\. Almost all of the upgrading costs are raw
material costs for text and cover paper\. STBB already buys in bulk and
supplies to sub-contracted printers\. A subsidy to STBB would therefore
automatically include these printers\. Existing production and distribution
systems would remain intact and parents would still contribute to the costs of
the books - an important factor taking into account the recurrent cost impact
of a completely free textbook distribution (which can only be roughly
estimated at about Rps 100 million p\.a\. in the absence of adequate data on
enrollments and drop-out rates)\. To inform future textbook policy, the PEDP
would include a comprehensive evaluation of subsidized, upgraded books and the
pilot, free distribution to rural girls (Annex 10)\.
15\. Textbook Content\. Textbooks in Sindh generally suffer from the
following deficiencies in content: a) poor language grading, from one level
to another and even between different subject books at the same level; b) lack
of exercise material, particularly in math, science and Urdu; c) inappropriate
pedagogical level; d) dull layout and design; e) poor co-ordination between
subject textbooks at different levels in the same series; f) inappropriate
Illustrations; g) a high proportion of factual and grammatical errors in the
text (indicative of poor copy editing); h) a significant gap between the
pedagogic requirements of the curriculum and the teachers' abilities to
perform; and g) an urban middle class and gender bias in many of the textbooks
which is inappropriate for rural, poor children, particularly girls\.
16\. These problems can be attributed to a number of causes: a)
inadequate supervision in editorial and artwork departments; b) inexperienced
writing teams; c) the lack of any kind of pilot testing - particularly for
rural situations; d) poor publishing skills (para\. 4); and e) poor
communications between the STBB and key agencies such as the Curriculum Bureau
and the Directorates of Education, an example of which is the lack of pilot
testing of new materials (para\. 23)
17\. To address these textbook content issues, the PEDP would support:
a) Institutional development in writing, editing, design and artwork,
production, publishing and financial management\. Assistance would be provided
to local commercial publishers, in addition to the STBB; b) print technology
development; and c) pilot testing of all new manuscripts\.
Institutional Development '
18\. 8xoert Services\. Thirty six staff months of expert services would
be provided by three experts In a) book design/illustration, b) math/science
textbook editing, and c) English textbook editing\. The experts should have a
minimum of 5 years practical experience of textbook publishing, with some
working knowledge of conditions in developing countries\. The experts would
make two visits c\.-\. Sindh per year for about two months duration for the first
2 See also Annex 5 for the schedule of Technical Assistance\.
- 104 -
Annex 9
Page 5 of 6
three years of the project\. Based at the STBB, the experts would provide on-
job training, advice and consultancy to local authors, editors and designers
to improve teamwork, liaison, and professional skills\. They would encourage
liaison between the STBB and Curriculum Bureau in developing textbooks and
ma\.jrials and would also demonstrate the practical aspects of interpreting
pilot test results (para\. 23)\. They will review STBB editorial management
systems and recommend improvements where necessary\.
19\. An additional four staff months of expert services would be
provided for speciallst on-job training in areas to be identified during PEDP
implementation\.
20\. Training\. Fourteen staff-years of overseas professional training
in production management, printing, graphic design for textbooks and editing
would be provided for about 14 senior, experienced STBB staff with good
English and graduate level educational qualifications\. Staff who receive
professional training would be bonded for at least 5 years so that they
continue to make their services available to STBB on return from training\.
21\. Middle level and junior staff should from time to time receive
local training run by professionally qualified and experienced expatriate
publishers\. During the first three years of the PEDP, finance would be
provided for four local training courses, each of about two weeks duration,
including professional fees, airfares and subsistence for two overseas
trainers, course preparation costs, local attendance and translation costs\.
The courses would be consolidated into an STBB in-service training manual
during the fourth year of the PEDP\.
Print Technology Development
22\. To encourage print technology development, GOsind would provide
notice of enhanced production specification requirements two years in advance
to all printers in the province who are currently, or who wish to be involved
in manufacturing books for the STBB\. Additional equipment would also be
provided to the STBB to upgrade cover printing on binding operations and to
install computer typesetting facilities'\.
Pilot Testing of Manuscripts
23\. Support will be provided to the STBB to develop pilot testing, in
close collaboration with the Curriculum Bureau and the Divisional Directorates
of Schools\. About 30 new manuscripts will be developed and pilot tested per
year\. Pilot testing will be undertaken after the STBB has edited text but
before final manuscripts (mss) are passed to the National Review Board for
approval\. The proposed methodology is as follows\.
'Specifications have been prepared and are available in the PEDP file\.
- 105 -
Annex 9
Page 6 of 6
24\. The senior editor (SE) in STBB (in charge of all subject and mss
editors) will draw up an annual plan of mss to be pilot tested and will pass
this to an appointed Pilot Testing Co-ordination Manager (PTCM) at the
Curriculum Bureau through whom all pilot testing matters will pass\. The SE
will also pass the annual plan to all other involved editorial staff whose
delegated responsibility it will be to advise the SE and the PTCN of 1rogress,
editing completion date and availability of pilot testing materials and
testing instruments (i\.e\., teacher interview schedules, self administrated
questionnaires etc\.)
25\. The Mss editor will simultaneously pass edited mss to the PTCM and
the STBB design, illustration, printshop sections for the production of pilot
materials\. The PTCM will appoint a curriculum officer(CO) from the Curriculum
Bureau staff to design the testing instruments and to manage the testing in
the schools\. The CO will then call a meeting with the editor and the author
to discuss areas of concern in the mss\. The CO then designs instruments and
passes them through the PTCN to the editor to organize their production\. The
quantities of both instruments and pilot test materials needed would have
already been fixed in the annual plan of the SE\. The editor would be
responsible for having the instruments and materials passed via the PTCN back
to the CO\. The CO would then organize a workshop to trair\. teachers who will be
using the pilot materials (approximately 20 teachers in 20 schools) and to
orlent the junior staff of the Curriculum Bureau whose task it is to conduct
interviews with teachers and to ensure that the questionnaires are correctly
filled in\. The CO then compiles the results and passes them to the editor for
inclusion in the final edited version of the ms which is then sent to the
National Review Board\.
26\. As this would be a new step in mss development, the duration of
first pilot testing operations would be a complete academic year, with the
pilot liaison officers visiting the schools every 4 weeks to get details on
the strengths and weaknesses of the mss while they are still fresh in the
minds of the teachers\. A fortnightly meeting between the CO and all the
liaison officers will be the occasion of completing reports and for raising
practical problems\. After the first year, the pilot testing period would be
shortened to six months\.
27\. The PEDP would support about six staff months of exert services
during the first two years of the PEDP to assist with the development of pilot
testing, training of counterpart staff, and evaluation of the results\. The
experts would be based at the STBB, and would work closely with the Curriculum
Bureau to develop pilot testing procedures\. The experts would have a minimum
of five years relevant textbook publishing experience, with some relevant
experience in developing countries\. The PEDP will also support local training,
and preparation and evaluation of pilot materials\.
-106 - Annex 10
PZa I gf 2
EVALUATION OF FREE TEXTBOOK DISTRIBUTION TO RURAL GIRLS, UPGRADED PRODUCTION
SPECIFICATION/SUBSIDY SCHEME\. AND SUPPLEMENTARY READERS SCHEM
Backgrgu=A
1\. The PEDP has a number of components to increase book availability
to students and teachers\. By the end of the PEDP, in 1995, it is intended that
most primary school children will have access to an enhanced number of
textbooks with significantly higher production specifications, upgraded
design, improved curriculum and pedagogic content, at an affordable price\. In
addition, supplementary reading materials will become available for the first
time in many schools\.
The study
2\. This large program of book development would be evaluated in terms
of cost and education benefit in order to inform future policy formulation\.
The evaluation would comprise:
(a) A base-line study of book ownership and utilization in about 100
urban slum and rural schools (man\. and female) in the province\.
This study would be completed by December, 1990\.
(b) A study to be undertaken in 1992-93 and completed by June 30,
1993, ustng the same school sample and covering a complementary
set of topics to those in the base-line study\.
3\. The topics for the two studies would include:
(a) Availability of textbooks and supplementary materials by subject,
gender and milieu\.
(b) Level of book and supplementary material ownership by subject,
gender and milieu\.
(c) Effectiveness of distribution system (are books available for
sale?)\.
(d) Book life\.
(e) Book usage\.
(f) Impact of subsidy, upgraded design and improved content on sales
and availability\.
(g) Impact of improved availability of books and supplementary
materials for rural girls on participation and drop-out\.
- 107 -
Annex 10
Page 2 of 2
(h) Impact of improved availability of textbooks and supplementary
materials on reading ability by grade, gender and milieu\.
(i) Impact of learning modules on teacher subject knowledge,
achievement testing, classroom practice, etc\.
Methodology
4\. The base-line study would be designed in detail and implemented by
December 1990 by the Curriculum Bureau\. The PEDP would finance the costs of
the base-line and follow up study, together with technical assistanc to
assist and train Bureau staff in the design of study instruments and data
analysis\. About 12 staff-months of expert services vould be provided for this
purpose\. The expert team would comprise an education researcher with at least
five years experience in research methodology and analysis, and a books expert
with substantial experience of implementing book development schemes in
developing countries\. The enpert" would visit Pakistan for about three months
each in 1990 and 1993 respectively\.
- 108 -
Annex 11
Pae1 ofI
SIMNNAL INFORENTION TO BE SUPPLIED BY GOSINDH TO IDA
By end January and end July of each year, starting in July 1990, the
Sindh Government would prepare a table for the preceding period June -
December, or January - June comprising the following information (all sources
of funds, e\.g\. ADP, Peoples Works Program would be included):
Primary Education Development Budget
Allocations Expenditures Classrooms Built
Male Female Male Female Male Female
New rural
New Urban
Shelterless Rural
Shelterless Urban
Rehabilitation/
Reconstruction Rural
Rehabilitation/
Reconstruction Urban
Other
Total
Primary Education Recurrent Budget
Allocations Expenditures
Salaries of Teaching Staff
Salaries of Non-Teaching Staff
Maintenance
Supplies and Materials
Total
- 109 -
Annex 12
Page 1 of 2
REPUBLIC OF PAKISTAN
STAFF APPRAISAL REPORT
SINDH PRINARY EDUCATION DEVELOPMENT PROGRAM
SCHEDULE OF DISBWRSENENTS
Disbursement Profile a/
I D A | Disbureements I Sector |
Fscalt --------------------I This Average 1n|
Year & Cuarter Cumulativel Program Pakistan
uarter U--SS Niticns -- I --------X -----------
p=__r ========= |I W|
FY96 I | | | |
First I 5\.00 75\.00 1 66\.7 I I
Second I 5\.00 I 80\.00 I 71\.1 70\.0
Third I 5\.00 j 85\.00 I 75\.6 I I
Fourth 1 5\.00 I 90\.00 I 80\.0 I 77\.0
FY97 I I 1 1 1
First I 4\.00 I 94\.00 I 83\.6
Second I 3\.00 I 97\.00 86\.2 I 83\.0
Third I 3\.00 I 100\.00 I 88\.9 |
Fourth I 2\.00 102\.00 I 90\.7 I 88\.0
FY98 | I I
First I 2\.00 104\.00 I 92\.4
Second 2\.00 I 106\.00 I 94\.2 I 93\.0
Third I 2\.00 I 108\.00 I 96\.0
Fourth | 2\.00 | 110\.00 | 97\.8 | 98\.0 |
FY99
First j 1\.50 111\.50 99\.1I
Second r 1\.00 I 112\.50 I 100\.0 I 100\.0
a/ The country profile for Education Projects\.
-110 -
Annex 12
Page 2 of 2
REPU8LIC OF PAKISTAN
STAFF APPRAIS%L REPORT
SINDN PRIMARY EDUCATION DEVELOPMENT PROGRAM
SCHEDULE OF DISIURSENENTS
==2222===3222=22==== 3 333333333-333-3=333332-= 3_=22 I
D;sbursement Profile al I
\.I
I D A I Disbursements I Sector
Fiscal- -------------------- IThis Average in
Year 9 Quarter Cumulativel Program Pakistan
Quarter --USS Nillimons -- -------- -----------
2322C_232222= :2=2223 U2=t33332231 SD233333 3=233=23
FY91 | I
First I 0\.00 0\.00 0\.0
Second I 7\.00 7\.00 1 6\.2 I 0\.0
Third ! 1 7\.001 6\.2 I
Fourth ! ! 7\.00 1 6\.2 I 1\.0 |
=-= 2=== = ==ww _ __ t t
FY92 | I I
First 1 2\.00 I 9\.00 8\.0
Second I 2\.00 11\.001 9\.81 3\.0
Third ! 3\.00 ! 14\.00 12\.4 I I
Fourth ! 4\.00 I 18\.00 1 16\.0 I 6\.0 I
FY93
First I 4\.00 1 22\.00 I 19\.6
Second I 4\.00 I 26\.00 I 23\.1 I 11\.0
Third 4\.00 I 30\.00 I 26\.7
Fourth | 4\.00 | 34\.00 30\.2 18\.0 |
FY94
First I 4\.00 I 38\.00 33\.8
Second I 4\.00 I 42\.00 I 37\.3 I 28\.0
Third I 4\.00 46\.00 40\.9
Fourth j 4\.00 I 50\.00 ; 44\.4 I 40\.0
' ~~32=322332=3333== I 3222=1=D =32=3=23= 1 3323333331 = =22
FY95
First I 5\.00 55\.00 48\.9
Second 5\.00 60\.00 j 53\.3 54\.0
Third j 5\.00 65\.00 I 57\.8
Fourth I 5\.00 70\.00 | 62\.2 | 62\.0
==2_2==-=====s 2333332=3233333=32==23-
- 111 -
Annex 13
Page 1 of 1
DOCUMENTS FOR PROJECT FILE
PAKISTAN: Education Sector Strategy Review Report No\. 7110-PAK,
December 1988\.
PAKISTAN: Staff Appraisal Reports, Primary Education II and III\.
WORKING PAPERS
Operations of Sind Textbook Board\.
Production and Distribution Plans for Learning Modules\.
Free Textbook Distribution Scheme for Rural Girls\.
The Supplementary Reader_ Scheme\.
Planning Management and Implementation of Primary Education
in Sind\.
LOTUS Cost Tables
OTHERS
Govt\. of Sind\. Primary Education Development Program (1990-1994),
August 1989\.
World Bank\. Study of Mosque Schools with Special Reference to
Girls Education, January 1989\.
Schmidt, R\.L\. Report on Pakistani Parents who are Educating their
Daughters, Berkeley, 1987\.
Qureshi, M\. A A Brief Note on Procedures for Contract Awards and
Payments under Extant Rules in Government of Sind for
Civil Works\.
Annexes of above paper: Standard Tender Documents for
LCB Procedures\.
Govt\. of Sind\. Directorate of Education Engineering Works (DEEW)
"Innovative Step by the Education Department -
Performances and Evaluation" (Pictorial of primary
schools buildings in Sind with comments on DEEW)
O- r 21 PAKISTAN
REnBucI 4 unStRN
Cfmm W SIND PRIMARY EDUCAlON
f; jiAKISIAN DEVELOPMENT PROGRAM
t S jMNWA *0 Twns and Villages --- Distrid Boundaries
0 Province Capitol - Division Boundaries
U\.A\.E 5 \ 1 Selected Roads Province Boundaries
-410M? --I I Sehled Railroads - - Intefonl Boundaries
>- / - Riven
\. Arabian Soa
JACOBABAD no PUNJA B
B A L U C H I S T A N mu! ink '
2V ~~~~~~~~~~~~J28r
-2t r *<~~~~~~~~~~ |~\. Shi rik r o f \.0/ 0¢
gL A R A \.
Staglerikat 7~~hriu
{: K moa2 ? iFairgnug nbU K K U Ri
li Nafl~~arastr ; i a
ir p ur irwell
Naha Hh gotilO
s t e t Daulabr Mari \~~~r Cake
-2de S / A N G H A R 2 6f--
D A ,D \ip o,<
x / < <7 T H A R P A R K A R \
|- Gl ut - en-noa AlI
-24 - '</Hg \ 24*-T 4
241
\.>t' t ~~~~~~~~~~~~- Wfts~~
0 20 4 60 80 IWO KILOMETEr
o At-ab/an Seo t/g O {O 120 304iS05 BMILESi ,c-In\.--
Arobjan eo
70 | APPROVAL |
P048202 |  ICRR 12757
Report Number : ICRR12757
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 09/27/2007
PROJ ID : P048202 Appraisal Actual
Project Name : Petroleum Sector US$M ):
Project Costs (US$M): 26\.20 25\.70
Management
Capacity Building
Project
Country : Chad Loan/ US$M ):
Loan /Credit (US$M): 23\.70 23\.70
Sector Board : EMT US$M):
Cofinancing (US$M ):
Sector (s): Central government
administration (41%)
Other social services
(37%)
Oil and gas (22%)
Theme (s): Regulation and
competition policy
(29% - P)
Pollution management
and environmental
health (29% - P)
Social analysis and
monitoring (28% - P)
Environmental policies
and institutions (14% -
S)
L/C Number : C3373
Board Approval Date : 06/06/2000
Partners involved : Closing Date : 12/31/2005 12/31/2006
Evaluator : Panel Reviewer : Group Manager : Group :
Robert Mark Lacey Fernando Manibog Alain A\. Barbu IEGSG
2\. Project Objectives and Components:
a\. Objectives:
The development objectives of the project, as stated in the Project Appraisal Document (PAD), were to
(a) strengthen the capacity of Chad to manage the development of its petroleum resources in an
environmentally and socially sound manner, beginning with the Doba Petroleum Project (DPP) in
southern Chad; (b) strengthen the capacity of Chad to minimize and mitigate the potential negative
environmental and social impacts of the DPP on the producing region; (c) strengthen local capacity in the
Doba region, and provide opportunities for the regionâs residents to improve their living conditions; and
(d) establish an effective framework for further sound private sector investment in the petroleum sector,
and engage effectively with such investors\.
This statement of objectives differs significantly from that in the Development Credit Agreement (DCA)\.
The latterâs much shorter and simpler statement is: âThe objectives of the project are to strengthen the
capacity of the Borrower to: (i) better manage the development of petroleum resources in an
environmentally and socially sound manner; and (ii) increase the use of petroleum resources from the
Chad Export Projectâ? (this is the same as the DPP mentioned in the PAD)\. The ICR states that the PAD
formulation of objectives guided project implementation\. Given that this formulation is fuller than that in
the DCA, and has been used by the ICR, it will also be used in this Review\. Such a large discrepancy
between the DCA and the PAD is, however, a cause for concern, especially when, as here, the DCA
objectives are so much less demanding\.
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components (or Key Conditions in the case of DPLs, as appropriate):
The project consisted of two components\. The first was the DPP Management component (US$18\.9
million or 72 percent of total project cost at appraisal, US$18\.2 million or 71 percent of total project cost
at closure)\. This consisted of (i) strengthening government capacity, including developing technical,
social and environmental competence in the Environment Ministry (MEWR), the National Technical
Control and Monitoring Committee (Comité Technique National de Suivi et Control â CTNSC), the
Doba Project Unit (DPU), set up to monitor the operations of the DPP, and the Petroleum Ministry
(MMEP); (ii) mitigating negative impacts of the DPP on the producing region by limiting migration
through a communications campaign, financing social infrastructure facilities, and supporting local
development activities; and (iii) information and communication activities, including the development of
a monitoring and information system, and generating accurate public information on the DPP and the
project with a view to encouraging dialogue among stakeholders\.
The second component was aimed at building petroleum sector management capacity (US$5\.3 million or
20\.2 percent of total project cost at appraisal, US$5\.5 million or 21\.4 percent of total project cost at
closure)\. This consisted of (i) strengthening the environmental and social regulatory framework
applicable to petroleum development projects in Chad, drawing on the lessons of the DPP; and (ii)
strengthening Chadâs capacity to manage the technical aspects of the sector and its ability to attract,
negotiate and engage with potential investors, inter alia through developing an effective management
information system, training, and promotion activities\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Project Cost\. Total project costs at closure, including a refinanced Project Preparation Facility (PPF)
advance of US$2\.2 million, were US$25\.7 million, US$0\.5 million less than the US$26\.2 million
estimated at appraisal\. However, there were substantial cost overruns during the first years of
implementation, and the proceeds of the Credit were almost entirely committed by mid-2003\. In October
2005, the Borrower requested a reallocation among expenditure categories in the DCA to cover the
higher than anticipated costs of consulting services due mainly to the weakness of the US dollar against
the Euro\. This rubric was increased by US$3\.1 million (46 percent), financed by reductions mainly in
unallocated expenditures, operating costs, and micro-projects\. By 2005, the Credit was exhausted\. In
July 2004, the Borrower requested a Supplemental Grant (SG) of US$10 million\. However, there were
delays in fulfilling Board presentation requirements (a Letter of Sector Strategy, assurance of counterpart
funding availability, and a procurement plan), and the suspension of the countryâs portfolio during the
first half of 2006, following the Governmentâs unilateral amendment of the Petroleum Revenue
Management Law (see Sections 4 and 9 below), meant that the SG could not be approved before project
closure\.
Financing\. The IDA credit of US$23\.7 million financed 92\.2 percent of project costs\. The contribution
of the government was US$2 million, $0\.5 million less than foreseen at appraisal\.
Dates\. The project became effective in March 2001, nine months after Board approval\. The delay was
due to disagreements between the government and the Bank concerning the institutional arrangements for
implementation, and also to difficulties in staffing the Project Implementation Units (PIU)\. The closing
date was twice extended\. The first extension, for four months from December 31 2005 to April 30 2006,
was to allow what was thought to be sufficient time for the preparation of the SG\. The second, until
December 31, 2006 was to allow completion of ongoing activities which had been delayed during the
suspension of the countryâs portfolio\.
3\. Relevance of Objectives & Design:
The project was and remains relevant to the social, economic and environmental development needs of
Chad which is emerging as an important crude oil exporter\. It is consistent with the goals of both the
Bankâs 1996 Country Assistance Strategy (CAS) â restoring public sector capacity, focusing public
expenditures on poverty reduction, and creating an environment favorable to private sector development
â and the principal objective of the 2001 and 2003 CASs, which is to assist Chad in making the best use
of its petroleum revenues as it attempts to attain the Millennium Development Goals\. One of the two
pillars of the 2003 CAS is strengthening governance and the institutional arrangements for public
resource management and service delivery, the rule of law and the establishment of robust social and
environmental safeguards, in the face of mounting exploitation of the countryâs oil reserves\.
However, the design of the project was too complex and ambitious, particularly for a country with Chadâ
s institutional and human capacity limitations\. The absorptive capacity of the civil servants who were to
be the targets of the training programs was known and acknowledged at appraisal, but inadequately
addressed in project design\. There was too little emphasis on, and insufficient funding for, training\. The
project attempted to tackle too many activities and sector issues\. Little attention was paid during
preparation to ensuring coherence between the goals of the project and the responsibilities and capacities
of the institutions involved\.
4\. Achievement of Objectives (Efficacy):
Development Objective (a) (see Section 2\.a\. above) was achieved to a modest extent\. Although some
competencies were developed and remain available to the government and the economy as a whole,
capacity building was ad hoc \. There was no training plan, and training did not fit in with established
patterns of career development in Chadâs public service\. The allocations of project funds to training were
insufficient\. There has, therefore, been little, if any, coherent general and sustainable improvement in
institutional capacity\. Most capacity building was delivered to, or carried out by, project implementation
units (PIU) or other temporary structures with no long term operating responsibilities or political
authority\. The uncertain future of these institutions, combined with poorly defined public sector career
perspectives meant that many trained personnel have left government service\. Government institutions
responsible for the petroleum sector are still characterized by major weaknesses\. Moreover, the impact of
the project was undermined by adverse institutional changes\. National Coordination, the high level body
set up to coordinate and supervise project activities, including those of the CTNSC and the DPU, was
transferred in September 2004, from the Office of the President to the MMEP\. This reduced its authority
and ability to coordinate decisions across Ministries\. The 2005 decision to create a National Oil
Company threatens to undermine the capacity of other bodies, notably the MMEP, and to spread scarce
skills even more thinly\. The exhaustion of project funding, the freezing of all disbursements for seven
months following the Governmentâs unilateral amendment of the Petroleum Revenue Management Law
(see Section 9 below), and the failure to maintain the projectâs institutional set up, meant that the PIUs
lost almost their entire staff\.
Objective (b) was achieved to a modest degree\. The DPUâs petroleum inspectors helped to apply
appropriate quality and quantity control procedures to the export of crude from the DPP\. An Oil Spill
Response Plan was approved by the Cabinet, but implementing regulations are not yet developed\. The
DPU also carried out regular analysis of royalties and initiated the launch and supervision of external
audits\. Improved coordination with the operating Consortium enabled improved management of land,
water supply and sanitation for the benefit of local communities and new arrivals\. Prevention campaigns
financed by the project have heightened awareness of the dangers of sexually-transmitted diseases among
truckers and other high risk groups\. Sustainable forest management practices were introduced in six pilot
villages\. CTNSC successfully monitored the construction phase of the Chad Cameroon Petroleum
Development and Pipeline Project (CCPDPP) and gained credibility with the Consortium through its
technical reviews of the Consortiumâs environmental proposals\. However, this monitoring capacity was
not sustained\. The MIS was not properly developed, implemented or maintained, so that the CTNSC
experiences difficulties in collecting, analyzing and using social and environmental data\. A robust
institutional framework necessary to support continued environmental protection and mitigation activities
has not been developed\. Although there is some provision in the 2007 national budget for CTNSC, there
is no assurance of continuity in 2008 and beyond\. Although guidelines for implementing the
Environmental Management Plan were prepared in 2005, no Environmental Decree or regulations have
been adopted\.
Objective (c) was substantially attained\. Although the Local Initiative Action Fund (Fonds dâAction
Concertées dâInitiative Locale â FACIL) got off to a slow start due to delays in recruiting qualified
personnel and poor cash flow management by CTNCS, its micro-credit projects have contributed to the
development of the Doba region\. Loans were given to 8,000 people in 10 cantons for economic and
commercial activities, though the outcomes in terms of employment creation and increased living
standards have not been evaluated\. 29 school buildings and 58 new classrooms were built, seven bridges
were constructed or rehabilitated, and drinking water supply systems improved\. Training courses on a
variety of topics (such as masonry and poultry breeding) were delivered to some 500 people, though
again it is not known how useful they were in actually raising incomes\. Women played an active role on
FACIL committees and were directly assisted in the promotion of income-generating activities\. It is,
however, unclear how permanent the improvements will be, and what institutional and other measures
have been taken to ensure the regular maintenance of the new infrastructure\. Moreover, infrastructure
construction was allowed to divert project funds from training activities\.
Objective (d) was achieved only to a modest extent \. Considerable efforts were made in technical and
financial training for staff of the DPU, MMEP and Ministry of Finance\. However, as noted earlier, many
of the people concerned have since left the public sector\. A model was successfully developed to help the
Government determine the price differential between Doba Blend crude oil and Brent, which is
commonly used as an international price benchmark\. MMEP, though, has not been diligent in keeping
current its subscription to Platts Oilgram which supplies the monthly input of freight rates and oil prices
required by the model\. As a result, the model cannot be regularly used\. Accelerated negotiations
(unforeseen at the time of project preparation) were successfully conducted for the renewal of the
Consortiumâs concession after the faster than anticipated completion of the CCPDPP construction phase\.
The negotiations were carried out principally by specialized technical and legal consultants, and it is
unclear how much capacity has been transferred to the Chadian officials\. The Government has been
actively promoting the petroleum sector, and three new concessions were signed in 2004\. The quality of
the promotion effort is, nonetheless, undermined by lack of funding under the project to develop an
information system for geological, geophysical and petrophysical data\. This data is currently stored by
the Consortium\. The greatest shortcoming with regard to this objective is the failure to improve sector
governance through strengthening of institutions and a legal framework favoring a clear separation
between policy, implementation and monitoring responsibilities\. Although the project supported the
preparation of a new hydrocarbon law, there is a lack of political support for key governance measures in
Chad in general, and in the petroleum sector specifically\. The unilateral amendment of the Petroleum
Revenue Management Law is symptomatic of this, as is the decision to create a National Oil Company
which will likely exacerbate opacity\.
5\. Efficiency (not applicable to DPLs):
Not applicable for a TA operation\.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-
re -estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal % %
ICR estimate % %
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
The projectâs outcome is Moderately Unsatisfactory\. Its principal development objectives â the
building of Chadian capacity to manage the countryâs petroleum sector in a financially, environmentally
and socially sound manner, and the underpinning of that capacity by robust national institutions â have
not been achieved\. This was partly due to poor design, which was over-ambitious and under-emphasized
training, and partly to lack of government commitment to, and national ownership of, project goals\. A
fully Unsatisfactory rating is avoided because there were a number of positive outcomes, and some
durable competencies were created which should benefit the Chadian economy as a whole\.
a\. Outcome Rating : Moderately Unsatisfactory
7\. Rationale for Risk to Development Outcome Rating:
The risk to development outcome is high\. First, the project has failed to develop an institutional and
legal framework capable of supporting environment protection and mitigation activities\. Second, capacity
constraints in the sector Ministries have only been partially addressed\. Third, there is no assured
financing for continuing the activities of project institutions beyond 2007\. Fourth, the CTNSC has lost
many of its trained staff\. As for DPU, some of its personnel have been absorbed into MMEP, but no
further budgetary provision is to be made for the institution itself\. Fifth, it is not certain whether MMEP
will have the financial resources to conduct the regular training programs necessary to keep its staff
abreast of changing developments in the oil industry\. Similarly, the Ministry may be unable to secure
sufficient funding to acquire essential equipment or to create and maintain a petroleum database system\.
Sixth, the financial and capacity constraints of the public sector, and of MMEP in particular, may be
further exacerbated by the creation of a National Oil Company\. Finally, there is no more budgetary
provision for National Coordination which has, for all practical purposes, ceased to exist\.
a\. Risk to Development Outcome Rating : High
8\. Assessment of Bank Performance:
Ensuring quality at entry was Unsatisfactory\. Major design shortcomings have been described in
Section 3 above\. In addition, risks were inadequately assessed, notably institutional and fiduciary
capacities, and mitigating measures weak\. For example, the risks of a weakening of government
commitment and capacity to strengthen the sector, and of inadequate use made of trained Chadians,
were both considered modest, and were to be mitigated by Bank support, linkage to implementation of
the CCPDPP, and the fact that the project would provide improved working conditions\. More
attention should have been paid to sequencing and to identifying those functions and skill types which
were likely to be critical in the short to medium term\. The M&E indicators shown in the PAD are not
quantifiable, time-bound or outcome-oriented\. With hindsight, it is clear that the linking of the project
to the implementation of a large and highly visible engineering activity like the CCPDPP led to
unrealistic demands in a country with severely limited human resources and capacity\. The consequent
over-hasty design may also account for the major discrepancy between the PAD and the DCA
concerning project objectives\.
Supervision was Moderately Unsatisfactory\. It was hampered by inappropriate design and by staffing
problems\. During the first three years of implementation, the task team had no petroleum specialist\.
When this expertise was finally added, project resources were practically exhausted\. Until 2002, the
TTL was based in Washington, a manifestly inadequate arrangement for supervising a complex
project of this magnitude\. There was a high rate of turnover in TTLs â five during the course of the
project â which inevitably led to continuity problems\. Inadequate supervision contributed to the
projectâs considerable financial and fiduciary difficulties (see Section 11 below)\. Despite manifest
problems, supervision missions classified the project as âSatisfactoryâ? until mid-2005; only after that
date did it become initially âModerately Unsatisfactoryâ? and then âUnsatisfactoryâ?\. These
shortcomings were partially counterbalanced by more positive aspects of performance during
implementation such as the intensive hands-on support provided to the Chadian authorities to put in
place the modalities for oil revenue management, direct advice in a number of technical oil sector
areas (which went beyond the services normally provided by the Bank to an implementing agency)
and the constant interventions of senior management in an attempt to reinforce commitment to
capacity building at the top level of government\.
at -Entry :Unsatisfactory
a\. Ensuring Quality -at-
b\. Quality of Supervision :Moderately Unsatisfactory
c\. Overall Bank Performance :Unsatisfactory
9\. Assessment of Borrower Performance:
Government performance was Unsatisfactory\. During project preparation, the government appeared
committed to the project\. However, during implementation, the project faced opposition\. The
authorities were difficult to convince about the need to improve their petroleum and environmental
sector capabilities\. Intense dialogue and the intervention of senior Bank management were required to
improve government commitment and performance\. By late 2004, these were wavering once again\.
Serious fiduciary and financial management issues contributed to an exhaustion of project funds by
2005 (see Section 11 below)\. In December 2005, Parliament approved the Governmentâs decision to
amend unilaterally the Petroleum Revenue Management Law, which governed the distribution of oil
revenues to the social and other priority sectors\. The amendment, which broadened the definition of
priority sectors to include, inter alia , security and territorial administration, was in contravention of
both the DCA for this project and the Loan Agreement for the CCPDPP\. The Bank responded by
suspending all disbursements under the active portfolio in Chad, which triggered an automatic
freezing of certain revenues held in an escrow account in London\. Disbursements under this project
did not resume until after the Government and the Bank signed a Memorandum of Understanding in
July 2006\. By then, other developments had adversely affected the project: the National Oil Company
had been created, and the PIUs had lost almost their entire staff due to lack of funding and uncertain
government commitment to project institutions\. Inter-agency coordination was weak, and government
personnel lacked motivation to participate in project activities\.
Most of the shortcomings of the implementing agencies were the fault of the government rather than
of the agencies themselves\. National Coordination, even before its absorption into the MMEP, proved
unable to carry out its appointed tasks or to contribute effectively to the deliberations on the
institutional and legal framework for the sector\. With the assistance of the Bank team, CTNSC
steadily improved its capacity during implementation and gained credibility with the Consortium\. Its
valuable work was, however, undermined by lack of coordination with the DPU, and later by
inadequate funding\.
a\. Government Performance :Unsatisfactory
b\. Implementing Agency Performance :Moderately Unsatisfactory
c\. Overall Borrower Performance :Unsatisfactory
10\. M&E Design, Implementation, & Utilization:
The quality of M&E must be rated as Negligible\. The indicators developed in the PAD (Annex 1) are
almost all output, rather than outcome, based\. Even these are, for the most part, neither quantified nor
time-bound\. There were four basic indicators shown in the Results Framework of the ICR -- (i) effective
government monitoring of the DPP (including financial and technical aspects); (ii) effective
implementation of the DPP Environmental Management Plan; (iii) social infrastructure improvements in
the producing region; and (iv) substantially increased government dealings with new investors\. These
output measures were supplemented by four intermediate outcome indicators: (v) oil price comparators
reflect pertinent international price; (vi) environmental regulations for the petroleum sector are
developed and a new Hydrocarbons Code is prepared; (vii) capacity in the Environment Ministry and
CTNSC to monitor environmental and social aspects of petroleum activities is strengthened; and (viii)
the pressure of migrating population on the region is mitigated\. However, these latter do not constitute
clear and easily measurable outcome indicators\. There are no objective and time-bound output gauges for
capacity building, which should have been available to government, Bank, civil society and other
stakeholders\.
Annex 2 to the PAD contains a summary data sheet for a fuller and more sophisticated management
information system (MIS)\. However, this system was not properly developed, implemented or
maintained, and necessary data was not collected\. The durability of M&E capabilities developed in
CTNSC and DPU are in some doubt following the transfer of staff to MMEP and MEWR\. These
institutions have not been endowed with either the capacity or the organizational structure necessary to
mainstream M&E practices\.
a\. M&E Quality Rating : Negligible
11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
Environment: Not applicable\.
Resettlement: Not applicable\.
Fiduciary: Major fiduciary issues adversely affected project implementation\. Drawings were made from
the special accounts to finance ineligible expenditures\. The procurement provisions of the Credit
Agreement were violated on numerous occasions: contracts were awarded without Bank non-objection;
there was excessive use of single-source contracting; bidding was fragmented; ceiling amounts were
exceeded; and either there was no procurement plan or it was not observed\. There are a number of unpaid
invoices outstanding due to the government making commitments beyond credit resources\. During
portfolio suspension, the PIUs, lacking access to government counterpart funding, used the projectâs
special accounts to finance their expenditures\. Resulting outstanding balances in the special accounts of
DPU (US$213,000) and CTNSC (US$700,000) had not been refunded by the government six months
after project closure\. A further US$40,000 was reimbursed by FACIL to CTNSC, and has still not been
repaid to the project\. As noted in Section 4 above, some of these problems resulted from the extreme
pressure to keep up with the accelerated construction schedule of the CCPDPP\. In other cases, they were
because of delays on the part of the government in making payments from the national counterpart funds\.
The government is responsible for reimbursing IDA or the project with all outstanding amounts as well
as for settling remaining unpaid invoices\.
Apart from these issues, the projectâs financial management system, including accounting, controls,
auditing and reporting, was adequate and satisfied Bank requirements\.
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Moderately Moderately Of the four project development
Satisfactory Unsatisfactory
objectives, only one was achieved
to a substantial degree, two were
modest, and one negligible\.
Risk to Development Significant High There is little political buy-in or
Outcome :
local ownership of project
objectives\. Nearly all project
structures no longer exist\. Financial
and institutional capacity for
continuing and completing project
activities is weak\.
Bank Performance : Moderately Unsatisfactory There were serious shortcomings in
Unsatisfactory
both preparation and supervision\.
Borrower Performance : Unsatisfactory Unsatisfactory
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank for IEG to
arrive at a clear rating, IEG will downgrade the relevant ratings as
warranted beginning July 1, 2006\.
- The "Reason for Disagreement/Comments" column could
cross-reference other sections of the ICR Review, as appropriate \.
13\. Lessons:
1\. Effective implementation of capacity building projects requires solid commitment from the
Borrower at a high level, and must take place in the context of clear policy objectives with the political
commitment to reach them\.
2\. Human, financial and institutional constraints must be carefully assessed\. Only on the basis of such
an assessment can realistic expectations be built as to what can be achieved through this type of
project\.
3\. There must be an early and strong emphasis on building capacity\. Training should be the core of
such exercises\.
4\. Temptations to cover too many sectors and too many activities should be avoided\. Inclusion of, for
example, infrastructure building components are likely to prove a serious distraction for both financial
and human resources\.
5\. There should be the maximum clarity as to what types of capacity need to be created and which
personnel are to be targeted\. Moreover, capacity building should be properly sequenced\.
6\. An adequately equipped team and continuity of team leadership are essential for smooth
implementation
7\. In nearly all cases, but especially in extractive industries, an appropriate legal, institutional and
regulatory framework should be in place before production starts\. This would facilitate the building of
capacity\.
8\. Capacity building should focus on existing, permanent national institutions rather than relying on
temporary entities which have political or operational authority, and are thus unable to mainstream
reforms\.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
The ICR is thorough, well and clearly written, and contains all the elements necessary to evaluate the
project\. Its occasional repetitiveness is due to the required format and organization\. It is commendably
frank in its analysis of the shortcomings of both Bank and Borrower\. Its one drawback is that not all its
ratings reflect the conclusions of this analysis\.
a\.Quality of ICR Rating : Satisfactory | APPROVAL |
P164271 | FOR OFFICIAL USE ONLY
Report No: PAD2668
INTERNATIONAL DEVELOPMENT ASSOCIATION
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED GRANT IN THE AMOUNT OF SDR 36\.5 MILLION (US$50\.0 MILLION EQUIVALENT)
AND A
PROPOSED CREDIT IN THE AMOUNT OF EUR 45\.0 MILLION (US$50\.0 MILLION EQUIVALENT)
TO THE
REPUBLIC OF NIGER
FOR A
GOVERNANCE OF EXTRACTIVES FOR LOCAL DEVELOPMENT AND COVID-19
RESPONSE PROJECT
July 13, 2020
Governance Global Practice
Africa Region
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
Exchange Rate Effective May 31, 2020
Currency Unit = Euro (EUR)
EUR 0\.8984= US$1
SDR 0\.7288 = US$1
FISCAL YEAR
January 1 - December 31
Regional Vice President: Ousmane Diagana
Country Director: Soukeyna Kane
Global Practice Director: Edward Olowo-Okere
Regional Director: Elisabeth Huybens
Practice Manager: Alexandre Arrobbio
Task Team Leaders: Abel Bove, Kirsten Lori Hund, Ragnvald Michel Maellberg
ABBREVIATIONS AND ACRONYMS
AFSIEN Association des Femmes du Secteur des Industries Extractives du Niger, Women in
extractive sector network
ANFICT Agence Nationale de Financement des Collectivités Territoriales, National Agency for
Financing Territorial Communities
ASM Artisanal and Small-scale Mining
BCEAO Banque Centrale des Ãtats de l'Afrique de l'Ouest, West Africa Central Bank
CE Citizen Engagement
CFGCT Centre de Formation en Gestion des Collectivités Territoriales, LG training center
COMINAK Compagnie minière d'Akokan, State-Owned Mining Company of Akokan
COVID-19 Coronavirus Disease 2019
CNESS Centrale Nationale des Etudes Stratégiques et Sécurité, National Center for Strategic
Security Studies
CNPC China National Petroleum Corporation
CRGM Centre de Recherche Géologique et Minière, Geological and Mining Research Center
CPF Country Partnership Framework
CY Calendar Year
DEP Direction des Etudes et Programmes, Direction of Studies and Programming
DFIL Disbursement and Financial Information Letter
DGATD Direction Générale de lâAdministration du Territoire et de la Deconcentration, General
Direction of Territorial Administration and Deconcentration
DGDCT Direction Générale de la Décentralisation et des Collectivités Territoriales, General Direction
of Decentralization and Local Government
DGTCP Direction General du Trésor et de la Comptabilité Publique, General Direction of Treasury
and Public Accounting
DRH Direction des Ressources Humaines, Human Resources Department
ECOWAS Economic Community of West African States
EEP Eligible Expenditure Programs
EITI Extractive Industries Transparency Initiative
ENA Ecole Nationale dâAdministration, National Public Administration School
ESCP Environmental and Social Commitment Plan
ESS Environmental and Social Safeguards
EUR Euro
FAD Fond dâAppui au Développement, Development Support Fund
FCV Fragility Conflict and Violence
FM Financial Management
FMS Financial Management Specialist
FP Fond de Péréquation, Equalization Fund
FCFA Franc of the Financial Community of Africa
FY Fiscal Year
GBV Gender Based Violence
GDP Gross Domestic Product
GOLD Governance of extractives for Local Development
GoN Government of Niger
GRM Grievance Redress Mechanism
GRS Grievance Redress Service
HACP Haute Autorité à la Consolidation de la Paix, High Authority for Peace Consolidation
HR Human Resources
HRM Human Resources Management
IDA International Development Association
IAEA International Atomic Energy Agency
IGF Inspection Générale des Finances ; General Inspection of Finance
IFR Interim Financial Report
IMF International Monetary Fund
IPF Investment Project Financing
IRR Internal Rate of Return
IVA Independent Verification Agent
IT Information Technology
LG Local Government
LSM Large Scale Mining
M&E Monitoring and Evaluation
MoF Ministry of Finance
MoM Ministry of Mines
MoP Ministry of Planning
NPV Net Present Value
OECD Organisation for Economic Co-operation and Development
PBC Performance Based Condition
PBR Performance Based Result
PCDS Public Sector Capacity and Performance for Service Delivery
PDES Programme de développement économique et social
PDO Project Development Objective
PFS Project annual financial statements
PIM Project Implementation Manual
PIU Project Implementation Unit
PFM Public Financial Management
Plan TCR Plan de Transfert des Ressources et des Compétences, Plan for the Transfer of Resources
and Competences to Local Government
PPSD Project Procurement Strategy for Development
PRACC Projet dâAppui a la Croissance et la Competitivite, Project for Competitiveness and Growth
SC Steering Committee
SEP Stakeholder Engagement Plan
SESA Mining Sector Strategic Environmental and Social Assessment
SIGMINES Système dâInformation Géologique Mines (Mining geological information system)
SOPAMIN Société du patrimoine des mines du Niger, State-Owned Mining Investment Company
SORAZ Société de Raffinage de Zinder, State-Owned Petroleum Refining Company
SYSCOHADA Système Comptable de lâOrganisation pour l'harmonisation en Afrique du droit des affaires,
accounting system of the Organisation for the Harmonisation of Corporate Law in Africa
TA Technical assistance
ToR Terms of References
TSA Treasury Single Account
WAEMU West African Economic and Monetary Union
WB World Bank
The World Bank
Governance of Extractives for Local Development & COVID-19 Response Project (P164271)
TABLE OF CONTENTS
DATASHEET \. 1
I\. STRATEGIC CONTEXT \. 7
A\. Country Context\. 7
B\. Sectoral and Institutional Context \. 8
C\. Relevance to Higher Level Objectives\. 9
II\. PROJECT DESCRIPTION\. 9
A\. Project Development Objective (PDO) \. 9
B\. Project Components \. 10
C\. Project Beneficiaries \. 17
D\. Results Chain \. 17
E\. Rationale for Bank Involvement and Role of Partners \. 19
F\. Lessons Learned and Reflected in the Project Design \. 19
III\. IMPLEMENTATION ARRANGEMENTS \. 20
A\. Institutional and Implementation Arrangements \. 20
B\. Results Monitoring and Evaluation Arrangements\. 20
C\. Sustainability\. 21
IV\. PROJECT APPRAISAL SUMMARY \. 22
A\. Technical, Economic and Financial Analysis \. 22
B\. Fiduciary\. 22
C\. Legal Operational Policies \. 24
D\. Environmental and Social (E&S) \. 25
V\. GRIEVANCE REDRESS SERVICES \. 26
VI\. KEY RISKS \. 26
VII\. RESULTS FRAMEWORK AND MONITORING \. 29
Annex 1: Implementation Arrangements and Support Plan \. 61
Annex 2: GOLD Project Contribution to Identified Relevant Gender Gaps \. 74
Annex 3: Extractive Revenue-Sharing Arrangement in Niger\. 76
Annex 4: Overview of Transfer of Responsibilities to Local Governments \. 77
Annex 5: Local Government Financing in Niger: opportunities \. 78
Annex 6: Extractive Sector Management Challenges \. 80
Annex 7: GOLD Project Contribution to Niger FCV Risk Mitigation Strategy \. 86
Annex 8: Climate Co-Benefits Rationale \. 88
Annex 9: Donor Partners and other World Bank Projects that have synergies with the GOLD
Project \. 89
Annex 10: Economic Analysis of Niger-GOLD project \. 91
The World Bank
Governance of Extractives for Local Development & COVID-19 Response Project (P164271)
DATASHEET
BASIC INFORMATION
BASIC_INFO_TABLE
Country(ies) Project Name
Niger Governance of Extractives for Local Development & COVID-19 response Project
Project ID Financing Instrument Environmental and Social Risk Classification
Investment Project
P164271 Substantial
Financing
Financing & Implementation Modalities
[ ] Multiphase Programmatic Approach (MPA) [ ] Contingent Emergency Response Component (CERC)
[ ] Series of Projects (SOP) [â] Fragile State(s)
[â] Performance-Based Conditions (PBCs) [ ] Small State(s)
[ ] Financial Intermediaries (FI) [ ] Fragile within a non-fragile Country
[ ] Project-Based Guarantee [ ] Conflict
[ ] Deferred Drawdown [ ] Responding to Natural or Man-made Disaster
[ ] Alternate Procurement Arrangements (APA) [ ] Hands-on Enhanced Implementation Support (HEIS)
Expected Approval Date Expected Closing Date
03-Aug-2020 31-Jul-2025
Bank/IFC Collaboration
No
Proposed Development Objective(s)
The project development objective is to strengthen local governmentsâ capacity and extractive sector management
for service delivery in the targeted regions\.
Components
Component Name Cost (US$, millions)
Page 1 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Strengthening Local Government Capacity 59\.00
Improving extractive sectorâs management 37\.00
Project management 4\.00
Organizations
Borrower: Republic of Niger
Implementing Agency: Ministry of Planing
PROJECT FINANCING DATA (US$, Millions)
SUMMARY -NewFin1
Total Project Cost 100\.00
Total Financing 100\.00
of which IBRD/IDA 100\.00
Financing Gap 0\.00
DETAILS -NewFinEnh1
World Bank Group Financing
International Development Association (IDA) 100\.00
IDA Credit 50\.00
IDA Grant 50\.00
IDA Resources (in US$, Millions)
Credit Amount Grant Amount Guarantee Amount Total Amount
Niger 50\.00 50\.00 0\.00 100\.00
National PBA 50\.00 50\.00 0\.00 100\.00
Total 50\.00 50\.00 0\.00 100\.00
Expected Disbursements (in US$, Millions)
Page 2 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
WB Fiscal Year 2020 2021 2022 2023 2024 2025
Annual 0\.00 21\.00 16\.00 27\.00 29\.00 7\.00
Cumulative 0\.00 21\.00 37\.00 64\.00 93\.00 100\.00
INSTITUTIONAL DATA
Practice Area (Lead) Contributing Practice Areas
Governance Energy & Extractives
Climate Change and Disaster Screening
This operation has been screened for short and long-term climate change and disaster risks
SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT)
Risk Category Rating
1\. Political and Governance ï¬ High
2\. Macroeconomic ï¬ High
3\. Sector Strategies and Policies ï¬ Moderate
4\. Technical Design of Project or Program ï¬ Substantial
5\. Institutional Capacity for Implementation and Sustainability ï¬ High
6\. Fiduciary ï¬ Substantial
7\. Environment and Social ï¬ Substantial
8\. Stakeholders ï¬ Substantial
9\. Other ï¬ High
10\. Overall ï¬ High
Page 3 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
COMPLIANCE
Policy
Does the project depart from the CPF in content or in other significant respects?
[ ] Yes [â] No
Does the project require any waivers of Bank policies?
[ ] Yes [â] No
Environmental and Social Standards Relevance Given its Context at the Time of Appraisal
E & S Standards Relevance
Assessment and Management of Environmental and Social Risks and Impacts Relevant
Stakeholder Engagement and Information Disclosure Relevant
Labor and Working Conditions Relevant
Resource Efficiency and Pollution Prevention and Management Relevant
Community Health and Safety Relevant
Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Relevant
Biodiversity Conservation and Sustainable Management of Living Natural Relevant
Resources
Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Not Currently Relevant
Local Communities
Cultural Heritage Not Currently Relevant
Financial Intermediaries Not Currently Relevant
NOTE: For further information regarding the World Bankâs due diligence assessment of the Projectâs potential
environmental and social risks and impacts, please refer to the Projectâs Appraisal Environmental and Social Review
Summary (ESRS)\.
Legal Covenants
Sections and Description
Page 4 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Schedule 2, section I\.A\.1(a): The Recipient shall, not later than two (2) months after the Effective Date, establish
and maintain, throughout the Project implementation period, with composition, mandate and resources
satisfactory to the Association, a steering committee, to be chaired by a representative of the Ministry of Planning
and to be composed of the Recipientâs key ministries and stakeholders
Sections and Description
Schedule 2, section I\.A\.2(ii): The PIU shall, not later than three (3) months after the Effective Date, recruit and
thereafter maintain at all times during Project implementation, an assistant accountant, and a senior internal
auditor each of whose qualifications, experience and terms of reference acceptable to the Association
Sections and Description
Schedule 2, section I\.B\.2\.(a): The Recipient shall, not later than three (3) months after the Effective Date, install and
thereafter maintain throughout the Project implementation period, an accounting software for the Project
acceptable to the Association
Sections and Description
Schedule 2, section I\.B\.2\.(b): The Recipient, not later than six (6) months after the Effective Date recruit, and
thereafter maintain throughout the Project implementation period, an external auditor for the Project with
experience, qualifications and on terms of reference acceptable to the Association
Sections and Description
Schedule 2, section I\.E\.(a): The Recipient shall, not later than three (3) months after the Effective Date, recruit and
thereafter maintain, at all times during the implementation of the Project, an independent Verification Agent under
terms of reference acceptable to the Association to verify the data and other evidence supporting the achievement
of one or more PBRs
Sections and Description
Schedule 2, section I\.C\.1: 1: The Recipient shall, not later than November 30 of each year during the
implementation of the Project, starting January 1, or such later date as the Association may agree in writing,
prepare and furnish to the Association for its approval, the annual work plan and budget containing all proposed
activities for inclusion in the Project during the following calendar year, together with the financing plan for such
activities and a timetable for their implementation
Sections and Description
Schedule 2, section II: The Recipient shall furnish to the Association each Project Report not later than forty-five
(45) days after the end of each calendar semester, covering the calendar semester
Conditions
Type Description
Effectiveness Art\. 5\.01 (a): The Recipient has adopted a Project Implementation Manual in accordance
with Section I\.B\.1 of Schedule 2 to this Agreement
Page 5 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Type Description
Effectiveness Art\. 5\.01 (b): The Recipient has recruited to the Project Implementation Unit (âPIUâ) staff
referred to in Section I\.A\.2\.(i) of Schedule 2 to this Agreement
Type Description
Disbursement Schedule 2, Section III\.B\.1: No withdrawal shall be made:
(a) for payments made prior to the Signature Date except that withdrawals up to an
aggregate amount not to exceed $20,000,000 may be made for payments made prior to this
date but on or after the date twelve (12) months preceding the Signature Date, for Eligible
Expenditures under Category (2); or
(b) on the basis of PBRs achieved prior to the Signature Date\.
(c) under Category (2), until and unless the Recipient has furnished evidence satisfactory to
the Association that the respective PBRs set forth in the table in the Annex to this Schedule
have been achieved in accordance with the Verification Protocols, as confirmed by the
Verification Agent referred to in Section I\.E\.(a) of the Schedule 2 to this Agreement\.
Page 6 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
I\. STRATEGIC CONTEXT
A\. Country Context
1\. Nigerâs economy is subject to high fragility and external shocks, with fiscal implications\. Real annual Gross
Domestic Product (GDP) growth rates averaged 6\.3 percent between 2012 and 2019\. Growth remains volatile and
predominately driven by rain-fed agriculture vulnerable to climatic shocks\. The extractive sector, accounting for 6\.8
percent of GDP in 2019, is subject to sudden commodity price fluctuations\.1 Moreover, a recent economic downturn in
Nigeria and border closure has affected growth by 0\.4 percent of GDP and government revenues\. Public spending in the
past few years was increasingly financed by public debt\.2 Finally, Coronavirus Disease 2019 (COVID-19) pandemic is
expected to affect growth negatively in 2020 and could have prolonged adverse impact on growth, public finances and
poverty\. Before the COVID-19 crisis, extreme poverty was expected to decline from 41\.5 percent in 2019 to 40\.1 percent
in 2021 and the number of poor people to increase from 9\.5 million to 10\.1 million due to population growth\. However,
COVID-19 crisisâ economic impact increases household vulnerability to fall into poverty\. 3
2\. Niger is exposed to multiple challenges, stemming from a combination of deep-rooted causes and short-term
factors limiting the impact of Government development efforts\. The most immediate vulnerability is related to regional
insecurity\. This challenge affects livelihood and strains the fiscal space, given increased security spending and costs\. 4 Niger
is also affected by structural challenges such as limited economic opportunities for the youth, high gender inequality, 5 and
insufficient access to basic education and health6\. Access to basic services is affected by limited resources, high population
growth, large country size, insecurity, and limited state presence and capabilities\.
3\. Key drivers of fragility are growing insecurity, natural resources competition, extractive sector related tensions,
youth marginalization and limited service delivery:7 (i) Growing regional insecurity and terrorist attacks in border regions
with Mali, Burkina Faso and Lake Chad affect Nigerâs stability and fuel pre-existing intercommunal tensions; (ii) increasing
competition over natural resources (water, arable land and forests) intensified by demographic pressure (70 percent
population increase expected by 2030) and climate related stresses;8 (iii) marginalization of youth due to limited economic
opportunities and low education levels potentially fueling grievances9 and making them vulnerable to radicalization; (iv)
transparency challenge extractives management and mining revenue redistribution, exacerbating tensions, especially in
mining areas; and (v) governance challenges hampering service delivery and contributing to popular dissatisfaction\.
4\. In addition, the COVID-19 outbreak has been affecting Niger since March 2020 \. On March 11, 2020, the World
Health Organization declared the virus outbreak a pandemic and Niger confirmed its first cases on March 19, 2020\. As of
July 6, 2020, 1,093 cases and 68 deaths have been confirmed\. The COVID-19 outbreak and non-sanitary measures to
mitigate the spread affect Nigerâs economic activity, public sector management and service delivery\.
1 For example, a decline in uranium prices reduced government mining revenues by 30 percent between 2014 and 2016\.
2 In 2012-2017, public spending increased from 22\.5 to 26\.8 percent of GDP; and public debt from 26\.1 to 49\.7 percent of GDP\.
3 World Bank (2020), Niger Public Expenditure Review
4 Insecurity and security responses affects local livelihood given limitations on trade (curfews, roadblocks, security costs for transports, etc\.)\.
5 The 2015 Gender Inequality Index ranks Niger 157 out of 159 countries in terms of gender disparities\. Annex 2\.
6 Niger ranked 189 out of 189 countries by the 2019 Human Development Index\.
7 World Bank (2017), Niger Risks and Resilience Assessment (RRA)\.
8 Forced displacement of vulnerable groups has also contributed to exacerbate pressure on service delivery and natural resources (land, water)\.
9 World Bank (2018), Country Partnership Framework (CPF), Niger, No\. 123736-NE\.
Page 7 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
B\. Sectoral and Institutional Context
5\. The Government of Niger (GoN) has shown a strong commitment in addressing critical Fragility, Conflict and
Violence (FCV) as well as COVID-19 challenges\. Nigerâs current Development Strategy, the Second Economic and Social
Development Plan 2017-2021 (Deuxième plan de développement économique et social, PDES-II) recognizes insecurity as a
major obstacle to economic, social and cultural development\. In response, PDES-II proposes: (i) improving the security
governance strategic framework; (ii) mitigating security threats; (iii) reducing community conflicts; and (iv) promoting
development initiatives for peace and security\. To mitigate COVID-19 impact, Niger declared a state of emergency on
March 27, 2020, implemented non-sanitary measures10 and is working with partners to increase health system capacity\.
6\. The GoN has adopted reforms to improve the deployment and decentralization of public resources, and
extractive revenue-sharing arrangement\. Geographical concentration of financial and Human Resources (HR) in Niamey
is a major service delivery bottleneck and impacts stability\. A 2016 reform aims to decentralize education, health, water
and environment sectors to Local Governments (LGs)\. In line with Article 152 of the Constitution and Law no\. 2014-08 of
April 16, 2014,11 the State of Niger introduced a clause in the Mining Code in 2006 and the Petroleum code of 2007, which
allocates 15 percent of mining royalties to the affected populations and the regions and communes of the extraction
zones\. To mitigate the negative impact of extraction, GoN issued a plan in 2018 to incrementally transfers responsibilities
and related resources in 2018-2021 (Annex 6)\.
7\. Implementation pace of decentralization and extractive revenue reforms has been slower than expected\. Roles
and responsibilities for each government level need to be clarified and key policies, legislation and regulations remain to
be established i\.e\. policy for deconcentration of central level civil servants, LGs´ civil servant legislation, and detailed
regulations and norms related to LGs´ Public Financial Management (PFM)12\. LGsâ HR capacity and training at LG training
center â Centre de Formation en Gestion des Collectivités Territoriales (CFGCT), are limited\. Actual transfers to LG have so
far been limited and extractive revenue transfers fall short of legal requirements, in large part due to limited LG capacities\.
The GoN has issued a 2018-22 Clearance Plan for LG extractive revenue arrears accumulated in 2012-16 (Annex 5)\.
8\. Agadez, Diffa, Tillabery and Zinder, the main extractive regions of the country, are facing fragility challenges \.
These four extractive regions account for most of current mining revenues and are home to 44 percent of the total
population\. Tillabery, one of the countryâs most populated regions, shares security-vulnerable borders with Mali and
Burkina Faso\. A similar border situation applies to the regions of Diffa and Agadez\. Limited extractive sector management
in these regions potentially contributes to fragility risks, as most of the Artisanal and Small-scale Mining (ASM) value chain
is informal, and is frequently associated with social and environmental risks, as well as terrorism financing\. 13
9\. Extractive regions contribute a quarter of government revenue14 and present a strong revenue potential if
extractive sector management improves\. Extractive sector development through better public management and further
private sector investment is an avenue for structural transformation\.15 There is high potential of gold, iron, copper, nickel,
phosphate, salt and battery minerals, and Niger has recently become an oil producer\.16 Implementation of legal and
institutional reforms to attract private investment has been slow, and challenges in budgeting affect Ministries of
10 Including border closure, schools closing, lockdown and curfews in main cities affected, etc\.
11 The Decree 2015-245 of 8 May 2015 stipulates that 85 percent finances investments, 10 percent the recurrent budget of the local authorities of
the mining regions, and 5 percent finances technical support to local authorities by line ministries\.
12 Decree 2016-302-PRN-MISPDACR-MF of June 29, 2016\.
13 Cf\. Annex 7: Gold ASM sites are in fragile border areas/attract youth; International Crisis Group (2019) Getting a grip on central Sahelâs gold rush\.
14 Extractive sector exports accounted for 84 percent of total exports and 22 percent of government revenues in 2017\.
15 World Bank (2017), Systematic Country Diagnostic, Niger\.
16 The Agadem-Cotonou oil pipeline is expected to boost production from 20,000 barrels/day in 2019 to 110,000 barrels in 2022\.
Page 8 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Petroleum and Mines performance (Annex 6)\. Improved management capacity and further development of related
regulations and procedures could improve new mining cadaster, geo-data management center and laboratory
performance\. Investing in geodata17 and sector transparency as per new Extractive Industries Transparency Initiative (EITI)
Standard could strengthen GoNâs capacity to attract and secure more favorable terms with private sector investors\.
10\. This International Development Association Financed (IDA) project proposes to support GoN strategic reforms
to deploy public resources, improve extractive sector management and contribute to addressing the COVID-19 crisis\.
Supporting the deployment of resources through decentralization will improve LG capacity, access to service delivery and
COVID-19 response coordination beyond Niamey\. Investing in geo-data and extractive sectorâs management will attract
investors, mitigate associated social and environmental risks, foster job creation and boost revenue mobilization\.
Formalizing ASM and enhancing oversight capacity will foster the sector as a driver of resilience\. Increased transparency
and participation in local governance and extractives will contribute to strengthen accountability and state credibility\.
C\. Relevance to Higher Level Objectives
11\. The proposed project is aligned with the World Bank Group Country Partnership Framework (CPF) for Republic
of Niger on decentralization, governance, fragility and extractives \.18 Nigerâs CPF for the period FY18-22 emphasizes the
role of governance and a well-managed extractive sector to: (i) ensure transparency, accountability and transfers of
extractive revenue to LGs; (ii) mitigate FCV risks; (iii) increase revenue mobilization; (iv) promote private-sector
development and job creation; and (v) adopt a citizen-centric approach to improve service delivery\. The project is expected
to contribute to these objectives\.
12\. This project will contribute to FCV risks mitigation efforts\. This will be accomplished by addressing some of the
structural drivers of FCV in Niger\. Specifically, the project will seek to improve: (i) a positive state presence across the
country related to service delivery, (ii) state capacity to prevent conflict and foster inclusiveness at local level; (iii)
extractive sector management to foster sustainable growth; and (iv) local-level livelihoods, through ASM\.
13\. The project contributes to the World Bankâs Twin Goals and IDA priorities\. The focus on increasing capacity at the
local level is expected to contribute to strengthen GoN´s capability and governance, in service delivery as well as extractive
sector activities\. It will also contribute to maximizing beneficial impacts of extractive industries for poverty reduction,
through both job creation and revenue mobilization\.
14\. The project also contributes to the World Bank response to COVID-19 pandemic \. In the short term, the project
will support the operationalization of local COVID-19 crisis management cells\. In the mid-term, the project will contribute
to COVID-19 resilience by contributing to improve service delivery, revenue mobilization from extractive sector and jobs,
especially in ASM, which is likely to increase as alternative livelihood following COVID-19 crisis and impact on the economy\.
II\. PROJECT DESCRIPTION
A\. Project Development Objective (PDO)
PDO Statement
15\. The project development objective is to strengthen local governmentsâ capacity and extractive sector
management for service delivery in the targeted regions\.
16\. Proposed PDO-level results indicators are:
ï Increased access to water, primary education and health services in rural areas in the targeted regions
ï Improved municipalitiesâ budget execution rate in the targeted regions
17 Available data on geological resources cover less than 15 percent of Nigerâs overall territory\.
18 World Bank (2018), Country Partnership Framework (CPF), Niger, No\. 123736-NE\.
Page 9 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
ï Increased extractive revenues transferred to LGs
ï Increased requests for mining exploration permits
ï Increased artisanal miners under valid mining permit and trained on environmental and social good practices
B\. Project Components
17\. The project will combine Performance-Based Conditions (PBCs) and Technical Assistance (TA) to support
Government reforms\. The TA will finance, inter alia, expertise to improve the legal framework, strategies and processes,
software and training manuals\. PBCs of the Governance of Extractives for Local Development (GOLD) Project will provide
incentives for implementation of policies, laws and regulations related to state deployment, COVID-19 coordination
mechanism and extractive sector management\.
18\. PBCs will be needed to incentivize implementation of nascent reforms contributing to PDO achievement\. There
is a need to strengthen the inter-ministerial dialogue and coordination and to incentivize decentralization reform
implementation\. PBCs provide incentives for adequate LG transfers and enhanced mining sectorâs oversight\. This approach
provides the fiscal space within a fragile and fiscally constrained context for implementing decentralization and extractive
sector reforms, both at their infancy, which implies a shift in budgeting those reforms implementation\. It increases
predictability and strengthens institutional capacity by fostering: (i) alignment of interests between sector ministries and
Ministry of Finance (MoF), and (ii) the dialogue between MoF and sector ministries on budgeting and expected results\.
19\. The project will target core institutions and actors involved in decentralization and extractive sector
management in the extractive regions of Agadez, Diffa, Tillabery and Zinder\. Institutions covered include core ministries
(Ministry of Interior, MoF) and extractive sector ministries (Ministry of Mines (MoM), Ministry of Petroleum) and those
subject to decentralization (Primary Education, Health, and Water) to effectively deploy public resources, execute budgets
at the local level and strengthen extractive sector management\.19 Support at the institutional level will be combined with
large-scale capacity-building in the targeted regions: Agadez, Diffa, Tillabery and Zinder\.
Component 1\. Strengthening Local Governmentsâ Capacities (US$59\.0 million equivalent, including EUR26\.5 million
credit and SDR21\.5 million grant)
20\. This component is to finance TA to strengthen systems and capacities for state deployment policies and incentivize
through PBCs the availability of public financing to transfer human and financial resources at local level\.
21\. Sub-component 1\.1: TA to strengthen the systems for resource deployment and LG performance (US$7\.0 million
equivalent)\. This sub-component will finance:
(i) Human Resource Management (HRM) TA including on: (a) local civil service management manuals and procedures;
(b) training systems of LG staff and oversight over civil servants in partnership with CFGCT (including defining a
capacity-building strategy and plan, training trainers, revising curricula, building the capacity of the CFGCT in
management20)\. PBC#1 (Operational municipalities and decentralized services with adequately trained staff) will
enable implementation and roll out of new curricula and the LG HRM process;
(ii) PFM TA including for: (a) preparation of the legal framework and procedures for deconcentrated management of
public resources and LG financing in line with the Western-Africa Economic and Monetary Union (WAEMU) directives
(including drafting legal texts and procedures defining the modalities relative to budgeting/execution/reporting on
sectoral transfers and extractive revenue to LG, on-the-job training at central level for targeted ministriesâ Directorates
of Studies and Programming (Direction des Etudes et Programmes, DEP) on pluri-annual programming and annual
performance reporting, studies on decentralization; (b) deploying the Treasury Single Account (TSA) e-system at local
19 Sector ministries selection was based on three criteria: (i) the level of readiness to decentralization; (ii) core functions of the government essential
to state deployment; and/or (iii) extractives sector\.
20 Including strategic business planning and functional review of CFGCT, distance learning feasibility study\.
Page 10 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
levels (upgrading the e-TSA software, equipment, training of software users)\. PBC#1 on training at local level will
include PFM legal framework updated through TA;
(iii) Local governance and risk monitoring systems through the design and implementation of two information
management systems for (a) monitoring LG management (HRM, PFM, including piloting perception data collection on
service delivery); and (b) monitoring drivers of conflict and violence by the National Center for Strategic Security
Studies (Centre National des Etudes Stratégiques et de Sécurité, CNESS), including perception surveys\.
22\. Sub-component 1\.2: PBCs for effective deployment of public resources (US$52\.0 million equivalent)\. This sub-
component is designed to incentivize, through PBCs, the mobilization of resources to implement public human and
financial resources deployment at the local level in the targeted regions and sectors\.
Table 1\. State Deployment PBCs
PBCs Performance Based Results (PBRs) US$m Schedule
PBR#1\.1 Following application of decrees/codes on the Local Civil Service Law: 6\.0 Year 1
revised LG code, decree on status of LG executive staff, decree on status of LG
PBC#1: Operational
fiduciary staff, decree on status of LG auxiliary staff, decree on status of technical
municipalities and
staff; and (ii) revised manual for payroll process have been prepared and adopted in
decentralized services
a manner satisfactory to the Association in Calendar Year (CY) 2020
with adequately
PBR#1\.2 Increased number of Public Officials from municipalities and decentralized 15\.0 Year 2-4
trained staff
services of Targeted Sectors trained in local public financial management and HR
management and are at post in the Targeted Regions
PBR#2\.1 Inter-ministerial decision on modalities for allocation and execution of 4\.0 Year 1
extractive revenues has been prepared and adopted in a manner satisfactory to the
Association in CY20
PBR#2\.2 Annual Extractive Revenue Transfers to LGs have increased as follows: 4\.0 Year 2-5
PBC#2: Effective PBR#2\.2\.1: By end of CY21, 40% Annual Extractive Revenue Transfers have been
mechanism for transferred to LGs
extractive revenue PBR#2\.2\.2: By end of CY22, 50% Annual Extractive Revenue Transfers have been
transfers to LGs transferred to LGs
PBR#2\.2\.3: By end of CY23, 60% Annual Extractive Revenue Transfers have been
transferred to LGs
PBR#2\.2\.4: By end of CY24, 70% Annual Extractive Revenue Transfers have been
transferred to LGs
PBR#3\.1: All municipalities in Targeted Regions have effectively received 3\.0 Year 2-4
PBC#3: Improved
notification of their annual budget allocations from the Ministry of Finance no later
timeliness of transfers
than 20 days after Finance Laws have been signed in CY21, CY22 and CY23,
to LGs
respectively
PBC#4: Improved LG PBR#4\.1: Targeted Regionsâ municipalitiesâ annual spending in Targeted Sectors has 2\.0 Year 4
capacity for better increased by 200% in comparison with CY19
service delivery in the PBR#4\.2: All municipalities of the Targeted Regions have an average student-to- 2\.0 Year 5
Targeted Sectors teacher ratio below 41 in their primary schools
PBC#5: Effective PBR#5\.1: 8 regional COVID-19 crisis management cells have been established in 10\.0 Year 1
central-local accordance with ministerial decision no\.052/PM of March 20,2020 and are
coordination operational in a manner satisfactory to the Association in CY20
mechanism for COVID- PBR#5\.2: The 8 regional COVID-19 crisis management cells have prepared and 2\.0 Year 2
19 emergency provided to the Recipientâs central COVID-19 crisis management cell cumulatively
response 80 weekly reports to central level since their establishment
PBC#6: Increased PBR#6\.1: the Recipient has prepared and adopted Inspection Manuals satisfactory 0\.5 Year 1
impact of inspection to the Association in CY20
Page 11 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
PBCs Performance Based Results (PBRs) US$m Schedule
missions and PBR#6\.2: at least 200 Public Entities have been inspected annually using the 1\.5 Year 2-4
coordination with LGs Inspection Manual by end of each CY in (i) CY21, (ii) CY22, (iii) CY23
in Targeted Sectors PBR#6\.3: at least 100 Public Entities inspected the previous CY have implemented 2\.0 Year 3-4
70% or more of inspection recommendation by each CY in (i) CY2022, and (ii)
CY2023
Total Financing allocated 52\.0
PBC#1 on HR deployment
23\. Purpose\. This PBC#1 will incentivize the implementation of the HR strategy related to decentralization to ensure
all LG have the key executive staff posted in the LG and adequate support from line ministries at local level, thus increasing
the capacity of LG to manage their financial resources, improve service delivery and foster local development\. This PBC
will also incentivize an increase in CFGCTâs capacity to implement at scale the training of LG executive staff, local councilors
and relevant deconcentrated services in HRM & PFM â thus building human capacity in managing the transfer of financial
resources and responsibilities to LG\.
24\. Eligible Expenditure Programs (EEP)\. Related EEP are from the National Agency for Financing Territorial
Communities (ANFICT)21, LG recurrent budget (financed mostly through the LG Development Support Fund, FAD),22 the
CFGCT and the Ministry of Interior in charge of Decentralization departments i\.e\. General Direction of Decentralization
and LG (Direction Générale de la Décentralisation et des Collectivités Territoriales, DGDCT), HR Department (Direction des
Ressources Humaines, DRH), and DEP\. Those departments are implementing HR and LG staffing policy\. ANFICT is
responsible for the management of FAD, providing LG subsidy for recurrent spending\. Resources to those departments
and FAD have to increase to implement decentralization HR policies\. The CFGCT, responsible LG trainings across the
territory, resources will increase significantly to scale-up trainings\.
PBC#2-3-4 on LG spending
25\. Purpose\. These PBC#2, PBC#3 and PBC#4 will incentivize the implementation of the mechanism for transferring
financial resources to LG in time, hence increasing LG spending in the targeted social sectors, i\.e\. primary education, health
and water â the main responsibilities transferred to LG\. Those PBCs are complementary to one another, capturing the
PFM chain: from effectiveness and timeliness of transfers to budget execution capturing the capacity to both plan and
execute budget, and ultimately, deliver services\. These PBCs are in synergy with PBC#1 on HRM\.
26\. EEP\. Related EEP are from the ANFICT, DGDCT and the Directorate General of Treasury and Public Accounting
(Direction Générale du Trésor et de la Comptabilité Publique, DGTCP) and its Regional Directorates and the
Decentralization units in the targeted sector Ministries (Primary Education, Health, Water)\. ANFICT supports LG in PFM
and the monitoring of central transfers to LG (FAD and the Equalization Fund ( Fond de Perequation, FP)\. DGDCT oversees
monitoring and controlling LG budgeting and annual accounts, while the DGTCP is responsible for the control of LG budget
execution\. The sector Regional Directorates and the decentralization unit in the sector ministries comprising of the DEP,
DRH, Inspection Services (IGS, Inspection Générale des Services) play a crucial role in budget planning and oversight of LG
for their respective sectors\. Thus, this EPP relates to the implementation of the PFM mechanism related to
decentralization, shifting resources and building capacity in those institutions in charge of local PFM\.
PBC#5-6 on COVID-19 and social sectorsâ coordination with LG
21 Agence Nationale de Financement des Collectivités Territoriales, National Agency for Financing Territorial Communities
22 Fond dâAppui au Développement, LG Development Support Fund
Page 12 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
27\. Purpose\. PBC#5 and PBC#6 will incentivize the coordination of social sector ministries at central and local level with
the LGs on COVID-19 emergency response as well as inspection of service providers across the territory\. The COVID-19
emergency response makes it imperative to clearly define coordination channels and responsibilities between
deconcentrated services, LGs and the central government\. The increase of supervision and inspection missions is also a
consequence of on-going decentralization policy and civil service reform\. Both are impacting the ability of line ministries
to fulfill their functions\. Ministerial reorganization, as well as transfers of responsibilities aim to increase the field presence
of line ministries, in order to support LG, supervise frontline service providers and ultimately improve service delivery\.
28\. EEP\. Related EEP are from targeted line ministriesâ departments (Primary Education, Health, Water) responsible
for planning, facilitating and implementing supervision: Inspection (IGS), Planning (DEP) and HR (DRH), as well as from the
local representatives of the Directorate General of Territorial Administration and Deconcentration ( Direction Générale de
lâAdministration du Territoire et de la Deconcentration, DGATD) coordinating the COVID-19 response in the field with LGs\.
29\. Verification protocols\. An Independent Verification Agent (IVA) will be contracted, not later than three months
after the effective date, to support the General Inspection of Finance (Inspection Générale des Finances, IGF) and Court of
Auditors (Cour des Comptes) in the annual verification of PBRs and audit the EEP as needed, prior to their submission to
IDA\. The World Bank retains the right to make the final decision on whether a PBR has been achieved or not and may
undertake independent quality assurance checks of selected PBRs to ensure continued robustness of the system\.
30\. Retroactive Financing\. The project will retroactively finance certain activities, aligned with the PDO, and which
the GoN has been implementing within the reform processes undertaken as part of this project\. The retroactive financing
will cover activities related to the implementation decrees of the 2019 Local Civil Service Law, 23 the revised procedures
for payment processes, the joint inter-ministerial decision on implementation modalities for extractive revenue
transferred to LG, and the operationalization of local COVID-19 crisis management cells\. As such, no withdrawal shall be
made prior to the financing agreement date, except for withdrawals up to an aggregated amount not to exceed US$20
million for payments made one year prior to the signature of the finance agreement for eligible expenditures\.
Table 2\. Synergies between GOLD TA, GOLD PBC and Current IDA on public sector
Implementation through
IDA PCDS24 results GOLD projectâs TA at central level
PBCs
Civil service TA: ministerial organization, TA on manuals to implement local HRM PBC#1: staffing and PFM/HRM
performance evaluation system TA on curricula for LG, training of trainers training; PBC#2-3-4: spending;
(2018/20); biometric census (2019/20) TA and equipment for LG performance monitoring PBC#6: inspection missions
system
TA on program budgeting (2017/19), TA on LG PFM regulation in line with WAEMU directives PBC#1: adoption of key LG
TA on central TSA (2018/19) TA and equipment on LG e-Treasury Single Account PFM regulation (2020)
TA on National M&E System (2019/20) TA on curricula for training LG on PFM PBC#4: LG financial transfers
LG Census (2018) TA and equipment for M&E of LG performance
31\. Component 2\. Improving extractive sectorâs management (US$37\.0 million equivalent, including EUR16\.6 million
credit and SDR13\.5 million grant)\. This component will finance TA to improve extractive sectorâs management and
investment attractiveness and its integration into the local economy\. The component will, through PBCs, incentivize the
availability of public financing to register and train ASM miners and to increase oversight on mining sites\.
32\. Sub-component 2\.1 TA to improve extractive sector management (US$27\.0 million equivalent)\. This
subcomponent aims to improve extractive sector management through better regulatory framework, geo data
23 Revised LG code, decrees on status of LG executive staff, LG fiduciary staff, LG auxiliary and LG technical staff\.
24 Public Sector Capacity and Performance for Service Delivery (PCDS) P145261
Page 13 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
management and risk mitigation capacity, and to improve extractive sector integration in the local economy through
enhanced local content and ASM capacity\. The sub-component will finance TA on:
(i) The regulatory framework: (a) updating legal and policy framework (including fiscal regime, local content, emergency
response policies and social and environmental regulations), (b) building capacity (including training and toolkits on
monitoring licenses and contracts, environmental and social impacts)\. PBC#7 and PBC#8 support at scale
implementation of the legal framework at the local level; (c) developing long-term socio-economic and environmental
government strategy for uranium mine closure (diagnostic, strategy, multi-stakeholders consultation, action plan)
without financing mining closure activities; (d) developing strategy, action and capacity-building plans for
implementation of extractive industries local content policies;
(ii) Geo-data management: Support GoN to acquire, process, store, and disseminate information about the countryâs
subsoil to better assess, promote and manage its mineral potential, and to help the identification of dedicated
artisanal mining zones, through: (a) an airborne and geophysical and geological data collection and verification
campaign in priority zones;25 (b) design and implementation of an integrated information management system for the
extractive sector, enabling a web-based integrated management of geodata, mining and petroleum cadaster,
contracts, environmental, fiscal and production data, in line with EITI; (c) capacity-building for the mineral sector
laboratory in Niamey and the mining cadaster, which are both part of the MoM, to operate in line with international
good practices; and (d) development and implementation of an investment promotion strategy of large mineral
deposits to attract investors26;
(iii) ASM management by (a) elaborating a strategy for the formalization of the gold ASM value chain (including an
organizational assessment of ASM oversight, studies on supply chain, multi-stakeholders dialogues on gold ASM); (b)
trainings public officials on the revised institutional framework, including social and environmental impactsâ
management at mine site level27 â PBC#7 and PBC#8 will support the implementation of this legal framework by
trained public officials when they formalize ASM and control mining sites; (c) designing training and demonstration
centers at pilot salt and gold ASM sites to showcase internationally recognized socially and environmentally sound
mining practices and techniques, and minersâ business practices, specifically targeting women; 28 and (d) supporting
the organization for Women in Extractives in Niger (AFSIEN29) with capacity building and studies\.
33\. Sub-component 2\.2: PBCs for effective extractive sector oversight (US$10\.0 million equivalent) \. This sub-
component is designed to incentivize through PBCs the mobilization of resources to implement the effective oversight of
the extractive sector, from ASM to Large Scale Mining (LSM) sites to improve social, environmental and fiscal compliance\.
Table 3\. Extractives PBCs
PBCs PBRs US$m Schedule
PBR#7\.1: at least 70 mining license holders have been subject to annual
inspection using the Extractive Sites Inspection Manual in CY22, CY23, and 3\.0 Year 3-5
PBC#7: Increased impact of
CY24
inspection missions of
PBR #7\.2: at least 50 mining license holders inspected the previous CY have
mining sites
implemented 70 percent or more of inspectionâs recommendations using the 2\.0 Year 4-5
Extractive Sites Inspection Manual CY23 and CY24
PBC#8: Number of artisanal PBR#8: 400 new artisanal and small-scale mining permits issued in compliance
5\.0 Year 2-5
and small-scale mining with the Recipientâs Mining Code
25 Including geo-data surveys, data banks, compilation of data aiming at the production of national thematic maps (geology and prospectivity), etc\.
26 Including maps and reports, workshops, media documentation, and participation in international conferences and industry meetings\.
27 Capacity-building on good practices for mining and processing techniques, mining titles, waste management, mine site organization,
environmental and social risks (including gender dimensions) and mitigation measures, revenue mobilization, and management\.
28 E\.g\. guide on good practices for ASM miners, training on health & safety issues; environmentally responsible mining techniques methodologies\.
29 Association des Femmes du Secteur des Industries Extractives du Niger, Women in Extractive Sector Network\.
Page 14 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
PBCs PBRs US$m Schedule
permits issued by the MoM
Total Financing allocated 10\.0
PBC#7 on mining sites inspection
34\. Purpose\. This PBC#7 will incentivize the increase of inspection of mining sites, which are currently limited, thus
improving mining sitesâ oversight (both large scale and ASM) and coordination with local authorities\. This will increase the
implementation of the policy and legal framework, enhancing mining sitesâ compliance\. It will also improve MoMâs
understanding of mining sitesâ issues and inform policy and strategy\.
35\. EEP\. Related EEP are from the MoM, in charge of exploitation and environment at central and deconcentrated
levels, as well as the mining laboratory and geological research center ( Centre de Recherche Géologique et Minière, CRGM)
and the local representatives of the DGATD\. MoM services and CRGM are overseeing mining sites and will need additional
resources to achieve the PBC\. DGATD is involved at local level in mining inspection missions to ensure continuous oversight
of social and environmental aspects of mining sites with communities, LG and traditional authorities\.
PBC#8 on ASM
36\. Purpose\. This PBC#8 will incentivize the formalization process of, currently mostly informal, artisanal mining\.
ASM permits are valid for three years and geographically defined\. Up to date information on ASM will inform GoN on
challenges related to ASM and inform MoM programming, as well as provide the opportunity for MoMâs deconcentrated
units to increase awareness of ASM permit owners on environmental and social practices, and supply chain\.
37\. EEP\. Related EEP are from the MoM departments responsible for ASM permits verification and registration, and
awareness-raising and training (Artisanal Mining; Planning; Geology; CRGM; Environment; Legal; Financial Management;
HR)\. The local representative of the DGATD will also be involved to ensure coordination with traditional authorities and
ASM representatives\. Increase in temporary staffing and operating costs are expected to achieve the PBC\.
38\. Verification protocols\. An IVA will be contracted to support the IGF and Court of Auditors ( Cour des Comptes) to
conduct annual verification for PBRs and audit the EEP upon needs, prior to their submission to IDA\. The World Bank will
retain the right to make the final decision on whether a PBR has been achieved and may undertake independent quality
assurance checks of selected PBRs to ensure continued robustness of the system\.
Table 4\. Synergies between GOLD TA, GOLD PBC and current IDA on extractive sector
Building on PRACC30 and PCDS projectsâ GOLD projectâs TA at central level Implementation
results through PBCs
TA on mineral cadaster and laboratory (2019) TA on legal and policy framework, incl\. templates for PBC#7: mining
and oil and mining codes (2017) inspection, capacity building of public officials inspection
Audit of SOPAMIN31 (2018); TA on oil and TA on ASM strategy, ASM monitoring tools PBC#8: ASM
mining codes (2017); census of ASM sites TA and equipment for pilot training ASM sites
(2019)
Component 3: Project management (US$4\.0 million equivalent, including EUR1\.8 million credit and SDR1\.5 million
grant)
30 Projet dâAppui à la Croissance et la Competitivite, Project for Competitiveness and Growth), P127204\.
31 Société du patrimoine des mines du Niger, State-Owned Mining Investment Company (SOPAMIN)
Page 15 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
39\. This component will ensure project coordination and management \. The component will support: (i) day to day
management of the project; (ii) procurement and financial management; (iii) monitoring and evaluation (M&E); (iv)
coordination of project activities; (v) communication; (vi) support of training and advisory services needed for the overall
performance of the project; and (vii) leadership and change management to address collaboration and cooperation
challenges, e\.g\. through coaching on Rapid Result approach within targeted ministries\.
Cross-cutting topics in projectâs components
40\. Project activities are designed to contribute to citizen engagement (CE) and women empowerment and mitigate
FCV risks and climate change\. Project activities in both components contribute to address key FCV drivers related to social
inclusion, CE, extractive sector-related risks, jobs, and improving GoN capacity to monitor risks of conflicts (Annex 7)\.
Climate change considerations are integrated in project activities wherever possible (Annex 8)\. Project activities will also:
ï address gender gaps related to extractive sector and local governance: (i) in access to water, health and education,
sectors decentralized to LG, which the project intends to contribute to improve; (ii) in women participation in local
governance, which the project intends to improve by fostering training of female public officials, and by including
gender budgeting and participatory approaches to LG management in the large-scale trainings of local authorities;
(iii) in artisanal mining (low pay, low status, higher health risks), which the project intends to contribute to improve
through training and coaching female artisanal miners in particular, piloting ASM and LG partnership in local
development planning, especially related to issue affecting women in particular (Annex 2);
ï contribute to fostering CE: project supervision will include consultations with direct beneficiaries and citizens, and
feedback will be used to adjust projectâs implementation\. A project grievance redress mechanism will be set up
following best practices, inform projectâs implementation and its performance will be tracked through a projectâs
intermediary indicator\. Also, the following projectâs activities will contribute to strengthen CE by the GoN : (i) large-
scale capacity-building mainstreaming of participatory approach in LG management; (ii) pilot data collection on
service delivery and decentralization from citizens; (iii) pilot ASM miner participation in the LG planning; (iv)
compliance with new EITI standards\.
41\. Project activities will also contribute to mitigate the COVID-19 impact: They will (i) provide support to
operationalize local COVID-19 crisis management units including in social sectors and for LG and local authorities; (ii)
integrate pandemic aspects in GoN fragility driverâs monitoring system; (iii) provide support for a LG performance
monitoring information system to monitor service delivery i\.e\. health; (iv) support e-TSA deployment at the local level, to
reduce use of cash; (v) strengthen local authoritiesâ coordination capacity, including in health sector; (vi) increase
extractive revenue mobilization, hence mid-term fiscal and economic resilience; and (vii) increase ASM oversight as ASM
is increasing as an alternative livelihood following COVID-19 crisis\.
Table 5\. Synergies between GOLD TA, GOLD PBC and current IDA on extractive sector
Components US$ million
Component 1: Strengthening Local Governmentsâ Capacities 58\.50
- Sub-component 1\.1: TA to strengthen the systems for resource deployment and LG performance 6\.50
- Sub-component 1\.2: PBCs for effective deployment of public resources 52\.00
Component 2: Improving extractive sectorâs management 36\.50
- Sub-component 2\.1 TA to improve extractive sector management 26\.50
- Sub-component 2\.2: PBCs for effective extractive sector oversight 10\.00
Component 3: Project Management 3\.80
Project Preparation Advance 1\.20
Total 100\.00
Page 16 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
C\. Project Beneficiaries
42\. The direct beneficiaries of the project will be: (i) civil servants from targeted ministries and agencies, (ii) LG staff
and elected representatives in targeted regions, and (iii) the artisanal miners targeted by the ASM pilot, with a focus on
women and youth\. Indirect beneficiaries include citizens in the targeted regions, who benefit from better service delivery
by LG, especially in health, primary education and water\. In addition, citizens will also greatly benefit from a coordinated
COVID-19 crisis response between the central and local government, mitigating both health and economic impacts\.
D\. Results Chain
43\. The project will support government efforts in deploying human and financial resources to LGs, coordinating the
COVID-19 response, investing in geo-data and transparent extractive sector management, and supporting the
contribution of ASM to sustainable development\. By supporting deconcentration and decentralization reforms, the
project will increase financial execution and access to service delivery outside Niamey, especially in the context of the
COVID-19 pandemic\. Investing in geo-data, extractive sector management and transparency will help attract investors,
foster an extractive sector more integrated in the local economy, mitigate associated social and environmental risks, foster
job creation and boost revenue mobilization\. Formalizing ASM and enhancing oversight capacity will foster the sector as
a driver of resilience rather than of fragility\. Increased transparency and participation in local governance and extractive
industries, at all levels, will contribute to strengthen accountability and state credibility (Figure 1)\.
Page 17 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Figure 1\. GOLD Project Theory of Change
Outputs Outcomes PDO Impact
Increased LG HR capacity in the targeted regions in PFM,
HRM, CE and conflict mediation (PBC#1)
Increased spending of LG in social sectors (Primary
Education, Health, Water) (PBC#2, PBC#3, PBC#4) Increased access to services in
Primary Education, Health, Water
Increased oversight of LG LG performance improved
Component 1
Improved LG public finance
Increased oversight of social sector ministries &
management Drivers of Fragility mitigated
coordination at local level (PBC#5) (incl\. COVID-19
response, PBC#6) To strengthen Local - Improved access to services
Governmentsâ capacity - Improved citizen engagement
Improved analysis on conflict risk and - Improved capacity to mitigate
extractive sector local conflict
Improved extractive sector legal and policy framework in management - Increased transparency in
line with global good practices for extractive sector
service delivery - Decreased negative social and
Increased capacity for extractive policy framework in environmental impacts of the
implementation the targeted extractive extractive industries in targeted
Increased interest from private regions
regions
Increased oversight of mining sites (PBC#7) sector investment in extractive - Increased jobs related to
Component 2 extractive sector
Increased knowledge of geological potential Increased use of environmental
and social good practices in Revenue mobilization from
Increased capacity of artisanal miners in environmental, extractives, including artisanal and extractive sector increased
social safeguards, and business (PBC#8) small-scale mining
Increased transparency of extractive sector
Intermediate Results Indicators PDO Level Indicators
⢠Public officials trained on LGâs PFM and HRM, conflict mediation and Citizen Engagement ⢠Increased access to water, primary education and health services in rural
⢠Citizens in the targeted regions who are aware of their municipality's annual investment projects plan and think it area in the targeted regions
corresponds to their priorities Grievances received and addressed timely by the project ⢠Improved municipalitiesâ budget execution rate in the targeted regions
⢠Municipalitiesâ own-tax recovery rate increased ⢠Increased extractive revenue transferred to LG
⢠National reports on risk of conflict produced, incl\. perceptions ⢠Increased requests for mining exploration permit
⢠Beneficiariesâ satisfaction ⢠Increased artisanal miners under valid mining permit and trained on
⢠EITI compliance to new standard environmental and social good practices
⢠Geological knowledge increased
⢠Mine closure strategy adopted
⢠Local content strategy for extractives adopted
⢠Women leadership in ASM sites increased
⢠Perceptions of extractive firms on legal system and geo-data management improved
Page 18 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
E\. Rationale for Bank Involvement and Role of Partners
44\. The project is suited for GoNâs current public sector reform agenda\. The project is expected to help GoNâs efforts
to build a positive state presence, focused in four main extractive regions displaying a clear economic potential and key
challenges in terms of fragility, service delivery, and social stability\. This is the case, for example, with the deployment of
stateâs financial and human resources, combining hands-on support through TA and PBCs to incentivize and support on-
going PFM and public sector reforms in targeted sectors (primary education, health and water)\. The Bank´s involvement
also adds value by bringing international experience and know-how from similar contexts\.
45\. PBCs are designed to incentivize the GoN to deploy additional resources while addressing sustainability issues\.
While decentralization in Niger has been part of the governmentâs agenda since 1996, it remains limited\. The projectâs
PBCs have been designed to bolster these reforms and give them the weight and incentives needed for full
operationalization\. The project will also help to ensure that extra costs associated with deployed resources are
sustainable, through synergies associated with the development of the extractive sector\. This will eventually generate
additional public revenue, 15 percent of which is earmarked for LGs from extractive regions\.
46\. The mining sector is a priority for the GoN and a key source of growth essential to achieving five key sustainable
development targets\. These targets are poverty elimination, gender equality, shared and sustainable growth, reduced
income inequality, and social inclusion\. Project interventions directly relate to the provision of public goods that can
stimulate private economic activity and investment\. Moreover, the project was selected as a priority for IDA allocation,
given the high potential of the mining sector for poverty reduction through export-led growth, public sector financing,
employment opportunities for the youth through local procurement and ASM\.
47\. The project builds on past interventions and synergies with other partners\. GOLDâs support builds on the results
of the ongoing Public Sector Capacity and Performance for Service Delivery (PCDS, P145261) project, on PFM and HRM
reforms achieved at central level, and the Project for Competitiveness and Growth (PRACC, P127204), with regards to
the extractive sector\. Support to decentralization is complemented by other projects and partners supporting the
decentralization process\.32 Supporting effective state deployment will also provide foundations for on-going and future
projects in education, water and health (cf\. Annex 9)\. Finally, the Swiss government has expressed interest to provide
additional support to the ASM component through a trust fund of between US$7\.0-10\.0 million to be implemented by
the GOLD PIU\. The preparation has been delayed because of the COVID-19 crisis, but approval is expected by 2021\.
F\. Lessons Learned and Reflected in the Project Design
48\. Bank experience in Niger and countries with similar features shows combining result-based financing and TA as
an effective mix\. Combining PBC and TA has been successfully implemented in other fragile contexts such as Afghanistan,
Mali and conflict-affected provinces of Pakistan\. Lessons from on-going projects using PBC in Niger guided GOLD design
on both verification process and PBC formulation\.33 Lessons from other projects on public sector reform were also
incorporated, such as: (i) consolidating TA in a few large contracts to reduce procurement-related bottlenecks; and (ii)
support institutional change management through Rapid Result and Leadership TA\. 34
49\. Lessons from Bank operations within the Economic Community of West African States (ECOWAS) highlight the
need to focus on long-term investment in institutional capacity-building to oversees extractive industries and foster a
sustainable development of the sector\. The GOLD project builds upon reforms already supported in Niger by the PRACC
32 Mostly focused on hands-on TA to LGs and financing LG investments projects directly\. Cf\. annex 9\.
33 Lessons from Niger PCDS-P145261 and Health-P147638: (i) combining an IVA with the IGF and the Cour des Comptes (Court of Auditors) for EEP
verification; (ii) indicators should be clear, measurable, transformative and aligned with government programs\.
34 E\.g\. Niger PCDS-P145261, Niger Health-P147638\.
Page 19 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
(P127204), notably the new petroleum and mining codes, the new mineral cadaster and laboratory, and the EITI process\.
Experience from PRACC indicates that: (i) long-term capacity-building of public administration to implement and enforce
the laws, and (ii) the presence of public officials on the ground is crucial, as mine site level impacts cannot be managed
from Niamey\. In this regard, the PBC will provide the incentives and the means for enhanced control of extractive
industries\. The PRACC project has provided the team with, on the one hand, strong working relations with the ministries
of Mines and Petroleum, and on the other hand, with real insights in the strengths and challenges of those ministries\. In
addition, the project builds upon lessons learned from other extractive sectorâs TA in West Africa, such as the Mineral
Development Support Project (MDSP-P124648) in Burkina Faso (2012-2018), which focused on increasing knowledge of
resources, institutional capacity building for monitoring, evaluation and enforcement, mine revenue collection and
transparency, and legal and regulatory aspects\. The Mali Governance in Mining sector (P164242) project was recently
approved, and shares several objectives with the Niger project, notably the formalization of the ASM sector and the
collection and management of geodata\. Where relevant, the project will seek to foster south-south learning between the
respective Ministries of Mines\.
50\. A gender-sensitive approach in extractive was also considered in project design\. As per World Bank report and
projects,35 taking a gender-sensitive approach in extractive may have a positive and significant development impact\.
Therefore, the GOLD project makes use of these guidelines to strengthening the role of women in ASM\. The gender-
sensitive framework was successfully implemented in ASM with Democratic Republic of Congo Growth with Governance
in the Mineral Sector (P106982), and Natural Resources Governance Project in Central African Republic (P161973)\.
III\. IMPLEMENTATION ARRANGEMENTS
A\. Institutional and Implementation Arrangements
51\. The project will be managed by a PIU embedded at the Ministry of Planning (MoP) \. Institutional arrangements
ensure: (i) coordination with the Ministries of Interior, Finance, Civil Service, Mines and Petroleum; and (ii) project
coordination, fiduciary management and M&E\. The Steering Committee (SC) will include main project stakeholders and
will validate project planning and implementation reports submitted by the PIU\. PIU staffing will comprise a national
coordinator, two technical experts on extractives and public sector management who will coordinate with the relevant
lead ministries, a financial management specialist, an accountant, a procurement specialist, an environmental safeguards
specialist, a social safeguards specialist, an M&E specialist, and a communication specialist\. The PIU shall be maintained
at all times during project implementation with functions, resources and staffing satisfactory to IDA\. Leading counterparts
in the main beneficiary ministries (Ministry of Interior, MoF, MoM) will be designated to support the PIU in project
implementation, and focal points in other involved ministries and agencies will be designated to ensure coordination
between beneficiaries with the PIU\. The Project Implementation Manual (PIM) detailing administrative, procurement,
financial management, safeguards, M&E procedures and arrangements is in preparation and should be finalized by
effectiveness\.
B\. Results Monitoring and Evaluation Arrangements
52\. The PIU will develop a M&E framework to support project implementation\. The M&E system will be a result-
based framework, conceived as a management tool, and emphasizing project impacts and outcomes, as well as the
regular monitoring of inputs and outputs covering the three project components\. The M&E system will build on the
targeted ministries Annual Performance Report as well as the National M&E system being improved under the leadership
35 World Bank (2015) Gender and the Extractive Industries: An Overview\.
Page 20 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
of the MoP with TA from PCDS project\.
53\. The M&E process will involve data collection and reporting, production of periodic activity reports, and biannual
reviews\. A mid-term review will be conducted no later than three years after the first disbursement\. A final independent
evaluation will be conducted in the last semester of project implementation to assess overall project results achievement\.
Beneficiaries satisfaction surveys will be included to inform the Result Framework\.
54\. The implementation and results of this project will be monitored through a variety of instruments, including
close supervision of the World Bank through missions, regular field visits by project beneficiary entities and project staff;
oversight of the project SC; annual verification of PBRs and audit of EEP, annual operational audits that will produce
timely information on the compliance of all stakeholders with the procedures and responsibilities outlined in the PIM
and M&E plan\.
C\. Sustainability
55\. Project sustainability depends on client policy and institutional capacity, continuity, and political stability\. The
design of the project aims at fostering policy implementation in the long term, as PBCs incentivize the government
commitment to finance state deployment policy as well as extractive sector oversight and transparency\. The alignment
of TA and PBCs with the relevant government programs is expected to foster sustainability of the TA outputs\. The MoF
in addition to targeted line ministries was closely associated during the design\. Large-scale PFM and HRM capacity
building in targeted regions will foster better management of resources transferred to LGs\. Meanwhile, a viable state
deployment policy and extractive sector investment can only be sustainable if LG financial resources allocations are
maintained\.
56\. External factors such as insecurity and international commodity prices may impact project sustainability \.
Insecurity may favor security spending, affecting budget allocation to other sectors\. Insecurity as well as international
commodity prices may impact foreign direct investment in extractives\. Meanwhile, the project will contribute to mitigate
fragility risks, increase fiscal space, and foster access to information on geological data\.
57\. Stability and peace are enhanced by this project through public resourcesâ deployment, risks monitoring and
increased extractive sectorâs oversight\. By enhancing local accountability and creating peace dividends (stronger local
development from increased transfers to LGs), the project will help to mitigate factors that drive fragility\. Improved
coordination between LG and line ministries will improve service delivery as well as COVID-19 response and resilience\.
Enhanced risk monitoring will enable a better allocation of resource by the GoN on sectors and areas to mitigate risks\.
Increasing investments from the private sector in extractives will improve the fiscal space, enabling state deployment
implementation, and the consequent improvements of service delivery across the territory\.
58\. Sub-regional coordination to sustain effort on the artisanal gold mining sector will be important \. Coordination
and harmonization at sub-regional level with border or peer countries in the sub-region will be a key to ensure efforts on
gold ASM last\. This project will support regional dialogue on ASM management to the extent possible, through close
collaboration with other TA projects that support the formalization of ASM in Mali, Burkina Faso, Togo and Guinea\.
59\. Fiscal sustainability\. The Economic Analysis shows a positive rate of return of investments (Annex 10)\.
Implementation of decentralization and extractive policies will require additional efforts and resources from the
departments in charge of operationalizing the LG transfer mechanism and enhancing control of extractive sector in the
short term, which the EEP will contribute to cover\. In the mid-term, the fiscal sustainability impact is limited because: (i)
increase of LG spending is mostly a shift from central government spending to LGs and spending efficiency is expected to
be higher when executed by LGs; (ii) increased recurrent spending at the local level is marginal compared to the national
budget and mitigated by the expected increase in LG own-source revenue mobilization; and (iii) revenue mobilization
Page 21 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
from extractive industries is expected to increase following projectsâ investment\.
IV\. PROJECT APPRAISAL SUMMARY
A\. Technical, Economic and Financial Analysis
60\. The economic analysis shows that the project is largely economically profitable with a positive Net Present
Value (NPV) of US$48\.01m and an Internal Rate of Return (IRR) of 22\.5 percent\. The sources of quantifiable economic
gains attributable to the project are: (i) the deployment of the stateâs financial resources through decentralization reform;
(ii) the increase in revenues from the extractive sector; and (iii) mitigation of conflictsâ risks\. The benefits are converted
into monetary terms using a method based on the fiscal multiplier (Annex 10)\. The positive NPV and IRR are robust to
adverse scenarios\. The project is also expected to generate welfare gains that cannot be quantified\.
B\. Fiduciary
Financial Management
61\. A new PIU will be created and embedded at the MoP by project effectiveness date\. The PIU of the MoP will
manage both the technical and the fiduciary aspects of the proposed project\.
62\. Highlights from the Financial Management (FM) assessments of the MoP and risk mitigating steps \. An
assessment of the FM arrangements has been conducted for the MoP which will host the new PIU\. The objective of the
assessment was to determine whether this entity has adequate FM arrangements (including planning and budgeting,
accounting, internal control, funds flow, financial reporting and auditing)\. The FM arrangements are acceptable if they
are considered capable of (a) correctly recording all budgets, transactions and balances; (b) supporting the preparation
of regular and reliable financial statements; (c) safeguarding the entityâs assets; and (d) reflecting auditing arrangements
acceptable to the World Bank\. The FM assessment was carried out in accordance with the FM Manual for World Bank
Investment Project Financing (IPF) Operations (effective on March 1, 2010 and was last revised on February 10, 2017)\.
The detailed summary of the completed FM assessment and suggested measures to address risks are described in Annex
1, and summarized hereafter\. The FM arrangements in the MoP will be adequate when the following measures are
implemented:
ï Project Implementing Unit\. A PIU is created by a ministerial act and embedded in the MoP\.
ï Accounting Staff\. (i) A FM Specialist (FMS) and a senior accountant are recruited not later than three months after
the Effective Date\.
ï Computerized accounting information system\. The MoP has acquired an accounting software to support project
specifics, within three months after effectiveness\.
ï FM Manual\. The MoP has prepared and adopted an FM manual as part of the PIM, in form and substance acceptable
to the WB, for the purpose of implementing this proposed project; this is an effectiveness condition\.
ï Internal Audit\. An internal audit unit is established\. The internal audit team will comprise of a senior internal auditor\.
The senior internal auditor is to be recruited not later than three (3) months after the Effective Date\. An additional
internal auditor would be recruited if needed, during the project implementation\.
ï External Audit\. The MoP through its PIU has recruited an external auditor not later than six (6) months after the
Effective Date\.
ï PBCs verification\. No later than three (3) months after the Effectiveness Date, the MoP, through its PIU, shall recruit
an independent audit firm for the purpose of supporting the IGF to carry out an annual independent assessment and
verification of the performance of the targeted ministries towards achieving the PBCs and EEP\. The Court of Account
(Cour des Comptes) will validate the report and issue the certification of expenditures\.
Page 22 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
ï Project Account\. The MoP will be required to open a separate bank account for project funds\.
63\. The overall FM risk for the project is rated Substantial\. The conclusion of the FM assessment is that the proposed
FM arrangements, including the mitigation measures for the project, meet the World Bankâs minimum FM requirements
under Policy and Directive for IPF operations, and, hence, are adequate to provide, with reasonable assurance, accurate
and timely information on the status of the project required by the IDA\.
64\. Eligible expenditure programs (EEPs) will consist of salary and wages, training, and operating cost of the
ministries and entities involved in the achievement of the PBCs\. The World Bank Guidance Note on IPFs with PBCs dated
January 2020, World Bank Policy and Procedures for IPFs, including procurement, FM, safeguards policies and anti-
corruption guidelines apply to this project\. Upon achievement and verification of PBCs, the World Bank will disburse
funds to a governmentâs account located at the central bank, against the EEPs, as evidenced in the projectâs semiannual
Interim unaudited financial reports (IFRs)\. The definition of EEPs for this project will be included in the PIM\. Eligible
expenditures, as ascertained in the EEPs Statement, will form part of the IFRs submitted for disbursement, and exceed
PBCsâ allocated amount\. EEPs will be audited as part of the projectâs annual financial statement audit\.
Table 6\. Estimate of Eligible Expenditure Programs
Ref\. local Eligible Expenditure Amount (US$ million)
Identified EEP
level
(salaries and benefits, operating costs) 2019 2020 2021 2022 2023 2024 Total
exec\.
FAD: LG recurrent cost subsidy 3\.81 x 3\.18 3\.50 3\.85 4\.23 4\.23 18\.99
ANFICT 0\.65 x 0\.99 1\.09 1\.20 1\.32 1\.32 5\.91
CFGCT 1\.36 x 1\.27 1\.52 1\.83 2\.19 2\.19 9\.01
Ministry of Interior: DGDCT, DRH 0\.36 - 0\.40 0\.44 0\.44 0\.44 0\.44 2\.16
Treasury network (DGTCP) 6\.88 x 6\.37 6\.37 6\.69 6\.69 6\.69 32\.81
Regional Directorates (4 regions) x
anddecentralization unit (DEP, DRH, IGS) 8\.08 8\.27 8\.35 8\.35 8\.35 8\.35 41\.67
of Ministry of Primary Education
Regional Directorates (4 regions) x
anddecentralization unit (DEP, DRH, IGS) 1\.96 1\.82 1\.91 1\.91 1\.91 1\.91 9\.48
of Ministry of Public Health
Regional Directorates (4 regions) x
anddecentralization unit (DEP, DRH, IGS) 0\.95 0\.99 1\.01 1\.01 1\.01 1\.01 5\.01
of Ministry of Hydraulic and Sanitation
Directorate in charge of Territorial x
0\.12 0\.22 0\.24 0\.24 0\.24 0\.24 1\.16
Administration: DGATD
Ministry of Mines 1\.61 x 1\.66 1\.83 1\.90 1\.98 1\.98 9\.34
CRGM 0\.24 - 0\.24 0\.26 0\.29 0\.32 0\.32 1\.43
TOTAL EEP (component 1\.2+2\.2) 26\.02 25\.41 26\.52 27\.70 28\.68 28\.68 136\.98
NB(1): the percentage of EEP to be executed at local level is est\. 50 percent from a 2019 baseline of 34 percent
NB(2): GOLD project amount allocated to PBC is US$62\.0 million, 45 percent of EEP amount
Procurement
65\. The Borrower will carry out procurement for the project in accordance with the World Bank Procurement
Regulations for IPF Borrowers (Procurement Regulations) dated July 2016 and revised in November 2017 and August
2018 under the New Procurement Framework, and the Guidelines on Preventing and Combating Fraud and Corruption
Page 23 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
in Projects Financed by International Bank for Reconstruction and Development Loans and IDA Credits and Grants, dated
October 15, 2006 and revised in January 2011 and as of July 1, 2016\.
66\. All works, goods and non-consulting services will be procured in accordance with the requirements set forth or
referred to in the Section VI-Approved Methods: Goods, Works, and Non-Consulting Services of the Procurement
Regulations\. The Consulting Services will be procured in accordance with the requirements set forth or referred to in the
Section VII-Approved Selection Methods: Consulting Services of the Procurement Regulations, the Project Procurement
Strategy for Development (PPSD), and the Procurement Plan, approved by the World Bank\. The Procurement Plan,
including its updates, shall include for each contract: (i) a brief description of the activities/contracts; (ii) selection
methods to be applied; (iii) cost estimates; (iv) time schedules; (v) the World Bank review requirements; (vi) any other
relevant procurement information\. The Procurement Plan covering the first 18 months of the project implementation
was prepared and agreed during negotiations\. Any update of the Procurement Plan will be submitted for the World Bank
approval\. The Borrower shall use the World Bank online Systematic Tracking of Exchanges in Procurement (STEP) to
prepare, clear, and update its Procurement Plans and conduct all procurement transactions\.
67\. All procuring entities as well as bidders, and service providers, i\.e\. suppliers, contractors, and consultants shall
observe the highest standard of ethics during the procurement and execution of contracts financed under the project in
accordance with paragraph 3\.32 and Annex IV of the Procurement Regulations\.
68\. When procurement is done in the national market, as agreed in the Procurement Plan, the countryâs own
procurement procedures may be used with the requirements set forth or referred to in paragraphs 5\.3 to 5\.6 related to
National Procurement Procedures\.
69\. PPSD\. The Borrower prepared its PPSD, which describes how fit-for-purpose procurement activities will support
project operations for the achievement of project development objectives and deliver value-for-money\. The PPSD was
reviewed by the Bank that found it acceptable\. The main procurement activities include: aerial geophysical survey works,
geological mapping works, supply of Information Systems Information Technology (IT) equipment, supply of small
equipment for ASM training activities, TA on Decentralization and improvement of the e-TSA information system, third
party control of geological survey works, TA on extractive sector legal framework, regulations and policies (Mining, ASM,
petroleum), TA on a long-term social and environmental strategy to mitigate the impact of minesâ closure, and the
recruitment of the IVA\. The Client will use open and international/national approaches as well as restricted and
international/national approaches\. The project envisages some complex procurement like aerial geophysical survey
works, geological mapping works, supply of Information Systems IT equipment that challenge the Borrower capacity\.
With the recruitment of firms dedicated to TA and quality control, the capacity will be strengthened\. Small contracts of
goods (⤠US$100,000) will be procured through Request for Quotation under Restricted/national approach\.
70\. The procurement risk prior to the mitigation measures is considered Substantial based on the challenges of the
national procurement system and given that the key staff of the PIU is not recruited yet\. The risk can be reduced to a
residual rating of Moderate after controls or mitigation measures have been applied\. A detailed procurement description
and institutional arrangements is done in Annex 1\.
\.C\. Legal Operational Policies
\.
Triggered?
Projects on International Waterways OP 7\.50 No
Projects in Disputed Areas OP 7\.60 No
\.
Page 24 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
D\. Environmental and Social (E&S)
71\. Although being technical assistance-based, the project is assigned a substantial E&S risk rating \. This project is
rated substantial not because of the projectâs activities, which are largely TA, with very few, if any, minor civil works, but
more due to the following: longer-term environmental and social risks that could result from this TA, a project that is
seeking to increase the number of ASM licenses in a sector that is currently little controlled by GoN\. If the project can
require GoN to put in place processes to ensure that the targeted licenses are accompanied by some sort of training,
these risks will be minimized\. If the project helps to increase the number of licenses, without deep rooted training in the
sector, then the risks are elevated, and the environment rating does reflect this risk\. The project also will produce
soil/geology studies that may lead to further extractive investigations by the Recipient\. Instead, Component 2\.1 will train
some ASM miners on improved extractive management practices and reduce their impact on the environment and their
personal safety, thereby providing a positive environmental impact\. Likewise, Component 2\.1 will not fund the closure
of uranium sites but will fund a study that will help develop a long-term environment and social strategy for the city of
Arlit as it deals with the technical aspects of sustainably and safely closing uranium mines\. The projectâs components are
therefore designed to improve the capacity of GoN to manage the environmental and social risks associated with the
mining sector\. On the social side, the risk is also Substantial because the mining sector in general and the ASM sub-sector
in Niger is a fertile ground for health hazards, gender-based violence (GBV), and abuse and exploitation of women,
children and migrant workers\. The project will not generate social adverse impacts such as physical displacement of
population, economic displacement, land acquisition, loss of assets or access to assets\. The project activities will require
inclusive stakeholder mobilization and a robust information-sharing system\. During implementation the project will
conduct a social assessment to identify the specific needs of stakeholders considered in the Stakeholder Engagement
Plan (SEP), such as ASM, private sector, community leaders, womenâ and youth organizations, as well as other stakeholder
platforms\.
72\. Borrower capacity for the Environmental and Social Commitment Plan (ESCP36) implementation The PIU will hire
an environmental specialist and a social specialist with the role and responsibility of ensuring the implementation of the
environmental and social standards requirements\.
73\. Borrowerâs commitments to address environmental and social risks and impacts \. To address the key risks and
impacts of the project, the Borrower has completed the following actions/measures: prior to the Board: (i) preparation,
consultation and disclosure of the SEP finalized, adopted and disclosed in February 202037 ; (ii) preparation, consultation,
adoption and disclosure of the updated Mining Sector Strategic Environmental and Social Assessment (SESA) with the
final version to be completed and disclosed within the first six months of project implementation38 and (iii) a Labor
Management Procedure was adopted on July 9, 2020\. The possible issues to be addressed outlined in the ESCP include
timelines for the following : (i) implementation of the SEP; (ii) preparation of sector relevant environmental and social
guidelines including for ASM activities; (iii) preparation and implementation of awareness sessions on health, safety and
environment for miners and others; (iv) dialogue with GoN on conditions for ASM licenses; (v) preparation and
implementation of a capacity building plan; (vi) preparation of a GBV action plan; (vii) recruitment of a full time
environmental/social specialist; (viii) design of a sector-wide Grievance Redress Mechanism\.
74\. In addition, it is important to pay special attention to integrating GBV, child labor, and forced labor issues which
is usually precipitated by mining activities\. This project will undertake a gender analysis to explore deeper the gender
36 Negotiated ESCP dated June 4, 2020 disclosed on June 5, 2020 on World Bank website\.
37 SEP was disclosed in Niger newspaper Le Sahel and on World Bank website on February 10, 2020
38 The draft SESA has been prepared, consulted upon and disclosed on the World Bank website prior to appraisal and on GoN website in February
28, 2020: https://beeei\.zd\.fr/ressources/centreaccesinfo/rapports_provisoires/rapports-devaluation-environnementale-strategiques/ )
Page 25 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
constraints as well as the specific project approach to ensure gender is mainstreamed into the planning and
implementation process\. The study will also establish key indicators for monitoring\. The project will identify and consult
with relevant gender focused Non-Governmental Organizations, Community Based Organizations and local women in the
project discussions and initiatives\.
75\. The Borrower will provide quarterly reports as set out in the ESCP to the World Bank of the results of the
monitoring of environmental and social issues\. Such reports will provide an accurate and objective record of project
implementation, including compliance with the ESCP and the requirements of the Environmental and Social Safeguards
(ESS)\. Such reports will include information on stakeholder engagement conducted during project implementation in
accordance with ESS 10 on Stakeholder Engagement and Information Disclosure\.
\. 76\. Environmental and Social Safeguard Summary
\.
The project's direct and short-term environmental risk is minimal\. However, longer term environmental risks are
substantial as the project increases the number of artisanal miners that are licensed, without any wider scale
complimentary sustainability/environmental training to this group\. For example, 400 new artisanal and small-scale
permits are envisioned in the formalization process of existing ASM, but only a fraction of these artisanal miners will be
exposed to training under the project\. The team has started to engage Government to ensure linkages of ASM
formalization with some sort of capacity training\. There are also substantial social risks due to the negative legacy of
the mining sector in general in the country, and civil society organizations may raise strong concerns about the project\.
The quality of the Stakeholder engagement Plan and its effective implementation will reduce the reputational risk of
the Bank\. The updated SESA will also be a strong outcome of the project because key specific risks management
measures that will be identified in the SESA could also be implemented to strengthen outcomes and reduce longer-
term
\. environmental and social risks\.
V\. GRIEVANCE REDRESS SERVICES
77\. Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported
project may submit complaints to existing project-level grievance redress mechanisms or the WBâs Grievance
Redress Service (GRS)\. The GRS ensures that complaints received are promptly reviewed in order to address project-
related concerns\. Project affected communities and individuals may submit their complaint to the WBâs independent
Inspection Panel which determines whether harm occurred, or could occur, as a result of World Bank non-compliance
with its policies and procedures\. Complaints may be submitted at any time after concerns have been brought directly
to the World Bank's attention, and Bank Management has been given an opportunity to respond\. For information on
how to submit complaints to the World Bankâs corporate Grievance Redress Service (GRS), please visit
http://www\.worldbank\.org/en/projects-operations/products-and-services/grievance-redress-service\. For
information on how to submit complaints to the World Bank Inspection Panel, please visit www\.inspectionpanel\.org\.
VI\. KEY RISKS
78\. The overall risk for this project is rated as High, with political and governance, macroeconomic, and institutional
capacity, sustainability and security risks being high, while technical design of the project, fiduciary, environment and
social, stakeholdersâ risks rated substantial\. The governance and macroeconomic risks are mitigated by the country
reform program undertaken by the GoN with support from the development partners\. The other risks will be mitigated
by (i) ensuring an institutional arrangement that fosters collaboration at the central level and piloting an integrated
approach to local development in key mining communities; (ii) using a collaborative leadership approach to overcome
implementation bottlenecks; and (iii) building public administration capacity, as well as systems to continue the training
Page 26 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
over time\. Given the emergency context due to COVID-19, a virtual communication channel with the GoN and PIU will be
established to ensure continued engagement on issues impacting project performance and compliance\.
79\. Political and governance risks: High\. The political situation is overall stable\. Protests in urban centers are common,
with occasional burst of violence, mostly short-lived\. Local elections have been postponed since 2016 and might be a
driver of protests\. Overall governance performance is below regional averages39 with potential challenges in government
coordination and access to information\. National local and presidential elections 2020-2021 may affect project
implementation\. The project is designed to mitigate those risks by involving central- and local-level stakeholders, with
clear leadership at the MoP level\.
80\. Macroeconomic risks: High\. Niger faces risks related to COVID-19\. The pandemic will shrink output as a result of
the interplay of the supply and demand contraction\. Public finances will be strained as a result of the public responses to
support the health system, the economy and the population, both on the revenue and expenditure sides\. Poverty is
projected to rise, affecting mainly urban poor in the service and the natural resource sector\. In addition, apart from
COVID-19 related risks, volatile commodity prices, Nigeriaâs border closure, insecurity, high debt and limited fiscal space
are key risks\. This could affect the operation by limiting available resource for targeted sectors\. The proposed operation
helps address these risks by fostering extractive sector revenue, thereby increasing fiscal space\. It also contributes to
mitigating conflictâs risk and costs, through conflict prevention in mining communities, improved service delivery and job
creation\. It also supports COVID-19 response coordination and hence contributing to mitigating the pandemic\. Additional
mitigating factors include the on-going International Monetary Fund Extended Credit Facility programs and Nigerâs
inclusion in WAEMU contributing to adequate macro-fiscal management\.
81\. Institutional capacity and sustainability: High\. Institutional capacity is a challenge, particularly outside of Niamey,
due to constraints related to turnover, civil servantsâ capacity, collaboration and information, resistance to change, and
lack of HR, affecting policy and project implementation\. These risks will be mitigated by: (i) ensuring an institutional
arrangement that fosters collaboration at the central level and by piloting an integrated approach to local development
in key mining communities; (ii) using a collaborative leadership and Rapid Result approach to overcome implementation
bottlenecks; and (iii) building public administration capacity, as well as systems to continue the training over time\.
Additional mitigating factor include the on-going functional review and HRM reengineering supported by PCDS project\.
82\. Technical Design Risk: Substantial\. The plurality of stakeholders combined with the combination of financing
instruments brings the design risks to substantial\. To mitigate this risk, the design of the projectâs components builds on
lessons learned from previous capacity-building operations in Niger namely the PCDS and the PRACC on public and mining
sectors\. Also, PBC and TA have been carefully designed to complement each other and aligned with government
programs\.
83\. Fiduciary: Substantial\. Based on the experience from IDA-funded projects executed in Niger, there is potential to
further improve capacity to implement externally funded projects, given the long lead times in procurement, and thus
the fiduciary risk rated as Substantial\. Also, Nigerâs PFM system still faces challenges in budget planning and execution as
there is potential to further involve sector ministries in the budget formulation process and to further strengthen
forecasting capacity\. The GoNâs commitment to the PFM reform agenda as evidenced by progress made in program-
budgeting (effective since 2018), commitment controls, TSA, civil service payroll (using banking system for payroll,
integrating payroll and HRM database, biometric census) and on-going TA in PFM are expected to help mitigate fiduciary
risks\. The proposed operations will complement these efforts by: (i) deepening PFM reform at decentralized levels; and
(ii) improving transparency on budget and extractive revenues; while (iii) institutional arrangements will mitigate
39As measured by Worldwide Governance Indicators, the Mo-Ibrahim Index, the Country Policy and Institutional Assessment), the Open Budget
Index and the Fragile States Index\.
Page 27 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
projectâs fiduciary risks with experienced fiduciary experts in the PIU and independent verification for the EEP \.
Furthermore, given the current context of the COVID 19 pandemic, the controls implemented in IDA funded projects may
be impacted\. To that end, the World Bank will assist the project on adaptations and flexibilities that could make possible
to guarantee an acceptable level of transparency in operations\.
84\. Environment and social risks: Substantial\. Direct projectâs potential adverse risks and impacts on human
populations or the environment are not likely to be significant, because the project will mostly provide TA and does not
involve activities such as resettlement, land acquisition, loss of assets or access to assets, rights of way, clearing of trees
which involve high potential negative impacts on people or the environment\.The potential risks and issues directly
induced by the project are likely to have the following features: (i) predictable and expected to be temporary and/or
reversible; (ii) low in magnitude; (iii) site-specific, without likelihood of impacts beyond the actual projectâs footprint; and
(iv) low probability of direct serious adverse effects to human health or the environment\. Overall, there are no
environmental and social safeguards issues of large scale, significant and/or irreversible impacts anticipated\. Meanwhile,
there are some key longer-term risks: (i) contextual risk in the extractive sector, a sector that has a high potential for
social and environmental grievances and (ii) longer-term environmental risks that could result from a project seeking to
increase the number of ASM licenses in a sector currently not well controlled by GoN\. The mining sector in Niger has
been subject to criticisms including grievances on environmental impacts and institutional failures\. Concerns of
communities are related to radioactive pollution, water resource depletion and pollution, work-related diseases, and the
appropriation of land and water resources\. Legally enshrined common property regimes and pastoral territories, have in
the past often been affected by extractives permits without the appropriate compensation which may heighten the
scrutiny on the project\. The project will work closely with the GoN on strengthening both the legal framework and
government capacity for monitoring of social and environmental impacts of resource extraction\. It will also support
policy dialogue regarding the criteria for licensing of ASM, in an effort to ensure that sustainable mining is embedded in
the process\. This will start with the pilot training of artisanal miners with regards to sustainable mining practices\.
85\. Stakeholder: Substantial\. Both, deploying stateâs human and financial resource and developing the extractive
sector, concern a high number of stakeholders from the public sector, the formal and informal private sector, and the
civil society, and at the central, regional and local levels\. The proposed project will mitigate stakeholder risks by: (i)
fostering access to information on project; (ii) promoting access to information on LGs, budget, extractives revenue and
geodata; (iii) fostering a multi-stakeholderâs platform at local, regional, and national levels on extractives; (iv)
strengthening public sector and LG coordination on service delivery at local, regional and central levels\.
86\. Other risks: Security: High\. Persisting insecurity could impact foreign investment, including extractive, divert
public spending to security, affect human resourcesâ deployment in conflict-affected areas and projectâs implementation
in some areas\. The pandemic could have an impact on project activities\. The proposed project is expected to: (i) increase
extractives revenue mobilization and hence mitigate the impact on service delivery of a potential fiscal crunch; (ii) support
rural development and service delivery; (iii) help improve local livelihoods in mining communities, including for destitute
\. youth; and (iv) increase the GoNâs conflict risk and ASM activity monitoring capacity\.
Page 28 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
VII\. RESULTS FRAMEWORK AND MONITORING
Results Framework
COUNTRY: Niger
Governance of Extractives for Local Development & COVID-19 response Project
Project Development Objectives(s)
The project development objective is to strengthen local governmentsâ capacity and extractive sector management for service delivery in the targeted
regions\.
Project Development Objective Indicators
RESULT_FRAME_TBL_ PD O
Indicator Name PBC Baseline Intermediate Targets End Target
1 2 3
Strengthen Local Government Capacity
Unsatisfactory: 30\.6 percent Improved: 40 percent of
of population with access to population with access to
Increased access to water, primary drinkable water point, 31\.3 drinkable water point, 25
education and health services in students per teacher, 52\.52 students per teacher, 60
the targeted regions (Text) percent of population with percent of population with
integrated health center integrated health center
within 5km within 5km
For Water: population with
access to drinkable water point 30\.6 percent 32 percent 34 percent 40 percent
(Text)
For Education: reduced student PBC
31\.30 30\.00 29\.00 25\.00
per teacher ratio (Text) 4\.2
For Health: population with
integrated health centers within 52\.52 percent 54 percent 57 percent 60 percent
5 km (Text)
Page 29 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
RESULT_FRAME_TBL_ PD O
Indicator Name PBC Baseline Intermediate Targets End Target
1 2 3
Improved municipalities budget
execution rate in the targeted PBC 3 38\.00 40\.00 45\.00 50\.00
regions (Percentage)
Increased extractives revenues PBC
54\.00 40\.00 50\.00 60\.00 70\.00
transfered to LG (Percentage) 2\.2
Improve extractive sectorâs management
Increased requests for mining
59\.00 65\.00 120\.00 139\.00
exploration permits (Number)
Increased artisanal miners under
valid mining permit and trained on
0\.00 1,500\.00 3,000\.00 5,000\.00
environmental and social good
practices (Number)
of which women (Number) 0\.00 500\.00 1,000\.00 1,700\.00 2,000\.00
PDO Table SPACE
Intermediate Results Indicators by Components
RESULT_FRAME_TBL_ IO
Indicator Name PBC Baseline Intermediate Targets End Target
1 2 3
Strengthening Local Government Capacities
Public officials trained on LGâs PFM
& HRM, conflict mediation & PBC
0\.00 750\.00 1,750\.00 4,000\.00
Citizen Engagement (Number) 1\.2
Of which percentage are women
(Percentage) 0\.00 30\.00
National report on drivers of
0\.00 1\.00 2\.00 3\.00 4\.00
conflict produced, incl\. perceptions
Page 30 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
RESULT_FRAME_TBL_ IO
Indicator Name PBC Baseline Intermediate Targets End Target
1 2 3
(Number)
Municipality's own tax recovery
30\.00 35\.00 50\.00 60\.00
rate (Percentage)
Beneficiariesâ satisfaction
(Percentage) 0\.00 60\.00 70\.00 70\.00 70\.00
Women beneficiaries'
0\.00 70\.00 70\.00 70\.00
satisfaction (Percentage)
Citizens in the targeted regions
who are aware of their
municipality's annual investment
0\.00 50\.00 70\.00
projects plan and think it
corresponds to their priorities
(Percentage)
Women in the targeted regions
who are aware of their
municipality's annual
0\.00 70\.00
investment projects plan and
think it corresponds to their
priorities (Percentage)
Inter-ministerial decision on
modalities for allocation and PBC
execution of extractive revenues No Yes
2\.1
adopted (Yes/No)
Increased spending of targeted
municipalities in targeted sectors PBC
0\.00 20\.00 70\.00 120\.00 200\.00
4\.1
(Percentage)
COVID-19 response
Effective central-local COVID-19 coordination mechanism are
no coordination between local
emergency response coordination PBC 5 effective with regular
level and central level
mechanism (Text) reporting from regional crisis
management cells
Page 31 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
RESULT_FRAME_TBL_ IO
Indicator Name PBC Baseline Intermediate Targets End Target
1 2 3
Increased impact of Inspection
missions in targeted social sectors PBC 0\.00 100\.00 200\.00 300\.00
6\.3
(Number)
Improving extractive sector management
Geographical coverage of
12\.86 14\.00 15\.00 17\.86
geological knowledge (Percentage)
Adoption of mine closure strategy
(Yes/No) No Yes
Adoption of Local content strategy
for extractives (Yes/No) No Yes
Increased women leadership in
0\.00 15\.00 30\.00
targeted ASM sites (Percentage)
EITI compliance to new standard
No Yes Yes Yes Yes
(Yes/No)
Perceptions of extractive firms on
legal system and geo-data
0\.00 20\.00 50\.00
management as encouraging
investment (Percentage)
Increased impact of mining sites' PBC
0\.00 50\.00 100\.00 150\.00
inspection (Number) 7\.2
Increased formalization of artisanal
and small scale mining sites PBC 8 168\.00 268\.00 368\.00 468\.00 568\.00
(Number)
Project Management
Grievances received and addressed
0\.00 20\.00 50\.00 70\.00
timely by the project (Percentage)
IO Table SPACE
Page 32 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
UL Table SPACE
Monitoring & Evaluation Plan: PDO Indicators
Methodology for Data Responsibility for Data
Indicator Name Definition/Description Frequency Datasource
Collection Collection
Ministries in
This indicator measures the Extracts from official
charge of
access to service in the four statistics from the Ministries in charge of
Increased access to water, primary Primary
targeted regions for primary Annual Ministries in charge of Primary Education,
education and health services in the Education,
education, health and water Primary Education, Health and Water
targeted regions Health and
and disagreated in sub- Health and Water
Water
indicators\.
This indicator is the
Households' access rate to
drinkable water source,
within less than 30 minutes
(i\.e\. the time to fetch water
from household)\. The Extracts from official
Ministry in
indicator is the average of statistics from the Ministry in charge of
For Water: population with access to Annual charge
the four regions' rate, i\.e\. Ministry in charge of Water
drinkable water point of Water
for the baseline: Water
Agadez (34\.93 percent),
Diffa (40\.93 percent),
Tillabery (14\.17 percent),
and Zinder (32\.39 percent)
This sub-indicator aims to Ministry of Extract from the annual
Ministry in charge of
For Education: reduced student per reduce the student to Annual Primary statistics from the
Primary Education
teacher ratio teacher ratio which Education Ministry of Primary
currently greatly varies from Education
Page 33 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
region to region\. The
indicator is the average of
the primary schools' of the
targeted regions\.
This sub-indicator aims to
increase access to health
centers by service users\. The
indicator is the average of
Extract from official
the indicators in each Ministry in
data from the Ministry in charge of
For Health: population with targeted regions\. Baseline is Annual charge of
ministry in charge of health\.
integrated health centers within 5 km hence the average of health\.
health\.
Agadez (68\.41 percent),
Diffa (49\.24 percent),
Tillabery (49\.9 percent) and
Zinder (42\.54 percent)\.
This indicator is the average Municipalitie
DGCT consolidates data
of the annual budget s records
Improved municipalities budget execution Annual on municipalities' DGDCT
execution rate of consolidated
rate in the targeted regions financial data annually
municipalities of the at DGCT
targeted regions
Transfers of the 15 percent
extractive sector taxes to LG
Planned and executed
include (i) the 2009-2017
Annual allocated budget as
Increased extractives revenues transfered arrears plan execution Annual MoF with PIU
finance law well as the Arrears
to LG expected in 2018-2022 and
Plan\.
(ii) the annual 15 percent
following 2017 (i\.e\. 2018
and onwards)\.
Number of mining Ministry of Data from the Ministry
Increased requests for mining exploration Annual Ministry of Mines
exploration permits' request Mines of Mines
permits
registered (cumulative)
Page 34 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Number of artisanal miners
who benefited from at least
Increased artisanal miners under valid 4 days training on both Ministry of Ministry of Mines
Annual Ministry of Mines
mining permit and trained on social and environmental Mines database on ASM
environmental and social good practices safeguards and active under
a valid authorization for
mining exploitation
Number of women artisanal
miners who benefited from
at least 4 days training on
Ministry of Ministry of Mines
both social and Annual Ministry of Mines
of which women Mines database on ASM
environmental safeguards
and active under a valid
authorization for mining
exploitation
ME PDO Table SPACE
Monitoring & Evaluation Plan: Intermediate Results Indicators
Methodology for Data Responsibility for Data
Indicator Name Definition/Description Frequency Datasource
Collection Collection
The CFGCT will keep a
Number of public officials
database of all who
who benefited from a
Public officials trained on LGâs PFM & Semi- CFGCT have benefited from
training from the CFGCT on CFGCT
HRM, conflict mediation & Citizen annual database their trainings
HRM or PFM or citizen
Engagement desegregated by
engagement or conflict
institution and gender\.
mediation
This indicators measures
and tracks the number of
Of which percentage are women
women that are
beneficiaries of training\.
Page 35 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Semi-
National report on drivers of conflict Report published by the CNESS CNESS records CNESS and PIU
annual
produced, incl\. perceptions CNESS on drivers of conflict
Average of the own-source LG
Consolidation of data
tax recovery rate of the Annual Administrativ DGDCT
Municipality's own tax recovery rate from LGs' accounts
municipalities in the e accounts
targeted regions
An exit satisfaction
Average satisfaction rate survey will be
(satisfied and very satisfied) conducted at the end of
of the beneficiaries of Semi- Satisfaction each training by the
PIU
Beneficiariesâ satisfaction trainings programs for both Annual surveys CFGCT, and two surveys
components: at the mid-term and
decentralization and end of project by a firm
extractives\. will adjust the results\.
This indicators tracks the Same as Same as
percentage of women main main Same as main indicator Same as main indicator
Women beneficiaries' satisfaction
beneficiaries that are indicator indicator
satisfied
This indicator aims to
Two surveys will be
Citizens in the targeted regions who are measure the level of Twice (mid
conducted (at mid term
aware of their municipality's annual engagement of citizens in term and Surveys DGDCT and PIU
and before the end of
investment projects plan and think it their commune as well as end)
project)
corresponds to their priorities their satisfaction of their
commune' spending
This indicator aims to
Women in the targeted regions who measure the level of Same as Same as
are aware of their municipality's engagement of women in main main Same as main indicator Same as main indicator
annual investment projects plan and their LG as well as their indicator indicator
think it corresponds to their priorities satisfaction of their LG'
spending
Page 36 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Adoption of interministerial
Inter-ministerial decision on modalities decision on modalities for Official
Once\. Official Gazette PIU
for allocation and execution of extractive the allocation & execution Gazette
revenues adopted of the extractive revenue
transferred to LG
This indicator measures the
percentage increase of total
annual spending of all
Municipalitie
Increased spending of targeted municipalities in the Annual DGDCT database DGDCT
s' budget
municipalities in targeted sectors targeted retions in the
targeted sectors (primary
education, health, water)
compared to 2019 baseline\.
The indicator measures the
effective coordination
mechanism of the COVID-19 Central
database of the central
Effective central-local COVID-19 emergency response with COVID-19
quaterly COVID-19 coordination PIU
emergency response coordination the creation of regional coordination
cell
mechanism COVID-19 crisis cell
management cells, the
production of report to the
central level
The indicator measures the
inspection
number of local public
reports from
structures (from front-line
ministries in
service delivery providers to
charge of review of inspection
Increased impact of Inspection missions in local public administration) annual PIU
primary reports
targeted social sectors in the targeted sectors
education,
(primary education, health,
health and
water) which implemented
water\.
>70 percent of inspections
recommendations\.
Page 37 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
The indicator seeks to
A spatial geo data
increase the geological Ministry of
Geographical coverage of geological Annual collection will be Ministry of Mines
knowledge throughout the Mines
knowledge conducted
country, with geological
mapping at 1/200,000
This indicator measures the
Availability of A strategy for mine
adoption of the GoN mine
Once the written closure is officially Minisitry of Mines
Adoption of mine closure strategy closure strategy along with
strategy adopted
its implementation road
map
A written and A strategy for the local
This indicator measures the
adopted content for the Ministry of Mines &
Adoption of Local content strategy for adoption of the GoN Local Once
strategy is extractives sector is Ministry of Petroleum
extractives content strategy for the
available officially adopted
extractives sector
Surveys at
Women leadership in ASM
Baseline in beginning of
management is the increase
2020, mid- project to
of women in decision-
term establish Surveys in targeted
Increased women leadership in targeted making roles in ASM sites, Ministry of Mines & PIU
review and baseline, ASM sites
ASM sites within the ASM value chain
end of mid-term
in this ASM site, as well as
project review, end
business around the ASM
of project
site\.
This indicator reflects the
government's commitment
EITI secretariat
to make the extractive
EITI confirms Niger
sector transparent by Annual PIU
EITI compliance to new standard Secretariat compliance to new
making key information on
standard
mining and oil management
accessible to the public
Page 38 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Sample for the survey
of extractive firms
active in Niger or
The indicator will measure interested by Niger will
Survey of
the perceptions of come from Ministry of
Baseline, extractive
extractive firms on Niger's Mines, EITI secretariat
Perceptions of extractive firms on legal mid-term firms active
legal system and geo-data and PIU
system and geo-data management as and end of in Niger or
management, and whether Cadaster\. Questionnair
encouraging investment project interested by
it encourage private sector e and data collection
Niger
investment or do not deter will build from the
it\. Fraser Institute Annual
Mining Company
Survey
This indicator measures the
number of mining permit
holders who have been Ministry of review of inspection
Increased impact of mining sites' annual PIU
subject to inspection Mines reports
inspection
mission and implemented
>70 percent of
recommendations\.
The indicator measures the
number of artisanal and
ministry of review of ministry of
Increased formalization of artisanal and small scale mining permits semester Ministry of Mines
mines mines database
small scale mining sites registered by the ministry of
mines in compliance with
the mining code\.
This indicator measures the Semi- PIU M&E extracts from PIU M&E
Grievances received and addressed timely PIU
percentage of grievances Annual database database
by the project
and received and processed
Page 39 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
by the PIU within the delay
set in the PIM\.
ME IO Table SPACE
Performance-Based Conditions Matrix
DLI_TBL_MATRI X
PBC 1 PBC 1\. Operational municipalities & decentralized services with adequately trained staff
Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Output Yes Text 21,000,000\.00
Period Value Allocated Amount (USD) Formula
Baseline Legal framework for LG HRM incomplete,
municipalities staffing inadequate, training at
scale not rolled up yet
December 2020 0\.00
December 2021 0\.00
December 2022 0\.00
December 2023 0\.00
December 2024 Legal framework for LG HRM is adopted; and 21,000,000\.00
Staff is trained and certified and at post\.
Page 40 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
DLI_TBL_MATRI X
PBR 1\.1 (i) the application decrees of the Local Civil Service Law and (ii) revised manual for payroll process have been
PBC 1\.1
adopted in a manner satisfactory to the Association in CY20
Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Output No Yes/No 6,000,000\.00 6\.00
Period Value Allocated Amount (USD) Formula
Baseline No
December 2020 Yes 6,000,000\.00
December 2021 0\.00
December 2022 0\.00
December 2023 0\.00
December 2024 Yes 0\.00
DLI_TBL_MATRI X
PBR 1\.2 Increased number of Public Officials from municipalities & decentralized services of Targeted Sectors trained in
PBC 1\.2
local PFM and HRM and at post in the Targeted Regions
Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Intermediate Outcome Yes Number 15,000,000\.00 15\.00
Period Value Allocated Amount (USD) Formula
Baseline 0\.00
December 2020 0\.00
December 2021 750\.00 2,812,500\.00
Page 41 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
December 2022 1,750\.00 3,750,000\.00
December 2023 4,000\.00 8,437,500\.00
December 2024 4,000\.00 0\.00 $3750 per person trained and
certified at post
DLI_TBL_MATRI X
PBC 2 PBC 2: Effective mechanism for extractive revenue transfer to LG
Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Output Yes Text 8,000,000\.00
Period Value Allocated Amount (USD) Formula
Baseline limited transfer and opacity on allocation
December 2020 0\.00
December 2021 0\.00
December 2022 0\.00
December 2023 0\.00
December 2024 increased transfer of extractive revenue to LG 8,000,000\.00
DLI_TBL_MATRI X
PBR 2\.1 Inter-ministerial decision on modalities for allocation and execution of extractive revenues has been prepared and
PBC 2\.1
adopted in a manner satisfactory to the Association in CY20
Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Intermediate Outcome Yes Text 4,000,000\.00 4\.00
Period Value Allocated Amount (USD) Formula
Page 42 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Baseline Legal text is incomplete
December 2020 Legal text has been adopted 4,000,000\.00
December 2021 0\.00
December 2022 0\.00
December 2023 0\.00
December 2024 Legal text has been adopted 0\.00
DLI_TBL_MATRI X
PBC 2\.2 PBR 2\.2 Annual Extractive Revenue Transfers to LGs increased
Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Outcome No Percentage 4,000,000\.00 4\.00
Period Value Allocated Amount (USD) Formula
Baseline 0\.00
December 2020 0\.00 0\.00
December 2021 40\.00 1,000,000\.00
December 2022 50\.00 1,000,000\.00
December 2023 60\.00 1,000,000\.00
December 2024 70\.00 1,000,000\.00
Page 43 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
DLI_TBL_MATRI X
PBR 3\.1: All municipalities in Targeted Regions have effectively received notification of annual budget allocation from MoF
PBC 3
no later than 20 days after Finance Laws signed in CY21, CY22, and CY23
Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Intermediate Outcome No Yes/No 3,000,000\.00 3\.00
Period Value Allocated Amount (USD) Formula
Baseline No
December 2020 0\.00
December 2021 Yes 1,000,000\.00
December 2022 Yes 1,000,000\.00
December 2023 Yes 1,000,000\.00
December 2024 Yes 0\.00
DLI_TBL_MATRI X
PBC 4 PBC 4: Improved LG capacity for better service delivery in the targeted sectors
Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Outcome Yes Text 4,000,000\.00
Period Value Allocated Amount (USD) Formula
Baseline limited capacity of LG to improve service delivery
December 2020 0\.00
December 2021 0\.00
Page 44 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
December 2022 0\.00
December 2023 0\.00
December 2024 Increased capacity of LG to improve service 4,000,000\.00
delivery
DLI_TBL_MATRI X
PBR 4\.1 Targeted Regionsâ municipalitiesâ annual spending in Targeted Sectors has increased by 200 percent in comparison
PBC 4\.1
with CY19
Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Intermediate Outcome No Percentage 2,000,000\.00 2\.00
Period Value Allocated Amount (USD) Formula
Baseline 0\.00
December 2020 0\.00
December 2021 0\.00
December 2022 0\.00
December 2023 200\.00 2,000,000\.00
December 2024 200\.00 0\.00
Page 45 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
DLI_TBL_MATRI X
PBR 4\.2 All municipalities of the Targeted Regions have an average student-to-teacher ratio below 41 in their primary
PBC 4\.2
schools
Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Outcome No Percentage 2,000,000\.00 2\.00
Period Value Allocated Amount (USD) Formula
Baseline 78\.00
December 2020 0\.00
December 2021 0\.00
December 2022 0\.00
December 2023 0\.00
December 2024 100\.00 2,000,000\.00
DLI_TBL_MATRI X
PBC 5 PBC 5: Effective central-local coordination mechanism for COVID-19 emergency response
Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Output No Text 12,000,000\.00
Period Value Allocated Amount (USD) Formula
Baseline Very limited inspection missions & coordination
of social sectors with social sectors'
deconcentrated services
December 2020 0\.00
Page 46 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
December 2021 0\.00
December 2022 0\.00
December 2023 0\.00
December 2024 Effective coordination mechanisms for the 12,000,000\.00
COVID-19 response mechanism
DLI_TBL_MATRI X
PBR 5\.1 8 regional COVID-19 crisis management cells established in accordance with ministerial decision 052/PM of March
PBC 5\.1
20,2020 and operational in a manner satisfactory to the Association in CY20
Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Output Yes Number 10,000,000\.00 10\.00
Period Value Allocated Amount (USD) Formula
Baseline 0\.00
December 2020 8\.00 10,000,000\.00 $1,250,000 per regional crisis cells
operationnal up to muni
December 2021 0\.00
December 2022 0\.00
December 2023 0\.00
December 2024 8\.00 0\.00
Page 47 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
DLI_TBL_MATRI X
PBR 5\.2 The 8 regional COVID-19 crisis management cells have provided to the Recipientâs central COVID-19 crisis
PBC 5\.2
management cell cumulatively 80 weekly reports to central level since establishment
Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Intermediate Outcome No Percentage 2,000,000\.00 2\.00
Period Value Allocated Amount (USD) Formula
Baseline 0\.00
December 2020 0\.00
December 2021 80\.00 2,000,000\.00
December 2022 0\.00
December 2023 0\.00
December 2024 80\.00 0\.00
DLI_TBL_MATRI X
PBC 6 PBC 6: Increased impact of inspection missions and coordination with LG in targeted sectors
Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Intermediate Outcome Yes Text 4,000,000\.00 4\.00
Period Value Allocated Amount (USD) Formula
Baseline limited missions with no impact
December 2020 0\.00
December 2021 0\.00
Page 48 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
December 2022 0\.00
December 2023 0\.00
December 2024 increased inspection of services and active 4,000,000\.00
monitoring of recommendations
DLI_TBL_MATRI X
PBC 6\.1 PBR 6\.1 The Recipient has prepared and adopted Inspection Manuals satisfactory to the Association in CY20
Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Intermediate Outcome No Text 500,000\.00 0\.50
Period Value Allocated Amount (USD) Formula
Baseline Inspections Manuals not yet adopted
December 2020 Inspection Manuals adopted 500,000\.00
December 2021 0\.00
December 2022 0\.00
December 2023 0\.00
December 2024 Inspection Manuals adopted 0\.00
DLI_TBL_MATRI X
PBR 6\.2 At least 200 Public Entities have been inspected annually using the Inspection Manual by end of each CY in (i) CY21,
PBC 6\.2
(ii) CY22, (iii) CY23
Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Intermediate Outcome No Number 1,500,000\.00 1\.50
Period Value Allocated Amount (USD) Formula
Page 49 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Baseline 0\.00
December 2020 0\.00
December 2021 200\.00 500,000\.00
December 2022 400\.00 500,000\.00
December 2023 600\.00 500,000\.00
December 2024 600\.00 0\.00
DLI_TBL_MATRI X
PBR 6\.3 At least 100 Public Entities inspected the previous CY have implemented 70 percent or more of inspection
PBC 6\.3
recommendation by each CY in (i) CY22, and (ii) CY23
Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Outcome No Number 2,000,000\.00 2\.00
Period Value Allocated Amount (USD) Formula
Baseline 0\.00
December 2020 0\.00
December 2021 0\.00
December 2022 100\.00 1,000,000\.00
December 2023 200\.00 1,000,000\.00
December 2024 200\.00 0\.00
Page 50 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
DLI_TBL_MATRI X
PBC 7 PBC 7: Increased impact of inspection missions of mining sites
Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Intermediate Outcome Yes Text 5,000,000\.00 5\.00
Period Value Allocated Amount (USD) Formula
Baseline limited inspection, limited follow up
December 2020 0\.00
December 2021 0\.00
December 2022 0\.00
December 2023 0\.00
December 2024 increase mining sites inpection and active 5,000,000\.00
monitoring
DLI_TBL_MATRI X
PBR 7\.1 At least 70 mining license holders have been subject to annual inspection using the Extractive Sites Inspection
PBC 7\.1
Manual in CY22, CY23, CY24
Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Intermediate Outcome No Number 3,000,000\.00 3\.00
Period Value Allocated Amount (USD) Formula
Baseline 0\.00
December 2020 0\.00
December 2021 0\.00 0\.00
Page 51 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
December 2022 70\.00 1,000,000\.00
December 2023 140\.00 1,000,000\.00
December 2024 210\.00 1,000,000\.00
DLI_TBL_MATRI X
PBR 7\.2 At least 50 mining license holders have implemented 70 percent or more of inspectionâs recommendations using
PBC 7\.2
the Extractive Sites Inspection Manual CY23 and CY24
Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Intermediate Outcome No Number 2,000,000\.00 2\.00
Period Value Allocated Amount (USD) Formula
Baseline 0\.00
December 2020 0\.00
December 2021 0\.00
December 2022 0\.00
December 2023 50\.00 1,000,000\.00
December 2024 100\.00 1,000,000\.00
DLI_TBL_MATRI X
PBC 8 PBC 8: 400 new artisanal and small-scale mining permits issued in compliance with the Recipientâs Mining Code
Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Intermediate Outcome Yes Number 5,000,000\.00 5\.00
Period Value Allocated Amount (USD) Formula
Page 52 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Baseline 168\.00
December 2020 0\.00 0\.00
December 2021 268\.00 1,250,000\.00
December 2022 368\.00 1,250,000\.00
December 2023 468\.00 1,250,000\.00
December 2024 568\.00 1,250,000\.00 USD12,500 per ASM permit
delivered
Verification Protocol Table: Performance-Based Conditions
PBC 1 PBC 1\. Operational municipalities & decentralized services with adequately trained staff
Description This PBC is disaggregated in two
Data source/ Agency
Verification Entity
Procedure
PBR 1\.1 (i) the application decrees of the Local Civil Service Law and (ii) revised manual for payroll process have been
PBC 1\.1
adopted in a manner satisfactory to the Association in CY20
This PBC aims to ensure Government has adopted a series of legal texts: (i) the implementation decree on LG civil service
Description (revised LG code, decree on status of LG executive staff, decree on status of LG fiduciary staff, decree on status of LG
auxiliary staff, decree on status of technical staff); (ii) ministerial decision revising civil service career and pay processes
Page 53 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Data source/ Agency Official Gazette\.
Verification Entity IVA
Publication and submission to the IVA
Procedure
PBR 1\.2 Increased number of Public Officials from municipalities & decentralized services of Targeted Sectors trained in
PBC 1\.2
local PFM and HRM and at post in the Targeted Regions
This condition aims to increase the number of municipalities and decentralized services that are in line with the minimum
Description required staffing to effectively run and support municipalities and that I have trained and certified staff which are
effectively in their post\.
Data source/ Agency DGDCT
Verification Entity Court of Auditors / IVA
Verification of the CFGCT database on trainings plus cross check data with HR-payroll database\.
Procedure
PBC 2 PBC 2: Effective mechanism for extractive revenue transfer to LG
Description The PBC is disagregated in two
Data source/ Agency
Verification Entity
Procedure
PBR 2\.1 Inter-ministerial decision on modalities for allocation and execution of extractive revenues has been prepared and
PBC 2\.1
adopted in a manner satisfactory to the Association in CY20
Adoption of interministerial decision on modalities for the allocation and execution of the extractive revenue transferred to
Description
LG
Data source/ Agency Official Gazette
Verification Entity Court of Auditor / IVA
Page 54 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Publication of adopted texts in official documents\.
Procedure
PBC 2\.2 PBR 2\.2 Annual Extractive Revenue Transfers to LGs increased
The PBC aims to improve the actual annual transfers of extractvie revenue due to Local Governments as planned in the
Description
Finance Laws and Arrears Plans\.
Data source/ Agency MoF
Verification Entity Court of Auditors / IVA
Verification of official Budget data in the approved budget\.
Procedure
PBR 3\.1: All municipalities in Targeted Regions have effectively received notification of annual budget allocation from MoF
PBC 3
no later than 20 days after Finance Laws signed in CY21, CY22, and CY23
Description This PBC aims to improve transparency and timeliness of the central government transfers to LG
Data source/ Agency ANFICT and MoF
Verification Entity Court of Auditors / IVA
IVA will verify ANFICT and MoF Notifications, as well as survey receptions of those notifications in targeted municipalities
Procedure
PBC 4 PBC 4: Improved LG capacity for better service delivery in the targeted sectors
Description This PBC is disaggregated in two
Data source/ Agency
Verification Entity
Procedure
Page 55 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
PBR 4\.1 Targeted Regionsâ municipalitiesâ annual spending in Targeted Sectors has increased by 200 percent in
PBC 4\.1
comparison with CY19
This PBC aims to increase municipalities' spending in social sectors\. As such, annual municipalities' spending in the targeted
Description sectors (primary edu\., health, water) in the targeted regions have increased by 200 percent compared to 2019\. This is
expected to be reached in 2023\.
Data source/ Agency Municipalities' budget
Verification Entity IVA / Court of Auditors
DGDCT based on LGs Administrative accounts submitted by LGs
Procedure
PBR 4\.2 All municipalities of the Targeted Regions have an average student-to-teacher ratio below 41 in their primary
PBC 4\.2
schools
Description The PBC measures the average primary schools' students per teachers ratio per municipalities in the targeted regions\.
Data source/ Agency Ministry of Primary Education official statistics
Verification Entity IVA
Based on the official statistics from the Ministry of Primary Education, the IVA will perform a control on a sample of
Procedure schools\.
PBC 5 PBC 5: Effective central-local coordination mechanism for COVID-19 emergency response
Description This PBC is disagregated in two \.
Data source/ Agency
Verification Entity
Procedure
Page 56 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
PBR 5\.1 8 regional COVID-19 crisis management cells established in accordance with ministerial decision 052/PM of March
PBC 5\.1
20,2020 and operational in a manner satisfactory to the Association in CY20
This result measures the operationalization of the COVID-19 response coordination mechanisms, through the creation and
operationalization of local crisis management cells\. The COVID-19 crisis regional cells are considered operational when (i)
the members are clearly identified and include representatives from all Local Governments in the given region and social
Description
sectors deconcentrated services (health, education, water), (ii) the communication tree from the municipal, departmental,
regional and central level established, (iii) each regions have produced at least 1 reporting to the central government on
COVID-19 situation\.
Data source/ Agency Central COVID-19 coordination cell
Verification Entity IVA / Court of Accounts
The IVA will verify the official documents establishing the local COVID-19 crisis cells and their periodic reports\.
Procedure
PBR 5\.2 The 8 regional COVID-19 crisis management cells have provided to the Recipientâs central COVID-19 crisis
PBC 5\.2
management cell cumulatively 80 weekly reports to central level since establishment
The indicator measures the effectiveness of the COVID-19 emergency response coordination mechanism between central
Description and local level\. The target of 80 reports (cumulative of all regional cell) is an indication of active reporting from the regional
cells to the central level\.
Data source/ Agency regional reports / Central COVID-19 response cell
Verification Entity IVA / Court of Accounts
The IVA will assess the number of report produced per regions during the COVID-19 crisis in Niger
Procedure
PBC 6 PBC 6: Increased impact of inspection missions and coordination with LG in targeted sectors
Description This PBC is disaggregated in two
Data source/ Agency
Verification Entity
Page 57 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Procedure
PBC 6\.1 PBR 6\.1 The Recipient has prepared and adopted Inspection Manuals satisfactory to the Association in CY20
The PBC aims to ensure that Inspection Manuals in primary edu\., health and water satisfactory to IDA adopted by end of
Description
CY2020
Data source/ Agency Ministries in charge of primary education, health and water
Verification Entity IVA
Review of the inspection manuals
Procedure
PBR 6\.2 At least 200 Public Entities have been inspected annually using the Inspection Manual by end of each CY in (i)
PBC 6\.2
CY21, (ii) CY22, (iii) CY23
The PBC aims to ensure that at least 200 public entities subject to inspections using the new template by end of CY2021 in
Description
primary edu\., health and water
Data source/ Agency Ministries in charge of primary education, health and water
Verification Entity IVA
Review of inspection reports and control on sample\.
Procedure
PBR 6\.3 At least 100 Public Entities inspected the previous CY have implemented 70 percent or more of inspection
PBC 6\.3
recommendation by each CY in (i) CY22, and (ii) CY23
This PBC aims to ensure that by end of 2022 at least 100 public entities inspected the previous year implementing >70
Description
percent of missionâs recommendations
Data source/ Agency Ministries in charge of primary education, health and water
Verification Entity IVA
Review of inspection reports and control on sample\.
Procedure
Page 58 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
PBC 7 PBC 7: Increased impact of inspection missions of mining sites
Description This PBC is disaggregated in two\.
Data source/ Agency
Verification Entity
Procedure
PBR 7\.1 At least 70 mining license holders have been subject to annual inspection using the Extractive Sites Inspection
PBC 7\.1
Manual in CY22, CY23, CY24
This PBC measures the increase of field inspection of mining sites led by the MoM, using the manuals and template for
Description
extractive inspection developed under the TA\.
Data source/ Agency Ministry of Mines
Verification Entity IVA
Verifying mining inspection report produced, their compliance with the adopted manual and templates, and verifying with a
Procedure sample of mining permits holders
PBR 7\.2 At least 50 mining license holders have implemented 70 percent or more of inspectionâs recommendations using
PBC 7\.2
the Extractive Sites Inspection Manual CY23 and CY24
This PBC ensures that there is an active monitoring of mining inspection recommendations and actual implementation by
Description
mining permits holders of those recommendations\.
Data source/ Agency MoM
Verification Entity IVA
Inspection missions report and on-site verification onselected sample\.
Procedure
PBC 8 PBC 8: 400 new artisanal and small-scale mining permits issued in compliance with the Recipientâs Mining Code
Description The PBC measures the government's efforts to formalize the artisanal mining sector by increasing the number of permit
Page 59 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
holders of small and artisanal scale miners compliant with the mining code
Data source/ Agency MoM database
Verification Entity IVA / Court of Accounts
Control based on the MoM database, completed with survey of a sample of permit holder\.
Procedure
Page 60 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Annex 1: Implementation Arrangements and Support Plan
COUNTRY: Niger
Governance of Extractives for Local Development and COVID 19 Response Project
1\. The project will be managed by a PIU embedded at the MoP\. Institutional arrangements are designed to ensure
(i) strong coordination with the ministries of Interior, Finance, the Civil Service, Mines and Petroleum; and (ii) strong project
coordination, fiduciary management and M&E\.
2\. The SC will include the main beneficiaries and stakeholders of the project\. The SC will review and validate project
implementation planning (Annual Work Plan and Budget) and implementation (bi-annual progress reports) submitted by
the PIU\. The SC will be established not later than two months after the Effective Date and maintained throughout the
implementation period\.
3\. The staffing of the PIU will include a national coordinator, two technical experts housed in the relevant ministries
to implement activities related to extractives and public sector management who will closely coordinate with the relevant
lead ministries, a FM specialist, an accountant, a procurement specialist, a safeguards specialist, an M&E specialist, and a
communication specialist\.
4\. The PIU shall be maintained at all times during Project implementation with functions, resources and staffing
satisfactory to IDA\. The PIM detailing administrative, procurement, FM, safeguards, monitoring and evaluation procedures
and arrangements for the Project is being finalized\.
5\. Counterpart from the ministries of Finance, of Interior and of Mines will be designated and support
implementation of the two components\. Focal points from involved ministries (Education, Health, Hydraulics) will be the
Director of Programs\. The counterpartâs team from the Ministry of Finance will be from the Financial Management
Department (Direction des Ressources Financières et du Matériel) and DGTCP, and from DGDCT for the Ministry of Interior\.
Those counterparts will be integrated to the PIU\.
Figure A1\.1: Project Implementation Arrangements
Steering Committee: Ministries of (i) Planning (Chair); (ii) Interior; (iii) Mines; (iv) Petroleum; (v) Primary Education;
(vi) Public Health; (vii) Hydraulics; (viii) Finances; (ix) Civil Service
Ministry of Planning Counterparts and focal
points from beneficiary
ministries of:
-Interior
-Finance;
PIU Coordinator Expert: Public Sector
Management
-Mining;
-Petroleum;
-Primary Education;
Expert: Extractive Sector -Public Health;
Management
FM Internal Procureme ESS Communica -Hydraulics;
Speciali auditor nt Speciali tion and -EITI;
st Specialist st M&E
Specialist
-CNESS;
-ANFICT;
Accountant Procurement
-CFGCT
assistant
Page 61 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Financial Management\.
6\. In line with the guidelines stated in the FM Manual for World Bank IPF Operations of March 1, 2010 and last
revised on February 10, 2017, a FM assessment was conducted within the Ministry of Planning\. It was agreed that a new
PIU will be created and embedded at the MoP and to implement overall projectâs activities as per the Financing Agreement\.
The new PIU to be created to manage both the technical and the fiduciary aspects of the proposed project\. The assessment
of the FM capacity of the MoP was conducted by the Niger Country Office FMS\. The objectives of the assessment were to
determine the following: (a) whether this entity has adequate FM arrangements in place (planning, budgeting, accounting,
internal control, funds flow, financial reporting, and auditing arrangements) to ensure that project funds will be used for
purposes they are intended for and in an efficient and economical way; (b) that project financial reports will be prepared
in an accurate, reliable and timely manner; and (c) the projectâs assets will be safeguarded\.
7\. The MoP is currently implementing the Niger - Competitiveness and Growth Support Project (P127204, US$50\.0
million) and the Niger - Investment Climate Support Project (P148839, US$9\.08 million)\. Fiduciary compliance was deemed
satisfactory for both projects\. For example, the unaudited Interim Financial Reports (IFRs) were submitted on time and
found acceptable to World Bank\. The last audited financial statements, for the fiscal year ended December 31, 2018 were
submitted to the World Bank in a timely manner with an unqualified audit opinion for both projects\. The audit reports were
found acceptable to the World Bank\.
8\. The FM assessment concluded that current arrangements would need to be strengthened to meet the World
Bankâs minimum requirements under IPF World Bank Policy\. As a result of the identified FM capacity constraints, the
following actions need to be completed to ensure adequate FM arrangements for all aspects of the project: preparing and
adopting of the PIM by effectiveness, including FM procedures such as internal controls, budget process, assets safeguards,
and description of roles and responsibilities of all stakeholders; recruit an FMS and a senior accountant be effectiveness\. In
addition, the PIU will recruit an additional accountant, a senior internal auditor, an internal auditor, and purchase an
accounting software to reflect the specificities of the project, all these, not later than three months after the Effective Date\.
An external auditor for the audit of projectâs financial statements and an IVA for the PBCs will be recruited based on Terms
of References (ToR) acceptable to the World Bank, respectively not later than six months and three (3) months after the
Effective Date\.
9\. Given that the MoP will be reinforced by creating a new PIU to be staffed with necessary external resources and
the implementation of the mitigation measures, the FM assessment notes that the FM residual risk for MoP is Substantial\.
Planning and Budgeting Arrangements
10\. The budgeting process from elaboration to execution and control will be clearly defined in the PIM, including FM
arrangements, and the budget will be reviewed and adopted by the SC before the beginning of its execution\. Annual draft
budget will be submitted to the World Bank non-objection before adoption and implementation, and no later than
November 30 of each year\. Periodic monitoring of budget execution and variance analysis will be prepared by the PIU and
included in the semi-annual unaudited IFRs\.
Accounting Arrangements
11\. FM Manual\. A PIM detailing administrative, procurement, FM, safeguards, monitoring and evaluation procedures
and arrangements for the project will be elaborated and adopted by the MoP in form and substance satisfactory to the
World Bank, by the project effectiveness date\.
Page 62 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
12\. Accounting staff\. By project effectiveness date, a FMS and a senior accountant will be recruited based on ToRs
satisfactory to the World Bank\.
13\. Accounting information systems\. A computerized FM system will be acquired and installed not later than three
months after the Effective Date\. The accounting software to be procured would include the following modules to be
integrated: budgeting, general accounting, cost accounting, reporting, monitoring and evaluation, fixed assets management,
preparation of withdrawal applications, and tracking of disbursements by donors\.
14\. Accounting standards: The PIU will use the accounting system of the Organisation for the Harmonisation of
Corporate Law in Africa (Système Comptable de lâOrganisation pour l'harmonisation en Afrique du droit des affaires,
SYSCOHADA) accounting standards which are commonly used among West African Francophone countries\. The chart of
accounts will be prepared to reflect various project components to facilitate the preparation of relevant monthly, quarterly,
semi-annual and annual financial statements\. Annual financial statements will be prepared in accordance with SYSCOHADA
accounting standards and relevant International Public-Sector Accounting Standards using a computerized accounting
system\.
Internal Control and Internal Auditing
15\. Manuals\. Financial Procedures will be detailed in the PIM to be elaborated and adopted in form and substance
satisfactory to the World Bank by project effectiveness date\. The financial procedures will cover at least the following
aspects: institutional arrangements, budget and budgetary control, disbursement procedures and banking arrangements,
receipt of goods and payment of invoices, internal control procedures, accounting system and transaction records, reporting
requirement, and audit arrangement\. The financial procedures will also include guidance for handling project funds by any
relevant entity involved in the project activities implementation, as well as annexes with template forms and reports such
as asset control form and register, budget formats, monthly, quarterly, and semi-annual reports, annual financial
statements, etc\.
16\. In addition to the PIM, an Internal Audit Manual will be elaborated by the projectâs internal auditor within six
months after the consultant in charge of internal audit functions is in place\.
17\. Internal audit functions\. A qualified and experienced senior internal auditor will be recruited with ToRs acceptable
to the World Bank and will provide support to PIU\. The senior internal auditor will be recruited not later than three months
after the Effective Date\.
18\. The project internal auditor will advise on the adequacy of project systems of internal controls and will conduct
reviews of the implementation of projectâs activities\. The role of project internal auditor will also include following up on
implementation of appropriate actions to improve effectiveness of risk management, control, and governance processes at
all levels and training of projectâs staff\. The internal auditor will be trained on risk-based audit\. Additional trainings will be
recommended as part of continuing professional education\. The projectâs SC is expected to have a fiduciary oversight
function\.
Funds Flow and Disbursement Arrangements
19\. Disbursement arrangements and use of funds\. Proceeds of the financing will follow the standard World Bank
procedures for IPF, for use by the Borrower for eligible expenditures as defined in the Financing Agreement\. The project will
finance 100 percent of eligible expenditures inclusive of taxes\.
20\. The design features of the proposed project cater to the requirements of a hybrid funding structure, all within
the IPF instrument of the World Bank\. This involves a result-based approach through PBC for project financing across
subcomponents 1\.2 and 2\.2 of the project\. In addition, some funding will be provided to the PIU under subcomponents 2\.1
and 2\.1 and Component 3, based on the traditional investment financing approach to support the non-PBC activities\.
Page 63 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
21\. The operation proposes US$100 million to be allocated to the Borrower in the form of IDA credit and grant of
US$50 million each\. Proceeds of the financing will be used by the project for payments of eligible expenditures upon
achievement of PBRs as defined in the Financing Agreement and further detailed in the Annual Work Plans and Budgets and
Procurement Plans\. Disbursement arrangements have been designed in consultation with the Borrower after considering
the assessment of the Implementing Agencyâs FM capacities and anticipated cash flow needs of the operation\. For the PBC
subcomponents there will be no advances into the Designated Account\. The Borrower will only receive funding on
satisfactory achievement of results as verified by the IVA and acceptable to IDA\.
Modalities for Disbursements under PBC of subcomponents 1\.2 and 2\.2
22\. Performance-Based Conditions\. The total resources allocation to be implemented under the PBCs is estimated at
US$62\.0 million across subcomponents 1\.2 and 2\.2 of the project\. In line with World Bank guidelines, for IPF with PBCs,
there will be no advance but, the underlying principle will be, following project effectiveness to disburse, funds to the
governmentâs account only upon satisfactory achievement of the PBC\. As per the design, disbursements under these
subcomponents will be measured and valued in monetary terms for each respective year through a set of identifiable and
measurable PBC over the project implementation period\. For each subcomponent (1\.2 and 2\.2), the respective PBCs have
been defined into a set of achievable results\.
23\. Satisfactorily achieving the defined PBC targets as identified in the Results Framework and Monitoring table and
in the Financial Agreement will constitute the primary basis for triggering credit disbursements under the subcomponents
1\.2 and 2\.2 of the project\. The PBC have been individually priced, and as such the eligible disbursement amount will be the
sum of the achieved results multiplied by the unitary monetary value (price) as per the disbursement schedule\.
24\. While noncompliance with a PBC target in a period will result in funds associated with that PBC being withheld,
disbursement associated with the achievement of other PBCs will not be affected\. Where achievement of a PBC results
cannot be verified, an amount equivalent to the PBC resultâs value will be withheld or considered as undocumented and
outstanding obligation on the Borrower\. This amount will be paid at any later date, during project life, and at the discretion
of the World Bank when such achievement can be verified\. The task team may consider that a later achievement of the PBC
result would not qualify for disbursement against the unmet result if it determines that the on-schedule (timely)
achievement of the result is critically fundamental to achieving the overall objectives of the project\.
25\. Additional details of the verification protocols and the independent verification process shall be documented in
the PIM\. The verification protocols to be defined will incorporate good practices expected from the impact of the TA
implemented under the project to support sound management of the resources made available to LG\. The protocols would
highlight the need for the segregation of duties between authorization and accounting officer and to the principle of
accounting, which are essential to ensure that the LG resources are used to achieve their intended purposes and avoid
negative externalities\.
26\. Eligible Expenditure Program\. The overall Government program of expenditures to be supported under the
subcomponents 1\.2 and 2\.2 is defined as the set of defined eligible expenditures\. EEPs will consist of expenditures for goods,
non-consulting services, consulting services (including for audits), and trainings related to the achievement of the PBCs for
decentralization and extractive sector, incurred by the Borrower as described in the Financing Agreement\. The World Bank
Guidance Note on IPFs with PBCs dated January 2020, World Bank Policy and Procedures for IPFs dated October 2018 applies
to this project\. Consistent with IPF Policy, the World Bank ensures the efficiency of any expenditures it finances\. In the case
of salaries, the World Bank will ensure that there are adequate accounting systems and controls are in place for personnel
management\. The World Bank will ensure that the solutions currently being implemented by the PCDS, in particular the
biometric census of civil servants (2019-2020) and the integrated payroll and HRM system (2019-2020) are used in order to
mitigate the risks associated with controlling the number of the Governmentâs overall personnel and other inherent FM
risks\. These measures are complementary to the independent verification mechanisms\.
Page 64 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Table A1\.1\. Estimate of Eligible Expenditure Programs
Ref\. Eligible Expenditure Amount (US$ million)
Identified Eligible Expenditure Program
2019 2020 2021 2022 2023 2024 Total
FAD: LG recurrent cost subsidy (salaries &
3\.81 3\.18 3\.50 3\.85 4\.23 4\.23 18\.99
operating cost)
ANFICT (subsidy: salaries & operating costs) 0\.65 0\.99 1\.09 1\.20 1\.32 1\.32 5\.91
CFGCT (subsidy: salaries & operating costs) 1\.36 1\.27 1\.52 1\.83 2\.19 2\.19 9\.01
Ministry in charge of Interior: DGDCT, DRH 0\.36 0\.40 0\.44 0\.44 0\.44 0\.44 2\.16
â¦salaries and benefits 0\.09 0\.09 0\.10 0\.10 0\.10 0\.10
\.operating costs 0\.27 0\.31 0\.34 0\.34 0\.34 0\.34
Treasury network (DGTCP) 6\.88 6\.37 6\.37 6\.69 6\.69 6\.69 32\.81
â¦salaries and benefits 4\.9 4\.9 4\.9 5\.15 5\.15 5\.15
\.operating costs 1\.98 1\.47 1\.47 1\.54 1\.54 1\.54
Regional offices (4 regions) and
decentralization unit (DEP, DRH, IGS) of 8\.08 8\.27 8\.35 8\.35 8\.35 8\.35 41\.67
Ministry of Primary Education
â¦salaries and benefits 7\.46 7\.46 7\.46 7\.46 7\.46 7\.46
\.operating costs 0\.62 0\.81 0\.89 0\.89 0\.89 0\.89
Regional offices (4 regions) and
decentralization unit (DEP, DRH, IGS) in 1\.96 1\.82 1\.91 1\.91 1\.91 1\.91 9\.48
Ministry of Public Health
â¦salaries and benefits 0\.88 0\.88 0\.88 0\.88 0\.88 0\.88
\.operating costs 1\.08 0\.94 1\.03 1\.03 1\.03 1\.03
Regional offices (4 regions) and
decentralization unit (DEP, DRH, IGS) in 0\.95 0\.99 1\.01 1\.01 1\.01 1\.01 5\.01
Ministry of Hydraulics
â¦salaries and benefits 0\.83 0\.83 0\.83 0\.83 0\.83 0\.83
\.operating costs 0\.12 0\.16 0\.18 0\.18 0\.18 0\.18
Directorate in charge of Territorial
0\.12 0\.22 0\.24 0\.24 0\.24 0\.24 1\.16
Administration: DGATD
â¦salaries and benefits 0\.06 0\.06 0\.06 0\.06 0\.06 0\.06
\.operating costs 0\.06 0\.16 0\.18 0\.18 0\.18 0\.18
Ministry of Mines 1\.61 1\.66 1\.83 1\.90 1\.98 1\.98 9\.34
â¦salaries and benefits 0\.97 1 1\.10 1\.10 1\.10 1\.10
\.operating costs 0\.64 0\.66 0\.73 0\.80 0\.88 0\.88
CRGM (subsidy: salaries & operating costs) 0\.24 0\.24 0\.26 0\.29 0\.32 0\.32 1\.43
TOTAL EEP 26\.02 25\.41 26\.52 27\.70 28\.68 28\.68 136\.98
NB: GOLD project amount allocated to PBC is US$62\.0 million, i45 percent of the EEP amount
27\. Upon achievement and verification of PBCs, the World Bank will disburse funds to a governmentâs account located
at the central bank, against the EEPs, as evidenced in the projectâs semiannual unaudited IFRs\. The eligible expenditure
amount, as ascertained in the EEPs Statement, will form part of the IFRs submitted for disbursement\. EEPs will be audited
as part of the projectâs annual financial statement audit\.
Page 65 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
28\. The allocated amounts for the PBCs are less than the overall amount of the EEPs \. The World Bank will ensure
that the eligible expenditure amount, as ascertained in the EEP Statement that will form part of the IFR submitted for
disbursement exceeds the PBC resultsâ allocated amount\. Where the EEPs for a reporting period are less than the total value
of PBC result earned within the reporting period, disbursement shall be limited to the value of the verified EEPs\.
29\. As part of its reporting, the PIU will prepare semi-annual Budget Execution Reports (EEP Spending Reports) and
make them available to their respective ACE Impact center fiduciary staff for preparation of the EEP Statement which will
be incorporated into the IFRs and used to monitor implementation progress of the EEPs \. Such EEP would be verified by the
IVA as part of the documentation for achieving results\. The EEP Statements will be audited annually by the external audit
firm as part of the Project Financial Statement Audit to confirm that EEPs were incurred under the agreed budget lines and
are eligible for World Bank financing\. The audited EEPs will be submitted to the World Bank\.
30\. Documentation under PBC subcomponents\. It is expected that on a half-yearly basis, the MoP will provide
satisfactory documentary evidence indicating the achievement of the PBCs as per the Financing Agreement\. To document
results, the following are required (i) acceptable IFRs, (ii) EEPs Spending Reports, and (iii) evidence of independent
verification of the set of PBC results for that specific year/period in which they have been achieved\. These reports will then
form the basis of documenting and used to determine the earned amount to be transferred to the Reimbursement Account\.
Funds flow and disbursement arrangements
31\. Disbursements for subcomponents 1\.1 and 2\.1 and component 3 which will be managed by the PIU for the
technical assistance to strengthen the systems for state deployment and LG performance and to foster extractive
investment and integration in local economy, and for overall project management and coordination, shall be transactions-
based\. The World Bank will disburse loan proceeds to the PIU into a Designated Account (DA) denominated in Franc CFA
(FCFA) of BCEAO (West Africa Central Bank, Banque Centrale des Ãtats de l'Afrique de l'Ouest), maintained at a commercial
bank acceptable to the World Bank for subcomponents 1\.1 and 2\.1 and Component 3\. Disbursements would be transactions
based whereby withdrawal applications will be supported with Statement of Expenditures\. Overall disbursement
arrangements will follow standard disbursement policies and procedures established in the Disbursement Guidelines for IPF
dated February 2017, and in the Disbursement Letter of the Project\. The Figure A1\.2 below depicts the projectâs funds flow
mechanism\.
Table A1\.2: Disbursements per Expenditure Category
Category Amount allocated Percentage of expenditures to be
(in US$ million) financed (including taxes)
(1) Goods, minor works, non-consulting services, consulting services, 36\.8 100%
Training, and Operating Costs under Parts 1\.1, 2\.1 and 3 of the Project\.
(2) Eligible Expenditures Program under Parts 1\.2 and 2\.2 of the 62\.0 Up to 100% of the Amount of
Project\. Financing allocated to each PBCs
(3) Refund of Preparation Advance40 1\.2
TOTAL ALLOCATED AMOUNT 100\.0
32\. Operating Costs means the reasonable costs, approved by the IDA, in each Annual Work Plan and Budget, for
the incremental expenses incurred on account of project implementation, consisting of vehicle operation and maintenance,
communication and insurance costs, banking charges, rental expenses, office (and office equipment) maintenance, utilities,
document duplication/printing, consumables, travel cost and per diem for PIU staff for travel linked to project
40Project preparation advance is financing the recruitment of key PIU staff; the preparation of key documents (PIM, SEP, ESCP, SESA, PPSD, LMP)
and several technical studies on decentralization, geological data management, artisanal mining, mine closure and information systems diagnostics\.
Page 66 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
implementation, and salaries of PIU contractual staff (but excluding consulting services and salaries of officials of the
Borrowerâs civil service)\.
33\. If ineligible expenditures are found to have been made from the Designated Account, the Recipient is obliged
to refund the amount in question, and IDA will have the right to suspend disbursement of the funds if reporting requirements
are not complied with as provided for in the Financing Agreement\. The World will periodically assess adequacy of the FM
systems and this will form the basis of any change in disbursement methods\. The authorized signatories of each participating
country will sign and submit withdrawal applications electronically through the World Bank Client Connection website\.
34\. Further details about disbursements to the project will be included in the disbursement procedures described
in the Disbursement and Financial Information Letter (DFIL) and the financial procedures included in the PIM\.
Figure A1\.2: Flow of Funds
Financial Reporting Arrangements
35\. In line with the World Bankâs FM guidelines, the PIU will be required to prepare and submit semi-annual IFRs to
account for activities funded under this project\. The project FMS and Accountants within the PIU are responsible for
preparing and submitting acceptable Unaudited IFRs to the World Bank, no later than 45 days after the end of the semester\.
The IFRs will be designed to provide relevant and timely information to the projectâs management on all project related
Page 67 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
activities implemented by the MoP through its PIU\. The formats and contents of the IFRs have been agreed on between
the World Bank and the MoP during negotiations\. These reports will as a minimum include:
(i) a statement of sources and uses of funds and opening and closing balances for the semester and cumulative;
(ii) a statement of uses of fund that shows actual expenditures appropriately classified by main project activities
(categories, sub-components) as per the PAD, including comparison with budget for the semester and cumulative;
(iii) a statement on movements (inflows and outflows) of the project Designated Account including opening and
closing balances;
(iv) a statement of expenditure forecast for the next semester together with the cash requirement;
(v) notes and explanations;
(vi) Any other report that shall be required to provide further and relevant information on project expenditure
including the EEPs Spending Report for the PBC components\.
Auditing and verification of PBCs
36\. Project annual financial statements (PFS) will be audited by an external auditor acceptable to the World Bank
following International Standards for Auditing issued by the International Federation of Accountants, and specific terms of
reference (ToR) acceptable to the World Bank\. Annual audits will cover all project funding and expenditures\. Audit reports
together with management letters must be submitted to the World Bank within six months after the end of the
governmentâs fiscal year\. In accordance with World Bank Policy on Access to Information, the Borrower is required to make
its audited financial statements publicly available in a manner acceptable to the World Bank\. Following the World Bank
formal receipt of these statements from the borrower, the World Bank also makes them available to the public\. The scope
of audit will be detailed in the ToRs\. Opinions will be required on: Designated Account; Statements of Expenditures, PFSs;
compliance and internal controls\. It is required that the firm is recruited in line with World Bank Procurement Guidelines
to ensure competitive selection\. In this regard, the ToRs will be reviewed and cleared by the World Bank\. The PIU must
ensure that all EEPs are audited\. External auditor will be appointed not later than six months after the Effective Date\.
Table A1\.3: Audit Reports
Audit Report Due Date
(PFS and management letter to be submitted by the MoP Submitted within six months after the end of each financial
through its PIU\. year\.
Financial Management Action Plan
37\. Following on from the FM Assessment for the MoP which identified some challenges and areas of improvement,
the below FM Management Action Plan is recommended as a means of mitigating any risk and helping to improve the
fiduciary environment during implementation\.
Table A1\.4: Financial Management Action Plan
Action Due by Responsible
1\. Prepare and adopt the FM Manual\. By Effective Date
2\. Recruit a FM Specialist (FMS) with qualifications and experience By Effective Date
satisfactory to IDA in fiduciary work
3\. Recruit a senior accountant with qualifications and experience By Effective Date
satisfactory to IDA
MoP
4\. Acquire a computerized accounting information system for project not later than three months after the
management, with specifications acceptable to IDA Effective Date
5\. Recruit a Senior internal auditor with qualifications and experience not later than three months after the
satisfactory to IDA to support the PIU\. Effective Date
Page 68 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Action Due by Responsible
6\. Recruit an external auditor with ToRs acceptable to IDA Not later than six months after the Effective
Date
7\. Recruit an IVA for the PBC Not later than three months after the
Effective Date
38\. Financial Covenants\. Financial covenants related to standard FM requirements are covered under Section 5\.09 of
the IDA General Conditions and specific FM aspects are included in the DFIL\.
Conclusion of the FM Assessment
39\. A description of the projectâs FM arrangements as documented in the preceding paragraphs indicates that they
satisfy the World Bankâs minimum requirements as per World Bank Policy\. Overall, the FM residual risk is assessed and
rated as Substantial\. The substantial risk rating is because of inherent risk associated with the design, including amongst
others, (i) the third project using PBC in the country and (ii) possible challenges with multiple sectors involving in the
projectâs activities implementation\.
40\. Supervision Plan\. Based on the risk rating of the project and the current FM arrangements, it is expected that in
the first year of implementation, there will be four quarterly onsite visits to ascertain adequacy of systems and
supplemented by desk reviews of IFRs and audit reports should the current COVID-19 crisis permit\. The FM supervision
missionâs objectives will include ensuring that adequate FM systems are maintained for the project throughout project life\.
In adopting a risk-based approach to FM supervision, the key risk areas of focus will include assessing the accuracy and
reasonableness of budgets, their predictability and budget execution, compliance with payment and fund disbursement
arrangements and the ability of the systems to generate reliable financial reports\.
Procurement
41\. The PIU will be responsible for the project for procurement planning and management\. The project Coordinator
will be responsible for decision-making during the procurement process\.
42\. Filing and record keeping\. As part of the PIM, the Procurement Procedures will set out detailed procedures for
maintaining and providing readily available access to project procurement records, in compliance with the Financing
Agreement\. An archiving room will be available, and the PIU will assign one person responsible for maintaining the records\.
A logbook of the contracts with a unique numbering system shall be maintained\. Signed contracts as in the logbook shall
be reflected in the commitment control system of the Recipientâs accounting system or books of accounts as commitments
whose payments will be updated with reference made to the payment voucher\. This will put in place a complete record
system whereby the contracts and related payments can be corroborated\.
43\. Project Procurement Strategy for Development\. As part of the preparation of the project, the Borrower prepared
its PPSD, describing how fit-for-purpose procurement activities will support project operations for the achievement of
project development objectives and deliver value-for-money\. The PPSD was reviewed by the Bank that found it acceptable\.
The main procurement activities include : aerial geophysical survey works, geological mapping works, supply of Information
Systems IT equipment, supply of small equipment for ASM training activities, TA on Decentralization and improvement of
the e-TSA information system, third party control of geological survey works, TA on extractive sector legal framework,
regulations and policies (Mining, ASM, petroleum), TA on a long-term social and environmental strategy to mitigate the
impact of mines closure, and the recruitment of the IVA\. The Client will use open and international/national approaches as
well as restricted and international/national approaches\. The project envisages some complex procurement like aerial
geophysical survey works, geological mapping works, supply of Information Systems IT equipment that will challenge the
Borrower capacity\. With the recruitment of firms dedicated to TA and quality control, the capacity will be strengthened\.
Small contracts of goods (equal or less than US$100,000) will be procured through Request for Quotation under
Page 69 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Restricted/national approach\. The recruitment of civil servants as individual consultants or as part of the team of consulting
firms will abide by the provisions of paragraph 3\.23 (d) of the Procurement Regulations\.
44\. Procurement Plan\. The Borrower prepared a detailed 18-month Procurement Plan was agreed between the
Borrower and the World Bank during the negotiations\. The Procurement Plan will be updated in agreement with the World
Bank annually or as required to reflect the actual project implementation needs and improvements in institutional capacity\.
45\. Training, Workshops, Study Tours, and Conferences\. Training activities would comprise workshops and training,
based on individual needs, as well as group requirements, on-the-job training, and hiring consultants for developing training
materials and conducting training\. Selection of consultants for training services follows the requirements for selection of
consultants above\. All training and workshop activities (other than consulting services) would be carried out on the basis
of approved Annual Work Plans/Training Plans that would identify the general framework of training activities for the year,
including (a) the type of training or workshop; (b) the personnel to be trained; (c) the institutions that would conduct the
training and reason for selection of this institution; (d) the justification for the training, i\.e\. how it would lead to effective
performance and implementation of the project and or sector; (e) the duration of the proposed training; and (f) the cost
estimate of the training\. Reports by the trainees, including completion certificate/diploma upon completion of training,
shall be provided to the Project Coordinator, will be kept as parts of the records, and will be shared with the World Bank if
required\. Detailed training and workshop terms of reference providing the nature of training/workshop, number of
trainees/participants, duration, staff days/weeks/months, timing, and estimated cost will be submitted to IDA for review
and approval prior to initiating the process\. The selection methods will derive from the activity requirement, schedule, and
circumstance\. After the training, the beneficiaries will be requested to submit a brief report indicating what skills have been
acquired and how these skills will contribute to enhancing their performance and attaining the project objective\.
46\. Operational Cost financed by the project would be incremental expenses, incurred by the PIU, the SC and the PIU
counterparts and focal points based on the Annual Work Plans and Budgets as approved by IDA, on account of project
implementation, management, and monitoring and evaluation, including the reasonable costs for utilities and supplies,
bank charges, communications, vehicle operation, maintenance, and insurance, office space rental, building and equipment
maintenance, public awareness-related media expenses, travel and supervision, and salaries of contractual and temporary
staff, but excluding salaries, fees, honoraria, and bonuses of members of the Borrowerâs civil service\. Such service needs
will be procured using the procurement procedures specified in the PIM accepted and approved by the World Bank\.
47\. Procurement Manual\. Procurement arrangements, roles and responsibilities, methods, and requirements for
carrying out procurement shall be elaborated in detail in the Procurement Manual, which will be a section of the PIM\. The
PIM shall be prepared by the Borrower and agreed with the World Bank by the effectiveness date\.
48\. Procurement methods\. The Borrower will use the procurement methods and market approach in accordance with
the Procurement Regulations\. Open National Market Approach is a competitive bidding procedure normally used for public
procurement in the country of the Recipient and may be used to procure goods, works, or non-consultant services, provided
it meets the requirements of paragraphs 5\.3 to 5\.6 of the Procurement Regulations (see Table A1\.5)\.
Table A1\.5: Requirements and Actions for National Open Competitive Procurement
# Requirements Actions
1 The request for bids/request for proposals will require that Reinforce the related provisions by taking into account the
Bidders/Proposers submitting Bids/Proposals present signed aspects related to the World Bank Anti-Corruption
acceptance at the time of bidding to be incorporated in any Guidelines (including without limitation the WBâs right to
resulting contracts, confirming application of, and compliance sanction and the World Bank inspection and audit rights)\.
with, the World Bank Anti-Corruption Guidelines, including Introducing a template of this acceptance in the bidding
without limitation the World Bank right to sanction and the documents\. A World Bank -approved template will be
World Bank inspection and audit provided
Page 70 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
2 Contracts with appropriate allocation of responsibilities, risks, Update and take into account the required new elements
and liabilities (in particular to strengthen environmental and social
performance, health, and safety)
3 Rights for the World Bank to review procurement documents The requirement must be included in the bidding
and activities documents to grant rights to the World Bank to review
procurement documentation and activities\. The legal
agreement may also allow this provision
4 An effective complaints mechanism None
5 Maintenance of records of the Procurement Process The requirement must be included in the bidding
documents and in the legal agreement\. The PIU must spell
out the practical modalities and the appropriate
documentation to archive in the procurement manual
49\. The thresholds for specific market approaches and procurement methods and the World Bank prior review
requirements are also provided in table\.
Table A1\.6: Thresholds for Procurement Methods, and Prior Review
Expenditure Contract (C) Value Contracts Subject to
Procurement Method
Category Threshold* [US$] Prior Review /[US$]
Open Competition International Market Approach and ⥠10,000,000
C ⥠10,000,000
Direct Contracting
Works 200,000 < C <
Open Competition National Market Approach None
10,000,000
C ⤠200,000 Request for Quotation None
Open Competition International Market Approach and ⥠2,000,000
C ⥠500,000
Goods, IT, and non- Direct Contracting
consulting services 100,000 < C < 500,000 Open Competition National Market Approach None
C ⤠100,000 Request for Quotation None
National shortlist for C < 100,000 For Consulting Services None
selection of
consultant firms C ⤠200,000 For Engineering and Construction Supervision None
International shortlist C ⥠100,000 For Consulting Services ⥠1,000,000
for selection of
consultant firms C > 200,000 For Engineering and Construction Supervision ⥠1,000,000
Selection of ⥠300,000
All values All Approaches
Individual consultants
Direct contracting As agreed in
All values
Procurement Plan
Training, workshops,
All values Based on approved Annual Work Plan & Budgets
study tours
Note: *These thresholds are for the purposes of the initial procurement plan for the first 18 months and for the risk rated substantial\. The thresholds
will be revised periodically based on reassessment of risks\. All contracts not subject to prior review will be post-reviewed\.
50\. Procurement Risk Rating\. The project procurement risk prior to the mitigation measures is Substantial\. The risk
can be reduced to a residual rating of Moderate upon consideration of successful implementation of the mitigation
measures contained in the action plan provided in table\.
Page 71 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Table A1\.7: Action Plan for Strengthening Procurement Capacity
Key Risks Mitigation actions By By when
Lack of a procurement Develop a PIM with a section on procurement PIU by project effectiveness
procedures manual based on detailing all applicable procedures, instructions, and
âWorld Bank Procurement guidance for handling procurement, the standard
Regulations for IPF Borrowersâ bidding documents, and other standard
dated July 2016, revised in procurement documents to be used\. The PIM will
November 2017 and August 2018 outline the interaction between the project
stakeholders responsible for procurement
Lack of Procurement Specialist Recruit a Procurement Specialist on competitive PIU by project effectiveness
basis
Bureaucratic practices and Closely monitor and exercise quality/control of all PIU Throughout project
unnecessary control may result in aspects of the procurement process, including implementation
procurement delays affecting evaluation, selection, and contract award in line
project implementation with the provisions of the procurement manual\.
Set up a monthly meeting within the PIU on the
progress of procurement activities and report to the
Ministry and the World Bank\. Revise as necessary PIU
the decree on the establishment of independent Public
expert committees in externally funded projects to Procurement
give to PIUs the autonomy and speed required for Regulatory
project implementation\. Authority
Limited competition for Using specific procurement approach such as PIU/WB During emergency
international procurement limited/restricted approach\. Apply the 14 provisions period and when itâs
activities due to the current decreed by World Bank during COVID-19 emergency requested and required
COVID-19 response/recovery period (procurement tips on submission of bids
phases: Borrower travel bans in electronically including for countries whose e-
place for contractors/ suppliers/ Procurement is not yet approved by the World
consultantsâ foreign personnel; Bank)\. Measures for
constraints in institutional and suppliers/contractors/consultants preferencing like
implementing capacity in direct payments by World Bank, advance payments,
borrowing country etc\. will be applied on need basis\.
The procurement in unsecured Apply World Bank streamlined Procurement PIU During emergency
situation can restrict competition Arrangements for Projects in Situations of Urgent period and when
and possibly increase prices and Need of Assistance or Capacity Constraints under requested and required
collusion risks paragraph 12 of Section III of the IPF Policy (March
7, 2019)
Poor filing which can lead to loss Provide adequate space and equipment for the PIU Expected within 6
of documents procurement archive and set up an adequate filing months after the
system for project records to ensure easy retrieval beginning of project
of information/data according to World Bank implementation
requirements for archiving\.
Designate or recruit an officer to be responsible for
data management
Insert in STEP the documents at each stage of
procurement process\.
51\. Procurement supervision\. In addition to prior review and World Bank implementation support missions, at least
two missions per year, with at least one visit to the field to carry out post-review of procurement actions is recommended\.
Page 72 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
52\. Post-review procurement\. Post-reviews can be done either by World Bank \. They may also be carried out by third
parties such as supreme audit institutions, procurement regulatory authorities, consulting firms, Non-Governmental
Organizations, and others, according to procedures acceptable to the World Bank to ascertain compliance with
procurement procedures as defined in the legal documents\. The procurement post-reviews will cover at least 10 percent
of contracts across the World Bank portfolio that have not been prior reviewed in a financial year\. The sampling is risk
based and considers (a) project procurement risk rating (with riskier projects having a larger sample); and (b) contract risk
rating, to ensure that riskier contracts constitute a higher proportion of the sample\. Post-reviews contribute to the overall
procurement performance rating of the project based on the rating of the post-procurement review and provide a basis
for updating the project procurement risk and the risk mitigation plan\.
53\. Oversight and monitoring arrangements for procurement\. The PIM will define the projectâs internal organization
and its implementation procedures\. It will include, among other things, all relevant procedures for calling for bids, selecting
consultants, and awarding contracts\. The project monitoring arrangements for procurement will be specified\. Detailed
procurement documentation (namely, the PPSD) may be referenced as such and retained in the project files\. The detailed
18-month Procurement Plan was agreed with the Recipient on March 28, 2020 and have been uploaded to the World Bank
website after the negotiations\.
Page 73 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Annex 2: GOLD Project Contribution to Identified Relevant Gender Gaps
Gender gaps relevant to GOLD project
1\. Gender inequality in Niger is high and hampers economic growth\. The 2019 Gender Inequality Index41 places
Niger 154 out of 160 countries in 2018\. Niger also has the lowest Gender Development Index (0\.298 in 2018)\.42 GDP per
capita could increase by up to a third with gender equality, translating in higher income by women and lower population
growth\.43
2\. Girls continue to be less likely to complete primary and secondary cycles than boys \. In 2016, the primary
completion rate is estimated at only 26\.5 percent for girls aged 15-18 versus 41\.4 percent for boys; for lower secondary,
completion rates are estimated at 6\.2 percent for girls aged 18-20 versus 15\.6 percent for boys\. For upper secondary,
completion rates remain extremely low as well, at 2\.4 percent among girls aged 21-24 versus 6\.5 percent for boys \.
3\. There is a strong negative relationship between child marriage and educational attainment for girls across
Western African countries\. Completion rates for lower secondary school and the child marriage prevalence rate are
strongly correlated across countries, pointing to the important role of schooling at the secondary level in ending child
marriage\. In Niger itself, evidence suggest that child marriage does reduce educational attainment\.
4\. Gender gaps in productivity and earnings are significant and strongly correlated with education and
occupational segregation\. When considering individual sources of income, gender gaps are observed across agricultural
productivity, entrepreneurship profits and earnings, ranging from 21 to 55 percent\.44 Gender differences in labor
productivity and earnings are primarily the result of inadequate access to labor and other productive inputs, occupational
segregation, and lower levels of education\.
5\. An inadequate legal framework also contributes to inequality at work\. Legal barriers to womenâs employment
and entrepreneurship persist\. Nigerâs performance is below the average for Sub-Saharan Africa in five of eight areas scored
in the 2020 Women, Business, and the Law database\. Out of a maximum score of 100 per area, Niger scores an average
of 59 versus an average of 70 for Sub-Saharan Africa\.45
6\. Gender gaps in the extractive sector reflects similar challenges from: (i) low status, low pay and very few women
with graduate level technical positions in the extractives sector, both public and private; (ii) limited access to finance to
carry out economic initiatives around extractives activities; and (iii) limited womenâs participation in the elaboration of
community development plans resulting in lower focus on gender-sensitive activities in LG development plans and
Corporate Social Responsibility activities of extractives firms\.
7\. In addition, a number of sector-specific challenges make women particularly vulnerable : (i) physically exhausting
jobs, rarely own/manage mine pits or included in mining cooperatives; (ii) risk of gender-based violence 46; (iii)
environment and health issues47 as working conditions at ASM sites are challenging for workers at the lower levels of the
value chain, and for women in particular, given the limited use of protective gear, and access to health care or water\.
8\. Legislative reforms have been introduced since 2000 to improve women representation in politics\. Since 2000,
a quota law has been in place, which mandated that the proportion of elected candidates of either sex should not be lower
41 UNDP, 2019: Gender Inequality Index\.
42 Ratio of female to male HDI values\.
43 World Bank, 2019, Economic Impacts of Gender Inequality in Niger\.
44 2014 Living Standards Measurement Study\.
45 World Bank, 2020, Women, Business and the Law: https://wbl\.worldbank\.org\.
46 World Bank, 2018, Preliminary study on gender and human rights in the ASM sector in Niger\.
47 Mercury and cyanide are increasingly used\.
Page 74 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
than 10 percent in parliamentary and local election, raised to 15 percent in 2014\. The 2009 National Gender Policy
implementation plan contains specific objectives to promote womenâs political participation\.48
9\. Women representation and participation in politics and civil service remains low\. As of January 2020, Niger
counts 7 women ministers in government out of 44 (i\.e\. 15 percent) and ranks 125 out of 189 countries in terms of women
representation in Parliament, with 17 percent of seats\.49 At the local level, about 14\.5 percent of municipal councilors are
women50 and only eight mayors are women\.51 In civil service, an estimated 36 percent of women are civil servants,
decreasing to 25 percent for high level (category A)\.52
GOLD project contribution to address identified gender gaps53
10\. In Component 1, public sector management TA will include gender specific activities:
(i) Gender-budgeting and particular attention to inclusion in the revised CGFCT curricula and trainings of LG public
officials on LG public finance management, as well as in the revised methodology for local development planning;
(ii) Increased transfer to LG is expected to increase access to services in health, primary education and water,
contributing to bridge the gender gaps in those services particularly relevant for women and girls\.
11\. In Component 2, ASM pilot sites will be selected according to the strong presence of women miners on site, to
ensure that they benefit from equal training opportunities as men\. In particular:
(i) Emphasis will be placed on coaching women on business development and cooperativesâ management and a
gender and public health component, included in the training program\. Equal field experience and training
opportunities will be offered on the geodata survey and analysis;
(ii) Capacity building will be provided to the AFSIEN, to strengthen the position of women in leadership positions and
promote women and girlsâ enrollment in higher education relevant for the mining industry;
(iii) Dialogue will be facilitated between ASM, communities and LG through TA in ASM pilot sites, to ensure municipal
development plans include service delivery needs from women in ASM communities;
(iv) TA will be provided to support reforms of the legal and policy framework in the extractive sector at the local level:
gender will be mainstreamed to improve womenâs ownership, control of assets and access to jobs in the upstream
and downstream\.
(v) A mine closure strategy will be developed for Arlit, and gender mainstreamed across the strategy, to address the
needs of women and girls with regards to jobs and service delivery (education, water, health) after the closure of
the uranium mines\.
12\. The following gender specific indicators will be monitored throughout project implementation: (i) women in
ASM trained in business management, social and environmental good practices; (ii) female public officials trained by the
project; (iii) womenâs beneficiaries satisfaction; (iv) women leadership in ASM sites; (v) women in the targeted regions
who are aware of their LG annual investment program and think it corresponds to their priorities\.
48 OECD, SIGI 2019\.
49 IPU, 2020\.
50 GoN, 2018, LG census\.
51 2015 survey from the Association of Women Jurists\.
52 Data from the National Statistics Institute for the year 2017\.
53 Project activities and indicators are in line with the 3 priority pillars as highlighted in WB Notes Why Gender Matters for Extractives and Suggested
project activities and indicators to close the gender gaps in extractives: enhancing womenâs voice (consultations and communities decision-making
processes, national networks, GBV); improving human endowments (health, education); and removing constraints for more and better jobs\.
Page 75 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Annex 3: Extractive Revenue-Sharing Arrangement in Niger
1\. Oil and mining revenues-sharing arrangement with local governments of the extraction zones is provided by
law\. Article 152 of the Constitution and Law no\. 2014-08 of April 16, 2016 allocates 15 percent of oil and mining revenues
to the affected populations through the regional governments and municipalities of the extraction zones, in order to
assure shared prosperity in the communities that might otherwise be impacted by the oil and mineral extraction\.
Municipalities are allocated 85 percent and regional government 15 percent\. Most transfers to LG finance investment (85
percent), while the rest finance recurrent costs (10 percent for LG, five percent for deconcentrated services supporting
LG)\.
2\. The transfers have been limited so far because of limited capacity at local level and lack of modalities for the
processing of transfers and reporting\. Following the delays in the transfer of the extractive revenue to LG, the government
established in 2018 an 2012-2016 arrear repayment plan to be implemented in 2018-2022\. While some transfers were
made in 2019 to the targeted RG, modalities of allocation to municipalities are unclear\. The transfers raise many
challenges: (i) capacity: the windfall is unprecedented, and municipalities may not have the technical capacity to absorb
and execute this budget; (ii) territorial equity: non-extractive regions do not benefit from this additional windfall, and the
ANFICT allocation is too low to counterbalance; (iii) transparency: the lack of clarity on allocations formulae to
municipalities and on impact may fuel grievances\.
3\. Based on simulations performed from this plan we can estimate the amount of extractive revenue that the LG
of the regions of Agadez, Diffa and Tillabery would receive every year\. The region of Zinder does not figure in these
calculations yet because it was not part of the arrear repayment plan as oil activities in Zinder are recent\. The simulations
conclude that Agadez would receive US$1\.2m every year, Diffa US$10\.4m and Tillabery US$0\.4m (Figure A3\.1)\.
Figure A3\.1\. Equalization Simulation (CFAF per capita)
30000
25000
20000
15000
10000
5000
0
Agadez Diffa Dosso Maradi Tahoua Tillabery Zinder
Fiscal Revenues 2017 Fiscal Revenues 2017 + Royalties
Fiscal Revenues 2017+ Royalties + Arrears Fiscal Revenues 2017 + Royalties + Arrears 2022
NB: The blue column shows the aggregated fiscal revenues of the communes of each region, including their own resources and the transferred
revenues\. The orange column shows the impact that the transfers of the 15 percent would do to their resources\. The grey column shows the fiscal
revenues of the regions with the transfer and the arrears repayment based on the amount for 2019\. Finally, the yellow column shows the regionâs
fiscal revenues with the transfer of the 15 percent and the arrear repayment amount planned for 2022\. Source: World Bank calculations based on
MoF data
Page 76 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Annex 4: Overview of Transfer of Responsibilities to Local Governments
1\. With the successful rollout of local elections in 2011, Nigerâ s decentralization process has gained momentum\.
In 2012, the first roadmap for the operationalization of skills transfer to the local levels elaborated through a National
Decentralization Policy Framework was adopted\. Equally, the 2013 National Policy for the Modernization of the State, sets
short to long term orientations and guidelines for the government in improving public sector performance\. Implemented
under the leadership of the Prime Ministerâs Office it includes decentralization reforms\. 2014 was a landmark year with
(i) the development of a methodological guide for the transfer of skills and resources; and (ii) the adoption of the
modalities of transfer of competences and resources from the Central government to the LGs\. Decrees 2016-075 and 076
of January 26, 2016 and 2016-076 of January 26, 2016 detail transferred competences to LGs (municipalities and regions)\. 54
De jure responsibilities of LGs include infrastructure maintenance, equipment, construction while line ministries keep
responsibilities for staff management (e\.g\. teachers, doctors), policy-making, and control of service delivery quality\.
2\. Actual transfers of competences for Education, Heath, Water and Environment are planned by decree for 2018-
2021 and on-going for primary education, health and water\. A new momentum was reached in 2017 with the adoption
of the Plan for the Transfer of Resources and Competences 2018-2021 (Plan TCR) for four sectors: Health, Education,
Water and Environment, with different level of implementation\. The GoN is currently taking stock of the implementation
of the, Plan TCR for 2018 to identify implementation gaps and progresses\. For now, three ministries appear to be the most
advanced in rolling out the incremental transfer of responsibilities and related resources:
(i) The Ministry of Primary Education has transferred three of the five responsibilities to LG early 2019: (i) the
recruitment and management of contractual teachers; (ii) school mapping planning; (iii) the construction and
maintenance of kindergartens, preschools, primary schools, and non-formal primary education centers, with the
technical support of ANFICT and financed by the new Education Fund (Fonds commun pour lâéducation)\. Two
competences remain to be transferred: (i) the equipment of school, literacy centers, non-formal education centers;
and (ii) the acquisition and management of school supplies, teaching and learning materials\.
(ii) The Ministry of Hydraulics transferred water points service to LGs\. The transfersâ roadmap of the Ministry of
Hydraulics is aligned with the 2010 Water Law which outlines the distribution of responsibilities in the water and
sanitation sectorâwith a principle of subsidiarity\. The Promotion of Hygiene and Basic Sanitation strategy and the
Water, Hygiene and Sanitation sector program 2016-30 aim to ensure the availability and sustainable management
of water resources and sanitation for all\. In 2018, all water points services were mapped, and their ownership and
management transferred to LG\.
(iii) The Ministry of Health is finalizing in 2020 its action plan to transfer responsibilities to LG\.
(iv) The Ministries of Vocational Training, Secondary Education and Environment are in the early stage of preparing
their LG transfer plan\.
Decree 2016-075/PRN/MISPD/ACR/MEP/A/PLN/EC/MH/A/MESU/DD/MEF/MEP/T/MFP/RA and decree 2016-076/ PRN/ MISPD/ACR/
54
MEP/A/PLN/EC/ MH/A/ MESU/DD/ MEF/ MEP/T/ MFP/RA\.
Page 77 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Annex 5: Local Government Financing in Niger: opportunities
1\. LGs have financial autonomy and have to adopt a budget to spend transferred and locally sourced funds\. The
local councils debate and adopt a budget based on a budget framework letter received from their competent authority
and the multi-year local development plan and annual investment plans\. The budget must be adopted before January 1
of each year after which the oversight authority has 30 days to validate or send the budget back for modification\.
2\. LG significantly improved their planning processes and have now defined a dedicated financing framework and
mechanisms\. The LG budgeting and accountability legal framework is clear55 though control mechanisms could improve\.
The government has created two funds managed by ANFICT56 to provide revenues to decentralized entities: (i) the FAD
for recurrent expenditures; and (ii) the FP for investments\. ANFICT resources have been limited and unpredictable\. 57
ANFICT is facing challenges with the equalization formula as it requires statistical data that are not generated yet\.
3\. There is room for improvement in LG capacities and LG resources\. The graphs below illustrate LG local tax
recovery rate is low (Figure A5\.1), and government transfers (Figure A5\.2), estimated at 2 percent of total GoN budget\.
This can be explained by limited LG capacity in FM (Figure A5\.3) and control on these resources if they were to be
transferred (Figure A5\.4)\. While most municipalities have development, some of them are out of dates (Figure A5\.5)\. The
combination of all these challenges leads to a low execution rate of LG recurrent and investment budget (Figure A5\.6)\.
Figure A5\.1: Niger LGâs Own-source Revenue Mobilization (2017)
Source: BOOST and 2018 LG Census
Figure A5\.2: Financial Resources Transferred to LG (2017)
Source: 2018 LG Census
55 Decree2016-302-PRN-MISPDACR-MF of June 29, 2016\.
56 TheANFICT is a public agency, supervised by the Ministry of Decentralization and MoF, responsible for LG financing Law 2008-38 of July 10, 2008\.
57 FAD and FP budget execution rates varies from 30 percent (2015) to 100 percent (2017); FAD and FP 2016-19 annual executed amounts range
between US$1\.8-2\.0m\.
Page 78 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Figure A5\.3: Obstacles to Financial Resource Transfer to LG: Limited Technical Capacity
Source: 2018 LG Census
Figure A5\.4: Obstacles to Financial Resource Transfer to LG: Limited a Posteriori Control
Source: 2018 LG Census\.
Figure A5\.5 LG Development Plan and its Median Age
100% 2020
90% 2015
80% 2010
70% 2005
Agadez Diffa Dosso Maradi Niamey Tahoua Tillabéri zinder
Yes No Median Age
Source: 2018 LG Census\.
Page 79 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Annex 6: Extractive Sector Management Challenges
1\. The extractive sector contributes significantly to the economy of Niger , accounting for 83\.43 percent of total
exports making 6\.8 percent of the GDP in 2019 (although it currently contributes less than one percent to local
employment)\. The sector lacks diversification and is dominated by oil production (70 percent value) and uranium mining
(28\.5 percent)58\.
2\. The potential for extractive industries development in Niger is high \. The countryâs mining authorities have
expressed the intention to diversify their mining sector in the medium term\. The MoM has announced the existence of
deposits in the Aïr mountains (titanium and vanadium59, lithium) and in Liptako (lithium, iron60), as well as phosphates
deposits in Tahoua\.61 The finalization of a pipeline for export of crude oil is expected to increase the production to 110,000
barrels/day in 2022 from 200,000 barrels/day in 2020\. The 2013 discovery of gold in the Agadez region (Djado, Tafassasset
and Aïr) have resulted in a proliferation of artisanal mining sites, which employ an estimated 450,000 persons\. Meanwhile,
the downturn in prices, and lower cost options in other countries, resulted in a scale-back of mining projects in Niger\. The
extractive sector is hampered by limited human resources and technical capacity, both at national and regional levels\.
Challenges in extractive sector management
3\. The extractive sector is hampered by limited human resources and technical capacity \. Over the last decades the
sector has been constrained by a lack of investment in HR capacity and development programs to enhance professional
skills\. Women are under-represented both in universities and within higher-level roles in the sector itself\. Key areas to
develop include all aspects of modern mining management, including environmental management and tax and auditing,
data management, and small scale and artisanal mineral extraction and processing technologies\.
4\. Legal, institutional and technical improvements have been made, but implementation capacity is limited \. A new
petroleum code was adopted in 2017, and the 2006 Mining Code and Mining Policy are being revised\. The 2017 amendment
to the mining law provides a much-needed legal framework for ASM, defining and adapting legislation on ASM activities\.
The reforms, which included the delegation of several regulatory responsibilities to the SOPAMIN, were introduced to
facilitate regulation of the ASM sector, defining rights and obligations\. Yet, the legal and institutional frameworks are
hampered by realities on the ground\. The mining cadaster and geo-data management center (SIGMINES62) have been
modernized and a new mineral laboratory was built and equipped in 2017-2019\. 63 Yet management capacity could be
further improved, and many related regulations and procedures still need to be developed\. The laboratory is not yet
operational due to insufficient staffing and resources for recurrent spending, and SIGMINES and the cadaster are facing
challenges with aging staff that is not being replaced upon retirement\.
5\. Public sector capacity to oversee extractive sector is limited\. Budget management challenges affect the
performance of the ministries of Petroleum and Mines\.64 Most of the budget is spent at central level, and the staffing and
equipment is mostly based in Niamey\. Oversight at operational level is limited\. 65 Public spending on mining and petroleum
has been less than one percent of annual GoN spending in 2013-2017\. Both ministries are coping with ageing staff close to,
58 EITI 2017, 2019 United Nations Comtrade (United Nations International Trade Statistics Database\.
59 Supposedly 8 MT of TiO2 and 49,000 To of V2O5 likely reserves\.
60 The Say-Kollo iron deposit, with resource estimates of 1\.2bn/t @ 40 - 45 percent Fe\.
61 Deposits in Tahoua and in âParc du Wâ, with resource estimate of 1\.2 bn/t @ 23 percent P2O5\.
62 Système dâInformation Géologique Mines, geo-data management center\.
63 The WB has been supporting the extractive industries through the US$50 million Competitiveness and Growth Support project (P127204) and the
Africa Extractive Industries Trust Fund (P150108) to strengthen GoN capacity to negotiate mining and petroleum deals\.
64 Budget execution rates in 2013-2017 varied from 6-41 percent for Ministry of Energy andOil, and 27-82 percent for Ministry of Mines and Industry\.
65 E\.g\. spending of the Ministry of Mines & Industry in 2017 is estimated >95percent in Niamey and central level\.
Page 80 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
or past, retirement age\.
6\. Niger was re-admitted into the Extractive Industries Transparency Initiative (EITI) Process in the February 2020 \.
Niger was an active member of the EITI since 2005\. In October 2017 Niger was suspended from EITI due to inadequate
progress in implementing the 2016 Standard and insufficient civil society engagement\. The GoN subsequently withdrew
from the EITI Process\. Niger has re-submitted its candidacy application in October 2019 to the EITI, under the leadership of
the Prime Minister\. Re-joining EITI is an important signal towards the investment community\. Niger has rich experience
with EITI implementation and there are many achievements that can be built upon\.
Large Scale Extractive Industries in Niger
7\. Oil\. The Agadem Rift Basin is located in the administrative region of Diffa, in South East Niger, and covers an area
of 27,516 km2 towards lake Chad\. It is part of the main Central African Rift Basin, which extends into Nigeria, Chad,
Cameroon and Sudan\.
ï Since 2011, China National Petroleum Corporation (CNPC) is the main actor in Niger in the oil sector, with 97
discoveries from the last 127 exploration wells\. Despite the high success rate seen in the Agadem Rift Basin to date,
the oil industry believes the basin to have large untapped potential\. In late 2018, British Savannah Petroleum
announced the fifth oil discovery on its Agadem permit, foreseeing the start of commercial production by 2019, on
what they believe to contain approximately 2\.8bn barrels of âyet-to-findâ crude oil prospective resource\.
ï CNPC also operates the Zinder oil refinery, a 60-40 percent joint-venture with the GoN, through the Société de
Raffinage de Zinder (SORAZ)\. Completed in 2011, the refinery produces diesel, gasoline, and LPG products, which cover
local market demand (CNPC, 2019)\. SORAZ oil products are both sold internally and exported through the Niger
Petroleum Product Company (Société Nigérienne des Produits Pétroliers), an enterprise wholly owned by the State of
Niger, created in 1977 and responsible for the importation, transportation, storage, refining and marketing of
petroleum products\.
ï On January 2019, the GoN signed a bilateral agreement for the construction of a 2,000 km-long pipeline running from
Nigerien oil fields in the Agadem Rift Basin to the port of Cotonou\. The pipeline, whose construction was planned to
start end 2019, delayed till at least September 2020, could start operating by 2022, for a projected cost of US$2-4bn\.
The pipeline would be managed by companies set up by CNPC for this purpose in both transit countries with possible
participation of the host governments\.
ï In November 2018, the GoN confirmed viable oil discovery by Algeriaâs state-owned Sonatrach on the Kafra block and
signed a production sharing contract allowing Sonatrach to start commercial production, estimated to yield some
90,000 b/d in the near future\.
ï In January 2019, the GoN approved a new strategic policy for the development of the oil industry in the country by
2025\. The policy estimates that, with the completion of the Benin pipeline by 2021-2022, the oil sector could
contribute up to 25 percent of the countryâs GDP (while it was 4 percent in 2017) and employ between 8 and 12
percent of the countryâs workforce\.
8\. Uranium\. Niger is the worldâs fifth producer of uranium and hosts reserves of uranium ore for 425,600 tU, 5
percent of the world total (Organization for Economic Co-operation and Development (OECD)/International Atomic Energy
Agency (IAEA), 2019)\. Uranium deposits are located within the Tim Mersoï Basin, close to the twin mining towns of Arlit
and Akokan, 900 km north-east of the capital Niamey on the southern border of the Sahara Desert and on the western
range of the Air mountains\. Uranium concentrates are trucked to ports in Benin and then mostly exported to the Malvési
conversion facility in France\.
ï Uranium production in Niger started in 1971 with the Société des Mines de l'Aïr (Somaïr, Air Mines Company) and
1978 by the Compagnie minière d'Akouta (Cominak, Akouta Mining Company)\. In 2007, China National Nuclear
Corporation broke a 36-years monopoly in uranium exploitation by French company Areva (in partnership with the
Page 81 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
GoN and other ventures) by creating the Société des Mines dâAzelik to mine the Azelik/Teguidda deposits, however
only active in 2010-2015\. Cumulative production since 1970âs to the end of 2017 was about 140,000 tU\. Uranium
production peaked to 4,116 tU in 2015 thanks to the introduction of more efficient recuperation techniques but
dropped sharply in 2016 and was 3,449 tU in 2017\.66 Such trend is explained by the decrease of production at the
Somaïr open pit and the Cominak underground mine, as well as the shut down in 2015 of the Azelik mine as a result
of enduring depressed uranium prices and high extraction costs\.
ï After peaking at US$136/lb in June 2007, uranium prices dropped continuously, reaching the current lows of US$25/lb\.
The decommissioning of nuclear power plants in some economies and the accumulated uranium stockpiles by
countries such as China and Japan made the current supply exceed the demand; the industry predicts that such trend
will not be reversed for at least the entire 2020 decade\. In the current market downturn, the industry estimates that
uranium production in Niger is estimated at 3,500 to 5,000 tU/yr in the foreseeable future\.
ï Uranium sites in Niger employed some 3,850 people in 2017\.67 French mining company Orano announced the
dismissal of some 1,250 employees at its Cominak subsidiary at the end of 2019, and the mineâs closure between 2020
and 2021\.
ï In 2009 Areva started building what would have been the biggest open-pit uranium mine in Africa at Imouraren, with
a potential capacity of 5,000 tU/yr for 35 years\. In 2014, the drop in uranium prices pushed the French operator to
put the construction project on hold\. The discovery of gold sites in the Djado at the same period allowed to mitigate
the negative impacts in terms of jobs and livelihood loss\.
ï The Imminent closure of the majority of Nigerâs uranium mines poses a significant risk for revenue mobilization,
service delivery and Arlitâs economy as well as regional stability\. Uranium mines are the main purveyor of jobs and
social services in Arlit, a city of 150,000 inhabitants\. They are also the principal client of the Nigerien Coal Company
(Société Nigérienne du Charbon); the coal-fired powerplant that provides power to the town\. The closure of the mines
will most likely result in the collapse of the Nigerien Coal Company\. The mines and surrounding areas bear significant
environmental risks and no environmental or social plans exist yet to anticipate and mitigate the impact of closure\.
9\. Large-scale gold mining\. Samira Hill, an open-pit exploitation active since 2004 under a 80-20 percent joint
venture Liptako Mines Company (Société des Mines du Liptako) between Canadian Mining Exploration Society in West
Africa)and the GoN, is the only large-scale gold mine in Niger; in 2017 Liptako Mines Company recorded a production of
just 706 kg, representing 2\.9 percent of the total export value of the extractive sector in Niger\. ASM gold mining is not
reported in official trade statistics but produces an estimated 10 tons of gold per year\.68 Coexistence between ASM and
large-scale mines is not yet as significant an issue in Niger as in other gold producing countries in the region\. Nevertheless,
the issue remains pertinent given some progress to attract largescale investment, including from Turkish owned exploration
companies in Tillabery and Chinese owned companies in the north\. Currently, should a deposit be discovered in an ASM
zone, the overlying ASM permit will not be renewed\.
ASM in Niger
10\. ASM for gold in Niger â spanning the Tillabery, Agadez, and to a lesser extent Maradi administrative regions â
represents the countryâs most important mining sector in terms of employment and profitability\. It is also the fastest
growing and most significant driver of social, environmental, and security issues\. Besides gold, other ASM mineral
66 Comtrade data, 2019
67 As of 1 January 2018, 898 workers were employed at the Somaïr and 776 at the Cominak mines\. Orano reported that 99 percent of the workers at
these two mines are Nigerien\. About 680 workers were employed at the Azelik mine, but due to the cessation of mining operations, only 25 have
been retained\. The Imouraren project employed about 300 during the development stage and was expected to create about 1,400 permanent and up
to 3,000 indirect jobs when the facility is in full production\.
68 OECD 2018, Gold at the crossroads: Assessment of the supply chains of gold produced in Burkina Faso, Mali and Niger\.
Page 82 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
commodities produced in Niger include: sand and gravel aggregate; gypsum from the Tahoua region used in cement
production; cassiterite (tin) from the Air mountains; trona (natron) from Diffa, Dosso and Zinder regions and used in cattle
feed; salt from Dosso and Agadez; copper from Agadez, and gemstones\.69
11\. The emergence of the ASM sector motivated a revision of the Mining Code in 2017, but control mechanisms
established have yet to be implemented due to capacity constraints, operational challenges on the ground, and confusion
over roles and responsibilities\. Most of the sector remains outside of the formal framework, with Komabangou in Tillabery
region being the only site which remains officially open according to mining sector officials\. Taxes, royalties, and licensing
fees are not systematically collected; designation and enforcement of ASM designated zones is incomplete; ASM sites
remain unmonitored, unpermitted, or have difficulty renewing permits; environmental, safety and reporting requirements
are mostly unmet; and site-level government presence and provision of supports and extension services is lacking\. 70
12\. Formal governance of the sector remains centralized\. Regional directorates are not authorised to issue mining
permits and there is no direct formal role for local authorities\. As per the 2017 reforms, SOPAMIN has, in theory, assumed
responsibility for: site monitoring missions; provision of support and extension services; control of ASM gold exports; and
statistics, cartography, and data management\. Meanwhile, the MoM and its Directorate of Small-Scale Mining Operations
remain responsible for: permitting and licensing ASM sites, miners, and traders; designation of ASM zones; and the collection
of fees and royalties on behalf of the MoF\. The Department of the Interior assumes responsibility for mine site security\.
13\. State, LG and traditional authorities all source varying types of revenue from ASM operations, albeit the
coverage, legality, and enforcement of taxes and fees varies considerably from site to site\. In the formal framework,
taxation and regulation of ASM activities is differentiated by artisanal mining, semi-mechanised mining, and re-mining of
tailings\. Currently, the only formal taxes effectively paid for relate to the issuing and renewal of mining permits (FCFA
150,000 per 400m2 for artisanal sites with FCFA 250,000 annual renewal), royalty taxes, individual access permits (e\.g\., FCFA
10,000 per m2 per year for an artisanal site), individual access cards (FCFA 20,000 with annual renewal); and authorisations
to engage in trade and a sales tax for approved traders (FCFA 3,000,000 fixed cost with 3 percent on value)\. 71 Altogether,
public revenues from the sector totaled FCFA 730 million in 2018 (MoM)\.
14\. The value and volume of ASM gold production has surged since the 2014 discovery of gold fields and ensuing
gold rush in the Agadez region, along with an increasing gold price\. Total estimates of production range from 5\.7 tons in
2018 (figures from MoM, based on transactions declared by a roughly 50 agreed traders) to 12 tons per year (10 tons in
Agadez and two tons in Tillabery),72 representing up to US$633 million in current prices in 2019\.73 ASM production therefore
represents between 79-89 percent of total gold produced in Niger, assuming the countryâs only large scale mine in Tillabery,
Samira Hill, runs at its 1\.5 tons per year processing capacity\.
15\. ASM gold direct employment is estimated between 100,000 to 400,00074, with the sector attracting Nigerien
nationals and foreign migrants, providing off-season livelihood for workers in the agricultural sector, and indirectly
69 Djibo Sambo, C\. âExploitation et Fiscalite Miniere Au Nigerâ; ILO, âSocial and Labour Issues in Small-Scale Minesâ; UNECA, âNiger | ASMâ\.
70 Bibi Traore M\. & Arji, S\. âPreliminary Study on the Artisanal Mining Sector in Niger Final Reportâ\. Levin Sources, 2019\.
71 Costs indicated are for artisanal sites\. Costs for semi-mechanized and tailings mining are higher\. Other formal framework taxes not currently
enforced include an annual tax on equipment owners (e\.g\., FCFA 200,000 per year per metal detector)\. Massaran Bibi Traore, and Saidou Arji,\.
âPreliminary Study on the Artisanal Mining Sector in Niger Final Reportâ\. Levin Sources, 2019\.
72 Sollazzo, R\. 2019\. âGold at the Crossroads: Assessment of the Supply Chains of Gold Produced in Burkina Faso Mali Nigerâ OECD\.
73 February 28th, 2020 prices of US$1,644 per ounce\.
74 Nigerien authorities estimated that at its peak in 2017, ASM gold could have employed directly and indirectly as many as 600 000 people\. In the
first half of 2018, wages from ASM gold in the north were thought to be about XOF 54 000 to 85 000 (US$96 to US$151) a month, markedly more
than the XOF 40 000 to 50 000 (US$71 to US$89) a month a worker in Niamey could expect\. Marcena, H\. âPulling at Golden Webs: Combating Criminal
Consortia in the African Artisanal and Small-Scale Gold Mining and Trade Sectorâ, 2019\.
Page 83 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
supporting many more through upstream supply and service activities\.75 There is limited downstream value-added activity,
such as jewelry manufacturing\. Notably, there is one gold refinery located in Niger with up to 300 employees, built in 2018,
and refining processed ore from ASM operations, albeit with limited transparency\.
16\. ASM gold production is frequently smuggled out of Niger, directly via plane or over land onto trading hubs and
end markets including the United Arab Emirates, India, Lebanon, and Switzerland\. 76 Financial incentives to smuggle gold
stem from: 1) Nigerien taxes (i\.e\. a 350,000 FCFA per kilogram customs tax and a 120,000 FCFA per kilogram export tax);
and 2) BCEAO currency exchange fee (1\.2 percent for US$/FCFA exchanges as of July 2019)\.77 Combined, these legal
mechanisms represent about three times more than the cost of smuggling\. 78 Failure to compete with illicit export channels
explains why a recent SOPAMIN scheme (2018) to buy ASM gold through mobile trading posts has largely failed\.
Nevertheless, official export receipts are rising and greater formalization is anticipated to help gold overtake uranium as the
countryâs second largest official export earner (after petroleum), with official export receipts from gold forecast by the
International Monetary Fund (IMF) to climb more than 500 percent from 19 billion FCFA in 2018 to 121 billion FCFA in
2024\.79
17\. Geological potential, continued growth in gold prices, along with an ample supply of labor are expected to drive
continued growth in the sector for the coming years\. Gold prices performed strongly in 2019, increasing by 18\.4 percent,
and are forecast to continue to rise in response to financial and geopolitical uncertainty combined with low interest rates
and gold purchases from central banks\.80 Along with an increased number and size of mine sites, the sector has an
opportunity to increase the scale and productivity of its operations\.81
18\. Gold production in the Agadez region is split into three areas â Tchibarakten, Air Mountains, and the Djado
plateau â all of which experienced gold rushes following their discoveries around 2014\. There were an estimated 25 sites
in the Djado plateau before it was shut down by the GoN in 2017\. Gold from the Djado plateau is sourced mostly from
alluvial deposits\. These deposits are of a higher carat quality (gold nuggets) than the mostly orogenic gold mined in
Tchibarakten and Air mountains\. During the initial gold rush, extraction required only shovels and metal detectors and no
mercury or cyanide processing\.82 Being relatively cheap, fast and easy to exploit, the area continues to produce gold despite
the formal closure by the government\. Besides the Djado plateau, Gold in the Agadez region is produced in roughly 87 sites
in the Air mountains, and 22 in Tchibarakten alongside the Algerian border\. These sites are predominantly orogenic deposits,
exploited through pit mining with crushed ores being processed with mercury or transported to cyanidation plants around
Agadez and the Air mountains\. Gold production in the Agadez region is markedly different from operations to the south in
Tillabery, with hardly any women involved, and a larger share of totally informal sites that fall completely outside of ASM
permitted boundaries and with no official state presence\. Notably, the surge of ASM has been considered a stabilizing factor,
providing alternative livelihoods to local populations\.
75 HACP & Peace Nexus Foundation, âEtude Sur La Typologie Des Conflits Dans La Secteur Minier Au Nigerâ; Massaran Bibi Traore and Saidou Arji,
âPreliminary Study on the Artisanal Mining Sector in Niger Final Reportâ\.
76 Marcena, H\. âPulling at Golden Webs: Combating Criminal Consortia in the African Artisanal and Small-Scale Gold Mining and Trade Sectorâ, 2019\.
Bibi Traore, M\. & Arji, S\. âPreliminary Study on the Artisanal Mining Sector in Niger Final Reportâ\. Levin Sources, 2019\. Sollazzo, R\. âGold at the
Crossroads: Assessment of the Supply Chains of Gold Produced in Burkina Faso Mali Nigerâ\. OECD, 2018\.
77 As required by the WAEMU, all exporters are to repatriate profits from gold exports into the FCFA zone via the BCEAO\.
78 Combined these bring the total cost to legally export a kilo of gold to FCFA 760,883 per kg, compared to an estimated FCFA 513,603 per kg through
smuggling networks and black-market exchanges; Sollazzo, R\. âConflict Risk Analysisâ\.
79 IMF, âIMF Country Report No\. 19/239â\.
80 World Gold Council, âGold Outlook 2020â\.
81 Sollazzo, R\. âGold at the Crossroads: Assessment of the Supply Chains of Gold Produced in Burkina Faso Mali Nigerâ\. OECD, 2018\.
82 Grégoire, E & Gagnol, L\. âRuées Vers lâor Au Saharaâ¯: Lâorpaillage Dans Le Désert Du Ténéré et Le Massif de lâAïr (Niger)â\. EchoGéo, 2017\.
Page 84 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
19\. Tillabery represents Nigerâs oldest gold producing region, with roughly 73 sites, generally located along three
segments of the Birimian greenstones belt â a gold-rich geological formation that extends across the border into Burkina
Faso\. Tillaberyâs gold production is relatively more developed and has historically had a closer relationship with state
regulators\. Meanwhile, the security situation in the area has deteriorated significantly along with the rise of armed groups
in the broader Liptako-Gourma region, generating operational risks for interventions and raising security costs for GoN
involvement\. Some reports also indicate that armed groups benefit from the mine sites\.83 Other unique challenges include
the presence of children on and around mine sites and marginalization of women who are exploited at lower rungs of the
value chain and are generally in vulnerable positions in mining communities\.
20\. Gold production in Maradi is relatively limited with an estimated 7 sites\. Production is mostly sourced from
alluvial deposits along river systems\. Security risks have increased in the past couple of years with armed violence against
civilians from unidentified groups along the border with Nigeria\.
21\. The ASM sector has an important relationship with the environment \. Sites in the south completely close off
during the rainy season and serve as a source of employment and livelihood for off-season agricultural workers\. Threats to
the environment stem from uncontrolled use of mercury, cyanide and other chemicals (e\.g\., detergent) that poison the air,
soil and scare water supplies\. In addition, ASM activities leave behind lasting physical damage to the surface environment,
occur in protected nature and wildlife, and exacerbate unsustainable demand for wood used in ASM pits and infrastructure\.
22\. ASM sites are also dangerous places to work and can be destitute sources of livelihood for people engaged in
the lower value jobs (e\.g\., processing through winnowing and ore washing), which in the south are often women\. Lack of
protective equipment and use of explosives leads to chemical exposure, accidents and fatal injuries\. Drug abuse (i\.e\.,
tramadol) is also common to help extend working hours in pit mining\. Access to health care is difficult and health centers
are sometimes located tens of kilometers from mining sites\. Access to water is another challenge, particularly in Agadez,
with workers suffering from heat and dehydration\.
23\. A 2019 study from Nigerâs High Authority for Peace Consolidation (Haute Autorité à la Consolidation de la Paix,
HACP) identified four types of conflicts facing Nigerâs mining sector : 1) land use conflicts (tied to disagreements over site
perimeters, contracts or permits); 2) environmental conflicts (concerning soil and water pollution, deforestation and
sanitation); 3) governance conflicts (implicating relationships between communities, businesses, and authorities, and
states); and 4) security conflicts (including inter- and intra-communal tensions, banditry, scams, and conflicts that could
implicit jihadist groups)\.84
24\. The COVID-19 pandemic impact on Nigerâs economy will likely increase the number of ASM \. The impact of the
pandemic on trade and jobs, combined with the rising value of gold will almost certainly cause the population of the ASM
communities to grow\. Economic necessity and ASMâs de facto low entry barriers will pull people into the sector\. This will
impact the health, safety and income of ASM miners and their communities\. This could also result in an increased risk for
conflict and inequality, and thus a growing need for effective state presence on mining sites\.
83 âManaging Trafficking in Northern Nigerâ\. International Crisis Group, 2020; Assanvo, W\. âIs Organised Crime Fuelling Terror Groups in Liptako-
Gourma?â Institute for Security Studies, 2019; Lewis, D\. & McNeill, R\. âSpecial Report: How Jihadists Struck Gold in the Africaâs Sahelâ\. Reuters, 2019\.
84 HACP & Peace Nexus Foundation\. âEtude Sur La Typologie Des Conflits Dans La Secteur Minier Au Nigerâ, April 2019\.
Page 85 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Annex 7: GOLD Project Contribution to Niger FCV Risk Mitigation Strategy
1\. Niger is exposed to multiple conflict and fragility risks, which stem from a combination of deep-rooted structural
causes and short-term drivers\. The most immediate vulnerability is related to the growing regional insecurity and violent
extremist groups, which threaten the countryâs stability and fuel pre-existing intercommunal tensions\. Five key drivers of
fragility have emerged from the 2017 Risk and Resilience Assessment:
ï increasing competition over natural resources (water, arable land and forests) intensified by demographic pressure
(increase by 70 percent by 2030) and climate related stresses;
ï marginalization of youth due to limited economic opportunities, difficulty in accessing land and low education levels
potentially fueling grievances and making them vulnerable to radicalization;
ï governance challenges hampering services and contributing to popular dissatisfaction;
ï transparency challenges in the management of extractives and unequal redistribution of mining revenues
exacerbating tensions, especially in the mining areas;
ï growing regional insecurity and violent extremist groups that threaten Nigerâs stability and fuel pre-existing
intercommunal tensions\.
2\. The GoN has shown a strong commitment in addressing critical FCV risks and articulated its approach in a series
of key strategic documents\. Nigerâs development strategy, PDES-II, operationalizes Nigerâs Renaissance Program, launched
by President Issoufou in 2011\. The program recognizes that insecurity constitutes an obstacle to economic, social and
cultural development and considers key: (i) improving the strategic framework of security governance; (ii) mitigating
security threats; (iii) reducing community conflicts; and (iv) promoting development initiatives for peace and security\.
3\. The GoN has also established national bodies dedicated to promoting peace and security, which act as key
national counterparts for the WB and other partners\. The HACP is an institution attached to the Presidency of the Republic
of Niger in charge of analysis, prevention and management of crises and conflicts\. The CNESS has been created in 2016 and
its role is to carry out prospective analysis and studies on strategic and security issues, as reflected in its Strategic
Orientation Plan (2017-2019)\.
4\. IDA19 classified Niger as Fragile Country\. Priority FCV risks mitigation areas and activities identified in the World
Bank 2017 Risks and Resilience Assessment were (i) reducing grievances through more equitable and transparent
institutions and improved local governance and service delivery; (ii) increasing opportunities for youth and women in fragile
regions and supporting the peaceful management and sharing of agropastoral resources; (iii) strengthening crisis
prevention, preparedness and response\.
5\. GOLD Project significantly contributes to mitigate Niger fragility risks\. The interdependence of extractive sector
and state deployment policies and how they contribute to fragility is laid out in figure below\. GOLD project activities
contributing to mitigate fragility risks are:
(i) Capacity strengthening of local authorities on conflict management and citizen engagement\. The project will
provide TA and capacity-building to deconcentrated services and LGs, in partnership with CFGCT\. The objective
will be to strengthen local capacities for peace, aimed at supporting the inclusion of conflict prevention issues into
local processes and mainstreaming participatory approaches into local development planning\. The following areas
for capacity-building activities for LGs and deconcentrated services in the targeted regions on: (i) conflict
management, prevention and response; (ii) communication capacities of LGs civil servants to better communicate
to citizens on FCV related issues; (iii) social inclusion, transparency and participatory approach in local governance\.
(ii) Grievance Redress Mechanisms\. The project will finance a GRM for project activities, that will inform both, the
MoM on a design of a sector-wide GRM for the extractive sector, and the Ministry of Interior on a potential GRM
for LG\.
Page 86 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
(iii) Mitigating risks from extractives\. The project will (i) provide TA to improve the legal framework related to
environmental and social aspects related to extractive industries as well as the GoN strategy for mine closure
anticipating the social impact of Arlit mining closure; and (ii) strengthen through PBC the control and oversight of
mining sites as well as the capacity of the government and ASM miners on environmental and social risks, norms
and good practices\.
(iv) Fostering jobs in extractive sector\. The project will (i) improve the capacity of artisanal miner in improving their
business and livelihood, (ii) strengthen the capacity of the MoM for implementing local content, increasing the
potential for jobs for Nigerien in the extractive sector and (iii) increasing the likelihood of private sector investment
in extractive sector given the availability of geological data, and therefore job creation\.
(v) Fostering extractive sector transparency\. The project will contribute to build trust between citizens, civil society
and the government through TA on access to information on extractives, from geological data to contract and
revenue (EITI)\.
(vi) Measuring the perception of citizens on conflict and service delivery\. The joint United Nations-World Bank
Pathways for Peace highlighted that âone of the greatest risks of violence today stem from the mobilization of
perceptions of exclusion and injustice, rooted in inequalities across groupsâ\. Therefore, the project will carry out
perception surveys of citizens on conflict (with CNESS) and on service delivery quality (pilots with Ministry of
Interior)\.
(vii) Conflict risk monitoring and early warning system\. GOLD project will contribute to the national conflict risk
monitoring system by providing TA to CNESS to set up an integrated conflict risk-related information management
system\. Also, the TA to the Ministry of Interior to set up an Information and Communication Technology based
integrated information management system on LG performance will feed into the conflict risk monitoring system\.
6\. In parallel, the Niger Risk Mitigation World Bank-Executed Trust Fund85 will feed the policy dialogue with the GoN
to: (i) provide recommendations on a harmonized early warning and response system; (ii) generate consensus at the client
level and among partners; and (iii) clarify leadership\. While the GoN has committed to security and peace-building, the
limited integration and harmonization of initiatives is a challenge\. HACP is an institution attached to the Presidency of the
Republic of Niger in charge of analysis, prevention and management of crises and conflicts\. The HACP has put in place peace
committees in the Diffa and Tillabery regions for peacebuilding and conflict mediation\. In parallel, the Min\. of Interior is
supporting the setup of vigilance committees, through equipment (radio, mobile phone) and training\. Finally, CNESS,
established in 2016, is in charge of regularly monitoring the evolution of security risk in Niger and in the sub-region\.
85 Maximizing the Development Impact of the IDA18 FCV Risk Mitigation Regime in Niger: P170773
Page 87 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Annex 8: Climate Co-Benefits Rationale
1\. Climate change affects both rural development and extractive industries; and contribute to Nigerâs
fragility risks\. The GoNâs priorities to reduce Green House Gas emissions is to improve the resilience of agriculture,
animal husbandry and forestry as well as sustainable land management â including water resources management\. 86
Roughly 80 percent of Nigerâs farmland is degraded due to climate change\. Temperatures rises 1\.5 times faster
than the global average\. As a result, droughts and floods are growing longer and more frequent, undermining food
production\. About 10 million people in Niger depend on livestock rearing for survival, while the land available to
pastoralists shrinks as population growth pushes farmers northward to cultivate more crops\. The region is home
to the largest number of people who are disproportionately affected by global warming\.87 The Industrial Mining
Sector is affected by the increasing water scarcity, which makes operating water and energy intensive processes of
mineral treatment more costly and complicated\. Yet, the main impact of climate change on the extractive
Industries in Niger is that it provides alternative livelihoods for people that have lost their livelihoods in agriculture
and livestock sectors because of climate change\. This is particularly relevant for the ASM sector, which plays an
important role in providing job opportunities for young people that have no longer any alternatives\. Meanwhile,
increasing state footprint and monitoring system is crucial to improve oversight of climate risks and inform policy-
making, and increasing the capacity of LG to integrate climate resilience in their development planning is as
important\.
2\. The project will contribute to mitigate climate risks by including
ï climate resilience into the core training of LG executive staff on development planning;
ï climate data and analysis in the risk monitoring information system;
ï climate mitigation and adaptation into the revision of extractive legal and policy framework;
ï climate resilience into the training of public officials on the environmental impact of mining and into the
template report for extractive sites inspection;
ï the identification of new underground water resource and additional climate related analysis through the
geodata collection88;
ï climate resilience and Green House Gas -reducing activities (such as land rehabilitation, afforestation, etc\.)
in the elaboration of the GoN strategy for mine closure; and
ï climate mitigation, adaptation and resilience in the training for miners on sustainable ASM practices\.
3\. Finally, the strengthening of the policy framework, mining cadaster and the geodata management will
improve land use planning and governance of land and water, contributing to mitigate conflicts between different
land users, and thus also contributing to a sustainable management of natural resources\.
86 Nationally Determined Contributions intends to reduce Green House Gas emissions under the United Nations Framework Convention on
Climate Change, currently at elaboration stage\.
87 https://www\.climatecentre\.org/news/1066/un-sahel-region-one-of-the-most-vulnerable-to-climate-change\.
88 Increased geodata knowledge could serve further than extractive sector development: land use management (for agriculture, water flow
management, land planning related to stability and contamination issues including areas more susceptible to landslides, identification of
underground water bodies)\.
Page 88 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Annex 9: Donor Partners and other World Bank Projects that have synergies with the GOLD Project
Partner Amount Period Geographic Targeting Axis of intervention
United Nations Children's Fund US$11\.0 2017-2020 266 LGs Modernization of the Civil Registry systems
million
US$245 588 2019 - 2021 24 LG Citizen Engagement at LG level
European Union EUR25\.6 2013-2018 3 Regions (Agadez, Tahoua Local development and stabilization of the North
million and Tillabery)
EUR12,9 3 year Diffa Region (cities: Maine Strengthen institutional and community resilience in Diffa
million Soroa, Chétimari, Diffa,
Assaga, Toumour, Kabelawa,
NâGuimi
Swiss Aid ~ CHF 44\.1 2015-2019 32 LGs (Maradi-25 LG; several projects supporting LGs such as citizen engagement for improved
million Dosso : 10 communes) social and economic livelihood; support to the media and water and
sanitation
EUR6\.6 million 2018-2022 Nationwide Regional Program to Support Financial Decentralization in West Africa\.
This project is co-financed with the BMZ and additional funding is being
sought for the delivery of the entire program
Swiss Aid (together with the World US$7\.0- 2021-2024 Regions : Agadez and Support for the Formalization of the Artisanal Gold Mining Sector, with a
Bank) 10\.0Million (pipeline) Tillabery string focus on strengthening the position of women and addressing
Conflict Risk
International Organization for US$35\.0 2019 Regions : Agadez and Tawar Conflict prevention-social cohesion
Migrations million
Belgian cooperation EUR16\.0 Closed in 2018 Dosso Region Strengthening local governance and food security
million
German cooperation EUR8\.0 million 2018-2020 51 LG in Tillabery, Tahoua Governance and Decentralization: Support to the implementation of the
and Agadez regions transfer of resources to LG through ANFICT
EUR28\.0 2019-2022 Regions: all LG (106) of Governance: Support to LG Public Investment Management
million Tillabery Tahoua and Agadez
French cooperation EUR5\.0 million 2019? (4 2 Regions: Diffa and Tillabery State modernization for service delivery (Capacity building of
years) decentralized and deconcentrated services)
United States Agency for US$18\.0 2019-2021 LG in Maradi and Zinder Support to local development Administrative and PFM capacity building;
International Development million Enhance civic Engagement and citizen feedback loops
Luxembourg EUR105\.0 2016-2020 Regions: Agadez; Dosso; The portfolio consists of 6 interventions spanning from Basic to
million Zinder professional education; regional capacity building; water and sanitation
Page 89 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Partner Amount Period Geographic Targeting Axis of intervention
and local development
IDA Urban Water and Sanitation US$160\.0 2011-2020 Nationwide Access to sustainable water supply services and to improved sanitation
P117365 million services in some urban areas
IDA Population and Health US$103\.0 2015-2021 Regions Increase the utilization of reproductive health and nutrition services in
Support Project (P147638) million Targeted Areas
IDA Niger Community Action US$70\.0 2012-2019 Nationwide Strengthen local development planning and implementation capacities, to
Program Phase 3 (P132306) million support targeted population in improving agriculture productivity, and
effectively respond to crisis or emergencies
IDA Niger Refugees and Host US$80\.0 2018-2023 Regions: Diffa, Tillabery and Improve access to basic services and economic opportunities for refugees
Communities Support Project million Tahoua and host communities
P164563
IDA Social Safety Nets (P123399) US$101\.0 2011-2019 Nationwide Establish and support an effective and adaptive safety net system increase
and P155846 million access of poor and vulnerable people to cash transfer and cash for work
programs
IDA Niger Disaster Risk US$100\.0 2014-2020 Diffa, Dosso, Niamey and Multi-sector: support to LG; Disaster Risk management and Climate
Management and Urban million Tillabery change adaptation, Urban development, Water resources, and agriculture\.
Development Project (P145932)
IDA PCDS (P145261) US$40\.0 2014-2021 Central Support to HR and PFM reforms\.
million Government/Nationwide
IDA PRACC (P127204) US$65\.4 2012-2021 Nationwide Support to improve selected aspects of Niger's business environment, to
million support the development of select industries and to increase local
business participation in the extractive industry sector\.
African Development Bank US$1\.4 million 2013- 2019 Nationwide Domestic Resources Mobilization Support and Governance Improvement
Project
Page 90 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Annex 10: Economic Analysis of Niger-GOLD project
1\. The PDO is to is to strengthen local governmentsâ capacity and extractive sector management for service
delivery in the targeted regions\. The targeted regions are Agadez, Diffa, Tillabery and Zinder\. The project combines PBCs
and TA to support government reforms\. Support to legal framework and policy formulation is combined with large-scale
capacity-building in targeted regions\. The project targets core ministries (Interior, Finance, Planning, Civil Service), targeted
line ministries in extractives (Mines, Petroleum) and social sectors subject to deconcentration and decentralization (Primary
Education, Health, Water)\. The expected benefits of the project include: 1) deployment of human and financial resources,
2) improved investment climate in the extractive sector, and 3) mitigation of violence \. Additional gains that could not be
quantified are expected from: a) formalization of the artisanal mining sector, and b) mitigation of environmental costs of
extractives\.
2\. This economic analysis estimates the expected economic impact that could be attributable to this project\. The
method selected for the analysis is the NPV because the project is expected to provide a stream of economic and welfare
gains that are amenable to a year by year accounting\. More specifically, the exercise will determine as precisely as possible
the economic added value that can be directly attributed to the results of the project and compare it to the cost of the
project\. Both economic gains and economic costs measurable in monetary terms will be discounted to obtain the net
present value to assess the viability of the project\.
3\. The use of a methodology based on the concept of fiscal multiplier89 helps to circumvent many of the issues
associated with measuring the economic gains of a decentralization or PFM project\. The fiscal multiplier estimate is based
on the IMF framework90 and on the assumption that LGs have higher fiscal multipliers than central governments\. This
assumption is supported by the arguments that LGs are more accountable to local populations and are more aware of the
needs of their constituents which leads to less waste and leakages\. This assumption is also supported by some empirical
evidence as presented in the methodology section below\. For consistency, the method is also applied to the economic
gains estimate from increased revenues generated by the development of the mining sector\. Additional economic gains
come from alleviation of conflict, approximated using available literature and added to the calculations\.
4\. The economic analysis will evaluate whether the economic benefits of the project are justified relatively to its
cost of US$100 million\. The direct beneficiary of the project will be (i) the civil servants from the targeted ministries and
public agencies, (ii) the LG staffs and elected representatives in the targeted regions, and (iii) the artisanal miners targeted
by the pilot on ASM, with a focus on women\. Indirect beneficiaries include citizens from the targeted regions, who will
benefited from better service delivery from LG, especially in health, education and water thanks to state deployment
policy\. By supporting deconcentration and decentralization reforms, the project will increase financial execution and
access to service delivery outside Niamey\. Investing in geo-data, extractive sector management and transparency will
attract investors, foster an extractive sector more integrated in the local economy, mitigate the associated social and
environmental risks, foster job creation and boost revenue mobilization\. Formalizing ASM and enhancing oversight
capacity will foster the sector as a driver of resilience rather than of fragility\. Increased transparency and participation on
local governance and extractive industries at all levels will contribute to strengthen accountability and state credibility\.
Fiscal Multiplier Methodology and Underlying Assumptions
5\. Some of the projectâs expected impact does not directly generate streams of revenues which are what is
normally evaluated through Net Present Value methods\. The resources that will be deployed and transferred to LGs are
not earmarked\. The project will also result in better management of resources thanks to increased predictability and
89 The IMF (2014) paper defines fiscal multipliers as the measure of the short-term impact of discretionary fiscal policy on output, i\.e\. the ratio of a
change in output to an exogenous change in the fiscal deficit with respect to their baselines\.
90 Fiscal Multipliers: Size, Determinants and Use in Macroeconomic Projections, IMF Technical Notes and Manuals, Sept\. 2014\.
Page 91 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
reliability of transfers from the central government to LGs; improved PFM capacity at the local level resulting in better
budget planning and execution, reporting and accounting practices and less leakages; improved administrative capacity
at the local level resulting in improved responsiveness of municipal governments to citizensâ concerns, needs and requests;
increased mobilization of local taxation revenues; and improved accountability linkages between local decision makers
and citizens\. Additionally, though some of these infrastructures will be beneficial for the general population and will be
targeted toward the most vulnerable populations (women, children and people with disability), they are more directed
towards increasing welfare than generating predictable streams of revenues\. Environmental and violence cost mitigation
are also two factors that have been associated with important economic gains but do not have direct associated flows of
revenues\.
6\. The use of a methodology based on the concept of fiscal multiplier has multiple advantage for this type of
situation\. First, because the output from the method is in units of the GDP, it is directly measurable and limited to the
added-value provided by each activity, meaning that it includes the value of the additional jobs and services provided by
the investment while accounting for the opportunity cost\. The second advantage of this method is that it makes more
straightforward the task of incorporating other indirect economic benefits of the project\. For example, while the literature
for the impact of less conflict on specific projects is scant, there is abundant study of the aggregate impact of conflict on
GDP which can then serve as good approximations and can be incorporated in this framework\.
7\. To determine the appropriate size of the fiscal multiplier, the IMF proposes a framework for countries where
no reliable estimate is available\. The IMF recommends the use of their bucket approach which bunches countries into
three groups that are likely to have similar multiplier values based on their structural characteristics and then adjusting
for specific factors such as monetary policy and types of instrument\. The estimate can then be cross-checked with general
findings from the literature on other countries\.
8\. One key aspect of the method from the IMF is that it takes into account the permanency effect of fiscal shocks\.
In general, model-based and econometric studies find that the output effect of an exogenous fiscal shock vanishes within
five yearsâeven if fiscal measures are permanent\. The effect does not decline in a linear way but usually has an inverted
U shape, with the maximum impact occurring in the second year\. Meanwhile, the duration of these effects varies according
to several factors: (i) the persistence of the fiscal shock; (ii) the type of fiscal instrument; and (iii) conjunctural factors such
as the cyclical position and whether monetary policy responds to the fiscal shock\. A fiscal shock at time t would have
output effects at time t, t+1, â¦, t+3\. This is illustrated in Table from the IMF (2014) 91\.
Table A101 Illustration of IMF Multiplier effects
9\. For the purpose of this analysis, the multi-year approximation for the fiscal multiplier of Niger is set at (0\.6, 0\.8,
0\.6, 0\.3) for the four years of the effect\. This considers structural characteristics, such as trade openness, flexible labor
91The IMF (2014) paper defines fiscal multipliers as the measure of the short-term impact of discretionary fiscal policy on output, i\.e\. the ratio of a
change in output to an exogenous change in the fiscal deficit with respect to their baselines\. IMF (2014) Fiscal Multipliers: Size, Determinants, and
Use in Macroeconomic Projections
Page 92 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
markets, spending and revenue inefficiencies, debt levels, etc\., of Niger\. Developing economies are generally placed in the
low-multiplier bucket and IPFs have the highest fiscal multiplies\. As LG transfer levels are assumed permanent, the
considered fiscal shock is the difference between transferred amounts at time t and t-1, meaning the incremental increase\.
This offers a conservative and lower bound level for the economic gains from the transfers to LGs\.
10\. A central assumption of the project is that LGs have a higher productivity on their investments, meaning a lower
unit cost\. This claim is supported by data comparing local and central unit costs for different projects in Guinea (the
Support to Local Governance Project, P167884) and in Mali (Decentralization project, P164561)\. This means that, for
example, a US dollar spent by a LG would have a bigger welfare and economic impact than a US dollar spent by the central
government\. This higher productivity comes from a lower unit cost of the local projects due to lower levels of leakages as
LGs are often more accountable to their beneficiaries, and lower transaction and supervision costs\. Due to the lack of
available data for Niger, data from Guinea was used to try to measure the difference in productivity at the local and central
level\. Data for Niger will be collected during project execution Based on the table below taken from a similar project in
Guinea, the Support to Local Governance Project, the initial productivity markup used for this economic analysis is 15
percent\. This claim is supported by data comparing local and central unit costs for different projects and presented in the
table below\. In addition to a lower unit cost, better alignment of the investments with the local needs could lead to higher
welfare gains\. One caveat of using the Guinea data is that the country is more advanced than Niger in their decentralization
and therefore their efficiency at the local level might be higher\. This possibility is going to be addressed in the sensitivity
analysis of this economic analysis\.
11\. In terms of general macro assumptions, the analysis assumes a market exchange rate fixed at the recent average
rate of FCFA 580 for US$1 and a 6 percent discount rate which is standard for a WAEMU country\. It is also assumed that
these macroeconomic assumptions are to remain constant over the projectâs life\.
Table A10\.2 Example of Projects at Local and Central levels in Guinea (Guinean Francs million)
Improved
LG Offices Health Clinic Elementary School Drilling
Well
W/toilet,
incinerati
3
W/toilet on pit, W/equipment,
classrooms no
unit and Home & home, water W/Equipme
Source Rural Urban and homes equip
garbage fence, access and nt
for ment
pit solar kit, fence
teachers
water
access
Compagnie des
Bauxites 600
de Guinée
Prog\. dâAppui
aux
404 526 550 448 80\.4 47
communautés
villageoises 3
Prog\. d'appui Ã
la gouvernance
288 360 98\.7
des redevances
minières
Prog\. sectoriel
628
pour l'éducation
Plan Guinée 448
National Budget
500 550 400 100
of Guinea
Page 93 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Project Economic Benefits and Costs
12\. Through its activities, the project is expected to have multiple economic benefits that are quantifiable \. The
expected benefits of the project include: 1) deployment of human and financial resources, 2) improved investment climate
in the extractive sector, and 3) mitigation of violence costs\.
13\. Benefit 1: Deployment of public human and financial resources\. The project will contribute to operationalize
decentralization\. The project will also support the country system by completing the legal framework and procedures on
LG PFM and oversight, as well as building the capacity of Niger to train future cohorts of LG civil service\. The hypothesis is
that the budget executed locally will be: (i) executed at lower cost (unit cost is lower when executed locally); (ii) according
to local preferences and needs (less waste, better targeting for poor, and included in participatory process, and hence
higher impact); and (iii) invested in all communes, mostly on small infrastructures in both urban and rich areas, which tend
to impact poor population first (water points, classrooms in primary school, small road infrastructures, etc\.)\. The estimated
amount used for the analysis comes from simulations on public expenditures taken from the BOOST database\.
Table A10\.3: Budget from Targeted Ministries Transferred to LGs (FCFA billion)
2019 2020 2021 2022 2023 2024
Baseline (prediction) (prediction) (prediction) (prediction) (prediction)
Amount of Public Expenditure Deployed BASELINE 24\.88 25\.85 26\.82 27\.79 28\.76 29\.73
Share of budget executed at regional, departmental
and LG (PROJECT TARGETS) 0\.10 0\.20 0\.30 0\.40 0\.50 0\.50
Amount of Public Expenditure Deployed with
Project 24\.88 51\.71 80\.47 111\.17 143\.82 148\.67
Difference 0\.00 25\.85 53\.65 83\.38 115\.05 118\.94
Increment of the difference 25\.85 27\.79 29\.73 31\.67 3\.88
14\. For the purpose of the economic analysis using the fiscal multiplier methodology, the amount of public
expenditures that matters is the additional amount of public expenditures spent at the local level rather than at the central
level (the difference row) above the previous yearâs amount (the increment of the difference row), given that the fiscal
multiplier applies to changes in fiscal policy and not to levels\. The following table shows the economic gains of the baseline
scenario\. The present discounted value for the economic gain of the first benefit is therefore US$56\.51 million\.
Table A10\.4\. Economic Gains from the Transfer of Resources (FCFA billion)
2020 2021 2022 2023 2024 2025 2026 2027
Gain from 2020 Increment 2\.33 3\.10 2\.33 1\.16
Gain from 2021 Increment 2\.50 3\.34 2\.50 1\.25
Gain from 2022 Increment 2\.68 3\.57 2\.68 1\.34
Gain from 2023 Increment 2\.85 3\.80 2\.85 1\.43
Gain from 2024 Increment 0\.35 0\.47 0\.35 0\.17
Total for the year 2\.33 5\.60 8\.34 10\.08 8\.08 4\.65 1\.77 0\.17
15\. Benefit 2: Improved investment climate in the extractive sector\. The approach used in estimating the economic
benefit from the mining component of GOLD project is in line with the objective of that component\. The objective is to
increase Nigerâs fiscal space through extractive sector, and job creation by fostering a conducive environment for investors
in sustainable mining, enhancing the integration of extractive industries in local economy\.
16\. The extractive sectorâs economic benefits are expected to come from the improvement of its contribution to the
Governmentâs long-term growth objectives\. Exploration of extractive resourcesâ potential improved public sector capacity
Page 94 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
to regulate and manage the actors involved, and increased transparency will lead to an augmentation of investment in
the extractive sector\.
17\. Direct returns to the Government will be in the form of fiscal benefits which accrue from (a) increase in revenues
from the growth of large-scale mining production; (b) increase in revenues from formalized small-scale mining operations;
and (c) increase in household income from improved small-scale mining practices\. A secondary effect of the project would
be an increase of rural employment and incomes through better performance of small-scale mining, and the broadening
of the tax base as local procurement stimulates the creation of jobs and small businesses as local suppliers of goods and
services to large-scale mining operations\.
18\. The table below shows the assumptions that have been made regarding the baseline productions of the two
extractive sectors targeted by the project: gold and uranium\. The projections are from the IMF in collaboration with the
Government from 2019 to 2024\.
Table A10\.5\. Predictions on the Productions of Gold and Uranium (at market value, FCFA billion)
2017 2018 2019 2020 2021 2022 2023 2024
Total (baseline) 198\.042 147\.714 160\.202 181\.755 188\.625 186\.607 178\.011 198\.736
Uranium, (baseline) 169 123 131 134 121 120 80 80
Gold (baseline) 29 24 29 48 68 66 98 119
Total (with project) 198 148 160 182 191 190 184 211
Uranium, (with project) 169 123 131 134 122 121 81 81
Gold (with project) 29 24 29 48 69 68\.3 102\.9 130\.6
Total Increment 0 0 0 0\.48 2 3 6 13
19\. First, the assumptions made are based on the fact that the project will help in the management of uranium site
closure and in the formalization of artisanal mining which will have a positive impact on the production of ASM, especially
gold and salt\. Second, investing in geodata will increase investment in the sector due to greater interest by exploration
firms, due to reduced costs and risks; and will contribute to strengthen the GoNâs capacity to attract and secure more
favorable terms with investors\. This will increase the production of minerals in general and gold in particular\. Lastly, the
assumption is that as the ASM will become formal and other new investment in the same sector comes due to the project,
the share of mining revenues in total production will become important and more revenues will be collected\.
20\. The of share of mining revenues and by backward induction the de facto average effective tax rate for the
extractives in total production for the period of 2015-2018 was 10 percent\. There are three reasons to believe that the
effective tax rate will increase based on the project\. First, the formalization of the small-scale miners would mean that
gold would be formally exported instead of smuggled out\. Second these small-scale miners would be paying taxes on their
production of which 15 percent is already earmarked for LGs\. The ASM formalization will lead to a reduction of their
transaction costs of having to operate illicitly such as avoiding patrols, paying fines and paying enablers\. Finally, there are
additional market opportunities associated with ASM formalization and extension\. Based on these observations, we make
the assumptions that the effective tax rate will gradually increase from 10 to 20 percent over the course of the project\.
Table A10\.6\. Direct Production Revenues and Fiscal Revenues
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Share of mining production in revenues (in %) 7\.00 5\.67 11\.11 10\.15 10\.20 15\.00 18\.00 20\.00 20\.00 20\.00
Resource budget revenues from mining due to
0\.00 0\.00 0\.00 0\.00 0\.00 0\.07 0\.35 0\.64 1\.14 2\.53
the project, CFAF billion
Increment of budget revenues 0\.07 0\.28 0\.29 0\.50 1\.39
Gains from production due to the project 0\.00 0\.00 0\.00 0\.00 0\.00 0\.40 1\.61 2\.55 4\.56 10\.14
Page 95 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
21\. The increase in production revenue is a direct economic gain for the economy and, additionally, some of it will
lead to an increase in fiscal space for the Government\. The effective tax rate allows to determine the proportion of the
new extractive revenues to which we can also apply a fiscal multiplier effect\. We assume that 100 percent of the new
taxes will be converted into public spending, the reason being that a 15 percent of the revenues is already earmarked for
LGs\. These LGs do not have the possibility to borrow and therefore do not have debts toward which the new revenues
could go to and they are underfunded, leading to a high spending propensity\. In this table we apply the central multiplier
because the conversion of the 15 percent into local expenditure was done in the previous section using the difference of
multiplier method\. Combining the gains of both the direct production increase and the additional public spending for the
second benefit of the mining component leads to a present-discounted economic benefit of US$33\.47 million\.
Table A10\.7 Economic Gains from transfer of resources at the local level
2020 2021 2022 2023 2024 2025 2026 2027
Gain from 2020 Increment 0\.04 0\.06 0\.04 0\.02
Gain from 2021 Increment 0\.17 0\.22 0\.17 0\.08
Gain from 2022 Increment 0\.2 0\.2 0\.2 0\.1
Gain from 2023 Increment 0\.3 0\.4 0\.3 0\.2
Gain from 2024 Increment 0\.8 1\.1 0\.8 0\.4
Total gain from increased fiscal revenues 0\.04 0\.23 0\.44 0\.72 1\.49 1\.50 0\.99 0\.42
22\. Benefit 3: Mitigation of the risk of fragility and violence, and their consequences on poverty, service delivery,
social inclusion and livelihood\. Being an RMR financed IPF, mitigation of conflict risk pervades the GOLD projectâs theory
of change and is an expected outcome of the project\. According to the Pathways for Peace report, it is clear that violent
conflicts exact an incalculably high cost in direct and indirect damage to societies, economies, and people\. It kills and
injures combatants and civilians alike and inflicts insidious damage to bodies, minds, and communities that can halt human
and economic development for many years\. long-term effects on the countries involved, and on their neighbors, include
costs such as reduced economic growth, minimized trade and investment, and the added cost of reconstruction\.
23\. The consequences are hugely negative for fragile contexts\. Mavriqi (2016)92 finds that countries experiencing
violent conflict suffer a reduction in annual GDP growth of 2â4 percent and up to 8\.4 percent if the conflict is severe\. On
average, countries that border a high-intensity conflict zone experience an annual decline of 1\.4 percentage points in their
GDP and an acceleration in inflation of 1\.7 percentage points\.93 For Hoeffler (2017)94, the cost of violence can be
understood as the sum of the cost to (1) the individual victim (2) to their family (3) their immediate community and (4) to
society at large\. Some of the costs of violence are easier to express in monetary terms than others\. The medical care, lost
income and criminal justice system cost are relatively straightforward to measure and are termed tangible costs\. The
intangible costs of pain, suffering, decreased quality of life and psychological distress are more difficult to monetize\. The
author estimates that for Sub-Saharan Africa, the cost of collective violence is approximately 0\.63 percent of GDP and the
cost of interpersonal violence at 3\.68 percent of GDP\.
24\. The Global Peace Index Report95 directly addresses the idea of the fiscal multiplier in conjuncture with fragility:
âthe multiplier effectâs (the reason that a dollar of expenditure can create more than a dollar of economic activity) exact
magnitude is difficult to measure, but it is likely to be particularly high in the case of expenditure related to containing
violence\. For instance, if a community were to become more peaceful, individuals would spend less time and resources
protecting themselves against violence\. Because of this decrease in violence there are likely to be substantial flow-on
92 Mavriqi, R\. R\. 2016\. âGlobal Economic Burden of Conflict\.â Unpublished manuscript\.
93 Röther, B\., G\. Pierre, D\. Lombardo, R\. Herrala, P\. Toffano, E\. Roos, G\. Auclair, and K\. Manasseh\. 2016\. âThe Economic Impact of Conflicts and the
Refugee Crisis in the Middle East and North Africa\.â IMF Staff Discussion Note SDN/16/08, International Monetary Fund, Washington, DC\.
94 Hoeffler, A\., 2017, âWhat are the costs of violence?â, Forthcoming in Politics, Philosophy & Economics\.
95 Global Peace Index 2018, Institute for Economics and Peace\.
Page 96 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
effects for the wider economy, as money is diverted towards more productive areas such as health, business investment,
education and infrastructure\.â The report estimates the cost of violence for Niger at 11 percent of GDP\.
25\. Niger is exposed to multiple conflict and fragility risks, which stem from a combination of deep-rooted structural
causes and short-term drivers\. The project will contribute to mitigate these risks by contributing to improving: (i) a
positive state presence across the country, service delivery, state capacity to prevent and mediate conflict at local level
and foster participation; (ii) extractive industriesâ management; and (iii) livelihood of artisanal miners, especially women
and youth\. The project supports activities to increase civic engagement and the inclusion of citizens in decision-making\.
26\. In line with RMRâs objectives, the project will also support capacity strengthening of local authorities on conflict
management and social inclusion\. The objective will be to strengthen local systems and capacities for peace, aimed at
supporting the inclusion of conflict prevention issues into local processes and social inclusion\. The following areas for
capacity-building activities for LG and deconcentrated services in the targeted regions on (i) conflict management,
prevention and response; (ii) communication capacities of local civil servants to give LGs the tools to better communicate
to citizens on FCV related issues; (iii) social inclusion, transparency and participatory approach in local governance\.
27\. The project will also support mitigating risk in extractive sector: ASM, mining closure strategy, jobs and EITI\.
The project will (i) support ASM sound management to make it a driver of resilience, through capacity-building to artisanal
miners in environment and social good practices and in business development; (ii) build the capacity of public oversight
of ASM which will also mitigate the risk for public decision affecting ASM, as in the closing of the ASM sites in the Djado in
2017; (iii) support the government and LG in anticipating the social impact of Arlit mining closure; (iv) contribute to build
trust between citizens, civil society and the government through transparency in extractives (EITI)\.
28\. Conflict risk monitoring & early warning system\. GOLD project will contribute to the national conflict risk
monitoring system by providing TA to CNESS to set up the ICT-based integrated conflict risk-related information
management system\. Also, the TA to the Min\. of Interior to set up an ICT-based integrated information management
system on LG performance will feed into the conflict risk monitoring system\. In parallel, the Niger RMR Bank-Executed
Trust Fund will feed the policy dialogue with the GoN to (i) provide recommendations on a harmonized early warning and
response system; (ii) generate consensus at the client level and among partners; and (iii) clarify leadership\. While the GoN
has committed to peacebuilding, the limited integration and harmonization of initiatives is a challenge\.
29\. Based on the literature and the expected impact of these activities, the economic analysis uses as a baseline
hypothesis the reduction of the risk of violence by 1 percent\. The project could reduce the cost of violence by 0\.11
percent of GDP on an annual basis, out of the 11 percent estimated by the Global Peace Report\. Based on these
assumptions, the decrease of violence risk by 1 percent GDP savings lead to an economic gain of US$58\.03 million\.
Table A10\.8\. Savings from conflict mitigation in FCFA billion
2020 2021 2022 2023 2024
GDP of Niger96 6056\.00 6527\.00 7402\.00 8011\.00 8721\.00
Savings from Conflict mitigation 6\.6616 7\.1797 8\.1422 8\.8121 9\.5931
Summary of the Baseline Analysis
30\. Based on the assumptions made we can estimate the economic gain from the transfers of the extractive revenues
to the LG\. When discounted and converted into US$ the economic gains from the project are approximately US$49\.02
million and an IRR of 22\.5 percent\. We believe this measure to be conservative for many reasons\. First, the residual value
was mostly ignored to account for a worst-case scenario that the reforms take longer to take effect and because it is hard
to predict price and conflict evolution over a longer time horizon\. Second, this economic analysis can only take into account
96 At current prices, sourced from IMF Article IV 2019\.
Page 97 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
the measurable impacts which is only a small fraction of the expected impact of this structural project\.
Table A10\.9\. Summary of the baseline scenario
Cost of project -100\.00
Gains from transfers of resources at the local level 56\.51
Gains from development of the extractive sector 33\.47
Gains from mitigation of conflict risk 58\.03
Total 148\.02
IRR 22\.50%
Sensitivity Analysis
31\. For the analysis of the sensitivity of the results to the assumptions made, four adverse scenarios are evaluated\.
The first scenario assesses the case where the local tax multiplier does not end up being as good as expected\. The baseline
scenario considered a productivity markup of 15 percent of the local multiplier over the central multiplier\. In this first
scenario we therefore assume that the markup is only 5 percent which leads to a reduction of the NPV from US$48\.02
million to US$10\.35 million\. The second scenario evaluates a case where the extractive revenues is a 1/3 of what is
expected\. This assumption leads to a NPV of US$25\.71 million\. The third scenario evaluates the case where the project
fails to mitigate as much fragility and violence risks as expected, meaning a decrease of the cost of violence by 0\.5 percent
of 11 percent instead of 1 percent of 11 percent\. In that case, the NPV is decreased from US$48\.02 million to US$19
million\. For all three of these adverse the NPV and the IRR remain positive\. A final case combines all scenarios into a worst-
case scenario\. The NPV become negative and the IRR drops below the discounting rate only in the worst-case scenario,
suggesting a robust economic profitability of the project\. The results are presented in the table below\.
Table A10\.10\. Sensitivity Analysis
Baseline Scenario 1 Scenario 2 Scenario 3 Worst Case
Cost of Project -100\.00 -100\.00 -100\.00 -100\.00 -100\.00
Decentralization Economic Gains 56\.51 18\.84 56\.51 56\.51 18\.84
Mines Economic Gains 33\.47 33\.47 11\.16 33\.47 11\.16
Violence mitigation Economic Gains 58\.03 58\.03 58\.03 29\.02 29\.02
NPV in US$ (net of project cost) 48\.02 10\.35 25\.71 19\.00 -40\.98
IRR 22\.5% 4\.3% 12\.4% 10\.5% -20\.8%
Conclusion
32\. From the above analysis, it is clear that when the projectâs benefits are compared with its associated costs the
NPV and IRR show positive outcomes\. This means that the projectâs investments are economically viable\. When
discounted and converted into US$ the economic gains from the project are approximately US$49\.02 million and the IRR
to 22\.5 percent\. We believe this measure to be conservative for many reasons\. First, the residual value was mostly ignored
to account for a worst-case scenario that the reforms take longer to take effect and because it is hard to predict price and
conflict evolution over a longer time horizon\. Second, this economic analysis can only take into account the measurable
impacts which is only a small fraction of the expected impact of this structural project\. Also, many of the activities of the
project are also expected to have an impact on the social welfare of the beneficiaries and to have second order effects,
both of which are difficult to translate into monetary value\. These elements include the benefits of citizen engagement,
increased economic opportunities for women, the stabilizing impact of giving jobs to idle youth, etc\. Furthermore, violence
has humanitarian and spillover costs that were not included in the analysis\. A sensitivity analysis conducted to test the
robustness of the analysis regarding choice of analysis assumptions also showed positive outcomes when adverse
scenarios are considered\.
Page 98 of 99
The World Bank
Governance of Extractives for Local Development Project (P164271)
Details on Extractives Calculations
Table A10\.11\. Changes in Volumes with and Without Project
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Production in volumes
Uranium, tons (baseline) 4,334 2,924 3,525 2,870 3,054 2,983 2,689 2,733 1,819 1,819
Gold, kg (baseline) 1,516 1,517 1,518 1,519 1,520 2,160 2,940 2,885 3,919 4,748
Uranium, tons (with the project) 4,334 2,924 3,525 2,870 3,054 2,983 2,702 2,760 1,837 1,837
Gold, kg (with the project) 1,516 1,517 1,518 1,519 1,520 2,182 2,999 2,972 4,115 5,223
Uranium growth due to the project) 0 0 0 0 0 0 0\.5 1\.0 1\.0 1\.0
Gold growth due to the project 0 0 0 0 0 1\.0 2\.0 3\.0 5\.0 10\.0
Table A10\.12\. Assumptions on Prices for Uranium and Gold
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Nominal GDP, CFAF billion 4,289 4,511 4,726 5,163 5,571 6,056 6,527 7,402 8,011 8,721
Price, uranium international, 1000 CFAF/Kg 22 16 13 11 17 17 17 17 17 17
Export price, uranium for Niger, 1000 CFAF/Kg 56 61 48 43 43 45 45 44 44 44
Export price, gold 1000 CFAF/gram 19 22 19 16 19 22 23 23 25 25
Page 99 of 99 | APPROVAL |
P007969 | Documenl of
The World Bank
FOR OFFICIAL USE ONLY
Report No\. 7079
PROJECT COMPLETION RErORT
PERU
SIDERPERU TECHNICAL ASSISTANCE PROJECT
(LOAN S19-PE)
January 5, 1988
Industry Departrent
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
Currency unit - Sol (SI\.)
GOVERNMENT OF PERU FISCAL YEAR
January 1 to December 31
WEIGHTS AND MEASURES
ABBREVIATIONS
COFIDE - Compania Financiera de Desarrollo
DR - Direct Reduction Process for the production of sponge
iron used as raw material in steelmaking
EAF - Electric Arc Furnace
LD - Linz Donawitz (Basic Oxygen Furnace)
SIDERPERU - EmDress Siderurgica del Peru
SLRN - Stelco-Lurgi - Republic National (a Coal-based DR
process)
tpy - Metric tons per year\.
FOM OFMCIAL USE ONLY
THE WORLD BANK
Wdshingtni\. DC 20433
USA
January 5, 1988
IEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Completion Report on Peru - Siderperu
Technical Assistance Project (Loan S-19-PE)
Attached, for information, is a copy of report entitled "Project
Completion Report on Peru - Siderperu Technical A\. -tance Project (Loan
S19-PE)" prepared by the Latin America and the Caribbean Regional Office\.
Further evaluation of this project by the Operations Evaluation Department
has not been made\.
Attachment
This document has a restricted distribution and may be used by recipients only in the performance
of their official duties\. Its contents may not otherwise be discobsed without World Bank au!thorization\.
M Ol(ICIAL US ONLY
PROJECT COMPLETION REPORT
PERU - SIDERPERU TECHNICAL ASSISTANCE PROJECT
(LOAN S-19-PE)
TABLE OF CONTENTS
Page No\.
PREFACE \. **** \.j\. i
BASIC DATA SHEET \.*\. \. i
HIGHLIGHTS \. \.
I\. INTRODUCTION \. 1
II\. PROJECT BACKGROUND \. 1
A\. Project Origin, Appraisal and Loan Approval \. 1
B\. Project Objectives and Description \. 2
III\. PROJECT IMPLEMENTATION AND MANAGEMENT \. 3
A\. Achievement of Project Objectives \. 3
B\. Project Management \. \. 3
C\. Implementation Schedule \. \. 6
D\. Performance of Consultants 6\. 6
E\. Disbursements \. \. 7
IV\. CONCLUSIONS \. 7
A\. Overall Assessment \.7\. \. \. 7
B\. Lessons Learned 7
BORROWER'S PROJECT COMPLETION REPORT \. 10- 24
This document has a restricted distribution and may be used by recipients only in the performance
of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
PROJECT COKPLETION REPORT
PERU - SIDERPERU TECHNICAL ASSISTANCE PROJECT
(LOAN S-19-PE)
PIREPACE
Loan 5-19-PR for the SIDERPZRU Steel Company, in the aount of
US$5\.0 million, was signed on Deceuber 15, 1980, and becam *ffective
April 16, 1981\. After one extension of the cloaing date, the Government of
Peru requested on OLtob4r 31, 1985, that the undiabursed portlon of the
loan (US$3\.4 million) be cancelled\. The loan was closed on December 9,
1985\.
The original objective of the loan had been to strengthen
SIDERPERU's project execution and plant operation capability to enable it
to install iuccesafully and manage a two-stage 400,000 tpy expansion of the
Chimbote steel mill\. After completion of a technical diagnostic study in
August 1981, (financed under the loan) it was deterained that prior to
embarking on the expansion project, the plant had to undergo a full
rehabilitation project\. In Oct-ber 1982, SIDERPERU agreed to postpone the
expansion program and concentrate on the rehabilitation effort and the
project scope from expansion to rehabilitation was formally approved by the
Bank on April 12, 1983;
The Project Completion Report has been prepared by the Industry
Department based on a draft report from SIDERPERU, information In project
files and knowledge of staff in the Industry Department who were associated
with this project\. A Bank mission visited Peru in October 1986 for the
purpose of preparing this report\.
In accordance with the revised procedures for project performance
audit reporting, this PCR was read by the Operations Evaluation Department
(OED), but the project was not audited by OED staff\.
Following standard procedures, OED sent copies of the draft report
to Government and the Borrower for comments\. However, no comments were
received\.
- ii -
PROJECT COMPLETION REPORT
PERU - SIDERPERU TECHNICAL ASSISTANCE PROJECT
(LOAN S-19-PE)
BASIC DATA SHEET
Project Data
Loan Amount (US$ million)
Original Disbursed Cancelled Repaid Outstanding
5\.0 1\.6 3\.4 1\.6
Cumulative Disbursements (US$ million)
Bank FY: 1981 1982 1983 1984
Appraisal Estimate 1\.2 3\.1 4\.7 5\.0
Actual - 0\.4 1\.3 1\.4
Project Appraisal February 1980
Board Approval July 1980
Loan Signing December 1980
Loan Effectiveness April 1981
Loan Closing December 1985
Completion N/A
MISSION DATA
No\. of No\. of Report
Mission Month/Year Days Persons Date
Identification 09/79 09/04/79
Preappraisal 02/80 5 3 02/19/80
Appraisal 03/80 & 06/80 8 2 07/14/80
Supervision I 04/81 5 2 07/29/81
Supervision II 06/81 5 2 07/29/81
Supervision III 10/81 5 3 11/11/81
Supervision :V 03/82 10 2 04/16/82
Supervision V 05/82 5 2 07/12/82
Supervision VI 10/82 4 1 10/28/82
Supervision VII 01/83 17 2 02/03/83
Supervision VIII 03/83 4 1 04/04/83
Supervision IX 04/83a/ 3 5 05/04/83
Supervision X 04/83 11 3 06/10/83
Supervision XI 09/83 6 3 09/30/83
Supervision XII 02/84 5 1 10/18/83
Supervision XIII 06/84a/ 3 3 07/02/84
Supervision XIV 04/85 6 2 07/08/85
PCR 10/86 5 2 10/31/86
a/ Visit by Peruvian delegation and consultants\.
- ili -
PROJECT COMPLETION REPORT
PERU - SIDERPERU TECHNICAL ASSISTANCE PkOJECT
(LOAN S-19-PE)
HIGHLIGHTS
The project was conceived as technical assistance to SIDERPERU to
strengthen the company's project management capabilities and to implement
successfully and manage its expanded facilities (para- 3\.01)\. With this
objective, the SIDERPERU Technical Assistance Project was approved in July
1980\.
SIDERPERU's Chimbote plant, located 460 km north of Lima, was at
that time the only integrated steel plant in Peru, accounting for 90X of
the steelmaking capacity in the country\. Although the plant's crude steel
capacity was rated at 500,000 tons per year, its rolling capacity was in
excess of 700,000 tpy and the company had relied on imported slabs and
billets to feed its rolling mills\. To eliminate this imbalance and to cope
with an apparent growth in steel demand in the country (which at the time
had one of the lowest per capita consumptions in Latin America) the company
had begun implementing a balancing and expansion program\.
Shortly after Board approval of the loan, the new Government that
took office in July 1980, requested a full review of the expansion program\.
Before agreeing to sign the loan, it also questioned the quality of
existing operations and whether the expansion being planned would still be
viable with tariffs lower than those prevailing at the time (para\. 3\.02)\.
In response, the Bank agreed to include in the project scope a review of
the Stage I expansion and a diagnostic study of the plant and its existing
operations, including market and sector issues\. On these premises, the
loan was signed in December 1980 and made effective in April of the
following year after nine and a half months of delay (para\. 3\.03)\.
in June 1981, a Belgian consulting engineering firm associated
with an operating steel company was selected to carry out the diagnostic
study\. The study, which was completed in August 1981, revealed that the
plant facilities were in such poor condition that they would require
substantial rehabilitation (para\. 3\.04)\. In addition, poor maintenance
practices resulting mainly from the compan,"s lack of funds had aggravated
the situation during the period 1980/81\. It was therefore decided - with
full agreement of the Bank - to restore the company's operating efficiency
and improve its financial position prior to embarking on the expansion
project\. In October 1981, SIDERPERU agreed to postpone the expansion
project and to undertake a full feasibility study (also including bidding
doctments and technical specifications) of the rehabilitation project
(para\. 3\.06)\. That confirmed SIDERPERU's intent to change the project
objective and physical scope from expansion to rehabilitation\.
- iv -
The feasibility study was completed during 1982\. In parallel, a
management diagnostic study was carried out and some of its recommendations
implemented in early 1983\. By then, however, the company's financial
position had seriously deteriorated and declining steel demand made the
full rehabilitation project, estimated at US$170 million, no longer viable
(para\. 3\.09)\. After a number of attempts to reduce the scope of the
project to fit budget and market prospects, a minimum sCope estimated at
US$38 million was agreed and a project manager was selocted in June 1985\.
SIDERPERU's Board, with a new national Government coming into office\.
postponed a decision to approve contract negotiations with the selected
consulting firm\. Subsequently, the new Board appointed by the incoming
Government refused to approve the selection on the grounds that it lacked
sufficient information to act\. After one extension of the loan closing
date in June 1985, the Government requested cancellation of the undisbursed
balance of the loan in October 1985 (para\. 3\.14)\. The Bank cancelled the
loan on December 9, 1985, with US$3\.4 million still undisbursed\.
Although there were some achievements under this project, they
remain largely obscured by the overall failure to implement the project
components\. First, after completion of the diagnostic study, the Bank
successfully ccnvinced SIDERPERU to reorient its priorities and focus on
rehabilitation and operating practices\. Second, the Bank was instrumental
in the quick and efficient implementation of the management diagnostic
study and subsequent plan of action which instituted some changes in the
management organization which still prevail\. Third, through intensive
dialogue with the Government, the Bank pressed for a financial
restructuring of the company as a condition for project execution (a
financial restructuring took place during 1984)\. Finally, the Bank brought
into perspective the need to undertake broad studies of the overall
development of the steel sector to help establish and clarify the role that
SIDERPERU should play in such a development (para\. 4\.01)\.
Two important lessons can be learned from this project\. First,
when the Bank is not able to participate actively and in a timely way in
the design and supervision of the preparatory work, it may happen that all
the elements required for satisfactory appraisal are not carefully studied\.
Although in the case of the SIDERPERU T\.A\. loan it was stated that the
first stage expansion had not been appraised in depth, a blanket
endorsement of the company's overall expansion program was provided by the
Bank\. While the T\.A\. loan financed the studies that led to the conclusions
that substantial rehabilitation work was required prior to embarking in the
ambitious expansion program, this might also have become evident if a more
thorough appraisal had been carried out\. it is also possible that, by
endorsing the concept of expansion, the Bank may have impaired the
management's credibility to sell the rehabilitation program to the new
government after it became apparent that the expansion project was not
viable\. Second, the difficulties associated with a forthcoming change in
government should not be underestimated\. Although there was a perception
of support from the incoming new government, SIDERPERU was concerned with
possible delays that would occur if a new economic team had to review and
approve the project concept\. In Peru this was admittedly a lengthy process
-v -
because of the various layers of government agencies which were normally
required to review and approve public sector projects\. The long delay
experienced between loan approval and eventual effectiveness in this
project, however, have shown that expediency in processing a loan prior to
government changes can produce opposite results than those desired\.
PROJECT COMPLETION REPORT
PERU - SIDERPERU TECHNICAL ASSISTANCE PROJECT
(LOAN S-19-PE)
I\. INTRODUCTION
1\.01 The SIDERPERU Technical Assistance Project (the Project) was
d- 4 ned to assist the company to: (i) strengthen its project execution
cai lity and enable it to implement successfully and manage the Stage I
expaeron project (442 of project costs); (ii) improve its operating
pract ies, including yield and quality standards, maintenance procedures,
produc\.lon planning and information systems (20% of project costs);
(iii) provice staff training, both for coal-based DR operations and other
practices (232 of project costs); and (iv) finance feasibility studies for
the Stage II expansion project and other smaller studies (13% of project
costs)\.
1\.02 Peru is a country with adequate amounts of raw materials needed
for the production of steel\. High quality iron ore pellets are produced in
mines located about 600 miles to the south of Chimbore and coal suitable
for the direct reduction process is economically available from nearby
mines\. Despite these natural advantages, and despite having one of the
lowest per capita steel consumptious in Latin America, Peru's domestic
steel production had been unable to satisfy domestic demand\. In fact prior
to project appraisal, the country had been importing up to 30% of its steel
requirements\./
1\.03 Since 1975, SIDERPERU had been operating successfully an
experimental kiln to test the use of the STARN coal-based direct reduction
(DR) technology owned by Lurgi of Germany\. It permitted the use of low
cost anthracite coal located close to Chimbote to produce sponge iron from
iron ore pellets\. Sponge iron can be substituted for scrap in an electric
arc furnace (EAF)\.
II\. PROJECT BACKGROUND
A\. Project Origin, Appraisal and Loan Approval
2\.01 The Project developed in mid-1979 from a Government request for
Bank assistance in reviewing two plans for the debottlenecking and
expansion of the Peruvian steel industry\. One of the plans presented to
the Bank consisted of a two-stage installation of a new 1 million ton per
year conventional blast furnace plant and a second one consisting of a
short-term development program, which would entail a small phased
debottlenecking and minor improvements and the expansion of liquid steel
capacity in two stages of 200,000 tons per year each\. The Bank did not
agree with the 1 million ton per year project since, under local market
1/ A large portion of these imports, however, were black plate coils
which could not be manufactured by SIDERPERU\.
-2-
conditions existing at the time, a large portion of the output would have
had to be exported and the plant could not reach the levels of production
that would make it competitive in the international market\. Instead, the
Bank recommended the short-term development program which was considered
financially and economically more attractive\.
2\.02 In February 1980, a Bank identification mission visited Lime and
Chimbote and determined that the technical viability of the short-term
developoent progrm (i\.e\., 400,000 tpy expansion in two stages) was sound\.
The mission, however, reached this conclusion solely from discussions with
SIDERPERU's technical staff, since no project related study had yet been
supplied to the Bank\. In fact, SIDERPERU (which was well under way for the
procurement of the Phase I expansion) was initially concerned that Bank
participation would delay the project and were reluctant to release a
UNIDO-financed study, apparently the only available document at the time,
because of what it considered "the narrow scope of the study" 2/ and the
possibility that it might have been misinterpreted by government
officials\. After a one-man, one-day mission to France to review with
SIDERPERU and French consultants (which had met to review the bids received
for the first phase expansion and selection of suppliers), it was
recommended that the Bank consider making an engineering loan to cover the
foreign exchange cost of a contract for management services, associated
with the provision of training and operating assistance, in the amount of
US$5\.0 million\.
2\.03 With national elections forthcoming in May of 1980, SIDERPERU had
indicated to the Bank «hat it expected to place contracts on tne four
equipment packages, which had already beer defined, as soon as possible\.
In order to provide for the consulting services to be financed by the
Project in a timely manner, the Bank proposed to expedite loan processing\.
The Project was appraised in February 1980\. Negotiations wera held in
Washington on June 1980 and a loan of US$5\.0 million was approved on
July 15, 1980\. The loan became effective on April 16, 1981\.
B\. Project Objectives and Description
2\.04 The Project was designed to strengthen SIDERPERU's capabillties
for efficient project execution and plant operation\. Specifically, it
consisted of the following:
(a) consulting services to assist in project management for the
installation and start-up of a 200,000 tpy Stage I expansion
program;
(b) consulting services to provide assistance in the operation of
existing plant facilities and initial operations of the Stage I
facilities;
2/ The Dastur study compared the ironmaking alternatives between blast
furnace (based on imported coke) vs\. the direct reduction (based on
domestic anthracite)\.
3
(c) assistance froQ a steel company experienced in coal-based DR
technology to prQvide training for SIDERPERU's staff both or the
job and in its plant abroad and consulting services to establish
a training program for SIDERPERU; and
(d) consulting services to prepare a feasibility study for the
Stage II expansion program, including a technical end econosic
review of the Stage I expansion, and studies of coal
transportation and electric systems\.
III\. PROJECT IMPLEMENTATION AND MANAGEMENT
A\. Achievement of Project Objectives
3\.01 The Project had been originally designed to strengthen
SIDERPERU's project execution and plant operations capability to enable it
to install successfully and manage its expanded facilities\. The first
stage expansion was dropped about 14 months after Board approval in favor
of the rehabilitation project which had been recommended by the conaultants
who undertook the diagnostic study (para 3\.02)\. At the closing date of the
TA loan, none of the original project objectives had been achieved\.
B\. Project Management
Diagnostic Study
3\.02 Before the Government which took office aftet approval of the
Bank loan in July 1980 would agree to signature of the loan, it requested
that the scope of the Project be modified to include a thorough
technical/economic review of the proposed expansion project and to
undertake an evaluation of the company's overall operating capabilities and
future prospects\.
3\.03 The Bank agreed to include and finance under Section D of the
Project (Studies) a diagnostic study aimed at: (i) improving existing
operations with respect to volume, yield, quality and costs; (ii) defining
a short-term rehabilitation and modernization program; and (iii) defining
the framework for a long-term development strategy\. Although the company's
management at the time initially resisted carrying out these studies, the
Government and SIDERPERU finally agreed to have consultants review the
company's investment program and the loan was signed on December 15, 1980\.
3\.04 In January 1981 the company's president and management team
resigned\. An acting company president was appointed in February and
had to deal with a extremely difficult management situation within the
company\. In addition, considerable pressure was being exerted by equipment
suppliers with whom SIDERPER'J had signed contracts in mid-1980\. In May
1981, a General Manager was appointed to the newly created position and
successfully expedited the selection and appointment of a Belgian
consulting engineering firm, (in association with an operating steel
company), to undertake the diagnostic study\. The final report, submitted
-4-
in August 1981, co;tfirmed the need and the basic viability of a
rehabilitation project\.3/ The basic viability of the rehabilitation
project was also confir ed by an independent consultant retained by the
Bank to review the consultant's report\.
3\.05 The fact that the operating steel company in charge of the
technical aspects of the study operated equipment similar to SIDERPERU's
greatly contributed to the quality of the technical report\. On the other
hand, the report was less precise in areas such as market, capital costs
and financial and economic analysis\. The consultants, however, were most
receptive to Bank observations\.
Management Diagnostic Study
3\.06 With the overall viability of the rehabilitation project
confirmed by the diagnostic study, in October 1981 SIDERPERU and the Bank
agreed to carry out its full feasibility study\. To expedite project
implementation, the study would also include the preparation of technical
specifications and bidding documents\. At the same time, it was decided to
retain a specialized management consulting firm to review the company's
management structure and management information systems, and make
recommendations for their improvement\.
3\.07 Serious objections by the Board of SIDERPERU about the need for
these studies delayed approval for both the feasibility and management
studies until the end of January 198' In February, action was started to
request a formal change in the scope of the Project from expansion to
rehabilitation and to include the additional studies\. (In April 1983 an
amendment to the TA loan was circulated to the Bank EDs on a no-objection
basis\.)
3\.08 The selection of the winning bid for the management diagnostic
study was approved in late July 1982 but protracted contract negotiations
delayed the start of work until late September\. The preliminary report was
completed in January 1983\. The Bank, however, found the report inadequate
inasmuch as it did not provide a clear stracegy and plan of action to carry
out its major recommendations\. The consultants agreed to expand the report
and it was subsequently finalized in March 1983\. Although SIDERPERU's
present organizational structure reenonds to some of the report's
recommendations, the bulk of the proposals were never implemented\.
Subsequent changes in the company's top management account'- to some extent
- for the lack of action in implementing needed management reorganization\.
Feasibility Study
3\.09 The feasibility study for the full rehabilitation project
recommended by the diagnostic study was completed in January 1983\. The
scope consisted of a complete revamping of the blast furnace, electric arc
3/ However, the detailed makeuo of that project, and timing of its
implementation still needed further clar0ifcation\.
-5-
furnaces and LD converters, debottlenecking of the rolling mills,
improvements to the direct reduction facilities, overall upgrading of
instrumentation throughout the plant and complete rehabilitation of the
networks for water and electrical services\. Under this project, it was
expected to restore plant production to its rated capacity of about 500,000
tons of liquid steel per year\. Estimated cost of the project was
US$170 million\.
3\.10 At the completion of the feasibility study, however, a number of
new developments were making the full rehabilitation project no longer
viable\. First, the economic performance of the country for the previous
two years had deteriorated, and both actual and future projected demand for
steel had been seriously affected\. Second, as a result of inconsistent
government trade policies which practically liberalized steel imports while
maintaining heavy duties on coke, spares and other imported items required
by SIDERPERU, sale had declined and the financial situation of the company
had worsened\. There were no prospects for recovery without massive new
capitalization, particularly with the deteriorating market outlook\. Last,
but not least, a new non-flat steel producer had started up in January 1983
and was expected to achieve rapidly significant production levels (due to
his utilization of a simpler process route EAF based on scrap) with a
resulting decline in SIDERPERU's share of the non-flat market\. As a
consequence of these developments, by 1983 the company was no longer in a
position to undertake the full rehabilitation project and the technical
consultants were asked to revise their report with the objective of
defining a minimum rehabilitation program\. Their work was completed in
April 1983 and the cost of the reduced project was estimated at
US$110 million\.
3\.11 COFIDE technical engineering staff, acting independently and
without consultation with SIDERPERU, contracted a Spanish consulting firm
to review the minimum rehabilitation scope\. The consultants recommended
and COFIDE supported a new approach whereby the minimum rehabilitation
project would be implemented in two phases\. The first phase would focus
only on investments in non-process equipment (electricity and water
networks, control equipment, instrumentation) with some minor revamping of
the EAFs and the non-flat rolling mills\. The blast furnace, which had been
shutdown since August, would not be rehabilitated a\.d all steel making
would be via the EAFs\. The investment cost of the first phase was
estimated at US$33 million\.
3\.12 The top management of the company at the time did not agree with
this approach\. The Bank supported the argument that further work to
justify the mothballing of the blast furnace was required because the
economics of producing steel solely via the EAFs had not been fully
demonstrated\. COFIDE agreed to undertake further analysis\. However,
frustrated by the lack of government support in implementing the financial
restructuring package, the perceived increased interference by COFIDE in
the administration of the company, and major disagreements on technical
matters, SIDERPERU's president, General Manager and Board all resigned
during the last quarter of 1983\. A new President and General Manager (a
former COFIDE consultant) were appointed shortly thereafter\.
6-
3\.13 Early in 1984, the first tranche of the financial restructuring
package took place\. Simultaneously, SIDERPERU's technical staff prepared a
feasibility study for a US$38 million first phase rehabilitation project
and representatives from COFIDE and SIDERPERU presented it in Washington in
June 1984\. The Bank indicated at the meetings that, while in agreement to
proceed with the thrust of the TA project in support of the scaled-down
rehabilitation project, the Government should explore other financing
sources for the investment project, should the Bank deteruine it could not
provide financing in a timely manner\.
3\.14 In late 1984, the procurement of project management and operating
assistance was started\. After a protracted selection procedure, a winning
bid was selected in June 1985, but the Board - with a new national
government coming into office in July of that year - was reluctant to
authorize contract negotiations\. Shortly after the new government took
office, SIDERPERU's Board and top management were changed\. The new Board
refused to consider approval of the selected firm on the grounds that they
lacked sufficient knowledge to act\. After one extension of the loan in
June 1985, in October of the same year the Government requested
cancellation of tte loan\.
C\. Implementation Schedule
3\.15 The implementation of the Project encountered substantial delays
immediately after loan approval\. Also, despite apparent agreement during
project appraisal from officials of the forthcoming Government with
SIDERPERU's expansion plans, loan signature and effectiveness were delayed
by the new Government five and nine months, respectively\. These were
caused by their serious - and valid - objections regarding tariff issues
and their concern about the overall ability of management to operate the
company\. None of these issues had been addressed by the Project, although
the need to strengthen SIDERPERU's management had been identified during
project preparation\.
3\.15 SIDERPERU had an experienced and highly competent core of
engineers in its Planning Department who were able to grasp quickly Bank
procurement procedures for the selection of consultants, and did an
excellent technical job of bid evaluations in all instances\. On the other
hand, a cumbersome and bureaucratic system of internal (Board) and external
(Government) approvals was largely responsible for processing delays\.
3\.16 Given the absence of a formal implementation schedule in the
Appraisal (President's) Report and the very substantial changes in project
scope, a meaningful comparison between estimated and actual implementation
dates cannot be made\.
D\. Performance of Consultants
3\.17 During most of the implementation period, SIDERPERU depended
heavily on consultants\. Their performance was generally satisfactory, but
some of the success resulted from the extensive amount of Bank supervision
received by the Project\. On the other hand, although the diagnostic and
- 7 -
feasibility studies were completed on time, some aggravation and delays
could have been avoided if all parties (i\.e\., SIDERPERU, the consultants
and the Bank) could have defined and agreed more clearly on some of the
main technical parameters (i\.e\., market growth rates, seiling price
assumptions, methodology for economic analysis, etc\.), as well as
presentation requirements (such as tables, annexes, etc\.) required in
studies and reports\.
E\. Disbursements
3\.18 Disbursements were made against 100% of foreign expenditures for
contracts awarded for consulting contracts\. Owing to the substantial delay
in loan effectiveness, no disbursements were made during the first year of
the loan and less than 10% of the expected total was disbursed during the
second year\. The bulk of the disbursemerts was made during the third and
fourth year\. At the time the loan was closed, five years after approval,
disbursements totalled US$1\.4 million or only 28% of the total loan
amount\. The undisbursed amount of US$3\.6 million was cancelled\.
IV\. CONCLUSIONS
A\. Overall Assessment
4\.01 Although the Project did not achieve its stated objectives and
the expansion, under the original project scope, was not carried out, the
rehabilitation of the company's facilities under the revised project scope,
coupled with a thorough financial, management and labor restructuring,
would have been economically justifiable\. Through intensive supervision by
the same Bank team during 1981-84 and excellent rapport with the company's
top management during the same period, the Bank was flexible and quick in
redirecting the main thrust of the TA project as well as supportive of the
company's efforts\. It also acted as a positive mediator between the
company and the government agencies but, ultimately, the inability of the
Government to define, support and implement a national steel development
program and its inconsistent pricing and trade policies proved to be too
difficult for the project to overcome\. Also the questionable role of the
holding company (COFIDE) and its interference in the management of
SIDERPERU (mainly during late 1984/85) had a detrimental impact on projec\.
implementation\. FinaAly, even the small benefits achieved under the
Project have become either diluted by subsequent inaction (i\.e\., management
study) or are being jeopardized (financial restructuring) by presenc sector
policies\.
B\. Lessons Learned
4\.02 The lessons of this project reaffirm past experience on the
critical effects of inadequate project preparation\. First, in the case of
a project which - either through expansion or rehabilitation - is designed
to expand significantly its output, it is imperative to examine carefully
not only its market, but also to define clearly objectives of physical
scope and technical and economic viability\. A technical assistance proj3ct
- a -
per se is not a substitute for adequate and thorough project preparation
although in instances where the local talent is clearly lacking, 't can
help to bring the analysis into proper focus\. Thus, if an adequate
feasibility analysis is not available, the Bank can, when called upon, play
an important role in assisting the borrower through this effort by means of
a well-designed engineering loan before any commitment for the supply of
equipment is made\. In any case project feasibility must be evaluated
separately - and prior to - project implementation\. Efforts to remedy
shortcomings and deficiencies in preparatory work throughout project
implementation will, in most instances, prove ineffective\. The policy
environment in which the project will continue to operate after its
completion also needs tc be carefully evaluated to ensure that the project
in fact can achieve its economic objectives\. Only after the Bank is fujl\.,
satisfied that these conditions either exist or will be properly addressed
as part of project design should it endorse the scope of the project\.
4\.03 Second, it is recognized that free standing TA loans offer a good
opportunity for support'ng institutional development and that successful
project implementation of a public sector company within a complex
government bureaucracy depends heavily on these institutional
arrangements\. Thus, when two or more Ministries or government agencies are
involved and the company does not enjoy proper autonomy (or conversely can
be subject to interference from other government agencies), such
institutional arrangements must be addressed to provide for effective
project implementation\.
4\.04 Finally, the difficulties associated with a forthcoming change in
government should not be underestimated\. Expediency in processing a loan
prior to such change can lead, as in this case, to poor proect
preparation\.
- 9 -
EMPRESA SIDERURGICA DEL PERU
SIDERPERU
TECHNICAL ASSISTANCE PROJECT COMPLETION REPORT
LOAN AGREEMENT S-19 PE
- 10 -
TABLE OF CONTENTS
Page No\.
L\.0 \. Introduction\.11
2\.0 The Loan Agreement\.1\. 11
2\.1 Background \. 11
2\.2 Objectives and scope\. 11
2\.3 Modifications \. 12
3\.0 Uses of Loan Proceeds \. \. 12
3\.1 Review of expansion program feasibility study 13
3\.2 Preparation of rehabilitation project feasibility study 13
3\.3 Management consulting services \. \.14
4\.0 Administrative Issues \. \. 15
5\.0 Conclusions\. \.15
6\.0 Brief Outline of Sequence of Events
Annex No\. I \. 17
Annex No\. 2 \.19
- 11 -
1\.0 Introduction
This report is made in reference to Loan Agreement S-19 PE, signed
by SIDERPERU and the World Bank for US$5 million, a sum designed to help fund
execution of SIDERPERU's investment projects and strengthen its organizational
and managerial capacities\.
2\.0 The Loan Agreement
2\.1 Background
In 1979, SIDERPERU had been about to begin implementation of the
first stage of its expansion program, but a World Bank mission that visited
the enterprise in 1980, on becoming fully acquainted with the program, noted
that in view of its importance and complexity SIDERPERU should be advised to
obtain technical assistance with its execution\.
Subsequently, in December that year, SIDERPERU and the Bank
therefore entered into Loan Agreement S-19 PE (SIDERPERU Technical Assistance
Project), under which a sum of US$5 million equivalent was to be lent\.
Ratified by the Government of Peru via Presidential Decree No\.
279-80-EF of December 31, 1980, the Agreement had the guarantee of the
Republic of Peru, extended via Executive Decree No\. 23194 of July 19, 1980\.
2\.2 Objectives and scope
As the Agreement itself stated, the objectives of the project were
to assist SIDERPERU in the execution and full appraisal of the first stage of
its expansion program and to strengthen its project execution and plant
operating capabilities\.
The Agreement described the project as consisting of four parts:
Part A: Project management services
Strengthening of SIDERPERU'S project management capability by means
of the provision and utilization of about 230 man-months of consultants'
services to assist it in managing the execution and start-up of the first
stage\.
Part B: Operating assistance
Improvement of SIDERPERU'S operating methods and practices,
inter alia, yield and quality standards, maintenance procedures, production
planning and information systems, by means of the provision and utilization of
about 100 man-months of consultants' services, to be utilized in the operation
of existing plant facilities and initial organization of the facilities
installed in the first stage\.
- 12 -
Part C: Training of SIDERPERU staff
(i) On-the-job training and training abroad for about 50 persons in the
operation of the first stage; and
(ii) developing and establishing a permanent trainiing program\.
Part D: Studies
(i) Execution of a complete feasibility study for the second stage which
was to include: (A) a review of the technical and economic aspects
of the first stage with a view to: (1) identifying possible design
changes that might improve the efficiency of the first stage, and
(2) gathering data and information for the design of the second
stage; and (B) a market study and estimates of capital and operating
costs\.
(ii) Execution of a study to identify the most appropriate means of
transporting coal to Chimbote from mines selected by SIDERPERU\.
(iii) Execution of a study of SIDERPERU'S power generation capacity, its
internal electrical network and its connection to the national grid
systems, with a view to determining the changes in them required for
their improvement and for adapting the enterprise's existing
electric systems to the needs of the expansion program\.
2\.3 Modifications
Following a decision not to proceed for the moment with the first
stage of the expansion program, SIDERPERU, with Bank approval, decided to
focus on rehabilitating its plant facilities and postpone plans for expansion\.
It was therefore agreed with the Bank that the objectives as set out
in the Loan Agreement would be modified, that the first stage of the program
would be replaced by a "1980-1985 Expansion Program," and that the latter
would comprise rehabilitation (modernization) and expansion measures\.
3\.0 Uses of Loan Proceeds
At closing of this Agreement, a total of US$1,360,814\.48 had been
utilized, leaving a balance of US$3,639,815\.52\.
Loan proceeds were employed in three categories of technical
assistance activities\.
In selecting and awarding contracts to the consulting firms that
would be carrying out these activities, SIDERPERU followed Bank guidelines
("Use of Consultants by World Bank Borrowers," August 1981) and remained in
close contact with the Bank throughouit the process\.
- 13 -
3\.1 Review of expansion program feasibility study
3\.1\.1 Objective
To review the feasibility study of the expansion program prepared by
SIDERPERU\.
3\.1\.2 Description
A contract to obtaini this service--provided during the course of
1981 at a total cost of US$308,964--was entered into with
Tractionel/Mecanarbed, a Belgien-Luxembourg firm selected with help from Amaro
Lanari Jr\. Asesoria Ltda\. and the approval of the Bank\.
3\.1\.3 Results
The goals specified in the respective contracts were achieved to the
satisfaction of both SIDERPERU and the World Bank\.
In following up the consultants' recommendations, SIDERPERU, WitLu
Bank consent, decided to postpone Stage I of its the expansion program unvil
it had carried out a rehabilitation project\.
3\.2 Preparation of the rehabilitation project feasibility study
3\.2\.1 Objective
To prepare a feasibility study on a rehabilitation project designed
to achieve maximum production levels with existing plant and facilities\.
3\.2\.2 Description
The rehabilitation project feasibility study was conducted in two
phases, with consulting assistance from Tractionel/Mecanarbed\.
The first phase led to a conclusion that rehabilitation measures
costing a total of US$110 million were necessary\.
In conjunction with the World Bank and the relevant Peruvian public
agencies with sector responsibilities, SIDERPERU decided to go ahead with
rehabilitation in two stages\. To help decide the dimensions of the first, a
supplementary study was undertaken, the conclusion being that there was an
investment requirement of US$72\.9 million\.
In order to provide assistance for Tractionel/Mecanarbed and to
ensure the project would mesh with the arrangements to obtain management
consulting services, Edmund Mangan of Bethlehem Steel, was retained to provide
advice\.
ToLal cost of the services connected with this study, which were
provided in 1982 and the first half of 1983, was US$566,423\.
- 14 -
3\.2\.3 Results
The objectives and goals of both the initial and sup?lementary
feasibility studies and the consulting services provided by Mr\. Mangan were
accomplished in a manner satisfactory to SIDERPERU and the Bank\.
The iiitial study determined the full range of investment activities
that would be required for rehabilitation\. The supplementary study, besides
orioritizing thenL in the light of the financial constraints on both the
e:-terprise and th, country itself, also ircluded preliminary engineering
di-ign studies, the foundation for the detailed engineering designs and
tzchnical specifications on which the international procurement procedures
's,ociated with the rehabilitaLion project would be based\.
The presence of the consultants and the active particir,ation of the
Bank enabled SIDERPERU to familiarize itself with one method of preparing
feasibility studies (which includes the use of computer piograms for
calculation of product-\.on costs and for project economic and financial
analysis and evaluation)\. This gave SIDFRPERU staff the wherewithal to update
earlier studies and, mote important stll, formulate the first stage of the
project, limited to a macimum investmenlt of US$40 million\.
3\.3 Management services
3\.3\.1 Objective
To improve SIDERPERU's administrative organization and structure,
its business systems and procedures, and its operating and managerial
practices, thereby creating a more functional and efficient enterprise\.
3\.3\.2 Description
The consulting firm of Booz Allen and Hamilton was retained to
provide assistance in this sphere, their first commission being to conduct a
diagnostic study of SIDERPERU's administrative organization and structure and
to formulate an action plan\.
The plan detailed the actions needed in the various divisions of the
enterprise to overcome its organizational, procedural and information system
limitations\. It also contained a ranked priority listing of these actions and
a timetable for their execution\.
For advice on how to coordinate implementation of the
recommendations contained in the action plan, SIDERPERU, with Bank approval,
entered into a consulting services contract with Amaro Lanari Jr\. Asesoria
Ltda\. In fact, the specific commission given this firm was to advise the
General Manager directly on Executive Committee organizational questions and
the basis structure of the enterprise\.
These various consulting services were provided during the second
half of 1982 and the first quarter of 1983, at a total cost of US$484,797:48\.
- 15 -
3\.3\.4 Results
The following illustrate the impact on SIDERPERU of the
recommendations made in these studies:
- as now organized, the enterprise shows some of e structural
changes and basic functions recommended by the tcnsultants;
- the terms of reference and bidding conditions used in selecting
consultants to advise on implementation of the action plan were
written by SIDERPERU itself, following Booz Allen and Hamilton's
recommendations\.
With the Bank's approval, SIDERPERU issued an international call for
tenders, although, because of the change of government in Peru, no contract
was ever awarded\.
4\.0 Administrative Issues
Technical assistance activities frequently took longer to complete
than expected, mainly because of the Bank request that the SIDERPERU Board
acquaint itself- with them and reach its own decisions, a procedure which meant
that the SIDERPERU Directors needed to know what the Bank's opinions were\.
Delays in execution were even longer when the Bank required the
Ministry of Economic Affairs or CONADE to take a decision or issue an opinion
connected with SIDERPERU or the technical assistance projects\.
Finally, the internal procedures involved in obtaining government
agency approval of investment and technical assistance projects caused yet
other delays\. Securing consent opinions from INP, MICTI, CONADE and MEF took
at least an additional 12 months\.
5\.0 Conclusions
5\.1 On closing of this Loan Agreement, a total of US$1,360,814:48 had
been used, leaving a balance of US$3,6?9,815:52\.
5\.2 Proceeds of the Loan were employed as follows:
- Review of the feasibility study
for the expansion program US$308,964:00
- Preparation of the feasibility study
for the rehabilitation project US$566,423:00
- Management consulting services US$484,797:48
5\.3 The objectives and goals specified in the technical assistarLce
contracts signed were accomplished in a manner satisfactory to SIDERPERU and
the World Bank\.
- 16 -
5\.4 As a direct result of them, it was possible to determine what needed
to be done to rehabilitate the SIDERPERU plant and to:
- map out the first stage of a rehabilitation project involving
investment of US$40 million;
- make preliminary engineering design studies and use them as the
foundation for the technical specifications required in the
procurement process\.
In addition, SIDERPERU is now experienced in a methodology for
preparing feasibility studies that incorporates computerized economic and
financial appraisal programs\.
5\.5 The management consultants assicted in defining SIDERPERU's
organizational structure and basic functions and in drawing up terms of
reference and bidding conditions to govern the selection of and contract
negotiations with a consulting firm to handle implementation of the action
plan recommended by them\.
5\.6 Technical assistance activities took longer than expected owing to
the need to obtain the formal consent of both the SIDERPERU Board and the Bank\.
In addition, the time taken in obtaining favorable opinions from
Peru's public sector agencies as a prerequisite to execution of the investment
and technical assistance projects delayed implementation even further\.
- 17 -
ANNEX No\. 1
LOAN AGREEMENT S-19 PE: WORLD BANK/SIDERPERU
APPROVAL SIDERPERU CONTRACTS At Board of Directors meeting No\. 305 on
July 21, 1980 July 21, 1980, presided over by Vice
Admiral Ricardo Zevallos N\., Chairman, the
General Management and Finance Departments
were authorized to act in the name of
SIDERPERU in executing the relevant
contracts and other documentation\.
GOVERNMENT APPROVAL OF CONTRACT Via Presidential Decree No\. 279-80 EF of
December 31, 1980 December 31, 1980, the Government approved
Loan Agreement S-19 PE between the World
Bank and SIDERPERU\.
CONSULTING COhTRACTS
DATE CONSULTANTS AMOUNT PURPOSE
(US$)
April 4, 1981 Amaro Lanari Jr\. 3,964:00 Selection of consultants
Asesoria Ltda to review feasibility
study on 1980-85
expansion program\.
June 11, 1981 Tractionel/ 305,000:00 Review of feasibility
Meca\.aarbed study on 1980-85
expansion program\.
March 31, 1982 Tractionel/ 401,830:00 Production of feasibility
Mecanarbed study on rehabilitation
project\.
Sept\. 14, 1982 Booz Allen & 399,600:00 Management consulting
Hamilton services and production
of diagnostic study on
organization and
administrative structure
of SIDERPERU and
formulation of action
plan\.
Dec\. 30, 1982 Amaro Lanari Jr\. 85,197:48 Implementation of action
Asesoria Ltda\. plan and recommendations
on Executive Committee\.
- 18 -
Feb\. 17, 1983 Tractionel/ 133,340:00 Study supplementing
Mecanarbed feasibility study on
rehabilitation project\.
April 12, 1983 Edmund Mangan 31,253:00 Consulting services in
connection with
rehabilitation project
and drafting of bidding
conditions to govern
procurement of
consulting services on
training for maintenance
and operating personnel\.
Total Cost 1,360,184:48 Withheld (5%) on Amaro
Lanari Jr\. contract\.
Payable 3,726:00
Not committed 3,636,089:52
US$5,000,000:00
STATEMENT OF CONDITION Total Cost Available Total Loan
Balance
1,363,910:40 3,636,089:52 5,000,000:00
- 19 -
ANNEX NO\. 2
LOAN AGREEMENT S-19 PE: WORLD BANK/SIDERPERU
CHRONOLOGY OF MAJOR ACTIVITIES DECEMBER 1982-NOVEMBER 1984
Procurement Proceedings Cancelled In December 1982, invitations were issued
December 82-June 83 to bid on a management consulting contract
for the rehabilitation project\. Of the
total of 14 firms invited to bid, eight
accepted and actually made offers\.
SIDERPERU, in conjunction with ICSA,
decided to alter the rehabilitation
project to bring it into line with what
both the enterprise itself and the
Government were in fact in a position to
do and with the outlook projected for the
domestic steel market\.
As originally designed, the project called
for a total fixed capital investment of
US$70 million\.
COFIDE devised a plan to rectify the
serious economic and financial situation
in which SIDERPERU found itself\.
In the circumstances, it was proposed that
rehabilitation be undertaken in three
stages, for a total fixed capital
investment of US$170 million\.
These changes meant that the procurement
proceedings launched in December 1982 to
identify rehabilitation project
consultants were never carried through to
the end and no contract ever awarded\.
World Rank Mission ICSA and JIDERPERU staff met with
February 20-24, 1984 Bank representatives February 20-24, 1984
to review all aspects of the use of the
proceeds of the Technical Assistance Loan
and future work under the program to
rehabilitate SIDERPERU plant\.
The following agreements were reached:
- To begin new procurement proceedings for
selection of management consultants for
the rehabilitation project\. At least
the eight firms that had lodged offers
earlier were to be invited to take part
again\.
- 20 -
- To use balance of Loan proceeds
(US$3,636,089:52) as indicated here:
\. Management consulting services for
rehabilitationI project,
Stage I US$l,300,000:00
\. Operating assistance and training
US$1,611,476:52
\. Other studies US$ 724,613:00
TOTAL US$3,636,089:52
At the same time, operat:ng assistance and
training needs were identified and study
content mapped out\.
Production of Feasibility Study for Rehabilitation Project
Telex December 16, 1983 Receipt acknowledged of ICSA documents on
IBRD/SIDERPERU financial restructuring of SIDERPERU and
rehabilitation project\.
Further analysis of rehabilitation project
requested so as to obtain sound basis for
decision\.
Telex March 7, 1984 Respording to request from Government of
IBRD/SIDERPERU Peru that it visit SIDERPERU, IBRD
proposes steps to be taken beforehand\.
Information requested on SIDERPERU staff
review rehabilitation project as proposed
by ICSA/IDOM\.
Telex of March 30, 1984 Comments on ICSA/IDOM rehabilitation
IBRD/SIDERPERU project and also recommendation that
updated feasibility study be conducted
according to ICSA/IDOM proposal by
SIDERPERU personnel who worked with
Tractionel/Mecanarbed\. On completion of
study, a SIDERPERU/ICSA mission should
visit Bank for review of situation and
decision on future action\.
Telex of April 5, 1984 Notice that feasibility study under way,
SIDERPERU/IBRD in hands of staff who worked with
Tractionel/Mecanarbed\. Estimated
completion in six weeks\.
Telex of April 11, 1984 Latest edition of World Steel Dynamics
SIDERPERU/IBRD requested\.
- 21 -
Telex of April 12, 1984 Request for information to allow
IBRD/SIDERPERU preliminary economic and finlancial
appraisal of project\.
Offer made to provide some suggestions and
hypotheses to assist feasibility study\.
Telex of April 13, 1984 Remittal of information requested by
SIDERPERU/IBRD Bank\.
Telex of April 17, 1984 Relay of suggestions and basic assumptions
IBRD/SIDERPERU for conduct of feasibility study\.
Telex of May 8, 1984 Receipt of suggestions and assumptions
SIDERPERU/IBRD acknowledged\. Feasibility study
completion date of May 19 given\.
Telex of May 9, 1984 Request that study be forwarded two weeks
IBRD/SIDERPERU prior to departure of Bank mission
scheduled for June\.
Telex of May 21, 1984 Notice of dispatch of feasibility
SIDERPERU/IBRD study, completed May 19, to Bank\.
Telex of June 8, 1984 Proposal that SIDERPERU/ICSA mission begin
visit to Bank on June 25\. Draft agenda:
review of feasibility study;
imDlementation of Government measures in
support of SIDERPERU\.
SIDERPERU/ICSA Mission On June 25, SIDERPERU/ICSA mission
(Mensrs\. Antonio de la Puente, Neme
Mohanna and Antonio Martinez) arrives
Visit to Bank Headquarters at Bank to
discuss status of Technical Assistance
Project and proposed rehabilitation
project\.
SIDERPERU's current situation and remedial
steps under way also discussed\.
Bank noted it was studying question of its
participation in financing rehabilitation
project, participation dependent on
Government's macroeconomic objectives, to
be announced\.
Agreement on objectives, scope and timing
of consulting assistance sought by
SIDERPERU re its operating methods and
practices and project management
capabilities:
- Preparation of terms
of reference July 1-31
- Review and approval
of them by IBRD July 1-31
- 22 -
- Call for tenders and
lodging of bids Sept I-Oct 15
- Bid evaluation by
SIDERPERU Oct 15-Nov 15
- Review by IBRD
office, Lima Nov 15-30
- Contract negotiations Dec 1-31
- Consultants begin work Jan 1, 1985
Also agreed there would be no need for
subsequent updating of feasibility study
once reviewed\.
Procurement Proceedings: Consultants' Advice on Operating
and Project Management Methods and Practices
Telex of March 30, 1984 Proposal there be single contract
IBRD/ SIDERPERU with consultants to advise on management
of rehabilitation project and provide
technical assistance with operating
methods and practices\.
Terms of reference to be prepared after
completion of rehabilitation project
feasibility study\.
Telex of April 5, 1984 SIDERPERU agrees single contract
SIDERPERU/IBRD preferable in the two areas specified\.
Telex Notification of dates bidders' offers
SIDERPERU/IBRD lodged:
AUSTROPLAN June 13, 1984
DRAVO ENGINEERS June 18, 1984
PENSA ER June 20, 1984
NIPPON STEEL July 10, 1984
FRASER GR Aug 21, 1984
Telex of July 26, 1984 Notice given that bidding conditions, terms
SIDERPERU/IBRD of reference, and preliminary engineering
designs re procurement of consultants'
advice on operating methods and practices
and project management capabilities to be
forwarded to Bank by date set in June
timetable\.
Telex of August 9, 1984 Request for list of domestic and
IBRD/SIDERPERU foreign consulting firms to be invited to
bid on this consulting contract\.
Advice given regarding bidding conditions
(responsibility and participation of
Peruvian firms, arrangements for payment,
system of bid evaluation)\.
- 23 -
Telex of August 20, 1984 Request for information on status of
IBRD/SIDERPERU procurement arrangements and list of
foreign and domestic consulting firms
invited to bid\.
Telex of August 21, 1984 List given of the names of 14 foreign and
SIDERPERU/IBRD nine domestic firms selected by SIDERPERU
to take part in the procurement
proceedings\.
Response to points raised in previous
telex regarding Statement of Bidding
Conditions\.
Telex of August 24, 1984 Proposals made regarding criteria for
SIDERPERU/IBRD technical evaluation of bids and points
system for classifying them\.
Bank asked to apply in time to allow
invitations to prospective bidders to be
issued by August 31, 1984, in accordance
with the timetable set up the previous
June\.
Telexes of August 28 and 31, Telexes coordinating and defining
1984 bid-evaluation technical criteria and
IBRD/SIDERPERU evaluation points systems\.
Telex of August 29, 1984
STDERPERU/IBRD
Telex of August 27, 1984 Observations on number of consulting
IBRD/SIDERFERU firms prequalified by SIDERPERU\.
Telex of August 29, 1984 Reply to preceding telex:
SIDERPERU/IBRD arrangements used in 1983 procurement
proceedings were being repeated\.
IBRD opinion invited on prequalified firms\.
Telex of August 31, 1984 Confirmed telephone conversation of same
IBRD/SIDERPERU date accepting eight as maximum number of
firms to be invited to bid on consulting
contract\.
Telex of Septmeber 4, 1984 SIDERPERU remits list of the eight firms
SIDERPERU/IBRD to be invited to bid\.
Telex of September 11, 1984 Proposal that U\.S\. Steel be invited to bid
IBRD/SIDERPERU and request that Bethlehem and Ensidesa be
advised they were invited to bid jointly
with Kaiser and Tractionel, respectively\.
Telex of September 17, 1984 Response to preceding telex\. Noted that
SIDERPERU/IBRD Bank Guidelines were being followed:
equal treatment for all consulting firms\.
- 24 -
SIDERPERU ignorant as to whether
Bethlehem/Kaiser and Ensidesa/Tractionel
partnerships still current\.
Telex of September 28, 1984 Approval to consult by telex before
IBRD/SIDERPERU actual dispatch of invitations to bid to
the eight consulting firms listed in
SIDERPERU telex of September 4, 1984\.
Telex of October 1, 1984 Advice that the eight prequalified firms
SIDERPERU/IBRD were consulted by telex\.
Telex of October 2, 1984 Notice given of meeting in Santiago
SIDERPERU/IBRD de Chile between Messrs\. M\. Rowat and M\.
Meunier of Bank and Messrs\. Mohanna and
Martinez of SIDERPERU with regard to
participation of U\.S\. Steel\.
No objections by SIDERPERU to U\.S\. Steel
participating; necessary approval
requested\.
Telex of October 4, 1984 No objections from Bank to
IBRD/SIDERPERU invitation being made to U\.S\. Steel\.
Telex of October 10, 1984 Notice given that invitations now sent to
IBRD/SIDERPERU the nine prequalified firms that had
responded affirmatively to prior telex
requesting indication of interest\.
November 19, 1984 date set for bid opening\.
Telex of November 1, 1984 Further to telephone call,
IBRD/SIDERPERU Bank confirms view that date set for bid
opening should be postponed\.
Notice of Bank mission early 1985\.
Gratification expressed at recovery and
achievements of SIDERPERU\.
Telex of November 7, 1984 In view of Bank recommendation,
SIDERPERU/IBRD bid opening to be postponed to December 3,
1984, provided review of bid evaluation
results conducted by Bank in Lima at time
of mission\.
Telex of Novebmer 13, 1984 In response to telephone call from Bank
SIDERPERU/IBRD this date, SIDERPERU lists firms still in
the running but requesting furLher
postponement and those that have withdrawn\.
Telex of November 19, 1984 Notice that following Bank recommendation
SIDERPERU/IBRD bid opening date postponed again, to
December 21, 1984\. | APPROVAL |
P109219 | Page 1
PROJECT INFORMATION DOCUMENT (PID)
APPRAISAL STAGE
Report No\. AB3514
Project Name
RY-TAIZ MUNICIPAL DEVELOPMENT & FLOOD PROTECTION
PROJECT
ADDITIONAL FINANCING
Region
MIDDLE EAST AND NORTH AFRICA
Sector
Flood Protection (70%); Sub-national government administration (30%)\.
Project ID
P109219
Borrower(s)
GOVERNMENT OF REPUBLIC OF YEMEN
Implementing Agency
Ministry of Public Works and Highways, Project Management Unit
Environment Category
[] A [X ] B [ ] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared
December 7, 2007
Estimated Date of
Appraisal Authorization
December 12, 2007
Estimated Date of Board
Approval
January 29, 2008
1\. Country and Sector Background
1\.1
Rapid urban growth
places severe pressures on Yemens cities to deliver services\.
Yemens estimated average annual urban population growth rate over the past decade of 5\.1% is
the highest in the MENA Region and one of the highest in the world\. Urban growth is being
fueled by both a high natural population growth rate and in-migration from rural areas\. Urban
growth translates into new pressures on cities to expand services\. Yet delivery of infrastructure
and services in Yemeni cities is constrained by weak local revenue generation capacity and
correspondingly low levels of capital investment\. Cities finance most local infrastructure
investments through own-source revenues, while the central government assumes responsibility
for covering most local administration recurrent expenditures, particularly civil servant wages\.
As a consequence only an average of 10-15% of total local expenditures are devoted to capital
investments, which represents about $6 per capita\.
1\.2
Urban Poverty in Taiz\.
One of the main challenges confronting Taiz today is the high
incidence of poverty at the governorate and city level\. Taiz governorate contains the largest share
of population living in poverty in Yemen (13\.2%), mostly concentrated in rural areas\. Over 10%
of the countrys total urban poor reside in Taiz city\. In 2006, 37\.8% of Taizs population was
determined to be below the poverty line (World Bank Poverty Assessment, 2007)\. According to
the 2005-6 household survey, 23\.66% of urban households in Taiz Governorate (over 90% of
which live in Taiz city) are under the nationally defined average poverty line of US$0\.76 per
person per day)\.
1\.3
Challenges arising in Taiz due to its demographics and geophysical characteristics\.
Taiz
is the second largest urban settlement in Yemen, located in the interior highlands at altitudes
ranging between 1,100m and 1,600m above sea level, at the foothills of Sabir Mountain (altitude
3,000m)\. The city is the administrative capital of Taiz Governorate, the most populated of
Yemens 20 governorates with close to 16% of the total population\. Taiz citys population is
estimated today to be around 540,000 inhabitants, out of a total population in the Governorate of
3
million\. Due to its location at the base of Mt\. Sabir, Taiz City is subject to severe seasonal flash
flooding that annually claims at least one life, injures scores of city residents, and inflicts
significant damage and financial losses on the residences and businesses of the city\. In response
Page 2
to this daunting challenge, the World Bank-financed Taiz Municipal Development and Flood
Protection Project was designed with the main aim of erecting flood protection structures to
protect the Citys residents and businesses by channeling the flood waters through open and
closed flood structures to a catch basin south of the city\.
1\.4
Decentralization experience in Yemen has been slow due to implementation challenges\.
At the national level, the Government of Yemen (GOY) launched a decentralization initiative in
2000 with the issuance of the Local Authorities Law (Law No\. 4, of 2000)\. This process is
intended to devolve greater authorities to local administrations and is part of a political process
that has taken root since reunification in 1990\. Yemen has a strong, historical tradition for local
self-governance through the system of local cooperatives in the North and elected local councils
in the South\. This tradition includes community contribution to local development projects and
service schemes, a practice which is maintained, also because of the often insufficient transfers
from central government to the local sector ministries\. The broad political acceptance of
decentralization reform can, in part, be attributed to this tradition\.
1\.5
The Local Authorities Law (LAL) provides local councils direct responsibility for
planning, development, finance, services and social affairs\. Under the Law, local councils, which
are locally elected for the first time, are assigned responsibilities for budget preparation and
accounting; preparation of their own physical and economic plans; raising local revenues and
executing local public works\. Implementation of the new Law has been a slow and piecemeal
process\. Some key challenges still remain from the period prior to the law\. For the
foreseeable
future, therefore, the urban sector will continue to face the following challenges:
(a)
Decentralization has been a slow but persistent process\.
Since unification in 1990,
Yemen has been governed under a three-tiered system of a Central Government,
Governorates at the provincial level, and districts at the local level\. Responsibilities for the
development and management of Yemeni cities were spread across several districts and
overlapping mandates of Central Ministries through their branch offices operating at the local
level\. Until recently, the Ministry of Public Works and Highways (MOPWH) had the
mandate for most urban services and physical planning in the country\. It was represented in
Taiz by its own staff and executed duties normally associated with a municipality including
street lighting, storm water drainage, road construction, solid waste collection and disposal,
and basic planning responsibilities (e\.g\., issuing building permits)\. Following issuance of the
Local Administration Law in 2000, these responsibilities were formally shifted to local
councils at the Governorate and District level, and the local branch office of the Ministry was
charged with executing these functions at the discretion of the local council and consistent
with the Law\. This realignment of authorities and functions allowed Taiz City to prepare its
masterplan for the first time (with IDA-financing under TMDFPP) rather than having it
issued by the Capital\. Over time, this local level ownership should improve local planning
efforts, but it also will require a sustained focus on local capacity building\.
(b)
Weak institutional capacity at the local level\.
Even
with nominal transfer of central
government deconcentrated staff to local governments, their capacities are still weak and
inadequate for a significant expansion in role in the short term\. Human capacity at the local
level has been built through TMDFPP and other donor-supported initiatives\. However, it will
take some time before local administrations are able to carry out all of their mandated city
services\.
(c)
Inadequate contribution of local revenues\.
Public finance in Yemen has historically been
within the preview of central government\. Governorates and Districts prior to the new Law
Page 3
were simply administrative units and did not have their own financial base\. While the new
Law provides for retaining some local revenues, many aspects of revenue generation remain
undeveloped and are characterized by: the fragmented structure of local tax administration;
the limited tax base; and in efficiency in collections\. Local revenues provided for in the Law
are in the form of either low yield fees collected from business and individual activities or
originate from surcharges on electricity bills\. More sustainable and substantive sources of
local revenue, such as direct taxes for local public services or property taxes, are not
specifically provided for (but also are not excluded) in the Law\. Putting in place a sustainable
and adequate revenue base to support needed improvements in city service will be a major
challenge in the years to come\.
(d)
Poor levels of infrastructure provision and maintenance\.
Current
levels of local
infrastructure provision and maintenance reflect an equilibrium of low revenues and low
expenditures\. In many cities the provision of urban services cannot keep pace with population
and spatial growth\. Budget allocations to Governorates are normally inadequate and confined
to covering local recurrent expenditures meaning that execution of programs and investments
proceeds at an irregular pace\. Rarely is there a correlation between incremental investments
and an increase in maintenance budgets\. In sum, it will take a focused and prolonged effort at
the local level to achieve the substantial increase in investment and maintenance required to
deliver adequate city services\.
2\. Objectives
2\.1
The original Project has three development objectives: (i) Taiz local government
develops its capacity to carry out a major part of their responsibilities under the country's new
Local Authorities Law; (ii) to protect city residents, businesses and infrastructure from seasonal
destructive flash flooding; and (iii) initiate support for Yemen's decentralization program\. All of
these objectives would remain valid under the proposed additional financing\.
3\. Rationale for Bank Engagement
3\.1
IDA is in a unique position to assist the government to implement its decentralization
strategy\. As a donor, it is involved in virtually every key sector in the country and an active
participant in assisting the government to reform and re-engineer its governance structure\. IDA
assists the government in the areas of civil service reform, public expenditure reviews,
macroeconomic policy formulation, improving line ministry efficiency, providing urban
strategies and infrastructure and assisting with donor coordination\. All of these activities are
impacted by and, in turn, impact the Governments decentralization agenda and this places IDA
in a key position to act as the government's knowledgeable partner during implementation\.
Recent Bank-financed technical assistance in the areas of land management, investment
promotion, poverty assessments, and urban planning have made significant contributions in
shaping the policy agenda\. In addition, under the original TMDFPP, support has been provided
through establishment of 15 local council buildings and local level capacity building to support
the Governments broader decentralization initiative\.
4\. Description
4\.1
The proposed additional financing retains essentially the same project structure of the
original project\. Of the original three components, two will be utilized, as follows: (i) Flood
damage protection infrastructure and related public sector infrastructure; (ii) Resettlement (no
longer necessary as there will be no resettlement under the additional financing) would not be
Page 4
financed under the additional financing; and (iii) Local Council capacity building program\. A
forth component is added to cover the budget for project management by the Project Management
Unit (PMU)\. Although Component 2 will no longer be financed under the project, as there would
be no resettlement, IDA is working with Government and City counterparts to define a program
of continued support to the Resettlement Village and to several NGOs working with the residents
of Birara to ensure sustained impact and integration of the resettled community\. A detailed
description of each component is given below:
4\.2
Component 1- Flood Damage Protection Infrastructure (US$18\.30 Million Equivalent)
\.
Component 1 entails the construction of about: (i) 5\.1 kilometers length of flood damage
protection channels to protect populated areas, (ii) 22 kilometers length of street paving in
tributary areas to the flood damage protection structures to improve rainfall surface drainage and
prevent soil erosion to minimize maintenance of flood structures while improving pedestrian and
vehicular access; (iii) 1\.5 kilometers length of retaining walls to protect built-up areas and nearby
flood damage protection structures from potential risk of landslides; (iv) 2\.4 kilometers length of
footpaths in steep walkways to control erosion while providing safe pedestrian access; and (v)
13\.8 kilometers length of sewage collection pipes, and about 2,000 house connections to reduce
water pollution caused by sewage discharges onto the flood channels\. This component would be
executed through ten contractual packages\. The size of each contract has been determined by
grouping the works within the same geographic area, or by the type of work to be carried out, the
duration of each contract not to exceed eighteen months, and by limiting the cost of each contract
to sizes suitable for competition among medium and larger size contractors\.
4\.3
Component 2- Resettlement\. (Not financed under the Additional Financing)
This component would no longer be financed under the additional financing, as no resettlement
would be required under the project\. The proposed set of civil works projects noted in
Component 1 above are identified and have been reviewed by an independent social specialist
and determined not to require any resettlement\. However, careful monitoring during the
implementation phase will be carried out by a full-time social officer to ensure compliance with
OP 4\.12 concerning involuntary resettlement\. Furthermore, the work of the task team will be
com
plemented by a parallel assignment carried out by the Banks social team in which specially
targeted technical assistance and capacity building would be provided to the Resettlement Village
developed under the original project and to the NGOs providing services to residents in the
village\. This assistance is proposed to be supported by a JSDF (Japan Social Development Fund)
grant and would be intended to ensure sustainability of the village and integration of the residents
into local society, provide access to employment opportunities, and help to engender broader
social acceptance\.
4\.4
Component 3- Capacity Building for Local Councils (US$3\.37 Million Equivalent)\.
Component 3 consists of scaling-up the capacity building program for local councils and
administrations in support of the governments decentralization agenda through assisting the city
of Taiz in fulfilling its responsibilities under the Local Administration Law of 2000\. This
component also includes construction of two Local Council buildings in Taizieh and Salw
Districts (both within Taiz Governorate) and equipping such buildings with furniture and office
equipment necessary for Local Councils to fulfill their mandate under the Law\. This component
would consist of the following programs:
a\.
Traffic system management study (US$0\.30 Million equivalent)
\.
A
consultant would
study and recommend options for addressing traffic flows in the expanded road network
alongside the flood damage prevention channels aiming at reducing congestion and
identifying strategic sites suitable for parking areas in the vicinity of commercial areas
Page 5
and markets, which would be designed to enhance vehicular and pedestrian safety and
access within the city;
b\.
Street Addressing and Parcel Numbering (US$0\.44 Million equivalent)
\.
This
program would complement the new Taiz GIS system developed under the masterplan to
enhance local tax collection and improve delivery of public services\. The assignment
would be undertaken jointly by the Taiz public works and finance departments, under the
guidance and direction of the Taiz Local Council\. This activity would consist of: (i) a
study carried out in consultation with the Local Council and an already-established Street
Addressing City Committee, including survey work, system design, and implementation
plan\. In addition, bidding documents would be prepared for the supply and installation of
signs and postings of street names and parcel numbers (US$0\.12 Million equivalent); and
(ii) the supply and installation of street names and parcel numbers (US$0\.315 Million
equivalent)\.
c\.
Strategy for strengthening civil defense response capacity (US$0\.20 Million
equivalent)\.
This activity entails developing a civil defense strategy and provision of
basic equipment for initial implementation of a program for future expansion and
coordination among all concerned stakeholders\. The support would be aimed at
improving the response time and capacity of service providers to flood-affected victims
in all parts of the city\.
d\.
Master Plan detailed designs (US$0\.30 Million equivalent)\.
This activity
would
develop additional detailed maps of Taiz (five in total) to expand the already developed
system under the original project, including technical assistance and capacity building of
technical staff to enhance detailed planning efforts at the city level\.
e\.
Municipal Service Delivery Study (US$0\.23 Million equivalent)\.
This activity would
consist of a set of assignments in support of the citys efforts to consolidate its services
and administrative structures into a municipal management framework\. The study would
look into various options such as establishing a position of city manager, local tax
administration study for consolidating all municipal revenues and expenditures into a
single budgetary framework and developing a new organization chart with functional
departments and corresponding operations manuals\. This activity would also support the
review of the Governments proposed amendments to the Local Administration Law\.
f\.
Strengthening Land Management (US$0\.50 Million equivalent)\.
This activity would
assist the Government in formulating a viable national and local level framework for
public land management and land registration following establishment of the General
Authority for Land, Survey and Urban Planning (GALSUP)\.
g\.
Studies and Design for Sanitary Solid Waste Disposal (US$0\.25 Million equivalent)\.
This activity includes undertaking: (i) a study to implement the solid waste management
strategy carried out under phase 2 project; (ii) design of a sanitary landfill and drafting of
bidding documents of a selected site for construction under a separate program; and (iii)
undertaking an Independent Environmental and Social Impact Assessment (IESIA) for
the proposed solid waste management project to be executed under a separate program\.
h\.
Construction and Equipping Local Government Administration Buildings (US$1\.13
Million equivalent)\.
This activity would construct and equip two Local Council (LC)
buildings and equip the local office of GALSUP\.
Page 6
4\.5
Component 4- Project Management (US$0\.41 Million equivalent)\.
This activity includes the IDA-portion of the financing of the Project Management Unit (PMU)
staff and related operating expenditures (US$0\.38 Million equivalent) and a provision for
monitoring compliance with the Environmental Management Plan (EMP) required under the
proposed additional financing project (US$0\.03 Million equivalent)\. In addition, it will cover the
costs of a full-time Social Officer and Monitoring and Evaluation Specialist, two positions that
would be added to the original PMU staff to strengthen social and overall project monitoring\.
5\.
Financing
Source: ($m\.)
BORROWER/RECIPIENT 2\.20
International Development Association (IDA)
20\.00
Total
22\.20
6\. Implementation
The proposed additional financing would remain under the supervision of the Minister of Public
Works and Highways (MOPWH) and implemented by the existing Project Management Unit
(PMU) under the leadership of the same experienced Project Director as the original project\.
Minor modifications would be introduced to the staffing and project implementation oversight
function\. Specifically, a dedicated procurement specialist would be recruited locally to support
the Project Director and strengthen the procurement capacity within the PMU, a social officer
would monitor social impacts, facilitate community outreach, and liaise with beneficiaries in the
project areas, and an M&E/GIS specialist would track project achievements\.
In response to the lesson learned under the original project that there is a need for enhanced
coordination among ministries at the central level and strengthened communication between the
central and local departments within the line ministries, an inter-ministerial steering committee
would be established with the dual objective of facilitating project implementation and ensuring
that policy reforms stimulated by the project are adequately vetted, discussed, and integrated at
the central and local levels\. The steering committee would be comprised of leadership from the
MOPWH which would chair the committee, the Ministry of Local Administration which has a
key role in policies related to decentralization, the Ministry of Water and Environment which has
the mandate to coordinate activities to reduce risks from environmental emergencies, the Ministry
of Finance for budgetary and consultative purposes, the Governor of Taiz, and Local Council
Chairs\.
7\. Sustainability
Under the Governor of Taiz Decree No\. 3 of 2007, the maintenance of the flood protection
infrastructure in Taiz was assigned to the Cleaning and Improvement Fund (CIF), which is fully
funded by a tax on services fees (e\.g\. a 5% tax on electricity bills) and administered at the
Governorate level\. All cleaning equipment and storage facilities acquired under the original
project were also handed over to the CIF for use in maintaining the infrastructure\.
The additional financing to the Project includes scaled-up support for the
citys efforts to develop
a
consolidated municipal management system that would promote the efficient provision of
services and improve collection of local tax revenue\. With a strong financial foundation, the City
Page 7
of Taiz would be more capable of carrying out the decentralized responsibilities prescribed in the
Local Authorities Law\.
8\. Lessons Learned from Past Operations in the Country/Sector
A
key lesson learned in the original project is that commitment from all ministries or government
entities expected to play a role in project implementation should be established during project
preparation\. To address this issue, an inter-ministerial steering committee would be established
under the oversight of MOPWH to bring together all ministries whose input and involvement is
critical to the success of the project, especially the Ministry of Local Administration\.
Given the significant positive environmental and social impacts resulting from the original
project, a lesson learned is that under the additional financing there would be a need for a
dedicated M&E specialist within the PMU to track performance and impact in a systematic
manner\.
9\. Safeguard Policies (including public consultation)
The original project had
an Environment Category A classification with the most significant
issue identified in the Project Appraisal Document (PAD) as the resettlement of `70 families from
areas where construction works were planned to take place\. Under the additional financing, no
involuntary resettlement is envisaged or would be undertaken\. As such, the additional financing
integrated social and environmental classification is proposed to be downgraded to Category B
according to the World Banks Operational Policy on Environmental Assessment (OP 4\.01)\.
Environmental
\.
As an Environmental Category B Project, a Partial Environmental Assessment
is required\. An environmental impact assessment report (EIA) was prepared, following OP 4\.01
guidelines\. An Environmental Management Plan (EMP) is included with the EIA, and it
addresses potential environmental and social impacts, the necessary mitigation measures and
monitoring plan, and the capacity building requirements for the EMP implementation\.
An additional issue that was not explicitly addressed in the original project environmental
assessment is the matter of illegal piping of domestic wastewater from households surrounding
the wadis/flood structures into the structures\. Provision has been made under the original and the
proposed additional financing to correct this problem by installing wastewater collection pipes
along the flood structures to channel the effluent to the Al-Burayhi treatment ponds downstream\.
The Al-Burayhi Wastewater Treatment Plant is currently undergoing cleaning and capacity
upgrading carried out under the Bank-financed Urban Water and Sanitation Project; this work is
expected to be completed by February 2008\. The EIA carries out a review of the wastewater
treatment facility\.
Some farmers have been observed drawing some of the untreated wastewater from the collection
system downstream for use in agriculture\. Although not directly related to the project, the
downstream risk of some farmers potentially misusing untreated wastewater passing through the
network installed under the project would be addressed by organizing on a periodic basis for the
duration of the project public awareness sessions concerning the inherent health risks in using this
water prior to appropriate treatment\. This assistance is specified in the project EMP and would
be the responsibility of the consultant providing capacity building support on solid waste
management and environmental health awareness\.
Social
\.
Operational Policy on Cultural Property (OP 4\.11) may be triggered during construction,
if chance finds of archeological or cultural significance is encountered\. This issue is not expected
Page 8
to be significant, however, as the construction of the drainage channels, boulder traps, and sewers
is done in wadis, whereas the development of Taiz city is predominantly at high grounds and on
hill tops\. Nonetheless, OP 4\.11 should be evaluated during construction\. The construction
contracts should include a Chance Find procedure according to OPN 11\.03\.
A
detailed social assessment (SA) was carried out by an independent social scientist during the
preparation stage of the project and confirmed that no resettlement would take place and that no
land acquisition would therefore be required for implementation of this operation\.
Contact Point:
Task Team Leader
Stephen Karam
The World Bank
1818 H Street, NW
Washington D\.C\. 20433
Telephone: 202-458-7327
Fax: 202-614-4021
For information or other project related documents contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-5454
Fax: (202) 522-1500
Web: http:/ www\.worldbank\.org/infoshop | APPROVAL |
P108932 | IEG
Report Number: ICRR14742
ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted: 08/11/2015
Country: Ethiopia
Project ID: P108932 Appraisal Actual
Project Name: Pastoral Community Project Costs (US$M): 133\.25 119\.74
Development Project
Ii
L/C Number: Loan/Credit (US$M): 80\.00 74\.52
Sector Board: Agriculture and Rural Cofinancing (US$M): 33\.54 37\.35
Development
Cofinanciers: IFAD Board Approval Date : 05/29/2008
Closing Date: 12/31/2013 12/31/2013
Sector(s): General water; sanitation and flood protection sector (20%); Other social services (20%);
Animal production (20%); General education sector (20%); General agriculture; fishing and
forestry sector (20%)
Theme(s): Rural services and infrastructure (33%); Decentralization (17%); Natural disaster
management (17%); Water resource management (17%); Rural policies and institutions
(16%)
Prepared by: Reviewed by: ICR Review Group:
Coordinator:
J\. W\. Van Holst Lauren Kelly Christopher David IEGPS1
Pellekaan Nelson
2\. Project Objectives and Components:
a\. Objectives:
The project development objective (PDO) stated for Pastoral Community Development Project II (PCDP II) in the
Project Appraisal Document (PAD) was "to sustainably improve the livelihoods of pastoralists living in the arid and
semi-arid Ethiopian lowlands"\.
The PAD explained that "a 'livelihood' is defined as a people centered concept comprising four key elements
related to the well-being of individuals and families: (i) growth and stability of income; (ii) access to social and
public services; (iii) the social relations, institutions and natural environment that facilitate or constrain standards
of living; and (iv) reduction of vulnerability to disaster" (para 10)\.
The statement of the PDO in the Financing Agreement (FA) was "to assist the Recipient in increasing its pastoralist
communitiesâ resilience to external shocks; and improving the livelihoods of Beneficiary Communities, and thereby to
contribute to overall poverty alleviation in the territory of the Recipient" (Schedule 1)\. The Financing Agreement did
not define "livelihoods", but introduced the additional objective of poverty alleviation in the territory of Ethiopia\.
For the purpose of assessing this project's achievements this Review will use the objective stated in the Financing
Agreement\.
b\.Were the project objectives/key associated outcome targets revised during implementation?
Yes
If yes, did the Board approve the revised objectives/key associated outcome targets?
No
c\. Components:
The following is a brief summary of the project's components based on their description and estimated costs in the
PAD (pages 11-14 and Annex 4) and their actual costs in Annex 1 of the ICR\. The project was implemented in 55
pastoral and agro-pastoral woredas (districts) in the regions of Somali, Afar, Oromia and the Southern Nations,
Nationalities and Peoples National Regional States of Ethiopia\.
Component 1: Sustainable Livelihoods Enhancement (appraisal estimate US$90\.79 million, actual cost was
US$90\.94 million)\. This component would strengthen decentralized and participatory planning at the
woreda (district) and community/kebele (sub-district) levels, operating within the regional government structure\.
Women and men in pastoral and agro-pastoral communities would design and implement Community Action Plans
(CAPs) that reflect their development priorities\. There were two sub-components\.
Sub-Component A - Community Investment Fund (CIF): This was designed to finance community sub-projects
giving particular attention to poorer sub-groups and to women\. This sub-component was expected to absorb
84% of the sub-component's funding and 59% of total project costs\. It was therefore a dominant activity in the
project\. A Woreda Development Committee (WDC), comprising representatives of the woreda administration,
customary of institutions and beneficiary communities, would appraise and endorse CIF requests with the
support from the project's mobile support teams (MSTs)\. Beneficiary communities were required to make at least
a 15% cash or in-kind contribution to demonstrate commitment, and this contribution increased if communities
aimed to benefit from additional rounds of CIF support\.
Sub-component B - Rural Livelihoods Program (RLP): This sub-component supported the establishment of
pastoral rural savings and credit cooperatives (RUSACCOs) in beneficiary communities at woreda and regional
levels, and the capacity-building of associated support services\. These activities drew on the experience of the
Ethiopian Rural Financial Intermediation Program (RUFIP) - funded by IFAD - and other micro-finance projects in
rural Ethiopia\. Once registered (with project support), RUSACCOs were eligible for project financing of basic
office equipment, account books and promotional material, as well as a grant of up to 200% of their
pre-registration compulsory and voluntary savings as seed capital for income-generating activities for beneficiary
communities\. The limit for loans to cooperative members was Birr 50,000 each (equivalent to roughly US$2,564
each)\.
Component 2: Pastoral Risk Management (appraisal estimate US$28\.03 million; actual cost US15\.46 million)\. This
component financed early warning systems to develop Disaster Preparedness Contingency Plans (DPCDs) and
subsequently Disaster Preparedness Investment Plans (DPIPs)\. The decline of US$12\.57 million between the
appraisal estimate and the actual cost was not explained in the ICR\. However, a perusal of the "End of Project
Performance Report" prepared by the Ministry of Federal Affairs showed that investments in bore holes and irrigation
development were both close to 50% of the plans in Sub-component B (Tables 28 and 29)\. This shortfall could
explain most of the lower than estimated actual costs\. This component's two sub-components were as follows\.
Sub-component A - Pastoral Early Warning and Response Program (PEWRP): The pastoral Early Warning
System (EWS) provided information used to classify woredas participating in the project into one of five âdisaster
stagesâ\. Early response would be financed through Disaster Early Response (DER) grants administered at the
regional level by the Early Warning and Response Department (EWRD) of the Ministry of Agriculture and Rural
Development (MoARD), implemented by the regional Early Warning and Response Bureaus (EWRB), and
supported by the Regional Project Coordination Units (RPCUs)\. The project built capacity at woreda level to
prepare Disaster Preparedness Contingency Plans (DPCPs) that identified both disaster mitigation and early
response activities\.
Sub-component B: Disaster Preparedness Investment Program : The Regional Pastoral Development
Office/Commission (whether they were called "office" or "commission" depended on their geographic location)
integrated Disaster Preparedness Contingency Plans (DPCPs) into a long-term strategic disaster preparedness
strategy and a prioritized Disaster Preparedness Investment Program (DPIP) for the different regions\. To the
extent possible, productive safety net programs (PSNP) catchment management proposals would be integrated
into the DPIPs\. When the disaster preparedness strategy was approved by a regional Steering Committee,
regions would receive funding from PCDP II through Disaster Preparedness Strategic Investment Grants (DPSI
Grants) which could include construction and rehabilitation of feeder roads, improved water supply and
catchment management, fodder banks and rangeland improvement\.
Component 3: Participatory Learning and Knowledge Management (appraisal estimate US$1\.51 million; actual cost
US$1\.03 million)\. This component financed various activities aimed at generating information for the improving
management of pastoral resources in three sub-components\.
Sub-Component A - Participatory Action Learning : Participatory Action Learning pilots would be undertaken in
selected beneficiary communities to apply and further develop methodologies for demand-driven approaches to
participatory knowledge generation and innovation\. Starting on a small scale, facilitators would work with
pastoral communities to help them identify their research and knowledge priorities for financing by PCDP II\.
Sub-Component B - Knowledge Management and Networking : This was supported at regional and community
levels including through the establishment of small resource units on pastoral research and development as well
as pastoral development networks at the regional level\. These networks provided a forum for interested actors to
share lessons and information on regional pastoral development issues\.
Sub-component C - Policy Studies: A modest budget was made available to the Ministry of Federal Affairs
(MoFA) and Regional Pastoral Development Commissions/ Bureaux to commission studies they regarded as
necessary to inform the implementation of social and economic pastoral development policies\.
Component 4: Project Management (appraisal estimate US$7\.04 million; actual cost US$12\.31 million)\. As for the
previous PCDP I, the Federal Project Coordination Unit (FPCU) located in the MoFA was responsible for overall
PCDP II management, annual planning, and fiduciary management, liaison with stakeholder groups at federal level,
communication, M&E and reporting, staff capacity-building, and mobilization of technical assistance\. However, PCDP
II management was decentralized to the regional Pastoral Commissions and Pastoral Development Bureaux housed
the Regional Project Coordination Units (RPCUs), which had responsibility for PCDP II implementation at the regional
level\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Project Costs: The estimated project cost at appraisal was US$133\.25 million but the actual utilized cost at the
project's close was at US$119\.74 million which was US$13\.51 million (10%) below the the appraisal estimate\.
Financing: At appraisal it was estimated that IDA would provide US$23\.40 million as a credit and US$56\.60 million as
a grant\. The actual amounts of the credit and the grant at the project's close were respectively US$21\.75 million and
US$52\.77 million - both close to 93% but would have been 100% were it not for the fluctuations in the exchange rate\.
IFAD was expected to provide co-financing of US$33\.54 million but actually provided 11\.4% more (US$37\.35 million)
which included an unutilized advance of US$6\.1 million as explained in the ICR (page 31)\.
Borrower Contribution : The PAD estimated that the Government of Ethiopia would provide $19\.70 million toward the
cost of the project, but it actually provided only US$13\.97 million (70\.9% of the appraisal estimate)\.
Dates: According to the ICR (footnote 1, page 3), the Data Sheet recorded an incorrect original closing date implying
a six month delay in project completion\. December 31, 2013 was the original closing date in the Financing Agreement
(Schedule 2, Section IV) and it was not changed\.
Restructuring: On December 9, 2011 a level 2 restructuring of the project was approved based on discussions at the
mid term review (MTR)\. The MTR, using the definition of the PDO in the Financing Agreement, agreed to the need for
a substantial revision of the results framework including changes in the PDO indicators and Intermediate Outcome
(IO) Indicators\. These changes were incorporated in the approved Restructuring Paper in December 2011 when
about half the project's funds had been disbursed\. The revised indicators were recorded in the Data Sheet in the ICR\.
The restructuring process was aimed at discarding indicators that were not relevant or could not be measured, making
some of them more precise, and adding six indicators to measure access to social and public services contributing to
improved measurement of livelihoods\. The main outcome of the restructuring was the decision to move away from
qualitative indicators - a perception based approach - towards quantitative indicators that put in place targets and
measured the number of persons that achieved access to the project financed assets\.
While the changes in the indicators were considerable, they did not result in a change in the scope or quality of the
outcomes that the project intended to achieve\.
3\. Relevance of Objectives & Design:
a\. Relevance of Objectives:
High\. The project's development objective was "to assist the Recipient in increasing its pastoralist communitiesâ
resilience to external shocks; and improving the livelihoods of beneficiary communities, and thereby to contribute to
overall poverty alleviation in the territory of the Recipient"\. This objective, with its broad definition of "livelihoods " (see
Section 2a of this Review) was highly relevant to the pastoral communities in Ethiopia which have been chronically
vulnerable to many shocks such as drought, livestock diseases, and locusts causing losses in capital and income, and
disruption of social services due to civil conflict\. Pastoralism is practiced extensively in the four regions covered by
the project, namely the Afar and Somali Regional States (Regions), parts of the Oromiya Region, and in some Zones
of the Southern Nations, Nationalities and Peoples National Regional States (SNNPR)\. According to the PAD these
areas were populated by at least twelve million people, some eleven million animals covering half the area of Ethiopia\.
The population included (i) a few comparatively wealthy pastoralists with many livestock; (ii) a large numbers of poor
âagro-pastoralistsâ with small herds/flocks who depended on cropping or sale of their labor to sustain their livelihood
and (iii) a significant number of pastoralists gradually abandoning pastoral livelihoods due to loss of assets and
degradation of grazing lands (para 2)\.
The Government's "Plan for Accelerated and Sustained Development to End Poverty" (PASDEP) dated 2006 noted
that "poverty remains particularly intense in the pastoral areas, both in terms of low income and food consumption,
and high vulnerability defined in terms of the risk of sudden drops in income (page 191)"\. This project (PCDP II)
addressed some of the core strategies suggested in PASDEP for improving the livelihoods of pastoralists\.
The strategic objective in the Bank's Country Assistance Strategy (CAS) for Ethiopia for FY08-11 was consistent with
PASDEP namely fostering economic growth in order to sustain the emerging economic "take-off", improving access to
and quality of basic service delivery, and reducing Ethiopiaâs vulnerability to help improve prospects for sustainability
(Summary, page vi)\. In August 2012, 15 months before PCDP II closed, the second pillar of the Bank's Country
Partnership Strategy (CPS) for Ethiopia for FY13-16 was released with a pillar aimed at "Enhancing resilience and
reducing vulnerabilities by improving delivery of social services and developing a comprehensive approach to social
protection and risk management" (para 99)\. Hence the PCDP II development objectives continued to be highly
relevant to the Bank's strategic partnership with Ethiopia until it the project was closed in December 2013\.
b\. Relevance of Design:
Modest\. The design of the project's Results Framework in the PAD - linking the project's inputs and outputs to
outcomes - was inadequate\. The design lacked a clear causal chain reflecting the project logic - how support for
community saving, lending and investments and complementary support for early warning systems would increase
resilience, improve livelihoods and ultimately contribute to poverty alleviation\. Instead, the results framework at
design was merely a listing of the development objectives and indicators without having established needed logical
connections\.
The relevance of design was also weakened by a lack of information on how the proposed community driven
development (CDD) model would be effectively designed and implemented within complex pastoral and existing
bureaucratic systems at the woreda and kebele level in order to more effectively achieve the intended project results\.
The project introduced a CDD model involving women and men in pastoral and agro-pastoral communities who
prepared community action plans at the kebele level that were intended to pay particular attention to poorer
subgroups and to women\. When approved, the CAP would be financed by the project-financed Community
Investment Fund (CIF)\. The CAPs were reviewed by woreda development committees comprising representatives of
the woreda administration, customary institutions and beneficiary communities with the support from the project's
mobile support teams\. There is insufficient information to determine how the overall design of the appraisal and
approval processes at the community and district level supported adequate participation of community members
within the CAP process (choice and allocation of investments etc)\. For example, the End Evaluation report for the
project highlighted the role that the Woreda Development Committee (WDC) played in appraising and deciding on the
allocation of investments - a role that the WDC traditionally plays in the without-project scenario\. In sum, the design
was not specific enough about how a CDD model would be integrated and sustained within the existing structures and
how this model would lead to the intended project impacts,
A design feature that was introduced in the second phase - the Rural Savings and Credit Cooperative - was a
relevantly designed feature, modeled after pilots tested through an IFAD rural finance project\. The design of these
cooperatives addressed a financing gap and featured access to finance for pastoral women\. Another relevant design
feature was the importance assigned to the development of the early warning systems - that directly address the
project objective of increasing resilience to shocks and to protect livelihoods\. The design featured support for Early
Warning and Response Bureaux and woreda Early Warning and Response Desks that were were designed to collect
and analyze basic household-welfare data to identify the early onset of disasters at the woreda level\. This, together
with the subsequent preparation of Disaster Preparedness Investment Programs and coordination of pastoral risk
management in the central and regional project coordinating units, was a relevant design feature\.
The final element of the project's design was support for considerable training of government staff at the woreda level
and the pastoral communities, with the main emphasis on improving the management of pastoral resources\. This
activity was also substantially relevant to the project's objectives\.
Following the project's restructuring in December 2011, the project enhanced its results framework so that the system
was more in line with project's causal chain\. Meanwhile, the project retained several relevant design features
mentioned above\. However, information was still insufficient on how community driven development would be utilized
to more effectively achieve the project objectives and how community members would adequately participate in the
decision making processes (CAPs, CIF) and how this system would be sustained\.
4\. Achievement of Objectives (Efficacy):
The project's PDO was "to assist the Recipient in increasing its pastoralist communitiesâ resilience to external shocks;
and improving the livelihoods of beneficiary communities, and thereby to contribute to overall poverty alleviation in
the territory of the Recipient"\. For the purpose of assessing the project's achievements the objective has been
partitioned into three sub-objectives - as presented below\. In addition the PAD definition of "livelihood" noted in
Section 2a of this Review will be used to assess the first sub-objective\.
(A) improve the livelihoods of beneficiary communities;
(B) increase the pastoralist communitiesâ resilience to external shocks; and
(C) contribute to overall poverty alleviation in the project area\.
Information used in this assessment is taken from the Restructuring Paper (December 9, 2011), the ICR and the "End
Evaluation" prepared by an independent consultant which was based on a random sample of households from
woredas and kebeles which were carefully selected by the regional project coordinating units (PCUs)\. The bias in this
sample undermined the reliability of the survey results\.
Sub-Objective A\. Improve the livelihoods of beneficiary communities \. The project Substantially contributed to the
achievement of this first sub-objective\.
Outputs
ï¬ 54% of total community members (42% of female members) attended project related meetings compared with
original targets of 75% and 50% respectively
ï¬ 99% of approved (budgeted) community sub-projects completed each year compared with a target of 80%
ï¬ 93% of PCDP (social and infrastructure) sub-projects completed that become operational compared with a target
of 90%
ï¬ 100% of woredas posting woreda community investment fund (CIF) plans, budgets and service performance at
public centers compared with a target of 90% (dropped at restructuring)
ï¬ 100% of woredas with a complaint redress system for CIF plan established compared with a target of 90%
(dropped at restructuring)
ï¬ Students enrolled (grade 1-8) in PCDP II constructed schools per year but no data in ICR other than baselines for
four regions
ï¬ 100% of rural savings and credit cooperatives (RUSACCOs) that were established were offering credit service
two years after establishment compared with a target of 80%
ï¬ 70% of all RUSACCO members and 72% of female members had active Loan accounts compared with targets of
70% and 90% respectively\.
ï¬ 100% of RUSACCO members and female members had active savings accounts compared with targets of 95%
and 70% respectively (PDO 6)
ï¬ 562 water points were completed which reduced distance to clean water from an average of 8 km in the control
group to 4 km in the project area
Outcomes
ï¬ Outcomes prior to restructuring were measured by a perception survey\. It found that 87% of the targeted
community members interviewed were satisfied with service delivery provided by the PCDP II financed social
infrastructure as compared with a target of 70% (this PDO indicator was dropped at restructuring)\.
ï¬ Post restructuring, outcomes were measured per the definition provided in the PAD, namely as a function of
improved access to non-consumables (water, health, road connectivity):
- 1\.1 million people were provided with improved access to potable water but no target was established\.
- 43,600 households gained improved access to small scale irrigation services compared with a target 9,500
- 364,900 people gained access to improved road connectivity --rural roads -- compared with a target 200,000\.
- Communities most often opted for schools as part of the Community Investment Fund (CIF) plans\. Focus
Groups conducted by the End Evaluation reported that increased access to education helped students obtain
jobs in towns and cities, and that increased access to education supported better decision-making\.
- 2\.3 million livestock benefitted from increased access to livestock health facilities compared with a target of
450,000\.
- 757,648 people with gained increased access to health facilities and services provided by the PCDP II
compared with a target of 450,000\.
ï¬ The project fell short of measuring its contribution to achieving sustained growth of beneficiary incomes\.
However the "End Evaluation" calculated that credit beneficiaries earned on average an additional Br 2,477 of
income on loans with a range of between Br 1,562 and Br 2,858 which was equivalent (at an exchange rate of
Br17\.5=US$1) to about US$89 and US$163\. This range of average earnings on loans compares with an average
gross national income per capita in all Ethiopia of US$420 in 2012\.
ï¬ It is worth noting that a separate study conducted in December 2014 found there have historically been large
disparities between per capita urban and rural incomes in Ethiopia\. It reported that per capita rural income in
2012 was 25% of the national per capita income (US$105 versus US$420)\. The overall conclusion therefore is
that the additional average income earned on loans was considerable in relation to estimated average annual
rural income per capita\. However, more information is needed to draw conclusions on the impact of RUSSACO's
income generating activities on annual per capita income and hence an important aspect of livelihoods\.
B\. Increase the pastoralist communitiesâ resilience to external shocks \. The project Substantially contributed to the
achievement of the second sub-objective\.
Outputs
ï¬ 100% (four) of the project regions prepared comprehensive strategic disaster preparedness investment plans -
meeting the target of four\.
ï¬ 89% of approved (budgeted) Development Preparedness Strategic Investment Plan sub-projects completed each
year compared with a target of 80%\.
Outcomes
ï¬ Outcomes prior to restructuring were measured by a perception survey\. It found that 76% of community members
were satisfied with the timeliness, quantity and quality of disaster early response compared with a target of 70%
(dropped at restructuring but data reported in the End Evaluation report)\.
ï¬ Outcomes measured after restructuring were associated with key quantitative indicators set as part of the
process\. As a result of the implementation of the strategic disaster preparedness investment plans, the project
reported that 94% of community based disaster preparedness infrastructure investments were operational and
had maintenance plans compared with a target of 85% and 100% of disaster early response grant financed
activities (compared to a target of 80%) were implemented within one month after the request was officially
submitted\. These requests are triggered when the early warning system identifies a change from ânormalâ
conditions\.
ï¬ Early warning information on disaster risks available for 97% of pastoral and agro-pastoral woredas compared
with a target of 100%\.
C\. Contribute to overall poverty alleviation in the project area \. The project Modestly contributed to the achievement
of this third sub-objective\.
Outputs
ï¬ RUSACCOs were particularly valuable to the poorest of the poor, peri-urban pastoralists who had dropped out of
pastoralism because of livestock loss often because of drought (ICR, para 82)\.
Outcomes
ï¬ There was no data in the ICR on poverty reduction or contributions to poverty reduction in the four focus regions
or in Ethiopia that could be attributed to the project's implementation before or after restructuring\.
ï¬ However the ICR refers to a number of contributions the project made to non-monetary measures of livelihoods
(paras 70 to 71) which the literature has shown could result in increased earning capacity (such as through
improved education, better nutrition and enhanced health) thereby contributing to poverty alleviation\.
5\. Efficiency:
Annex 10 in the PAD concluded that a calculation of economic benefits generated by the project was of limited value
because of the multiple anticipated spillover effects between the projectâs activities\. In line with this conclusion the
main text of the PAD made no estimate of a rate of return but stated that the project was expected to have significant
economic and social benefits in the four project areas\. They were: (a) increased capacity for risk management and
early response to shocks such as drought; (b) effective citizensâ consultation and participatory development and
strengthened ownership of improved access to access to basic public facilities and social services; (c) increased
access by the pastoral community to sustainable financial services and derived increases in incomes; and (d) greater
effectiveness of public administration through capacity building, community participation and accountability (para 69)\.
The ICR also does not provide an estimate of the rate of return but refers to a calculation in Annex 10 of the PAD that
shows that the average annual cost of drought is estimated at US$70 million (although it was not clear how this was
derived) and that if 15% of this loss could be avoided it would be valued at more than the actual expected cost of
pastoral risk management (PRM) which ranged from $6\.5 to 7\.8 million par annum\. However, the ICR stated that data
were not available to make a comparable estimate for the project during implementation - even though a drought did
occur during the project's implementation and hence estimates of losses avoided such as were made in the PAD
could have been made\. Instead the ICR stated that "The only relevant income generating data (IGA) for economic
efficiency was that additional income from RUSACCO loans averaged Br 2,477" (para 75) - without indicating the rate
of return that these additional incomes represented\.
The ICR concluded its assessment of efficiency by listing four alternative ways of evaluating the project's efficiency,
namely (a) percentage of funds used\. 100 percent of IDA credits and grants were used - 100% of IDA and IFAD
financing; (b) percentage of output targets met - substantial according to the ICR; (c) superior quality of construction of
project infrastructure - for example, PCDP II human health posts cost 42 percent less than government/NGO-financed
health posts for comparable construction, and for primary schools grade 1-4 the PCDP II costs were 57 percent less
and for animal health posts PCDP II was 43 percent less; and (d) timely completion of the project - no extensions of
the closing date (ICR paras 76 to 79)\. None of these were adequate indicators of efficiency\.
It may, for example, have been more balanced to note that, despite no change in the scope of the project or its closing
date, the costs of project management increased to 75% above the original estimate\.
This Review considers that the analysis of efficiency in the ICR is partial and inadequate and less comprehensive than
in the PAD\. On this basis the project's efficiency is rated as modest\.
a\. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return (FRR) at appraisal and the
re-estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal No
ICR estimate No
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
The relevance of objectives was high, but the relevance of design was modest because of the weak results
framework and insufficient information to determine how the overall design of the appraisal and approval processes at
the community and district level supported adequate participation of community members in the preparation of
community action plans (CAPs) and how this would lead to increased resilience\. Based on the project's measurable
achievements presented in the ICR, the achievement of improved livelihoods at the project's close was substantial\.
Increased resilience was likely to be achieved through the implementation of the investments triggered by the Early
Warning systems and therefore achievement towards this objective is also rated substantial\. More rigorous measures
would be warranted going forward in Phase III for measuring this objective however\. There was no information in the
ICR on the extent to which the project contributed to poverty alleviation and this achievement was therefore rated as
modest\. The lack of quantitative assessment of the project's efficiency, together with a considerable proportional
increase in project management costs, led to a modest rating for efficiency\. Overall ,the project is rated as having had
moderate shortcomings in the achievement of its objectives\. Its outcome is therefore rated as moderately satisfacto
ry\.
a\. Outcome Rating: Moderately Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
The ICR noted three risks facing the project in the future, namely (a) inadequate support to project investments,
such as staff, supplies and maintenance to keep the assets financed by the project functional and sustainable; (b) the
government may abandon the CDD design and resume the top down, supply-driven approach for supporting
pastoralists and agro-pastoralists; and (c) early response systems may be difficult to sustain without substantial
budget support (para 87)
The ICR also mentioned that field interviews suggest that these risks are real, but not likely to fully materialize\. With
respect to the possible demise of the CDD approach and the return of a top down and supply-driven approach the ICR
drew attention to an awakening of the power of communities, often to the surprise of woreda staff\. The ICR
mentioned the example of the Jijiga woreda where the Woreda Development Committee asserted itself amongst other
development partners, particularly NGOs and insisted on a community initiative approach\. The ICR interpreted this
example as indicating that intensive consultations with communities and prioritization through CAPs will become a
standard feature of development interventions in the future (para 87)\. A different interpretation could be that the event
in Jijiga was a reaction by the community to undue pressures from the WDC\.
The ICR also mentioned that "Regional Governments with sizable pastoral populations are strong advocates of
pastoral causes\. The PCDP development approach based on a CDD model has become part of the development
planning process in these regions\. There is also evidence in some areas that the PCDP has unleashed a
self-sustaining process\. With improved access to social and economic services such as water supply education,
health (humans and animals) and rural finance through RUSACCOs have come gradually improving and diversifying
livelihoods that generate more income" (para 88)\.
On the other hand the ICR noted that there is concern that a CDD approach would not preserve project investments
unless there is also continued technical support from woreda facilitators and the mobile support teams financed by the
project\. In this context there are plans for testing the feasibility of user fees to pay for services (para 87)\.
Finally, the project's pastoral risk management and early warning systems have led to an awareness of the increasing
frequency and intensity of droughts and hence a service that signals the advance of disasters and provides advice on
coping mechanisms will remain in demand (ICR, paras 89 and 90)\. While support for these early warning and
advisory services will buttress a strong interest in their sustainability it will not necessarily ensure financing\.
On balance this review agrees with the ICR that risk to development outcome is significant\.
a\. Risk to Development Outcome Rating : Significant
8\. Assessment of Bank Performance:
a\. Quality at entry:
According to the ICR the Bank used its experience from the first PCDP to improve the design of PCDP II\. The
improved performance of the early warning system in this project compared with its predecessor attests to the
benefit of an improved design\. Section 3a of this Review has already noted that the relevance of the project's
objective before restructuring was high\. However, in light of a weak results framework in the PAD (also noted by
the ICR) the project's design before restructuring was rated as modest\. The results framework had significant
shortcomings because most indicators were inappropriate and needed extensive overhaul during the MTR\. The
ICR also noted the less than optimal participation of females in the activities of communities vis a vis the
community action plans (measured as 16% in the End of Term Evaluation\. There were also minor shortcomings
in the financial management arrangements because of the reliance on statements of expenditures which for a
remote project such as PCDP II was cumbersome to administer\. Quality at entry is therefore rated as moderately
satisfactory\.
Quality-at-Entry Rating: Moderately Satisfactory
b\. Quality of supervision:
The task manager for this project was a member of Bank staff in the country office in Addis Ababa\. This
facilitated prompt assistance to the government's project coordinating units which faced an extremely challenging
social and economic development challenge in remote and undeveloped regions of Ethiopia\. The MTR was
comprehensive and there was timely follow up on important issues such as the overhaul of the indicators in the
results framework with the assistance of specialists in monitoring and evaluation in Bank headquarters - which led
to formal proposals for the project's restructuring as described in Section 2 of this Review\. The ICR recognized
that the restructuring could have been done earlier\. According to the ICR the Bank established good working
relations with the government, the federal and regional project coordinating units as well as with the co-financier
(IFAD)\. It is noted that the project team was recognized by the region (a Vice Presidential award) for excellent
work in supervising PCDP II (paras 92 and 93)\.
IEG notes that the monitoring of the Redress Mechanism established during design was eliminated at
restructuring\. It is unclear why the monitoring of this critical project support mechanism was dropped\.
Quality of Supervision Rating : Satisfactory
Overall Bank Performance Rating : Moderately Satisfactory
9\. Assessment of Borrower Performance:
a\. Government Performance:
The ICR stated that the Ministry of Federal Affairs provided satisfactory support to the project on the basis that
it was effective in the handling the project's administration at the central government level\. The Ministry also
supported the project's management effectively and facilitated the mobilization of counterpart contributions at the
regional level\. One area where the ICR stated that government performance could have been smoother was in its
coordination with the Ministry of Agriculture and Rural Development and the Early Warning Response Department,
because there were occasional lapses in the disbursement of central government funds to the regions and
resulting delays in implementation (para 95)\.
Government Performance Rating Satisfactory
b\. Implementing Agency Performance:
The ICR stated that the Federal Cooperative Agency CA satisfactorily implemented the Rural Livelihood
Program through the Regional Cooperative Promotion Bureaus and relevant Woreda Cooperative Promotion
Desks\. The mobile support teams provided basic training and support to pastoral RUSACCOâs at community
level in areas where woreda development committees required support\. High turnover of the MSTs which created
problems in maintaining appropriate expertise (para 96)\.
According to the ICR (para 97) the Early Warning and Response Desks of the Ministry of Agriculture and Rural
Development managed Component 1 reasonably well including the regional Early Warning and Response
Bureaux and woreda early warning and response departments\. Early responses were effectively financed and
supported by Regional Project Coordination Units (RPCU)\. However, there were weaknesses in the project's
financial management and procurement, especially in the earlier years (see section 11b below)\.
Implementing Agency Performance Rating : Moderately Satisfactory
Overall Borrower Performance Rating : Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization:
a\. M&E Design:
The M&E system was the responsibility of the Federal Project Coordinating Unit (PAD, para 59)\. The FPCU set up
a sound reporting structure that allowed detailed tracking of physical progress of the project\. Financial transactions
were also well documented even if the flow of data was slow because of the large number of SOEs\. Using community
data gatherers for the early warning system was a successful design element and worked well in practice, because
communities reported that they felt empowered to better track the risk of drought and to address it in advance\. The
main weakness was that the original M&E framework PDO outcome indicators were inappropriate for the
measurement of the PDOs and, regardless, most of the PDOs could not be measured\. Three out of five original PDO
indicators were dropped and replaced during the project's restructuring in December 2011 and at the same time eight
more PDO indicators were added\.
b\. M&E Implementation:
More than 80% of early warning monthly reports and quarterly early warning bulletins produced and disseminated
(national and regional) by the early warning and Response Department and the Ministry of Agriculture and Rural
Development compared with a target of 80%\.
The quality of project reporting was high\. The reports were thorough and closely tracked a very large number of
Project activities\. In addition, in each region, the RPCUs produced films to document and advertise PCDP II activities\.
The films feature stakeholder interviews, project personnel and project investments\. Most prominent are the
stakeholdersâ testimonies of how the project has positively affected their lives\. These testimonials and success stories
have greatly contributed to visibility of PCDP II and as a result the Pastoral Standing committee in the Ethiopian
Parliament considers PCDP as a flagship program in pastoral areas\.
Part of the M&E implementation for the project was the "End Evaluation" prepared by an independent consultant\.
While there was a considerable amount of interesting information in this report, the sample used to obtain information
was arguably unreliable because "the sample of woredas and kebeles were carefully selected by the regional PCUs"
(page 9)\. Hence the sample was not a random sample and this seriously undermined the report's quality and
reliability\.
c\. M&E Utilization:
To supplement the information obtained from the survey, the End Evaluation used a substantial amount of
information from the project's monitoring system\. It is, however, not clear from the ICR how much of the information
collected in the course of the project was used to manage the project
M&E Quality Rating: Modest
11\. Other Issues
a\. Safeguards:
As indicated in the PAD, three safeguards policies were triggered: OP/BP 4\.01 (Environmental Assessment), OP/BP
4\.09 (Pest Management), and OP/BP 7\.50 (Project on International Water Ways)\. According to the ICR, the project
complied with all three policies\.
b\. Fiduciary Compliance:
Financial Management \.
Financial management (FM) practices were challenging in the remote regions areas and at the sub-district levels\. It
proved time consuming to collect statements of expenditures (SOEs) for all of the community investment fund
sub-projects, aggregate them at the woreda level, and send them up the chain through the regional governments and
to the FPCU\. Without the SOEs, the Bank could not replenish the project account and the communities would not
have the funds to complete the community investment\. This process caused some delays, but did not ultimately
negatively affect project development outcome\. FM rating was moderately unsatisfactory before the MTR, but
improved thereafter with timely approval of annual work plans and budgets, and the reduction in all advances to less
than four months (ICR, para 52)\. The final Implementation Supervision Report upgraded FM performance to
moderately satisfactory noting improvements in timely submission of SOEs, full utilization of IDA funds and actions
taken on most of the internal audit findings related to FM\.
Procurement\.
A review of procurement capacity assessment for this project was carried out\. In addition training on contract
administration and documentation was arranged\. Nevertheless, the ICR noted that "capacity inadequacies were
evident in the poor quality of the record keeping and procurement documentation" (para 53)\. The ISR rated
procurement moderately unsatisfactory for these reasons, but raised the rating in the final ISR to moderately
satisfactory with improved performance at regional and federal levels\. The ICR concluded that procurement by
communities was a positive step in capacity building as they gained experience in procuring skilled labor and building
materials for CIF sub-projects\. Field interviews by the ICR team reported that the procurement capacity that was
created "generated greater community ownership and contributed to cost effectiveness and transparency in the
procurement process" (para 53)\.
c\. Unintended Impacts (positive or negative):
None
d\. Other:
12\. Ratings: ICR IEG Review Reason for
Disagreement/Comments
Outcome: Moderately Moderately
Satisfactory Satisfactory
Risk to Development Significant Significant
Outcome:
Bank Performance: Moderately Moderately
Satisfactory Satisfactory
Borrower Performance : Satisfactory Moderately There were weaknesses in the project's
Satisfactory financial management and
procurement, especially in the earlier
years (see section 11b)\.
Quality of ICR: Satisfactory
NOTES:
- When insufficient information is provided by the Bank
for IEG to arrive at a clear rating, IEG will downgrade
the relevant ratings as warranted beginning July 1,
2006\.
- The "Reason for Disagreement/Comments" column
could cross-reference other sections of the ICR
Review, as appropriate\.
13\. Lessons:
The ICR drew five lessons from the project\. In brief they were
(a) Communities gain confidence in their ability to solve their own problems when they receive appropriate training
to support decision-making\.
(b) Community empowerment can be achieved by consultation early in the process on their priorities for use of
scarce project funds\.
(c) An SOE-driven approach to CIF replenishments is too unwieldy and creates implementation delays\. A more
practical needs to be found for all such projects\.
(d) Rural savings and loan cooperatives work well in promoting income generating activities that communities are
very familiar with, but less so on promoting new income generating activities\.
(e) Small-scale irrigation interventions, crop yield improvements are almost automatic in terms of implementation,
but crop diversification is not because it was found that farmers require more time, along with support services, to
diversify crops to such things as onions and tomatoes\.
This Review concluded that there were five broad lessons from the project:
(a) Care needs to be taken in ensuring that a CDD model of development is fully participatory and integrated into
local development planning processes, since without this, the ownership and sustainability of community driven
development planning will be weak and the process and its effects (pro-poor participation in local development
planning, increased relevance and resilience of community demanded assets, better targeted distribution of assets
etc) will diminish after project close\.
(b) Projects that seek to reduce vulnerability of project affected persons require a clear method for assessing and
measuring vulnerability and the project attributable impacts, especially in an environment with several donor and
government funded initiatives seeking to secure the same effect\.
(c) Implementing CDD within transhumant societies requires a differentiated design for the agro-pastoralists that
are largely sedentarized and the migrating population and their relatives residing in associated hamlets\. There are
many lesson to learn from this project about how to design and implement a CDD program that takes these
differences into account, especially in a fast changing social and economic environment that were not presented in
the ICR\. Facilitation, for example, will require a different skills set and some assets will need to be mobile\.
Decision-making processes will vary and will need to be designed in a manner that takes into account the needs of
pastoralists who may not be present in decision-making forums\.
(d) Care also needs to be taken to understand the role of the pastoral projects as a function of the wider
political-economy, especially with regard to the role of the project as function of programmatic goals designed to
sedentarize pastoral communities\.
(e) Pastoral Development projects are often implemented in environments that are characterized by a certain level
of land and asset contestation\. While this project had a grievance mechanism, the effectiveness of this mechanism
was not reported in the ICR\. Donors should apply a conflict filter in such cases to determine whether interventions
in contested areas may help or hurt a fragile environment, and adjust design accordingly\. In the case of the PCDP,
the project indicated it would avoid areas affected by conflict, or the risk of conflict\. However a strong justification is
required to ensure that the redirection of aid in these areas will not exacerbate grievances or potentially contribute
to pockets of increased poverty and insecurity\. The approach needs to weighed against multiple factors\.
14\. Assessment Recommended? Yes No
Why? The PPAR is recommended as an input into the Macro-Evaluation of the Rural Non Farm Economy\. A PPAR
is also recommended to more fully measure and report on the achievements of the project development outcomes,
with regard to increased resilience and and the sustainability of the incremental income that was earned through the
investments and the savings and loan cooperatives\. This is the second phase of a three phase program that have
been under implementation for 15 years\. IEG has, to date, not conducted a comprehensive review of its support for
pastoral livelihoods in Ethiopia (it was not included as a major theme in the 2008 CAE, for example)\. Some of the
project level issues that could be covered by the PPAR include the questions raised by this review about the
relevance and effectiveness of the CDD approach within the complex pastoral and food distribution systems in place
in Ethiopia; the combined effectiveness of the early warning systems, the CIF and the cooperatives with regard to
increasing resilience as a combined approach; and the relative effectiveness of the Bank's approach in the PCDP
compared to other donors' efforts and other Bank programs supporting social safety nets in the project areas\.
15\. Comments on Quality of ICR:
The ICR was candid and useful\. However it depended significantly (see Data Sheet) on the "End Evaluation" report
without acknowledging that the data in the End Evaluation were based on a non-random sample - mentioned in
Section 10b in this Review\. The ICR provided a "split" assessment of the project's outcome but without any
justification or evidence for the ratings before and after restructuring\. Finally, the ICR could have explored some
options for assessing the project's efficiency (such as had been done in the PAD) instead of concluding that there
were no data\.
a\.Quality of ICR Rating : Satisfactory | APPROVAL |
P158709 | COMBINED PROJECT INFORMATION DOCUMENTS / INTEGRATED
SAFEGUARDS DATA SHEET (PID/ISDS)
CONCEPT STAGE
Public Disclosure Copy
Report No\.: PIDISDSC16915
Date Prepared/Updated: 19-Jul-2016
I\. BASIC INFORMATION
A\. Basic Project Data
Country: Senegal Project ID: P158709
Parent
Project ID
(if any):
Project Name: Senegal Rural Electrification Program (P158709)
Region: AFRICA
Estimated Estimated 31-Oct-2016
Appraisal Date: Board Date:
Practice Area Energy & Extractives Lending
(Lead): Instrument:
Borrower(s): ASER
Implementing ASER
Agency:
Financing (in USD Million)
Financing Source Amount
Public Disclosure Copy
Borrower 4\.00
Carbon Fund 8\.28
Financing Gap 0\.00
Total Project Cost 12\.28
Environmental B - Partial Assessment
Category:
Is this a No
Repeater
project?
B\. Introduction and Context
Country Context
Senegal is a Sub-Saharan and coastal country with 13\.9 million inhabitants, of which almost 55
percent live in rural areas with population growth at 2\.5 percent\. The country aspires to become a
high middle-income country but was stuck in a low-growth equilibrium since 2006\. Compared to
an average growth rate of 6 percent in the rest of Sub-Saharan Africa (SSA), growth in Senegal
averaged only 4 percent between 2000 and 2010, and only 3\.3 percent between 2006 and 2013\.
The economic stagnation has been attributed to a series of internal and external factors, including
Page 1 of 11
drought, flooding and international food and oil shocks as well as poor governance\. The private
sector's ability to stimulate the economy was also limited due to a weak investment climate, costly
energy and declining competitiveness, underpinned by weak governance systems and poor
Public Disclosure Copy
implementation follow up\. Inadequate physical and human infrastructure also weighed on
Senegal's slow growth\. The improved Gross Domestic Product (GDP) growth rate (4\.7 percent
and forecasted to be above 5 percent for 2015, 2016 and 2017), driven mainly by the services
sector, particularly telecommunications and financial services, also seems to be linked to a
rebound in agriculture, a strengthened domestic demand boosted by public investment in
infrastructure, lower oil prices and reduced production costs as the Government of Senegal (GoS)
started implementing the Plan Senegal Emergent (Emerging Senegal Plan - PSE)\. The PSE
presents the authoritiesâ¢â¨ medium-term vision and aims to make Senegal an emerging economy
by 2035 prioritizing diversification and exports and increasing the productivity of Senegal's
economy in the public and private sectors\.
The PSE builds on the Strategie Nationale de Developpement Economique et Social (National
Economic and Social Development Strategy - SNDES) which was approved by the new
Government in 2012, serves as the consensual coordination framework for public action to place
Senegal on an accelerated recovery and growth path that would lead to higher, stable, and shared
growth over the medium to long term\. The PSE remains articulated around the same three pillars
as the SNDES: (i) growth, productivity, and wealth creation; (ii) human capital, social protection
and sustainable development and; (iii) governance, institutions, peace, and security\. The last two
remain essentially unchanged\. However, the first one has been significantly enhanced with the
identification of high priority programs and projects, and key reform areas\. Electricity generation
diversification and increased access, are included among the priority programs\.
Sectoral and Institutional Context
The energy sector plays a key role in the economic development strategy of Senegal as its price,
reliability and supply quality affects almost all economic activities in the country\. The electricity
sector has been characterized by high generation costs largely due to high thermal generation
Public Disclosure Copy
costs (about 90 percent of the electricity is generated using imported oil products), high
transmission and distribution losses, poor quality of service, and weak financial position of the
utility\. Moreover, due to the relatively weak performance and delays in commissioning new
facilities SENELEC, the national state-owned utility, has been continuously facing challenges to
meet the ever-growing demand and to provide reliable and affordable electricity\. To address the
issues faced by the sector, in October 2012, the GoS adopted a Letter of Development Policy for
the Energy Sector that outlines the sector policy objectives to improve the sector's performance in
the medium term\. The main axes of the Letter are: (a) ensuring energy security and increasing the
energy access for all; (b) developing a policy mix combining thermal generation, bio-energy,
coal, gas, and renewables and seizing the opportunities of regional interconnections; (c)
continuing and accelerating the liberalization of the energy sector by encouraging independent
production and institutional reform of the sector; (d) improving the competitiveness of the sector
in order to lower the cost of energy and reduce sector subsidies; and (e) strengthening regulation
of the sector
The situation of the electricity sector started to improve in 2013, following a period of severe
disruptions in 2011 and marginal improvements in 2012\. Aided by lower international oil prices
and investments that expanded heavy fuel oil power plants and rehabilitated power generation,
SENELEC, has significantly reduced unserved demand\. Generation upgrades have resulted in
lower production costs, with the amount of emergency rental power in the interconnected system
Page 2 of 11
decreasing from 150MW to 100MW\. Shifting from expensive diesel to cheaper heavy fuel oil
allowed for further savings\. SENELEC's tariff compensation (a government direct subsidy
provided to the utility to maintain affordable tariffs) has been reduced from about CFAF120
Public Disclosure Copy
billion in 2012 to about CFAF88 billion in 2013 to about CFAF77 billion in 2014 and 0 in 2015\.
Following years of heavy financial losses, SENELEC has reported marginal profits for 2013 and
2014 and 2015\. A performance contract between the GoS and SENELEC signed in May 2013
has also established a good mechanism for enhancements in the sector\. The performance contract
finalized in December 2015 but is being expanded for 2016 while a new performance contract
with revised indicators is being prepared for the period 2017-2019\. SENELEC is finalizing a
Generation Plan that aims to achieve an optimum generation mix with targets for diversification
of supply through coal power investments, renewable energy, natural gas generation and regional
power trade\. The utility is also preparing a Priority Action Plan targeted at updating transmission
and distribution networks and improving its commercial function for the period 2016-2018 while
it defines its Strategic Action Plan up to 2020\. But despite the efforts of the GoS in addressing the
energy sector issues, in the short-term, the sector still remains extremely sensitive to external oil
price shocks, potential delays with private sector generation projects, and any unforeseen
disruptions caused by equipment failure, while the government focuses more on progress with
medium-term diversification\.
Notwithstanding the fact that Senegal has steadily increased electrification rates reaching a
national average of 54 percent, with almost fully electrified urban areas, the majority of people in
rural areas do not have access to electricity (approximately 76 percent), including social services
(health centers, schools, etc\.)\. For basic energy needs, households mainly rely on fuelwood for
cooking and wicks, and kerosene lamps for lighting\. The use of these traditional fuels is
expensive and poses both health and environmental hazards while requiring time-consuming
foraging by women and children\. The "Agence Senegalaise d'Electrification Rurale" (Senegalese
Agency for Rural Electrification - ASER), established in 2000, is the autonomous governmental
agency in charge of implementing all rural electrification programs in the country\. Between 2000
Public Disclosure Copy
and 2010, ASER electrified more than 1,000 villages using grid extensions, Solar Home Systems
(SHS), and isolated mini-grids connected to diesel generators\. To accelerate the rural
electrification efforts, since 2009, ASER adopted a two-pronged concessionaire model to tend
concessions for rural areas to private investors under the Rural Electrification Priority Program
(PPER) as follows: i) large scale Rural Electrification Concessions (RECs) that are awarded to
national or international utilities; and ii) small scale concessions named Local Initiative for Rural
Electrification (ERILs), through which local initiatives for electrification can get their initial
investment subsidized\.
Relationship to CAS/CPS/CPF
By enhancing access to electricity in the country, the Project will contribute to the GoSâ¢â¨ s
poverty reduction plans and support the achievement of the Bank's twin goals of reducing poverty
and boosting shared prosperity\. The proposed Project is also aligned with the strategic objectives
of the Country Partnership Strategy (CPS) FY2013 â¢â¨ FY2017, which supports the priorities of
the Governmentôs National Strategy for Economic and Social Development (SNDES) and
Senegal's efforts to engage in a recovery and a higher growth and shared prosperity path over the
medium-term\. The overarching focus of the CPS is on improving governance, building resilience,
and restoring growth and fiscal space\. The Bank Project is focused on two pillars: Pillar 1 -
Accelerating inclusive growth and creating employment and Pillar 2 - Improving service delivery\.
Under Pillar 1, the CPS identifies improved access to affordable electricity and increased rural
access to electricity as a central piece of the strategy\. In the CPS, the Bank has also proposed
Page 3 of 11
Senegal as one of the pilot countries for the Sustainable Energy for All initiative to further
increase rural electrification in the country\.
Public Disclosure Copy
The proposed carbon finance instrument is part of the suite of World Bank Group (WBG)
instruments supporting the energy sector value chain in Senegal, covering household energy
provision in rural areas, generation, transmission, distribution, and improvement of
SENELECâ¢â¨ s performance\. The WBG program is anchored in strong sector dialogue with the
authorities focusing on lowering the cost of energy through cheaper and more mixed generation,
better governance and management of the power sector, and ensuring reasonably priced energy
access in rural areas\. The proposed Project also builds on previous World Bank Group (WBG)
support provided to the energy sector in Senegal including the Electricity Services for Rural
Areas Project (2004) that provided financing to subsidize rural electrification through output-
based aid\. The project leveraged private sector financial and technical strength by introducing
public-private partnerships (PPPs) and the design of concessions to be supported under this
Project (please refer to Annex 4 for more details)\. It also complements the Electricity Sector
Efficiency Enhancement Program (2005), aimed at supporting key investments in the energy
sector, to increase the level and the quality of energy services and reduce their costs to the
economy and the population and the ongoing Electricity Sector Support Project (2012) aimed at
upgrading and modernizing the transmission and distribution network in Senegal while ramping
up the efforts to provide more households with access to electricity\.
C\. Proposed Development Objective(s)
Proposed Development Objective(s)
The Project development objective is to increase the rural households' access to modern electricity
systems and consequently reduce GHG emissions by moving HHs from using traditional energy
sources to modern energy services\. The Project will use carbon-linked results based payment
scheme to support the implementation of the GoS's plan to scale up and accelerate rural
electrification through private concessionaires and other project operators\.
Public Disclosure Copy
The Project will use carbon-linked results based payment scheme to support the implementation
of the GoS plan to scale up and accelerate rural electrification through private concessionaires and
other project operators\. Carbon finance will help scale up and accelerate access to electricity by
providing a connection fee subsidy (in the form of a connection coupon/voucher) to rural
households in the concession areas in order to reduce the householdsô connection costs by
making the payment of the connection charge affordable to the poor rural population\. It is
expected that by mitigating the impact of the connection cost as a barrier to entry, the pace of
connections among rural households will increase\.
Key Results
â¢â¨Â¢ People provided with access to electricity under the project by household connection
(number)
â¢â¨Â¢ GHG reductions achieved and verified (tonnes of CO2)
â¢â¨Â¢ Direct project beneficiaries (number), out of which 51% percent are females (number)
D\. Concept Description
The proposed carbon finance operation will support the GoSôs goals of increasing access to
affordable and cleaner energy in rural Senegal through its National Program for Rural
Page 4 of 11
Electrification\. Carbon finance will help scale up and accelerate access to energy byproviding a
connection fee subsidy (in the form of a connection coupon/voucher) to rural households from
result-based carbon finance\. Carbon finance will be secured from the Carbon Initiative for
Public Disclosure Copy
Development (Ci-Dev) \. Ci-Dev reviewed the Project Idea Note (PIN) of the Senegal Rural
Electrification Carbon Finance Project submitted in September 2014 and endorsed its acceptance
into the Ci-Dev pipeline in February 2015 subject to World Bank PCN approval\. The successful
bidding of the first six concessions shows that private finance can be attracted in rural
electrification activities if the government offers the right incentives\. The subsidized scheme
played a catalytic role in attracting big international energy companies in a market that is seen as
risky and unprofitable\. However, after more than three years of operation of the first concessions,
the results are not satisfactory\. Only 5 percent of the expected connections have been achieved in
December 2015\.
Two mains barriers have been identified in the slow progress in these concessions already under
implementation\. The first barrier is related to the differentiated tariffs for rural customers\. Rural
customers served by SENELEC in the periphery of the concession areas enjoy lower tariffs than
the ones within the concession areas (the tariff difference could be up to three times the price per
kWh between the two depending on the concession area)\. This situation has discouraged potential
new customers in the concession areas to opt for the service\. The GoS is aware of the problem
and through the Electricity Regulatory Commission (CRSE) is exploring options to harmonize
SENELEC's and the concessionaires' tariffs\. A compensation mechanism for the concessionaires
will be considered to continue ensuring the commercial viability of the model\. The second barrier
is the connection fee that has to be paid by the potential new customers to the concessionaire\.
According to the current regulation, the concessionaire can charge new customers an advance on
their monthly electricity consumption (not to exceed two months) and a non-reimbursable
connection fee that varies depending on the selected consumption level (whereas S1 is 50W or
lower per month, S2 is between 50 and 90 W, S3 between 90 and 180 W and S4 is above 180 W)\.
For example, in the Kaffrine-Tambacounda-Kedougou concession, S1 consumers pay a
Public Disclosure Copy
connection fee of FCFA of 14,000 (approximately US$29) and S4 consumers pay FCFA 52,000
(approximately US$105), excluding advance on consumption\. These high upfront connection fees
are not affordable to many potential rural customers creating a significant barrier on the pace and
scale of rural electrification\.
Component 1\. Connection-fee subsidies to rural households in the concession areas through
carbon finance (US$8 million): This component will provide subsidies in the form of coupons/
vouchers to rural households in the concession areas in order to reduce the householdsô
connection costs by making the payment of the connection charge affordable to the poor rural
population\. It is expected that by mitigating the impact of the connection cost as a barrier to entry,
the pace of connections among rural households will increase and accelerate within the
concession areas\. This assumes that the GoS is addressing the tariff issue\. Under the
concessionaires model, financing comes from the following sources: (i) investment subsidies
(provided by the Government with their own funds or concessional lending by development
partners through the Rural Electrification Fund) to the concessionaires per connection; (ii) private
finance by the concessionaires including the concessionairesâ¢â¨ equity and/or loans; (iii) a
supplemental subsidy (RE subsidy) to promote the use of renewable energy (RE) resources in
rural electrification; and (iv) connection fees and specified tariffs paid by the consumers for each
technology type and service level (either as an energy charge or a fee-for-service basis) approved
by CRSE\. In the medium to long term, what makes the concessions sustainable is the electricity
Page 5 of 11
consumption levels of the rural households under that concession area\. An increased number of
connections due to lower connection fees will result in an increase in electricity demand that will
in turn allow the concessionaires to reach a critical mass to make the concessions more viable and
Public Disclosure Copy
sustainable\.
It is proposed that, after covering ASER's costs of administering the Project of Activities (PoA),
the carbon revenues will be used to provide coupons/vouchers that will reduce the connections
costs for the customers in the concession areas\. The Project will provide a â¢â¨ voucherâ¢â¨ or
â¢â¨ couponâ¢â¨ to households which would be redeemable with the private concessionaires for a
portion of the up-front connection cost\. This would cover between 20-60 percent of the up-front
connection cost required depending on the service level, with households also contributing to the
remaining of the payment required\. After the household redeems the voucher with the
concessionaire, the concessionaire would retrieve the value of the voucher/coupon with ASER\.
Because carbon finance uses a results-based payment approach (i\.e\. carbon emission reductions),
there is a need for seed money to finance the coupons which monetary values will be cashed by
concessionaires just after the connections are realized\. Carbon revenues will be used to refinance/
replenish the seed capital\. For that financing, ASER is considering to set up a â¢â¨ coupon/voucher
fundâ¢â¨ (i\.e\. revolving fund) through the existing Rural Electrification Fund (REF) or any other
set up to be agreed with the GoS\. Two options are being explored to provide the seed funds
required to initiate the coupons/vouchers scheme\. The first option is to finance it through a carbon
finance advance from Ci-Dev which may not be enough to pre-finance the coupons in the
beginning years\. The second option, that would also minimize the risks of not achieving the
expected emission reductions, is to finance the initial coupons and vouchers with seed financing
provided by the GoS (i\.e\. with the Fonds Special de Soutien au Secteur de l'Energie â¢â¨ FSE) or
other financing sources\. Once the first carbon credits can be certified and claimed, they will be
used to reimburse the GoS for the seed funds and/or to replenish the coupon fund\. The two
options were discussed with the GoS and received strong support from key players but as Project
preparation moves forward, the preferred option will need to be formally agreed by all key
Public Disclosure Copy
players and the operationalization of the scheme will need to be further elaborated, including a
formal commitment on the seed financing, the flow of funds mechanism, etc\. In case the second
option is selected, it will also require approval from the Government to change the mandate of the
FSE funds to allow the use of the funds to finance rural electrification activities including the
tariff harmonization and the coupons/vouchers\.
To fully reach the connection target by concessionaires, it was estimated that 106,000 households
will be connected in the 6 awarded concessions and 181,000 households expected in the
remaining concessions\. Based on the expected number of connections, the connection costs to be
paid by households are estimated to US$7\.70 million and US$13\.30 million from 2016-2021 for
the six awarded concession and the four remaining concessions respectively\. For the first six
concessions, it was assumed that carbon finance could contribute to 40-60 percent of the
connection cost depending on the service level\. For the four remaining concessions, carbon
finance will cover 20-35 percent of the connection costs \. This translates to total carbon
contribution of US$3\.30 million for the six awarded concessions and US$3\.50 million for the four
remaining concessions \. The total contribution of carbon finance is estimated at US$8\.00 million
of which about US$7\.00 million represents the value of the coupons and the remaining the Project
management cost until 2024\. It is expected that the four remaining concessions will start
implementation in 2019\. These numbers will be further confirmed during the design the of
coupon scheme\.
Page 6 of 11
The proposed coupon/voucher scheme is pro-poor\. Even though the scheme will benefit all rural
households in the concession areas, poorer households (i\.e\. inferred as those HH opting for the
Public Disclosure Copy
lower service levels as this choice not only reflects the affordability of the household to pay for
the connection fee but also for the electricity tariff to be paid by service level) will be able to
cover a larger portion of their connection fee with the coupon\. Due to the differentiated
connection fees paid for each service level, carbon revenues will support 60 percent of connection
costs for Service Level 1, 50 percent for Service Level 2 and 40 percent for Service Levels 3 and
4 for the six-awarded concessions\. For example, the connection fee for Service Level 1 is US$ 24
on average and with the coupon, the connection fee to be paid by the household will be reduced to
around US$10\. For Service Level 4, the connection fee is US$ 105 and with the coupon, it will be
reduced to US$63\. Because of the late roll-out of the four remaining concessions, carbon
revenues will finance 35 percent of the connection cost for Service Levels 1 and 2, and 25 and 20
percent for Service Level 3 and 4 respectively\. The amount of the coupon by service level will be
further analyzed/refined during the design of the scheme\.
The design of the coupon/voucher mechanism will be carried-out by ASER in close collaboration
with the concessionaires, and will include a detailed analysis of the optimum coupon amount by
service level; mechanisms for identification of the beneficiaries, distribution of the coupons
(based on the concessionaire's list of geo-referenced villages for their Priority Projects, and later
for the additional projects), and expected validity of the coupons based on the concessionaire's
capacity to connect the new households in a specific timeframe\. This scheme will also include an
aggressive communications campaign to ensure that the potential beneficiary households
understand and take advantage of the coupons\. The design will also include implementation of a
pilot program in few villages in one or more of the concession areas to gain experience and learn
from the voucher program that would help standardize the approach for wider application\. The
terms of reference for the design of the scheme and the implementation on the pilot program have
been prepared and it is expected that the consultancy will be launched in the next couple of
Public Disclosure Copy
months\. The design of the scheme and the implementation of the pilot program are estimated to
take up to seven months\. According to the existing timeline, the nationwide coupon/voucher
program could be launched in early 2017\.
Under the existing rural electrification model, the concessionaires have flexibility of using a
combination of on-grid, isolated diesel or PV-diesel hybrid mini-grid, off-grid SHS and solar
lantern to electrify rural households in Senegal\. The concessionaires are encouraged, but not
mandated, to use renewable energy technology\. The Certified emission reductions (CERs) will be
accrued based on the cumulative GHG reductions achieved and verified under the Project,
resulting from the cumulative use of electricity from a range of sources including grid, off-grid
and mini-grid technologies\.
Component 2\. Capacity Building for ASER (US$282,000): This component will provide capacity
building to ASER and technical support to the design of the coupon scheme\. Ci-Dev will, through
its readiness fund, provide funding for these activities following Ci-Dev readiness grant
procedures\. The capacity building will include operational support, training and technical
assistance to build capacity of ASER as the Coordinating and Managing Entity (CME) of the
PoA; strengthening ASERâ¢â¨ s institutional capacity for monitoring and quality control; the
implementation of a central monitoring system to aggregate connections and household energy
consumption data which are key to successful verification and issuance of CERs to the Project;
Page 7 of 11
and to facilitate the operation and management procedures of the PoA\. The activities under this
component will be fully aligned with the conclusions of the recent ASER organizational audit
financed by the Bank\. Ci-Dev readiness grant will also be used to design of the coupon/voucher
Public Disclosure Copy
scheme, the communications campaign to support the voucher scheme and the implementation
support for the pilot program on coupon/voucher scheme\. Appropriate child trust funds will be
created to finance this component\.
II\. SAFEGUARDS
A\. Project location and salient physical characteristics relevant to the safeguard
analysis (if known)
The concessions are in the following geographical areas Dagana-Podor-Saint Louis, Louga-
Kebemer-Linguere; Kaffrine-Tamba-Kedougou; Mbour Kaolack-Nioro-Fatick and Kolda-Velingara\.
It is estimated that the six-awarded concessions will allow the electrification of 1,443 villages (862
though grid extension and 581 with solar PV mini-grids and individual solar home systems)\. The
salient physical and geographical characteristics of the locations are not known for now, but will be
detailed in the ESMF\.
B\. Borrowerâs Institutional Capacity for Safeguard Policies
ASER, the autonomous public entity under the Ministry of Energy responsible for rural
electrification\. ASER has a track record for implementing Carbon Finance programs and has a good
understanding of CDM requirements\. However a recent audit of ASER raised some concerns on the
agency's implementation capacity\. The concessionaires responsible to implement the rural
electrification are all subsidiaries or join ventures with international electricity companies with
proven experience on electrification\. However, neither ASER nor the concessionaires have the
technical capacity for implementation and monitoring of the environmental and social aspects of the
activities\. The outreach and public awareness program by ASER is critical for successful
implementation, especially in aspects related to safety issues related to usage of electricity,
economics of usage and the involvement of women and the local communities in monitoring of
Public Disclosure Copy
environmental and social due diligence requirements\. ASER should hire an Environmental and social
expert and also a qualified communication firm, while the concessionaires will hire trained staff to
develop site-specific ESMPs, obtain appropriate clearances and undertake consultations and
disclosure\. A comprehensive safeguards capacity building program will be required to be undertaken
with support from the Bank\.
C\. Environmental and Social Safeguards Specialists on the Team
Ruma Tavorath (GEN07)
Salamata Bal (GSU01)
D\. POLICIES THAT MIGHT APPLY
Safeguard Policies Triggered? Explanation (Optional)
Environmental Assessment Yes It is expected that the rural electrification
OP/BP 4\.01 technologies will have potential environmental
impacts, related to indiscriminate disposal of lead-
acid batteries and compact fluorescent lamps (CFLs)\.
Environmental impacts for grid extensions are
related to works at access road, substations,
distribution lines and distribution networks which
Page 8 of 11
may require safe disposal of construction and other
waste\. These impacts are expected to be localized
and moderate\. Off-grid investments will include
Public Disclosure Copy
hybrid systems based on diesel generators
Natural Habitats OP/BP 4\.04 TBD Impacts on natural habitats are not expected, but
cannot be fully excluded at this stage\. This will be
determined with the preparation of the ESMF, and
provisions for screening investments for this policy
will be included as required
Forests OP/BP 4\.36 TBD This policy is not expected to be triggered, but this
will be further verified during project preparation\.
Provisions for screening investments for this policy
will be included in the ESMF, if needed
Pest Management OP 4\.09 No This policy is not expected to be triggered, but this
will be further verified during the preparation of the
ESMF
Physical Cultural Resources TBD Since specific locations are not known, it is not
OP/BP 4\.11 possible to rule out the presence of physical cultural
resources\. Provisions for screening investments
during project implementation and, when needed,
including requirements as part of environmental
assessment and ESMP, to avoid impacting physical
cultural resources, will be part of the ESMF\.
Indigenous Peoples OP/BP No There are no Indigenous Peoples in the project areas,
4\.10 as defined by OP/BP 4\.10\.
Involuntary Resettlement OP/ Yes The geographical areas and the impacts are not
BP 4\.12 known yet and it is expected that the rural
Public Disclosure Copy
electrification technologies will have positive
impacts on the communities and moderated land
acquisition, however the policy is triggered since the
project will finance distribution networks and mini
power plants, in some villages which may require
involuntary land acquisition resulting in potential
loss of access to assets, means of livelihoods or
resources\.
The detailed description of the investment in each
village are yet unknown, the ASER will prepare a
Resettlement Policy Framework (RPF) to guide in
the likelihood of preparing or updating site specific
Resettlement Action Plans (RAP) during project
implementation if needed\. The RPF will be disclosed
in the country and at infoshop\.
Safety of Dams OP/BP 4\.37 No The project interventions is not expected to require
the construction of dams or impoundment structures,
nor is it expected that they could cause impacts to
existing structures as governed by this policy\.
Page 9 of 11
Projects on International No The project interventions are not expected to cause
Waterways OP/BP 7\.50 any drainage or discharges to surface waters, nor
entail any significant usage of surface water that
Public Disclosure Copy
would affect international waterways\.
Projects in Disputed Areas OP/ No The project interventions are not in any disputed
BP 7\.60 areas\.
E\. Safeguard Preparation Plan
1\. Tentative target date for preparing the PAD Stage ISDS
06-Jun-2016
2\. Time frame for launching and completing the safeguard-related studies that may be
needed\. The specific studies and their timing should be specified in the PAD-stage
ISDS\.
Under an earlier similar Bank funded rural electrification Project, an Environmental and Social
Management Framework (ESMF) (Cadre de Gestion des Impacts Environnementaux) had been
elaborated\. The document is being revised and updated by ASER in line with this project and its
associated potential environmental and social impacts\. The ESMF will clearly define the potential
impacts and delineate the guidelines for screening of all subprojects and processes and procedures
needed for development, approval, consultation, disclosure and implementation and monitoring of
site-specific Environmental and Social Management Impact Assessments and Environmental and
Social Management Plans (ESMPs)\. The ESMF will also include guidance on health and safety
issues to be followed during project implementation based on the World Bank Group's
Environmental, Health and Safety (EHS) Guidelines for Power Transmission and Distribution and
including provisions for beneficiaries and worker health and safety\. The ESMF will be consulted
with relevant stakeholders (in local languages as appropriate), well documented and disclosed prior
to Appraisal\.
Public Disclosure Copy
III\.Contact point
World Bank
Contact: Kirtan Chandra Sahoo
Title: Senior Carbon Finance Speciali
Contact: Affouda Leon Biaou
Title: Carbon Finance Specialist
Borrower/Client/Recipient
Name: ASER
Contact: Antou Gueye Samba
Title: Managing Director
Email: agsamba@aser\.sn
Implementing Agencies
Name: ASER
Contact: Antou Gueye Samba
Title: Managing Director
Email: agsamba@aser\.sn
Page 10 of 11
IV\. For more information contact:
The InfoShop
The World Bank
Public Disclosure Copy
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Web: http://www\.worldbank\.org/infoshop
V\. Approval
Task Team Leader(s): Name: Kirtan Chandra Sahoo,Affouda Leon Biaou
Approved By
Safeguards Advisor: Name: Maman-Sani Issa (SA) Date: 19-Jul-2016
Practice Manager/ Name: Charles Joseph Cormier (PMGR) Date: 20-Jul-2016
Manager:
Country Director: Name: R\. Gregory Toulmin (CD) Date: 20-Jul-2016
1 Reminder: The Bank's Disclosure Policy requires that safeguard-related documents be disclosed before appraisal (i) at
the InfoShop and (ii) in country, at publicly accessible locations and in a form and language that are accessible to
potentially affected persons\.
Public Disclosure Copy
Page 11 of 11 | APPROVAL |
P001897 | Document of
The World Bank
FOR OFFICIAL USE ONLY
LAL Z 62-a-iAS
Report No\. P-3516-MAS
REPORT AND RECOMMENDATION
OF THE
PRESIDENT OF THE
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
TO THE
EXECUTIVE DIRECTORS
ON A
PROPOSED US$5\.0 MILLION LOAN
TO MAURITIUS
FOR A
TECHNICAL ASSISTANCE PROJECT
November 16, 1983
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCYL EQUIVALENTS
Annual 1 Rupee 1 US$
Average = US$ = Rupees
1975 0\.1659 6\.0268
1976 0\.1497 6\.6824
1977 0\.1515 6\.5996
1978 0\.1628 6\.1410
1979 0\.1562 6\.4017
1980 05\.1300 7\.6896
1981 0\.1100 9\.0911
1982 0\.0920 10\.8990
GOVERNMENT FISCAL YEAR
July 1-June 30
GLOSSARY OF ABBREVIATIONS
CHA - Central Housing Authority
DWC - Development Works Corporation
EPZ - Export Processing Zone
MEDIA - Mauritius Export Development and Investment
Authority
MEFF - Ma'\.ritius Equity Financing Fund
MGTO - Mauritius Government Tourist Office
TDA - Tea Development Authority
WEIGHTS AND MEASURES
1 kilometer = 0\.62 miles
1 square kilometer a 0\.3861 miles
1 hectare \. 2\.4\.7 acres
1 arpent = 1\.043 acres
1 metric ton = 1\.102 short tons
1 metric ton 0\.984 long tons
1 kilogram = 2\.205 pounds
FOR OFFICIAL USE ONLY
MAURITIUS
TECHNICAL ASSISTANCE PROJECT
LOAN AND PROJECT SUMMARY
Borrower: Government of Mauritius\.
Amount: US$5\.0 million equivalent (including capitalized front-end
fee)\.
Terms: Repayable in 17 years, including four years of grace, at
the standard variable interest rate\.
Program
Description Project Objectives and Content: The project is designed to
help the Government implement and consolidate its
structural adjustment program agreed with the Bank under
the SAL II program\. More specifically, it is aimed at:
assisting the implementation of reform measures in the
agriculture sector, specifically the restructuring of the
sugar and tea industries and the diversification of
agricultural production; supporting the establishment of
the Mauritius Export Development and Investment Authority
which will promote export development and investment;
assisting the Ministry of Labor to devise a coherent wage
and incomes policy in the private sector; strengthening the
ability of the Mauritius Government Tourist Office to carry
out an expanded promotional program; and helping improve
the efficiency of the public sector by strengthening the
organization and management of key ministries and selected
public enterprises\.
Benefits and Risks: The main risks associated with the
project include possible delays in recruiting the required
technical assistance personnel, owing to the specialized
nature of some of the assignments under the project and the
Government's general preference for grant financing of
technical assistance\. This concern was taken into account
in designing the project, which includes only those
elements essential to the structural adjustment process for
which no alternative financing is available\.
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
Estimated Project Costs
In US$ Thousands
Item Local Foreign Total
Long-term advisers 1350 1\.350
Short-term consultants 1205 1205
Commissions of inquiry
and special studies 200 445 645
Operating Costs for MEDIA 750 400 1150
Promotional Costs MGTO 600 1000 1600
Equipment (computers,
hardware and software) 700 700
Maintenance of equipment 50 50
Office space and local'
support 30 30
Training 50 50
Supplementary Studies 200 200
Contingencies 160 440 600
Total Project Cost,
Net of Taxes 1790 5790 7580
Financing Plan
In US$ Thousands
Local Foreign Total Percent
Bank 5000 000 66
Government 1790 790 2580 34
Total 1790 5790 7580 100
Estimated Disbursements
In US$ Thousands
Bank FY 1983 1984 1985 1986
Annual 1000 1500 2000 500
Cumulative 1000 2500 4500 5000
- ii1 -
Staff Appraisal Report: None
Rate of Return: n\.a\.
MAP: IBRD 3209R (PPA)
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
REPORT AND RECOMMENDATION OF THE PRESIDENT
OF THE IBRD TO THE EXECUTIVE DIRECTORS
ON A PROPOSED LOAN TO MAURITIUS
FOR A TECHNICAL ASSISTANCE PROJECT
1\. I submit the following report and recommendation on a proposed
loan to Mauritius for the equivalent of US$5\.0 million including
the capitalized front-end fee to help finance a technical assistance
project in support of the Government's structural adjustment program agreed
with the Bank\.
2\. Part I of this report describes the economy\. An Economic
Memorandum entitled "Mauritius: Recent Developments and Prospects" (No\.
3857) was issued in Gray Cover in May 1982 and in Red Cover in January
1983\. An Economic Updating Note was prepared and circulated to the Second
Mauritius Consultative Group in June 1983\. Country data are given in Annex
I to this report\. Part II describes other Bank Group operations in
Mauritius\. Part III sets out performance under the first Structural
Adjustment Loan and presents the second structural adjustment program\.
Part IV describes the proposed technical assistance loan\.
PART I - The Economyl/
A\. Main Features of the Mauritian Economy
3\. Mauritius is an island with smaller outer islands situated in the
Indian Ocean, densely populated and with an economy dominated by sugar
production\. Despite significant expansion of other sectors since the early
1970s, sugar still occupies around 90 percept of the cultivable area and
accounts for about 60 percent of export earnings\. The level of economic
activity, therefore, is highly sensitive to fluctuations in sugar
production and exports\. Overdependence on a single commodity also renders
the economy highly vulnerable to external shocks and disturbances\.
4\. With a GNP per capita of about US$1,240 in 1982, Mauritius has
the standard of living of a middle-income developing country\. Standards of
nutrition, health care, and general education greatly exceed those of
neighboring countries\. The adult literacy rate is over 80 percent, life
expectancy at birth is about 65 years, and basic needs are extensively
covered\. The main island of Mauritius has a population of 971,000 (1982)
on a land area of about 2,000 km2 just over half of which is cultivable\.
1/ This section is identical with the President's Report for the proposed
Second Loan to Mauritius for Structural Adjustment, Report Number
P3500-MAS\.
-2-
The outer islands are less developed and dispersed over a wide area of the
Indian Ocian; the largest of these islands is Rodrigues, 400 miles East of
Mauritius, with a population of about 30,000 (1982)\.
5\. Mauritius' population is a mosaic of various ethnic groups:
about 68 percent are of Indian origin; about 29 percent is called the
general population consisting of Franco-Mauritians and people of African or
mixed descent\. The Sino-Mauritian population accounts for the remaining 3
percent\. This ethnic diversity is compounded by the diversity of religious
and ideological beliefs, both of which contribute to a complex political
climate\. Nevertheless, despite the ethnic complexity, the Government
functions in a system of parliamentary democracy and the country has
avoided the emergence of racial, religious or cultural conflicts\.
6\. Mauritius enjoys a pleasant tropical climate which makes it
attractive for tourists\. However, the country is subject to cyclones
between late December and March which can cause severe damage\. Major
cyclones occur on average at 12-15 year intervals\. The absence of mineral
resources and the distance of Mauritius from major markets, (about 6 thou-
sand miles from Western Europe; 10 thousand miles from the U\.S\.; and 7
thousand miles from Japan) affect the potential for economic development
and condition the choice of economic activities best suited to Mauritius\.
It does not lie on the main sea routes and thus maritime transport costs
are relatively higher in Mauaritius than in countries competing for similar
markets\.
B\. Economic Developments in the 1970s
7\. During most of the seventies Mauritius achieved high economic
growth, considerable employment generation, moderate expansion of exports
and a remarkable record in improving the welfare of its population\.
Because of the small size of the domestic market, the Government recognized
that export growth was of vital importance to the economy and sought to lay
the basis for export oriented development\. This was achieved by encourag-
ing sugar production, tourism, tea cultivation and the establishment of
manufacturing industries in an export processing zone (EPZ)\. This strategy
had considerable success until the late 1970s\. The unprecedented increase
in sugar prices in 1973 and 1974 helped the economy to grow by more than 10
percent per year between 1972-1977\. During this period, Gross Domestic
Income increased by nearly two-thirds and helped accelerate the growth of
manufacturing, construction and service sectors\. Most of the increase in
sugar profits was reinvested in joint ventures with foreign private
investors\. As a result, the rate of domestic investment, as a percentage
of GDP, rose from about 13 percent in 1972 to a peak of 36 percent in
1976\. The rapid growth in production and exports was also accompanied by a
rapid increase in employment; in 1977, the unemployment rate was reduced
nearly one-half to less than 8 percent, from about 15 percent in 1972\.
-3-
8\. After the decline of sugar prices in 1976, severe economic
difficulties emerged\. The period 1977-79 was marked by a deceleration of
GDP and export growth\. The slowdown in the growth of exports compounded by
a sharp increase in the price of oil in 1979, led to a rapic deterioration
in the balance of payments\. The balance of payments difficulties were
further aggravated by expansionary fiscal and monetary policies\. Total
government expenditures reached about 40 percent of CDP in 1978/79\.
Recu-rrent outlays rose with the sharply increased wage bill reflecting both
hig'\. salary increases and expanding public employment\. Food subsidies, and
expenditures on health, education and social security were also substan-
tially increased\. At the same time, capital expenditures rose sharply\.
The overall budget deficit thus rose to nearly 16 percent of GDP in
1978/79\.
9\. The widening current account deficits between 1977-79 were
financed largely by a drawdown of foreign exchange reserves and increasing
recourse to external borrowing on commercial terms\. As a result, the
country's external debt more than tripled and the debt service ratio rose
from a modest 1 percent in 1976 to nearly 10 percent in 1979\. In late 1979
depletion of foreign exchange reserves and increasing fiscal and financial
imbalances prompted the adoption of more austere economic policies\. The
Government introduced a stabilization program involving a 30 percent
devaluation, restrictions on public expenditures, and ceilings on salary
increases\.
C\. Recent Economic Developments
10\. The 1979/80 stabilization program was short-lived; in 1980, major
natural disasters wiped out the favorable effects of the austerity
measures\. A severe cyclone destroyed much of the sugar crop and production
declined uy 30 percent\. Significant shortfall in sugar production was
transmitted directly to the rest of the economy\. With the exception of
tourism, real output in all sectors fell sharply\. The level of GDP in 1980
was about 9 percent lower than in 1979\. Emergency food imports and
additional public expenditures required to rehabilitate damaged
infrastructure further compromised the stabilization efforts\.
11\. The economy recovered progressively in 1981 and 1982\. Sugar
production increased from 475 thousand tons in 1980 to 575 thousand tons in
1981 and 690 thousand tons in 1982\. However, non-sugar industry slowed
down markedly in 1982 as new orders for manufactured products fell, owing
to the worldwide recession and restrictive economic measures adopted by the
industrialized countries\. The recovery in tourism was modest despite a
second exchange rate readjustment\.
12\. On the demand side, gross fixed capital formation declined by
almost 10 percent in 1981 and about 11 percent in 1982\. After a slight
increase in 1981, total consumption is estimated to have declined by about
3 percent in 1982 mainly due to a reduction in private consumption\. Hence
1982 saw a rise in the domestic savings rate from 14 percent of GDP in 1981
to 18 percent of GDP in 1982\.
-4-
13\. The sharp contraction in economic activity in 1980 was
accompanied by a rapid rise in unemployment\. The unemployment situation
deteriorated further and in 1982 the number of registered unemployed
reached nearly 25 percent of the labor force\.
Fiscal Performance
14\. The overall fiscal performance continued to deteriorate until
1981/82\. After a decline to about 11 percent of GDP in 1979/80 the
budgetary deficit climbed to about 14 percent of GDP in 1980/81\. This
reflected primarily the heavy interest payments on external debt which
accounted for nearly one-fourth of current expenditures\. In 1981/82,
discretionary tax measures, the recovery of receipts from taxes on sugar
exports, the trimming of the public sector investment program and the
containment of current expenditures helped to reduce the overall deficit to
12\.8 percent of GDP\.
15\. In 1982/83, there was further improvement in fiscal performance\.
Provisional data on the 1982/83 budgetary outturn indicate an overall
deficit of MR 1\.2 billion, equivalent to less than 10 percent of GDP\. In
1982/83 total revenue increased by 22\.6 percent over 1981/82, reflecting
mainly an increase in the rate of stamp duties on imports and the
introduction, in January 1983, of a 5 percent sales tax on goods at the
wholesale level\. As a result, the share in GDP of total revenue rose from
21 percent in the previous fiscal year to about 23 percent in 1982/83\.
Current outlays were kept constant with respect to GDP despite a 24 percent
increase in interest payments on public debt\. The budgetary cost of
sv')sidies on rice and wheat flour was reduced to MR 190 million from MR 230
million in 1981/82 through increases in retail prices\.
The 1983/84 Budget
16\. The 1983/84 Budget has recently been aproved by Parliament after
being delayed by nearly three months beca:,e of the general elections\.
The Budget reflects the fiscal objectives of the current 18-month stand-by
arrangement; it aims at reducing the overall deficit from 9\.9 percent of
GDP to 8\.8 percent of estimated GDP by June 1984\.
17\. To achieve this objective the 1983/84 budget introduces a number
of discretionary revenue measures\. These include the rationalization of
import duties, the reimposition of custom duties on non-basic food items
and public sector imports, the introduction of a new tax on capital gains
arising from conversion of agricultural land to residential use and a
withholding tax on declared dividends\. Further increases in revenue,
compared with 1982/83, are expected to accrue from the first full year's
impact of the sales tax, introduced in January 1983\. On the expenditure
side, total government spending is budgeted to increase by 11\.2 percent
from the estimated outturn for 1982/83\. Current expenditures are expected
to remain at their 1982/83 level, with increases in some items offset by
reductions in transfers to parastatals and subsidies on rice and wheat
-5-
flour\. Capital expenditures are budgeted to increase by 11 percent in
conformity with the revised Public Investment Program (PSIP)\.
Balance of Payments Performance
18\. Mauritius' balance of payments deteriorated steadily until 1982\.
The deterioration was particularly pronounced in 1981 as sugar exports
remained below that of a normal year and manufacturing exports to European
countries were hampered by appreciation of the Mauritian rupee against
European currencies\. Expansionary fiscal policy also contributed to the
deterioration of the balance of payments\. To restrain import demand and
restore the competitiveness of manufacturing exports the rupee was devalued
by 20 percent, with respect to the SDR, in September 1981\.
19\. The balance of payments improved substantially in 1982\. The
volume of imports fell by 17 percent as a result of slower growth in GDP
and effective demand management policies\. Despite heavy interest payments
on eurodollar borrowings, the current account deficit was reduced
substantially from about 13 percent of GDP in 1981 to about 6 percent in
1982\. The current account deficit is expected to decline further to about
5 percent of GDP by the end of 1983\.
External Public Debt
20\. Debt outstanding and disbursed is estimated to have reached
$393 million at the end of 1982, equivalent to 36 percent of GDP\.
Financial institutions account for almost 40 percent of Mauritius' total
debt outstanding and disbursed\. As overall terms of external borrowings
hardened, particularly due to Eurodollar borrowings, debt service payments
increased from $49 million in 1981 to $58 million in 1982 and are estimated
to reach almost $90 million in 1983\. As a consequence, the debt service
ratio has risen from 9\.8 percent to 13 percent in 1982 and is expected to
reach 20 percent in 1983\. Including IMF payments, the debt service ratio
increased from 12\.4 percent in 1981 to 14\.6 percent in 1982 and is expected
to reach 22\.5 percent in 1983\.
D\. The Need for Structural Adjustment
21\. Mauritius' economic imbalances result primarily from the
Government's expansionary policy response to rising unemployment, and the
Country's heavy dependence on a single commodity\. Favorable conditions in
the mid-1970s led the Government to expand public expenditures; when
resource availabilities increased during the sugar boom, the Government
embarked on a policy of income redistribution through general salary
increases, expansion of public sector employment and a large infrastructure
investment program\. Failure to take prompt action to revert to more
austere economic policies when sugar prices declined resulted in excessive
budgetary deficits, strong domestic demand, rising domestic inflation and,
ultimately, in large balance of payments deficits\.
- 6 -
22\. Current account deficits of about 12 percent of GDP which
Mauritius experienced during 1977-1981 cannot be sustained over a longer
period\. Fundamental structural changes need to be made in the economy-if
future growth is not to be seriously limited by balance of payments and
creditworthiness constraints\. First, more resources need to be channelled
to export production and efficient import-substitution, including
substitutes for imported energy\. Second, domestic savings, particularly in
the public sector, need to be increased to reduce the country's reliance on
external borrowings\. However, the scope for generating additional domestic
savings by constraining consumption growth is limited\. Consequently,
efficiency of resource use would be one of the critical determinants of
output growth\.
23\. In the short term, to maintain the country's creditworthiness,
domestic demand will need to be restrained through exchange rate and demand
management policies\. In the medium term growth will depend largely on the
country's ability to diversi\.fy and stimulate exports in both agriculture
and manufacturing, promote tourism and to a lesser extent reduce its
dependence on imported energy and food products\.
24\. Mauritius has some scope for the development of industrial
products for the domestic market\. However, given the' importance of
economies of scale in many industrial processes and the limited size of the
domestic market, import substitution will not provide the main impetus for
the sustained growth of this sector\. Thus, further development and
expansion of export oriented industrialization must remain the major
priority for Mauritius\. Given the monocultural nature of agriculture and
limited resource endowment of Mauritius such manufacturing will continue to
be largely import-intensive\. However, in the future, a vigorous effort
will have to be made to increase the share of value added generated in
manufacturing\. Furthermore, to the extent possible manufacturing will have
to rely more on labor intensive technology in order >-o absorb a significant
portion of the growing labor force\.
25\. Tourism in Mauritius developed as a major activity in the 1970s\.
Before then, most visitors were from the neighboring islands of Reunion and
Madagascar, attracted by cultural and family ties\. In the 1970s, largely
with private initiative and with support from Government, tourism developed
strongly\. Visitor arrival statistics indicate an average annual rate of
growth of 18\.5 percent in the 1970s\. Earnings rose much faster, at about
30 percent per year, reflecting both increases in tourist spending and
growth in arrivals from Europe and South Africa\. By 1979, tourism had
become the third largest foreign exchange earner, after sugar and
manufactures, and a major source of employment, providing jobs directly and
indirectly, for some 20,000 Mauritians (10 percent of the labor force)\.
Since 1979, however, the industry has been stagnating, with visitor
arrivals continuing to be at around 10 percent below that year's peak of
128,000 and investment in tourism has declined sharply\. There is still
ample scope for further expansion of this sector through adequate
implementation of policies designed to increase tourist arrivals as well as
tourist spending in Mauritius\.
-7-
26\. Traditionally\. Mauritius has exported sugar and imported food to
satisfy its requirements\. The ble4> outlook for world sugar prices, the
limited land potential for expanding sugar production and the growing food
requirements call for a major effort to diversify agricultural production\.
Substituting food crops for sugar cultivation is a possibility, but depends
on establishing the economic costs and benefits of the acreage kept under
sugar production and the potential benefits of alternative crops to be
cultivated as a substitute or in association with sugar\. This is a complex
issue which also involves the relative split of sugar export proceeds
between Government, planters and millers, possible changes in labor
legislation and a reassessment of wages and other social benefits in the
sugar sector in the light of those prevailing in other parts of the
economy\.
27\. Mauritius is almost exclusively dependent on imported energy\.
Petroleum imports rose to account for about 20 percent of the import bill
in 1982 from about 7 percent in 1970\. Therefore, it has become a matter of
urgency for Government to explore means to conserve energy and to develop
alternative sources to attend the growing needs of the economy\.
28\. The high level of unemployment is a major socio-economic
problem\. The Mauritian labor force is likely to increase by 100,000 in the
next decade\. It is unlikely that agriculture will generate a significant
number of new employment opportunities during the rest of the 1980s\. The
sugar industry, traditionally the major employer, already occupies 90
percent of arable Jand and cannot expand further\. In the coming years, the
sugar sector will shed labor as sugar harvesting becomes increasingly
mechanized\. Diversification into other crops may at best create enough new
jobs to offset the negative impact of the sugar sub-sector\. Employment in
the public sector should not expand further given the already difficult
fiscal situation\. Even though tourism is likely to expand significantly,
it will not absorb all the increase in the labor force\. With the
progressive introduction of restrictive immigration measures in many labor
importing countries, the main outlet for the growth of Mauritius' labor
force is therefore to be in manufacturing\.
29\. The unemployed labor force, at present, is comprised of a large
group of unskilled persons fit only for labor intensive activities and a
small number of unemployed youths with relatively high academic
qualifications\. Moreover there are major discrepancies in the level of
remuneration in the various segments of the economy\. Paradoxically,
workers involved in productive activity sometimes earn a substantially
lower income than those whose contribution to the productive process is
marginal\. In addition, legislation to protect workers' employment rights
has been detrimental to labor mobility and resulted in redundancy in some
parts of the labor market while shortfalls exist in others\. Reform of the
labor legislation is one of the key complementary actions to economic
policy measures required to improve the employment prospects in lauritius\.
30\. In the longer term, population growth, currently at 1\.5 percent,
continues to add to the difficulties of structural adjustment\. Mauritius
has made significant progress in developing its population policy but there
is some indication that family planning has reached a plateau\. The
-8-
Government is continuing to seek means of strengthening its population
program\.
31\. The Government's structural adjustment program for the 1980s
focuses on those policy areas which have the greatest need of fundamental
reform and the greatest potential for improving the balance of payments\.
As the preparation and implementation of far-reaching policy reforms
require considerable time, the program is phased and concentrated on a
limited number of sectors at a time\. Moreover, phasing of the reforms is
essential to provide the economy with sufficient time to adapt to the new
policy framework\.
PART !I - OTHER BANK GROUP OPERATIONS IN MAURITIUS2/
32\. To date Mauritius has received five IDA credits and fifteen Bank
loans totalling US$161\.8 million, to help finance projects in industry
(US$39\.5 million), power (US$22\.0 million), ports (US$13\.6 million),
agriculture and rural development (US$9\.4 million), urban development
(US$15\.0 million), water supply (US$12\.2 million), education (US$22\.2
million) and structural adjustment (US$15\.0 million)\. Our last operation,
a US$15\.2 million loan for a Highways project was approved by the Board on
July 26, 1983\. IFC made a small loan (US$0\.6 million) in 1971 for hotel
development and is currently studying new investment possibilities (Annex
II presents a summary of Bank's operations)\.
33\. The Bank's operational program in Mauritius has in the last two
to three years moved in the direction of greater emphasis on the dialogue
on macro and sectoral economic policies that the Government intends to
pursue in the medium term as part of the structural adjustment of the
Mauritian economy\. In line with this strategy, a first structural
adjustment loan to Mauritius was approved by the Executive Directors in
FY81\.
34\. Meanwhile, our efforts to support renewed growth in productive
sectors are being pursued through project lending\. The project lending
program generally supports Government's strategy of economic diversifica-
tion and employment creation through projects in public infrastructure,
utilities, and technical education as a means of laying the foundation for
increased industrialization\. While the dialogue with the Government on
broader policy matters is being actively pursued under the non-project
assistance program (SAL), specific sector issues, i\.e\. utility service
rates, sectoral budgets, pricing, cost recovery, etc\. are being addressed
in the context of individual projects\.
35\. Implementation of current projects is generally satisfactory, and
by and large Mauritian implementing agencies are well able to handle
project responsibilities\. Two notable exceptions, however, were the first
rural development project and the tea development project recently
completed\. The rural development project had mixed success in achieving
2/ This section is identical with the President's Report for the proposed
Second Loan to Mauritius for Structural Adjustment, Report Number
P3500-MAS\.
- 9 -
its objectives\. The tea project encountered serious problems caused by
falling international tea prices, inadequacies in project management and
equipment, and lack of interest from smallholders in taking over tea
plots\. Government has prepared a plan of action for restructuring the
Mauritius Tea Development Authority with technical assistance under the
Bank T\.A\. Loan\. In addition, a Commission of Inquiry on tea has been set
up to examine the industry-wide problems affecting tea operations in
Mauritius and to make recommendations for a long-term program of action\.
36\. Disbursement performance in Mauritius remains close to Bank-wide
average and is in fact on the increase if one includes the quickly
disbursed first SAL program\.
37\. Four audit reports on projects in Mauritius have thus far been
prepared by the Operations Evaluation Department\. Report No 2101 of June
20, 1978 on the first line of credit made to the Development Bank of
Mauritius (Cr\. 313-MAS) showed that the project had made a valuable
contribution to development of the Mauritian economy\. Report No\. 3761 of
December 31, 1981 on the Tea Development Project (Cr\. 239-MAS) discussed
the problems encountered by the project, and concluded that it had not been
successful, especially because of the institutional difficulties arising
from the agency created in connection with the project, the Tea Development
Authority\. Report No\. 4008 of June 28, 1982 on the Coromandel Industrial
Estate (Cr\. 411-MAS) concluded that the general objectives of the project
had been met, i\.e\. facilitating industrial development and employment
generation through provision of serviced sites; however, specific targets
on investment and employment were not achieved\. In addition, the financial
performance of the industrial estate has to date been significantly below
expectation\. A fourth report on the Rural Development Project, Report No\.
3988 of June 22, 1982, was critical of the design of the project,
particularly the failure of its few productive elements\.
III - THE STRUCTURAL ADJUSTMENT LOANS3/
38\. The First Structural Adjustment Loan for an amount of US$15\.0
million was approved by the Executive Directors in June 1981\. The loan,
which was not tranched, was fully disbursed in January 1982\. This
operation supported a first program of adjustment described in the
Government's "Statement of Development Policy" and complemented a
stabilization program agreed with the IMF\. The objective was to provide
balance of payments sunport in the short term in order to prevent
interruption of growth while initiating basic economic reforms for
structural adjustment in the medium term\.
The Program
39\. The basic components of the Government's first program of
adjustment were the following:
3/ The material from para\. 38 to para\. 113 is identical to the President's
Report for the proposed Second Loan to Mauritius for Structural
Adjustment, Report Number P-3500-MAS\.
- 10 -
(a) a scaling down and restructuring of the public sector
investment program (PSIP), placing greater emphasis on
infrastructure directly linked to production together
with development of criteria for selection of projects
and review of the PSIP;
(b) implementation of a series of measuwes in industry,
aimed at stimulating production, exports and investment
in this sector;
(c) development of policies and technical solutions to
stimulate agricultural production other than sugar;
(d) preparation of a national energy plan, including an
assessment of the potential use of bagasse for power
generation;
(e) an assessment of the problems facing the tourism
industry;
(f) measures in the education sector to improve efficiency
and contain Government expenditures;
(g) a series of measures in different public sector
agencies aimed at greater efficiency in the public
sector and at reducing demands on the budget; and
(h) strengthening of the institutional capacity for debt
management\.
40\. The program did not specify quantitative targets per se\.
However, the objective on the balance of payments was to reduce the current
account deficit from about 12 percent of GDP in 1979/80 to about 8 percent
in 1984/85\. Also the debt service ratio was to be kept below 15 percent\.
B\. Progress Achieved
41\. The Government's overall performance in implementing the first
phase of the Adjustment program has been mixed\. In large part, this was
due to delays occasioned by the 1982 national elections which made many
ministers unable to take decisions in an uncertain political climate, or
even to undertake studies which were already agreed upon\. The
stabilization program, however, was on the whole successfully implemented\.
The two devaluations of 1979 and 1981 coupled with the wage restraint
policy did much to restore competitiveness of the economy\.
42\. The Public Sector Investment Program (PSIP) was substantially
reduced\. In current Rupees the program for 1983/84 - 1985/86 is 30 percent
below the program submitted in 1982/83\. This revision corresponds to a
- 11 -
greater realism on the part of the Government of Mauritius with regard to
its absorptive capacity and the need to reduce government expenditure to
curb the overall budget deficit\.
43\. In the industrial sector, a consulting firm was contracted to
promote foreign investment in Mauritius, and a promotion mission visited
Singapore, Japan, Taiwan and Hong Kong\. An Export Service Zone Act
extended the EPZ incentive package to firms engaged in export services or
re-export of merchandise\. Agreements on double taxation were reached with
U\.K\., France and India\. An export credit guarantee scheme, managed by DBM,
was introduced followed by an export credit insurance scheme, and an export
promotion unit was established in the Ministry of Commerce and Industry\.
The structure of interest rates was revised and interest ceilings were
removed for all loans except loans to industry and sugar which remained in
force until early 1983\.
44\. As an incentive to agricultural diversification, the Government
introduced a scheme by which investors in new projects for agricultural
production are entitled to Development Certificates giving tax advantages
comparable to those available for industry and tourism\. A Committee was
appointed in February 1981 to monitor implementation-of the recommendations
of a Plan of Action for agricultural diversification\. Subsequently, six
specialized subcommittees were established to study specific policies,
measures and issues related primarily to rice; livestock and milk; maize;
agricultural marketing; credit; food processing and other facilities;
agricultural research; and fisheries\. The subcommittees made a serious
effort to analyze the technical and institutional problems, but were unable
to focus adequately on major policy issues\. Therefore the document
prepared on agricultural div,rsification did not contribute much to
defining appropriate policies to stimulate food crops and facilitate
agricultural diversification\. Although in late 1982 the consumer prices
for rice and wheat were increased significantly with a view to eventually
abolishing subsidies and promoting consumption of locally produced
substitutes, there has been only limited progress on agricultural
diversification\. In fact, expectations on this matter may have been
somewhat unrealistic\. As noted above, the definition of measures for
diversification of agriculture depends critically on prior analysis and
conclusions of the Sugar Inquiry Commission\.
45\. The Sugar Inquiry Commission was not established until after the
1982 elections\. In September 1982, an experienced consultant, well known
to the Bank, was appointed as the Chairman of the Commission which includes
two senior Mauritian economists\. Since then, extensive analytical work has
been conducted and public hearings, with the participation of both public
and private sector representatives, have been held\. The final report will
be issued in December 1983\.
46\. The Government did succeed in formulating an integrated energy
policy in September 1981\. An Energy Planning Unit was created within the
Ministry of Economic Planning and Development, and then transferred to the
Ministry of Energy\. The main issue was how to develop power generation
- 12 -
from bagasse\. A pre-feasibility study confirmed that there was significant
potential to reduce oil imports by equipping sugar factories with more
efficient generating plants that can use bagasse\. One sugar estate has
embarked upon an investment to improve and expand its generating capacity\.
Two others are planning similar investments and tenders have been called
for a pilot project for the pelletization of bagasse, a process which is
expected to increase the efficiency of utilization of bagasse for power
generation\. On the demand side, both petroleum and electricity have been
priced at appropriate levels to reflect the import cost of energy and a
daylight saving scheme was introduced\.
47\. The study on air access and the study assessing the potential of
tourism were carried out in time\. Hlowever, the study on air access did not
meet expectations and Government had to take the lead in developing policy
proposals for this sector in consultation with tourist operators\. These
studies confirmed the need for further action in the development of this
sector, vital for the economy because of its contribution to foreign
exchange earnings and employment\.
48\. Only after the 1982 elections did the authorities complete a
strategy paper on education indicating that government expenditures on
education should be limited to 14 percent of the recurrent budget and that
the pupil/teacher ratio should be increased to 30:1 The closing of 21
sub-standard private schools was decided at the end of 1982\. A Commission
of Inquiry to resolve other outstanding sector issues was appointed in late
1982 and its findings are expected shortly\.
49\. The Government's Statement of Development Policy identified
three majo\. parastatals in which a process of restructuring goals,
improving efficiency and redeploying personnel was underway: the Tea
Development Authority (TDA), the Development Works Corporation (DWC) and
the Central Housing Authority (CHA)\. However, the reform of these
parastatals was only partially carried out\. A proposal to restructure TDA
was discussed with the Bank only in November 1982 and a plan to reduce DWC
personnel by 2,000 was completed only in February 1983\.
50\. In the past, there were weaknesses in monitoring the external
debt portfolio for the purpose of holding the external debt burden within
manageable limits\. The Government, conscious of the recent rapid growth of
its debt service burden, made a special effort to improve its debt
management capacity with the use of computer facilities and technical
assistance from the Bank\.
51\. The evaluation of the impact of SAL I on the macroeconomic
performance of Mauritius can only be tentative; since the observed results
cover only the first half of the program period, the national accounts
series have been revised, and the actual economic outcome was influenced by
a number of events outside the program itself\. In 1980, owing mainly to
the poor sugar year, real GDP declined by a hefty 10 percent\. In the
following two years, however, GDP recovered to its 1979 level\. Still the
available information in terms of the major aggregate variables amenable to
- 13 -
Government policy measures is quite favorable\. Thus, in the last two
fiscal years, the current account deficit of the balance of payments is
lower as a share of GDP than the SAL I objectives, while the overall
Government deficit is only slightly higher in 1982/83\. On the other hand,
the debt service ratio at 20 percent is higher than the SAL target of 15
percent, owing in part to commercial borrowing in early 1982 on harder
terms than anticipated and especially to the depressed sugar prices in
1982\.
Table 1
SAL I: Macroeconomic Targets And Performance
Percent of GDP
1980/81 1981/82 1982/83
SAL I Targets
Balance of Payments Current
Account Deficit 14\.0 8\.9 8\.0
Government Overall Deficit 16\.0 13\.0 11\.0
Debt Service Ratio 9\.1 13\.0 15\.2
Performance
Balance of Payments Current
Account Deficit 15\.4 6\.0 5\.4
Government Overall Deficit 13\.2 12\.8 9\.9
Debt Service Ratio 9\.1 13\.2 19\.7
52\. Overall, the first Structural Adjustment Operation was timely
and its results positive despite the shortcomings in implementation as
noted above\. On the one hand it contributed to the mobilization of a
financing package at a time when Mauritius' foreign exchange reserves were
completely exhausted\. On the other hand, it helped to develop a dialogue
both internally and with the international community - pertaining to a
large number of sector issues whose adequate solution are critical for the
achievement of sustained growth of output and employment\. Also, the
discussions on the different components of SAL I helped the emergence of a
general consensus among different segments of political opinion in
Mauritius on the urgency and content of the future policy reforms required
by the economy\. This in turn set the stage for further action on the part
of the authorities as contemplated in the proposed Second Structural
Adjustment Loan\.
53\. At the second meeting of the Mauritius Consultative Group, which
was held June 1 and 2, 1983 under the auspices of the World Bank, the
Government presented its diagnosis of the situation and prospects of the
- 14 -
Mauritian economy and its program of policy reforms to restore economic
growth\. To meet the challenge presented by high unemployment, heavy debt
service obligations, and minimal foreign exchange reserves, the Government
has strengthened its structural adjustment program to further promote
export-led industrialization, renewed growth of tourism, the restructuring
of the sugar industry and agricultural diversification\. The meeting
endorsed the view that the proposed policy reforms were appropriate and
that the Government's investment program appeared generally sound and
compatible with the structural adjustment program\. Participating
delegations indicated that they would be prepared to support the
Government's efforts through special balance of payments assistance\.
54\. The second phase of the Mauritius structural adjustment program
was endorsed by the new Government elected in August 1983\. The program is
described in a Statement of Development Policy dated September 29, 1983
(Annex III)\. The following are the highlights\.
A\. The Program For Export-Led Industrialization
55\. The program in industry is comprehensive\. -The four prongs of
this program are the following: (i) maintaining Mauritius' export
competitiveness vis-a-vis other countries competing in the same markets;
(ii) reforming the system of export incentives to extend it to all firms
involved, directly or indirectly, in export activity; (iii) attracting
foreign investment and technology which is considered as the most effective
means of expanding exports of manufactured products; and (iv) encouraging
private investment by strengthening the equity base of Mauritian
enterprises and providing them with adequate capital\.
(i) Maintaining Export Competiveness
56\. Mauritius has two significant advantages with respect to
manufacturing for export markets\. First, it has an abundant supply of
unskilled and semi-skilled workers who are willing to offer their services
in return for relatively modest wages and who can be easily trained\.
Second, it enjoys duty-free access to the European Common Market\. The
relative importance of the second advantage is declining as other
developing countries take advantage of their own preferential access to
that market\.
57\. Comparative data suggest that Mauritius is reasonably
competitive with many other developing countries in terms of wage rates and
unit wage costs\. Today, the dollar-equivalent wage rates paid by export
companies in Mauritius are lower than those of many countries of comparable
per capita income albeit higher than those of Bangladesh, China, India,
Pakistan, and Sri Lanka\. Relative unit wage costs can be maintained unless
inflation gets out of hand or exchange rate management becomes inadequate\.
In this context, keeping the exchange rate at an appropriate level is the
single most important policy measure that Government can follow to preserve
- 15 -
and enhance the development of manufactured exports from Mauritius\. The
Rupee is not believed to be overvalued at the current rate of exchange, but
active management of the rate will be needed to prevent future
misalignment\. Government intends to keep the exchange rate under constant
review\.
(ii) Reform of the Export Incentive System
58\. Unifying Export Incentives: The Government intends to merge and
modify the "development certificate" and "export certificate" schemes\. A
Development Certificate Scheme was introduced in 1964 to encourage the
formation of import substituting industries\. In 1970, an export incentive
scheme was created for export industries\. At the end of 1982 there were
120 manufacturing enterprises holding a Development Certificate and 110
holding an Export Certificate\.
59\. Development Certificate firms are exempted from company tax for a
period of five years if they take the initial depreciation allowance, or
eight years if they do not\. Dividends paid to shareholders are tax-free
(individual income tax) for a period of five years from start of
production\. Imports of capital goods are free of duty\.
60\. Export Certificate firms now enjoy full relief from company tax
for ten years, 50 percent relief in years 11-15, and 25 percent relief in
years 16-20\. During the first ten years they can pay tax-free dividends to
their owners for five years (beginning with the first year that dividends
are paid)\. The firms are exempted with respect to import duties on capital
goods and machinery, as well as current material imports\. They are also
exempted from paying the stamp duty, which is currently 12 percent of
import value\.
61\. Recently, an Export Service Certificate was created to encourage
entrepot and service activities in Mauritius\. Holders enjoy a flat ten
percent tax rate for at least ten and not more than twenty years\. They are
also permitted to pay tax-free dividends to owners for five years,
beginning with the first year that dividends are paid\.
62\. Tax relief is also available to firms outside the certificate
schemes if they export items other than sugar, sugar by-products, tea, and
tobacco\. This relief was allowed for five consecutive years as from
July 1, 1981, and may be renewed for another five years\. If the firm is
new, it can deduct an amount equal to five percent of the export value
achieved during its first year of operation from otherwise chargeable
income\. If not new, the firm can deduct an amount equal to five percent of
the increase in the f\.o\.b\. export value in the income year, relative to a
base period\. The base period is normally the preceding three years\. Base
period values are adjusted upward by an arbitrary factor of ten percent per
year to allow for inflation\.
- 16 -
63\. Non-certificate companies have to pay import and stamp duties
when their imports enter Mauritius, but can request drawback with respect
to duties paid for imports embodied in subsequent exports\. Development
certificate holders enjoy the same right of drawback\.
64\. To encourage all firms to export the Government has decided to
merge the Export Certificate and Development Certificate schemes by
granting, on a pro rata basis of their exports, the same incentives\.
Furthermore, to reduce some of the costs to EPZ firms, specific measures
will be taken so they could sell part of their products on the local
market\.
65\. Abolishing Quantitative Import Restrictions: Mauritius provides
tariff and non-tariff protection to local industries\. Ad valorem import
duties and other taxes on imports together range from zero to 200 percent
on the value of imports\. In October 1981 the "stamp duty" of five percent
was extended to cover nearly three-fifths of all imports, by value, and the
rate was later raised to twelve percent\.
66\. The import licensing (non-tariff protection) is done on a
case-by-case basis by the Ministry of Industry and Commerce\. The procedure
is discretionary, and is administered in such a way as to limit imports to
about one-fifth of domestic demand if local producers are capable of
supplying the other four-fifths\. This is a de facto system of import
quotas, the full extent of which is not known\. These import quotas
discourage efficiency in local industries\. Even if the domestic company
agrees to a local sales price that is equal to or less than the prevailing
c\.i\.f\. import price plus tariff at the time of negotiating an import
license, Mauritian consumers have no assurance that declining world prices
(resulting from improved technologies or increased competition among
suppliers) will be matched by declining local prices\. More importantly,
quantitative import restrictions encourage production for the domestic
market and discourage production for exports\.
67\. Government has agreed to eliminate the current discretionary
system of industrial protection, via import licensing, by gradually
shifting to a generalized, time-phased program of declining tariffs\. In
the meantime Government has already undertaken to stop granting new
quantitative import restrictions\.
68\. The precise nature of the program of action to follow will be
identified by a major Industrial Policy Review (IPR) already launched, and
to be completed by July 1984 (Annex IV)\.
(iii) Attracting Foreign Investment for Exports
69\. The Government has recently passed legislation (September 13,
1983) establishing a new entity, the Mauritius Export Development and
Investment Authority (MEDIA), to promote foreign investment and export
sales\. MEDIA, an autonomous institution, will enable prospective investors
- 17 -
to deal with only one agency for obtaining all the necessary information
and clearances to start and operate an industr7l in Mauritius\.
70\. The principal functions of MEDIA are: (i) to promote, assist
and develop exports from Mauritius; (ii) to engage in investment
promotional activities designed to promote Mauritius as an attractive base
for the establishment of export-led industries; (iii) to plan, implement
and review programs of action for the development of exports and investment
in industries manufacturing for export; (iv) to develop and manage
industrial sites and buildings within the framework of the National
Physical Development Plan; and (v) to advise Government on all matters
relating to the development of exports and investment promotion\.
71\. MEDIA will re-organize the current export and investment
promotion functions of the Ministry of Industry and Cooperatives\. It
will act as a contact point for potential foreign investors and foreign
importers, provide them with all necessary information and put them in
contact with local businessmen as well as advise them\. MEDIA will also
assist in matters such as designs, product development, packaging,
advertising and after-sales services\.
72\. The Government considers MEDIA crucial for export promotion and
export-led industrialization, and has requested financial assistance to
ensure that the unit gets launched properly and without delay\. The Bank
is accordingly proposing to include US$0\.5 million in the proposed
Technical Assistance Loan, being processed simultaneously with the SAL-II
Loan, to cover 66 percent of MEDIA's operating expenses for the years FY
84-86\. Thereafter, Government and the private sector will meet all
expenses\.
(iv) Encouraging Private Investment
73\. Providing Fiscal Incentives: In Mauritius resident companies
are taxed after distribution of dividends\. This method of company
taxation: (a) encourages distribution of earnings, (b) discourages
investment, and (c) produces unacceptable debt/equity ratios\. The
existing tax system also differentiates in favor of "public" companies\. At
present, the effective tax rate on the retained profits of resident public
companies is 55 percent\. The same rate is 66 percent on privately-held
companies that do not permit their shares to be traded\. The top marginal
rate of personal income tax, on the other hand, is 70 percent\. To a
potential investor these rates appear prima facie to be very high\.
74\. Based on IMF recommendations, Government has decided to lower
the existing tax rates on companies and introduce a tax payable at the
source before distribution of profits\. This is a first step and the rates
will progressively be unified over a period of time\. Reducing nominal tax
rates from the existing levels should improve investor perceptions\. In
addition, the companies' balance sheets should be improved and the firms'
ability to borrow should be increased\.
- 18 -
75\. Given the difficulty of anticipating the full reaction of
companies and shareholders to the new tax system, a few years of experience
will be needed in order to see whether the change has indeed provided
sufficient incentive for companies to retain a higher proportion of their
earnings\.
76\. Strengthening the Capital Base of Export Industries: As
indicated earlier, many manufacturing companies in Mauritius exhibit
fragile balance sheets and there is a need to improve the capital base of
Mauritian enterprises\. While the business income tax reform is designed to
reduce the incentive to pay out an excessive share of profits to
shareholders, additional steps will be needed to lower financial gearing
ratios and make companies more attractive for commercial bank loans\.
Government has, with Legislation dated September 9, 1983, created a
Mauritius Equity Financing Fund (MEFF) to bolster the equity position of
export industries that show promise of success\.
77\. The initial capital of MEFF will be Rs 100 million\. A Board of
Trustees consisting of public and private sector representatives is being
identified at this time and steps are being taken to select a full-time
professional Manager to supervise the NEFF\. The Development Bank of
Mauritius (DBM) will provide space and staff support to the MEFF in return
for an annual fee\.
78\. MEFF will give priority to manufacturing for exports, and will
be prepared to match, rupee for rupee, bona fide cash equity contributions
made by owners of existing and new companies\. During the first year of its
existence, however, the MEFF will favor existing companies with proven
track records\. As operating experience is acquired, NEFF will increase its
assistance to new companies\. Cumulative participating preference shares
and other financial instruments will be used by the MEFF as vehicles for
assisting companies\. The assistance will be structured in such a way that
the beneficiaries will be stimulated to buy NEFF ownership out as quickly
as profits permit\.
79\. It is anticipated that DBM and the commercial banks of Mauritius
will collaborate with the MEFF by providing loans to the assisted
companies\. Provisional assurance of such collaboration will be obtained as
required before NEFF assistance is approved\. While the MEFF will be
prepared to take sizable business risks, it is not intended to be a
charitable institution\. The decision to assist or not to assist companies
will be based on thorough appraisal of financial and economic prospects,
with collateral security as a secondary consideration\. Early approvals
will relate mostly to established enterprises with identified markets,
where capital is needed for expansion\. NEFF will require a positive return
from its investments in successful enterprises in order to avoid
decapitalization\. Preference shares and similar instruments will require
service ahead of common shares\.
80\. Reducing The Cost of Foreign Exchange Transactions: Although the
commercial banking system in Mauritius is reasonably efficient, weaknesses
- 19 -
exist in the area of foreign exchange transactions\. The buy-sell spread
has been very large on currencies other than the Pound Sterling and the
U\.S\. Dollar, running about four percent on French Francs and Deutschemark
and three percent on the Japanese Yen\. Conversions between the Mauritius
Rupee and the latter three currencies (and others) have traditionally been
made through the Pound Sterling\. In May 1983 the Bank of Mauritius
reviewed the situation and reduced the margin authorized to commercial
banks for transactions in foreign exchange\. Recently the Government has
requested the assistance of the IMF to review the costs and other terms of
foreign exchange transactions\.
B\. The Program for Tourism Development
81\. Tourism plays an important role in Mauritius\. It contributes
about 10 percent of foreign exchange earnings and provides employment for
about 20,000 people (10 percent of the labor force)\. Through most of the
1970s the Government's role in tourism was supportive of the sector's
expansion, and was largely expressed through the incentives granted to
investors through Development Certificates and financing guarantees\. The
Government began its own tourism promotion activity with the first campaign
of the Mauritius Government Tourism Office (MGTO) launched in Britain in
1977-78\.
82\. In recent years there has been a decline in receipts from tourism
as a result of continued world recession combined with the erosion of
Mauritius' competitive position vis-a-vis other tourist destinations\.
During 1974-79, principally because of the distance to major markets, tour
prices to Mauritius were around 15-20 percent higher than for comparable
holidays in the Caribbean or Sri Lanka\. Tour price increases for European
visitors in 1980 widened this differential to around 35-40 percent\.
Although price movements have diverged less sharply since then, the
differential between prices in Mauritius and in approximately comparable
beach hotels in Kenya and Sri Lanka has remained in this range\. For South
African visitors also, Mauritius has become a less attractive destination
with prices in the 1982/83 season being only marginally lower than
comparable holiday packages to more dz\.stant destinations such as Portugal
and Spain\. Each component of the tour price (airfares, hotel, and other
ground costs) has contributed to the relative loss of competitive position,
but increases in air fare, cumulatively more than 40 percent in real terms
since 1979, have had the largest impact\.
83\. Limited direct air access to Mauritius has been the most
important single factor behind the rising cost of air fares\. This can be
seen from comparing the Mauritian experience with that of other countries;
while tourist arrivals in Mauritius are now running at around 10 percent
below the 1979 level, increases in the same period in countries with
relatively free air access range from 23 percent for Thailand to 37 percent
- 20 -
for Cyprus\. In Sri Lanka, where there are no restrictions on air carriers,
tourist arrivals increased by 63 percent\. The limited air-access also
threatens the viability of new investments in tourism\.
84\. The Government has prepared a comprehensive program for tourism
based on a strategy to maximize foreign exchange earnings\. The program
aims at increasing the number of tourists by: (a) improving the
accessibility of Mauritius; (b) better promotion in existing and new
markets; and (c) expanding room capacity\. The program also includes
measures to stimulate tourism spending\.
85\. The program relies on the adoption of air access policies to
maximize the flow of tourist arrivals, requiring an immediate expansion of
the air route network serving Mauritius\. To this end discussions have
already begun to negotiate traffic rights for potentially important tourist
markets in the Gulf States and Australia\. Within the framework of existing
agreements, Air Mauritius (the national cartier) has begun analyzing the
potential viability of new services and traffic points and the require-
ments, including additional aircraft capacity, needed to provide such
services\. Air Mauritius is also exploring the potential for regional
pooling of traffic rights and services with Seychelles\.
86\. Following this strategy, the initiative in introducing new
services falls on Air Mauritius rather than on foreign airlines or charter
carriers\. The airline has concluded an agreement for special flights for
Italian tourists, and between December 1983 and April 1984 will start
operating weekly exclusive tourist services from Rome\. The possibilities
for other charter services to tourist points not served by the scheduled
airlines are being investigated, and these possibilities, together with the
opportunities for new and expanded scheduled airline services, make it
reasonable to target inauguration of two new services (by Air Mauritius or
others) for the 1983-84 season\. Assuming Boeing 707 aircraft capacities
for the new services, airline capacity for tourists during the peak season
of 1983-84 would thus increase by about 25 percent\.
87\. Air service expansion envisaged under the program needs to be
supported by improved promotion activity by both public and private sector
tourism interests\. The Government will intensify its promotion program in
the main tourist generating countries to sustain the growth in existing
markets and to tap new sources\. The Government has a7reed to a substantial
increase in the budget of the MGTO and has indicated that the MGTO budget
should exceed Rs 14 million, the level required to restore the 1979 dollar
equivalent value of promotion activities\. It has also agreed to give MGTO
greater financial autonomy within the overall public sector financial
control framework\. MGTO has planned an extended tourism promotion campaign
for 1984, and has submitted an annual work program in support of its budget
request\. Also the Government will commission a study of new market
potential and of the market strategies needed to exploit this potential\.
Separate studies on the Australian and U\.S\. markets are being considered
with bilateral financing\.
- 21 -
88\. Taking into account the interest expressed by investors in
projects to expand hotel bed capacity, the Government will take measures to
insure the granting of investment incentives and permits for construction
starts on 600 new rooms by January 1984\. It is expected that the total
availability of rooms by the end of 1984 will be 2,650 compared to 2,200
now and reach 2,900 rooms by the end of 1985\. Some of this additional
capacity may come from a program to classify, licence, and assist in the
marketing of private rental bungalows of appropriate standards which have
recently been built\.
89\. The Government has also examined taxes affecting tourism and will
reduce selected taxes and surcharges contingent upon assurances of
compensating reductions in retail tariffs\. The objective is to improve
price competitiveness, encourage longer stays and increase tourist spending
in Mauritius\.
90\. The Government's program for tourism was developed by a
Ministerial Comnittee, chaired by the Minister for External Affairs,
Tourism, and Immigration\. A reporting and monitoring system for the
tourism sector has been organized\. This Committee will also monitor
progress in separate but related plans affecting tourism development
including the renovation of Plaisance Airport, improvements to road
connections serving the airport, and plans to extend the development impact
of tourism through construction of airstrips and improved accommodation on
other islands including Rodrigues and Agalega\.
91\. A more widely-based consultative process has also been initiated
for the approval of air fares and freight rates\. These will now be
considered by ani inter-Ministerial committee chaired by the Finance
Ministry and including Ministries responsible for tourism, planning, and
communications, consulting with Air Mauritius, the Board of Airlines, and
user groups as appropriate\.
C\. The Program for Agricultural Diversification
92\. Agriculture, dominated by sugar, continues to be the most
important economic activity in Mauritius\. The Government intends to focus
its efforts on restructuring the sugar industry and diversifying
agricultural production\. The two objectives are linked since sugar
dominates agricultural production and cultivable acreage\. Any measure to
extend agricultural diversification would be complementary to or a
substitute for sugar production\. Establishing the economic costs and
benefits of the acreages kept under sugar cultivation is, therefore, a
precondition to diversification into other crops\.
93\. The Government has set up a Commission of Inquiry on the Sugar
Industry\. This constitutes a decisive step toward defining future
agricultural policy in Mauritius\. Its terms of reference are extensive
and address all issues relevant to the sugar industry including managerial
- 22 -
and social questions\. The present timetable for the Commission calls for a
final report by December 1983\. Thereafter discussions would take place
between the Bank and the Government on a specific action program\.
94\. It would be difficult to identify specific short-term remedies
for the sugar industry in the absence of the comprehensive policy framework
expected to be formulated by the Commission\. Nevertheless, without waiting
for the results of the Commission, the Government in July 1982 decided to
reduce slightly the export tax on sugar to ease the tight financial
situation of the sugar industry\. It might eventually be more appropriate
to replace the export tax on sugar by, for example, a tax on land\. The
Sugar Commission of Inquiry is expected to make recommendations on this
matter\.
95\. Agricultural diversification aims at encouraging more efficient
utilization of scarce land and at increasing food crop production\. A
package of measures including pricing, marketing, and research is designed
to shift consumer demand from imported food toward locally produced food,
while simultaneously stimulating the supply of locally produced goods\. The
Government's objective is to encourage domestic production through the
extension of guaranteed prices to paddy, ginger, and groundnuts\. Subsidies
on imported rice and flour are gradually being reduced to stimulate
substitution of locally produced food commodities\.
96\. The Government intends to set up an Agricultural Diversification
Corporation (ADC) which will co-ordinate the use of underutilized Crown
lands as well as uneconomic tea lands\. An inventory of all Crown lands is
being carried out and a study group has been set up to make an in-depth
review of the tea sector\. The Government also intends to establish a Land
Bank Authority that will be responsible for zoning lands and will have
pre-emptive rights on land transactions\. The Land Bank will be empowered
to licence all sales of land and will be able to purchase land for eventual
sale\. This would inter alia prevent agricultural land from being directed
to housing purposes\. The Government further intends to take measures to
prevent fragmentation of sugar lands which has in the past resulted in the
emergence of uneconomic units\.
97\. Another possible area of action for food import substitution and
for export development is the fishing 1udustry\. Despite its potential in
fishing, Mauritius does not have at present a well-developed, local fishing
industry\. The Government would like to promote a fishing industry and to
formulate a strategy for its development\. A study will be carried out
under the Technical Assistance Project to: (a) review existing fisheries
studies and resource surveys concentrating on the nature of the resource
and the history of its exploitation; and (b) review the comparative
advantage, markets and commercial viability of different fisheries
development activities\.
98\. The Government has also undertaken to reduce Mauritian dependence
on meat and milk imports\. The target is to produce, by 1990, 40 percent of
the country's meat requirement through livestock development\. A major
- 23 -
program of technical and financial assistance has been negotiated with the
French Fonds d'Aide et de Coop6ration and the Caisse Centrale de
Cooperation Economique to support the development of the meat and milk
sector\.
D\. Promotion Of Employment
99\. The Government is deeply concerned by the high level of
unemployment currently prevailing in Mauritius (about 25 percent)\. It aims
at alleviating this situation mainly by growth-related measures in the
productive sectors as described before, but also through changes in wage
legislation and improvements in training and the education system\.
100\. The existing labor legislation and the mechanism for wage
negotiations are cumbersome, create wage inequities, and prevent labor
mobility among various sectors\. Legal arrangements and practices governing
public involvement in private employer-employee relations are also
complicated\. They constitute ad-hoc, frequently detailed minimum wage
orders for particular groups of workers, various arbitration and dispute
settlement procedures and other regulations affecting collective bargaining
and organizational relationships\. Furthermore, in the public sector the
existence of an independent Civil Service Arbitration Tribunal obstructs
the development of an orderly internal wage structure for civil servants
and lays the foundatiGn for a continuing series of demands for correction
of alleged inequities created by individual and uncoordinated arbitration
awards\. This distorts the governmental responsibility for the setting and
administration of an equitable and efficient-salary structure that is
consonant with economic and budgetary limitations\.
101\. The Government's objective is to continue with a policy of wage
restraint, in order both to maintain the competitiveness of Mauritian
export industry and to reduce the government budget deficit\. It has also
decided to take action on some non-monetary components of compensation, for
example by reducing the excessive number of paid national holidays\. The
principal area of concern, of course, is to ensure not only that the real
wage is competitive but that labor productivity is attractive to new
investors at that wage\. Government is aware of the complexity of these
issues and recognizes the importance of maintaining and improving
productivity\. It is also concerned with the existing and future obstacles
to absorb and redeploy labor\.
102\. The Government intends to review the existing mechanism for wage
negotiations and the system of setting minimum wages for individual
categories of workers\. A parliamentary committee has recently made
recommendations for a major revision of the Industrial Relations Act and
the authorities have decided to undertake a study of the effectiveness of
the civil service\. The mandate of the Sugar Commission includes an
analysis of labor cost and a review of the labor legislation governing the
sugar sector\. Government has requested the Bank to finance, as part of the
- 24 -
Technical Assistance loan, a study of the mechanism for minimum wage
negotiations\.
103\. The elimination of legal and other impediments to the efficient
use of labor needs to be complemented by vigorous positive reasures to
encourage the upgrading of workers through appropriate education and
training to facilitate their movement into more productive occupations\. In
the short run the Government has indicated that it will stabilize
government employment at the present level and will redeploy 2,000 DWC
workers\. Among the actions likely to be required are expansion of
industrial and apprenticeship training and improved employment exchange
services and programs to deal with the special and often acute problems
confronting youthful entrants to the labor force\.
104\. The Government is exploring means to stimulate and encourage
workers to take greater advantage of opportunities for temporary employment
in Middle Eastern and other countries\. A contract has been signed with the
Government of Zimbabwe for 260 private school teachers\. Government is also
encouraging teachers to sign contracts with the Seychelles and several Gulf
companies have been authorized to recruit in Mauritius\.
E\. Public Resource Management
105\. Fiscal Policy: Expansionary fiscal policy has been one of the
major factors behind Mauritian financial imbalances since 1979\. The
Government recognizes that growth of current expenditures needs to be
contained\. Before proceeding with expenditure reductions, there is a need
for a general review of public programs, so as to curb those which are
least cost-effective\. Such a comprehensive review is being conducted with
IM? assistance\.
106\. The IMF is also providing assistance for a reform of the tax
system in order to diversify the tax base and increase revenues\. A 5
percent sales tax has already gone into effect early in 1983 and is
expected to bring in additional revenue of Rs 190 million, equivalent to
about 10 percent of existing government revenue\. Also, the Government is
developing a program designed to improve: (a) tax administration; (b)
income tax collection; and (c) proceeds from taxes on real estate\. In
addition, to cut down on tax evasion, the Government has set up a Unified
Income Board as well as an Income Tax Tribunal\.
107\. To improve the monitoring of overall public expenditures, the
Ministry of Finance will consolidate the accounts of the Pension Fund, of
Local Governments and of the non-financial public enterprises with those of
the Central Government\. At present the accounting system of Local
Governments cannot be reconciled with the Central Government accounts\. To
strengthen monitoring and policy formulation a generally-accepted
accounting framework (OCAM) will be adopted as the basis for bookkeeping
operations in the public sector\.
- 25 -
108\. Public Sector Investment Program: The envisaged level of public
capital expenditure over the next three years should not impose an undue
strain on the financing capacity of the economy\. The present three-year
Public Sector Investment Program beginning July 1983 has been reduced by
Rs 600 million (30 percent) compared with the previous program\. The
revised PSIP reflects the Government structural adjustment strategy by
giving priority to the productive sectors\. The share of investments in the
productive sectors (agriculture, tourism and industry) represents
24 percent of the total three-year program\. 'The share of investment in
utilities has been reduced from 19 percent in the previous program to
12 percent\. The share in public infrastructure (road, airport and\. port)
has been increased from 7 percent to 16 percent\. However, some expensive
new infrastructure projects have been dropped and a number of
implementation schedules delayed to align the program with financial
stabilization targets and provide room for allocation of funds for tourism
and the newly established MEFF\. Investment for the airport has been
reduced as a result of the decision to renovate the Plaisance airport
rather than to proceed with new air terminal facilities\.
109\. In current Drices the revised PSIP will increase from Rs 1141
million in 1982/83 to Rs 1608 million in 1985/86, i\.e\. by 40 percent\. In
real terms, the increase will be around 10 percent during this period\. On
an annual basis, the real increase is concentrated in 1985-86 when the
financial capacity of the Government is expected to recover\. The
Government expects that restraining public borrowing for capital
expenditure in the next couple of years will permit some further and
desirable scope for the financing of private activities\.
- 26 -
Table 2\. Public Sector Investment Program, 1982/83 - 1985/86
(Rs million current prices)
TOTAL
83/84-85/86
Sector 1983/84 1984/85 1985/86 %
Agriculture & Rural
Development 196 290 267 17\.6
Industry & Tourism 71 105 105 6\.6
Water, Sewerage & Urban
Infrastructure 175 177 339 16\.2
Energy 233 117 39 9\.1
Telecommunications 34 56 50 3\.3
Roads and Road Transport 57 137 162 8\.3
Housing 92 98 104 6\.9
Education 40 55 65 3\.7
Health 56 63 69 4\.4
Airport and Ports 72 80 160 7\.3
Dev\. Works & Others 219 238 248 16\.6
Total 1245 1416 1608 100
Annual increase in 1982 prices - 3% 7%
PSIP in the Bank's last economic
report (current prices) 1846 2042 2204
110\. The Ministry of Planning has recently issued guidelines for the
preparation of new public investment projects\. These project guidelines
conform with generally accepted principles of economic appraisal\. All
project costs and benefits are expressed in border prices and approaches
will be adopted which appropriately reflect the scarcity of land and the
availability of labor in Mauritius\. Under SAL I the Government had agreed
to consult the Bank before including any project in excess of Rs 100
mil]ion in the Public Sector Investment Program\. This limit will be
retained under SAL II\.
111\. The Program for Restructuring Parastatal Enterprises: The
Government has undertaken a program to reinforce the efficiency of
parastatals, and it has requested Bank assistance in restructuring DWC,
CHA, and TDA\. The Development Works Corporation (DWC) which employs about
6,000 workers will be transformed into a public contractor and will be
given financial autonomy by December 1984\. Some 2,000 workers engaged in
forestry and agricultural activities are being redeployed to the Ministry
of Agriculture\. As for the Central Housing Authority (CHA), the
Government's objective is to reduce its dependence on Government assistance
and to make it a viable housing institution\. As a first step, the
Government will undertake a study on CHA management\. The role of the CHA
in the public housing program will also be reexamined\.
- 27 -
112\. The Tea Development Authority (TDA) receives an annual subsidy of
about Rs 60 million from the central government budget\. In order to
improve its financial efficiency it has been decided that TDA will offer
tea plots of between 1 and 2 arpents each to TDA trainees and pluckers (the
available cultivated tea land is 2,895 arpents)\. As many as 1,500
smallholders from TDA surplus staff may take plots over the next three
years\. Some of the other 1,300 surplus TDA employees will be redeployed to
more productive work during this three year period\. This program
should result in a doubling of tea export earnings by 1986\. Although
Government will have to continue to subsidize TDA, this proposal is
considered economically acceptable since the domestic resource costs are
expected to be lowered to a level equivalent to about 8 Rupees per US
dollar of export earnings in 1984/85\. The Government has set up a study
group to examine the economic and financial viability of the Mauritius Tea
Industry as a whole\. Annex VI describes in detail the Government action
program for tea and TDA\.
113\. Debt Monitoring and Management: The Government has made progress
in monitoring central government borrowing and transactions on foreign
loans\. Further, the Ministry of Economic Planning and Development has
acquired computer facilities, and now has the capacity to provide analysis
of the financial impact of new foreign borrowing and its implications for
creditworthiness\. Borrowing and transactions on central government debt
are now closely monitored by the Acccountant General's Office\. To improve
debt reporting by parastatals and government-guaranteed agencies, the
Government has instructed all parastatals and agencies to report the status
of individual loan transactions to the Accountant General and to the
Ministry of Economic Planning and Development\.
PART IV - THE PROJECT
Background
1i4\. The technical assistance requirements to be met from the proposed
loan were first identified during the Economic Mission that visited
Mauritius in October-November 1982\. This early work was followed up during
the joint appraisal of the Structural Adjustment and Technical Assistance
Loans in February 1983\. It is recognized that technical assistance would be
required to formulate and implement reform programs in key areas of
structural adjustment\. The main elements of the technical assistance
program requested by the Government have been included in the Statement of
Development Policy submitted to the Bank in support of a request for a
structural adjustment loan to Mauritius\. The project therefore forms an
integral part of the economic structural adjustment program\. Assistance to
the Tea Development Authority and the Sugar Commission of Inquiry was
started in January 1983 and an advance of US$525,000 from the Project
Preparation Facility was approved to support these initial activities\.
Negotiations for the proposed loan were held in Washington D\.C\. from May 10
to 17, 1983\. The Mauritian delegation was headed by the Minister of
- 28 -
Finance\. A Loan and Project Summary is provided at the beginning of this
Report and Annex III contains supplemental project data\.
Project Objectives
115\. The major objective of the project is to support the structural
adjustment program of Mauritius by providing expert advice and
implementation assistance in key areas of the economy\. The elements of the
structural adjustment program to be supported by the proposed loan are as
follows:
(i) increase exports and attract new foreign investment;
(ii) increase foreign exchange earnings from tourism;
(iii) restructure the sugar and tea industries and diversify
agricultural production;
(iv) eliminate excessive labor regulations and other impediments to
the efficient use of labor and to encourage the movement of
workers into more productive occupations in the industrial
sector;
(v) increase the efficiency of the public sector\.
Specifically, the project would provide advisory services, special studies,
implementation assistance and material support to carry out the program
summarized above\. Details of the project components are provided in the
paragraphs below and a schedule for implementation of project studies is
provided in Annex V\.
Detailed Features
Mauritius Export Development and Investment Authority (MEDIA)
116\. The development of export-oriented industry must remain the major
priority for Mauritius\. Intensification of the industrial promotion effort
is the focal point of the structural adjustment program\. To this end, a
number of measures are to be taken by the Government to maintain the
competitiveness of Mauritius as a base for export-oriented industry;
measures which include a more responsive management of the foreign exchange
rate, and the possible replacement of the present system of protection for
new industries by a general time-phased program of declining tariffs,
liberalization of interest rates and the creation of an Equity Financing
Fund\.
117\. A major component of the Government's program of support for
export-oriented industry is the creation of a Mauritius Export Development
and Investment Authority (MEDIA) to reorganize the current export and
investment promotion functions of the Ministry of Commerce and Industry\.
The specific functions of the authority are:
- 29 -
(i) promote, assist and develop exports from Mauritius;
(ii) engage in investment promotional activities designed to promote
Mauritius as an attractive base for the establishment of
export-led industries;
(iii) plan, implement and review programs of action for the development
of exports and investment in industries producing for export;
(iv) develop and manage industrial sites and buildings within the
framework of the National Physical Development Plan; and
(v) advise Government on all matters relating to the development of
exports and investment promotion\.
118\. Legislation for the creation of MEDIA has been enacted into law
following parliamentary review on September 13, 1983\. The Authority is an
autonomous body under a board of directors comprising representatives of
the public and private sectors\. Its staff will be limited to seven or
eight individuals, and will include at least one economist and a market
specialist\. Financing for MEDIA will be provided initially by the
Government with additional rrivate sector funding after the Authority is
well established\. The Government has obtained assurances from officials of
the Chamber of Commerce and Industry and the Export Processing Zone
Association of their readiness to contribute to the financing of MEDIA's
promotional activities\. The Government has requested Bank assistance in
financing the services of a manager to head MEDIA for three years\. The
Government will submit to the Bank detailed information on the proposed
organizational structure of the Authority as well as Government's proposals
for methods of mobilizing private sector financing for MEDIA's continued
operation after the initial start-up period\.
119\. Initial funding for MEDIA must be adequate to permit operations
on a scale likely to have a significant impact\. It is important that the
Authority employ top professional staff who would, in addition, recruit
highly specialized consultants from countries where this type of activity
has met with notable success\. Adequate financial support for MEDIA during
its start up phase is, therefore, essential\. Current estimates of the
appropriate level of funding for MEDIA's operating costs (including
consultants) are approximately US$500,000 equivalent per annum\. In
addition to the head of MEDIA, the proposed loan would finance the services
of such short term consultants as may be required as well as MEDIA's
operating costs (both foreign and local) on a declining scale, i\.e\. 70
percent in the first year, 50 percent in the second year, and 30 percent in
the third year\. Assurances were obtained during negotiations that for the
first three years and each year thereafter, the Government would provide to
MEDIA sufficient funds to cover the balance of its operating costs (Section
3\.06, draft Loan Agreement)\. The Government will consult with the Bank on
MEDIA's annual work programs and proposed budgets (Section 3\.06, draft Loan
Agreement\.
- 30 -
Mauritius Equity Financing Fund
120\. Many manufacturing companies in Mauritius exhibit fragile balance
sheets and there is a need to improve the capital base of Mauritian
enterprises\. Government passed legislation on September 9, 1983 to
establish an Equity Financing Fund to bolster the equity position of
manufacturing concerns that show promise of success\. Government intends to
donate Rs 100 million, in stages, to create the Mauritius Equity Financing
Fund (MEFF)\. A Board of Trustees is being identified at this time, and the
Government intends to recruit a full-time professional manager to supervise
the MEFF\. Funds for the manager for 24 months ha-ve been included in the
proposed technical assistance loan\.
121\. The Development Bank of Mauritius (DBM) will provide space and
staff support to the MEFF Manager in return for an annual fee\. The NEFE'
has its own legal identity, however, and will have no link with DBM other
than services for a fee\. Funds contributed by the Government will be
placed in interest-bearing financial instruments and thereby become an
endowment\. Interest earnings are expected to be sufficient to cover NEFF
expenses for a considerable period of time\.
122\. In considering applications for MEFF assistance, companies
manufacturing primarily for export will be favored, but efficient
import-substituting firms will also receive consideration\. The MEFF will
be prepared to match bona fide cash equity contributions made by owners of
existing and new companies\. During the first year of its existence,
however, the NEFF will favor existing companies with proven track records\.
As operating experience is acquired, MEFF will increase its assistance to
new business formations\.
Tourism
123\. To achieve the projected improvement in the resource balance,
Mauritius will need a significant growth in gross foreign exchange earnings
from tourism\. The Government is taking a number of steps under its
structural adjustment program to encourage this growth including: changes
in Mauritius' air access policy, improved promotion of tourism and an
increase in investment in accommodations\. Market expansion and improved
penetration in existing markets will require additional promotion activity
and a substantial increase in the budget of the Mauritius Government
Tourist Office (MGTO)\. Under the project, an increase in the promotional
budget of US$800,000 equivalent is proposed for 1983/84, with a similar
increase for the following financial year as part of Government
contribution to the financing of the project\. Assurances to this effect
have been given during negotiations (Section 3\.05, draft Loan Agreement)\.
124\. The proposed project includes a study to be carried out by a firm
of management consultants (6 man/months) of the organization, staffing,
training and promotional programs of the MGTO and to recommend appropriate
changes (including budget levels) to enable the Office to handle a larger
- 31 -
promotional program\. Proposals for training of MGTO staff arising from the
study would also be financed with project funds\.
125\. A second study to be carried out by an expert with extensive
experience in tourism and air service marketing (4 man/months) would
propose appropriate air travel marketing strategies for tourist flights to
Mauritius from new and traditional markets and recommend a market
intelligence gathering and monitoring system to provide information to the
Government on the potential for developing these markets\.
126\. It is expected that both studies described above would commence in
June 1984 and the consultants' findings and recommendations would be
available for review with the Bank no later than December 1984 (Section
3\.07, draft Loan Agreement)\.
127\. Assistance to the Agricultural Sector\. In agriculture, the
Government intends to focus its efforts on restucturing the sugar industry
and diversifying agricultural production\. The two objectives are linked
since sugar dominates agricultural production and cultivable acreage,
agricultural diversification would be complementary to or a substitute for
sugar production and establishing the economic costs and benefits of the
acreages kept under sugar cultivation is, therefore, a precondition to
diversification into other crops\. In order to identify specific short-term
remedies for the sugar industry, the Government has established a Sugar
Commission of Inquiry which will address all issues relevant to the sugar
industry, including managerial, social and economic questions\. A
concomitant program of agricultural diversification aims at encouraging
more efficient utilization of scarce land and at increasing food crop
production\.
128\. In support of these efforts, the proposed technical assistance
project would finance 94 man months of consultant services as follows:
(a) Sugar Commission of Inquiry\. The position of the Chairman (6
man-months) of the Commission is included in the proposed loan\.
In addition, 10 man/months of technical experts will be financed
under the project to assist the work of the Sugar Sector
Study Unit established under the Commission to collect data
relating to sugar production\.
(b) Tea Industry\. Although the tea industry is a valuable foreign
exchange earner, it is at present incurring substantial financial
losses\. Losses to the public sector, which is responsible for
about 70 percent of the country's tea production, are subsidized
by the Government\. A study group has been established by the
Government to examine the industry-wide problems of the tea
industry and to advise on possible reform measures to restore the
short- and long-term economic and financial viability of this
industry in Mauritius\. The technical assistance project will
finance 6 man-months of consultancy services to assist in this
review\.
- 32 -
(c) Tea Development Authority\. At the present time the Tea
Development Authority (TDA) produces about 56 percent of the
country's tea\. This production, however, is supported by heavy
injections of Government funds and TDA represents a significant
drain on the budget\. In order to reduce the costs to the
Government and increase the efficiency of the TDA, a
restructuring program is underway which will involve the
redeployment of redundant field laborers, a revised management
organization for TDA, the establishment of performance criteria
for tea factories and the setting of a minimum guaranteed price
for smallholder production\. Under the project, an adviser will
be assigned to the TDA for up to three years to assist in the
restructuring exercise\.
(d) Agricultural Diversification\. Although non-sugar/tea agriculture
is relatively small, it could and should contribute to curbing
food imports and expanding exports\. The agricultural
diversification program under the structural adjustment program
would emphasize the following steps: gradual reduction in
subsidies for rice and wheat flour to shift consumer demand away
from imported foodstuffs and at the same time stimulate the
production of local foods by guaranteeing minimum prices to
producers, expanding storage facilities and encouraging livestock
and fish production\. The proposed loan will support a package of
measures designed to investigate the potential of alternative
crops and agricultural products as follows:
(i) Survey of Crown Lands\. As indicated above, most of the
cultivable acreage in Mauritius is under sugar\.
Possibilities for diversifying agriculture by bringing new
areas under cultivation are severely limited\. Unexploited
potential exists however in the development of about 75,000
acres of uncommitted or underutilized crown lands which may
be suitable for agricultural purposes\. A survey of
available crown lands and forest lands will be undertaken
under the project to update data on crop potential,
production methods, and input requirements for the crown
lands and to formulate a policy for their optimum
utilization\. The survey would be carried out by a
consulting firm experienced in the preparation of
agricultural development programs (8 man/months)\.
(ii) Index of Non-Sugar Lands\. The index of lands currently
under sugar cultivation on a holding-by-holding basis will
be extended under the project to include non-sugar lands\.
This index will provide information such as type of crop,
size, locatioi>, etc\. needed for land use planning purposes\.
The proposed loan would finance' consultant services (4
man/months) to design and monitor the survey\. The survey
would be carried out in conjunction with the survey of crown
lands described above\.
- 33 -
(iii) Organization of Agricultural Diversification\. To establish
the organizational alternatives for coordinating the use of
crown lands, and more generally managing the utilization of
lands suitable for agricultural diversification in light of
the recommendations of the Sugar Commission of Inquiry, the
project would include a study of the organization of
agricultural diversification (6 man/months)\. The appropri-
ateness of the Agricultural Diversification Corporation
(ADC) proposed by Government would be examined as part of
this study\. It is expected that the corporation will not be
formally established until this study has been completed and
reviewed, together with its budgetary implications, in
consultation with the Bank\.
(iv) Fisheries Development Strategy\. To formulate a strategy for
fisheries development in Mauritius' extensive territorial
waters, assuming such development is justified, the project
would include a study (6 man/months) to: a) review existing
fisheries studies and resource surveys on Mauritius
concentrating on the nature of the resource and the history
of its exploitation; b) review the comparative advantage,
markets and commercial viability of different fisheries
development activities (artisanal, commercial long-line,
trawling along the Saya de Mahla bank)\. The results would
be reviewed and discussed with the Bank as part of the
Bank's sector work program (Fisheries Study), before
proceeding with further studies or preparation of specific
projects\.
(v) Marine Pollution\. In conjunction with the above study, a
study of the effects of pollutants on the lagoon ecosystem
and adjacent waters with special reference to the fisheries
resources will be carried out by a marine biologist (6
man/months) to be financed by the project\. Marine pollution
and the destruction of the coral reef are at present,
obstacles to efforts to restock the overfished lagoons\. An
analysis of the extent of the pollution and recommendations
of measures to protect the lagoon and adjacent waters are
therefore necessary corollaries to any program designed to
revitalize the national fishing industry\.
(vi) Integrated Development of Rodrigues\. At present most of the
male labor force on the island of Rodrigues is on the
Government payroll and a large part of the population
receives welfare benefits\. In order to reduce its
dependence on Government resources, a program designed to
foster the development of the island is planned\. The
project will finance a rural development specialist for
6 man/months to assist in carrying out a techno-economic
survey and to prepare an integrated development program for
Rodrigues\.
- 34 -
Wages and Employment
129\. The issue of wages and employment is central to the adjustment
and stabilization policy\. The existing legal arrangements and practices
governing public involvement in private employer-employee relations are a
burden on industries\. They include detailed, minimum wage orders for
particular groups of workers, various arbitration and dispute settlement
procedures and other regulations\. This system of governmental wage setting
has introduced major distortions into relative wage levels and labor
distribution among the sectors\. Mauritius' future development requires a
decentralized system of wage determination more responsive to changing
economic circumstances\.
130\. Study of Private Sector Wage Regulations\. As a part of its
structural adjustment program, the Government is currently reviewing the
whole issue of wages and employment in the public sector and a major
revision of the Industrial Relations Act is underway\. The proposed project
will finance the services of a labor economist and an industrial relations
expert (12 man/months) to be provided under ILO auspices for a
complementary study to extend to the private sector activities already
underway in the public sector to improve the mechanism for wage
negotiations and to simplify labor legislation\. The study will lead to
recommendations for policy measures and modifications of the existing legal
framework needed to implement a coherent wage and incomes policy that
encourages rather than hinders rapid industrialization and growth\. It is
expected that the experts will be recruited and the study will commence no
later than May 1984 and that the consultants' interim progress report will
be available for review no later than December 1984 (Section 3\.07, draft
Loan Agreement)\.
131\. Unemployment Scheme\. Wqith the record level of registerEkd
unemployment, the creation of a hardship unemployment fund is a matter of
urgency\. Past governmental efforts to ameliorate unemployment through
develoment works programs have tended to become a chronic budgetary drain
with the added complications of overstaffing and inefficient labor use in
public sector agencies\. Short-term emergency relief for the unemployed, as
a complement to measures to increase employment in the industrial sector,
can alleviate hardships while at the same time avoiding the long-term costs
to the Government of employing surplus labor\. The Government has
instituted an unemployment hardship relief scheme and intends to set up a
contributory unemployment scheme\. The project will finance a consultant (3
man/months) to provide assistance in determining the feasible scope and
alternative methods of financing such a scheme\.
Public Administration
132\. As a part of the structural adjustment program, the Government is
attempting to increase the efficiency of the public sector by eliminating
waste, improving Government services and strengthening its monitoring and
planning capacity\. Given the importance of the program of reforms in the
- 35 -
industrial, agricultural and tourism sector, the Government will undertake
an independent review of each of the organizations responsible for these
sectors to determine the extent to which their management, staffing and
organizational structure is adapted to the objectives of their respective
sectoral work program, including those features included under the
Structural Adjustment Loan\. The Government has requested technical
assistance from the Bank to carry out this review\. Specific areas to be
covered are outlined below\.
(i) Central Government--advisory services (10 man/months) for a
review of the organization and structure of the key ministries
concerned with structural reform as outlined above and including
the Ministry of Finance and the Ministry of Economic Planning and
Development\. Other organizations which are involved in the
adjustment program such as the Ministry of Works, the Social
Security office of the Ministry of Employment and Social Security
and the Ministry of Housing, Lands and the Environment will also
be reviewed\. The studies will focus on specific problem areas
relating to civil service management, staffing and coordination,
which have been identified by the Government, and will be
reviewed with the Bank prior to implementation\.
(ii) Budgetary Reform--Concurrently, the Government has agreed to and
supports the Bank's proposal to introduce reforms in the
budgetary procedures in order to establish a system which more
accurately reflects the program of priorities of the various
ministries\. To enable Government to undertake the necessary
changes in the budgetary procedures and to introduce a system of
program budgeting, technical assistance will be provided to the
Ministry of Finance and the Ministry of Economic Development to
prepare a program of action for the training of Covernment
officials in the implementation of the improved budgeting
system\. A report is being prepared by consultants furnished by
CTFC and to the extent that further funding will not be available
for the implementation of the recommendations of this report, the
proposed loan will finance the services of specialists in
programming and budgeting techniques\.
(iii) Parastatals--Under the SAL program and the IMF standby
arrangement, the Government is committed to reducing the budget
deficit by about 12 percent in FY83/84\. As a part of the budget
restraint measures, the Government plans to tighten up the
financial management of key parastatals and improve their
efficiency in order to reduce the amount of Government subsidies
required for their operation\. Under the technical assistance
loan, two such parastatals would receive assistance:
a) The Development Works Corporation (DWC)\. The DWC,
initially created in 1970 to provide temporary employment
during the non-harvest season, has grown to become the
largest single corporate employer on the island\. DWC
- 36 -
workers are no longer temporary, but are permanent
employees enjoying full employment benefits guaranteed by
law\. The proposed loan includes assistance to DWC in the
form of a Financial Controller for two years to institute
procedures for financial autonomy and accountability; and
a Plant and Transport Manager to advise the General
Manager on equipment maintenance and to improve
procurement operations and the overall efficiency of the
workshops\.
b) The Central Housing Authority (CHA)\. The CHA was
established in 1960 to undertake housing reconstruction in
the wake of several severe cyclones\. Although, the houses
constructed by the CHA are designed for the low-income
group, CHA built houses cost more than one and one half
times the cost of houses built by private contractors, thus
defeating the intended purpose of the Authority\. With the
objective of turning the CHA into an efficient institution
capable of constructing housing at competitive prices, the
Government is seeking technical assistance to review the
general management, technical supervision, and financial
management of the CHA\. The proposed loan would provide 6
man/months of consultant services to carry out the review\.
133\. In addition to the restructuring exercise, the Mauritian
Government has an urgent need to expand its capacity to collect, process
and analyze data to strengthen its capacity for economic planning\.
Consultant services (8 man/months) for a study of medium- and longer-term
needs for an integrated computer system in the Government sector are
included in the proposed project\. The timing of the study, which is
scheduled to begin in early 1984, is particularly important\. The demands
on the Government's limited computer facilities for information required in
implementing the various measures of the economic adjustment program have
rapidly exceeded the Government's existing capacity\. In attempting to meet
these needs, various ministries are seeking to acquire equipment of their
own, separate from the Government's central facilities\. The Government
hopes to avoid purchasing computer equipment in an ad hoc and costly
manner, but rather to establish a solid framework for the gradual
acquisition of an integrated information management system\. Following the
study, and subject to the Bank's review of the consultants' proposals, the
project would also finance a portion of the hardware and software (up to
US$700,000) to be acquired\.
Supplementary Studies and Advisory Services
134\. Funds for supplementary studies and other activities not yet fully
defined would be included in the proposed loan\. Tentative uses of these
resources include a study of the needs and recommended organization of
rural roads maintenance units, the development of a training program for
the staff of the State Commercial Bank, and assistance to the staff of the
Ministry of Finance and the Ministry of Economic Planning and Development
- 37 -
in implementing new budgetary procedures\. Essential consultant services
for implementation of the structural adjustment program in other areas
would also be eligible for financing\.
Advisory Services for Economic and Structural Adjustment
135\. The Government will assign, by January 1984, responsibility for
reviewing the structural adjustment program, elaborating further adjustment
policies and designing a new economic plan of action for the Economic
Management Committee established under SAL I to ensure coordination of
economic policy\. In view of the complexity of the structural adjustment
program and the broad range of measures required to implement it, the
Government will need assistance from a macro-economic adviser experienced
in the implementation of national economic policy measures\. The
macro-economic adviser (24 man-months) would be assigned to the Economic
Management Committee and would provide the Government with appropriate
policy advice and follow up on the studies to be undertaken by Government
with regard to the structural adjustment program\.
Project Organization and Implementation
136\. The project would be managed and administered by the Ministry of
Economic Planning and Development in consultation with the other
beneficiaries\. For those studies relating to the Government as a whole,
responsibility for the selection and recruitment of resident specialists
and short-term consultants would rest with the Ministry of Economic
Planning and Development\. Selection and recruitment of consultants for
studies of specific interest to individual ministries would be the
responsibility of the ministries concerned in consultation with the
Ministry of Economic Planning and Development\.
137\. For the purposes of the computer studies, the Government will set
up a review committee comprised of representatives from the Ministry of
Finance, the Ministry of Economic Planning and Development, the Central
Statistical Office and other primary users of the computerized information
system\. The purpose of the review committee will be to decide on the
recommendations made by the consultants at each stage of the study and to
ensure that all potential user needs are taken into consideration\. The
Government would submit to the Bank no later than five months following the
inception of the study, their proposal for a Government-wide information
management system\. The Government would exchange views with the Bank
before proceeding with the detailed equipment and facilities plan and the
procurement of any equipment called for (Section 2\.03, draft Loan
Agreement)\.
138\. The progress of the project would be monitored by regular Bank
supervision missions in conjunction with the supervision of the SAL II
project\. The Government would consult with the Bank on the findings and
recommendations of each study financed by the project (Section 3\.04(a),
draft Loan Agreement)\. There would be an annual review of project
activities by representatives of the Economic Management Committee to
38 -
assess progress and, if necessary, revise the number and nature of the
specialists still to be recruited and the content of remaining studies in
consultation with the Bank\.
Project Costs and Financing
139\. The total project cost would be US$7\.6 million, with an estimated
76 percent foreign exchange component\. The project cost table is provided
in the Project and Loan Summary at the front of this report\. The proposed
loan of US$5 million represents 86 percent of the foreign exchange costs
and 64 percent of total costs of the project\. The balance of the project
costs would be met by the Government\. Price contingencies of 8 percent per
annum have been included for resident advisers, short-term consultants and
equipment; and 10 percent for local incremental operating costs\. Average
cost per month for the technical assistance personnel is estimated at
US$10,000 per month, excluding international travel\.
Project Accounts, Audit and Reporting
140\. Separate accounts would be maintained for all project activities\.
Project accounts for all institutions covered by the project would be
audited each year by independent auditors acceptable to the Bank in
accordance with appropriate auditing principles consistently applied
(Section 4\.02, draft Loan Agreement)\. It is expected that all expeditures
would be made under clearly defined contractual arrangements except for
expenditures relating to MEDIA (see paragraph 143 below)\. A certified copy
of all project accounts and financial statements as well as the auditor's
report would be submitted to the Bank within six months of the close of
each fiscal year (Section 4\.02, draft Loan Agreement)\. The Borrower would
prepare and submit to the Bank a final report on the execution of the
project no later than six months after the completion of the project
ev;xpected by June 30, 1986 (Section 3\.04, draft Loan Agreement)\. The
closing date for the Bank loan would be December 31, 1986\.
Procurement
141\. Selection of technical experts and consultants required under the
project would be in accordance with principles and procedures satisfactory
to the Bank on the basis of the "Guidelines on the Use of Consultants by
World Bank Borrowers and the World Bank as Executing Agency" published in
August 1981 (Section 3\.02, draft Loan Agreement)\. All terms of reference,
qualifications, experience, terms and conditions of employment of
consultants, selection procedures and contracts for technical experts would
be subject to the Bank's prior approval (Section 3\.02, draft Loan
Agreement)\. Terms of reference for certain studies and services which have
already been reviewed and found satisfactory to the Bank are included in
Annex IV to this report\. The Borrower will decide whether to invite
proposals from a short list of firms or to request a proposal from a single
firm of its choice\. In both instances, however, the Bank would approve the
firms invited and, subsequently, the contract\. Technical assistance is
expected to be provided by both local and foreign consulting firms, working
- 39 -
together in consortia or independently\. During negotiations, Government
procedures for recruitement of specialists have been reviewed\. Procurement
of computer equipment would follow international competitive bidding in
accordance with the Bank guidelines\.
Disbursement
142\. Funds from the Bank loan would be disbursed over three years as
follows:
(a) 100 percent of foreign expenditures for advisers, consultants and
special studies;
(b) 100 percent of foreign expenditures for equipment;
(c) 70 percent, 50 percent and 30 percent respectively of start-up
and operating costs for MEDIA in each of its first three years of
operations;
(d) 100 percent of foreign expenditures for training\.
143\. All disbursements would be fully documented\. To cover operating
costs of MEDIA, the Bank shall establish a special account designated by
the Government and shall deposit into this account an amount estimated to
be the requirement for the first three months of MEDIA's operation\.
Replenishments of the special account would be made on the basis of
certified statements of expenditure\. Expenditures made under the Project
Preparation Facility would be refinanced from the Bank loan upon its
effectiveness (Section 2\.02(b), draft Loan Agreement)\.
Benefits and Risks
144\. The proposed project is expected to help the Government in
implementing and consolidating the structural reform measures agreed upon
under the SAL II program\. In the medium- and longer-term it would assure
better functioning of the various institutions included in the project and
contribute to a more efficient use of existing staff resources\. The
project would also help to promote exports and tourism, thereby increasing
the country's foreign exchange earnings\.
145\. There is some risk of delays in recruiting technical assistance
personnel under the project, owing both to the specialized nature of
certain assignments and to the Government's general preference for grant
financing of technical assistance\. This concern was taken into
consideration in designing the project and only those studies essential to
the adjustment process and for which no alternative prospective source of
financing is available, have been included in the proposed loan\.
- 40 -
Benefits and Risks
144\. The proposed project is expected to help the Government in
implementing and consolidating the structural reform measures agreed upon
under the SAL II program\. In the medium- and longer-term it would assure
better functioning of the various institutions included in the project and
contribute to a more efficient use of existing staff resources\. The
project would also help to promote exports and tourism, thereby increasing
the country's foreign exchange earnings\.
145\. There is some risk of delays in recruiting technical assistance
personnel under the project, owing both to the specialized nature of
certain assignments and to the Government's general preference for grant
financing of technical assistance\. This concern was taken into
consideration in designing the project and only those studies essential to
the adjustment process and for which no alternative prospective source of
financing is available, have been included in the proposed loan\.
PART V LEGAL INSTRUMENTS AND AUTHORITY
146\. The draft Loan Agreement between Mauritius and the Bank and the
Report of the Committee provided for in Article III, Section IV (iii) of
the Articles of Agreement of the Bank are being distributed separately\.
Special conditions of the project are listed in Annex III to this report\.
Special conditions of loan effectiveness would be (a) the opening by the
Government of a special account to receive advances from the Bank loan
(Schedule 4 to the Loan Agreement), and (b) the fulfillment by Mauritius of
all conditions precedent to the effectiveness of the SAL II Loan Agreement\.
PART VI - RECOMMENDATION
147\. I ai satisfied that the proposed Loan would comply with the
Articles of Agreement of the Bank\. I recommend that the Executive
Directors approve the proposed Loan\.
A\.W\. Clausen
President
Attachments\.
November 16, 1983
Washington, D\.C\.
BEST\. f YM'RILt LE
-41 - ANNEX I
Page 1 of 5
T A B L E 3A
MAURITIUS - SOCIAL INDICATORS DATA SHEET
MAURITIUS REFERENCE GtOUPS (WEIGHTED AVERAGES) /a
MOST (HOST RECENT\.ESTD4ATE) /b
/b RECENT MIDDLE INCOME MIDDLE INCCME
196 197OL0 ESTIMATI- AFRICA S\. OF SAHARA N\. AFRICA & MID EAST
ANNA (TU NUSO SQ\. KM)
TOTAL 1\.9 1\.9 1\.9
AGRICULTURAL 1\.0 1\.1 1\.1
CII NI CAPITA (US$) 280\.0 400\.0 1270\.0 1147\.9 1340\.0
Db CO (TIOH PER CAPITA
(KILOGRAMS OF COAL EQUIVALENT) 100\.0 384\.0 524\.0 724\.2 810\.4
POPUATION AND VITAL STATISTICS
POPULATION,MID-YEAR (THOUSANDS) 664\.0 829\.0 971\.0
URBAN POPULATION (% OF TOTAL) 33\.2 42\.0 53\.1 2e\.5 47\.4
POPULATION PROJECTIONS
POPULATION IN YEAR 2000 (MILL) 1\.3
STATIONARY POPULATION (MILL) 2\.0
YEAR STATIONARY POP\. REACHED 2095
POPULATION DENSITY
PER SQ\. KM\. 357\.0 445\.7 514\.5 56\.5 36\.0
PER SQ\. KM\. AGRI\. LAND 664\.0 740\.2 839\.5 131\.8 449\.0
POPULATION AGE STRUCTUJRE (X)
0-14 YRS 45\.7 42\.1 34\.3 45\.9 43\.9
15-64 YRS 51\.3 54\.6 61\.8 51\.2 52\.8
65 AND ABOVE 2\.9 3\.2 3\.8 2\.8 3\.3
POPULATION GROWTH RATE (x)
TOTAL 3\.1 2\.2 1\.4 2\.8 2\.9
URBAN 4\.5 4\.6 3\.6 5\.3 4\.6
CRUDE BIRTH RATE (PER THOUS) 41\.4 28\.0 26\.5 47\.6 42\.5
CRUDE DEATH RATE (PER THOUS) 8\.9 7\.6 7\.0 L5\.2 12\.0
GROSS REPRODUCTION RATE 2\.9 1\.9 1\.4 3\.2 3\.0
FAMILY PLANNING
ACCEPTORS, ANNUAL (THOUS) \. 9\.8 12\.2
USERS (% OF MARRIED WOMEN) \. 25\.0 51\.0
FOOD AID NUTRITION
INDEX OF FOOD PROD\. PER CAPITA
(1969-71-100) 111\.0 95\.0 91\.0 95\.7 97\.5
PER CAPITA SUPPLY OF
CALORIES (% OF REQUIREMENTS) 109\.0 106\.0 122\.0 97\.1 102\.3
PROTEINS (GRAMS PER DAY) 51\.0 50\.0 63\.0 56\.0 72\.0
OF WHICH ANIMAL AND PULSE 18\.0 18\.0 27\.0/c 17\.2 17\.8
CHILD (AGES 1-4) DEATH RATE 11\.0 8\.7 2\.9 23\.6 15\.2
HEALTH
LIFE EXPECT\. AT BIRTII (YEARS) 59\.1 62\.3 65\.8 51\.9 57\.2
INFANT MORT\. RATE (PER THOUS) 70\.5 61\.1 33\.7 117\.6 104\.2
ACCESS TO SAFE WATER (%POP)
TOTAL \. 61\.0 60\.0/d 25\.4 59\.3
URBAN \. 100\.0 1oo\.o7; 70\.5 84\.9
RURAL \. 29\.0 22\.67d 12\.3 37\.5
ACCESS TO EXCRETA DISPOSAL
(Z OF POPULATION)
TOTAL \. 77\.0 82\.0/d
URBAN \. \. 51\.0 6 3\. 07r
RURAL * 99\.0 loo\.d7
POPULATION PER PHYSICIAN 4680\.0 4190\.0 2000\.0 12181\.6 3536\.0
POP\. PER NURSING PERSON 2100\.0/e 820\.0 610\.0 2292\.0 1820\.7
POP\. PER HOSPITAL BED
TOTAL 210\.0 250\.0 280\.0/c 1075\.4 643\.3
URBAN 110\.0/e 250\.0 29O\.077 402\.3 545\.0
RURAL *- 500\.0 880\.67c 3926\.7 2462\.0
ADMISSIONS PER HOSPITAL BED \. 22\.7 30\.4/c \. 26\.4
HOUSING
AVERAGE SIZE OF HOUSEHOLD
TOTAL 4\.9/e 5\.3/f
URBAN 4\. 97e \.
RURAL 4\.s7e \.
AVERAGE NO\. OF PERSONS/ROOM
TOTAL 1\.9/e \.
URBAN 1\.87i \.
RURAL 1\. 97i \.
ACCESS TO ELECT\. (% OF DWELLINGS)
TOTAL 46\.9/e 70\.1/f *- *- 46\.2
URBAN 81\.97e \. \. \. 77\.6
RURAL 29\.2/e \. \. \. 16\.1
----------------------------------------------------------------------------------------------------------------------
- 42 -
ANNEX I
Page 2 of 5
T A R L E 3A
MAURITIUS - SOCIAL INDICATORS DATA SHEET
MAURITIUS REFERENCE GROUPS (WEIGHTED AVERAGES) /a
MOST (MOST RECENT ESTIMATE) /b
RECENT b MIDDLE INCOME MIDDLE INCC4E
1960- 1970- ESTIMATE- AFRICA S\. OF SAHARA N\. AFRICA & MID EAST
EDUCATION
ADJUSTED ENROLLMENT RATIOS
PRIMARY: TOTAL 98\.0 97\.0 102\.0 97\.2 89\.6
MALE 103\.0 98\.0 103\.0 103\.1 104\.8
FEMALE 93\.0 97\.0 102\.0 88\.5 72\.4
SECONDARY: TOTAL 24\.0 28\.0 50\.0 17\.2 41\.7
MALE 32\.0 33\.0 51\.0 23\.5 52\.8
FEMALE 15\.0 23\.0 50\.0 14\.2 31\.2
VOCATIONAL (% OF SECONDARY) 2\.3 1\.4 1\.3/k 5\.2 10\.3
PUPIL-TEACHER RATIO
PRIMARY 36\.0 32\.0 20\.0 42\.9 31\.9
SECONDARY 22\.0 26\.0 27\.0 23\.7 23\.3
ADULT LITERACY RATE (X) 60\.8/e 80\.0/f 79\.0 37\.1 43\.3
CONSUMPT ION
PASSENGER CARS/THOUSAND POP 13\.6 15\.1 27\.5/g 18\.8 18\.0
RADIO RECEIVERS/THOUSAND POP 60\.2 102\.5 205\.9 97\.8 138\.1
TV RECEIVERS/THOUSAND POP \. 22\.9 80\.5 18\.6 45\.6
NEWSPAPER ("DAILY GENERAL
INTEREST") CIRCULATION
PER THOUSAND POPULATION 88\.1 78\.5 78\.6 18\.2 31\.0
CINEMA ANNUAL ATTENDANCE/CAPITA 11\.0/e 10\.2 8\.5 0\.6 1\.7
LABOR FORCE
TOTAL LABOR FORCE (THOUS) 200\.0 256\.0 341\.0
FEMALE (PERCENT) 19\.6 20\.0 22\.8 36\.1 10\.7
AGRICULTURE (PERCENT) 40\.0 34\.0 29\.0 56\.8 42\.5
INDUSTRY (PERCENT) 26\.0 25\.0 24\.0 17\.5 27\.8
PARTICIPATION RATE (PERCENT)
TOTAL 30\.1 30\.9 35\.1 37\.0 25\.6
MALE 48\.6 49\.6 54\.7 47\.1 45\.4
FEMALE 11\.8 12\.3 15\.9 27\.0 5\.6
ECONOMIC DEPENDENCY RATIO 1\.6 1\.5 1\.1 1\.3 1\.8
INCOME DISTRIBUTION
PERCENT OF PRIVATE INCOME
RECEIVED BY
HIGHEST 5% OF HOUSEHOLDS 28\.0 \. 31\.O/d
HIGHEST 20% OF HOUSEHOLDS 51\.0 \. 55\.07\.
LOWEST 20% OF HOUSEHOLDS 4\.5 \. 4\.57;d
LOWEST 40% OF HOUSEHOLDS 14\.0 \. 14\.07\.
POVERTY TARGET GROUPS
ESTIMATED ABSOLUTE POVERTY INCOME
LEVEL (US$ PER CAPITA)
URBAN \. \. 190\.0 534\.2 276\.1
RURAL \. \. 190\.0 255\.9 177\.1
ESTIMATED RELATIVE POVERTY INCOME
LEVEL (US$ PER CAPITA)
URBAN \. \. 290\.0 491\.5 400\.0
RURAL \. \. 290\.0 188\.1 283\.3
ESTIMATED POP\. BELOW ABSOLUTE
POVERTY INCOME LEVEL (%)
URBAN \. \. 12\.0 \. 22\.0
RURAL \. \. 12\.0 \. 30\.8
- ----- ---- ------ -------- ------ -- --------- ----- ---------- --------- -- ----- -- --- --- - ------- ------------- --------------
NOT AVAILABLE
NOT APPLICABLE
N O T E S
/a The group averages for each indicator are population-weighted arithmetic means\. Coverage of countries among the
indicators depends on availability of data and is not uniform\.
/b Unless otherwise noted, "Data for 1960" refer to any year between 1959 and 1961; "Data for 1970" between 1969 and
1971; and data for "Most Recent Estimate" between 1979 and 1981\.
/c 1977; /d 1975; /e 1962; /f 1972; /g 1978\.
May 1983
0
\. \.~\. \.
Z ~ -~A I aS
a 2a a aa\. a a a a a
a aI a I Ia\. -4 -a a a a a a a a5
a a \.a a a a a a~~\.a \. \.a a\. \. \. a\. a\.a\.a \. aI \.a
a a a a a aa\. a\. a a aa a\. a\. a\. a\. \.a
\. a a \. a \. a \. \. a \. \. \. \. a\. a aa a a
a a
a a a -a a F Aaa a a aa a a a aa
75aaa a a-aaa aaa\. aaaaa-\.
a a\. a\. a\.7 a\.
75 4 aa\. a\.aak \.a\. aa aa aa
MW\.aaaaa Z I a aa a\.a\.a\.a\. \.a\. a \. -aI~ -aa a-a
LA I a\.aa\.a aa a
aSaa aa a \. aa a aa aa a a\.a
a \.aa a\. a \.a \.a\. aaa\. aa a\. \.a\. \.a a\.a a \.a\.aa\.
a PIaa la -\.aaaa a Sa 7 a a
a \.a\.a\.a\.a\.a\.a\. \. \. \. \.
a-a \. \. aa\.aa\. \. \. a \. aaa a a a\. ~ aaaaa-aa
a a a a--aa Ia a a a a a\. a a75 a a\. a \.a
a\. aa a a a aa aa a\. a a\. \.a a \. \. a\. aa\. aa\. aaaaaa\.aaa a\.aaaaa a
a \. a a a\.aaa a I Ea a
- 44 -
Annex I
Page 4 of 5
MAURITIUS - ECONOMIC INDICATORS
GROSS DOMESTIC PRODUCT IN 1982
Annual rates of Growth /
US$ Mln\. % 1976-79 1979-82
GDP at Market Prices 1080\.3 100\.0 6\.4 0\.1
Gross Domestic Investment 227\.5 21\.1 4\.1 -16\.0
Gross Domestic Saving 194\.3 18\.0 7\.7 6\.1
Current Account Balance -50\.2 -4\.6 - -
Exports of Goods, NFS 498\.9 46\.2 5\.3 -1\.7
Imports of Goods, NFS 532\.1 49\.3 3\.6 -9\.6
OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1981
Value added2/ Labor Force3/ V\.A\. per Worker
US$ Mln\. % Thousand % US$ %
Sugar 132\.1 14\.2 50\.0 25\.7 2642 56\.0
Other Agriculture 55\.8 3\.9 6\.8 3\.5 5265 111\.5
Other Industry 122\.0 13\.1 36\.6 18\.8 3333 70\.6
Services 639\.0 68\.8 100\.9 52\.0 6333 134\.1
Total 928\.9 100\.0 194\.3 100\.0 4721 100\.0
GOVERNMENT FINANCE\.
Central Government
Rs Mln\. % of GDP
1981/82 1981/82
Current Revenue 2222\.8 21\.9
Current Expenditures 2756\.4 25\.1
Current Deficits -533\.6 -3\.2
Capital Expenditure 922\.6 8\.5
Overall deficit -1456\.2 11\.7
Foreign Financing (gross) 947\.7 6\.2
MONEY, CREDIT and PRICES
1978 1979 1980 1981 1982
(Rs million outstanding at the end of the period)
Money and Quasi Money 2861\.5 3113\.7 3837\.4 3992\.5 4926\.9
Claims on Government (net) 1525\.5 1967\.9 2396\.9 3190\.6 3991\.1
Claims on private sector 1508\.1 1721\.6 1881\.1 2259\.1 2460\.0
(Percentage or Index Numbers)
Money and Quasi Money as % of GDP 45\.7 40\.8 44\.1 38\.8 41\.8
GDP Price Deflator (1976 = 100) 116\.6 134\.6 171\.5 190\.1 107\.1
Annual percentage changes in =
GDP Deflator 8\.8 15\.4 27\.4 10\.8 8\.9
Claims on Government (net) 32\.0 29\.0 21\.8 33\.1 25\.1
Claims on private sector 11\.5 14\.2 9\.3 20\.1 8\.9
Note: All conversions to dollars in this table are at the average exchange rate
prevailing during the period covered\.
1/ In 1976 prices\.
2/ At factor cost
3/ Employment in large establishments as of September 1982\.
October 1983
BEST CPi AVAILALE -45-
Annex I
Page 5 of 5
MALRITIUS - TRADE PAYMN AND CAPITAL FLOWS
BALANCE OF PAYMS NERCHANDISE EXPORTS (AVERAGE 1979-81)
1979 1980 1981 1982
(US$ Mllion) US$ mln\. %
Exports of Goods, NFS 509\.2 578\.7 494\.7 504\.3 Sugar 233\.9 62\.0
Imports of Goods, NES 649\.7 694\.7 614\.2 536\.2 Mblasses 10\.6 2\.8
Resource Gap -140\.5 -127\.7 -119\.5 -31\.9 Tea 5\.8 1\.5
Clothinjs 9\.8 2\.6
Investment Income (net) -16\.6 -23\.1 -45\.5 -45\.7 Other products 117\.4 31\.1
Net Transfers 12\.2 20\.7 17\.3 30\.7 Re-exports ( 76\.2) ( 20\.2)
Current Account Balance -144\.8 -188\.5 -147\.8 -46\.9
Total 377\.5 100\.0
Long-term Capital 10\.0 3\.8 7\.8 1\.5
Net MLT borrowing: 71\.6 64\.5 36\.8 81\.0
Disbursements (75\.6) (76\.1) (49\.1)(105\.7) EXTERNAL DEBT, DECEMBER 31, 1982
Amortization (4\.0) (11\.6) (12\.3) (24\.7) (US$ million)
Other capital (net)l/ 11\.1 75\.3 1\.8 -16\.5
Public Debt, outstanding and
Change in Reserves 52\.1 -25\.1 101\.4 -19\.1 disbursed 393\.3
( (-) = increase)
MeM item DEBT SERVICE RATIO FOR 1981
Use of SDRs 1\.1 0\.8 -7\.3 - Public Debt, incl\. guaranteed 13\.22/
Use of IW credit 40\.8 41\.0 64\.4 32\.0
IBRD/IDA LENDING, (September 30, 198?)
(US$ Million)
RATE OF EXCHANGE IBRD IDA
1979 1980 1981 1982 Outstanding & Disbursed 62\.39 20\.19
US$1\.0=R6\.4017 US$1\.0=7\.6896 US$1\.0=9\.0911 US$1\.0=10\.8990 Undisbursed 63\.50 -
R1\.0=US$0\.1562 R1\.0=US$0\.1300 RI\.0=4U $0\.1100 R1\.0=US$0\.0920 Outstandinm including 125\.89 20\.19
undisbursed
1/ Includes short-term private capital, SDR allocation and errors and omissions
2/ Debt service payments as percentage of estimated export earnings\.
October 1983
- 46 -
ANNEX II
Page 1 of 1
STATUS OF BANK GROUP OPERATIONS IN MAURITIUS
A\. Statement of Bank Loans and IDA Credits (as of September 30, 1983)
Loan or US$ million
Credit Amount (less cancellations)l/
Number Year Borrower Purpose Bank IDA Undisbursed
Six Loans and Five Credits have been fully disbursed 43\.62 20\.42
976-MAS 1974 Mauritius Port I 10\.00 \.76
1339-T-MAS 1976 Mauritius Revised Port I 3\.60 \.32
1543-MAS 1978 Mauritius Second Education 15\.20 7\.07
1548-MAS 1978 Mauritius Second Power 15\.00 9\.12
1789-MAS 1980 DBM Development Bank V 5\.59 4\.09
1926-MAS 1981 Mauritius Urban Rehabilitation
and Development 15\.00 9\.44
2164-MAS 1982 DBM Development Bank VI 6\.00 5\.90
2229-MAS 1983 Mauritius Water Supply 12\.20 11\.60
2337-MAS2/ 1983 Mauritius Highways 15\.20 15\.20
TOTAL 141\.41 20\.42 63\.50
of which has been repaid 15\.52 \.23 -
TOTAL now outstanding 125\.89 20\.19
Amount sold 4\.95
of which has been repaid 4\.66 \.29
TOTAL now held by Bank and IDA 125\.60 20\.19
TOTAL undisbursed - 63\.50
B\. Statement of IFC Investments (September 30, 1983)
Year Borrower Type of Business Loan Equity Total
1971 Dinarobin Inns Tourism 0\.6 - 0\.6
& Hotels Ltd\.
Total gross commitment 0\.6 - 0\.6
Less cancellations, terminations,
repayments and sales 0\.56 0\.56
Net held by IFC 0\.04 0\.04
Total undisbursed 0\.0 0\.0 0\.0
1/ Prior to exchange adjustments\.
2/ Not yet effective\.
- 47 -
ANNEX III
Page 1 of 1
MAURITIUS
SUPPLEMENTARY PROJECT DATA SHEET
TECHNICAL ASSISTANCE PROJECT
I\. Timetable of Key Events
(a) Time taken to prepare project: 6 months
(b) Initial Discussion with the Bank: November 1982
(c) Appraisal Mission: February 1983
(d) Negotiations: May 10 to 17, 1983
(e) Planned Date of Effectiveness: January 1984
II\. Special Implementation Action
The Bank has approved a PPF advance of US$525,000 to facilitate
the initial activities of the Sugar Commission of Inquiry and the
restructuring of the Tea Development Authority\.
III\. Special Conditions of the Project
(a) The Government would take steps to ensure adequate budgetary
provision at the beginning of each fiscal year for the
Government's portion of MEDIA's operating costs, i\.e\., 30% of
estimated budget in year one, 50% in year two, 70% in year three
and 100% each year thereafter (para\. 119);
(b) The Government would consult with the Bank on the annual work
program of MEDIA (para\. 119);
(c) The Government would submit to the Bank for its prior approval
the proposed annual budget for MEDIA (para\. 119);
Special Conditions of Loan Effectiveness
(a) The Government shall have opened a special account to receive
advances from the Bank loan to cover MEDIA's first three months
of operation (para\. 143)\.
(b) All conditions precedent to the effectiveness of the SAL II loan
agreement shall have been fulfilled\.
- 48 -
ANNEX IV
Page 1 of 31
MAURITIUS
ORGANIZATION STUDY OF TOURISM PROMOTION SERVICES
TERMS OF REFERENCE
The study will consist of two main parts: the first part will
analyze the present organization\. It will look into the staffing,
training and promotional programs of the existing tourism promotion
services at the Mauritian Government Tourist Office (MGTO); the second
part will recommend appropriate budget and promotion programs,
organization, staffing, and training of the MGTO on the assumption of a
significant increase in resources made available for tourism promotion\.
In formulating these recommendations the consultant(s) will analyze the
tourism market segments which Mauritius is attracting and may be able to
attract in the future\.
Part I: Present Organization needs
The consultant(s) will undertake the following review:
1\. review the present set up and staffing for the ongoing
promotional activites;
2\. analyze the effectiveness of the campaigns already launched
during the past 3-4 years in light of the Mauritius Government Tourist
Office budget allocations;
3\. look into the qualifications and training requirements of the
MGTO staff;
4\. look into the quality and quantity of sales support material
available;
5\. analyze and describe the promotional campaigns being
undertaken by the different sectors of the travel trade, i\.e\. airlines,
tour operators and Travel Agents both local and abroad\. Particular
emphasis will be paid to the promotional activities of the national
carrier;
6\. examine the extent of co-ordination and cooperation between
the promotional campaigns of the MGTO and those of the different sectors
of the travel trade both local and abroad;
7\. look into the future scope of joint promotion campaigns and
tour operators' financial support;
49 -
ANNEX IV
Page 2 of 31
8\. evaluate the appropriateness of the existing organization,
procedures, staffing and training of the MGTO and the effectiveness of its
promotion campaigns and overseas agents, having regard to the resources
presently made available for official tourism promotion\.
Part II\. The consultant(s) will look into the following aspects in the
second phase of the study:
1\. analyze the various market segments for vacation travel to
Mauritius by country of origin;
2\. analyze the types of travel arrangements preferred by the
tourists in the different markets;
3\. compare the attractiveness of Mauritius as a holiday resort
with other similar destinations;
4\. compare the holiday cost in Mauritius vis-a-vis our
competitors;
5\. look into the motivation, length of stay, time of visit, age
group, income level, etc\.;
6\. analyze the specific needs of tourists from the different
source markets and recommend how Mauritius can cater to these needs;
7\. recommend margketing strategies to attract increased visitor
flows, and the necessary organizational, staffing and training programs
needed to implement such strategies effectively;
8\. recommend the scale of the promotional budgets for 1984/85 and
subsequent years needed to achieve the agreed 8 percent annual increase in
visitor numbers;
9\. The consultant will recommend the types of training needed and
also where the training courses can be obtained\.
The consultant/expert will report through the Permanent Secretary
of the Ministry of External Affairs, Tourism and Emigration to the
Monitoring Committee on the competitiveness of the Tourist Industry\. The
Ministry will give all the technical support needed for the study\.
For the purpose of the study, the consultant/expert will need a
small staff attached to him\. The MGTO can assign a Tourist Officer, a
Statistician and a Clerical Officer to work under the consultant during
the time of the study\.
-\.--1
- 50 - ANNEX IV
Page 3 of 31
Duration and Reports
Completion of both phases of the study is expected to take about
six months, with a report on Part I submitted three months after
commencing work\. The report of Part I will also include a draft work
program and travel schedule for Part II, approval for which shall be
deemed to have been given one month after its submission\. To the maximum
extent possible and particularly for Part I and the institutional aspects
of Part II, the work shall be done in Mauritius\. The draft Part II report
shall be submitted three months after approval of the draft work program\.
The final version, incorporating relevant comments, will be submitted two
months later\. The study team shall work closely with the consultants
working on the Air Travel Marketing Strategies Study\.
The consultants selected shall be qualified management consultants
with demonstrated experience in tourism activities\.
Tentative Starting Date: June 1984
Completion Date: December 1984
- 51 -
ANNEX IV
Page 4 of 31
MAURITIUS
STUDY OF AIR TRAVEL MARKETING STRATEGIES
TERMS OF REFERENCE
The study will propose appropriate marketing strategies for
tourist flights to Mauritius from new and traditional markets, and
recommend a market intelligence gathering and monitoring system to provide
the essential information to the Government on the potential for
developing tourism markets\. In formulating these proposals, the
consultant will take account of the prospects for air services to be
operated by Air Mauritius as well as foreign carriers, and will consider
the potential for both scheduled and non-scheduled operations\.
Background
The Government has selected tourism as one of the key sectors to
assist in restoring equilibrium in the balance of payments, and has
adopted a broadly based action plan to stimulate growth in the sector and
the recovery of Mauritius' competitive market position\.
A key element in the recovery plan in a continuing program to
improve and diversify air service connections\. This programme has already
begun with a major marketing campaign in the U\.K\., and agreements to
introduce extra flights to South Africa and Rome before the 1983-84 high
season\. Government-to-Government and airline-to-airline discussions have
also been initiated with several countries to explore the possibilities of
an early introduction of new services, including joint ventures and
traffic rights pooling between Air Mauritius and foreign airlines and
dedicated tourists flights, as well as conventional bilateral route
sharing\.
The study would assist in determining a longer term strategy for
the expansion of air services to Mauritius, and in establishing the
information gathering and market monitoring systems necessary to keep the
strategy abreast of changing conditions in the international air travel
markets\.
The Study
The consultant will review the existing coverage of air services
and, taking into account current initiatives to expand this coverage and
other conditions in international markets, shall recommend a program of
air service development after identifying the most promising new
medium-term tourist markets, consistent with Mauritius' chosen tourism
development strategy favoring high-spending visitors\. In the light of
expected market conditions over the next five years, the consultant shall
- 52 -
ANNEX IV
Page 5 of 31
assess whether air services to existing and new markets are more
appropriately organized as regular scheduled flights, catering to small
groups or individual tourists, or as special (charter) flights catering to
large groups\. The strategy for air service development so recommended
shall also take account of major tour wholesaler/retailer practices in the
specific markets considered and the general regulatory framework affecting
the type of air services to be developed\. The consultant should also
identify potential longer-term future markets and set up a data collection
system to monitor the timing for potential expansion into these markets\.
In making the review, the study will include, but not be limited
to, the following potential markets:
New Countries and
Regions Specialized Markets
Australia Affinity groups
Japan Conventions
Middle East Incentive tours
Scandinavia Business stop-overs
Eastern Europe
East Africa countries
The study will also evaluate a range of marketing techniques, such as
off-season pricing and joint regional promotions, judged suitable for each
particular market\.
Duration and Reports
The study will take about six months, with an Inception Report
submitted one month after the work commences, a draft final report three
months thereafter\. The Inception Report shall make a preliminary survey
of all potential markets for Mauritius' tourism, identify the most
promising areas for further work and propose a work plan for undertaking
the required analysis\. Approval of the work plan shall be deemed to have
been given three weeks after its submission unless indicated to the
contrary\. The Government comments on the draft final report will be
provided to the consultant within one month of its receipt\. The Final
Report shall be submitted one month after receipt of the Government's
comments\. In making the study, the consultant shall maintain close
consultation with the MGTO and other relevant Mauritian officials and
tourism industry representatives, with Air Mauritius and with the
consultants undertaking the Organization Study of Tourism Promotion
Services\.
Selection to undertake this study will depend on demonstrated
experience in tourism and air service marketing\. Estimated starting date:
June 1984; completion December 0984\.
- 53 - ANNEX IV
Page 6 of 31
MAURITIUS
TECHNICAL ASSISTANCE FOR THE COMMISSION OF INQUIRY ON THE SUGAR INDUSTRY
TERMS OF REFERENCE
1\. A Commission of Inquiry on the Sugar Industry in Mauritius was
instituted towards the end of December 1982 with Dr\. D\. Avramovic, Senior
Adviser to UNCTAD, as Chairman\. The Commission will look into all aspects
of the sugar industry and everything related thereto\.
2\. The Commission has started its work and a first session of
formal hearings was held in the month of March 1983\. The major parties
concerned with the sugar industry have already deponed\. It is expected
that the draft report of the Commission would be finalized by December
1983\.
3\. Some financing assistance will be required for the Commission\.
This will be primarily to meet the cost of the Chairman's assignment of
about five man-months\. Other consultancy services may also be required
either for the inquiry itself or in relation ot the follow-up action
arising from the findings and recommendations of the Commission\. Some
back up support and equipment may also be required\.
- 54 -
ANNEX IV
Page 7 of 31
MAURITIUS
STUDY GROUP ON TEA INDUSTRY
TERMS OF REFERENCE
The tea industry in Mauritius, while being a valuable earner of
foreign exchange, is incurring financial losses\. It is alleged that the
loss is considerable in the privately owned factories and they cannot
continue to bear these much longer\. In the public sector, the factory
losses of Nouvelle France and the three factories operated by the Tea
Development Authority are subsidized by the Government to an extent which
is unacceptable\. The plantation side of the Tea Development Authority is
being organized into smallholdings in order to cut the heavy burden which
the State now bears\.
In light of the above, the Government has set up a Study Group
on Tea Industry with the following terms of reLerence:
(i) (a) to examine in depth the state of the tea industry as a
whole with particular regard to farm budgets and the cost
of green leaf production by smallholders and metayers, the
cost of green leaf transport to factories, the quality of
green leaf and the amount of damage done under present
transport conditions, the potential for increasing green
leaf yields in estates and by smallholders/metayers;
(b) to assess the requirements for the improvement of the
infrastructure (roads, housing, tea villages) and the
measure of improvement to green leaf yields and transports;
(c) to consider the relative positions of factories to green
leaf production areas and assess potential savings from
reallocating some smallholders to other factories; and
(d) to consider the benefits from mechanization not losing
sight of the effect on employment opportunities\.
(ii) (a) to examine in detail the cost of production at each
factory, ascertain and quantify where savings can be
effected, at the same time ensuring that the standard of
manufactures does not suffer but improves;
(b) to estimate the capital investments required to achieve
cost cutting (e\.g\., boilers to burn bagasse instead of oil)
and how these investments can be financed; and
- 55 -
ANNEX IV
Page 8 of 31
(c) to estimate the local and foreign costs in assessing the
cost of production\.
(iii) to forecast as far as is practicable the selling price of
Mauritian teas assuming improved leaf and manufacturing
standards and taking into account the quantities produced for
local consumption;
(iv) from the studies at (i), (ii) and (iii) above, to assess whether
the current ratio of 60 percent:34 percent of smallholders to
manufacturers requires adjustment and to what degree\. It will
also have to ascertain whether the industry requires subsidies
from Government and recommend how such subsidies must be divided
between growers and manufacturers;
(v) to determine the amount of gross and net foreign exchange
earnings and the ratio between the economic cost of resources
consumed and the income derived;
(vi) to examine the current proposal for the purchase of\.Indian tea
and blending it with Mauritian tea in the Island, with
particular reference to the financial and economic implications
of these proposals;
(vii) finally, to assess the short- and long-term economic and
financial viability of the tea industry in Mauritius and make
the requisite recommendations to the Government\.
During discussions in the context of negotiations for the Second
Structural Adjustment Loan, the World Bank delegation indicated its
willingness to provide consultancy services under the Technical Assistance
Loan to assist the Study Group\.
The consultancy services would be reqxuired for a period of about
five weeks and should consist of the following:
(i) An analyst a "tea man" with all-round experience of
factories, plantation activities, and
marketing and who can bring to the work of
the Study Group an international outlook;
(ii) An agro-economist a person with experience in the
micro-economic aspects of the tea industry
who can analyze critically and evaluate the
real cost of production of each
unit--smallholders, planters and factories\.
Such an assignment requires an economist who
has specialized in the industry\.
Tentative Starting Date: April 1984
Tentative Completion Date: September 1984
- 56 -
ANNEX IV
Page 9 of 31
MAURITIUS
TERMS OF REFERENCE
LAND USE, CAPABILITY AND DEVELOPMENT STUDY
Background
V\. Sugar dominates Mauritian agriculture and occupies about 90
percent of the arable land, which in an island economy of some 200,000 ha
is a scarce resource\. The Government of Mauritius has commissioned the
Mauritius Sugar Industry Research Institute (MSIRI) to compile an index of
all sugar lands on a holding by holding basis and wishes to extend this
indexing to non-sugar lands\. The index will provide information such as
cropped area by type of crop, location, soil type, slope, stage of
development (derocking, irrigation, etc\.)\. The information is needed for
detailed land use planning purposes\. Included amongst the non-sugar lands
are areas of uncommitted, underutilized Crown and other lands with
agricultural potential\. The Government of Mauritius has applied for a
Technical Assistance loan from the World Bank to carry out a study to
identify these areas, assess their potential for development and prepare a
five-year program to bring this potential into production\.
Objectives
2\. The specific objectives of the study are to:
(a) Investigate and update existing data on uncommitted,
underutilized Crown and other lands which are suitable for
agricultura] purposes and not currently used for sugar
production;
(b) Review existing afforestation programs and to examine the
potential for aligning these to include the concept of
agro-forestry;
(c) Specifically identify from within the uncommitted, underutilized
Crown and other lands those areas with the highest potential for
productive development;
(d) Formulate a policy for the optimum economic utilization of
available Crown and forest lands, particularly with regard to
maximizing the net foreign exchange earnings and employment,
that could be generated by developing those portions of this
land with the highest potential for productive development;
(e) Identify and prepare a five-year development program that is
consistent with this policy\.
- 57 -
ANNEX IV
Page 10 of 31
(f) Prepare detailed lists of the investment and manpower required
in the five-year development program, including estimates of:
the total material requirements by source (imported, domestic);
manpower requirements by nature and source (professional,
administrative, skilled, unskilled); and the total financial
requirements this investment would require identified in terms
of foreign exchange vis-a-vis domestic currencies and to include
estimates fo the duties and taxes involved in each;
(g) Estimate the total operating costs of the program on an annual
basis from a detailed list of the physical and manpower inputs
required and express the total operational financial
requirements needed, both during the five-year investment period
and beyond in terms of the demand for foreign exchange and
domestic currencies, including estimates of the duties and taxes
involved in each;
(h) Prepare a detailed list of all the output it is anticipated will
be produced as a result of the investment and operating costs;
identifying when this would appear, how it would be disposed
of--exported (raw, processed), consumed locally (raw,
processed), and the financial and hence economic (or border)
prices at which any sales involved might be transacted\. In so
doing any taxes and duties involved, and the marketing
mechanisms, costs and margins used should be identified,
described and quantified\.
Responsibilities
3\. Government would provide all existing data for review by the
study team, including a document and map(s) that clearly identifies the
precise study area and any areas on which Government requries an update of
existing information before it can make a final decision\. A list of the
existing data is attached (Schedule 1)\.
4\. The study team will review the material provided, conduct
familiarization field trips, collect whatever data Government has
indicated that it needs from those areas on which it has been unable to
make a final decision\. From this the study team will prepare an interim
report to present its initial findings (including an overview of the
resources involved) and recommendations for discussion and agreement with
Government on the next steps\. In particular decisions will be sought on
the:
(a) Precise boundaries of the final study area;
- 58 - ANNEX IV
Page 11 of 31
(b) Most likely development program or programs to be investigated
in more detail before selecting one for in-depth preparation;
(c) Need to collect and present additional information and to
identify the skills and disciplines this will require, including
the detail and accuracy to which such data needs to be
collected; the extent to which Government can provide the
required resources (survey teams, mapping facilities,
etc\.)--with the remainder being supplied by the study team; the
chronological time frame within which this information is to be
collected and made ready for use; and details of the Government
study team working relationships needed (e\.g\., secondment of
Government supplied manpower, equipment, etc\., to the study
team, or independent action under separate terms of reference);
(d) The criteria and any constraints on or within which the final
development program is to be assessed\. Including a financing
plan identifying the scope for international lending (usually
confined to foreign exchange component) and hence demand for
local financing; the likely impact on Government expenditures
and revenues; economic rate of return, the Domestic Resource
cost of the recommended program; and its likely impact on
employment\.
Schedule 1
Data to be Provided by the Government
(Indicative list only\. Final list
will be the result of exhaustive
Government review\.)
1\. Maps--list stating location of area mapped, data presented, scale,
date data was collected\.
2\. Aerial photographs and mosaics--list by date flown, location of area
and scale\.
3\. Climactic--list by location of rec_\.)-ling station, nature of
information, method of collection, duration and continuity of records\.
4\. Soil data--surveys, taxonomy\.
5\. Land use--surveys\.
- 59 -ANITEX IV
Page 12 of 31
6\. Geological--surveys\.
7\. Topographical\.
8\. Hydrological--catchment basins, groundwater flooding (incidence,
depth, and duration), existing and potential for irrigation\.
9\. Land forms\.
10\. Population--human, animal; distribution and associated
infrastructure/facilities\.
11\. Transport, communications, water and power distribution grids\.
12\. Relevant regional plans/studies\.
13\. Cadastral\.
Tentative Starting Date: March 1984
Tentative Completion Date: July 1984
- 60 - ANNEX IV
Page 13 of 31
MAURITIUS
CONSULTANT/EXPERT FOR THE ORGANIZATION OF AGRICULTURAL DIVERSIFICATION
TERIMS OF REFERENCE
To assist the Government in analyzing the organizational options
for managing lands suitable for agricultural diversification, including
the proposed agricultural diversification corporation, a consultant expert
would be employed to:
(a) In light of recommendations of the sugar commission of inquiry,
establish the alternatives for managing the utilization of
non-sugar lands (incentives to private sector, promotion through
extension service, public corporation, etc\.);
(b) evaluate the costs and benefits of each approach; and
(c) recommend a course of action which would optimize utilization of
agricultural diversification lands at minimum cost to Government
and the economy\.
(d) examine legislation creating the Agricultural Diversification
Corporation (ADC) and determine its consistency with the results
of (c) above, and propose appropriate changes in the legislation
as necessary\.
The consultant/expert should have wide experience in the
organization of agricultural diversification in other countries and would
report to the Ministry of Economic Planning and Development\. The duration
of his appointment would be six months\.
Tentative Starting Date: March 1984
Tentative Completion Date: July 1984
- 61 - ANNEX IV
Page 14 of 31
MAURITIUS
STUDY FOR THE FORMULATION OF A FISHERIES DEVELOPMENT STRATEGY
TERMS OF REFERENCE
Despite the existence of various fishing activities in
Mauritius' extensive territorial waters, including the lagoon, there is no
clear picture of the nature and extent of Mauritius' fish resources\. The
degree to which it is economically and financially worthwhile to develop
these resources is also not clear\.
To help formulate a strategy for the development of Mauritius'
fisheries resources, a study would be carried out to:
(a) review existing fisheries studies and resource surveys
concentrating on the nature of the resource and the history of
its exploitation; and
(b) review the comparative advantage, markets and commercial
viability of different fisheries development activities
(artisanal, commercial long line, trawling along the Saya de
Mahla bank)\.
The results of these studies would be reviewed and discussed with the
Bank, before proceeding with additional fisheries resource surveys or
preparation of specific projects\.
The consultant to carry out the above studies should have wide
experience in industrial fishing operations\. The duration of his
appointment would be one year\.
Tentative Starting Date: June 1984
- 62 - ANNEX IV
Page 15 of 31
MAURITIUS
CONSULTANT/EXPERT FOR A STUDY OF THE CAUSES OF POLLUTION AND
PROPOSALS TO ALLEVIATE MARINE POLLUTION
TERMS OF REFERENCE
The marine resources of Mauritius represent considerable unknown
potential which could contribute significantly to the economic
development of the country\. So far the effort to tap these resources has
been very little and more so no attention has been given for the
protection and conservation of our lagoons\. Not only our lagoons have
been over-exploited but they have been left to become polluted\.
It is therefore imperative at this stage of our development to
have the services of a consultant or a team of experts who can advise the
Government on the pollution aspect of our marine resources\.
The candidate should be a marine fisheries biologist with
considerable experience in effects of pollutants on tropical coastal
fisheries including vast knowledge of lagoon and coral reef ecosystems\.
Duration of appointment: Six months\.
Terms of Reference:
(1) To assess the effects of pollutants on the lagoon ecosystem and
adjacent waters with special reference to the fisheries
resources, resulting from land-based, coastal and marine-related
activities including marine transportation (e\.g\., oil pollution
from tankers)\.
(2) After preliminary investigations the expert will organize the
sampling and analysis necessary to carry the assessment as laid
out in (1) above\. These will include the analysis of samples of
water, sediment, fish and other living organisms (e\.g\., corals
found on reefs and the sea-bed)\.
To review and make recommendations to strengthen the present
organizational arrangements for combatting oil spills on an
emergency basis\.
(3) To study the effects of sand dredging from lagoons\.
- 63- ANNEX IV
Page 16 of 31
(4) In the light of the above findings to submit recommendations for
the protection and conservation of our resources in the lagoon
and adjacent waters\.
The Consultant/Expert will report to the officer in charge of
the Fisheries Division of the Ministry of Agriculture, Fisheries and
Natural Resources and will be assisted by the staff of the Division\.
Tentative Starting Date: October 1984
Tentative Completion Date: April 1985
- 64 -
ANNEX IV
Page 17 of 31
MAURITIUS
TECHNO-ECONOMIC SURVEY OF RODRIGUES
TERMS OF REFERENCE
Rodrigues is a small island with a population of approximately
33,000 dependent on subsistence agriculture and fishing\. The island is
regularly hit by cyclones and plagued by severe drought which has had
devastating effects on the island's agriculture\. As a result of these
hardships, most of the male population of the island has been placed on
the Government payroll and many others receive social benefits of one kind
or another\. In order to reduce its dependence on Government resources, a
program designed to foster the development of the island is planned\.
Agricultural output can be considerably increased through more appropriate
land use, better cropping techniques and better use of available water
resources\. As a first step, a basic resource study is needed to prepare a
development strategy for Rodrigues\. 'rhe detailed terms of reference for
this resource study are as follows:
Terms of Reference
(1) To carry out a detailed survey of the resources available in
Rodrigues with a view to draw up an integrated plan for the
economic and social development of Rodrigues\. In this context,
emphasis would be laid on:
(a) agriculture and livestock development;
(b) exploitation of fishing resources; and
(c) the setting up of cottage industries\.
(2) To review the existing educational and training facilities and
to assess their adequacy to meet the requirement for various
types and levels of skills needed for the development of
Rodrigues\.
(3) To explore the possibility of developing financial institutions
to mobilize and generate financial resources\.
(4) To advise on the development of the necessary physical
infrastructure which would be required in line with future
development of Rodrigues\.
- 65 - ANNEX IV
Page 18 of 31
(5) To explore the possibility of increasing exports of agriculture
and other products from Rodrigues to Mauritius and to reduce
imports into Rodrigues\.
The Consultant/Expert will report to the Resident Commissioner of
Rodrigues\.
Duration: Six months\.
Tentative Starting Date: March 1984
Tentative Completion Date: September 1984
- 66 -
ANNEX IV
Page 19 of 31
MAURITIUS
STUDY OF GOVERNMEHIT REGULATIONS OF WAGES AND INDUSTRIAL
RELATIONS IN THE PRIVATE SECTOR
TERMS OF REFERENCE
The existing legal arrangements and practices governing public
involvement in private employer-employee relations are complicated and
have strong historical roots\. They constitute a complex intertwining of
ad hoc, frequently detailed minimum wage orders for particular groups of
workers, various arbitration and dispute settlement procedures and other
regulations of collective bargaining organizations and relationships\.
The system of minimum wage regulation has evolved in a process of
governmental fixation of both wage levels and relative wage structures in
various "sectors"\. Except for the important exception of the general cost
of living adjustment legislated annually to apply to all wage earners,
minimum wage determinations in the form of remunerations ordered by the
National Remuneration Board take place on a case-by-case basis\.
This ad hoc system of governmental wage setting has undoubtedly
introduced major distortions and anomalies into relative wage levels\.
Moreover, the growth of governmental interventions into wage setting
processes has very likely inhibited the development of collective
bargaining\. The structural changes involved in Mauritius' future
development--a declining share of employment in agriculture, the
decreasing dependence on sugar, a rapid growth of competition,
export-oriented manufactures--requires a system of wage determination both
more responsive to changing economic circumstances and with greater equity
across sectors and occupations\.
Study Objective
The principal objective of the study would be to provide the
empirical analytic foundations for recommendations for such legislative
changes regarding minimum wages, labor standards, collective bargaining
structure and dispute settlement procedures as might be required to make
Government policy more effective in controlling labor costs, encouraging
efficiency in the allocation of labor and ensuring equitable and
economically viable levels of remuneration\.
Work Program
The study would involve two parallel components--one concentrating
on governmental fixation of wages and working conditions through
- 67 -
ANNEX IV
Page 20 of 31
remuneration orders, general legislative provisions or independent
arbitration tribunals, and the other on the structure and operation of
collective bargaining relationships and dispute settlement procedures\.
The first component would provide for an analysis of the
functioning of the legal machinery now operating for determination of
wages and working conditions, and will include:
a) An analysis of wage and benefit levels currently in force under
remuneration orders and arbitration tribunal awards in the various
sectors\.
b) An examination, to the extent existing data permit, of the
intra- and inter-sectoral differentials by skill category
resulting from these orders and awards\.
c) An estimate by economic sector of the number of wc;rkers covered
by governmentally fixed wages and of the effectiveness of
enforcement\.
d) A pilot sample survey of occupational earnings to permit
preliminary comparisons of wage differentials between covered and
uncovered sectors\.
The second component poses more difficult and sensitive problems
of institutional and legal analysis and will need to be designed in close
cooperation with trade union and employer representatives\. Among the
elements that should be considered for inclusion are:
a) A comparative review of industrial relations systems,
collective bargaining structures, and labor legislation in small
open economies which have successfully combined export-oriented
industrialization with active collective bargaining institutions
(e\.g\. Norway, Denmark, New Zealand) in order to see what lessons
might be chosen from that experience of relevance to Mauritian
circumstances\.
b) An analysis of the impact of the existing legal framework on
the structure of minor organization and collective bargaining and
the possible modifications that might be introduced to encourage
its development in a manner conducive to rapid industrialization
and growth\.
- 68 -
ANNEX IV
Page 21 of 31
c) An examination of planning and policy constraints and
procedures required for effective formulation and implementation
of a coherent wages and incomes policy\.
Organization and Staffing
Much of the empirical and analytic work could be carried out by
external consultants working over a period of three to six months\. For
the analysis of the minimum wage system and relative wage structures, an
experienced labor economist and one or two research assistants would be
required\. For the design and management of the pilot wage survey, the
assistance of the Central Statistical Office would be needed although the
survey itself could perhaps be carried out with temporary staff\. The
collective bargaining and industrial relations study would require an
expert in industrial relations and collective bargaining systems,
preferably with experience in an economy heavily dependent upon external
trade\.
Both studies should be carried out under the supervision of a
joint steering group from the Ministries of Planning, Labor and Employment
with designated counterparts to collaborate closely with the external
consultants\. The steering group would be responsible for formulating, on
the basis of the consultant reports, specific recommendations for
legislative and administrative action by the Government\.
Tentative starting date: June 1984
Completion: December 1984
- 69 - ANNEX IV
Page 22 of 31
MAURITIUS
STUDY OF THE FEASIBILITY OF UNEMPLOYMENT INSURANCE
TERMS OF REFERENCE
The v(ilnerability of the Mauritian economy to external
fluctuations in export and import markets or to the damaging effects of
droughts, floods, and cyclones poses severe problems for Government policy
in dealing with the shorter term adverse consequences on employment and
income\. Past governmental efforts to ameliorate unemployment through
development works programs have tended to become a chronic budgetary drain
with the added complications of overstaffing and inefficient labor use in
public sector agencies\. Alternative instruments should be sought for
ameliorating the hardships borne by unemployed workers and their families
that do not aggravate the longer term problem of achieving higher and more
productive levels of employment\.
Study Objective
The purpose of the study would be to determirne the feasibility of
establishing an unemployment insurance scheme for dealing with short-term
unemployment problems\.
Work Program
The study would involve examination of:
a) the feasible scope, coverage, eligibility criteria, benefit
levels and duration of an adequate insurance scheme;
b) alternative methods of financing and managing the unemployment
insurance fund;
c) links to employment service operations and other income
maintenance or public employment programs\.
Organization and Staffing
As an exploratory study, the work could be carried out by an
external consultant within a period of three months\. He will need the
close collaboration of the Ministries of Planning, Finance, Employment and
Labor\. The consultant should be an economist with in-depth knowledge of
the structure and operation of unemployment schemes\.
Tentative Starting Date: June 1984
Tentative Completion Date: September 1984
- 70 -
ANNEX IV
Page 23 of 31
MAURITIUS
TERMS OF REFERENCE
ASSISTANCE TO THE DEVELOPMENT WORKS CORPORATION
Background
The Development Works Corporation, which was originally set up
to provide employment to new entrants to the labor market, has with time
emerged as a major construction company and executes works which it wins
through public tenders or which are assigned directly to it by the
Government or parastatal organizations\. It has a sizeable transport,
plant and equipment force totalling some 450 items, of which an
appreciable amount is presently unserviceable\. The corporation has an
establishment of over 6000 employees with an annual budget exceeding
Rs 100,000,000\.
Two experts are required, each for 24 man-months, a Plant and
Transport Manager to manage the Plant and Transport Division and a
Financial Controller\.
Plant and Transport Manager
The Development Works Corporation owns and operates a fleet of
over 100 lorries, jeeps, etc\. and over 300 items of equipment utilized on
civil works, including pneumatic compressors and drillers, concrete
mixers, tar boilers and sprayers, etc\. The Plant and Transport Manager
would report directly to the General Manager and will be responsible for:
1\. Administering the Plant and Transport (operation and
maintenance) Departments;
2\. Carrying out an assessment of the plant, vehicles and
equipment of the Corporation and advising on redundancies and/or
additional requirements in the light of current and future levels of
activity;
3\. Making recommendations on the policy to be followed
regarding maintenance, i\.e\., contracting or otherwise;
4\. (i) reorganizing the maintenance activity, planning and
establishing maintenance schedules;
(ii) reviewing procedures for procurement and holding of
spares;
- 71 -
ANNEX IV
Page 24 of 31
(iii) making recommendations on ways and means to improve
efficiency of workshops;
(iv) advising on facilities necessary to enable the
Corporation to deal effectively with the preventive and demand maintenance
work load;
(v) establishing control and reporting procedures and
providing management accounting service on maintenance and operations
cost\.
The Development Works Corporation will assign two counterparts
to the Plant and Transport Manager, a Transport Office for the operations
section who will hold a degree in engineering with a post graduate diploma
in transport and development, and a Mechanical Engineer for maintenance
management\.
Financial Controller
The Financial Controller would report directly to the General
Manager and would be responsible for:
1\. the financial accounting (stewardship) of the Corporation
through the Senior Accountant;
2\. reorganizing the existing management accounting system and
transforming it into one which primarily provides a management accounting
service to operations \.nanagers to allow them to improve efficiency, to
formulate and coordinate future plans, and to measure their execution;
3\. instituting procedures that would establish the necessary
financial autonomy and accountability for individual projects undertaken
by the Corporation;
4\. carrying out investment studies related to purchase of
capital equipment and proposals for DWC initiatives in new fields of
activity;
5\. producing financial statements, statement of cash flow,
etc\., as and when necessary\.
Tentative Starting Date: June 1984
Tentative Completion Date: December 1984
- 72 -
ANNEX IV
Page 25 of 31
MAURITIUS
REVIEW OF THE FUNCTIONING OF THE CENTRAL HOUSING AUTHORITY
TERMS OF REFERENCE
The Central Housing Authority (CHA), a parastatal body set up in
1960, has traditionally been associated with post cyclone housing
reconstruction programs\. These programs are implemented by CHA direct
labor and through private contracts\. Houses constructed under CHA
programs are meant for the low-income group earning less than Rs\. 1,600
per month\.
It has been observed that the cost of CHA-built houses is one and
a half times that of the private contractors\. The result is that
Government subsidies meant for the beneficiaries of CHA houses are
absorbed in the high construction costs\. This eventually leads to higher
prices for these houses, which, in many cases, may not be affordable by
the low-income group\.
The comparative high cost is a result of a number of factors\.
These include: a) low productivity of CHA workers; b) weak management
structure; c) inadequate technical supervision; and d) poor financial
management\.
Government is concerned about the situation and intends to review
the entire management structure of the Authority\. The objective is to
make the CHA a more efficient institution\. In this regard, a study will
be undertaken of the entire organization of the CHA\. This review would
cover the following broad areas: a) general management, b) technical
supervision, and c) financial mangement\.
General Management
1\. Review the present organization structure of the CHA, identify
weaknesses and propose a new management structure compatible with
the need to make the organization efficient and viable;
2\. Establish the line of authority and responsibilities at
various levels and recommend management control procedures;
3\. Examine the current system of data collection and processing
and make recommendations for an information and communications
system which is more in line with the revised organization
structure of the CHA; and
- 73 -
ANNEX IV
Page 26 of 31
4\. Examine the current labor regulations and personnel policy and
advise on reforms to increase productivity and to improve
industrial relations in the Authority\.
Technical Supervision
1\. Examine the current state of technical supervision in the
Authority and recommend ways to make it more efficient;
2\. Review procedures relating to materials management, transport
and general stores and sujggest ways for minimizing and eliminating
wastage\.
3\. Review the current construction methods with a view to
improving labor productivity and achieve greater economy in the
use of building materials\.
4\. Review specifications of houses currently built by the CHA and
recommend changes, if any, for reducing costs, without, however,
affecting functional requirements;
5\. Review the workshop activities and suggest possible
improvements; and
6\. Make a detailed inventory of all plants and equipment and
other assets and propose ways to keep them in the best possible
condition and to ensure optimum utilization\.
Financial Management
1\. Examine the existing financial and accounting procedures,
identify problems and make proposals for a suitable
cost-accounting system for monitoring performance on a continuing
basis;
2\. Examine the internal audit system and procedures and suggest
improvements;
3\. Examine the present revenue collection procedures and cost
recovery methods and propose improvements\.
On the basis of the above, the consultants would be required to
prepare and submit a corporate plan for a period of five years\. This plan
would include:
- 74 - ANNEX IV
Page 27 of 31
1\. a detailed and phased work program for the CHA;
2\. the targets to be reached in terms of number and types of
houses to be built;
3\. the requirements for various resources such as land,
materials, equipment and manpower; and
4\. the definition of the role of the CHA in the overall public
sector housing program\.
The consultants should be specialists in financial analysis and
management and have wide knowledge of the operation and functioning of
public sector housing institutions\. The consultants should report to the
Ministry of Housing, Land and the Environment\. This assignment would have
a duration of six months\.
Tentative Starting Date: May 1984
Tentative Completion Date: November 1984
- 75 -
ANNEX IV
Page 28 of 31
MAURITIUS
TERMS OF REFERENCE
A PROJECT TO DEVELOP GENERAL STRATEGY AND FRAMEWORK FOR INFORMATION
MANAGEMENT
Background
1\. The Data Processing Division of the Ministry of Finance serves
all Government ministries in Mauritius as well as the local
municipalities, the Development Wcrks Corporation and the Sugar
Arbitration Central Board\. The Division has two ICL mainframe computers,
an obsolete model 1900, which is to be replaced shortly, and an ME29\. The
Division has at present eight systems analysts and ten programmers,
although in the staffing table eleven systems analysts and sixteen
programmers have been allocated\.
2\. With these limited resources, the Data Processing Division
handles social security data, trade statistics, income tax, Government
payroll, telephone billing, pensions, rice rationing, unemployment
register, and sales tax, as well as the data processing needs of the
Central Statistics offices, including surveys, housing census, population
census, monthly demographics, medical statistics, records of the Registrar
General and microfiche index\. Although the Division is well organized and
efficiently run, the lack of adequate resources results in delays,
difficulties in access and severe restrictions on the introduction of new
applications to meet the Government's expanding needs\. The Ministry of
Economic Planning and Development, in order to meet its unique
requirements, has purchased an Apple II micro computer and word processor,
and other ministries are considering similar equipment\. The Central Water
Authority has opted for contracting out its data processing and analysis
with a private company in Mauritius\.
3\. In addition, Mauritius has an urgent need to collect, process
and analyze additional data, to underpin and expand its existing capacity
for economic planning and in so doing to increase its capacity for
objective policy formulation under tight and changing constraints\. Whilst
this need is common to all sectors of the economy, it is clearly obvious
in agriculture where the need to continuously define and redefine the
economic limits that exist for diversification is essential if Government
is to objectively manage the economy's capacity to (i) generate or save
foreign exchange, (ii) productively employ labor and (iii) move towards
more productive use of its limited land resources\.
- 76 -
ANNEX IV
Page 29 of 31
4\. To this end the Government has already agreed to set up two
Commissions of Inquiry, one for sugar and one for tea and to provide
specialized consultant's services to carry out a number of specific
studies\. The Government has also a) reviewed the scope for import
substitution; b) commissioned the Mauritius Sugar Industry Research
Institute (MSIRI) to compile an index of the physical and agronomic data
of all sugarcane fields; and c) agreed to a survey of crown lands to
formulate a policy for their optimum utilization\.
5\. To effectively utilize the results of these studies and data
collected for objective policy formulation will require considerable
analysis including the means to express this in terms of domestic resource
costs--initially by commodity but eventually in a form that will enable it
to be cross-referenced and presented by land area, production mix or
system, type of producer and impact on the labor market\. Accordingly,
there is a need to ensure that in the medium to long-term any
recommendations relating to the computer needs of Government should take
into account the need for compatibility between a wider range of data
types and sources than is currently the case\.
6\. The purchase of another ICL ME29 within the next few months will
permit the Data Processing Division to handle its current work load for
the short-run (one to two years) with little or no room for expansion\. It
is clear that more and more Government offices will be seeking\.
supplementary equipment, both to meet their expanding needs and to avoid
lengthy delays in access to the central computer\. The Government has,
therefore, requested a Government-wide analysis of its computer needs in
order to establish a consistent framework for an integrated computer
system which in the medium- and longer-term will need to accomodate a
wider range of data types and sources than it now has the capacity to
handle\.
Ob jectiv3:s
7\. The objectives of this project are:
(1) to assist the Government of Mauritius in achieving a consensus
about the general framework it will adopt in the development of
its information resource facilities;
(2) to recommend a multi-year facilities plan that is consistent
with the agreed general framework, that responds to users' needs
and that is detailed and specific for 1984-86 and more general
for years beyond; and
- 77 -
ANNEX IV
Page 30 of 31
(3) to establish a process of periodically updating the facilities
plan\.
(4) to recommend capacity requirements for hardware acquiL tion,
software selection and application design\.
8\. Specific Tasks
(1) The consultant will review and develop a summary report on all
information handling work done by and for the Government of
Mauritius including the Central Ministries, local municipalities
and parastatal organizations\. This summary report should
include:
(a) an inventory of the information systems presently in use
and linkages between them;
(b) identification of gaps and specific problem areas in the
present system;
(c) indicative demand projections for facilities through 1986
and an outlook for two years beyond that\.
(3) The formulation of alternative frameworks for a Government-wide
information management system\. The consultant will recommend
one of the formulated frameworks, giving reasons for the
recommendation by addressing the following issues:
(a) comparative costs and other trade-offs between
alternatives;
(b) availability of skills and expertise required to implement
alternative systems and an indicator of future staffing
needs;
(c) reliability, availability, and serviceability
considerations;
(d) appropriate combinations of large systems, mini computers,
micro computers, office technology equipment, and external
facilities;
(e) communication networks to link internal systems for easy
access and storing of data;
(f) storage, control and maintenance of institutional data;
- 78 -
ANNEX IV
Page 31 of 31
(g) systems and application software availability;
(h) incorporation or phase-out of existing hardware and
software;
(4) The consultant will obtain approval for the selected framework
from the Government Review Committeee before proceeding with the
detailed equipment and facilities plan, based on the alternative
finally selected\.
(5) Following agreement by the Government Review Committee on the
selected framework, the consultant will prepare an Information
Resource Facilities Plan for 1984-1986 including a schedule of
phase-in/phase-out of equipment and software, in accordance with
established priorities, availability of premises, and qualified
staff\.
(6) The consultant will recommend steps to be taken to implement the
facilities plan, including capacity requirements for hardware
acquisition, software selection, application design and training
requirements\.
Timing
9\. The consultant will work in close coordination with the Data
Processing Division in the Ministry of Finance and the Central Statistics
Office under the general supervision of the Director of Planning, Ministry
of Economic Planning and Development\. Proposals for alternative
frameworks for a Government-wide information management system should be
submitted to the Government within four months following the start of the
project\. The consultant should allow one month for discussion and
agreement with the Government before proceeding to the final stage\. Once
agreement has been reached, the consultants should complete the detailed
Information Resource Facilities Plan including the steps to be taken to
implement the Plan, within one month\.
Tentative starting date: March 1984
Completion date: September 1984
- 79 ANNE\. V
Page 1 of I
SCHEDULE OF IMPLEFENTATION OF PROJECT STUDIES
1983 1\.-9 1985
Itern Dec Jan Feb Mar Apr May Jun 'ul Aug Sep Oct Nov Dec Jan Feb Mar Apr
Ccmpletion of Sugar
Ccmission of Inquiry X
Data Collection
(Sugar Sector Unit) X X X X X X X X
Tea Industry Review X X X X X
Survey of Crcwn Lands X X X X
Index of Nonr-Sugar Lands X X X X
Agricultural
Diversification X X X X
Fisheries X X X
Marine Pollution X X X X X X
Rodrigues Developient X X X X X X
Private Sector
Wage Regulations X X X X X X X
Unemployment Schame X X X
Organization Study M[TO X X X X X X X
MGTO Marketing Strategies X X X X X X X
Public Sector Studies X X X X X X
Central Housing Authority X X X X X X
Computer Study X X X X X X
I BR D 3209R(PPA
DECEMBER 1i9t
MAURITIUS
Point cxCcn noni
---TRUNK ROADS /|1 z ,X -
ARTERIAL ROADS
OTHER MAIN ROADS t, Ant
\.- \. BUILT UP AREAS
SUDAR CANE
LANDS UNDER TEA\. POSITION JANUARY ES\.
FOREST & SCRU\.LAND
IS\., Y4ETS mplenio"
ALTITUDES OVER 1000 FEET
CUI LOULISI
( cr G )\/II\\.5e, THIS MAP ISv BASE Ov 191 329 \.
7ort ni
r f c
tw f ) r
\. *~~- mireAgi nrs^tanJ~@8@prat@)§ * ,,
edn,P f~r,v/" \.a\.on laIrr >
Xl4 L A = {~ oidakF# ^lie\. rk ~/e C4
jrdKrftnn sv dnrmn | APPROVAL |
P086465 | Page 1
INTEGRATED SAFEGUARDS DATASHEET
APPRAISAL STAGE
I\. Basic Information
Date prepared/updated: 02/10/2006
Report No\.: AC1417
1\. Basic Project Data
Country: Iran, Islamic Republic of
Project ID: P086465
Project Name: Road Safety Project
Task Team Leader: Jean-Charles Crochet
Estimated Appraisal Date: November 7,
2005
Estimated Board Date: May 18, 2006
Managing Unit: MNSIF
Lending Instrument: Sector Investment
and Maintenance Loan
Sector: Roads and highways (60%);Health (20%);General public administration sector
(20%)
Theme: Social risk mitigation (P);Other public sector governance (P);Other social
development (P);Other rule of law (S)
IBRD Amount (US$m\.):
80\.00
IDA Amount (US$m\.):
0\.00
GEF Amount (US$m\.):
0\.00
PCF Amount (US$m\.):
0\.00
Other financing amounts by source:
BORROWER
24\.90
24\.90
Environmental Category: B - Partial Assessment
Simplified Processing
Simple []
Repeater []
Is this project processed under OP 8\.50 (Emergency Recovery)
Yes [ ]
No [X]
2\. Project Objectives
The overall project development objective is to substantially reduce road accidents,
deaths and injuries in high-risk pilot inter-urban road corridors in six provinces (Gilan,
Quazvin, Tehran, Qom, Esfahan, and Khorassan) and in specific pilot urban areas in five
cities (Rasht, Tehran, Esfahan, Shiraz and Mashhad), through a coordinated and
integrated package of cost-effective, multi-sectoral, road safety interventions designed on
the basis of international best practice, and strengthen institutional capability for
implementation of the Government strategy in the transport sector\.
The key performance indicators are:
-
Reduction of the rates of accident, fatality, and injury in the pilot corridors and urban
areas;
-
Improved road user behavior measured by the observance of speed limits and the use
of seat belts and motorcycle helmets in the pilot corridors and urban areas;
-
Establishment of sound strategies and programs to improve efficiency in key areas of
the transport sector\.
Page 2
The proje
ct would contribute to the achievement of one of the countrys major policy
goals for the transport sector, road safety improvement, as set in the Fourth FYDP\. The
project is also fully consistent with the draft country assistance strategy (CAS) now being
finalized with the Government\. It would contribute to the CAS second objective
(Sharing the fruits of growth while addressing the needs of the poor and disadvantaged)
by reducing a major source of health costs and protecting vulnerable families from falling
into poverty\. It would also contribute to the CAS fourth objective (Building efficient,
accountable, and transparent public-sector governance) by greatly strengthening the
capability of public institutions to address an issue of national concern in a coordinated
way and with full participation of the population\.
3\. Project Description
The project consists mainly of a comprehensive program of activities for improving road
safety in the pilot corridors and urban areas as well as developing regulations and
institutional capabilities at the national level whenever possible in the short term\. These
activities have been designed on the basis of the experience of successful countries and
the assessment of issues in road safety management in Iran presented in Part A\.1 above\.
The project has seven components\. The first six are intended to result in safer road users,
safer vehicles, safer roads, better road safety monitoring and evaluation systems,
improved post crash rescue and emergency services and stronger institutional capacity, as
described below\. The seventh component, which is not related to road safety, but was
requested by the Ministry of Roads and Transportation (MRT), is for assisting the
Government in implementing key elements of its transport strategy\.
Component 1: Safer Road Users (US$16\.2 million) This component is aimed mainly at
improving road user behavior in the pilot corridors and urban areas\. It will consist of
technical assistance and training as well as the provision of equipment\. The main outputs
will be better work methods and programs for traffic police deterrence of high risk road
user behavior, public information campaigns coordinated with police enforcement
activities, better road safety education programs, improved regulations and procedures for
driver training and testing and for management of commercial driver health, manual and
guidelines covering all the above subject matters, trained staff in related government
agencies, and better educated children in the project pilot areas\.
Component 2: Safer Vehicles (US$0\.60 million)\. This component is aimed at improving
the road worthiness of both private cars and commercial vehicles\. It will consist of
technical assistance and training\. The main outputs will be new technical standards and
procedures for testing of vehicles, new regulations for loading of commercial vehicles
and transport of hazardous materials, recommendations for the establishment of a central
vehicle registration database, action plans for implementation, and trained police officers,
government agencies staff, and commercial vehicles operators\.
Component 3: Safer Roads (US$70\.8 million)\. This component is aimed at the provision
of safe rural and urban road infrastructure in the pilot corridors and urban areas\. It will
consist of technical assistance and training, provision and installation of new road safety
engineering equipment (e\.g\. signs, markings, crash barriers), and low cost civil works
Page 3
designed on the basis of best world wide practices\. The main outputs will be technical
manuals and guidelines for safe audits and accident blackspot analysis, trained technical
staff in the Road Maintenance and Transportation Organization (RMTO) and the pilot
cities, and the entire length (about 1,000 km) of the pilot corridors as well as about 175
km of main arteries in the pilot urban areas made free of major safety hazards\.
Component 4: Road Safety Monitoring and Evaluation Systems (US$5\.9 million)\. This
component is aimed at establishing an adequate system for monitoring and evaluation of
road safety activities in the pilot corridors and urban areas, and at setting up a national
road crash data and analysis system that provides reliable information to all concerned
agencies nationwide\. It is expected that the M&E methodologies developed under the
project will later on be implemented nationwide\. This component will consist of technical
assistance and training as well as the provision of equipment including new software and
hardware\. The main outputs will be better methods and procedures, adequate data
recording, processing, analysis and reporting systems, trained staff in concerned agencies,
and continuous feedback to be used for the fine tuning or adjustment of project activities\.
Component 5: Improving Post Crash Rescue and Relief Services and Emergency
Medical Services (US$2\.5 million)\. This component is aimed at improving the
performance of rescue and relief services and emergency medical services in the pilot
corridors and urban areas\. It will consist of technical assistance and training as well as
the provision of equipment\. The main outputs will be guidelines and manuals for
improved services, action plans for implementation, trained staff, and increased
capability for rescue operations on the site of accidents\.
Component 6: Institutional Development and Support (US$2\.7 million)\. This
component is aimed at improving and supporting the national institutional framework for
road safety activities\. It will consist of technical assistance and training as well as the
provision of equipment\. The main outputs will be improved road safety legislation
(including especially the penalty system), guidelines for improved road safety funding
allocation processes, delivery of annual consultation and information programs on the
NRSAP in pilot corridors and cities, implementation of an action plan for the
strengthening of the capacity of the Road Safety and Traffic Department (RSTD) of
RMTO, trained staff in road safety strategic management at the national level and
provincial and city levels in the pilot areas, and an updated National Road Safety Action
Plan for the period after the project\. This component will also involve support to the
Project Management Unit (PMU) through the provision of technical assistance and
training, office equipment, and the funding of incremental operating costs\.
Component 7: Transport Technical Assistance (US$5\.8 million)\. This component is
aimed at improving efficiency of operations and capacity in the transport sector through
transfer of international best practices\. It will consist of technical assistance and training\.
The main outputs will be diagnostics and specific recommendations for improving the
organization, management, regulations, and financial policies related to road
management, railway transport, port operations, and logistics and transit transport, action
plans for implementation, and trained staff\.
Page 4
4\. Project Location and salient physical characteristics relevant to the safeguard
analysis
Of the project components, only the components that include civil works will involve
potential negative social and/or environmental impacts\. The civil works proposed under
the project are blackspot improvements located in the above defined pilot inter-urban
corridors and pilot urban areas and typically include small engineering works such as
installation of guard rails, signs and rumble strips, construction of traffic islands and
segregated traffic lines, minor road widening and improvements to accommodate
pedestrian paths, site distances and curvature\.
Social impacts: the expected adverse social impacts will include small-scale land
acquisition/resettlement necessary for the construction of pedestrian facilities, minor road
widening or realignment to improve sight distances, curvature, and channellisation of
traffic, and installation of roundabouts\. Potentially affected persons are those residing
along the demonstration corridors where re-alignment or blackspot improvements are
necessary\. In addition, intersection improvements may be required, which are typically in
urban and urbanizing areas\. For the first batch of civil works, the locations and general
design have been identified by a consultant and a field visit took place during the pre-
appraisal mission to assess the scale of the potential resettlement issues\. It was confirmed
that resettlement issues were going to be very limited\. For the second and third batch of
civil works, black spots to be treated have yet to be identified, but it is expected that
impacts will be similar to those of the first batch\. Finally, the absence of indigenous
people living or transiting along the demonstration corridors in the pilot provinces and
cities has been confirmed by an environmental impact assessment expert during the pre-
appraisal mission\.
Direct environmental impacts: these will be confined to existing roadways and
immediate adjacent areas where civil works will be undertaken\. The selection of the first
batch of civil works has been made with regard to minimizing potential environmental
impacts, which was confirmed by the team's field visits during the pre-appraisal mission\.
For the second and third batch of civil works, black spots to be treated have yet to be
identified, but it is expected that impacts will be similar to those of the first batch\. In
addition, the team consulted with an environmental assessment expert during the pre-
appraisal mission, who confirmed that there were no undisturbed habitats, special-status
wildlife species registered and/or no cultural relics in the project areas or its
surroundings\. Finally, as all road works will be on existing right of way, except in very
minor cases, no long-term impact to area soils and hydrological characteristics are
expected\.
5\. Environmental and Social Safeguards Specialists
Mr Knut Opsal (MNSRE)
Mr John Bryant Collier (MNSRE)
Ms Sophie Marie-Odile Jablonski (MNSIF)
Page 5
6\. Safeguard Policies Triggered
Yes No
Environmental Assessment (OP/BP 4\.01)
X
Natural Habitats (OP/BP 4\.04)
X
Forests (OP/BP 4\.36)
X
Pest Management (OP 4\.09)
X
Cultural Property (OPN 11\.03)
X
Indigenous Peoples (OP/BP 4\.10)
X
Involuntary Resettlement (OP/BP 4\.12)
X
Safety of Dams (OP/BP 4\.37)
X
Projects on International Waterways (OP/BP
7\.50)
X
Projects in Disputed Areas (OP/BP 7\.60)
X
II\. Key Safeguard Policy Issues and Their Management
A\. Summary of Key Safeguard Issues
1\. Describe any safeguard issues and impacts associated with the proposed project\.
Identify and describe any potential large scale, significant and/or irreversible impacts:
Environmental Assessment (OP 4\.01)
The requirements of the safeguard policy on environmental assessment apply to the
project\. Environmental Management guidelines have been prepared in response to that
policy\. While preparing this document, it was found that the scale and magnitude of the
potential environmental impacts are very low, with most of the impacts site-specific, and
none irreversible\. The overall environmental impact of the project will be positive, as
traffic flows and road safety improve
Involuntary Resettlements (OP 4\.12)
Depending on the design and scale of engineering work associated with the blackspots
improvements, minor land acquisition and resettlement may take place, and hence this
may trigger the safeguard policy on involuntary resettlements\. A Resettlement Policy
Framework (RPF) has been prepared in response to that policy\. The RPF will ensure that
all displaced persons are compensated for their losses at replacement cost and provided
with other assistance and rehabilitation measures to assist them to improve, or at least
maintain, their pre-project living standards and income earning capacity\. Every effort will
be made to avoid land acquisition impacts, or, where it is not possible, to minimize
displacement and adverse impacts of projects by examining all available design options\.
Finally, the project is expected to generate social benefits to a large number of people\.
These include mainly (i) people who use the pilot corridors and will benefit from a safer
road environment and a reduced risk of accidents, and (ii) pedestrians and people who
work or live within proximity of the black spots or within the pilot urban areas, who will
have a lesser risk of being a road accident victim\.
Page 6
2\. Describe any potential indirect and/or long term impacts due to anticipated future
activities in the project area:
No indirect or long-term environmental impact due to anticipated future activity in the
project area, are foreseen\.
As road injury and deaths generally have an impact on the particularly economically
active elements of the community, the Project is expected to have positive impacts on
poverty reduction through the decrease in injuries to those elements\. In addition, the
social and economic consequences of rehabilitation and health care, which are often only
partly considered, cause health and economic losses, and hinder escape from poverty\. As
such, the Project is expected to address both health-related factors that push people into
poverty or make escape from it difficult, along with a reduction of health and economic
losses resulting from the accident trauma itself\.
3\. Describe any project alternatives (if relevant) considered to help avoid or minimize
adverse impacts\.
The design of the first batch of blackspot improvements was prepared with regard to
minimizing potential environmental and social impacts, which was confirmed by the
team's field visits during the pre-appraisal mission\. For the second and third batches of
civil works, black spots to be treated have yet to be identified, but EMP guidelines, to be
followed by the consultants in charge of the detailed design of the civil works, should
ensure a similar minimization of potential environmental and social impacts\.
4\. Describe measures taken by the borrower to address safeguard policy issues\. Provide
an assessment of borrower capacity to plan and implement the measures described\.
The only safeguard policies which are triggered in this project deal with Environmental
Assessment and Resettlement, as explained previously\.
To address the Environmental Assessment safeguard requirements:
-
the Borrower has prepared, endorsed and disclosed Environmental Management Plan
(EMP) guidelines that will ensure proper consideration of potential environmental and
social impacts at all stages of sub-project design for each batch of civil works, and by all
concerned parties;
-
due to the limited environmental capacities within the Road Maintenance and
Transport Organization (RMTO), which is the project implementation agency, the PMU
has recruited a (half-time) environmental safeguard consultant, who will organize and
oversee environmental management work under the project, and provide overall technical
support to the PMU on environmental matters\.
To address the Resettlement safeguard requirements of the World Bank:
-
the Borrower has prepared, endorsed and disclosed a Resettlement Policy Framework
(RPF) that will ensure proper consideration of potential resettlement and land acquisition
Page 7
impacts at all stages of sub-project design for each batch of civil works, and by all
concerned parties;
-
due to the limited resettlement/land acquisition capacities within RMTO, the PMU has
recruited a (part-time) resettlement/land acquisition safeguard consultant, who will
organize and oversee resettlement / land acquisition management work under the project,
and provide overall technical support to the PMU on resettlement/land acquisition
matters\.
5\. Identify the key stakeholders and describe the mechanisms for consultation and
disclosure on safeguard policies, with an emphasis on potentially affected people\.
Road users of the corridors and pilot urban areas, and people living or working in close
proximity are the key stakeholders directly affected by the project\.
-
The EMP guidelines include the requirement that comprehensive public consultation
be carried out at each stage of sub-projects' development with potentially affected groups
and local NGOs about the sub-project's environmental and social aspects, and that their
views be taken into account\.
-
The RPF clearly requires that potentially affected people participate throughout the
various stages of planning and implementation of the Inventories and Resettlement Plans,
including at the blackspot improvement design stage\. For this purpose, the RPF requires
that all potentially affected persons are informed of the provisions of the RPF earlier in
the process, as well as of their entitlements and rehabilitation choices, by various
meetings at the local provincial and/or city levels\.
-
In addition to the consultation process, the RPF and each Resettlement Plan will be
made available locally (for each sub-project) in Farsi before the start of the expropriation
activities\. Similarly, the EMP guidelines and the EMP prepared for each sub-project shall
be available locally in Farsi before the start of the works\.
B\. Disclosure Requirements Date
Environmental Assessment/Audit/Management Plan/Other:
Date of receipt by the Bank
01/13/2006
Date of "in-country" disclosure
01/01/2006
Date of submission to InfoShop
01/13/2006
For category A projects, date of distributing the Executive
Summary of the EA to the Executive Directors
Resettlement Action Plan/Framework/Policy Process:
Date of receipt by the Bank
01/13/2006
Date of "in-country" disclosure
01/01/2006
Date of submission to InfoShop
01/13/2006
Page 8
*
If the project triggers the Pest Management and/or Cultural Property, the
respective issues are to be addressed and disclosed as part of the Environmental
Assessment/Audit/or EMP\.
If in-country disclosure of any of the above documents is not expected, please
explain why:
C\. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the
ISDS is finalized by the project decision meeting)
OP/BP/GP 4\.01 - Environment Assessment
Does the project require a stand-alone EA (including EMP) report?
Yes
If yes, then did the Regional Environment Unit or Sector Manager (SM)
review and approve the EA report?
Yes
Are the cost and the accountabilities for the EMP incorporated in the
credit/loan?
Yes
OP/BP 4\.12 - Involuntary Resettlement
Has a resettlement plan/abbreviated plan/policy framework/process
framework (as appropriate) been prepared?
Yes
If yes, then did the Regional unit responsible for safeguards or Sector
Manager review the plan?
Yes
The World Bank Policy on Disclosure of Information
Have relevant safeguard policies documents been sent to the World Bank's
Infoshop?
Yes
Have relevant documents been disclosed in-country in a public place in a
form and language that are understandable and accessible to project-affected
groups and local NGOs?
Yes
All Safeguard Policies
Have satisfactory calendar, budget and clear institutional responsibilities
been prepared for the implementation of measures related to safeguard
policies?
Yes
Have costs related to safeguard policy measures been included in the project
cost?
Yes
Does the Monitoring and Evaluation system of the project include the
monitoring of safeguard impacts and measures related to safeguard policies?
Yes
Have satisfactory implementation arrangements been agreed with the
borrower and the same been adequately reflected in the project legal
documents?
Yes
Page 9
D\. Approvals
Signed and submitted by:
Name
Date
Task Team Leader:
Mr Jean-Charles Crochet
02/10/2006
Environmental Specialist:
Mr John Bryant Collier
Social Development Specialist
Mr Knut Opsal
Additional Environmental and/or
Social Development Specialist(s):
Ms Sophie Marie-Odile Jablonski
Approved by:
Sector Manager:
Mr Hedi Larbi
02/10/2006
Comments: | APPROVAL |
P165831 |  The World Bank
Targeted Social Assistance Rollout (P165831)
Combined Project Information Documents /
Integrated Safeguards Datasheet (PID/ISDS)
Appraisal Stage | Date Prepared/Updated: 31-Oct-2017 | Report No: PIDISDSA23437
Oct 23, 2017 Page 1 of 10
The World Bank
Targeted Social Assistance Rollout (P165831)
BASIC INFORMATION
OPS_TABLE_BASIC_DATA
A\. Basic Project Data
Country Project ID Project Name Parent Project ID (if any)
Tajikistan P165831 Targeted Social Assistance P122039
Rollout
Parent Project Name Region Estimated Appraisal Date Estimated Board Date
Social Safety Net Strengthening EUROPE AND CENTRAL 07-Nov-2017 20-Dec-2017
Project ASIA
Practice Area (Lead) Financing Instrument Borrower(s) Implementing Agency
Social Protection & Labor Investment Project Ministry of Finance, State Agency for Social
Financing Republic of Tajikistan Protection (SASP)
Proposed Development Objective(s) Parent
The development objective of the Project is to improve the capacity of the Government of Tajikistan to plan, monitor,
and manage social assistance for the poor through the development of a national registry of social protection and the
provision of training, equipment and related items for improving said capacity\.
Proposed Development Objective(s) Additional Financing
To achieve national geographic coverage of the Targeted Social Assistance program, ensuring integrated delivery of
services\.
Components
Component 2: Capacity building for Launching and Initiating the Rollout of the Targeted Social Assistance Program
Component 3: Project Management
Component 1: Establishing the National Registry for Social Protection and Supporting Development of the Targeted
Social Assistance P rogram
Component 4: Supporting national roll-out of the Targeted Social Assistance Program, including the National Registry
of Social Protection
Financing (in US$, millions)
FIN_SUMM_PUB_TBL
SUMMARY
Total Project Cost 1\.80
Total Financing 1\.80
Financing Gap 0\.00
Oct 23, 2017 Page 2 of 10
The World Bank
Targeted Social Assistance Rollout (P165831)
DETAILS -NewFin3
Total World Bank Group Financing 1\.80
World Bank Lending 1\.80
Environmental Assessment Category
Not Required (C)
Decision
The review did authorize the preparation to continue
B\. Introduction and Context
Country Context
Tajikistan maintains a strong economic growth during 2014-2016 at an average growth rate of 6\.5 percent, driven
mainly by foreign-financed investments\. The poverty rate fell from 32 percent in 2015 to an estimated 30\.3 percent in
2016\. These achievements showcase the Governmentâs efforts and commitments to reforms through adoption of a
number of interventions; such as the expansionary fiscal policies, including a considerable increase in foreign-financed
capital investment in the energy sector and road infrastructure; an accommodative monetary policy supporting a
heightened demand for local currency; and a raise of public sector wages and social transfers\. However, the economy is
still facing considerable challenges caused by the growing domestic vulnerabilities and risks in the financial sector,
business climate, and state-owned enterprises\.
Sectoral and Institutional Context
In the context of these economic challenges and vulnerabilities, the Government of Tajikistan has been working to
reform its social assistance system\. The on-going reform has focused on: (i) consolidating legacy cash social assistance
schemes (old programs of energy subsidies and conditional school allowances) and replacing them with a new Targeted
Social Assistance (TSA), which is a poverty related unconditional cash transfer program; (ii) strengthening a new
targeting mechanism of TSA based on Proxy-Means Testing (PMT); (iii) improving administration of the system,
including establishing a National Registry of Social Protection (NRSP) and putting it in use by electronically registering all
the TSA beneficiaries and payments; and (iv) building capacity at all levels of administration (center, regions, districts,
and Jamoats)\.
From a pilot covering two districts in 2011, the new TSA program was expanded to 10 districts in 2013\. Subsequently,
the Government approved expansion of the program to 15 more districts in mid-2014, and to another 15 districts in
2016\. In February 2017, the TSA bill was signed into the law by the President, laying a solid foundation for the national
TSA rollout in 2018\.
Oct 23, 2017 Page 3 of 10
The World Bank
Targeted Social Assistance Rollout (P165831)
To date, the project has registered the following achievements:
ï The TSA program is fully rolled out in 40 districts, or close to 60 percent of the country, covering
over 400 thousand beneficiaries\.
ï The new information system and National Registry for Social Protection (NRSP) have been
developed and are operational\. All operations of the TSA are fully automated and all records
digitized\. Correspondingly, the capacity of Government to plan, monitor, and manage the social
assistance has been considerably strengthened\. This provides a strong foundation for the planned
national roll-out\.
ï A comprehensive national household survey covering 50 districts and close to 3000 households was
conducted to inform improvements in the PMT formula\.
ï Strategy for national TSA roll-out has been developed and costed\. A full allocation required for the
national roll-out is in the state budget\.
ï Two new regional Program Coordination Centers (formerly known as Data Processing Centers) have
been established to facilitate the work of the program in remote areas, to streamline program
related services, and facilitate integration with other public benefits and services\.
The success of the new TSA program is indication of a strong commitment and capacity of the Government to act on
ambitious plans of a national roll-out in 2018, as mandated in the new Law\. To sustain the current success of the
reform, however, additional investments are required\. The State Agency of Social Protection (SASP), which is in charge
of administering the new system, has been in existence for only three years\. The Regional Centers under SASP were just
established in early 2017 on a pilot basis\. The plans are to establish at least three more such Centers across the country
as data processing and TSA service hubs to facilitate implementation work at the district level and communications
between the center and the districts\. The offices of district and Jamoat level staff in the remaining districts of the
country, where the new TSA program is not yet operational, will need investment in infrastructure and extensive
training\. At the central level, the new NRSP and the information system need to be fully institutionalized by ensuring
proper long-term maintenance arrangements and by developing synergies with other programs, including the disability
certification and benefits\.
C\. Proposed Development Objective(s)
Original PDO
The development objective of the Project is to improve the capacity of the Government of Tajikistan to plan, monitor,
and manage social assistance for the poor through the development of a national registry of social protection and the
provision of training, equipment and related items for improving said capacity\.
Current PDO
To achieve national geographic coverage of the Targeted Social Assistance program, ensuring integrated delivery of
services\.
Oct 23, 2017 Page 4 of 10
The World Bank
Targeted Social Assistance Rollout (P165831)
The original Project Development Objective (PDO), including all indicators, have been achieved\. The project will now
build on those achievements to bring the TSA program to full national scale and to build synergies, both in policy and in
administration, with other social interventions, ensuring holistic integrated approach to managing the social sector (see
below)\. The Project Paper will provide further details after the appraisal\.
Key Results
Proposed PDO indicators:
ï Coverage of the Targeted Social Assistance (TSA) Program (number of districts)
ï Beneficiaries of social safety net programs, TSA (number, core indicator)
ï Beneficiaries of Safety Nets programs, TSA â Female (number, core indicator)
ï Beneficiaries of Safety Nets programs, TSA â Unconditional cash transfers (number, core indicator)
ï TSA Beneficiaries who are elderly women living alone (number)
ï TSA Beneficiaries who are women and heads of households (number)
ï Number of non-TSA beneficiaries of social assistance and services who are registered in NRSP (number)
The indicators will be further reviewed as part of the project appraisal to ensure full alignment with the new Project
Development Objective\.
D\. Project Description
The current project has fully disbursed, having performed at or above the targets\. Most of the original and substantive
activities were conducted under components 1 and 2\. The original components 1 and 2 will remain the same but with
no new activities and no additional fundingallocations to them\. Additional financing will be provided to Component 3
(Project Management) to enable continued management and fiduciary support\. A new Component 4 will be added as
follows:
Component 4: Supporting national roll-out of the Targeted Social Assistance (TSA) Program, including the National
Registry of Social Protection\. Under this component, the proposed AF would extend activities that already constitute
the core of the original project design and supplement them with some new but closely linked activities, specifically:
i) Establishing additional Regional Coordination Centers under State Agency for Social Protection
(SASP) with a broad range of service functions for clients of the TSA program and other programs
managed by SASP\. The activities will include minor renovations, establishing connectivity and stable
electricity supply, transportation and office infrastructure, etc\.
ii) Minor renovation, furniture, and equipment to provide upgraded work places for district and
Jamoat level social workers, connectivity and stable electricity supply, and office logistics\.
iii) Public awareness and information campaigns around TSA, including design and printing of
information materials for general population\.
iv) Securing long-term maintenance arrangements for the National Registry of Social Protection (NRSP)
and the management information system\.
Oct 23, 2017 Page 5 of 10
The World Bank
Targeted Social Assistance Rollout (P165831)
v) Introducing improvements in mechanisms of TSA selection and delivery, specifically: establishing
limits on duration of receipt of benefits, introducing stratification of the PMT scores, and
establishing differentiation in TSA benefits levels, depending on family size and other conditions\. It is
also proposed that the TSA selection threshold be dynamically set, depending on availability of
funds and the program performance\.
vi) Conducting gender analysis of the TSA program to inform potential required policy and
administrative changes\.
vii) Strengthening citizen engagement aspects, including improvements to the current grievance redress
mechanisms\.
viii) Strengthening controls and monitoring of programs managed by SASP\.
ix) Conducting impact and/or targeting efficiency evaluation of the TSA program and capturing
beneficiary perception of the program\.
x) Revisions in the TSA Operations Manual as result of introduction of the proposed changes, including
training staff in new procedures at all levels of administration\.
The project will also support development of an integrated model of public service delivery by SASP, specifically in
establishing or strengthening synergies between various government interventions:
ï Institutionally, investments in establishing the NRSP under the current project will be further capitalized,
whereby the NRSP will be used as a single registry of beneficiaries of various programs;
ï On the policy side, the uses of the TSA targeting mechanism, as a unified method of eligibility assessment for
programs other than TSA will be further elaborated and incorporated into design of other programs to the
extent possible\. The on-going dialogue about improvements in the TSA targeting mechanisms as well as the
planned evaluation campaign for the TSA impact will guide that effort\. The priority arrears for policy
developments and coordination will include energy tariff compensation scheme, nutrition services, and disaster
response mechanisms\.
Finally, building on achievements of NRSP, this component will also help streamline and modernize the process of
disability certification of the State Medico-Social Expertise Service (SMSES)\. There are around 144,000 registered
disabled citizens of all ages in various categories and 34 offices of SMSES that support that function\. The project would
design a blueprint of the new mechanism of electronic registration of all disability cases, as a sub-module of NRSP, help
establish a data exchange with agencies providing benefits and services to those citizens, and invest in the capacity of
SMSES\. This effort will contribute to the agenda of integrating the provision of various social benefits and services\.
E\. Implementation
Institutional and Implementation Arrangements
The implementation arrangements will change to the extent that State Agency for Social Protection (SASP), that has
been in charge of implementing the new TSA program, will now assume the role of the primary implementing agency in
charge of the project\. The Head of SASP will be designated as ex-officio Project Director\. While the SASP has been a
project implementation agency, all fiduciary responsibilities under the parent project have been reserved to Ministry of
Health and Social Protection of Population (MHSPP)\. Under thus AF, the SASP will take direct charge of managing
fiduciary functions\. A group of dedicated consultants will operate under supervision of the Project Director to ensure
Oct 23, 2017 Page 6 of 10
The World Bank
Targeted Social Assistance Rollout (P165831)
smooth implementation and prudent fiduciary function\. The MHSPP, following its institutional mandate, will perform
general supervisory functions over SASP\. The team will conduct the necessary fiduciary assessment of SASP as part of
project appraisal\.
\.
F\. Project location and Salient physical characteristics relevant to the safeguard analysis (if known)
The Project supports a national reform of social assistance\. The Project may support some light
rehabilitation in the central office of the Ministry of Labor and Social Protection, the Ministry of Health and
Social Protection, and the State Agency for Social Protection, as well as regional and district offices
responsible for delivery of the social assistance\.
G\. Environmental and Social Safeguards Specialists on the Team
Kristine Schwebach, Social Safeguards Specialist
Svetlana K\. Sharipova, Social Safeguards Specialist
Satoshi Ishihara, Social Safeguards Specialist
Rustam Arstanov, Environmental Safeguards Specialist
SAFEGUARD POLICIES THAT MIGHT APPLY
SAFEGUARD _TBL
Safeguard Policies Triggered? Explanation (Optional)
while minor repairs in the office buildings might be
financed under the project, none of the works will
Environmental Assessment OP/BP 4\.01 No
include activities that could be categorized as
Category "B"
Natural Habitats OP/BP 4\.04 No No natural habitats will be impacted
Forests OP/BP 4\.36 No No forests or forestry is involved
Pest Management OP 4\.09 No no pesticides purchase or use is foreseen
Physical Cultural Resources OP/BP 4\.11 No No physical cultural resources are involved
Indigenous Peoples OP/BP 4\.10 No not applicable for Central Asia
Involuntary Resettlement OP/BP 4\.12 No no relocation or resettlement is foreseen
Safety of Dams OP/BP 4\.37 No no dams safety is involved
Projects on International Waterways
No no activities in the vicinity of water sites
OP/BP 7\.50
Oct 23, 2017 Page 7 of 10
The World Bank
Targeted Social Assistance Rollout (P165831)
Projects in Disputed Areas OP/BP 7\.60 No not applicable
KEY SAFEGUARD POLICY ISSUES AND THEIR MANAGEMENT
OPS_SAFEGUARD_SUMMARY_TBL
A\. Summary of Key Safeguard Issues
1\. Describe any safeguard issues and impacts associated with the proposed project\. Identify and describe any potential
large scale, significant and/or irreversible impacts:
No environmental impacts are expected under the project\. Minor renovations including plastering, installation of air
conditioners, replacement of furniture will be permitted\. However, none of the renovation activities that could be
assigned a Safeguards Category "B" will be allowed\. The Project Operations Manual will include environmental
guidelines relating to the minor repairs to offices\.
2\. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area:
n/a
3\. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts\.
n/a
4\. Describe measures taken by the borrower to address safeguard policy issues\. Provide an assessment of borrower
capacity to plan and implement the measures described\.
n/a
5\. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies,
with an emphasis on potentially affected people\.
n/a
OPS_SAFEGUARD_DISCLOSURE_TBL
B\. Disclosure Requirements (N\.B\. The sections below appear only if corresponding safeguard policy is triggered)
OPS_COMPLIANCE_INDICATOR_TBL
C\. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the ISDS is finalized by the project
decision meeting) (N\.B\. The sections below appear only if corresponding safeguard policy is triggered)
OPS_ PDI_ COMP_TA BLE
The World Bank Policy on Disclosure of Information
Have relevant safeguard policies documents been sent to the World Bank for disclosure?
NA
Have relevant documents been disclosed in-country in a public place in a form and language that are understandable
and accessible to project-affected groups and local NGOs?
Oct 23, 2017 Page 8 of 10
The World Bank
Targeted Social Assistance Rollout (P165831)
NA
OPS_ALL_COMP_TABLE
All Safeguard Policies
Have satisfactory calendar, budget and clear institutional responsibilities been prepared for the implementation of
measures related to safeguard policies?
NA
Have costs related to safeguard policy measures been included in the project cost?
NA
Does the Monitoring and Evaluation system of the project include the monitoring of safeguard impacts and measures
related to safeguard policies?
Yes
Have satisfactory implementation arrangements been agreed with the borrower and the same been adequately
reflected in the project legal documents?
Yes
CONTACT POINT
World Bank
Oleksiy A\. Sluchynskyy
Senior Economist
Borrower/Client/Recipient
Ministry of Finance, Republic of Tajikistan
Ahliddin Nuriddinzoda
Head of the External Debt Department
minfin@tojikiston\.com
Implementing Agencies
State Agency for Social Protection (SASP)
Abdukhakim Kholzoda
Director
hakim\.67@mail\.ru
Oct 23, 2017 Page 9 of 10
The World Bank
Targeted Social Assistance Rollout (P165831)
FOR MORE INFORMATION CONTACT
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 473-1000
Web: http://www\.worldbank\.org/projects
APPROVAL
Task Team Leader(s): Oleksiy A\. Sluchynskyy
Approved By
Safeguards Advisor: Nina Chee 30-Oct-2017
Practice Manager/Manager: Cem Mete 30-Oct-2017
Country Director: Sascha Djumena 02-Nov-2017
Oct 23, 2017 Page 10 of 10 | APPROVAL |
P048204 | Document
de la Banque mondiale
Rapport N° 19627-CM
DOCUMENT D'ÉVALUATION DU PROJET
DE
RENFORCEMENT DES CAPACITÉS DE GESTION
DE L'ENVIRONNEMENT DANS LE SECTEUR PÉTROLIER
EN RÉPUBLIQUE DU CAMEROUN
POUR LEQUEL UN CRÉDIT DE 4,3 millions de DTS
(équivalant à 5,77 millions de dollars)
EST PROPOSÉ
30 mars 2000
Groupe environnemental AFTE1
Département des opérations AFC07
Vice-Présidence Afrique
TAUX DE CHANGE
Monnaie = Franc CFA (FCFA)
1 USD = 651 FCFA
EXERCICE FINANCIER
1er juillet 30 juin
ABREVIATIONS ET SIGLES
AFD Agence française de développement
BIRD Banque internationale pour la reconstruction et le développement
COTCO Cameroon Oil Transportation Company
CPSP Comité de pilotage et de suivi des pipelines
CTNCS Comité technique national de suivi et de contrôle des aspects environnementaux
des projets pétroliers (Tchad)
ERS Environnement, routes et sécurité (section du CPSP)
EXXON Exxon Mobil Corporation (États-Unis)
FDI Fonds de développement institutionnel
GTZ Office allemand de la coopération technique
IDA Association internationale pour le développement
IEC Information, éducation, communication
MESRS Ministère de l'enseignement supérieur et de la recherche scientifique
MS Ministère de la santé publique
MINEF Ministère de l'environnement et de la forêt
MINUH Ministère de l'urbanisme et de l'habitat
MINPAT Ministère du Plan et de l'aménagement du territoire
MMERH Ministère des mines, de l'énergie et des ressources hydrauliques
ONG Organisation non gouvernementale
PAEH Programmes d'amélioration de l'environnement hors-site
PGE Plan de gestion environnementale
PIB Produit intérieur brut
PPA Plan pour les populations autochtones
PPF Mécanisme de financement de la préparation des projets
RFE Rapport de fin d'exécution
SAP Stratégie d'aide au pays
SFI Société financière internationale
SIG Système informatique de gestion
SISE Système d'information sur le suivi environnemental
SNH Société nationale des hydrocarbures
TOTCO Tchad Oil Transport Company
Vice-président : Jean-Louis Sarbib
Directeur des opérations : Serge Michailof
Responsable sectoriel : Charlotte Bingham
Chef de projet : Jean-Roger Mercier
PROJET DE RENFORCEMENT DES CAPACITÉS DE GESTION
DE L'ENVIRONNEMENT DANS LE SECTEUR PÉTROLIER (projet CAPECE)
SOMMAIRE
Page
A\. Objectif de développement du projet 1
1\. Objectif de développement du projet et principaux indicateurs de performance 1
2\. Indicateurs clés de performance 1
B\. Contexte stratégique 1
1\. Objectif sectoriel de la stratégie d'aide au pays (SAP) soutenu par le projet 1
2\. Principaux problèmes sectoriels et stratégie du gouvernement 3
3\. Problèmes sectoriels qui seront traités par le projet et choix stratégiques 4
C\. Description sommaire du projet 5
1\. Composantes du projet 5
2\. Principales réformes institutionnelles et de politique générale appuyées
par le projet 8
3\. Avantages et population cible 8
4\. Dispositifs institutionnels et modalités d'exécution 9
D\. Justification du projet 10
1\. Autres options envisagées pour le projet et raisons de leur rejet 10
2\. Principaux projets connexes financés par la Banque
et/ou d'autres institutions de développement 11
3\. Les leçons de l'expérience et leur prise en compte dans la conception du projet 11
4\. Indications de l'engagement de l'emprunteur et de son attachement au projet 12
5\. Valeur ajoutée par l'appui apporté par la Banque au projet 13
E\. Analyse sommaire du projet 13
1\. Analyse économique 13
2\. Analyse financière 14
3\. Analyse technique 14
4\. Analyse institutionnelle 14
5\. Analyse sociale 14
6\. Évaluation environnementale 15
7\. Approche participative 15
F\. Viabilité et risques 15
1\. Viabilité 15
2\. Risques critiques 16
3\. Aspects susceptibles de prêter à controverse 17
G\. Principales conditions du prêt 17
1\. Conditions d'entrée en vigueur 17
2\. Autres 17
H\. Conditions de mise à exécution 17
I\. Respect des politiques de la Banque 18
Annexes
Annexe 1\. Récapitulatif de la conception du projet 19
Annexe 2\. Description détaillée du projet 23
Annexe 3\. Coûts estimatifs du projet 37
Annexe 4\. Récapitulatif de l'analyse coût-efficacité 38
Annexe 5\. Modalités de passation des marchés et de décaissement 39
Annexe 6\. Calendrier d'instruction du projet 48
Annexe 7\. Documents figurant dans le dossier du projet 49
Annexe 8\. État des prêts et des crédits 52
Annexe 9\. Le pays en bref 53
Annexe 10 : Résumé de l'évaluation environnementale
du projet d'oléoduc Tchad-Cameroun 55
Carte No\. IBRD 30660 61
Date : 30 mars 2000 Chef de projet : Jean-Roger Mercier
Directeur des opérations : Serge Michailof Responsable sectoriel : Charlotte Bingham
N° du projet : CM-PE- Secteur : Environnement Thème : Renforcement institutionnel
48204
Instrument de prêt : Assistance technique /Renforcement des Programme d'interventions [ ] Oui [X] Non
capacités ciblées :
Données relatives au financement du projet [ ] Prêt [X] Crédit [ ] Garantie [ ] Autres [Préciser]
Pour les prêts/Crédits/Autres :
Montant (USD/DTS millions) : DTS 4,3 millions (soit 5\.77 millions d'USD)
Conditions proposées : [ ] Plusieurs devises [ ] Devise unique, préciser
Différé d'amortissement (années) : 10 ans [ ] Standard variable [ ] Fixe [ ] Base LIBOR
Durée (années) : 40 ans
Commission d'engagement : 0%
Commission de service : 0,75%
Plan de financement (USD millions) :
Source Monnaie nationale Devises Total
État camerounais 4,2 1,0 5,2
Cofinanciers
IDA 2,1 3,7 5,8
Total 6,3 4,7 11,0
Emprunteur : République du Cameroun
Garant : s\.o\.
Organisme responsable : Comité de pilotage et de suivi des pipelines
Adresse : BP 955, Yaoundé, Cameroun
Contact : Président Comité de pilotage et de suivi des pipelines (CPSP)
Tel : (237) 209860 Fax : (237) 204651
Montant estimatif des décaissements 2001 2002 2003 2004 2005 2006
(Ex\. Banque/USD millions)
Annuel 1,59 2,16 0,84 0,49 0,45 0,23
Cumulé 1,59 3,75 4,60 5,09 5,54 5,77
Pour les garanties : Néant [ ] Garantie partielle [ ] Garantie partielle des
des risques de crédit risques souverains
Durée de l'exécution du projet : Ex\. 2000-2006
Date prévue d'entrée en vigueur : 30 septembre 2000 Date de clôture : 31 décembre 2005
A : Objectif de développement du projet
1\. Objectif de développement du projet : (voir annexe 1)
1\. Le présent projet de renforcement des capacités de protection de l'environnement dans le secteur
pétrolier (projet CAPECE) a pour but d'élaborer et de mettre en place au Cameroun des capacités
nationales de gestion et de suivi environnementaux du Projet d'exploitation pétrolière et d'oléoduc, lequel
donne lieu à la construction et à l'exploitation d'un oléoduc pour le transport du pétrole exporté de la
frontière du Tchad/Cameroun à une installation offshore située aux environ de Kribi (Cameroun)\. À
moyen et long terme, ces capacités aideront le Cameroun à assurer la pérennité environnementale des
projets, programmes et politiques futurs concernant le secteur pétrolier\. Un projet parallèle de
renforcement des capacités, visant des objectifs similaires, est en préparation pour le Tchad\.
2\. Indicateurs clés de performance : (voir annexe 1)
2\. La mise en oeuvre du projet CAPECE permettra au Cameroun de tirer pleinement parti des
avantages du Projet d'exploitation pétrolière et d'oléoduc\. En particulier, on prévoit que les faits suivants
se produiront :
des normes et règles nationales sur l'environnement seront définies pour le secteur pétrolier ;
le Projet d'exploitation pétrolière et d'oléoduc est conforme aux normes et règles
environnementales définies ;
le gouvernement camerounais développe ses capacités de suivi et d'atténuation des impacts
environnementaux des grands projets d'infrastructures et d'énergie, dont dépend la poursuite
d'investissements étrangers judicieux dans le pays ; et
les informations relatives aux garde-fous environnementaux et sociaux du projet sont
communiquées à toutes les parties prenantes intéressées\.
B : Contexte stratégique
1\. Objectif sectoriel de la stratégie d'aide au pays (SAP) soutenu par le projet : (voir Annexe
1)
Numéro du document : 15275-CM Date de l'examen de la SAP : mars 1998
Rapport intérimaire : IDA/R98-14
3\. L'objectif principal de la Banque est d'aider le Cameroun à reprendre le plus rapidement possible
le terrain perdu en matière de développement économique et social, tout continuant à restructurer
son économie afin de rester compétitif dans un monde en mutation rapide\. La SAP a pour
objectif :
a) d'améliorer la mobilisation des ressources ;
b) de réduire la pauvreté, et ;
c) de créer un climat propice au développement du secteur privé\.
La réalisation de ces objectifs créera les conditions d'une croissance plus rapide, ce qui permettra au pays
de prolonger ses efforts de lutte contre la pauvreté\. Le projet CAPECE contribuera surtout à la réalisation
du premier et du troisième de ces objectifs\.
2
4\. Le Projet d'exploitation pétrolière et d'oléoduc offre au Tchad et, dans une moindre mesure, au
Cameroun, une occasion unique de remédier sensiblement à la pauvreté en accroissant les investissements
publics dans les secteurs sociaux essentiels\. La mise en valeur et l'exploitation des gisements de pétrole
tchadiens, de l'oléoduc et des infrastructures annexes au Tchad et au Cameroun sont financées par un
Consortium de sociétés internationales dirigé par Exxon et comprennent : a) la mise en valeur de
gisements de pétrole dans la région de Doba (République du Tchad), y compris le forage d'environ
300 puits et la construction d'installations et d'infrastructures annexes ; et b) , i) la construction d'un
oléoduc de 76 cm de diamètre et d'environ 1070 km de long (enterré à environ 1 m de profondeur) reliant
Doba à la côte atlantique du Cameroun, à proximité de Kribi, trois stations de pompage, et la
modernisation des installations et infrastructures annexes, et ii) l'installation de l'unité flottante de
stockage et de déchargement et des ouvrages auxiliaires et d'un oléoduc sous-marin de 11 km reliant le
littoral atlantique à l'unité\. Une société a été créée pour gérer le projet au Cameroun : la Cameroon Oil
Transportation Company (la COTCO)\. Le coût total du Projet d'exploitation pétrolière et d'oléoduc a été
évalué à environ 3,7 milliards de dollars, le coût de l'investissement pour la Cameroun Oil Transportation
Company (la COTCO) et la Tchad Oil Transportation Company (TOTCO) étant évalué respectivement à
1 800 et 300 millions de dollars\. La construction de la partie de l'oléoduc située sur le territoire
camerounais devrait démarrer vers la fin de 2001 et durer deux ans, tandis que les premiers travaux de
construction des infrastructures associées pourraient démarrer durant la deuxième moitié de l'année civile
2000\.
5\. La préparation du Projet d'exploitation pétrolière et d'oléoduc a nécessité l'élaboration d'un Plan
de gestion environnementale (PGE), conformément aux politiques du Groupe de la Banque mondiale \. La
part de l'État dans le capital de la COTCO sera financée par des prêts de la BIRD et de la Banque
européenne d'investissement (BEI), d'un montant total de 80 millions de dollars\. Au Cameroun, le PGE
sera principalement réalisé sous la responsabilité de la COTCO, avec la participation des gouvernements
camerounais et tchadien\. Outre le partage des responsabilités concernant la mise en oeuvre du PGE au
Cameroun, le gouvernement camerounais sera chargé conjointement avec la COTCO d'assurer le suivi
des impacts environnementaux et sociaux du Projet d'exploitation pétrolière et d'oléoduc\. Le PGE a été
finalisé et approuvé par le gouvernement camerounais en juin 1999\. Ces documents ont été mis à la
disposition du public et peuvent être consultés par toute personne intéressée (le contenu du dossier est
résumé à l'Annexe 10)\.
6\. La construction et l'exploitation de l'oléoduc est un grand projet qui générera des revenus
substantiels pour l'économie camerounaise (droits de transit, dividendes retirés par l'État de sa part dans
le capital de la COTCO et taxes)\. Une protection efficace de l'environnement minimisera les coûts directs
et indirects de cet oléoduc pour le Cameroun\.
7\. Dans le dialogue qu'elle a poursuivi avec le gouvernement camerounais, la COTCO, les ONG et
les autres parties prenantes au sujet du projet, la Banque a préconisé la « protection de l'environnement »
la plus complète possible, c'est-à-dire qui porte sur l'environnement naturel (ressources naturelles,
biodiversité, zones côtières), minimise les risques de pollution (en particulier, du sol et de l'eau), et
protège les groupes vulnérables\.
8\. Le projet vise à renforcer les capacités dont dispose le gouvernement pour protéger
l'environnement et atténuer les effets négatifs éventuels du Projet d'exploitation pétrolière et d'oléoduc
sur la société et sur l'environnement\. Il soutiendra, en particulier, l'exécution des programmes
d'indemnisation, de prévention et de gestion de l'impact sur la santé, la protection du patrimoine culturel,
le suivi des programmes de développement des populations autochtones et de conservation de la
biodiversité ainsi que le partage de l'information\.
3
9 La conception du Projet d'exploitation pétrolière et d'oléoduc prend en compte les aspects
environnementaux dans la mesure où l'oléoduc traverse des zones où l'impact environnemental est
minimal\. En outre, les mesures de protection proposées dans le PGE comprennent :
l'utilisation de caractéristiques, spécifications et pratiques appropriées pour la construction et
l'exploitation des ouvrages, ainsi que,
le contrôle, à la fois par la COTCO et par le gouvernement camerounais, de l'application de
ces caractéristiques, spécifications et pratiques,
l'exécution et le suivi d'un programme d'indemnisation des communautés et des individus
détenteurs de droits d'usufruit antérieurs sur l'emprise,
l'exécution et le suivi d'un Plan pour les populations autochtones (PPA) à l'intention des
peuples forestiers vivant dans la zone traversée par la partie du tracé de l'oléoduc située dans
la Forêt atlantique,
l'exécution et le suivi de deux projets d'amélioration de l'environnement hors-site (PAEH),
l'un à Campo-Ma'an et l'autre à Mbam & Djerem (voir carte), visant à compenser la perte de
biodiversité dans la forêt du littoral atlantique et dans les zones forestières semi-décidues,\.
10\. Les deux dernières activités seront financées et gérées par une Fondation pour l'environnement\.
Elle sera mise sur pied grâce à un fonds d'affectation spéciale d'un montant estimé actuellement à
3,5 millions de dollars, alimenté par la COTCO et sur lequel des fonds seront prélevés sur la durée
d'exploitation de l'oléoduc\. On trouvera des informations plus détaillées sur les responsabilités du
gouvernement camerounais concernant l'exécution du PGE à l'Annexe 10\.
11\. Les mesures de protection concernent les activités du secteur pétrolier (prévention des
déversements accidentels et autres problèmes liés à la construction et à l'exploitation du projet) et quatre
autres secteurs (le développement rural, pour la mise en oeuvre du PPA et les mesures d'amélioration de
l'environnement hors-site, la santé, pour la prévention de la transmission des maladies, l'éducation, pour
la gestion du plan pour les populations autochtones et pour la protection du patrimoine culturel, et les
transports, pour les infrastructures connexes, de même que la surveillance des déversements de pétrole en
mer)\. La COTCO mettra en oeuvre la plupart de ces mesures\. Le gouvernement est chargé i) de veiller à la
bonne exécution de ces mesures de sauvegarde et à leur conformité aux lois, règlements, normes et règles
en vigueur dans le pays, ii) de surveiller l'état de l'environnement physique et humain autour de l'oléoduc
et de ses infrastructures connexes, et iii) de superviser et d'appuyer la gestion des mesures de
compensation environnementales et la mise en oeuvre du PPA\.
2\. Principaux dossiers sectoriels et stratégie du gouvernement :
12\. Le Cameroun, dont la production tourne autour de 100 000 barils/jour est le cinquième
producteur de pétrole de l'Afrique subsaharienne (derrière le Nigeria, l'Angola, le Gabon et le Congo-
Brazzaville)\. En 1998, le pays a adopté des lois visant à encourager l'investissement étranger dans
l'exploration et la production de pétrole et de gaz\. Les mesures d'incitation lient l'impôt aux risques
découlant de la prospection de nouveaux gisements\. Les gisements ouverts récemment devraient
compenser une baisse récente de 10-15 % de la production des gisements exploités traditionnellement\.
Le pétrole représente environ un quart des exportations du Cameroun\.
13\. On observe actuellement une dégradation et une destruction, dans certains cas, irréversibles, des
ressources naturelles du Cameroun\. Dans les zones rurales, la biodiversité diminue, notamment en raison
du fait que le déboisement se poursuit au rythme approximatif de 120 000 ha par an (0,6 % de la
superficie de forêt naturelle perdue chaque année)\. La désertification avance dans le nord\. Les sols non
protégés sont emportés par l'érosion hydraulique et éolienne\. Les zones côtières subissent également des
4
pressions\. Dans les zones urbaines, la mauvaise gestion les déchets d'origine ménagère et industrielle
engendre des risques sanitaires et la pollution de l'eau et de l'air s'aggrave\.
14\. Le gouvernement est de plus en plus préoccupé par la dégradation de l'environnement\. Afin de la
combattre, il a élaboré en 1996 un Plan national de gestion environnementale (PNGE) et promulgué
d'importantes lois, au nombre desquelles la Loi sur la forêt de 1994 et, en application directe du PNGE, la
Loi-cadre sur l'environnement de 1996\. L'élaboration des décrets d'application est en cours (notamment
en ce qui concerne l'évaluation de l'impact environnemental et la gestion de la pollution) mais ils n'ont
pas encore été promulgués\. La stratégie identifiée dans le PNGE appelle le Ministère de l'environnement
et de la forêt (MINEF) à assumer une fonction de coordination, les ministères sectoriels étant chargés des
principales responsabilités de régulation et de suivi des problèmes environnementaux dans leurs domaines
de compétence respectifs\. Le PNGE contient une liste d'activités dont l'exécution est nécessaire et
représente un effort vaste et durable en vue d'infléchir les tendances négatives observées actuellement au
niveau de l'environnement\. Il n'est pas encore complètement intégré dans les politiques sectorielles, en
particulier dans le secteur énergétique\. Le gouvernement dispose de capacités insuffisantes pour faire
appliquer la législation existante ou pour assurer la mise en oeuvre du PNGE\. La coordination entre les
différents organes et services gouvernementaux chargés de la protection de l'environnement est
insuffisante\. Le Secrétariat permanent pour l'environnement (SPE) n'a été créé au sein du Ministère de
l'environnement et de la forêt (MINEF) qu'à la fin de mai 1999\.
3\. Problèmes sectoriels qui seront traités par le projet et choix stratégiques :
15\. Les principaux problèmes qui seront traités par le projet sont les faiblesses liées :
aux mécanismes institutionnels de coordination des activités de gestion environnementale au
niveau national ;
au cadre juridique et aux capacités connexes d'application effective et de suivi pour assurer
une exécution et un suivi efficaces du PGE du Projet d'exploitation pétrolière et d'oléoduc ;
et
aux processus de coordination entre les différentes parties prenantes, y compris les ONG\.
16\. Le gouvernement a créé, par le Décret 97-116 du 7 juillet 1997, un Comité de pilotage et de suivi
des pipelines (CPSP) qui est sous la tutelle de la SNH, la société nationale des hydrocarbures\. Le CPSP
est un organe interministériel qui a pour mandat de superviser et de surveiller tous les aspects
environnementaux et sociaux de la construction et de l'exploitation de l'oléoduc\. Le CPSP est formé de
deux branches :
a) Le « Comité de suivi » (CS) qui est la branche de direction, de suivi et de supervision
administrative\. Il comprend des représentants des quinze (15) ministères les plus intéressés par
l'autorisation, la supervision et le suivi des activités de construction et d'exploitation ; le CS est
présidé par le directeur général de la SNH, qui relève directement de la présidence de la
République\. Le CS est chargé, entre autres, de veiller à ce que toutes les parties concernées
respectent leurs obligations découlant du PGE et du plan d'indemnisation du Projet d'exploitation
pétrolière et d'oléoduc\.
b) Le « Secrétariat permanent » (SP) qui est la branche opérationnelle du CPSP\. Le SP a
pour mandat d'accomplir les missions du CPSP sur le terrain et d'en faire rapport au CS\.
17\. Un Arrêté présidentiel du 24 août 1999 définit les règles opérationnelles et de procédure du CPSP
et précise ses missions, énumérées le décret 97-116\. En outre, cet arrêté définit les structures
administratives du CPSP, dont le mandat sera confié à six unités opérationnelles\.
5
18\. Ces textes traduisent la volonté du gouvernement camerounais d'accroître l'efficacité des
activités de gestion et de suivi menées par le Cameroun dans le cadre du Projet d'exploitation pétrolière et
d'oléoduc en les confiant à un organe de coordination unique\. Ce dispositif minimisera les risques de
conflit de compétence et de conflit entre les organismes publics et les ministères intéressés\.
19\. Parmi les autres organismes gouvernementaux chargés de la gestion environnementale dans le
secteur pétrolier, on peut citer le Ministère de l'environnement et de la forêt (MINEF), le Ministère des
mines, de l'eau et de l'énergie (MMEE), à travers son Service d'inspection de l'oléoduc, le Ministère de
la santé, le Ministère de l'urbanisme (MINUH), le Ministère de l'enseignement supérieur et de la
recherche scientifique (MESRS), le Ministère des transports (MT) et le Ministère de l'intérieur\. D'autres
ministères ont un mandat secondaire\. Ils ont tous besoin d'améliorer leurs capacités, et de recevoir, en
particulier, des ressources techniques et financières suffisantes pour accomplir leur mission, et la
motivation du personnel\. Les raisons qui font que le gouvernement aura des difficultés à traiter les
impacts du projet d'oléoduc sont les suivantes :
Insuffisance du cadre réglementaire et juridique,
l'absence de base juridique pour l'exercice de l'autorité,
l'absence d'appui logistique (véhicules, télécommunications),
le manque de ressources financières, à la fois pour les investissements et les opérations, et
une connaissance insuffisante des projets d'oléoduc d'exportation et de leur impact potentiel
parmi le personnel intéressé du secteur public\.
20\. Pour surmonter ces obstacles et renforcer les capacités de traitement des impacts
environnementaux et sociaux de l'oléoduc, le projet CAPECE financera des interventions sur le terrain et
la coordination interministérielle par l'intermédiaire du CPSP\. Il aidera à :
clarifier les missions des organismes concernés, formuler et définir les normes et procédures
dans leurs domaines respectifs,
renforcer les capacités nationales de gestion et de suivi des conséquences environnementales
et sociales du développement dans le secteur pétrolier (oléoduc, installations offshore, risques
industriels liés à l'exploitation et au transport du pétrole) en étoffant les capacités des
ministères intéressés (MINEF, MMEE, MINUH, MEM, MT, MESRS, Intérieur),
renforcer les capacités dont dispose le gouvernement pour promouvoir la conservation de la
biodiversité, gérer et atténuer les impacts sociaux, y compris les impacts sur les populations
autochtones, par la collaboration avec le secteur privé et les ONG, et
promouvoir la participation de la société civile à l'exécution des projets par ses activités
d'IEC\.
C : Description sommaire du projet
1\. Composantes du projet (voir annexe 2 pour la description détaillée et annexe 3 pour la ventilation
détaillée des coûts) :
21\. La responsabilité de prévenir, d'éviter, d'atténuer, de compenser et de suivre les effets du Projet
d'exploitation pétrolière et d'oléoduc sur l'environnement incombe en premier lieu aux promoteurs du
projet\. Le rôle du secteur public dans la prévention et la prise en compte des impacts environnementaux et
sociaux éventuels du Projet d'exploitation pétrolière et d'oléoduc consiste, entre autres à :
réglementer le secteur afin de mettre en place un cadre solide et rendre le développement du
secteur pétrolier plus écologiquement durable,
6
fournir les autorisations administratives sur la base d'une analyse technique fiable menée par
la COTCO et vérifiée par le CPSP,
assurer le suivi et le contrôle technique de la mise en oeuvre des mesures d'atténuation par les
promoteurs,
veiller à l'application de la réglementation sur la lutte contre la pollution, la protection de la
santé et de la nature,
assurer le suivi des impacts environnementaux et sociaux, et
mener des activités d'information, d'éducation et de communication (IEC) sur les problèmes
environnementaux liés à l'oléoduc\.
22\. Les impacts environnementaux et sociaux du projet qui nécessitent un suivi et une atténuation
sont précisés dans le PGE et dans le plan d'indemnisation du Projet d'exploitation pétrolière et d'oléoduc
(voir annexe 10)\. La mise en oeuvre par le gouvernement camerounais des mesures de sauvegarde dans le
cadre du projet CAPECE sera liée au calendrier de construction et d'exploitation de l'oléoduc\. Au cours
des 18 mois qui suivront la date prévue pour l'approbation du projet (voir le calendrier du Projet
d'exploitation pétrolière et d'oléoduc ci-après), les activités sur le terrain seront limitées à quelques
ouvrages d'infrastructures et à la construction d'installations de stockage, tandis que la préparation des
plans d'ingénierie du champ pétrolier du Tchad sera en cours de finalisation\. A l'issue de cette période, le
projet CAPECE aura permis la mise en place du cadre réglementaire, le personnel aura été formé et les
capacités auront été renforcées\. Conformément au calendrier de travaux du Projet d'exploitation
pétrolière et d'oléoduc, les principales activités environnementales et sociales à mettre en oeuvre seront
les suivantes :
Période de travaux - 1ère à la 4ème année Période d'exploitation 5ème à la 25ème année
Participation aux études techniques finales afin
d'aider à l'élaboration des normes et règles
environnementales\. Prévention des déversements Prévention des déversements terrestres et gestion
terrestres et gestion des déchets\. des déchets\.
Suivi et prévention des risques pour la santé
environnementale, y compris le VIH/SIDA
Supervision de la compensation des impacts Supervision de la compensation des impacts
environnementaux environnementaux
Supervision du plan pour les populations autochtones Supervision du PPA
(PPA)
Participation au plan d'indemnisation et suivi de son
impact
Prévention et gestion de la dégradation de la
biodiversité animale durant les travaux
7
CALENDRIER PROJET D'EXPLOITATION PETROLIERE ET D'OLEODUC
Cumulative Months 12 24 36 48 60
Cumulative Quarters 1Q 2Q 3Q 4Q 5Q 6Q 7Q 8Q 9Q 10Q 11Q 12Q 13Q 14Q 15Q 16Q 17Q 18Q 19Q 20Q
Board Approval Financial Close
WORLDBANKAPPROVAL
ENGINEERING&PROCUREMENT
Engineering
Pipeline Pipe Procurement
FIELDCONSTRUCTION
Infrastructure
Pipeline Installation
Pump Stations
Offshore Facilities
Field Facilities
Drilling
FIRSTOILTOEXPORT SYSTEM
ENDOFCOMPLETIONTEST
8
Le projet comprendra les composantes suivantes :
Coûts Financement Financement
Composantes Indicatifs % du par la par la
(USD total Banque Banque
millions) (USD %
millions)
Élaboration d'un cadre réglementaire 1,3 12,0% 1,25 21,7%
favorable et étude prospective à long
terme du secteur pétrolier
Renforcement des capacités de 2,7 24,0% 1,04 18,0%
coordination
Renforcement des capacités 5,3 48,0% 2,71 46,9%
d'intervention des ministères sectoriels
et des services décentralisés sur le
terrain
Gestion, suivi et évaluation du projet 0,9 8,0% 0,77 13,3%
(Imprévus) (0,8) 8,0% (0,70)
Coût total du projet 11,0 100,0 5,77 100,0
Financement total requis 100,0 100,0
2\. Principales réformes institutionnelles et de politique générale appuyées par le projet :
23\. Le projet aidera à améliorer la performance environnementale du gouvernement camerounais
dans le secteur pétrolier\. Surtout, il :
Mettra le CPSP mieux à même d'assumer son rôle et ses responsabilités définies par l'Arrêté
présidentiel 24/8/99 et clarifiera les missions et les responsabilités des principaux organismes
intervenant dans la mise en oeuvre du plan de gestion et de compensation environnementales
du Projet d'exploitation pétrolière et d'oléoduc,
Renforcera les capacités d'évaluation, de suivi de l'environnement et d'intervention en cas
d'urgence dans le secteur pétrolier,
Renforcera les cadres juridiques et réglementaires de la gestion environnementale au plan
national, en élaborant les décrets d'application nécessaires et en renforçant les capacités
d'application, et
Promouvra une participation accrue des populations affectées par le projet et de la société
civile à la prise de décision en matière de développement durable\.
3\. Avantages et population cible
24\. Les avantages pour l'économie camerounaise et pour le secteur pétrolier en particulier, seront :
les risques environnementaux seront identifiés à un stade précoce, ce qui permettra ainsi
d'engager les mesures d'atténuation dans des délais appropriés ;
les impacts environnementaux nets du développement du secteur pétrolier seront positifs, en
particulier le potentiel touristique de la région de Kribi sera préservé,
les mesures d'amélioration de l'environnement hors-site et le PPA seront mis en oeuvre et
amélioreront la performance du Cameroun en matière de gestion de l'environnement ;
les risques de conflits sociaux dans la zone d'implantation de l'oléoduc seront minimisés ;
les capacités du Cameroun en matière de gestion environnementale sera renforcée dans le
secteur pétrolier de façon transparente et visible ; cela aidera alors à renforcer de façon
9
générale les systèmes de gestion environnementale au niveau du pays et à attirer davantage
l'investissement étranger ; et
l'opinion publique sera mieux sensibilisée aux mesures de sauvegarde de l'environnement
intégrées au projet ; cela démontrera combien il est important de mener une évaluation
d'impact environnemental des grands projets d'infrastructure, ce qui suscitera à l'avenir au
sein de la population un élan en faveur d'un développement plus durable au Cameroun\.
25\. La population cible du projet CAPECE est constituée :
des personnes vivant et exerçant des activités économiques dans les environs de l'oléoduc et
de son terminal marin,
des fonctionnaires et du personnel des organismes d'État opérant dans les secteurs pétrolier,
social et environnemental,
du public intéressé par les aspects environnementaux et sociaux du Projet d'exploitation
pétrolière et d'oléoduc\.
26\. On accordera une attention particulière aux aspects suivants :
impacts sur les personnes affectées par l'acquisition des terres,
impacts et suivi du VIH/SIDA sur les populations de la zone affectée par le projet, en
coopération étroite avec ONUSIDA, et
impact sur les populations autochtones de la zone affectée par le projet\.
4\. Dispositifs institutionnels et modalités d'exécution :
27\. Aux termes de l'Arrêté présidentiel du 24 août 1999, le CPSP a pour mission d'assurer le suivi de
la mise en oeuvre des plans de gestion environnementale, d'examiner les commentaires et répondre aux
questions du public sur les aspects environnementaux des projets d'oléoduc et de rédiger des rapports sur
les aspects environnementaux des projets d'oléoduc et de leur exploitation\. Par cet Arrêté, la branche
exécutive du CPSP, le SP, a été doté de six sections : a) la section chargée de l'environnement, du tracé et
de la sécurité, b) la section chargée de l'administration et de la comptabilité, c) la section économie et
finance, d) la section technique et de mobilisation des ressources locales , e) la section de conseil
juridique, et f) la section chargée de la communication et de l'éducation\. Chacune des six sections aura
besoin de renforcer ses capacités pour accomplir sa mission\. En outre, trois unités sur le terrain seront
créées par le CPSP\. Elles assureront l'exécution de ses missions de suivi et de coordination sur le terrain\.
Elles coordonneront étroitement leur travail sur le terrain avec les services décentralisés intervenant dans
la supervision et le suivi des différents aspects environnementaux et sociaux de la construction et de
l'exploitation de l'oléoduc\. L'organigramme du CPSP est indiqué à l'Annexe 2\.
28\. Le projet aidera le CPSP en lui apportant un appui à deux niveaux : au niveau central pour toutes
les activités de coordination et de suivi, et sur le terrain, trois unités mobiles (deux terrestres et une
marine) qui surveilleront étroitement les activités de construction de l'oléoduc\. La coordination
concernera en priorité sept ministères (les ministères de l'Environnement et de la Forêt, des Mines et de
l'Énergie, de la Santé, de l'Urbanisme, de l'Intérieur, des Transports, et de l'Enseignement supérieur et de
la Recherche scientifique)\. L'appui logistique fourni dans le cadre du projet sera géré en commun par le
Secrétariat permanent\. Le gouvernement supervisera la mise en oeuvre du PPA et des mesures de
compensation des impacts sur l'environnement, assurera sa part du suivi des impacts environnementaux et
sociaux, en coordination avec les activités d'IEC de la COTCO\. La gestion comptable, financière et du
processus de passation des marchés sera assurée par le CPSP selon des procédures jugées acceptables par
la Banque\. Le plan de passation des marchés est en cours de préparation et sera prêt à la date d'entrée en
vigueur\.
10
D : Justification du projet
1\. Autres options de projet étudiées et raisons de leur rejet :
29\. D'autres scénarios ont été élaborés en vue d'analyser i) la situation sans le projet, et ii) d'autres
mécanismes institutionnels\. En ce qui concerne la situation sans le projet, un consensus s'est formé entre
le gouvernement et les partenaires non gouvernementaux selon lequel, sans le projet CAPECE, les
autorités n'auraient guère les moyens de s'acquitter de leur obligation de mettre en oeuvre et de superviser
les mesures de sauvegarde prévues dans le cadre du Projet d'exploitation pétrolière et d'oléoduc\. En
outre, il a été souligné que, sans le projet, le gouvernement continuerait de ne pas pouvoir assurer la
supervision environnementale du secteur pétrolier\.
30\. Concernant les scénarios institutionnels, deux options ont été examinées :
i) Charger le ministère de l'Environnement de diriger le processus de renforcement des capacités
environnementales des institutions compétentes ; et
ii) Charger un organisme interministériel de cibler des domaines spécifiques nécessitant une
amélioration dans chaque ministère et organisme compétent\.
31\. La première option aurait permis de mener les activités envisagées dans le cadre des rôles et des
missions institutionnels des institutions gouvernementales définis par la loi environnementale de 1996
(96/12)\. Toutefois, cette option a été jugée très risquée, en raison des carences actuelles dans les domaines
où l »atténuation et le suivi de l'impact environnemental et social du Projet d'exploitation pétrolière et
d'oléoduc demande le plus de compétences et d'expertise, de la faible capacité du MINEF à mobiliser et à
coordonner les activités des autres ministères et organismes afin qu'ils puissent intervenir de manière
ordonnée et opportune\. La deuxième option a été privilégiée en raison de son caractère interinstitutionnel,
du fait qu'elle est spécialisée dans le fonctionnement du Projet d'exploitation pétrolière et d'oléoduc et du
fait que la direction de la SNH a facilement accès au Président de la République, si bien qu'elle est en
mesure de résoudre des conflits et de prendre des décisions qui dépassent les compétences des ministères
particuliers\. Le recours au CPSP, sous la tutelle de la Société nationale des hydrocarbures (SNH), une
unité opérationnelle établie, facilitera la prestation rapide des services sur le terrain, où elle est nécessaire\.
C'est le moyen le plus efficace de protéger l'environnement et le population dans le contexte actuel de
mobilisation urgente\. On mettra au point une solution à plus long terme de la gestion environnementale
du secteur pétrolier au Cameroun pendant la mise en oeuvre du projet CAPECE, compte tenu des
conclusions de l'étude prospective (voir l'annexe 2 pour plus de détails)\.
11
2\. Principaux projets connexes financés par la Banque et/ou d'autres institutions de développement
(achevés, en cours et prévus)
Problème sectoriel Projet Notes de la dernière supervision
(Projets financés par la Banque
uniquement)
Avancement de Objectif de
Financés par la Banque mise en oeuvre Développement
Gestion durable des forêts SAC III (1998-2003) S S
Atténuation de l'impact Projet du secteur des S S
environnemental des infrastructures transports (1997-2002)
linéaires Projet de privatisation des s\.o\. s\.o\.
chemins de fer (2000-2004)
Amélioration des capacités de Santé (1995-1999) I I
prestation des services publics
Autres organismes de
développement
Améliorer la conservation de la Gestion de la biodiversité S S
biodiversité FEM (1997-2000)
Notation : TS (Très satisfaisant), S (Satisfaisant), I (Insatisfaisant), TI (Très insatisfaisant), s\.o\. (sans objet)
3\. Les leçons de l'expérience et leur prise en compte dans la conception du projet
33\. La mise en oeuvre des conditions relatives à la forêt dans le cadre du troisième crédit à
l'ajustement structurel a nécessité un dialogue prolongé entre le gouvernement, la Banque, le FMI, les
autres bailleurs de fonds et le secteur privé\. Nous en avons conclu qu'un dialogue transparent, franc et
intensif, faisant intervenir, outre le gouvernement, tous les éléments de la société civile, est indispensable
pour faire accepter les réformes et assurer leur pérennité\. Si l'on veut que le gouvernement tienne ses
engagements en matière de gestion environnementale dans le contexte du projet d'oléoduc, il faut
poursuivre un débat public large et permanent et maintenir en éveil l'attention de la communauté
internationale\. Les activités d'IEC prévues dans le cadre du Projet d'exploitation pétrolière et d'oléoduc
sont destinées à résoudre ce problème\.
34\. Le projet du secteur des transports a expérimenté avec succès l'approche consistant à développer
les capacités de gestion environnementale au sein des organismes sectoriels\. Le projet conjugue un
aoûtien en faveur de l'évaluation environnementale stratégique au niveau sectoriel avec le renforcement
des capacités de gestion et de suivi des impacts environnementaux au niveau sous-sectoriel (routes)\. Le
projet démontre que les résultats réalisés dans la protection de l'environnement au niveau sectoriel
peuvent s'améliorer sensiblement s'il existe une volonté politique et des ressources suffisantes\. Le projet
CAPECE renforce les capacités environnementales dans un organisme multisectoriel et vise à assurer à la
fois l'efficacité sectorielle et la coordination globale des interventions, dans lesquelles le ministère de
l'Environnement joue un rôle majeur\.
35\. Par contre, le projet du secteur de la santé a démontré que les institutions publiques de ce secteur
avaient des capacités d'absorption limitées et qu'il était difficile de toucher les plus démunis, en
particulier dans les régions isolées\. Il faut expérimenter des approches nouvelles, en particulier déléguer
les activités de sensibilisation dans les domaines des soins de santé de base et de la distribution des
fournitures essentielles aux partenaires de la société civile, en dehors de l'administration\. Le projet
CAPECE fait appel aux ONG pour la fourniture des services et l'élaboration du volet essentiel relatif à la
gestion de la santé se fait en étroite collaboration avec l'ONUSIDA\.
12
36\. Le projet de conservation et de gestion de la biodiversité du FEM était conçu pour renforcer les
capacités du gouvernement à coordonner, contrôler et appuyer toute une série d'initiatives visant à
préserver la biodiversité dans le pays\. Bien que les activités du projet se soient bien déroulées sur la
majorité des sites du projet, la coordination au niveau gouvernemental laissait à désirer jusqu'à ces
derniers temps\. Après un bilan à mi-parcours approfondi, le projet a été restructuré et complété par un
plan d'action visant à améliorer la performance du gouvernement\. Le site de Campo Ma'an, pour lequel le
Projet d'exploitation pétrolière et d'oléoduc prévoit une mesure de compensation de la perte de
biodiversité, faisait l'objet d'une exploitation excessive par le passé et sa gestion a été mise en cause\.
Toutefois, le gouvernement vient de prendre l'importante décision de renforcer la protection de la zone
principale de Campo Ma'an et celle de Mbam & Djerem\. Le classement en parc national de deux zones
(Campo Ma'an qui couvre 264 064 ha, et Mbam & Djerem, qui en couvre 416 512 ha) a été
officiellement annoncé le 6 janvier 2000)\. L'appui supplémentaire à fournir dans le cadre du programme
d'amélioration de l'environnement hors-site (PAEH) du Projet d'exploitation pétrolière et d'oléoduc,
financé par la Fondation pour l'environnement qui sera créée par la COTCO, complétera les activités
lancées dans le cadre du projet du FEM et contribuera à assurer la pérennité (25 ans) de la mise en oeuvre
du plan de gestion du site\.
37\. Une évaluation environnementale (EE) a été réalisée à l'occasion de la préparation du Projet
d'exploitation pétrolière et d'oléoduc\. Il a fallu y apporter plusieurs séries d'améliorations et de mises au
point\. Les débats suscités et les questions soulevées par cette procédure d'évaluation environnementale
démontrent l'extrême importance d'une bonne stratégie de communication afin d'informer pleinement
toutes les parties prenantes (ONG et les médias en particulier) des mesures concrètes prises en vue de la
protection de l'environnement local dans le cadre du projet d'oléoduc\. Ces informations doivent reposer
sur la collecte et le traitement rigoureux des données, d'où l'importance des activités de suivi financées
par le projet CAPECE\. Cette expérience a souligné la nécessité et la pertinence de l'intégration des
activités d'IEC dans le projet\.
4\. Indications de l'engagement de l'emprunteur et de son attachement au projet :
38\. Le CPSP a été créé pour gérer toutes les activités liées au Projet d'exploitation pétrolière et
d'oléoduc, y compris ses impacts environnementaux et sociaux\. La sous-commission environnement du
CPSP a travaillé avec les promoteurs du projet (la COTCO) pour élaborer les mesures de sauvegarde
environnementale et sociale pendant toute la préparation du projet\. Cette sous-commission comprend des
représentants du MINEF, du ministère de l'urbanisme, du ministère de la recherche et de l'enseignement
supérieur, du ministère de la santé, et de l'Université\. Elle est présidée par le représentant du MINEF\. En
février 1999, le CPSP a lancé une étude diagnostique pour identifier les activités de renforcement des
capacités qui devaient être menées afin de permettre au gouvernement d'assumer son rôle dans la gestion
des impacts environnementaux du développement du secteur pétrolier\. Les résultats de cette étude ont été
examinés en juillet lors d'un séminaire d'une semaine avec le personnel de la Banque et constituent la
base de la préparation de ce projet\.
39\. En mars 1999, le Président de la République du Cameroun a accueilli une réunion des Chefs
d'État du Bassin du Congo sur la biodiversité et sur gestion durable de la forêt\. Lors de cette réunion, il a
réaffirmé que le gouvernement camerounais était déterminé à gérer durablement ses ressources naturelles
et sa biodiversité\. Le même mois, le ministre de l'Environnement et de la Forêt a instauré des mesures de
protection juridique provisoires des zones destinées à servir de compensations environnementales dans le
cadre du Projet d'exploitation pétrolière et d'oléoduc et a lancé le processus de classement\. Peu après, des
changements essentiels et politiquement difficiles au plan du personnel et au plan organisationnel ont été
opérés au sein de la direction centrale de la forêt (un nouveau directeur a été nommé) et dans les
départements où sont situées les zones de compensation\. A la fin du mois de mai, le gouvernement a
choisi le secrétaire permanent à l'environnement du MINEF, une nomination qui devrait faciliter la mise
en oeuvre du PNGE\. En août, le premier ministre a signé des décrets portant création des structures
13
institutionnelles chargées de la gestion technique unifiée de deux zones de biodiversité essentielles,
notamment Campo Ma'an\. Le classement en parcs nationaux de Campo Ma'an et de Mbam & Djerem est
devenu officiel le 6 janvier 2000\. Ces actions traduisent une détermination renouvelée de la part du
gouvernement d'améliorer la gestion environnementale et de promouvoir le développement durable\.
5\. Valeur ajoutée de l'appui apporté par la Banque au projet :
40\. L'appui de la Banque complétera les activités menées précédemment pour renforcer les capacités
générales de gestion de l'environnement du gouvernement camerounais, qui ont débuté par l'octroi d'un
don du Fonds de développement institutionnel (FDI) qui a aidé à financer le processus de PNGE et se
sont poursuivies avec le renforcement des capacités d'évaluation environnementale dans le cadre du
projet pour le secteur des transports\. Le réseau des institutions de gestion environnementale au Cameroun
bénéficiera des activités de renforcement des capacités menées dans le cadre du projet CAPECE\. Les
activités du projet seront coordonnées avec celles du PNGE II financé par d'autres bailleurs de fonds
(PNUD et Allemagne)\.
41\. Le Projet d'exploitation pétrolière et d'oléoduc bénéficiera du projet CAPECE et de l'appui et de
la participation de la Banque de différentes manières\. Le projet CAPECE aura des incidences dans les
domaines suivants :
Il facilitera la coordination des activités de sept grands ministères (MINEF, MMEE, MINUH,
MEM, MT, MESRS, Intérieur) et, ce faisant accroîtra l'efficacité et l'efficience de
l'exécution du Projet d'exploitation pétrolière et d'oléoduc;
L'application des politiques de protection environnementales et sociales de la Banque
permettra de minimiser les risques environnementaux et sociaux du Projet d'exploitation
pétrolière et d'oléoduc ;
La prise en compte de l'expérience acquise par la Banque à l'échelle mondiale dans le
domaine du renforcement des capacités de gestion environnementale a aidé à améliorer la
conception du projet grâce à l'adoption d'une approche intégrée (formation, développement
institutionnel, formation de réseaux) ;
En facilitant la préparation et la supervision de l'étude de prospective à long terme du secteur
pétrolier, il encouragera l'application d'une approche analytique fondée sur l'expérience de la
Banque ;
L'expérience de la Banque dans la conception et la mise en oeuvre des stratégies d'IEC aidera
le gouvernement à communiquer avec les parties prenantes internes et extérieures ;
Le recours aux partenariats auxquels appartient la Banque offrira un réseau permettant au
gouvernement de renforcer rapidement son expertise en matière de gestion environnementale\.
E\. Analyse sommaire du projet (les évaluations détaillées figurent dans le dossier du projet, voir
Annexe 7)
1\. Analyse économique (pour plus de détails, voir l'Annexe 4) :
42\. Il est difficile et complexe, pour un projet de renforcement des capacités, d'évaluer les avantages
procurés par le renforcement des capacités de gestion environnementale\. Toutefois, le coût du projet pour
le Cameroun est minimal en proportion des avantages que le Cameroun devrait retirer du Projet
d'exploitation pétrolière et d'oléoduc et, plus généralement, d'une meilleure gestion du secteur pétrolier
(par exemple, le plan d'intervention en cas de déversements d'hydrocarbures concerne toute la gamme de
déversements d'hydrocarbures possibles, dans le contexte de l'oléoduc et en dehors)\. Le projet CAPECE
contribue aussi à garantir une performances satisfaisante, ce qui est nécessaire pour inciter les bailleurs de
fonds à participer au Projet d'exploitation pétrolière et d'oléoduc\.
14
2\. Analyse financière :
Impact budgétaire :
43\. Le Projet créera pour le secteur pétrolier un cadre réglementaire environnemental et social, et
mettra en place des services restreints, mais efficaces et permanents, assurant le suivi et l'application de
ce cadre réglementaire, qui nécessitera l'appui du gouvernement\. Les recettes provenant du secteur
pétrolier seront largement suffisantes pour couvrir ce coût additionnel modique\.
3\. Analyse technique :
44\. Le Projet créera des capacités technologiques avancées pour le suivi de l'impact environnemental
d'un grand projet d'infrastructure\. Le personnel camerounais chargé de surveiller la qualité de l'air, de
l'eau et du sol apprendra à utiliser de nouvelles techniques et de nouveaux équipements qui seront utiles
pour d'autres projets d'infrastructure\. Les laboratoires qui exécuteront les analyses amélioreront
également la connaissance générale de la gestion environnementale au Cameroun\. Ce projet offre au
Cameroun la possibilité de renforcer ses capacités de gestion environnementale dans le secteur pétrolier\.
4\. Analyse institutionnelle :
a\. Agents d'exécution :
45\. L'exécution du projet sera coordonnée par le CPSP\. Les principales activités seront menées par le
CPSP, ses six unités opérationnelles et trois unités sur le terrain\. D'autres ministères et organismes
interviendront dans l'exécution du projet, au nombre desquels le ministère chargé de l'environnement
(MINEF), le ministère chargé de la santé (MS), le ministère chargé des mines et de l'énergie (MMEE), le
ministère chargé de l'urbanisme (MINUH), le ministère chargé des affaires sociales (MAS), le ministère
chargé de l'enseignement supérieur et de la recherche scientifique (MESRS), le ministère chargé des
transports (MT), le ministère chargé de l'administration décentralisée (Intérieur) et les universités
camerounaises\.
b\. Gestion du projet :
46\. Le Projet sera géré par le Comité de pilotage et de suivi des pipelines\. Les aspects administratifs
et financiers seront confiés à la section administrative et comptable du Secrétariat du comité et à la
section ressources humaines de la SNH, composée de personnel expérimenté de la SNH\. L'emprunteur
nommera le personnel de direction du Secrétariat permanent, conformément aux termes de l'Arrêté
présidentiel, et en informera l'IDA\. L'IDA et le gouvernement camerounais détermineront conjointement
les termes de référence des techniciens des unités opérant sur le terrain\. Ces techniciens seront choisis par
l'emprunteur, en l'absence d'objections de l'Association\.
5\. Analyse sociale :
47\. Ce projet vise à développer les capacités institutionnelles, ainsi qu'à sensibiliser la société civile
et les médias\. Il établira un dialogue transparent entre le gouvernement et les différentes parties prenantes
afin de promouvoir la participation du public aux activités du projet d'oléoduc\. En particulier, le projet
aidera à mettre en oeuvre des programmes visant à garantir une indemnisation adéquate des pertes subies,
à protéger la santé publique, à améliorer le bien-être des populations autochtones et à protéger l'héritage
culturel du Cameroun\. Bien que le projet CAPECE n'ait pas pour objectif principal de lutter contre
l'épidémie de VIH/SIDA, il contribuera à intensifier cette lutte en étroite collaboration avec d'autres
partenaires et les communautés locales\.
15
6\. Évaluation environnementale : Catégorie environnementale C
48\. Il s'agit ici d'un projet de renforcement des capacités comportant très peu d'investissements
physiques\. Tout le matériel financé dans le cadre du projet répondra aux spécifications environnementales
les plus avancées\. Des avantages environnementaux sont attendus de ce projet qui aidera à renforcer les
capacités nationales en matière de gestion des impacts environnementaux des projets pétroliers\.
7\. Approche participative
a\. Principaux bénéficiaires et autres groupes intéressés
49\. Les populations vivant le long du tracé de l'oléoduc ont été consultées durant l'évaluation
environnementale du Projet d'exploitation pétrolière et d'oléoduc, en particulier dans le cadre des
indemnisations au titre de ce projet\. Il a été tenu compte de leurs avis et préoccupations dans la
conception du Projet d'exploitation pétrolière et d'oléoduc\. Durant l'exécution du projet, les unités sur le
terrain seront régulièrement (pratiquement chaque jour) en contact avec les populations intéressées et
faciliteront le dialogue entre la population, la COTCO et le personnel des services publics décentralisés\.
50\. Les employés de l'État qui bénéficieront de la formation et d'une assistance technique dans le
cadre de ce projet acquerront des compétences plus modernes et plus approfondies qui pourront leur
servir en d'autres circonstances, par exemple dans le domaine en pleine expansion de la gestion
environnementale, en particulier dans le secteur pétrolier\. Le projet de renforcement des capacités a été
préparé à travers un atelier participatif auquel ont participé les principales parties prenantes venues de
l'administration\.
b\. Autres parties prenantes :
51\. Le grand public et les médias recevront des informations fiables et en temps utile sur l'état de
l'environnement et sur la situation sociale dans la zone d'implantation du projet d'oléoduc, sur l'état
d'avancement de la mise en oeuvre des mesures de compensation environnementale et du PPA, ainsi que
sur les résultats obtenus par les mécanismes de protection mis en place\. Des systèmes seront mis en place
afin de faciliter l'information en retour de la part du public et, à terme, la participation des bénéficiaires
aux activités de suivi et d'évaluation\.
F : Viabilité et risques
1\. Viabilité :
52\. Les capacités mise en place dans le cadre du CPSP seront relativement importantes, dans un
premier temps, afin de surveiller les impacts sur le terrain durant la période de construction\. Durant
l'exploitation, les capacités nécessaires seront beaucoup plus restreintes et pourront être entretenues pour
un faible coût\. Cependant, dans de nombreux pays, les limites des commissions interministérielles de
gestion de l'environnement sont apparues après quelques années\. Une importante étude de prospective à
long terme, qui sera effectuée vers la fin du projet, déterminera si le gouvernement est en mesure de gérer
durablement les impacts environnementaux dans le secteur pétrolier (voir Annexe 2)\. Cette étude utilisera
les premiers résultats du système de suivi et d'évaluation pour évaluer les réalisations et la performance
du CPSP et pour recommander une stratégie appropriée pour le long terme\.
16
2\. Risques critiques (compte tenu des hypothèses figurant dans la quatrième colonne
de l'annexe 1) :
Risque Notation du risque Mesures visant à réduire le risque
Des résultats aux objectifs
Le gouvernement n'est pas déterminé à S Obligation contractuelle d'appliquer le
appliquer intégralement les politiques de PGE dans le cadre du prêt octroyé par la
sauvegarde\. BIRD au Cameroun au titre du Projet
d'exploitation pétrolière et d'oléoduc
Groupe consultatif international
Composante opinion publique/IEC
Manque de coordination entre les Centralisation de l'autorité dans le cadre du
organismes d'État M CPSP
Formation et mesures d'incitation à
l'endroit du personnel des organismes
décentralisés\.
Absence de participation des populations S Composante IEC
intéressées par le projet\. Approche participative du PPA
Groupe consultatif international
Le personnel ne reste pas dans la fonction Des conditions de travail favorables sont
publique après avoir reçu la formation M offertes au personnel formé\.
et/ou n'est pas motivé à s'élever contre
toutes les formes de dégradation
environnementale et sociale\.
Le matériel et les procédures ne sont pas Un Manuel de mise en oeuvre du projet,
en place à temps et/ou ils ne sont pas M comprenant un plan de passation des
opérationnels au moment et au lieu où ils marchés, sera adopté par le gouvernement
sont nécessaires\. avant l'entrée en vigueur du projet\.
L'acquisition et la gestion du matériel sont
centralisées au niveau du CPSP et
l'utilisation du matériel sera programmée
mois par mois\. Les procédures feront
l'objet d'un audit régulier\.
L'avis du Groupe consultatif international Les termes de référence du Groupe
(GCI) ne fait pas l'objet d'un débat au M consultatif insistent sur son rapport
CPSP, il n'y est pas donné suite, et il n'est pédagogique avec le CPSP\. Le
pas largement diffusé\. gouvernement mettra les rapports du
Groupe à la disposition du public\. La
supervision de la Banque sera étroitement
axée sur cet aspect\.
Des produits aux résultats
Le personnel du CPSP n'est pas capable S La formation du personnel du CPSP mettra
de coordonner l'action des ministères l'accent sur le rôle de catalyseur des unités
sectoriels sur le terrain sur le terrain et sur les compétences
nécessaires pour coordonner les
interventions des ministères techniques\.
17
Le suivi n'est pas assuré ou il n'est pas La supervision de la Banque portera
utilisé pour améliorer la performance du S particulièrement sur la mise en oeuvre du
projet système d'information de gestion et du
système d'information sur la gestion
environnementale et la diffusion des
résultats de ce dernier\. L'absence de suivi
sérieux sera cause de suspension des
décaissements\.
Notation globale du risque M Une très grande place sera accordée à cette
supervision, qui sera réalisée conjointement
à la supervision de l'oléoduc\.
Notation du risque E (Risque élevé), S (Risque substantiel), M (Risque modeste), N (risque négligeable
ou faible)
3\. Aspects susceptibles de prêter à controverse
53\. Ce projet est lié au Projet d'exploitation pétrolière et d'oléoduc qui est controversé\. En effet, il
fait partie du plan de gestion environnementale (PGE) conçu pour ce projet\. Dans le cadre du PGE, le
gouvernement camerounais s'est engagé à veiller à ce que les activités du projet d'oléoduc soient menées
conformément aux normes nationales et à suivre la mise en oeuvre au nom du peuple camerounais\. Grâce
au projet CAPECE, le gouvernement camerounais sera mieux à même de définir et de faire appliquer ses
normes, en mettant particulièrement l'accent sur le bien-être des populations touchées par le projet, en
particulier des groupes ethniques démunis et vulnérables\. Le PGE se propose de se pencher sur les aspects
du Projet d'exploitation pétrolière et d'oléoduc concernant la biodiversité et les populations autochtones
par un mécanisme (la Fondation pour l'environnement) qui échappe en grande partie au contrôle du
gouvernement\. Toutefois, le gouvernement, par l'intermédiaire du CPSP et avec l'appui technique du
MINEF (pour la biodiversité) et des institutions universitaires intéressées (pour les populations
autochtones) assurera le suivi et appuiera la mise en oeuvre de ces programmes\. Les connaissances qui
seront acquises de cette façon pourront être sources d'améliorations de la politique et de la performance
du gouvernement à l'avenir\.
G : Principales conditions du prêt
1\. Conditions d'entrée en vigueur
54\. L'adoption du Manuel de mise en oeuvre du projet (comprenant les termes de référence du
personnel clé et des études, le plan de formation et le manuel de procédures) est une condition d'entrée en
vigueur du crédit, qui est également subordonnée aux deux conditions suivantes :
l'entrée en vigueur concomitante de l'Accord de prêt du Projet d'exploitation pétrolière et d'oléoduc,
et
une gestion financière adéquate du CSPS\.
2\. Autres
55\. Néant\.
H\. Conditions de mise en oeuvre
56\. [] Les dossiers technique pour les activités de la première année sont achevés et prêts pour le
démarrage de la mise en oeuvre\. [X] Néant\.
18
[] Les dossiers de passation des marchés pour les activités de la première année sont achevés et
prêts pour le démarrage de la mise en oeuvre du projet\.
[] Le plan d'exécution du projet a été évalué et jugé réaliste et de qualité satisfaisante\.
[X] Les éléments suivants manquent et sont discutés dans la rubrique conditions du prêt (Section
G) :
Le plan de passation des marchés est en cours de préparation et sera prêt avant l'entrée en vigueur du
crédit et sera inclus dans le Manuel d'exécution du projet\.
I\. Respect des politiques de la Banque
57\. [X] Ce projet est conforme à toutes les politiques pertinentes de la Banque\.
Jean Roger Mercier Charlotte Bingham Serge Michailof
Chef d'Équipe de projet Directeur sectoriel Directeur des opérations
19 Annexe 1
Annexe 1 : Récapitulatif de la conception du projet
CAMEROUN : Projet de renforcement des capacités de protection de l'environnement dans le secteur
pétrolier (projet CAPECE)
\
Indicateurs clés de
performance Suivi et évaluation Hypothèses critiques
But sectoriel de la SAP : Indicateurs sectoriels : Rapports sectoriels/par (Objectifs de la
pays : SAP/mission de la
Banque)
Améliorer la mobilisation des Les opérations du Projet Rapports préparés par les Les promoteurs et le
ressources\. d'exploitation pétrolière et exploitants privés du Projet gouvernement s'entendent sur
d'oléoduc est conforme aux d'exploitation pétrolière et leurs rôles respectifs\.
normes environnementales et d'oléoduc (la COTCO)\.
rapporte en moyenne au
Cameroun 20 millions de dollars
par an sur une période de 28 ans\.
Améliorer la productivité des La situation des populations Rapports annuels élaborés par le Des processus transparents pour la
populations démunies démunies vivant dans la zone du CPSP, à partir de la 4ème année\. participation locale aux activités
projet sera meilleure lorsque Étude d'impact du plan et aux avantages générés par le
l'oléoduc sera en exploitation\. d'indemnisation\. projet existent\.
Engagement à gérer le Projet
d'exploitation pétrolière et
d'oléoduc s'étend au secteur
pétrolier tout entier\.
Améliorer le climat pour le Normes environnementales Examens des dépenses publiques\.
développement du secteur privé définies dans le cadre du projet
sont appliquées dans tout le
secteur\. Hausse des
investissements dans le secteur
pétrolier\.
Résultats/objectifs
Indicateurs clés de
performance Suivi et évaluation Hypothèses critiques
Objectif de Indicateurs de Rapports : (Objectifs de
développement du résultats/impact : développement/objectifs
projet : de la SAP)
Créer des capacités nationales pour 1) Le temps d'intervention du 1) Rapports périodiques 1) Les ressources et le matériel
la gestion et le suivi gouvernement en cas d'accidents (semestriels) élaborés par CPSP\. fournis sont utilisés efficacement\.
environnementaux du projet et de déversement atteint un
d'oléoduc Tchad-Cameroun niveau de référence international
d'ici à 2005, et des sanctions
systématiques sont prises à
l'encontre du promoteur en cas de
non-respect de ses obligations
2) Les groupes vulnérables vivant 2) Rapports annuels provenant de 2) Les données de référence sont
le long de l'oléoduc conservent Fondation pour l'environnement\. disponibles\.
une situation culturelle, Rapports du CPSP\.
économique et sanitaire Rapports du GCI\.
équivalente, un an après la
construction de leur tronçon de
l'oléoduc\.
20 Annexe 1
3) La biodiversité est 3) Rapports annuels de la 3) La Fondation pour
effectivement protégée dans les Fondation pour l'environnement\. l'environnement est mise sur pied
zones de compensation Rapport sur l'état de et dispose d'une dotation
environnementale\. l'environnement (à mi-projet) financière appropriée, et le
élaboré par CPSP\. gouvernement camerounais
respecte ses obligations
concernant l'entretien des zones
de compensation\.
4) Le braconnage commercial 4) Rapport sur l'environnement 4) Le gouvernement renforce la
reste minimal dans la zone de élaboré par, avec la contribution lutte contre le braconnage dans la
l'oléoduc\. du MINEF (annuel)\. zone\.
Produits/résultats
Indicateurs clés de
performance Suivi et évaluation Hypothèses critiques
Produit de chaque Indicateurs de produits : Rapports de projet : (des produits à l'objectif)
composante :
i) Un environnement propice à la Normes et règles pour tous Rapport du conseil juridique du Les normes et règles ont été
gestion environnementale dans le les décrets sont basés sur les GCI\. élaborées de façon concertée\.
secteur pétrolier, y compris un normes internationales
cadre réglementaire, est en place et adaptées au contexte
diffusé, sur la base d'un consensus national/local
avec toutes les parties prenantes\. Les magistrats possèdent les
connaissances nécessaires Rapports sur la formation
pour sanctionner toute
infraction aux politiques
environnementales et
appliquer systématiquement
les lois\.
La transparence des
méthodes dans les domaines
environnemental et social est
améliorée\.
Enquêtes\. La transparence globale des
méthodes dans le secteur public
au Cameroun s'est améliorée\.
ii) Les parties prenantes sont bien Des informations cohérentes Rapports/articles
informées des aspects sont fournies par le
environnementaux et sociaux du gouvernement au parlement
projet d'oléoduc\. et aux autres partenaires
nationaux\.
Les parties prenantes Rapports/articles
extérieures sont bien
informées\.
iii) Les services publics sont Le niveau de compétence des Rapports sur la formation Le personnel demeure dans la
fournis de manière équitable, agents de l'État s'est accru\. fonction publique après avoir
efficace et en temps voulu par les L'indemnisation a été versée suivi la formation\.
délégations provinciales des en totalité un an après le Rapports du gouvernement et de Le gouvernement et les
ministères compétents\. démarrage du projet\. la COTCO\. promoteurs ont versé leurs parts
Réduction des retards dans des indemnisations\.
l'intervention de l'État\.
Le degré de respect des lois Rapports CPSP Les promoteurs acceptent de
nationales par les promoteurs coopérer lors des inspections et
est très élevé\. d'autoriser des mesures justes\.
SISE et suivi externe
21 Annexe 1
iv) La situation environnementale La qualité de SISE et suivi externe Les promoteurs appliquent de
fait l'objet d'une surveillance l'environnement dans la zone façon adéquate leur part du PGE\.
continuelle et les progrès d'influence de l'oléoduc est
enregistrés au niveau des capacités satisfaisante\. Le GCI a accès aux informations
sont connus\. Les informations collectées Rapports du GCI essentielles requises de la part des
sont de bonne qualité\. promoteurs\.
Ressources/résultats
Indicateurs clés de
performance Suivi et évaluation Hypothèses critiques
Composantes/Sous- Ressources Indicateurs Rapports : (Des composantes aux
composantes du projet : mises en résultats)
oeuvre :
milliers de
dollars
(arrondis)
1\. Élaboration d'un cadre 1 400
réglementaire habilitant
1\.1\. Élaborer des décrets et 140 12 décrets et Décrets publiés
organiser une formation règlements avant
décembre 2001\.
Formation de 50
personnes portant
sur nouveau cadre
réglementaire
avant juillet 2002\.
1\.2\. Étude de prospective à long 260 Étude achevée Rapports mensuels sur l'état
terme avant juillet 2004 d'avancement faisant état
entretiens avec CPSP\.
1\.3\. Remboursement PPF 1 000
2\. Renforcement des capacités de 2 800
coordination
2\.1\. Secrétariat permanent 2 100 Formation trois Rapports mensuels sur l'état Le personnel est motivé\. Les
experts (avant d'avancement incitations sont appropriées\. Les
juillet 2001) : Évaluation de l'IEC (à mi- relations de travail entre le
Biophysique, parcours et RFE) personnel, les entreprises, et les
Économie sociale AT expatriés sont bonnes\.
Santé
Étude des zones à Rapports sur études
risque (1ère année)
Étude d'impact
socio-économique
(5ème année)
2\.2\. Unités sur le terrain 700 Formation de 11 Rapports d'activité mensuels\. Coordination entre les
personnes pour techniciens et les
unités sur terrain communicateurs est bonne, de
(avant juil\. 2001) ; même qu'entre le personnel du
Biophysique (5) CPSP et l'administration\.
Économie sociale
(4), Santé (2)
3\. Renforcer les capacités 5 400
d'intervention
3\.1\. Au niveau de la gestion 900 Renforcement de Rapport sur la situation sanitaire Ministère de la santé et
sanitaire 20 centres santé (à mi-parcours et RFE)\. l'entreprise chargée de cette
avant juillet 2002\. Rapports sur la qualité des composante sont pleinement
services de santé publiés (à mi- efficaces\.
parcours et RFE)\.
22 Annexe 1
3\.2\. Au sujet des intervention en 700 Plan achevé avant Plan d'intervention du
cas de déversements juillet 2002 gouvernement en cas de
d'hydrocarbures déversement d'hydrocarbures (à
mi-parcours)
3\.3\. Ministères décentralisés 3 800 Formation de 70 Rapports d'activité mensuels du
fonctionnaires CPSP
avant juillet 2002
en gestion
ressources
naturelles, gestion
des différents, et
prévention et lutte
contre pollution\.
Au moins 80 %
fonctionnaires
formés dans cadre
du projet
continuent de
s'occuper projet\.
4\. Suivi et évaluation 800
4\.1\. Services d'un groupe 400 Publication du Évaluation du GCI (à mi- Les membres du groupe
consultatif international (GCI) rapport final du parcours et ICR) d'experts sont bien respectés tant
Conseil Rapports annuels reçus\. au plan local qu'international et
consultatif avant Les mesures recommandées ont coopèrent efficacement\.
juillet 2001\. été prises\.
4\.2\. Système d'information sur le 400 Système gestion, Le système d'information de
suivi environnemental (SISE) et suivi et évaluation gestion est en place
gestion et contrôle du projet projet Le système d'information sur le
opérationnel avant suivi environnemental est en
décembre 2000\. place
SISE en place
avant juillet 2001\.
23
Annexe 2 : description du projet
CAMEROUN : Projet de renforcement des capacités de protection de l'environnement
dans le secteur pétrolier (projet CAPECE)
Contexte
1\. Le projet vise à mettre le Cameroun mieux en mesure de régler les problèmes de gestion
environnementale liés à la construction et à l'exploitation d'un réseau de transport du pétrole par oléoduc de la
frontière tchadienne à un point de la côte atlantique proche de Kribi\. Plus spécifiquement, le projet a pour but
de renforcer les capacités existantes et de créer de nouveaux mécanismes institutionnels pour la mise en oeuvre
et la surveillance des mesures de protection de l'environnement prévues par le plan de gestion
environnementale (PGE) du Projet d'exploitation pétrolière et d'oléoduc\. Le Cameroun doit renforcer les
capacités de toutes ses institutions appelées à s'occuper des différentes incidences du Projet d'exploitation
pétrolière et d'oléoduc et coordonner leurs efforts à cette fin\.
2\. La gestion environnementale englobe toute la gamme d'activités à entreprendre pour éviter que le
projet n'ait un impact négatif sur les populations et l'environnement naturel\. Il s'agira certes de préserver le
milieu naturel, mais le programme a une portée plus vaste et vise également à protéger la santé humaine et à
minimiser les conflits sociaux locaux\.
3\. Le gouvernement camerounais a opté pour une stratégie consistant à confier la mise en oeuvre du PGE
à un organe de coordination agissant au niveau central, l'objectif étant d'assurer la plus grande cohérence
possible dans les activités des diverses administrations chargées de mandats spécifiques dans le cadre du
projet, de faciliter les contacts entre les pouvoirs publics et la COTCO, société chargée de l'exploitation de
l'oléoduc au Cameroun, grâce à la sélection d'un interlocuteur unique et de maximiser l'efficience lorsqu'il
faudra intervenir rapidement et ainsi éviter tout retard administratif\.
Structures institutionnelles
4\. L'organe responsable au premier chef de la gestion environnementale du Projet d'exploitation pétrolière
et d'oléoduc est le comité de pilotage et de suivi des pipelines (CPSP), présidé par le directeur général de la
SNH, qui est la société pétrolière nationale\. Afin de s'acquitter de sa mission et de ses responsabilités, le
CPSP comporte deux sous-divisions : a) le « Comité de suivi » (CS), chargé de l'administration et de la
formulation des politiques, et b) le Secrétariat permanent, qui est l'organe opérationnel\. La relation entre le
Comité de suivi et le CPSP, qui est exposée en détail dans l'Arrêté présidentiel, figurera dans le Manuel de
mise en oeuvre du projet\. Le CPSP comporte six sections centrales différentes chargées des divers aspects du
mandat qui lui a été confié et trois unités sur le terrain\. Ces sections sont les suivantes :
a) Une section de l'environnement, du tracé et de la sécurité, chargée des tâches ci-après :
Assurer l'interface avec le Groupe consultatif international
Coordonner toutes les interventions liées à la gestion environnementale de l'oléoduc
Gérer les trois unités sur le terrain
Assurer l'interface avec les autres unités du CPSP, en particulier l'Unité des affaires
juridiques
Gérer toutes les fonctions communes (y compris superviser la mise en oeuvre du plan
d'indemnisation, du plan pour les populations autochtones (PPA) et du programme
d'amélioration de l'environnement hors site (PAEH), comme décrit dans le PGE)
Suivre les résultats et la performance du programme
24 Annexe 2
b) Une section conseil juridique, chargée de superviser la préparation des règles et des procédures
requises et de passer en revue tous les aspects juridiques du programme de travail et des activités du
CPSP,
c) Une section administration et comptabilité,
d) Une section communication et éducation, chargée de l'élément information, éducation et
communication (IEC) du projet,
e) Une section économie et finances,
f) Une section ingénierie\.
g) Des Unités sur le terrain\. En outre, le CPSP encadrera pendant la construction de l'oléoduc deux
unités terrestres et une unité maritime, conformément au mandat qui lui a été confié de surveiller
l'impact des activités de construction sur le terrain\.
5\. Le plan de gestion environnementale et le plan d'indemnisation du Projet d'exploitation pétrolière et
d'oléoduc, qui ont été approuvés par le gouvernement camerounais, définissent les activités de suivi et de
contrôle dont ce dernier est responsable\. Ces activités recouvrent l'environnement biophysique (sols, air, eau),
les activités socio-économiques et la gestion des mesures de santé\. En outre, dans le cadre de ses
responsabilités de tutelle de la Fondation pour l'environnement, le gouvernement suivra toutes les activités
d'amélioration de l'environnement dans les parcs nationaux de Campo et de Mbam-Djerem ainsi que la mise
en oeuvre du plan pour les populations autochtones\.
6\. Conformément aux recommandations du PGE, l'exploitant (la COTCO) constituera trois unités de
surveillance sur le terrain, dont l'une s'occupera plus particulièrement de la surveillance des activités en mer,
afin de superviser les travaux de construction de l'oléoduc et du terminal offshore\. Le CPSP déploiera lui aussi
sur le terrain trois unités composées, chacune, de trois spécialistes, un dans chacun des trois domaines
d'intervention identifiés : impacts biophysiques, impacts socio-économiques et gestion des mesures de santé
(ce dernier sera affecté par rotation à chacune des trois unités sur le terrain)\. Ces unités seront chargées de
surveiller au jour le jour l'impact des travaux de construction de l'oléoduc et seront ainsi appelées à dialoguer
avec les administrations locales et la COTCO, et en particulier avec les unités de suivi de cette dernière\.
7\. Le CPSP supervisera l'exécution des éléments du programme de renforcement des capacités :
passation des marchés et gestion du matériel et des fournitures, appui logistique, programme de formation et
assistance technique\. La section de coordination est l'organe de centralisation des activités de l'État qui
permet aux pouvoirs publics de s'acquitter de leurs responsabilités en matière d'atténuation de l'impact
environnemental et social du Projet d'exploitation pétrolière et d'oléoduc\.
Composantes du projet
8\. Les composantes et sous-composantes du projet CAPECE sont les suivantes :
I\. renforcement du cadre institutionnel, réglementaire et juridique
I\.1\. Rédaction, diffusion et application des règlements d'application
I\.2\. Étude de prospective à long terme
II\. Renforcement des capacités de coordination
II\.1\. Programme de coordination centrale au secrétariat permanent du CPSP, y compris IEC
II\.2\. Unités sur le terrain du CPSP
III\. Renforcement des capacités d'intervention des pouvoirs publics
III\.1\. Gestion de la santé publique
III\.2\. Plan d'intervention en cas de déversement de pétrole : préparation et exécution
III\.3\. Appui aux administrations décentralisées
IV\. Suivi et évaluation
IV\.1\. Groupe consultatif international
25 Annexe 2
IV\.2\. Systèmes de suivi de la gestion, des performances et des capacités dans le domaine de
l'environnement
Composante 1 Mise en place d'un cadre réglementaire habilitant
Coût : 1,3 million de dollars (y compris le remboursement du PPF), financement IDA :
1,25 million de dollars
9\. Le pays est actuellement confronté à trois problèmes de gestion de l'environnement dans le secteur
pétrolier : i) la plupart des lois relatives à la protection de l'environnement qui ont été adoptées récemment
n'ont pas fait l'objet de décrets d'application, ii) il n'a pas été établi de procédures claires pour l'octroi de
permis et d'autorisations aux promoteurs de l'oléoduc, et iii) les pouvoirs publics n'ont pas les ressources
techniques et financières nécessaires pour exécuter le programme de suivi de l'environnement et pour faire en
sorte que le Projet d'exploitation pétrolière et d'oléoduc contribue à atténuer la pauvreté\. Cette composante a
pour but de résoudre les deux premiers de ces problèmes en élaborant des règlements et procédures de nature à
faciliter la protection de l'environnement dans le secteur pétrolier\. Elle a également pour but d'élaborer une
stratégie à long terme de gestion environnementale dans le secteur pétrolier au Cameroun\.
a) Préparation et publication des décrets d'application voulus
Coût : 0,14 million de dollars
10\. La mise en oeuvre de la loi sur l'environnement no 96/12 de 1996, ainsi que des autres lois concernant la
protection de l'environnement qui ont été promulguées dans le cadre du plan national de gestion de
l'environnement, est entravée par le fait que les décrets d'application nécessaires n'ont pas été promulgués\. Le
projet CAPECE aidera à élaborer et mettre en place les décrets d'application voulus ainsi qu'à renforcer les
capacités de supervision de tous les organismes appelés à surveiller l'impact de l'oléoduc\. On trouvera
ci-après la liste des décrets d'application devant être publiés en priorité (encadré 1)\.
Encadré 1 : Décrets relatifs à la gestion de l'environnement devant être rédigés et publiés en toute priorité
dans le secteur pétrolier au Cameroun :
Décrets et arrêtés d'application de la loi No\. 96/12 de l'Emprunteur en date du 5 août
1996 portant Loi-cadre relatif à la gestion de l'environnement :
i) Articles 17 à 19 : modalités d'application pour la réalisation d'une étude d'impact
environnemental
ii) Articles 31 à 33 : modalités d'application concernant les mesures adoptées pour
prévenir et combattre tous les types de pollution marine causée par les navires et par les
installations côtières ou en mer l
iii) Article 36 : modalités d'application des mesures de lutte contre la pollution du sol et
du sous-sol ;
iv) Articles 43 et 47 : modalités d'application des mesures concernant la gestion des
déchets ;
v) Articles 21, 30\.1 et 38 : modalités d'application des conditions dans lesquelles un
polluant peut être émis dans l'atmosphère, l'eau ou le sol, ainsi que des normes et règles
applicables à de telles émissions dans l'environnement naturel, y compris les eaux
intérieures ;
vi) Articles 57\.1 et 58 : modalités d'application des mesures touchant les substances
chimiques, toxiques et/ou dangereuses ; et
vii) Articles 60 et 61 : modalités d'application concernant les nuisances causées par le
bruit et les odeurs\.
26 Annexe 2
Décrets et arrêtés d'application de la loi No\. 98/15 de l'Emprunteur en date du
14 juillet 1998 concernant « les établissements classés dangereux, insalubres et
incommodes » ;
i) Article 7 : normes concernant le périmètre de sécurité à respecter autour des
établissements classés : et
ii) Article 18 : conditions d'emploi des fonctionnaires des services d'inspection des
établissements classés ; et
iii) Article 20 : conditions d'emploi des organismes ou spécialistes responsables des
contrôles et audits des établissements classés et homologation des laboratoires chargés du
suivi de la quantité et de la qualité des effluents des établissements classés\.
Règlements d'application de la Loi No\. 66\.11 de l'Emprunteur en date du 5 août 1996,
articles 5 et 10 concernant la normalisation et la liste des substances dont le rejet,
l'immersion et l'incinération en mer sont interdits\.
11\. Ces règlements d'application seront établis en étroite coordination avec tous les organismes
gouvernementaux s'occupant de la gestion, de la protection et de la réglementation de l'environnement\. Il sera
organisé des ateliers afin de discuter des projets de règlement aux différentes étapes de leur élaboration, pour
garantir une large participation des parties prenantes, l'engagement de l'administration et l'applicabilité et le
respect futurs des règlements proposés\.
12\. Il est envisagé d'organiser pendant l'exécution du projet un programme de formation des agents chargés
de la surveillance de l'environnement et de l'application des lois relatives à la protection de l'environnement
dans le cadre du Manuel de mise en oeuvre du projet (MEP)\. En outre, il sera organisé dans le contexte de la
composante IEC des campagnes de sensibilisation du public et de diffusion des règlements publiés\. Toutes les
parties prenantes intéressées une documentation concernant la législation relative à la protection de
l'environnement, ainsi que les mesures prises pour la faire respecter\.
13\. Cette composante du projet exigera le recrutement de deux consultants internationaux, l'un spécialisé
dans les normes et règles environnementales et l'autre dans le droit de l'environnement\. Il sera constitué une
équipe de consultants nationaux qui sera appuyée, pendant une courte période, par un expert international du
droit de l'environnement\. Le CPSP a préparé le mandat de ces experts, qui a été approuvé par la Banque\. Il
faudra prévoir en tout six mois de services de consultants internationaux\.
b) Élaboration d'une stratégie à long terme de gestion de l'environnement dans le secteur pétrolier\.
Coût : 0,26 million de dollars\.
14\. La gestion de l'impact environnemental et de l'impact social des activités réalisées dans le secteur
pétrolier ne pourra être durable que lorsque le gouvernement camerounais aura pris une décision sur le
mécanisme institutionnel optimal à mettre en place et l'aura introduit\. Une étude visant à faciliter l'élaboration
de cette stratégie à long terme sera réalisée pendant la troisième année d'exécution du projet\. Cette étude
évaluera les institutions existantes et leurs performances, définira les autres mécanismes institutionnels
pouvant être envisagés et donnera aux décideurs les éléments et les informations nécessaires pour faire un
choix parmi les scénarios suggérés\. Le mandat de cette étude sera incorporé au MEP\. Sa réalisation exigera six
mois de travail de consultants internationaux et six mois de travail de consultants nationaux\.
27 Annexe 2
Composante 2 Renforcement des capacités de coordination en matière de gestion de
l'environnement
Coût : 2,8 millions de dollars, financement IDA : 1,04 million de dollars
15\. La coordination assurée par le Comité de pilotage et de suivi des pipelines consistera notamment à :
assurer la coordination technique des interventions sur le terrain (gestion de l'impact sur la santé, de
l'impact biophysique et de l'impact socio-économique) ;
assurer la liaison avec les promoteurs ; et
mettre en oeuvre la stratégie d'IEC pour tenir les parties prenantes informées des progrès accomplis\.
16\. Pendant la construction de l'oléoduc, les unités sur le terrain et, après leur renforcement, les services
centraux du CPSP, comprendront 14 spécialistes principaux et un nombre raisonnable d'auxiliaires (voir ci-
après l'organigramme du CPSC)\. Les services gouvernementaux mettront ce personnel à la disposition du
projet pendant toute sa durée\. Le CPSP s'emploie à définir le mandat des spécialistes, lequel sera inclus dans
le MEP\. Des appels de candidatures pour pourvoir ces postes seront diffusés dans l'administration, et les
candidats sélectionnés seront mis à la disposition du CPSP\. Une formation spécialisée sera organisée et un
appui logistique sera fourni pour renforcer les capacités de l'ensemble des services du CPSP et des
administrations intéressées\. Un plan de formation est en cours de préparation, et il sera inclus dans le MEP\.
L'on s'attache également à mettre au point des incitations pour veiller à ce que les agents qui auront été
formés mettent les compétences ainsi acquises au service du projet\. Lorsqu'il ne sera pas possible de trouver
des agents nationaux, on pourra recourir à l'assistance technique de consultants internationaux\.
17\. Ces capacités additionnelles sont déployées principalement sur le terrain, où il faudra éviter que le
projet ait un impact néfaste sur l'environnement ou, s'il en a un, l'atténuer\. Un groupe restreint de
coordination sera également constitué au niveau central au CPSP afin de faciliter la coopération
intersectorielle\. Ce groupe s'attachera également, en coordination avec la stratégie de communication de la
COTCO, à renforcer les capacités d'IEC au sujet des thèmes définis par le projet CAPECE\.
28
Présidence
Figure 1 : Organigramme du CPSP
S N H
Ressources Humaines et
des Affaires Générales
Direction Financière
Division Juridique
Division de la Communication
CPSP
Comité de Suivi
Secretariat Permanent
Secretaire Permanent
Section Environnement Section Ingénierie et Section Administration et Section
Trace et Securite Section Economie et Finance mobilisation des Section Conseil Juridique Communication et
Chef Comptabilité
Ressources locales Education
Bio-Physicien Economiste (s) Comptable Ingénieurs Juriste (s) Agents de IEC
Socio-Economiste Analystes (s) Agent d'Achat Personnel de soutien
Expert en Gestion Santé Financiers (s) Logisticiens (s)
Assistants (e) Techniques Agent de compensation
Techniciens Archiviste et Comptable Matières
Personnel de soutien Personnel de soutien
Unité sur le Terrain Unité sur le Terrain Unité sur le Terrain Equipe en
(Terrestre) (Terrestre) (Maritime) Réserve
Effets Bio-Physiques Effets Bio-Physiques Effets Bio-Physiques Effets Bio-Physiques
Economie-sociale Economie-sociale Economie-sociale Economie-sociale
Gestion-Santé
Environnement Marine
29 Annexe 2
a) Coordination centrale\. Coût : 2,1 millions de dollars
18\. Les tâches spécifiques liées aux activités environnementales seront réalisées par une équipe de
spécialistes de haut niveau affectés à la section de l'environnement, du tracé et de la sécurité du secrétariat
permanent du CPSP\. Ces spécialistes s'occuperont de toutes les activités de gestion de l'impact biophysique,
de l'impact socio-économique et de l'impact sur la santé à réaliser pour mener à bien le PGE (voir
l'encadré 2)\. Ils relèveront du secrétaire permanent du CPSP et collaboreront étroitement avec la division de la
communication de la SNH à la réalisation de la sous-composante IEC\. Le coût de l'appui logistique à fournir à
l'unité de coordination centrale pendant toute la durée du projet est estimé à 2,1 millions de dollars\.
Encadré 2 : Spécialistes dont devra disposer l'unité centrale
Un biophysicien (environnement, faune et flore, gestion de la lutte contre la pollution)
Un sociologue/économiste (population, développement local, règlement des conflits), et
Un spécialiste de la santé (gestion de la santé publique) connaissant bien les problèmes associés à
l'épidémie de VIH/SIDA\.
b) Unités sur terrain\. Coût : 0,7 million de dollars
19\. Les trois unités sur le terrain devront combiner les mêmes compétences que l'unité centrale, l'accent
étant mis toutefois sur la gestion des ressources naturelles, en raison de la nature des problèmes
environnementaux qui se posent sur le terrain (les activités de lutte contre la pollution seront gérées au niveau
central, mais un appui dans ce domaine pourra être fourni aux unités sur le terrain qui en feront la demande)\.
Les unités sur le terrain géreront leurs propres services logistiques et leurs activités seront coordonnées par
l'un des spécialistes\. Leur principale responsabilité sera de superviser les activités de la COTCO et de veiller à
ce que les activités d'inspection et de contrôle devant être réalisées par les organismes gouvernementaux
soient effectivement menées ponctuellement et selon des modalités techniques et scientifiques acceptables\. Le
coût des services d'appui logistique et des services de consultants locaux dont auront besoin les unités sur le
terrain est estimé à 0,7 million de dollars\.
Encadré 3 : Compétences générales dont devra disposer chaque unité sur le terrain
Un biophysicien (environnement, faune et flore) à plein temps,
Un sociologue/économiste (population, développement local, règlement des conflits) à plein temps, et
Un spécialiste de la santé (santé publique) transféré d'une unité à une autre en tant que debesoin\.
L'unité centrale se procurera localement les services spécialisés dont elle pourrait avoir besoin\. Le projet
prévoit aussi de conclure des contrats avec des experts pour s'assurer leurs services au moins dans les
domaines suivants :
réalisation d'une étude des sites qui seront sans doute affectés par la construction d'installations fixes
(« zones à risque ») ;
fourniture d'un appui à la Fondation pour l'environnement et suivi de ses activités dans le contexte de la
mise en oeuvre du plan pour les populations autochtones ;
fourniture d'un appui et surveillance de l'impact de la construction de l'oléoduc sur le patrimoine culturel,
en particulier sur les sites archéologiques ;
réalisation d'une étude socio-économique, avec la participation des bénéficiaires, pour évaluer l'impact de
la construction de l'oléoduc sur les populations affectées par le projet\.
30 Annexe 2
20\. Les unités sur le terrain seront responsables d'un petit nombre d'interventions directes et devront, par
exemple, donner des avis à la COTCO sur les questions techniques qui appellent une attention immédiate ou
qui revêtent une importance mineure\. Essentiellement, toutefois, elles devront assurer la liaison appropriée
avec les représentants locaux compétents des organismes gouvernementaux (MINEF, MMEE, ministère de la
Santé, ministère des Affaires sociales, ministère des Transports) pour les encourager à veiller au respect des
normes, règlements et lois applicables dans leurs domaines de compétence respectifs et à l'accomplissement
de leurs responsabilités\. À cette fin, elles devront notamment se mettre en rapport avec les services
administratifs compétents, présenter des demandes en bonne et due forme, suivre le déroulement de la
procédure pour qu'il y soit donné suite rapidement (autorisations administratives ou contrôles techniques) et
consigner les résultats de l'intervention dans le système de suivi et d'évaluation\.
21\. Les unités sur le terrain collaboreront étroitement avec des représentants locaux des organismes
gouvernementaux devant participer à la construction et à l'exploitation du projet\. Lorsque les compétences
locales feront défaut, des spécialistes détachés par les services centraux des organes gouvernementaux
intéressés interviendront, ou il sera fait appel à des experts privés\. Les membres des unités sur le terrain seront
sélectionnés sur la base de leur expérience pratique et de leur aptitude à travailler en collaboration avec le
personnel des services techniques centraux et décentralisés du gouvernement\. Les effectifs totaux des unités
sur le terrain comprendront 13 spécialistes (trois équipes de trois personnes + une équipe de réserve + un
spécialiste de l'environnement marin) et devront être dotés de moyens de transport et de communication
adéquats\. Les agents sélectionnés pour pourvoir ces postes devront être approuvés par la Banque\.
22\. Les activités qui devront être entreprises conjointement par les unités sur le terrain et les différents
organismes gouvernementaux responsables de la gestion et de la protection de l'environnement sont décrites
ci-après\.
Environnement biophysique
23\. Les activités consisteront à :
surveiller les émissions dans l'atmosphère ;
surveiller la gestion des eaux usées ;
contrôler les tests hydrauliques de l'oléoduc ;
protéger les ressources hydrauliques de surface et souterraines ;
protéger les sols contre l'érosion ;
protéger la végétation et la faune ;
surveiller les activités des programmes de gestion environnementale hors site ;
surveiller les déversements en mer et assurer la protection du milieu marin ; et
évaluer le risque biophysique\.
Pendant la période de construction, l'accent sera mis sur la surveillance administrative et le contrôle des
travaux ; pendant la phase de l'exploitation, on insistera sur l'atténuation de l'impact des activités sur
l'environnement\.
Activités socio-économiques
24\. Les activités consisteront à :
surveiller la mise en oeuvre du Plan d'indemnisation ;
aider les autorités locales à gérer les conséquences des déplacements de population entraînés par les
activités de construction ;
promouvoir la participation, en tant que de besoin, des petites et moyennes entreprises (PME)
camerounaises ;
31 Annexe 2
surveiller l'exécution des plans de recrutement et de formation de la COTCO ;
contrôler le respect de l'emprise et des conditions de son utilisation pendant la phase de
l'exploitation ;
protéger les sites culturels, archéologiques et religieux et veiller à la préservation des découvertes
archéologiques imprévues ; et
surveiller les activités du PPA\.
Les sociologues/économistes des unités sur le terrain seront formés aux méthodes de résolution des conflits
selon les techniques les plus modernes\. Les compétences acquises au cours de ces séances de formation leur
serviront dans leur travail avec les populations locales de la zone d'influence de l'oléoduc\. Les méthodes de
résolution des conflits seront particulièrement utiles pour gérer les relations entre l'équipe d'ouvriers de
l'exploitant et les habitants de la région\.
Gestion de la santé
25\. Les activités du spécialiste de la santé qui sera affecté par roulement aux trois unités sur le terrain
consisteront notamment à :
surveiller l'état de santé des populations des régions traversées par l'oléoduc ;
identifier les interventions nécessaires de la part du ministère de la Santé pour améliorer l'état de santé
des populations et atténuer tout impact négatif découlant de la construction et de l'exploitation de
l'oléoduc ;
surveiller la mise en oeuvre des interventions de la COTCO en matière de santé, y compris le
programme de gestion de la santé qui doit être entrepris au niveau des collectivités locales, et du Plan
pour les populations autochtones ;
maintenir le contact avec les biophysiciens et sociologues/économistes pour recenser dès que possible
les problèmes pouvant surgir (par exemple en raison de la mauvaise qualité de l'eau potable) avant
qu'ils n'aient un impact négatif ;
assurer la liaison avec le bureau local d'ONUSIDA pour mieux faire face à l'épidémie de VIH/SIDA
faciliter les interventions d'urgence\.
Ce spécialiste sera transféré d'une unité à une autre sans être rattaché à aucune d'elles en particulier pendant
la phase de construction de l'oléoduc\.
c) Formation (coût compris dans les chiffres précédents)
26\. Une formation sera donnée au personnel du CPSP et aux effectifs des organismes gouvernementaux
participants (voir la composante 3)\. Au total, plus d'une centaine de cadre suivront des stages de formation de
courte durée, dont la plupart seront organisés en cours d'emploi au Cameroun\. Le Secrétariat permanent du
CPSP (avec l'assistance de l'Unité des ressources humaines de la SNH) coordonnera, si possible, la formation
avec celle organisée par la COTCO pour son personnel sur le terrain et avec celle fournie au personnel
tchadien de contrepartie (CTNSC) dans le cadre Projet de renforcement de la capacité institutionnelle de
gestion du secteur pétrolier afin de maximiser l'effet de synergie\. Un budget total de 700 000 dollars a été
affecté à la formation\.
27\. Une formation sera dispensée aux spécialistes des domaines suivants : i) spécialistes de
l'environnement et du pétrole (concepts et méthodes de gestion environnementale, études et analyses
environnementales, surveillance de l'environnement, conception et application de mesures tendant à atténuer
l'impact des activités sur l'environnement) ; ii) spécialistes de la santé (surveillance de la santé
32 Annexe 2
environnementale et atténuation d'impact) ; iii) sociologues/économistes (enquêtes et études sur l'évolution
des revenus, élaboration et suivi de programmes d'indemnisation) ; iv) administration (gestion financière,
passation des marchés, décaissements) ; v) magistrats et autres employés du système judiciaire afin
d'améliorer leurs capacités d'assurer l'application du nouveau cadre juridique et réglementaire relatif à
l'environnement dans le secteur pétrolier, et vi) toute autre discipline en rapport avec le projet (gestion,
bureautique, travail en réseau, anglais, gestion du savoir)\. Une formation sera dispensée aux agents des trois
unités sur le terrain ainsi qu'au personnel du Secrétariat permanent\. Le cas échéant, des membres du personnel
des entreprises et des autres parties prenantes participeront aux stages de formation afin de faciliter les
communications entre ces groupes et le CPSP\.
28\. La priorité sera accordée à la formation pratique au Cameroun\. Lorsqu'il ne sera pas possible de
l'organiser dans le pays, on pourra envisager un nombre limité de stages de formation à l'étranger\. Les
participants à ces stages s'engageront à rester au service du projet pendant trois ans au moins après
l'achèvement du stage\. Un plan de formation détaillé sera inclus dans le manuel de mise en oeuvre du projet,
qui devra être préparé avant la date d'entrée en vigueur\.
Encadré 4 : Liste et calendrier des activités de formation
Informations concernant le MEP (lancement du projet au début de 2000)
Systèmes d'information de gestion environnementale (2000)
Formation juridique (2000)
Inspecteurs de la pollution (2000)
Formation des garde-côtes (2001)
Application des nouveaux décrets de protection de l'environnement (2000)
Application du plan d'intervention du gouvernement en cas de déversements d'hydrocarbures (2001)
Langues et informatique (2000 et 2001)
Santé, y compris VIH/SIDA, formation (2000-04)
Formation en IEC (2000-04)
d) Information, éducation et communication (coût compris dans les chiffres précédents)
29\. Les activités d'IEC financées au titre du projet consisteront notamment à :
Sensibiliser les parties prenantes étrangères ;
Communiquer avec les populations affectées par le projet, les ONG, Exxon, la COTCO et les
sociétés connexes, les autres organismes gouvernementaux et le grand public ;
Préparer une stratégie d'IEC ; et
Mettre en place et gérer un site Internet et un système de gestion des connaissances\.
30\. Les besoins en matière de services logistiques et de formation pour les activités d'IEC ont été évalués
et un budget de 200 000 dollars a été alloué à cette sous-composante\. La sous-composante gestion de la santé
comporte ses propres activités d'IEC, dont le coût, en sus de ce montant, s'élève à 200 000 dollars\.
Composante 3 Renforcement des capacités d'intervention en matière de gestion de
l'environnement
Coût : 5,4 millions de dollars, financement IDA : 2,71 millions de dollars
31\. Cette composante du projet CAPECE a pour but de faciliter l'application du PGE en mettant à la
disposition des institutions camerounaises le matériel, les compétences et l'environnement de travail
33 Annexe 2
nécessaires pour leur permettre de s'acquitter rapidement et efficacement de leurs fonctions essentielles\. Les
principales sous-composantes concernent :
La gestion de la santé ;
La préparation et la mise en oeuvre du plan d'intervention en cas de déversements
d'hydrocarbures ; et
Le renforcement des capacités des services décentralisés de l'administration camerounaise\.
a) Gestion de la santé\. Coût : 0,9 million de dollars
32\. Pendant la période de construction de l'oléoduc, la COTCO assumera la responsabilité des questions
liées à l'hygiène du travail, tandis que le gouvernement devra s'occuper des questions de santé publique,
comme les maladies ou les accidents, que pourrait causer l'oléoduc parmi les populations avoisinantes\. Ce que
l'on craint surtout, c'est le risque de propagation de maladies transmises par des vecteurs et des maladies
sexuellement transmissibles (spécialement l'infection par le VIH/SIDA), les accidents de la circulation et
d'autres types d'accidents, et l'impact que le projet pourrait avoir sur les approvisionnements alimentaires et la
nutrition\.
33\. Bien que la prévalence du VIH/SIDA au Cameroun (qui serait d'en moyenne 7 % selon les dernières
estimations) soit relativement faible par rapport à ce qu'elle est en Afrique orientale et australe, le problème se
pose de manière aiguë parmi certains sous-groupes de population (15 % parmi les camionneurs et jusqu'à
20 % parmi les professionnels du sexe), selon les statistiques disponibles\. Le Cameroun n'a pas encore élaboré
de stratégie nationale pour lutter contre le VIH/SIDA ; la Banque a l'intention d'évoquer cette question dans le
cadre des entretiens qui doivent avoir lieu prochainement à propos de l'élaboration de la SAP\. La stratégie la
mieux appropriée, en pareille situation, consiste à mettre l'accent sur la prévention et à infléchir les
comportements des groupes les plus exposés\. Les ouvriers du bâtiment, les travailleurs occasionnels, les
camionneurs et les fournisseurs et les personnes qui suivent les camps de travailleurs seront les groupes visés
par le programme de prévention du VIH/SIDA qui sera réalisé dans le cadre du Projet d'exploitation pétrolière
et d'oléoduc et du projet CAPECE\. La COTCO organisera un programme d'éducation sanitaire et de
vaccination donnant lieu, notamment, à la vente de préservatifs à des prix subventionnés\. L'évolution de
l'incidence du VIH/SIDA sera suivie au moyen d'un système d'information épidémiologique et d'un système
sentinelle de surveillance qui seront mis en place pour les travailleurs\. La COTCO réalisera en outre un
programme d'antennes sanitaires au niveau communautaire pour mener un effort d'information et d'éducation
et poursuivre d'autres activités sanitaires ciblées\.
34\. Pour compléter ces activités de la COTCO, le projet CAPECE aidera le ministère de la Santé à
renforcer ses moyens de collecte et de traitement des données statistiques, à dispenser une formation aux
agents communautaires de santé et à améliorer la prestation des services de santé au niveau des communautés
en mettant à sa disposition des vaccins, des médicaments et des services d'analyses de laboratoire ainsi que
des fournitures dans les 10 districts sanitaires situés le long du tracé de l'oléoduc\. En ce qui concerne plus
particulièrement le VIH/SIDA, les pouvoirs publics sous-traiteront à une ONG locale expérimentée le soin de
mener un programme d'information, d'éducation et de ventes subventionnées dans la zone du projet, sous la
supervision du Comité national de lutte contre le sida\. Le coût de ce programme sur une période de cinq ans
est estimé à 140 000 dollars\. Ces activités seront également coordonnées avec l'ONUSIDA et leurs opérations
de suivi aux sites sentinelles\.
34 Annexe 2
b) Préparation et mise en oeuvre du plan d'intervention en cas de déversements d'hydrocarbures\.
Coût : 0,7 million de dollars
35\. Le gouvernement camerounais devra entreprendre un certain nombre d'activités pour compléter les
efforts déployés par la COTCO pour prévenir et atténuer tout effet néfaste du projet sur l'environnement et sur
la société\. En particulier, la COTCO a élaboré un plan général d'intervention en cas de déversements
d'hydrocarbures et préparera des plans adaptés aux différentes régions, qui nécessiteront l'application de
mesures concertées par les pouvoirs publics\. Il sera réalisé une étude pour élaborer un plan national
d'intervention d'urgence en cas de pollution accidentelle terrestre ou marine par des hydrocarbures\. Cette
étude sera réalisée par des consultants internationaux et nationaux avec la pleine participation de toutes les
parties prenantes potentielles\.
36\. Le descriptif de cette étude de faisabilité a été élaboré et sera joint en annexe au MEP\. On en trouvera
copie dans les dossiers du projet\.
c) Renforcement des capacités des services décentralisés de l'administration camerounaise\. Coût :
3,8 millions de dollars
37\. On s'attachera à renforcer les ministères intéressés, dont ceux chargés de l'environnement, des mines,
de l'urbanisme et des transports, au moyen de programmes de formation, de l'établissement de réseaux et de
services d'appui logistique\. La formation organisée et le matériel dont l'acquisition sera financée seront
destinés principalement aux agents sur terrain des services administratifs décentralisés se trouvant dans les
régions situées le long du tracé de l'oléoduc\. Ces agents auront un rôle clé à jouer en fournissant directement
l'assistance nécessaire, dans une optique coordonnée, pour suivre l'impact des activités sur l'environnement et
la société et en atténuer les effets, à la demande des unités sur le terrain du CPSP\. Comme, dans la pratique,
l'efficacité de la coordination interministérielle sur le terrain est limitée au Cameroun, la mise en place du
cadre nécessaire à cette coopération absorbera, dans un premier temps, une bonne part des efforts des unités
sur le terrain du CPSP\.
38\. Le matériel nécessaire sera acheté et mis à la disposition des organismes participant à la réalisation du
projet\. Il s'agira notamment : i) de matériel de bureau (ordinateurs, modems, téléphones cellulaires, radios,
télécopieurs), ii) de véhicules, et iii) de matériel spécialisé de mesure et de surveillance de l'impact
environnemental\. Le Secrétariat permanent du CPSP continuera d'assumer la responsabilité d'ensemble de la
gestion et de l'affectation du matériel financé au titre de ce projet\. Il autorisera les organismes coopérants
intéressés du gouvernement à utiliser le matériel sur la base de programmes mensuels préétablis, inspectera
périodiquement les stocks et obtiendra des rapports périodiques sur l'utilisation, l'emplacement et l'état du
matériel financé au titre du projet\. La SNH financera pendant toute la durée du projet les dépenses récurrentes
de matériel\.
39\. Le coût de la formation du personnel des services décentralisés est inclus dans celui indiqué pour la
composante 2\. Le coût de l'appui logistique, y compris les dépenses récurrentes, aux services décentralisés de
l'administration est estimé à 4,1 millions dollars sur toute la durée d'exécution du projet\. En outre, un montant
de 1,0 million de dollars a été prévu pour le financement des services de consultants locaux, par exemple pour
des analyses réalisées par des laboratoires privés et pour des interventions de courte durée par des experts
locaux qualifiés dans des domaines spécifiques\.
35 Annexe 2
Composante 4 Gestion, suivi et évaluation du projet
Coût : 0,8 million de dollars, financement IDA : 0,77 million de dollars
a) Services du Groupe consultatif international\. Coût : 0,4 million de dollars
40\. L'unité ETS du secrétariat permanent du CPSP conclura un contrat avec un groupe consultatif
international (GCI) pour le compte du Gouvernement\. Le groupe en question devrait lui fournir des services
dans les domaines suivants : i) environnement biophysique en général, ii) environnement biophysique dans le
contexte spécifique de la biologie marine, iii) impact socio-économique, et iv) santé environnementale\. La
composition du GCI pourra varier d'une année sur l'autre selon les thèmes à traiter en priorité\. Les experts
seront recrutés auprès d'une société spécialisée ou d'une université, et il est prévu au moins une visite par an\.
Le GCI fera rapport au secrétariat permanent du CPSP et au comité lui-même, en tant que de besoin\. Ses
rapports annuels seront communiqués au secrétariat permanent du CPSP pour approbation officielle et seront
ensuite rendus publics\. Le texte en sera communiqué à la Banque\. Le mandat initial (première année) et le
profil des experts figureront dans le Manuel de mise en oeuvre du projet\. Le GCI coopérera étroitement avec
l'ONUSIDA\. Le coût des services du GCI a été estimé à 400 000 dollars environ pour l'ensemble de la
période de cinq ans\.
b) Gestion et contrôle du projet\. Coût :0,4 million de dollars
41\. Le projet financera l'établissement, l'exploitation et l'entretien :
d'un Système d'information sur le suivi environnemental (SISE) qui devra permettre de collecter les
informations rassemblées dans le cadre du projet ainsi que par les partenaires extérieurs sur la
situation des indicateurs relatifs à l'environnement, à la santé et aux moyens de subsistance dans la
zone d'influence de l'oléoduc, et de communiquer cette information aux pouvoirs publics ainsi
qu'aux parties prenantes extérieures\.
d'un système de gestion, de suivi et d'évaluation, afin de surveiller les activités habilitantes prévues
dans le projet CAPECE et de déterminer si les capacités se renforcent\. Ce système permettra
également de suivre toutes les mesures qui doivent être introduites par les pouvoirs publics pour
assurer une bonne gestion de l'environnement ;
Ces deux systèmes sont actuellement préparés dans le cadre d'efforts concertés, en suivant la même approche
pour le Tchad et le Cameroun pour maximiser leur compatibilité maximum\.
42\. Le SISE permettra de collecter les informations rassemblées dans le cadre du projet ainsi que par les
partenaires extérieurs sur la situation des indicateurs relatifs à l'environnement, à la santé et aux moyens de
subsistance dans la zone d'influence de l'oléoduc, et de communiquer cette information aux pouvoirs publics
ainsi qu'aux parties prenantes extérieures\. La conception du SISE sera définitivement arrêtée pendant la
première année d'exécution du projet CAPECE\. À cette fin, deux consultants (un concepteur, qui sera sans
doute un consultant international, et un programmeur, probablement un consultant national) seront recrutés\. Le
système sera conçu selon les principes suivants : i) les données techniques (mesure environnementale de
l'impact biophysique, de l'impact sur la santé et de l'impact socio-économique) pourront être échangées entre
les parties prenantes (pouvoirs publics et COTCO essentiellement) au moyen d'une base de données commune
tenue par la COTCO ou, s'il y a lieu, par un sous-traitant extérieur ; ii) les données seront organisées suivant la
structure du PGE (impact biophysique, impact socio-économique et impact sur la santé, chaque sujet étant
subdivisé en plusieurs thèmes) ; iii) des rapports techniques détaillés, comprenant toutes les données relatives
à l'impact de l'oléoduc sur l'environnement se trouvant dans la base de données commune, seront produits
périodiquement ; et iv) un rapport sur l'environnement sera communiqué à tous les partenaires (ONG,
pouvoirs publics, partenaires internationaux, bailleurs de fonds, etc\.) sous forme de tableaux récapitulatifs
pouvant être consultés sur un site web et régulièrement publiés par les pouvoirs publics ou, s'il y a lieu, par un
sous-traitant extérieur\.
36 Annexe 2
43\. Le système de gestion, de suivi et d'évaluation\. Le SIG du projet permettra : i) de planifier de
manière rationnelle les activités à entreprendre dans un cadre logique général ; ii) d'établir pour chaque
activité des objectifs fixés de manière concertée, réalistes et clairs, et d'évaluer les écarts entre les indicateurs
de résultats et les objectifs prévus ; iii) de satisfaire aux besoins du CPSP en matière de gestion, de suivi et
d'évaluation des activités et de superviser, exécuter et suivre le PGE ; et iv) d'établir une série de rapports
adaptés, dans la mesure du possible, aux besoins des différentes parties prenantes afin de présenter les
informations pertinentes de façon synthétique pour qu'elles puissent être utilisées dans le cadre des activités
d'IEC\. Le système fait l'objet de dernières mises au point, et sera décrit dans le MEP\. Un aspect important du
système sera son interface avec le système financier et comptable, qui permettra de comparer les données
financières aux résultats techniques\. L'administration de ce système sera confiée à un spécialiste du suivi et de
l'évaluation chargé de veiller à ce que les procédures de planification, de suivi et d'évaluation soient
appliquées conformément au manuel et d'établir chaque rapport périodique, conformément aux procédures de
planification, de suivi et d'évaluation, d'identifier les activités où les montants décaissés ne correspondent pas
aux résultats matériels obtenus, d'identifier les raisons de ces écarts et de suggérer les solutions à apporter aux
problèmes identifiés\.
44\. Il sera réalisé des audits techniques et financiers annuels de la gestion du projet\. Une analyse
financière sera réalisée à mi-parcours pour évaluer les progrès accomplis en ce qui concerne l'amélioration du
rapport coût-efficacité des organisations existantes\.
37
Annexe 3 : Coûts estimatifs du projet
CAMEROUN : Projet de renforcement des capacités de protection de l'environnement dans le
secteur pétrolier (CAPECE)
Coût du projet Monnaie
nationale Devises Total
USD Millions USD Millions USD Millions
Coût total de base 5,90 4,10 10,00
Provisions pour aléas matériels 0,13 0\.13 0,26
Provisions pour aléas financiers 0,27 0,37 0,64
Coût total du projet 6,30 4,60 10,90
Financement total IDA 2,00 3,77 5,77
Coût du projet par Monnaie
catégorie nationale Devises Total
USD Millions USD Millions USD Millions
Matériels de transport 0,10 0,40 0,50
Autre matériels 0,10 0,20 0,30
Services et formation 0,90 3,10 4,00
Charges d'exploitation
additionnels 5,20 0,90 6,10
Coût total du projet 6,30 4,60 10,90
Financement total IDA 2,00 3,77 5,77
38
Annexe 4 : Récapitulatif financier
CAMEROUN : Projet de renforcement des capacités de protection de l'environnement dans le secteur pétrolier (CAPECE)
Exercices achevés
État IDA Total Devises Monnaie Taxes &
Montant % Montant % Montant % nationale droits
A\. Matériel et véhicules
Matériel 0 0 315,6 100 315,6 3,7 220,9 94,7 (171,9)
Véhicules 0 0 437,0 100 437,0 4,8 371,5 65,6 (205,0)
Total matériel, véhicules et matériels 0 0 752,6 100 752,6 8,5 592,4 160,2 (376,8)
B\. Services de consultant 0 0 5 013,5 100 5 013,5 41,8 3 109,8 1 903,7 (537,4)
C\. Charges d'exploitation 5 235,0 100,0 - - 5 235,0 49,8 939,9 4 295,1 (1 379,4)
TOTAL 5 235,0 47,6 5 766,1 52,4 11 001,1 100 0 4 642,1 6 359,0 (2 293,6)
Totaux, y compris les imprévus
2001 2002 2003 2004 2005 Total
1\. Services de consultants 2 847,8 1 144,5 581,7 471,5 505,4 5 550,9
2\. Matériels 412,8 39,0 11,6 11,9 12,2 487,5
3\. Véhicules 455,4 186,6 - - - 642,0
4\. Charges d'exploitation 1 180,5 1 314,3 1 411,2 1 357,1 1 351,3 6 614,4
TOTAL 4 896,4 2 684,5 2 004,5 1 840,5 1 868,9 11 001,1
39 Annexe 5
Annexe 5 : Modalités de passation des marchés et de décaissement
CAMEROUN : Projet de renforcement des capacités de protection de l'environnement
dans le secteur pétrolier (projet CAPECE)
1\. Généralités\. D'après l'examen analytique de la passation des marchés effectué en 1993, les
procédures du Mali n'entrent pas en contradiction avec les directives de la Banque\. Les appels d'offres
nationaux (AON) publiés au niveau local seront lancés conformément aux lois et règlements camerounais
régissant la passation de marchés jugés acceptables par l'IDA, à condition qu'ils garantissent l'économie,
l'efficacité, la transparence et une large compatibilité avec les objectifs fondamentaux des directives de la
Banque\. Dans le cadre des appels d'offres nationaux, les procédures doivent garantir que : i) les méthodes
utilisées dans l'évaluation des offres et l'attribution des marchés sont portées à la connaissance de tous les
soumissionnaires et ne sont pas appliquées de façon arbitraire ; ii) un temps de réponse suffisant (quatre
semaines) est accordé à tout soumissionnaire pour la préparation et le dépôt des offres ; iii) les procédures
de dépouillement des offres et le profil des soumissionnaires sont clairement spécifiés dans les documents
d'appel d'offres ; iv) aucune marge de préférence ne sera accordée aux fabricants locaux ; v) aucune firme
répondant aux critères ne sera exclue ; vi) le marché sera attribué au soumissionnaire le moins disant,
conformément à des méthodes préétablies et transparentes ; vii) les rapports d'évaluation des offres
indiqueront clairement les raisons du rejet des offres non conformes aux dispositions du dossier d'appel
d'offres ; et viii) avant la publication du premier avis d'appel d'offres, des projets de dossiers types
d'appel d'offres auront été soumis à l'IDA qui les aura jugés acceptables\. Un avis général de passation des
marchés sera établi et diffusé dans Development Business des Nations Unies/ (UNDB) au moment des
négociations pour faire connaître les principales missions de consultation et les éventuels AOI\. La
publication d'un avis dans la presse locale ou le journal officiel est également obligatoire pour un appel
d'offres national\. Les éléments du programme par catégorie de décaissements, leurs coûts estimatifs et les
méthodes de passation de marchés prévues pour les deux premières années sont résumés au tableau A ci-
après\. Les méthodes de sélection des consultants et les seuils applicables selon les méthodes de passation
des marchés et pour l'examen préalable sont récapitulés aux tableaux A1 et B ci-après\.
2\. Les marchés de fournitures financés par l'IDA seront passés conformément aux directives de la
Banque pour la passation des marchés au titre des prêts de la Banque mondiale et des crédits de l'IDA
(janvier 1995, révisés en janvier et août 1996, septembre 1997 et janvier 1999) et les dossiers types
d'appel d'offres de la Banque, et le rapport types d'évaluation seront utilisés pour les appels d'offres
internationaux\. Dans la mesure du possible, les marché de véhicules et de matériel informatique seront
regroupés en lots d'un montant estimé à la contre-valeur de 200 000 dollars ou plus chacun\. L'acquisition
de matériel informatique et de véhicules fera l'objet, de préférence, de marchés à responsabilité unique\.
On pourra envisager d'acquérir les véhicules par le truchement du Bureau des services d'achats
interorganisations\. D'autres marchés de fournitures (notamment pour le matériel de bureau et de
communication), dont le coût est estimé à moins de 100 000 dollars, seront passés selon les procédures
d'AON, à hauteur d'un montant global de 0,413 million de dollars\. Pour les marchés de fournitures dont le
coût est estimé à moins de 20 000 dollars chacun et à moins de 55 000 dollars au total, qui seront passés
par voie de consultation des fournisseurs à l'échelon national, l'emprunteur demandera des devis à au
moins trois fournisseurs qualifiés\.
3\. Les contrats de services de consultants financés par l'IDA seront passés conformément aux
directives de la Banque applicables à la sélection et à l'emploi de consultants par les emprunteurs de la
Banque mondiale (janvier 1997, révisées en septembre 1997 et en janvier 1999)\. La demande type de
propositions mise au point par la Banque sera utilisée pour la nomination des consultants\. Des contrats
simplifiés seront utilisés pour les missions à court terme, c'est-à-dire d'une durée maximum de six mois,
effectuées par des bureaux d'études ou des consultants individuels\. Le gouvernement a été informé au
stade de l'évaluation et au cours des négociations sur les caractéristiques des nouvelles directives
40 Annexe 5
applicables aux consultants, particulièrement en ce qui concerne la publicité et l'ouverture des plis\. Les
services de consultants financés par l'IDA concerneront : i) les études, la supervision, l'appui à la mise en
oeuvre du projet, l'appui à la gestion financière et les contrôles financiers ; et ii) les services de consultants
dans les domaines techniques et la formation\. On procédera à la sélection des consultants financés par
l'IDA (pour un montant total de 5,55 millions de dollars) sur la base d'une concurrence entre les bureaux
d'études qualifiés figurant sur une liste restreinte (sélection fondée sur la qualité technique et le coût), en
évaluant la qualité des propositions soumises avant de combiner l'évaluation de la qualité et celle des
coûts en pondérant et en additionnant les notes attribuées dans ces deux domaines\. Le bureau de
coordination veillera à ce que l'avis d'appel d'offres fasse l'objet d'une large publicité pour amener des
consultants à présenter leur candidature\. Sur la base de critères approuvés, la cellule d'exécution tiendra et
actualisera une liste de consultants qui servira à l'établissement de listes restreintes\.
4\. D'autres méthodes seront également utilisées\. Pour les audits et autres services de type classique,
la sélection au moindre coût sera la méthode la plus appropriée l'entreprise offrant le prix le plus bas
étant retenue à condition que sa proposition technique ait reçu la note de qualité minimum\. Pour les
consultants appelés à fournir des services simples et de portée limitée (d'un coût estimatif inférieur à
30 000 dollars par contrat, à hauteur d'un montant total de 200 000 dollars), on se fondera sur les
qualifications des consultants, c'est-à-dire sur leur expérience et leurs compétences dans les domaines
recherchés\. Pour les exposés et les petites études qui peuvent être réalisés par des consultants individuels,
à hauteur d'un montant total de 90 000 dollars, on procédera à une sélection fondée sur la comparaison des
qualifications entre les consultants individuels manifestant leur intérêt pour la mission ou contactés
directement\. À titre exceptionnel, on fera appel à la sélection par entente directe pour la formation à
condition que le montant total des contrats ne dépasse pas la contre-valeur de 200 000 dollars pendant la
durée de vie du projet\. Les listes restreintes de consultants pour les contrats d'un montant estimatif
inférieur à 50 000 dollars pourront comprendre uniquement des consultants nationaux si un nombre
suffisant de bureaux d'études qualifiés (au moins trois) sont disponibles sur place à des prix compétitifs\.
Cela sera particulièrement le cas pour les contrats relatifs aux services d'architecture et d'ingénierie\.
Toutefois, si des bureaux d'études étrangers manifestent leur intérêt pour ces contrats, ils seront pris en
considération\.
5\. Examens de l'IDA\. Les marchés financés par l'IDA au-delà du seuil correspondant à la contre-
valeur de 50 000 dollars pour les fournitures seront soumis aux procédures d'examen préalable de l'IDA\.
Ce processus sera applicable à environ 97 % des montants des marchés et contrats de travaux, de
fournitures et de services de consultants (voir tableau B ci-après)\. L'examen sélectif a posteriori des
marchés attribués au-dessous du seuil s'appliquera à environ un sur trois de ces marchés et sera effectué
par les services de la Banque au moyen d'audits et éventuellement par le canal d'autres consultants\.
6\. Les services de la Banque examineront également le processus de sélection utilisé pour le
recrutement des consultants proposés par l'emprunteur\. L'examen préalable de l'IDA pour la sélection des
consultants inclura l'examen des budgets, des listes restreintes, des procédures de sélection, des demandes
de propositions, des rapports d'évaluation, de l'attribution des marchés et des contrats négociés\. L'examen
préalable de l'IDA ne s'appliquera pas aux contrats relatifs au recrutement de bureaux d'études et de
consultants individuels d'un coût estimatif inférieur à la contre-valeur de 50 000 dollars\. Toutefois,
l'exception à la règle de l'examen préalable de l'IDA ne s'appliquera pas aux termes de référence de ces
contrats, indépendamment de leur valeur, au recrutement par entente directe, aux missions d'une nature
critique de l'avis de l'IDA ou aux avenants aux contrats entraînant un dépassement des seuils à partir
desquels l'examen préalable est obligatoire, comme indiqué plus haut\. Pour tous les contrats de services de
consultants soumis à un examen préalable (d'un montant estimatif supérieur à 50 000 dollars), l'ouverture
des plis contenant les propositions financières n'aura pas lieu avant que la Banque n'ait donné son avis de
« non-objection » à l'évaluation technique\. Les documents relatifs à la passation de marchés d'un montant
inférieur au seuil nécessitant un examen préalable seront conservés par les emprunteurs pour un examen a
41 Annexe 5
posteriori par les auditeurs et les missions de supervision de l'IDA\. Pour la formation à l'étranger, le
programme indiquant les noms des candidats, les estimations de coûts, le contenu des cours, les
périodes de formation et les établissements de formation retenus sera examiné chaque année par l'IDA\.
7\. Fréquence des missions de supervision de la passation des marchés\. Tous les 12 mois, une
mission de supervision comprendra une supervision spéciale de la passation des marchés pour les examens
a posteriori/audits\. Le spécialiste de la passation des marchés de la mission résidente de la Banque à
Yaoundé sera en contact permanent avec le personnel du projet\.
8\. Modification ou dérogation à la portée ou aux conditions des marchés\. Avant d'approuver
toute prolongation significative ou toute modification ou dérogation aux conditions des contrats ayant pour
effet d'en augmenter le coût total de plus de 15 % par rapport au prix d'origine, l'emprunteur devra
spécifier les raisons desdites modifications ou dérogations et obtenir préalablement un avis de « non-
objection » de l'IDA\.
9\. État des projets en cours du point de vue de la passation des marchés et modalités proposées\.
Les procédures nationales d'appel d'offres pour les marchés publics au Cameroun doivent être améliorées\.
Le personnel a encore besoin d'une formation et de directives de la part des consultants et de la mission
résidente\. La passation des marchés sera gérée une agence d'exécution : Le Comité de pilotage et de suivi
des pipelines (CPSP), sous la tutelle de la Société nationale des hydrocarbures (SNH)\. Il comprendra un
spécialiste de la passation des marchés affecté au projet et fera appel aux services de consultants en tant
que de besoin pour exécuter des tâches spécifiques\. Une évaluation des capacités CPSP a eu lieu durant
l'évaluation\. Son personnel actuel a été jugé acceptable\. Le gouvernement soumettra à l'approbation de
l'IDA une liste restreinte d'au moins trois candidats pour chaque poste à pourvoir et, avec l'accord de
l'IDA, nommera le comptable du projet et le spécialiste de la passation des marchés\. On renforcera le
CPSP : i) en améliorant les compétences de son personnel ; ii) en formant du personnel de remplacement
(spécialistes de la passation des marchés, comptables) parmi le personnel du CPSP ; et iii) à titre
exceptionnel, en faisant appel à des consultants à court terme\.
10\. Manuel de procédures\. Dans le cadre de l'exécution du CAPECE, les procédures de passation
des marchés de la SNH seront alignées sur les normes de l'IDA\. À cet effet, un manuel de procédures de
passation des marchés sera élaboré sur la base des procédures en vigueur de la SNH\. Il comprendra : i) les
procédures applicables aux appels d'offres, à la sélection des consultants et des fournisseurs, et à
l'attribution des marchés ; ii) les modalités internes de supervision et de contrôle, notamment les directives
opérationnelles définissant le rôle de l'agence d'exécution et les rapports à fournir ; et iii) les procédures
de décaissement\. Une version finale du manuel de procédures jugée acceptable par l'IDA sera finalisée
d'ici l'entrée en vigueur du crédit\.
11\. Avant l'entrée en vigueur du projet, le gouvernement examinera et approuvera en accord avec
l'IDA : a) un plan de passation des marchés pour la première année ; b) Le Manuel de procédures ; c) les
dossiers d'appel d'offres types à utiliser dans le cadre des procédures d'AON pour les fournitures ; et
d) un plan de formation pour le personnel du Secrétariat permanent et du CPSP\. Au cours des
négociations, le gouvernement a donné l'assurance qu'il : a) utilisera le manuel de procédures ; b) utilisera
les dossiers d'appel d'offres types de la Banque pour les AOI, la demande type de propositions pour la
sélection de consultants et les rapports types d'évaluation des offres ; c) appliquera les procédures et
modalités de passation des marchés définies ci-dessus ; d) mettra régulièrement à jour le plan de passation
des marchés au cours d'examens annuels avec l'IDA et les autres bailleurs de fonds, pour comparer les
délais fixés et leur respect effectif, indiquant si les limites globales applicables aux différentes méthodes
de passation des marchés ont été respectées, comportant des estimations de coûts révisées pour les
marchés particuliers et pour l'ensemble du programme, y compris la meilleure estimation possible des
provisions pour imprévus, ainsi qu'un calendrier révisé des étapes ultérieures de la passation des marchés,
42 Annexe 5
et transmettra ce plan à l'IDA, durant l'exécution, avec tous les documents liés à la passation des
marchés ; e) évaluera, par des examens annuels, l'efficacité des procédures d'appel d'offres et des résultats
obtenus dans ce domaine, par rapport à l'expérience acquise en la matière dans le cadre du programme, et
soumettra à l'examen de l'IDA une éventuelle modification des procédures actuelles dans la mesure où
cela accélérerait la passation des marchés, tout en respectant les Directives de la Banque dans ce domaine
et en continuant à exercer un contrôle adéquat sur l'attribution des marchés et les paiements y afférents ; et
f) prendra les mesures nécessaires pour faire en sorte que les étapes de la passation des marchés ne
dépassent pas les délais suivants :
Étapes de la passation des marchés Nombre maximum de semaines
Préparation des dossiers 4 (6 pour les grands marchés)
d'appel d'offres
Préparation des offres 4 (6 à 10 pour les AOI)
par les soumissionnaires
Évaluation des offres 2 (4 pour les grands marchés)
Signature des marchés 2
Paiements 3
Tableau A : Coût du projet ventilé par modalité de passation des marchés
(contre-valeur en millions d'USD)
Méthode de passation de marché Coût total
Catégorie de dépenses Coût (y compris les provisions pour aléas) (y compris les
imprévus)
AOI AON Autre NFB
1\. Fournitures 642,0 412,8 74,7 1\.129,5
(437,0) (260,3) (55,3) (752,6)
Matériel 412,8 74,7 487,5
(260,3) (55,3) (315,6)
Véhicules 642,0 642,0
(437,0) (437,0)
2\. Services
Services de consultants 3 880,5 1 558,7 111,7 5 550,9
et formation
(3 523,9) (1\.395,5) (94,1) (5 013,5)
3\. Frais d'exploitation 6 614,4 6 614,4
(0) (0)
Total 4 522,5 1 971,5 186,4 6 614,4 13 294,8
(3 960,9) (1 655,8) (149n4) (0) (5 766,1)
43 Annexe 5
Notes : a\. Les chiffres entre parenthèses indiquent le montant devant être financé par le crédit de l'IDA\.
b\. AOI = Appel d'offres international
c\. AON = Appel d'offres national
d\. Parmi les autres méthodes de passation des marchés figurent la consultation de fournisseurs, la sélection
de consultants conformément aux directives de l'IDA, les dépenses suivant des procédures administratives
officielles jugées acceptables par l'IDA et l'achat direct de fournitures\.
e\. N\.F\.B\. = Non financé par la Banque
f\. Les « fournitures » comprennent les achats de matériel, de fournitures connexes et de véhicules\.
g\. Les coûts d'exploitation comprennent les coûts d'exploitation additionnels liés à l'exécution, à la
gestion et à la supervision du projet, notamment aux fournitures de bureau, aux coûts des
communications et aux indemnités de déplacement du personnel du projet, mais ne comprennent pas
les salaires des fonctionnaires de l'emprunteur\.
Tableau A1 : Modalités relatives à la sélection des consultants
(contre-valeur en millions d'USD, toutes taxes comprises)
Services de consultant Méthode de sélection Coût total
Catégorie de dépenses Y compris les
provisions pour
imprévus
SFQC SMC QC Autre NFB
A\. Bureaux d'études
En général 4,88 4,88
Audits & type classique 0,18 0,18
Contrats de faible montant 0,20 0,20
(<USD 30 000)
Formation 0,20 0,20
B\. Consultants individuels
Ensemble 0,09 0,09
Total 4,88 0,18 0,29 0,20 5,55
Note
SFQC = Sélection fondée sur la qualité technique et le coût\.
SMC = Sélection au moindre coût\.
QC = Sélection fondée sur les qualifications des consultants\.
Divers = Sélection de consultants individuels (suivant la
section V des Directives applicables à la sélection des
consultants), pratiques commerciales et entente directe\.
N\.F\.B\. = Non financé par la Banque\.
44 Annexe 5
Tableau B : Seuils applicables aux méthodes de passation de marchés et à l'examen préalable
(montant en dollars)
Catégorie de Valeur du contrat Méthode de Marchés soumis à un examen
dépenses (seuil) passation des préalable / Valeur totale estimative
marchés en millions d'USD soumise à un
examen préalable
1\. Fournitures USD 50 000 et plus AOI USD 0,437 million / USD 0,437 million
Entre USD 20 000 et AON USD 0,260 million / USD 0,260 million
USD 50 000
Moins de USD 20 000 3 devis USD 0,0 million/USD 0,055 million
(plan national)
2a\. Bureaux USD 50 000 et plus SFQC +Liste USD 4,920 million/USD 4,920 million
d'études restreinte L'évaluation technique reçoit l'avis de
non objection de l'IDA avant
l'ouverture de propositions financières\.
Publication d'une annonce dans le
dossier d'appel d'offres pour recueillir
des manifestations d'intérêt
Moins de USD 30 000 QC
Moins de USD 30 000 Entente directe pour
la formation
Moins de USD 50 000
Les listes restreintes peuvent ne
comporter que des bureaux d'études
nationaux s'il en existe au moins trois
qui soient fiables\.
Consultants USD 50 000 et plus Comparaison d'au USD 0,0 million /USD 0,0 million
individuels moins trois CV
Moins de USD 50 000 Comparaison d'au USD 0,0 million /USD 0,090 million
moins trois CV
3\. Frais S\.O\. S\.O\. S\.O\.
d'exploitation
4\. Divers S\.O\. S\.O\. S\.O\.
Valeur totale des USD 5,617 millions/USD5,766 millions
contrats soumis à (soit 97 % de la valeur totale des
examen préalable marchés)
45 Annexe 5
Tableau C : Affectation des fonds du crédit
Catégorie de dépenses Montant Décaissements
(millions d'USD)
1\. Matériel, véhicules et 0,680 100 % des dépenses en devises et 85 %
fournitures des coûts en monnaie nationale
2\. Services de consultants, audits, 4,050 100 % des dépenses en devises et 85 %
formation et études des coûts en monnaie nationale
3\. Remboursement avance PPF 1,000 Montant dû
4\. Non affecté et imprévus 0,040
Total 5,770
12\. Procédures de décaissement\. Les décaissements se feront conformément aux procédures et aux
principes définis dans le Manuel de décaissement de la Banque\.
13\. Utilisation des relevés de dépenses\. Pour les dépenses afférentes à des marchés de fournitures,
des contrats de services de bureaux d'études et des contrats de services de consultants individuels évalués
à moins de 50 000 dollars ; aux services de formation évalués à moins de 30 000 dollars, les demandes de
décaissement seront faites sur la base de relevés de dépenses\. Les pièces justificatives des dépenses
réglées selon cette procédure seront conservées pour être examinées par les missions de supervision de
l'IDA et faire l'objet d'un audit indépendant aux bureaux du projet\.
14\. Compte spécial\. Un compte spécial libellé en FCFA, géré par le CPSP, sera ouvert dans une
banque jugée acceptable par l'IDA\. Le montant autorisé des fonds de l'IDA dans ce compte s'élèvera à la
contre-valeur de 300 000 dollars\. Aussitôt après l'entrée en vigueur du crédit, 50 % du montant autorisé,
soit la contre-valeur de 150 000 dollars, seront déposés audit compte\. Une fois que les décaissements
auront atteint 800 000 DTS, les 150 000 dollars restants du montant autorisé seront déposés au compte
spécial\. Le compte spécial du CPSP financera les dépenses afférentes aux catégories 1 et 2\.
15\. Le compte spécial sera géré sur la base d'un système d'avances de caisse, en utilisant les pièces
comptables appropriées pour un compte de gestion alimenté par des avances de caisse\. L'agence
d'exécution tiendra les dossiers relatifs à la comptabilité, à la passation des marchés et aux rapports qui
conviennent pour les composantes du projet\. Le CPSP préparera les états financiers, et les comptes
consolidés du projet pour ce qui concerne la composante de gestion publique et il préparera les demandes
de retraits mensuelles pour la reconstitution du compte spécial, quel que soit le niveau d'activité au cours
du mois considéré\. L'IDA reconstituera directement le compte spécial\.
16\. Valeur minimum applicable aux paiements directs et engagements spéciaux (ES)\. Les
demandes de paiements directs et d'engagements spéciaux devront porter sur une valeur équivalant au
moins à 20 % de l'avance du compte spécial en cours au moment de leur soumission\. Par conséquent,
lorsque le montant du compte spécial atteindra 150 000 dollars, la demande de paiement direct et
d'engagements spéciaux devra porter sur un montant minimum de 30 000 dollars, montant qui passera à
60 000 dollars une fois que le montant total autorisé aura été déposé sur le compte spécial\.
46 Annexe 5
17\. Flux financiers\. Aucun compte subsidiaire ne sera autorisé, pas plus que l'utilisation de la
procédure d'avance spéciale à 90 jours\. La part des dépenses prise en charge par l'État sera financée au
moment du paiement aux fournisseurs, et seule la partie admissible à un financement de l'IDA sera retirée
des comptes spéciaux\.
18\. Gestion financière\. Toutes les mesures seront prises pour faire en sorte que le système comptable
du projet proposé soit pleinement conforme à l'OP/10 02 d'ici la date d'entrée en vigueur du projet\. Les
agents comptables du CPSP ont les qualifications et la formation requises pour assurer la gestion des
pièces comptables du projet, comme l'indiquent les derniers rapports d'audit du CPSP, qui montrent que
les recommandations des auditeurs externes ont été appliquées, si bien que les auditeurs ont pu émettre un
avis ne comportant pas de réserves majeures\. Le logiciel de comptabilité fonctionnant actuellement au
CPSP convient aux besoins de la comptabilité du projet et semble à même de permettre simultanément la
tenue des livres de plusieurs comptes de projet\. Le CPSP soumettra à l'IDA des rapports trimestriels de
suivi du projet à partir de la deuxième phase, 18 mois au plus tard après l'entrée en vigueur du projet\. Le
CPSP élaborera d'ici à la fin de 1999 un plan d'action jugé acceptable par l'IDA pour assurer
l'établissement en temps voulu des rapports de suivi du projet\.
19\. Avant l'entrée en vigueur du projet, le CPSP proposera trois candidats qualifiés aux postes de
comptable du projet et de spécialiste de la passation de marché, et désignera un comptable du projet et un
spécialiste de la passation de marché jugés acceptables par l'IDA\. Le CPSP soumettra des relevés de
compte mensuels sous la forme appropriée aux fins de la consolidation des comptes du projet\.
20\. Le CPSP préparera les comptes annuels pour l'audit externe, quatre mois au plus tard après la fin
de l'exercice financier de l'emprunteur\. Des rapports d'audits signés seront remis chaque année à l'IDA,
six mois au plus tard après la fin de l l'exercice financier de l'emprunteur\. Les rapports d'audit porteront
sur les comptes du projet, le compte spécial et les relevés de dépenses\.
21\. Le CPSP prendra les mesures suivantes pour renforcer sa capacité de gestion du projet : avant
l'entrée en vigueur, il devra : a) définir les tâches et les modalités administratives, comptables, financières
et de passation de marchés du projet ; b) modifier en tant que de besoin le manuel de procédures et le plan
comptable du projet, sans omettre les directives opérationnelles définissant le rôle de l'agence d'exécution
et les règles de présentation de rapports ; c) renforcer le système informatique et les capacités du personnel
en tant que de besoin ; d) finaliser le manuel de procédures du projet sous forme d'annexe au Manuel de
mise en oeuvre du projet (MEP) ; e) soumettre un plan d'action jugé acceptable par l'IDA pour la
préparation des rapports de suivi du projet, à compter de la deuxième phase du projet ; et f) désigner des
auditeurs jugés acceptables par l'IDA, pour vérifier les comptes du projet et les relevés de dépenses,
conformément à des règles d'audit internationalement acceptables et avec tous les détails que l'IDA
pourra demander ; réaliser, au cours de l'exécution du projet, des audits annuels et les soumettre à l'IDA
dans un délai de six mois avant la fin de chaque année fiscale\.
Conformément à l'Arrêté présidentiel 433 portant organisation du CPSP, la SNH fournira au
CPSP l'appui financier et administratif nécessaire\. A cet effet, la SNH utilisera plan
administratif et comptable du projet élaboré pour remplir les critères des systèmes financiers
de la Banque\.
22\. Remboursement de l'avance PPF\. L'avance PPF 935-0, constituée pour la préparation du projet
de construction de l'oléoduc, sera remboursé sur le présent crédit en raison des conditions de l'IDA qui s'y
appliquent\.
47 Annexe 5
Décaissements estimatifs de l'IDA (en millions de dollars)
2001 2002 2003 2004 2005 2006
Décaissements 1,59 2,16 0,84 0,49 0,45 0,23
annuels
Décaissements 1,59 3,75 4,60 5,09 5,54 5,77
cumulés
48 Annexe 6
Annexe 6 : Calendrier d'instruction du projet
CAMEROUN Projet de renforcement des capacités de protection de l'environnement dans le
secteur pétrolier (CAPECE)
Calendrier du projet Prévisionnel Effectif
Durée de la préparation du projet (mois)
Première mission de la Banque (identification) mars 1999 mars 1999
Départ de la mission d'évaluation août 1999 juillet 1999
Négociations octobre 1999 février 2000
Date d'entrée en vigueur prévue avril 2000
Préparé par : le Comité de pilotage et de suivi des pipelines, Yaoundé, Cameroun
Assistantes de préparation : Marthe Malouf-Hardesty et Maria Mims
Membres du personnel de la Banque ayant travaillé au projet :
Nom Spécialité
Jean-Roger Mercier Chef d'équipe, questions biophysiques
Mohammed Abdou Bekhechi Chef d'équipe adjoint, cadre juridique et réglementaire
Cynthia C\. Cook Questions socio-économiques
Luc Lecuit Suivi et de l'évaluation
Guy-Joseph Malembeti Passation des marchés
Joseph Bonlong Systèmes financiers
Georges Visihio Minang Relations avec les ONG et la société civile
Jack Titsworth Institutions
Pascal de Giudisi, consultant Santé
Justin Dovoedo IEC
Eric Chinje IEC
Jérôme Chevallier Contrôle de la qualité
49 Annexe 7
Annexe 7 : Documents classés dans le dossier du projet*
CAMEROUN : Projet de renforcement des capacités de protection de l'environnement dans le
secteur pétrolier (CAPECE)
A\. Plan d'exécution du projet
Projet de Manuel de mise en oeuvre du projet, y compris le descriptif de l'Étude sur la préparation du plan
officiel de lutte contre les déversements d'hydrocarbure et le Manuel de procédures de la SNH\.
B\. Évaluations effectuées par le personnel de la Banque
Aide-mémoire de mission d'évaluation (août 1999)
C\. Divers
CAPECE-- Proposition relative au suivi et à l'évaluation (septembre 1999)
Rapport d'étude du Renforcement des capacités des gestion environnementale dans le secteur pétrolier au
Cameroun\. Buursink/RCM, mai 1999
Décret 97-116 du 07/07/97 définissant les conditions d'application de la Loi no 96/14 du 5 août 1996
régissant l'acheminement par oléoduc d'hydrocarbures en provenance d'autres pays\.
Arrêté no 433 du 24 août 1999, portant organisation et fonctionnement du Comité de pilotage et de suivi
des pipelines
*Y compris les fichiers électroniques\.
52
Annexe 8 : État des opérations du Groupe de la Banque mondiale
CAMEROUN : Projet de renforcement des capacités de protection de l'environnement dans le secteur pétrolier (CAPECE)
Nombre de57
projets
clos :
Différence entre
Ex\. Conseil Dernier ARPP décaissements
prévus et
Notation supervision b/ Montant initial décaissements réels a/
en millions d'USD
Projets en vigueur Objectifs de Avancement BIRD IDA Annulé Non Chiffres Chiffres
développement exécution décais\. initiaux révisés
1992 P000400 SÉCURITÉ ALIMENTAIRE I I 0 0 0 0 0 0
1995 P000411 SANTÉ/REPROD\./NUTIRITION I I 0 40,32 0 32,08 27,17 0,44
1996 P041553 PE/AT S S 0 11,86 0 5,95 6,57 0
1996 P000393 SECTEUR TRANSPORTS S S 0 56,14 0 31,28 18,39 0
1998 P055684 IUT DOUALA (PDCI) S S 0 5,01 0 4,81 2,41 0,03
1998 P054443 CREDIT AJUST\. STRUCT\. III S S 0 196,75 0 105,83 55,9 60,13
1999 P045348 APPUI AG\.EXT\.&RES S S 0 15,35 0 14,42 3,93 0
aDécaissements effectifs à ce jour moins décaissements prévus à ce jour selon les projections faites à l'évaluation\.
53 Annexe 9
CAMEROUN
ETAT DU PORTEFEUILLE
détenu et décaissé par
LA SFI
31 mai 1999
millions de dollars
Engagements Décaissements
SFI SFI
EX\. approuvé Société Prêt Fonds Quasi Partic\. Prêts Fonds Quasi Partic\.
propres\. propres
1979 Alucam 0,00 0,00 0,93 0,00 0,00 0,00 0,93 0,00
1986 CICAM 2,02 0,00 0,00 0,00 2,02 0,00 0,00 0,00
1992/94/97/98 Pecten Cameroun 60,00 0,00 0,00 190,00 25,24 0,00 0,00 79,94
1994/96 AEF Proleg 0,34 0,00 0,00 0,00 0,34 0,00 0,00 0,00
1994/96 AEF United Trspt 0,47 0,00 0,00 0,00 0,47 0,00 0,00 0,00
1995 AEF Comp Avicole 0,28 0,00 0,00 190,00 0,28 0,00 0,00 0,00
Portefeuille total 63,11 0,00 0,93 28,35 0,00 0,93 79,94
EX\. approuvé Société Approbations non encore suivies d'engagements
Prêt Fonds Quasi Partic
propres fonds
propres
Total des engagements 0,00 0,00 0,00 0,00
en attente
54 Annexe 9
Annexe 9 : Le pays en bref
CAMEROUN : Projet de renforcement des capacités de protection de l'environnement dans le
secteur pétrolier (CAPECE)
55 Annexe 10
Annexe 10 : Résumé
CAMEROUN : Documentation du Projet de renforcement des capacités de protection de
l'environnement dans le secteur pétrolier (CAPECE)
Résumé de l'évaluation environnementale du projet d'exportation pétrolière entre le Tchad et le
Cameroun, responsabilités du gouvernement camerounais
1\. En acceptant la documentation environnementale du Projet d'exploitation pétrolière et d'oléoduc,
le gouvernement camerounais consent à prendre activement part à la mise en oeuvre des mesures de
sauvegarde\. Celles-ci garantiront que les impacts environnementaux et sociaux éventuels du Projet
d'exploitation pétrolière et d'oléoduc seront prévenus, atténués ou compensés, et que le suivi confirme
l'efficacité de ces mesures a posteriori\. Ces mesures sont réunies dans le plan de gestion environnementale
(PGE), qui constitue la partie opérationnelle de l'évaluation environnementale (EE), comme stipulé dans
l'OD 4\.01 et l'OP/BP/GP 4\.01\. (Évaluation environnementale, février 1999)\. Le PGE attribue la majeure
partie de la responsabilité de la mise en oeuvre au Consortium de compagnies pétrolières\. Les
responsabilités du gouvernement camerounais à cet égard ont une ampleur et une dimension bien
moindres que celles du Consortium, bien qu'essentielles au succès de l'opération\. La description détaillée
des responsabilités du gouvernement dans le PGE est donnée ci-après\.
2\. Les mesures de sauvegarde ont été élaborées au cours d'un long processus de préparation qui a
impliqué une large concertation avec le gouvernement et les populations affectées\. L'objectif du PGE du
Cameroun est de définir les mesures qui seront mises en oeuvre par le gouvernement et la COTCO pendant
la construction et l'exploitation du projet, pour éliminer ou ramener à des niveaux raisonnables les
principaux impacts biophysiques, socio-économiques et sanitaires potentiels identifiés dans l'EE\. La
réussite de la mise en oeuvre du PGE nécessite que les actions spécifiques proposées soient réalisées par
les parties responsables du projet\.
3\. La documentation environnementale définit les mesures de sauvegarde dans une série d'activités
coordonnées :
Plan de gestion de l'accès induit
Plan de gestion du patrimoine culturel
Cartes de tracés, Liste d'activités environnementales et manuel afférent
Plan de surveillance de l'environnement de la COTCO
Critères et cahiers des charges techniques pour les questions biophysiques/socio-
économiques/sanitaires
Plan d'indemnisation
Plan concernant la Fondation pour l'environnement
Plan d'amélioration de l'environnement hors site
Plan pour les populations autochtones
Lutte contre les déversement d'hydrocarbures et Plan d'intervention national en cas de
déversement
Plan de déclassement
Programme de sensibilisation sanitaire des populations locales
Consultation
56 Annexe 10
Plan de gestion de l'accès induit
4 Ce plan a été mis au point pour résoudre les problèmes potentiels d'accès induit le long du tracé
du réseau camerounais de transport (RCT) pour ce qui concerne :
les impacts sur la faune et la flore sauvages dans la Vallée de Mbéré, la zone située entre les
rivières Pangar et Lom et la zone qui s'étend entre Belabo et Nanga Eboko, et
Les impacts connexes sur la végétation/les habitats dans les mêmes zones sensibles\.
Un certain nombre de techniques de contrôle d'accès précédemment utilisés dans les projets de type
linéaire ont été incorporées au plan de gestion de l'accès induit afin de rendre impossible l'accès des
véhicules ou d'entraver le mouvement des piétons dans les zones désignées ci-dessus\. La mise en oeuvre
du plan de gestion de l'accès induit est une responsabilité conjointe de la COTCO (information et
installation de barrières physiques) et du gouvernement (lutte contre les impacts de l'accès induit, mise en
vigueur des dispositions réglementaires relatives à la chasse et au braconnage, et réglementation de
l'abattage des arbres)
Plan de gestion du patrimoine culturel
5 Il comporte :
Les méthodes d'identification des biens culturels au voisinage immédiat de l'emprise du
RCT ;
Les techniques à mettre en oeuvre pendant la phase de construction du projet pour limiter les
impacts directs sur les sites archéologiques, historiques et paléontologiques,
Les méthodes de traitement proposées pour différents types de sites archéologiques,
historiques et paléontologiques situés à l'intérieur de l'emprise du RCT ou pouvant être
découvertes durant la phase de construction, et
Les normes à appliquer concernant la documentation et la signalisation de ressources
culturelles découvertes et traitées par le projet\.
La responsabilité de l'exécution de ce plan appartient à la COTCO et le gouvernement assumera le
contrôle et le suivi de la qualité du travail et l'utilisation du patrimoine découvert\.
Cartes de tracés, liste d'activités environnementales et manuel afférent
6 Les données environnementales de base collectées seront gérées par un système d'information qui
porte sur :
La classification des types de végétation/d'utilisation des terres
Les villages des populations autochtones
Les ressources en végétation et en faune
Les mesures de protection de la végétation et de la faune
Le suivi, les études/enquêtes et les restrictions saisonnières
Les mesures de protection de l'industrie de la pêche
Les mesures de contrôle de gestion de l'accès induit
Les mesures de lutte contre l'érosion et les sédiments
La manipulation du sol et les mesures de réhabilitation des zones spéciales
La COTCO a la charge de la mise au point des cartes de tracés, de la liste d'activités environnementales et
du manuel afférent\. Le système de surveillance du gouvernement recoupera ces données\.
57 Annexe 10
Plan de surveillance de l'environnement de la COTCO
7 Ce plan comprend :
La structure de l'organisation de surveillance de l'environnement de la COTCO,
Les rôles et attributions des postes dans cette organisation,
Les activités des agents de surveillance de la COTCO détachés sur le terrain concernant les problèmes
biophysiques, socio-économiques et sanitaires,
Les méthodes de documentation des observations de ces agents,
Les méthodes de vérification de la rectification des cas de manquement aux règles,
Les méthodes d'information des parties appropriées en cas d'identification d'une situation de
manquement aux règles, et
Les méthodes d'arrêt des travaux en cas de manquement sérieux aux règles
La COTCO est seule responsable de l'exécution de ce plan\.
Les conditions et spécifications techniques pour les questions biophysiques/socio-
économiques/sanitaires
8\. Les critères et cahiers des charges techniques s'appliqueront à tous les entrepreneurs travaillant au
projet d'oléoduc et sont une condition de sélection ; le non respect de ces obligations et de ces cahiers des
charges constituera une violation des dispositions contractuelles convenues avec la COTCO\. De manière
plus détaillée, ces obligations et ces cahiers des charges sont représentées par un certain nombre
d'obligations et cahiers des charges :
procédures de coordination des cahiers de charge des travaux (31, dont sept relatifs aux
aspects environnementaux/sociaux)
cahier des charges général du projet (21, dont 14 relatifs aux aspects
environnementaux/sociaux)
cahier des charges pour le Cameroun/Tchad (200, dont 8 relatifs aux aspects
environnementaux/sociaux)
Ces obligations et cahiers des charges incombent, au Cameroun, à la COTCO\. Les représentants du
gouvernement examineront le contenu des obligations et des cahiers des charges et recevront une
formation leur permettant d'identifier les manquements\.
Plan d'indemnisation
9\. Les nombreux agriculteurs et habitants qui avaient des cultures ou d'autres propriétés sur
l'emprise du RCT doivent être indemnisés et une indemnisation est également due au titre des ressources
communales\. Pour évaluer le montant de l'indemnisation, on a appliqué les normes juridiques nationales,
en les combinant avec les normes de la Banque\.
10\. Le plan d'indemnisation comprend :
Une liste récapitulative des individus, des ménages et des villages affectées par le projet\.
La définition des types de ressources au titre desquels les individus et les ménages auront droit
à une indemnisation et de ceux qui donnent droit à une indemnité collective\.
La description des méthodes utilisées pour identifier les individus et les ménages pouvant
bénéficier de l'indemnisation, mener les consultations publiques, évaluer et verser l'indemnité
voulue et pour déterminer les priorités de la communauté pour la fixation de l'indemnité
collective\.
Les procédures de plaintes\.
Une vue d'ensemble de la méthode de surveillance\.
58 Annexe 10
L'échéance et le budget du plan\.
Bien que, de propose délibéré, le projet ne doivent pas donner lieu à des réinstallations involontaires, le
plan d'indemnisation définit des circonstances pouvant déclencher un déplacement involontaire et la
procédure à suivre si le cas se présentait\.
11\. Le coût estimatif du plan d'indemnisation est compris entre 6 et 7 millions de dollars et sera
exécuté conjointement par la COTCO et le gouvernement\. Ce dernier assume des responsabilités
spécifiques, en vertu des lois du Cameroun, en matière de vérification de l'estimation des biens perdus et
de garantie de paiement de l'indemnisation (partielle)\. La COTCO assumera la charge de la plupart des
coûts du plan, le Gouvernement n'étant responsable que de la fraction qui lui incombe en vertu des lois du
Cameroun\.
Plan concernant la Fondation pour l'environnement
12\. En vue d'appuyer la mise en oeuvre du plan d'amélioration de l'environnement hors site et du
plan pour les populations autochtones, la COTCO versera une contribution de 3,5 millions de dollars en
vue de créer une Fondation pour l'environnement qui aura pour fonctions :
D'apporter un appui durable bien défini aux activités d'amélioration de l'environnement dans
les parcs nationaux de Mbam Djerem et de Campo Ma'an ; et
D'apporter un concours financier durable et spécifique aux activités de développement en
faveur des Pygmées Bakola dans la région de la forêt du littoral atlantique située aux alentours
de l'emprise de l'oléoduc entre Lolodorf et Kribi\.
13\. La Fondation pour l'environnement sera gérée par un conseil de gestion comprenant un
représentant du gouvernement, un citoyen camerounais connu et respecté et deux scientifiques de calibre
international\. Elle élira le président du conseil de gestion parmi ses membres\.
14\. On compte parmi les autres membres importants de la Fondation : le directeur des investissements
du fonds, l'administrateur de la Fondation, l'animateur du développement communautaire et les
organismes d'exécution qui seront choisis par appel d'offres\.
15\. Le rôle du gouvernement dans la Fondation consiste à nommer un représentant au conseil de
gestion et à surveiller le fonctionnement de la Fondation à travers les rapports périodiques\.
Plan d'amélioration de l'environnement hors site (PAEH)
16\. Pour atténuer les impacts résiduels de faible intensité sur la biodiversité et la valeur de l'habitat
naturel découlant de la construction et de l'exploitation du RCT, la COTCO mettra en oeuvre un PAEH\. Le
financement partiel par la COTCO (par le biais de la Fondation) des projets de conservation dans les
zones de Mbam-Djerem et de Campo est d'une importance capitale dans ce programme\.
17\. Le PAEH comporte des études et des recherches scientifiques, des activités de conservation et des
programmes d'éducation à la conservation\. Selon les prévisions, 2,9 millions de dollars du capital de la
Fondation seront consacrés au PAEH\.
18\. Le gouvernement a des obligations importantes en ce qui concerne l'appui à la mise en oeuvre du
PAEH\. Il doit en effet :
Donner un statu juridique aux zones désignées et les protéger efficacement,
Fournir le personnel, le logement et les bureaux sur les deux sites, et
59 Annexe 10
Régler les charges récurrentes (salaires du personnel, allocations, fournitures et matériel qui
n'est pas du ressort de la COTCO et réseaux publics)\.
Plan pour les populations autochtones (PPA)
19\. Un plan en faveur des populations autochtones a été mis sur pied afin d'atténuer toute incidence
négative potentielle indirecte et à long terme sur la population vulnérable des Pygmées Bakola vivant dans
la forêt du littoral Atlantique traversée le long du tracé de l'oléoduc (environ 120 km)\. Les mesures
prévues dans ce plan s'ajoutent à celles du plan d'indemnisation\.
20\. L'objectif du PPA est d'apporter des avantages durables à la population pygmée affectée par le
projet, par une assistance aux programmes ou projets relatifs à la santé des Pygmées, à leur éducation et à
leurs activités agricoles\. Étant donné les liens historiques qui associent les Bantous de la région aux
Pygmées Bakola, le PPA comprend également des mesures concernant les problèmes sanitaires des
populations bantoues\.
21\. Le PPA constitue un cadre dans lequel les tribus pygmées Bakola peuvent mobiliser leurs propres
ressources grâce à des subventions octroyées par la Fondation pour l'environnement (contribution totale
estimée provisoirement à 600 000 dollars sur les 3,5 millions de dollars de la Fondation)\. À ce stade, on a
seulement élaboré une description générique des programmes qui pourront être réalisés au titre du PPA, en
particulier des initiatives d'alphabétisation et d'éducation de base, d'assistance en matière d'hygiène,
d'amélioration de l'approvisionnement en eau et d'agriculture\. Les activités qui bénéficieront d'un
financement de la Fondation seront choisies et désignées avec la pleine participation des bénéficiaires
escomptés\.
22\. Le rôle du gouvernement consistera à superviser l'exécution du PPA\. Il faudra peut-être
coordonner les projets exécutés dans le cadre du PPA avec les programmes locaux des services
décentralisés compétents\.
Intervention en cas de déversement d'hydrocarbures
23\. L'objet principal des mesures du plan d'intervention du Projet d'exploitation pétrolière et
d'oléoduc est la prévention des incidents, qui sera rendue possible par des dispositifs et du matériel bien
conçus, une bonne maintenance et de bonnes procédures d'exploitation, formation appropriée du
personnel et des entreprises, et par la sensibilisation et la motivation de toutes les parties concernées\. Un
déversement (terrestre ou marin) d'hydrocarbures reste néanmoins toujours possible\.
24\. Un plan d'intervention en cas de déversement d'hydrocarbures est en cours d'élaboration\. Il
comportera une stratégie en trois temps : une étape préliminaire d'élaboration d'une méthode
d'intervention, qui a été présentée dans les documents du PGE du Projet d'exploitation pétrolière et
d'oléoduc, un plan général d'intervention en cas de déversement d'hydrocarbures, achevé en septembre
1999, et des plans d'intervention par zone en cas de déversement, qui seront élaborés au moins six mois
avant que ne commencent les activités de production\.
25\. Le volet marin du plan d'intervention sera conforme aux conventions et accords internationaux,
tels que la Convention internationale de 1974 pour la sauvegarde de la vie humaine en mer (SOLAS) et la
Convention internationale pour la prévention de la pollution par les navires (MARPOL 73/78)\.
26\. L'élaboration et la mise en oeuvre de la stratégie en trois temps du plan de lutte contre les
déversements d'hydrocarbures incombent à la COTCO\. Parallèlement, le gouvernement mettra sur pied
son propre plan d'intervention en cas de déversements d'hydrocarbures, qui dépassera le cadre du Projet
60 Annexe 10
d'exploitation pétrolière et d'oléoduc pour englober les capacités d'intervention en général en cas de
déversement, dans le contexte du CAPECE\.
Déclassement
27\. Dans cette dernière étape de la phase opérationnelle du Projet d'exploitation pétrolière et
d'oléoduc, un plan complet et global de déclassement sera élaboré pour la partie camerounaise des
installations du projet\. Il sera conforme aux lois en vigueur en République camerounaise et aux pratiques
internationales reconnues pour les sites et infrastructure industriels d'amont du secteur pétrolier au
moment du déclassement\. Le plan sera élaboré sur une base participative\.
28\. Le déclassement de la partie camerounaise du Projet d'exploitation pétrolière et d'oléoduc et la
prise de dispositions financières à cet égard incombent à la COTCO\. Le déclassement lui-même sera
effectué par des entreprises sous le contrôle de la COTCO\.
29\. Il appartiendra au gouvernement camerounais de contrôler le déclassement, de suivre sa mise en
oeuvre dans la pratique et d'approuver les travaux une fois achevés\. Ces événements, qui se produiront
dans un avenir lointain, n'entrent pas dans le cadre du présent projet, mais ils nécessiteront l'intervention
des services créés dans le secteur pétrolier pour le projet, qui doivent par conséquent être entretenus\.
Programme de sensibilisation des populations locales
30\. Un programme de sensibilisation d'un coût raisonnable, visant principalement à remédier à
certains impacts sur la santé publique qui sont extérieurs au Projet d'exploitation pétrolière et d'oléoduc
lui-même, sera mis sur pied et exécuté par la COTCO\. Il est prévu de cibler des problèmes donnés et de se
limiter aux emplacements situés à proximité des infrastructures sur terrain abritant du personnel affecté de
manière permanente\. Il comprendra :
L'information, l'éducation et la communication (IEC) en matière de comportement ;
Des interventions culturellement acceptables et viables ; et
Le financement direct d'organisations privées bénévoles (OPV)/ONG) qui ont pour centre
d'intérêt les initiatives éducatives et autres interventions sanitaires ciblées\.
31\. Le gouvernement camerounais assume la responsabilité de la gestion de la santé publique dans les
zones traversées par l'oléoduc\. Parallèlement, il renforcera sa présence et ses interventions sur le terrain,
tant à titre permanent que parmi les unités sur le terrain, par le biais du projet CAPECE\.
Consultation
32\. La COTCO procédera à des consultations fréquentes et régulières avec la société civile et les
populations affectées par le projet\. Le gouvernement camerounais informera aussi le public et les
principales parties prenantes quant aux incidences environnementales et sociales de la construction de
l'oléoduc et sollicitera leurs suggestions pour améliorer la performance du Projet\. La composante IEC du
projet donnera au CPSP les moyens de s'acquitter de cette responsabilité au nom du gouvernement\.
61
Oléoduc Tchad Cameroun
Partie camerounaise
Mbam Djeremde
Parc national
National Park
Mbam Djerem
CAMEROON OUN
YAOUNDE
UNDÉ
Kribi
Campo reserve
Réserve de Campo
Proposed national parks and
Parcs nationaux et réserves envisagés
Indigenous People Plan area
Zone du PPA
Pipeline
Oléoduc
Cities
Villes
00 500 km
500 km | APPROVAL |
P162005 |  The World Bank
Water Supply and Sanitation Services in Peri-Urban Areas and Small Towns (P162005)
Note to Task Teams: The following sections are system generated and can only be edited online in the Portal\.
Project Information Document/
Integrated Safeguards Data Sheet (PID/ISDS)
Concept Stage | Date Prepared/Updated: 05-Jun-2017 | Report No: PIDISDSC20365
June 22, 2017 Page 1 of 12
The World Bank
Water Supply and Sanitation Services in Peri-Urban Areas and Small Towns (P162005)
BASIC INFORMATION
A\. Basic Project Data OPS TABLE
Country Project ID Parent Project ID (if any) Project Name
Bolivia P162005 Water and Sanitation in
Peri-Urban Areas and
Small Towns (P162005)
Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead)
LATIN AMERICA AND Jul 17, 2017 Sep 28, 2017 Water
CARIBBEAN
Financing Instrument Borrower(s) Implementing Agency
Investment Project Financing Ministry of Development Vice-Ministry of Drinking
Planning Water and Basic Sanitation
(VAPSB)
Proposed Development Objective(s)
The Project Development Objective (PDO) is to improve access to water and sewerage services in participating peri-
urban areas and small towns, while mainstreaming climate-resilience in the planning and management of participating
water and wastewater utilities\.
Financing (in USD Million)
Finance OLD
Financing Source Amount
Borrower 22\.50
International Bank for Reconstruction and Development 140\.00
Total Project Cost 162\.50
Environmental Assessment Category Concept Review Decision
B-Partial Assessment Track II-The review did authorize the preparation to
continue
Note to Task Teams: End of system generated content, document is editable from here\.
June 22, 2017 Page 2 of 12
The World Bank
Water Supply and Sanitation Services in Peri-Urban Areas and Small Towns (P162005)
Other Decision (as needed)
B\. Introduction and Context
Country Context
In 2015, the population of Bolivia stood at approximately 11 million; 69 percent of which lived in urban areas\. Boosted
by gas and mining exports and rapidly increasing public investment, economic growth averaged roughly 5 percent per
year since 2004\. Strong economic growth in combination with prudent macroeconomic management has allowed for
sizeable fiscal and current account surpluses\. These surpluses in combination with the Multilateral Debt Relief Initiative1
have resulted in a sharp decrease in public debt from 94 percent of GDP in 2004 to less than 40 percent in 2013\. High
dependence on commodity exports renders the economy vulnerable to downturns in export prices and/or international
demand for such exports\. The rapid decline in export prices had not yet affected the growth rate in 2015, but has resulted
in fiscal and external deficits\. The economic outlook looks less buoyant with GDP growth forecasted to decline to 3\.6
percent per year\.
The commodity boom resulted in strong progress on the poverty reduction and shared prosperity fronts\. Between 2006
and 2015, the share of the population living in poverty decreased from 60 to 38\.6 percent\. Furthermore, the share of the
population living under the extreme poverty line fell from 37\.7 to 16\.8 percent\. Shared prosperity was strong over this
period, as the average income of the bottom 40 percent of the population grew by about 9 percent per year on average,
compared to 4 percent for the total population\. As a result, Bolivia experienced one of the largest reductions in inequality
in the LAC region, with the Gini coefficient decreasing by 12 points between 2006 and 2015\. Despite this progress, Bolivia
continues to face significant development challenges\. The country has one of the lowest GDP per capital levels in Latin
America and at 39 percent, it shows a much higher poverty rate than the average for Latin American (25 percent)\.
Bolivia is highly vulnerable to the impacts of climate change\. The retreat of the glaciers, and more frequent and intense
extreme weather events, such as the 2013 floods in the lowlands and the 2016 drought, have severe negative impacts
on the welfare of the population and in the economy\. In November 2016, 7 of the 9 departments declared a state of
emergency, 51 percent of the countryâs municipalities suffered agricultural damages and 34 percent livestock losses\.
The current drought emergency has made it clear that making the country and its economy more resilient to deal with
climate change is critical\.
Sectoral and Institutional Context
Although Bolivia is well endowed with renewable water resources, estimated at almost 53,000 cubic meter per person
per year, the spatial distribution of water resources does not match the population distribution throughout the country,
resulting in significant water scarcity in the Altiplano and inter-Andean valleys where two thirds of the population resides\.
In addition, water quality has been deteriorating significantly in recent years due to the extensive mining, urbanization,
rapid deforestation, overgrazing and the subsequent land degradation\.
Bolivia met the water supply target set by the Millennium Development Goals (MDGs)\. Access to improved water supply
services increased from 68 percent in 1990 to 90 percent in 2015 at national level\. Access to improved water in rural areas
increased from 55 percent in 2000 to 76 percent in 2015, narrowing the gap in service provision between rural and urban
1
The Multilateral Debt Relief Initiative (MDRI) provided for 100 percent relief on eligible debt from the IMF, IDA and AfDF to a group of low-
income countries, including Bolivia\. The initiative aimed to help eligible countries advance toward the United Nationsâ Millennium Development
Goals (MDGs) focused on halving poverty by 2015\.
June 22, 2017 Page 3 of 12
The World Bank
Water Supply and Sanitation Services in Peri-Urban Areas and Small Towns (P162005)
areas\. Yet, access to piped water (including access to standpipes) increased more modestly from 71 to 77 percent between
2001 and 2012, showing an increase from 88 to 90 percent in urban areas and from 40 to 52 percent in rural areas\. Even
though access to municipal water services has increased over the past decade, the quality of water service delivery
remains a challenge\.
Progress on the sanitation front has been slower\. Access to improved sanitation services increased from 28 percent to 50
percent between 1990 and 2015, while open defecation declined over the same period from 46 to 17 percent\. About 70
percent of the population had access to a water closet according to the 2012 household survey\. Yet, access is heavily
skewed towards households in urban areas\. In rural areas 63 percent of households did not have access to a toilet
compared to 13 percent in urban areas\. The quality of the toilet services is, however, low (e\.g\. 40 percent of households
share toilets with other households, which is considered âunsafe accessâ? by the MDGs)\. Regional variation in access to
toilets is high â with the highest rates in Santa Cruz, Pando and Beni (more than 85 percent) and the lowest rates in Potosi,
Oruro, Chuquisaca and La Paz (less than 60 percent)\. Access to safe wastewater collection services improved between
2001 and 2012 in all regions of the country\. However, by 2012, only 40 percent of households had access to a connection
to the sewer system, with large disparities between regions âfrom Tarija (53 percent) and La Paz (47 percent) to Pando
(13 percent)\.
Although Government spending for the water supply and sanitation (WSS) sector has increased by 150 percent in the past
15 years, the overall share of spending on this sector dropped from 1\.1 percent of GDP in 2000 to 0\.7 percent in 2015\.
Since many utilities are not able to generate sufficient revenues to pay for their total operating costs, there is a high
dependence on government funding\. The lack of enough resources for maintenance has resulted in shorter lifespans of
infrastructure assets causing water pipe breaks and sewer blockages\. Therefore, a large part of investment spending has
to be allocated to rehabilitation and premature replacement of existing infrastructure assets, as opposed to long-term
investments to expand water supply and wastewater collection and treatment services\.
This proposed project will be implemented under âMI Aguaâ? (Mas Inversión para Agua) Program, which started in 2011
to boost investments aimed at increasing access to safe drinking water supply and irrigation for rural communities\.
Between 2011 to 2016, the Bolivian government invested over USD 600 million in the implementation of MI Agua and its
equivalent MI Riego programs\. According to information provided by its main executing agency, the National Fund for
Social and Productive Investment (FPS), over 3,000 projects were implemented between 2011 and 2016 benefiting more
than 1\.5 million people\. The program is credited to have been decisive in the countryâs achievement of the water supply
MDG target\. MI Agua recently has expanded to promote investments in peri-urban areas and small towns\.
The sector is made up of a number of institutions\. The Ministry of Environment and Water (MMAyA) and its Vice-Ministry
of Drinking Water and Sanitation (VAPSB) are responsible for: (i) formulating, implementing, and monitoring water and
wastewater policies, including the 2015 water quality policy the 2015 water efficiency policy; (ii) setting technical
standards and norms; and (iii) formulating the water and wastewater investments budget\. The AAPS (Autoridad de
Fiscalización y Control Social en Agua Potable y Saneamiento) is the agency that regulates the provision of water services\.
In 2015, AAPS regulated 60 utilities covering a service area of 7\.9 million people\. These utilities provided water supply
and sewer services to 6\.7 million and 4\.3 million people, respectively, which represent coverage rates of 91 percent for
water supply and 55 percent for sewerage\. Operational performance is mixed\. Median water consumption is low at 94
liters per capita per day\. Metering is universal\. Non-revenue water stands at 29 percent, and less than 17 cubic meter per
kilometer per day\. The financial performance of the utilities is in general poor\. The typical utility only covers 76 percent
of its operation and maintenance expenses; the median collection efficiency stood at 82 percent in 2015\. EMAGUA
(Entidad Ejecutora de Medio Ambiente y Agua), FPS (Fondo de Inversión Productiva y Social), and UCP (Unidad
Coordinadora de Programas) implement investment programs in the sector, while SENASBA (Servicio Nacional para la
Sostenibilidad de Servicios en Saneamiento Básico) is tasked with improving the institutional capacity of the water and
June 22, 2017 Page 4 of 12
The World Bank
Water Supply and Sanitation Services in Peri-Urban Areas and Small Towns (P162005)
wastewater utilities and implementing community development programs in water and sanitation projects\. Municipal
governments are responsible for the provision of WSS services, and are, therefore involved alongside departmental
governments in project implementation and financing\. Water utilities in urban areas (EPSA, according to their Spanish
acronym) are usually municipal or service cooperatives\. Institutional arrangements for water resources management are
weak\. There is no a water resource management authority\.
The donor community is active in the water sector\. The Latin-American Development Bank (CAF) and the Inter-American
Development Bank (IDB) are the largest donors with lending operations in the water sector each of more than USD 500
million\. Their lending program focuses on the provision of water supply and sanitation services to urban cities, small towns
and rural communities\. The Spanish Cooperation Agency (AECID), German Cooperation Agency (GIZ), the Swiss
Development Cooperation and the German Development Bank (KfW) have a long tradition of sector involvement\. IDB, GIZ
and the European Union also provide technical assistance to water utilities\. The donor community has been active
supporters of the â?National Rural Water and Sanitation Strategyâ? and the â?National Strategy for Wastewater Treatmentâ?\.
Relationship to CPF
The proposed project will contribute to the achievement of higher level objectives of the Government of Bolivia and the
World Bank\. The Patriotic Agenda (2015-2025) focuses on providing universal access to basic social services, including
water supply and sanitation by 2025\. The Five âYear National Development Plan (Plan de Desarrollo Económico Social,
PDES 2015-2020) aims to reach 95 percent access in urban water supply and 70 percent in urban sanitation\. The PDES
anticipates sharp increases in the access to high-quality water and sanitation services, while reducing the gaps between
the urban and rural areas, and the poor and rich\.
The most recent World Bank's Country Partnership Framework (100985-BO) for Bolivia is fully aligned with the
Governmentâs NDP\. The CPF is organized around two pillars: (i) promoting broad-based and inclusive growth; and (ii)
supporting environmental and fiscal sustainability to improve public resource management and the business environment\.
Support for key infrastructure is a core part to share prosperity through the expected reduction water-borne diseases
resulting in absenteeism from work and/or school and the costs associated with out-of-pocket medical expenses and loss
of income\. The care for the sick and the responsibility of water collection and safety concerns also falls disproportionally
on women and girls\. Hence, improved access to water and wastewater services will help to improve social inclusion and
poverty reduction (Pillar 1) as the ISHES survey showed that the poor suffer more from lack of access to improved water
and wastewater services\. When having access to the services, they tend to suffer more from poor service delivery (as
measured by service interruptions) than other water users\. By addressing inadequate water and wastewater service
delivery, the project supports the Bankâs Twin Goals\. The project will also support the second pillar as water pollution is
widespread in Bolivia, with insufficient collection and treatment of wastewater an important source of contamination\.
C\. Proposed Development Objective(s)
Note to Task Teams: The PDO has been pre-populated from the datasheet for the first time for your convenience\.
Please keep it up to date whenever it is changed in the datasheet\.
The Project Development Objective (PDO) is to improve access to water and sewerage services in participating peri-urban
areas and small towns, while mainstreaming climate-resilience in the planning and management of participating water
and wastewater utilities\.
June 22, 2017 Page 5 of 12
The World Bank
Water Supply and Sanitation Services in Peri-Urban Areas and Small Towns (P162005)
Key Results (From PCN)
Key PDO indicators will be:
⢠Direct project beneficiaries (number) , of which female beneficiaries (percentage) (core indicator)
⢠People provided with access to water through piped household water connections (core indicator)
⢠People provided with access to sanitation through sewer connections (core indicator)
⢠Volume of wastewater collected and safely disposed
⢠Number of participating utilities that have developed and implemented water emergency plans
D\. Concept Description
The governmentâs Patriotic Agenda 2025 aims to achieve universal water and sanitation coverage by 2025\. It also aims to
achieve no contamination of water bodies by the same date\. These goals are fully aligned with the newly defined
Sustainable Development Goals (SDGs)\. The Vice Ministry of Water Supply and Sanitation hence has set goals to achieve
increases in access to water supply and sanitation, while increasing the capacity to treat wastewater and subsequently
reuse it\. This project is aimed to improve water supply and sanitation coverage in urban areas\.
The proposed project will support water supply and wastewater investments in high-priority areas that have been
identified in the âMI Aguaâ? program that aims to improve service delivery to underserved populations, mostly residing in
peri-urban areas and small towns\. The proposed project will also contribute to building climate resilience in the
participating utilities to ensure that they can better cope with the countryâs vulnerability to climate change\. Building this
climate resilience will include, but is not limited to improve the operational and financial viability of the utilities\.
Component 1: Infrastructure to Water Supply and Wastewater Services (USD 100 million)
This component will include water and wastewater investments in peri-urban areas and small towns\. This project will
marginally increase the volume of raw water abstracted2 (and hence water production) but will construct works that will
especially focus on the construction of water supply and/or sewer networks, and wastewater treatment plants\.
This component will fund a set of subprojects in water and wastewater services\. The proposed project portfolio includes
20 subprojects in 6 regions and 13 municipalities\. There are 13 subprojects located in peri-urban areas\. The remaining 7
investment subprojects are located in smaller urban towns\. In the current design, the Government estimates, that
municipalities and departments will provide at least 20 percent of the investment funds\.
The subprojects in peri-urban areas include investments in the cities of Cochabamba, Oruro, El Alto and La Paz\. They
include expansion of water and/or sewer networks in peri-urban neighborhoods\. The total investment costs of the 6
subprojects with completed detailed designs for peri-urban areas is estimated at USD 54 million, which will directly benefit
91,400 people\. The remaining sub-projects will benefit an additional 263,339 people\. An assessment of the detailed
designs and the capacity of municipalities to pay is underway\. The population directly expected to benefit from these
improvements through increases in access is estimated at 354,752 people\.
Component 2: Building Climate Resilient Utilities Component (USD 25 million)
This component aims to improve the performance and efficiency of the water and wastewater companies to make their
infrastructure systems and operations more climate-resilient\. The project will undertake climate change risk screening as
2 There is only one project identified so far that may include some increase in water production \.
June 22, 2017 Page 6 of 12
The World Bank
Water Supply and Sanitation Services in Peri-Urban Areas and Small Towns (P162005)
building more climate resilient water and wastewater utilities is an explicit objective of this project\.
The project will work in particular with the water utilities in El Alto and La Paz, Oruro, Cochabamba (the main beneficiaries
of the water supply and wastewater subprojects that will be implemented in peri-urban areas) so they mainstream climate
resilience in the way their plan and manage the delivery of their services\. This component will include:
⢠Assistance to water and wastewater companies in developing infrastructure investment plans that improve their
resilience to climate change (including but not limited to improved management of water resources) underpinned
by the introduction and/or improvement of information and information management systems, hydrological and
hydraulic models to assist in making utilities more climate resilient;
⢠Assistance to water and wastewater companies in improving preparedness for extreme weather events to include
amongst others the preparation of contingency plans, early warning systems, measures to ensure drinking water
quality in emergencies;
⢠Technical assistance in demand management (including but not limited to improving commercial systems,
revenue policies, and customer outreach to promote water conservation);
⢠Strengthening social accountability measures to improve customer-responsiveness and improve other feedback
mechanisms on the performance of water and wastewater companies;
⢠Improve â where utilities are currently not supported by improvement plans â the financial and operational
performance of participating utilities\.
Component 3: Project Implementation and Monitoring Component (USD 15 million)
This component will finance the operational costs of UCP to coordinate, implement, supervise and monitor the project\.
This component will also include the preparation of pre-investment studies and designs, including the preparation of
detailed designs for the wastewater treatment solutions for La Paz, Tarija and eventually other cities\.
Component 4: Contingency Emergency Component (estimated costs of USD 0 million)
This component will finance a fourth component to enable flexible project design in an environment where climate
vulnerability is a major risk\. The objective of this component is to support potential disaster-recovery needs in water and
wastewater systems in the participating utilities\. This component could be triggered in the event of a disaster upon formal
request from the Borrower\. Upon triggering, reallocation of project funds from other project components could be
undertaken to facilitate financing of goods and services that ensure the continuation of water and wastewater operations\.
Note to Task Teams: The following sections are system generated and can only be edited online in the Portal\.
SAFEGUARDS
A\. Project location and salient physical characteristics relevant to the safeguard analysis (if known)
The proposed project will support water supply and wastewater collection and treatment investments in peri-urban
areas of the cities of Oruro, La Paz, El Alto and Cochabamba, and mid-size cities/towns of Colquiri, Sorata, Chulumani,
Mairana, San Ramon, La Guardia, San Borja and Puerto Suarez\. The borrower will conduct a Social Assessment (SA) that
will analyze socio â cultural issues (including gender), and will identify social impacts in the proposed project area\. Even
though it is expected that the SA identifies diverse indigenous populations spread in peri-urban areas of large and in mid-
size cities, IPPs and/or IPPF would only be developed if the SA confirms IPs as defined in O\.P\.4\.10\. Where subprojects
June 22, 2017 Page 7 of 12
The World Bank
Water Supply and Sanitation Services in Peri-Urban Areas and Small Towns (P162005)
have detailed final design (El Alto, Cochabamba and Oruro cities), temporal impacts on access to assets and economic
activities may be caused; therefore O\.P\. 4\.12 is triggered, and Resettlement Action Plans (RAPs) will be prepared for these
subprojects\. A Resettlement Policy Framework will also be prepared for subprojects that are still to be finalized\. As the
works might result in some moderate influx of laborers from outside the area during the construction works, the SA will
include âin its social management frameworkâ mitigation measures aimed at lessening the possibilities of any type of
misconduct from outsiders in the proposed project area\. Social Safeguard Instruments will be developed by the client
before Appraisal\.
To comply with the Bankâs environmental policies and safeguards, the borrower will formulate Environmental
Assessments (EAs) for 6 subprojects for which detailed designs are complete (located in El Alto, Cochabamba and Oruro)\.
These EAs will guide the preparation of Environmental Management Plans (EMPs)\. For the remaining subprojects without
complete designs, Environmental and Social Management Framework (ESMF) will be prepared, as well as corresponding
EMPs\.
B\. Borrowerâs Institutional Capacity for Safeguard Policies
Institutional capacity for social and environmental safeguards will be evaluate during the preparation of the social and
environmental safeguard instruments\. Specific recommendations will be addressed before Appraisal\.
C\. Environmental and Social Safeguards Specialists on the Team
Juan Carlos Enriquez Uria, Angela Maria Caballero Espinoza
D\. Policies that might apply
Safeguard Policies Triggered? Explanation (Optional)
This policy will be triggered as the project will have
potential negative environmental and social impacts
would mainly occur in the construction phase, and
they would include soil erosion, noise, dust, shipping
and disposal of construction waste, etc\. These
potential impacts will be discussed and mitigated\.
Overall, the impact of the project is positive\. The
expected benefits of the project will include (i)
improvements in the access and quality of water
Environmental Assessment OP/BP 4\.01 Yes supply and wastewater collection services provided to
targeted urban areas; (ii) improvements in health
indicators associated with poor water and wastewater
services in the targeted areas; (iii) reduction in coping
costs to deal with inadequate water and wastewater
services; (iv) utilities that will be more resilient and
hence have more capacity to deal with the impacts of
climate change; and (v) possible environmental
externalities as the overall environment will benefit
from improvements in the collection of wastewater\.
June 22, 2017 Page 8 of 12
The World Bank
Water Supply and Sanitation Services in Peri-Urban Areas and Small Towns (P162005)
The Environmental and Social Management
Framework (ESMF) will include the Environmental
Impact Assessment (EIA) for each of the Subprojects\.
Based on the Environmental Impact Assessment (EIA),
an Environmental Management Plan will be prepared
including: (i) feasible and effective mitigation
measures to prevent, eliminate, reduce, mitigate, or
compensate for the adverse impacts of the subproject
on the different means (abiotic, biotic and social) and
during each stage of implementation and operation;
(ii) feasible and effective measures to enhance the
environmental benefits of each subproject; Iii) The
design of measures to recover and recompose the
affected environment; and, iv) a timeline of
initiation/implementation/finalization of the
measures, and environmental actions\. Environmental
management measures and actions should be
presented including technologies, technical
specifications, personnel and logistical requirements,
costs, scheduling activities, monitoring and supervision
activities, and the responsibilities of the actors
involved in each subproject\. Likewise, the measures to
be proposed should take into account the results of
community consultation and participation activities\.
\.The project will be focused on the provision of water
and wastewater infrastructure in peri-urban areas and
Natural Habitats OP/BP 4\.04 No
small towns, and will therefore not in any way impact
natural habitats\.
The project will be focused on the provision of water
and wastewater infrastructure in peri-urban areas and
Forests OP/BP 4\.36 No
small towns, and will therefore not in any way impact
forests\.
The project will be focused on the provision of water
and wastewater infrastructure in peri-urban areas and
small towns, and will not provide any funds for the
Pest Management OP 4\.09 No
purchase of pesticides, nor will it result in a change in
pest management within the peri-urban areas and
small towns targeted\.
Considering the portfolio of investments supported by
the project and expected to be financed, the major
risks regarding OP/BP are associated with civil works
Physical Cultural Resources OP/BP 4\.11 Yes
that could possibly uncover significant physical cultural
resources\. The ESMF (and EMP) will contemplate all
preventive measures in order to comply with the
June 22, 2017 Page 9 of 12
The World Bank
Water Supply and Sanitation Services in Peri-Urban Areas and Small Towns (P162005)
national regulations and the WB policies and
safeguards\.
This Policy is triggered given that Indigenous Peoples
may be present in the project area\. A screening to
determine whether Indigenous Peoples are present in,
or have collective attachment to, the project area will
be undertaken by the Bank\. The screening will place
special emphasis on whether or not a group has
collective attachment to geographically distinct
Indigenous Peoples OP/BP 4\.10 Yes
habitats and ancestral territories, as this is the criteria
that groups that live in urban and peri-urban areas are
least likely to meet\. An Indigenous Peoples Policy
Framework and/or Indigenous Peoples Plan will be
developed by appraisal if Indigenous Peoples are
deemed to be present, or have collective attachment
to, the project area\.
This Policy is triggered given that project activities may
result in temporary loss of assets or access to assets;
and/or temporary loss of income sources\. Subprojects
located in the cities of El Alto, Cochabamba and Oruro
that have finalized detailed designs, might cause
temporal impacts on access to assets and economic
activities, therefore Resettlement Action Plans (RAPs)
will be prepared\. Furthermore a Resettlement Policy
Framework (RPF) that encompasses procedures and
Involuntary Resettlement OP/BP 4\.12 Yes
requirements to develop RAPs for subprojects whose
detailed designs have yet to be determined, will be
also developed\.
The RAPs and the RPF will define methodologies for
compensation and resettlement of all types of possible
permanent or temporary physical impacts on land,
assets and economic activities that the proposed
project might cause\.
The project will not support the construction or
rehabilitation of dams nor will support other
Safety of Dams OP/BP 4\.37 No
investments which rely on the services of existing
dams\.
Projects on International Waterways The project will not affect international waterways as
No
OP/BP 7\.50 defined under the policy\.
No project activities are contemplated in disputes
Projects in Disputed Areas OP/BP 7\.60 No
areas as defined by OP/BP 7\.60\.
June 22, 2017 Page 10 of 12
The World Bank
Water Supply and Sanitation Services in Peri-Urban Areas and Small Towns (P162005)
E\. Safeguard Preparation Plan
Tentative target date for preparing the Appraisal Stage PID/ISDS
Jun 23, 2017
Time frame for launching and completing the safeguard-related studies that may be needed\. The specific studies and
their timing should be specified in the Appraisal Stage PID/ISDS
The Environmental and Social Management Framework will be prepared starting on January 2017, until May 2017\.
CONTACT POINT
World Bank
Caroline van den Berg, Luis Alfonso Alvestegui Justiniano
Lead Water Economist
Borrower/Client/Recipient
Ministry of Development Planning
Mariana Prado Noya
Minister of Planning
stephanie\.bellot@planificacion\.gob\.bo
Implementing Agencies
Vice-Ministry of Drinking Water and Basic Sanitation (VAPSB)
Carlos Ortuño Yañez
Minister of Environment and Water
carlos\.ortuno@riegobolivia\.org
FOR MORE INFORMATION CONTACT
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 473-1000
Web: http://www\.worldbank\.org/projects
June 22, 2017 Page 11 of 12
The World Bank
Water Supply and Sanitation Services in Peri-Urban Areas and Small Towns (P162005)
APPROVAL
Task Team Leader(s): Caroline van den Berg, Luis Alfonso Alvestegui Justiniano
Approved By
APPROVALTBL
Practice Manager/Manager: Rita E\. Cestti 06-Jun-2017
Country Director: Boris Enrique Utria 26-Jun-2017
Note to Task Teams: End of system generated content, document is editable from here\.
June 22, 2017 Page 12 of 12 | APPROVAL |
P008172 | Report No\. PIC1062
Project Name Uruguay-Public Administration Reform Project (@)
Region Latin America Caribbean
Sector Public Sector Management
Project ID UYPA8172
Borrower Republic of Uruguay
Beneficiary Ministry of Economy
Financing Plan IBRD US$23 million
Government US$ 7 million
Tentative Appraisal Date TBD
Projected Board Date August 11, 1997
1\. Background\. Breaking with its traditional statim, Uruguay began
some time ago to reform the public sector\. Its problems with public
enterprises revolve around inefficient monopolistic systems\. The public
sector is generally overexpanded, outdated, and needs to be
rationalized\. In addition to off-loading public enterprises and
downsizing the Central Government, there is a need to modernize core
government functions, including financial management, tax collections,
and customs and social security administration\. The 1985-89
administration began important reforms, including: elimination of
passenger service and reduction of uneconomic cargo operations of the
state railway; the introduction of performance contracts and tightened
financial discipline and Central Government regulation in state
enterprises; re-privatization of insolvent commercial banks; freezing of
new civil service hires and repeated cuts in public employee salaries\.
The present Administration has set more ambitious goals, including:
private sector participation in state monopolies in telecommunications,
aviation, ports, natural gas and electric power services; and reductions
in regulatory and reporting requirements\. To complement these
accomplishments, the Government's economic team has requested Bank
assistance for public administration reform and core agency
modernization\. Considerable groundwork has already been laid by the
Government toward the twin aims of improving the performance of the
Central Government and its Ministries and reducing impediments to
private markets\. The proposed project is designed to build on and
strengthen these previous efforts\.
2\. Project Objectives\. The proposed project aims to assist the
government by: (i) providing studies on how to modernize and reduce the
size of government agencies efficiently and effectively; (ii)
introducing modern integrated financial management systems; and (iii)
implementing an integrated approach to regulatory activities focused on
eliminating impediments to private market efficiency\.
3\. Project Description\. The proposed project includes three basic
components: (1) studies to develop programs for downsizing and
modernizing Central Government agencies and implementation of selected
modernization programs, (US$5 million); (2) reform of the public
financial management (PFM) system, (US$16 million); and (3) deregulation
to improve economic competitiveness (US$2 million)\.
a\. Downsizing and agency modernization is to be advanced
through: (i) detailed reviews of each of the twelve Central
Government Ministries, and (ii) modernization of select
agency functions, such as personnel management, payroll, and
materials and space management\. The reviews will: (a)
document problems, (b) propose strategies for solving those
problems, including implementation plans, and (c) include
feasibility of those strategies\.
b\. Reform of the PFM system will be advanced through: (i)
detailed review of the existing budgeting and financial
management systems; (ii) design and first phase
implementation in budget and treasury operations of a
comprehensive budgeting and financial management system; and
(iii) modernization of three key revenue agencies based on
prior Bank-sponsored reviews: Direccion General Impositiva
(DGI), Direccion Nacional de Aduanas (DNA) and Banco de
Prevision Social (BPS)\.
c\. Deregulation to improve economic competitiveness activities
to be supported by this loan include (i) technical assistance
to formulate a regulatory reform strategy aimed at
significantly improving competitiveness in Uruguay's private
markets, and (ii) technical assistance to identify an
effective strategy for implementing desired deregulatory
changes once they have been identified\.
4\. Activities eligible for external financing include investment costs
required for the streamlining the DGI, DNA and BPS, including equipment
and training for these reforms; and technical assistance and consultants
required to execute the Ministry-specific reviews and privatization
plans, the PFM system review and implementation design, and the
deregulation strategy review and design\.
5\. Project Financing\. Project financing consists entirely of IBRD TAL
assistance and Government funding\. No cofinancing arrangements are
planned\.
6\. Project Implementation\. The project will be implemented by the
Ministry of Economy through a Project Implementation Unit (PIU) that
will include, in addition to the Ministry of Economy, representatives
from PRONADE (Programa Nacional de Desburocratizacion), OPP (Oficina de
Planeamiento y Presupuestos), and ONSC (Oficina Nacional del Servicio
Civil)\. A member of the Ministry of Economy will serve as Project
Coordinator with overall implementation responsibility\. All studies and
implementation plans undertaken within the project will be supervised by
the PIU, with ultimate responsibility for their proper execution resting
with the Project Coordinator\.
7\. Project Sustainability\. Studies: Studies and implementation plans
to be financed under this project will provide the information base
required to make significant public sector reform possible\. Terms of
-2 -
reference (TORs) will require that each study focus not only on
assessment of existing problems, but also provide a blueprint for
implementation of its recommendations\. High-level representatives of
concerned Ministries will play important roles in the execution and
final approval of these studies to assure commitment to both the
assessment and implementation of recommendations\. Agency-specific
reforms: Reforms of the budgetary and treasury systems in the Ministry
of Economy and within the DGI, DNA and BPS will include installation of
appropriate hardware and software and implementation of changes in their
daily operating procedures and organizational frameworks\. Once in
place, these changes are intended to be self-sustaining\.
8\. Lessons from Previous Bank Involvement\. The proposed project
design reflects lessons learned from related Regional and Bank
experience (see Annex 1)\. Components have been limited in number and
scope, while objectives are limited to those deemed achievable\. In this
regard, rather than dramatically reducing the size of the civil service
and undertaking a full-scale restructuring of the public administration,
the project aims at the narrower objectives of building the knowledge
base required to support such a restructuring and downsizing plus
installing sustainable improvements in several public management systems
-- including budgeting, personnel, materials and space management, and
cost accounting -- which will provide management capacities necessary
for future implementation of required civil service reform efforts
identified in this project\. Performance indicators will be included for
all major project components\. Carefully structured Terms of Reference
(TORs) for all studies should assure their results contribute to future
implementation of their recommendations\. Unallocated funds will be kept
to a minimum\. Considerable effort will be devoted to assuring adequate
and sustainable borrower commitment\. Furthermore, project activities
that introduce routinized methodologies and systems are meant to assure
sustainability of borrower commitment even beyond the duration of the
project\. A full-time Project Coordinator is intended to assure adequate
borrower capacity to execute the project\. Monitoring of performance
indicators, inclusion of a mid-term review, and devotion of adequate
Bank resources to supervision will assure effective supervision\.
Finally, deregulation activities will focus on a comprehensive strategy
for reducing all types of government-created obstacles to the smooth
functioning of private markets, as well as reducing, rather than
augmenting, the number of regulatory bodies and the scope of their
activities\.
9\. Rationale for Bank Involvement\. The country strategy for Uruguay
calls for helping the current Government to arrest the loss of
structural adjustment momentum until inflation is contained, and then to
resume its attack on the still significant development agenda\. In
support of this overall strategy, the Bank's public sector strategy in
Uruguay calls for improvements in the administration of general taxes
and customs; help in reducing social security tax evasion and improving
accounting of social security contributions; reductions in the public
sector deficit; and improvements in public sector management\. The
downsizing and agency modernization component and the PFM system reform
component of this project address these elements of the Bank's public
sector strategy in Uruguay\. In addition, Uruguay's legal framework for
productive activities is singled out for attention in the Bank's most
- 3 -
recent Country Strategy Paper\. The deregulation component of this
project addresses that concern\.
10\. Environmental Aspects\. As this is a technical assistance project,
it is recommended that it be classified as Type C\.
11\. Program Objective Categories\. Public Sector Management (PB) is the
primary program objective category applicable to this project\. This
project will also support the country's antipoverty strategy by
increasing the efficiency with which the Government employs resources
and by enhancing the competitiveness of Uruguay's private sector\.
12\. Project Benefits\. Primary project benefits include enhancing the
efficiency of the public sector and fostering more efficient private
sector\.
Contact Point Public Information Center
The World Bank
1818 H Street N\.W\.
Washington D\.C\. 20433
Telephone No\.: (202)458-5454
Fax No\.: (202)522-1500
Note: This is information on an evolving project\. Certain
components may not necessarily be included in the final
project\.
Processed by the Public Information Center week ending March 21, 1997
- 4 - | APPROVAL |
P041277 |  | APPROVAL |
P160951 | PROJECT INFORMATION DOCUMENT (PID)
IDENTIFICATION/CONCEPT STAGE
Report No\.: PIDC83420
Public Disclosure Copy
Project Name Enhancing the implementation of Public Procurement in
Macedonia
Region EUROPE AND CENTRAL ASIA
Country Macedonia, former Yugoslav Republic of
Lending Instrument IPF
Project ID P160951
Borrower Name Ministry of Finance
Implementing Agency Public Procurement Bureau, Public Procurement Bureau
Environment Category C - Not Required
Date PID Prepared 01-Sep-2016
Estimated Date of Approval 30-Sep-2016
Initiation Note Review The review did authorize the preparation to continue
Decision
I\. Introduction and Context
Country Context
The Former Yugoslav Republic (FYR) of Macedonia is an upper middle-income country that has
made great strides in reforming its economy over the last decade\. While the country has made
significant progress in terms of its economic development, efforts across a range of areas are still
Public Disclosure Copy
needed to generate economic growth that will create jobs and improve living standards for all\.
The government and the World Bank Group are currently working on boosting competitiveness
while creating a favorable environment for local businesses that is necessary for putting the FYR
Macedonia on a sustainable growth path, create more and better jobs, and promote shared
prosperity of the bottom forty percent of the population\. Policies to improve educational outcomes
and other public services, and to remove labor market constraints will be needed to support growth
and make sure that a large part of the population reaps the benefits of sustained growth\.
Sectoral and Institutional Context
FYR Macedonia has made significant progress in public financial management reform during the
recent years\. In spite of this, gaps remain and capacity is low in many areas of recent legislative and
institutional changes\.
The proposed assistance is targeting two main areas - public procurement and anti-corruption -
allowing to strengthen efficiency and transparency in public procurement\. The development of
performance indicators by making various cross-references of the data, so that future trends and
patterns could be projected, is expected from the proposed activity\. Also is expected the
development of red flags and indicators through the analysis of data that could be integrated in the
e-procurement system\. The Public Procurement Bureau management has shown extensive interest
Page 1 of 6
to the proposed activities\. The proposed assistance serves as a support for strengthening the
countryâ¢â¨ s capacities as well as to increase the use of country system in terms of fiduciary aspects
for present and/or future projects\. The sophistication of the e-procurement portal will allow for the
Public Disclosure Copy
enhancement of procurement efficiency and result in cost and time savings\. The effective
implementation of these reforms within timeframes specified at the start of the reform process will
improve the public financial management, particularly in the procurement area\.
The capacity-building of the Public Procurement Bureauâ¢â¨ s staff will lead to presentations and
public release of papers on best practices and lessons learned\. The close collaboration with the
World Bank and European Union Procurement professionals will allow for knowledge transfer
between public officials in different countries (through conferences, seminars, bilateral interaction)
and will also strengthen the collaboration between FYR Macedonia, other countries in the Western
Balkan region and EU member states\. The newly acquired knowledge of the procurement officials
in FYR Macedonia will help carrying out the aforementioned reforms in the best way possible\.
Relationship to CAS/CPS/CPF
As part of the Country Partnership Strategy (CPS), which covers the period FY12-FY18, the
ongoing public sector reform agenda remains on focus for moving forward with reforms of central
governance systems and reducing opportunities and incentives for corruption\.
As envisaged in the CPS, the World Bank engaged with the Government on a comprehensive Public
Finance Review (PFR), completed and published in July 2015, which helped identify the scope for
further reforms in this area\. In relation to public procurement, the PFR recommended that the
Government could take further steps to increase competitive bidding and improve transparency and
accountability in public procurement by ensuring e-Tendering is used for all procurement activities\.
The grant-financed project is designed to strengthen efficiency and transparency in public
Public Disclosure Copy
procurement through targeting the two main areas of e-procurement and anti-corruption\. The
assistance will contribute to more effective implementation of the reforms in these areas within the
time frame of the project, and will eventually lead to improved public finance management and
transparency, particularly in the area of public procurement\. By focusing on the targeted areas, the
project will complement the country's medium to long-term development objectives in its efforts of
continuous improvement of its public finance management and is in line with Pillar 1: Growth and
Competitiveness in the current Country Partnership Strategy\.
II\. Project Development Objective(s)
Proposed Development Objective(s)
Page 2 of 6
The objective of the grant is to support the Government to enhance the performance of public
procurement in FYR Macedonia by improving the existing e-procurement system functionalities and
developing performance indicators for monitoring the performance of the public procurement
Public Disclosure Copy
system and building capacity of the Public Procurement Bureau (PPB)\. The grant will finance the
following activities:
Performance Indicators
The Public Procurement Bureau (PPB) has comprehensive database of all procurement procedures\.
This is a result of the reporting requirements contracting authorities have according to the law\. This
data is also well presented in PPBâ¢â¨ s annual reports\. However, further assistance is needed to
develop public procurement performance indicators by making various cross-references of this data,
so that future trends and patterns could be projected\. Furthermore, this data has a strong
anticorruption potential that is currently not being used, and therefore red flags need to be integrated
in the e-procurement system\.
E-procurement â¢â¨ security & software updates (new functionality)
Currently, PPB owns and manages the national e-procurement system used by all public sector
entities\. Technical assistance is requested to include new functionalities to the existing system, such
as (i) publication of procurement notices of international donors, in order to increase transparency
given the fact that local economic operators know the e-GP system as a unique place to search for
business opportunities with the public sector; (ii) e-Appeal functionality as currently it is paper-
based between the Economic Operators and State Appeals Commission; and (iii) pre-view of the
tender documents for Economic Operators without subscribing to the system\.
Capacity Building
Assistance is needed for building capacity of PPB staff on using the new performance indicators that
will be introduced as a result of project activities and red flags\. This includes sharing experiences
with other countries on these topics\.
Public Disclosure Copy
Key Results
Page 3 of 6
The key short-term results are as follows:
(i) The newly built set of performance indicators will allow for the identification of flaws and
Public Disclosure Copy
difficulties in the procurement process\. In that way, the procurement professionals in FYR
Macedonia will gain knowledge on what must be improved which includes, in the longer term, cost
savings and procurement efficiency enhancing\.
(ii) The expected new E-procurement portal with additional functionalities will allow for the
streamlining of electronic procurement procedures by making it available to all procuring entities
and thus, allowing both costs and time savings\. It will also provide more opportunities to economic
operators to access procurement notices of international donors, e-Appeal and pre-view of tender
documents without subscription to the ESPP system\.
(iii) A well-executed procurement procedure is often the result of well-trained staff\. Capacity-
building of staff on procurement performance indicators and red flags would enhance the efficiency
of public procurement in FYR Macedonia\. With a capacity-building topic such as anti-corruption,
the staff will be more aware of malpractices in procurement processes and will avoid the
mismanagement of public funds\. Additionally, such a training will be a good starting point for a
potential EU adhesion since the performance indicators will help identify areas of improvement and
bottlenecks in this regard\.
The expected longer term results and impacts are as follows:
(iv) Improved economic growth of Macedonia with enhanced public spending with the help of
the performance indicators
(v) A better alignment with the European Unionâ¢â¨ s directives on public procurement\.
(vi) A better pace alignment with Macedoniaâ¢â¨ s regional counterparts who are also in the
reform process of their public procurement systems such as Serbia, Bosnia, Albania etc\.
Public Disclosure Copy
(vii) Increased procurement efficiency with the continuous use of the procurement performance
indicators manual\.
(viii) Time and cost savings with the new e-procurement functionalities
III\. Preliminary Description
Concept Description
The Public Procurement Bureau in FYR Macedonia continues to expand its e-Procurement efforts\.
As part of the agencyâ¢â¨ s draft strategy for the development of the e-Procurement system
(2016-2020) it is planned to completely automate the procurement processes by 2018\. This works
well with the activities proposed in this proposal\. Furthermore, many non-governmental
organizations including the Center for Civil Communications sponsored by USAID have supported
the similar initiatives\. The concrete tools and capacity-building in this project will be sustainable\.
The enhancement of the e-procurement portal, and the performance indicators will be used on a
daily basis in the forthcoming years which will result in improving significantly the efficiency and
transparency of public procurement in FYR Macedonia on the long term and will permit a better
collaboration both with other countries in the Region and with international organizations such as
the European Union and the World Bank\. The important aspect is better knowledge of the integrity
threats in the procurement processes by being able to identify corruption and fraud which will lead
to a constant improvement of procurement practices\.
Page 4 of 6
IV\. Safeguard Policies that Might Apply
Safeguard Policies Triggered by the Project Yes No TBD
Public Disclosure Copy
Environmental Assessment OP/BP 4\.01 â
Natural Habitats OP/BP 4\.04 â
Forests OP/BP 4\.36 â
Pest Management OP 4\.09 â
Physical Cultural Resources OP/BP 4\.11 â
Indigenous Peoples OP/BP 4\.10 â
Involuntary Resettlement OP/BP 4\.12 â
Safety of Dams OP/BP 4\.37 â
Projects on International Waterways OP/BP 7\.50 â
Projects in Disputed Areas OP/BP 7\.60 â
V\. Financing (in USD Million)
Total Project Cost: 0\.3 Total Bank Financing: 0
Financing Gap: 0
Financing Source Amount
Strengthening Accountability and the Fiduciary Environment 0\.3
VI\. Contact point
World Bank
Contact: Antonia G\. Viyachka
Title: Procurement Specialist
Tel: 5240+7256
Email: aviyachka@worldbank\.org
Public Disclosure Copy
Contact: Joseph Huntington La Cascia
Title: Senior Procurement Specialist
Tel: 473-2215
Email: hlacascia@worldbank\.org
Borrower/Client/Recipient
Name: Ministry of Finance
Contact:
Title:
Tel:
Email:
Implementing Agencies
Name: Public Procurement Bureau
Contact: Aleksandar Argirovski
Title: Director
Tel: 0038923255682
Email:
Name: Public Procurement Bureau
Contact: Marija Jovanoska
Title: Head of Department
Page 5 of 6
Tel: 0038923255691
Email:
VII\. For more information contact:
Public Disclosure Copy
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Web: http://www\.worldbank\.org/infoshop
Public Disclosure Copy
Page 6 of 6 | APPROVAL |
P002004 | RESTRICTED
t CO0PY Report No\. P-304
*This report was prepared for use within the Bank and its affiliated organizations\.
They do not accept responsibility for its accuracy or completeness\. The report may
not be published nor may it be quoted as representing their views\.
INTERNATIONAL BANK FOR RECONSTRUCTON AND DEVELOPMENT
REPORT AND RECOMMENDATIONS
OF THE
PRESIDENT
TO THE
EXECUTIVE DIRECTORS
ON A
PROPOSED LOAN
TO
THE NIGERIAN PORTS AUTHORITY
OF THE FEDERATION OF NIGERIA
November 19, 1962
REPCRT AND RECOMMENDATIONS OF THE PRESIDENT TO THE
ETXI CUTrE DIRECTORS ON A PROPOSED LOA1 TO THE NIGERIAN
?ORTS AUTHORITY OF THE FEDERATION\. OF NIGERIA
1\. I submit the following report and recommendations on a proposed loan
of $13\.5 million to the Nigerian Ports Authority for extensions and improve-
ments to the A\.papa wharves in the port of Lagos, Nigeria\.
PART I - HISTORICAL
2\. In 1958, while Nigeria was a dependent British territory, the Bank
made a loan (193 UNI) of $28\.0 million equivalent to the Federation of
Nigeria with the guarantee of the United Kingdom for railway development\.
The status of this loan, now fully disbursed is as follows:
($ million equivalent)
Original Amount 28,o
of which has been repaid O\.6
Total now outstanding 27\.4
Amount sold 7\.4
of which has been repaid 0o6 6\.8
Amount now held by Bank 2OM6
3\. Nigeria became an independent member of the Commonwealth on
October 1, 1960 and joined the Bank on March 30, 1961\. Early in 1961 the
Federal Government drew the attention of the Bank to several projects for
which they were seeking external finance, among them the capital program
of the Nigerian Ports Authority\. In the course of 1961, the Bank sent
missions to Nigeria to study the economy and to appraise the Ports Authority's
capital program\. Negotiations for the proposed loan began in June 1962 and
have now been completed\.
- 2 -
PART II - DESCRIPTION OF THE LOAN
4\. BOR-ACfiER: The Nigerian Ports Authority
\.J\.aR-"TOR: The Federation of Nigeria
V,''CUNT: The equivalent in various currencies
of $13\.5 million
FURPOSE: To meet the foreign exchange cost of
an extension and improvements to the
Apapa wharves in the port of Lagos
AM4ORTIZATION: In 33 semi-annual installments beginning
February 1, 1967 and ending February 1, 1983\.
Each payment of interest and principal taken
together would be approximately equal\.
INTEREST RATE: To be determined at time of loan signing
COIThIITMENT CHARGE: 3/4 of 1%
PART III - LEGAL INSTRUMENTS AND AUTHORITY
5\. Attached are drafts of the following documents which will give
effect to the proposed loan:
(a) Loan Agreement between the Bank and Nigerian Ports Authority
(No\. 1)\.
(b) Guarantee Agreement between Federation of Nigeria and the
Bank (No\. 2)\.
6\. The Loan and Guarantee Agreements conform substantially to the
customary pattern\. The Loan Agreement provides, in addition to the usual
provisions, that the Borrower shall make arrangements satisfactory to the
Bank for the formulation and application of procedures to determine the
cost of performing its operations and services (Section 5\.o8)\. The Borrower
shall also give the Bank prior notice of any proposal to appoint a new
General Manager (Section 5\.09)\.
7\. Also attached is the Report of the Committee provided for in
Article III, Section 4 (iii) of the Articles of Agreement of the Bank (No\. 3)\.
PART IV - APPRAISAL OF THE LOAN
The Project
8\. A report on the project "Appraisal of Nigerian Ports Authority Apapa
Wharf Project - Nigeria" (TO 329-a), is attached (No\. 4)\.
9\. The project is for an extension and other improvements to the Apapa
wharves in the port of Lagos\. This is part of the Nigerian Ports Authority's
six-year development program, to which the Federal Government has given the
highest priority in the transport sector of the National Development Plan
1962-68\. Extension of the wharves at Apapa is urgently required to ease con-
gestion of the port\. The monthly average of days lost by ships awaiting berth-
ing space at Apapa has risen sharply from 22 in 1959/60 to 159 in 1961/62\.
In 1960/61 71% of all Nigeria's imports flowed through the port of Lagos,
Between 195h/55 and 1960/61 the number of ships berthed annually at Apapa
increased by 261% while berthing space at the quays increased by 100%\. It
is estimated by the Authority that between 1960/61 and 1966/67 the flow of
exports over the Apapa quays will rise by 44% and the flow of imports by 90%\.
10\. The project will provide four new berths, increasing the length of
the main quay wall at Apapa, now almost 4,900 feet, by 2,524 feet\. The pro-
ject includes also ancillary works and equipment, four transit sheds, two
warehouses, completion of two warehouses now under construction, a floating
crane and a fresh water delivery vessel\.
11\. Cost of the project is estimated to be ,6\.65 million ($18\.6 million
equivalent) of which ;]4L8 million ($13,5 million equivalent) is the estimated
foreign exchange cost\. The proposed loan would meet the foreign exchange
cost, and the Authority is expected to meet from its own resources not only
the rest of the cost of the project but also some 110\.6 million of the
b2le7 million representing the cost of other items in the six-year develop-
ment program\. In the Guarantee Agreement the Federation of Nigeria under-
takes to provide the Authority with funds, should this be necessary to
complete the project\.
The Borrower
12\. The Nigerian Ports Authority began operations on April 1, 1955\.
It is a public corporation responsible for operating the two main ports of
Nigeria, Lagos and Port Harcourt, for managing terminal waterways and for pro\.-
viding port services such as pilotage and navigational aids in all Nigerian
ports\. It is soundly organized, has competent management, and operates the
ports efficiently on a sound commercial basis\. The Board of the Authority
consists of (a) a Chairman, appointed by the Minister of Transport, (b) eleven
members appointed by the Minister to represent the Railway Corporation, the
- 4 -
Nigerian Produce Marketing Company, Regions and labor organizations, and
(c) six members elected by shipoiuners, importers and exporters\. The chief
executive is the General Manager, who is not a member of the Authority's
Board\.
13\. The Ports Act requires the Authority to meet all charges proper
to revenue, to cover debt amortization and to provide reserves\. Earnings
have been adequate, and the Authority expects to meet from its own resources
almost 50% of the estimated ;35 million cash requirements for capital
investment and debt service during the six years 1962-68\. Furthermore, it
has been agreed during the loan negotiations, that, with a view to main-
taining a sound financial structure for the Authority, the terms and condi-
tions of any borroiang which the Authority may undertake in order to finance
the other major port project which is presently under consideration (namely
the Bonny Bar dredging project) shall be mutually satisfactory to the
Authority and the Bank\.
PART V - THE NIGERIAN ECONOIY
14\. A report entitled "The Economy of Nigeria" (Sec M61-253) was
circulated to Executive Directors on November 14, 1961\.
15\. With an average per capita income estimated at $84 in 1960, most
of the people of Nigeria earn only a poor living from their economy\. Yet
there is a record of steady growth in recent years and good prospects for
further expansion\. Three-quarters of the people live from agriculture, and
agriculture produces some three-quarters of all exports\. Manufacturing out-
put in 1960, although still only 1-1/2% of gross domestic product, was five
times the 1950 value\. Petroleum exports began in 1958, reached an annual
rate of 2 million tons in 1961, and are increasing steadily\.
16\. A National Development Plan for 1962-68 has now been published
embracing the plans of the Federal Government and the Regional Governments
(Eastern, Northern and Western)\. The Plan aims at a well-balanced growth
throughout the economy, encourages private enterprise and contemplates
public investments of the order of L650 million, the major part in transport,
power, agriculture, industry and education\. It is hoped that about half of
this amount would be covered by foreign grants and loans,
17\. It is doubtful whether the rate of public investment assumed in
the Plan can be achieved, at least in the early years, since there is a
shortage of skilled personnel throughout the government services\. It is
also impossible to assess at this time the amount of foreign aid that may
in fact become available over the next six years, The U\.S\.A\. have already
promised $225 million (T80 million) over the five years 1962-67 and the U\.K\.
have allocated 15 million\.
18\. Nigeriats public external debt is low\. Annual service payments in
the next few years on the existing public external debt will represent 4 to
5% of 1960 exports\. The additional service payments resulting from the
proposed loan would be well within Nigeria's capacity and would still leave
an ample margin for additional borrowing over the next few years\.
PART VI - COiIPLIANCE WITH ARTICLES OF AGREMKNT
19\. I am satisfied that the proposed loan will comply with the Articles
of Agreement of the Bank,
PART VII - RECM-TMEODATIONS
20\. I recommend that the Bank at this time make a loan to the Nigerian
Ports Authority in an amount in various currencies equivalent to $13\.5 millicn,
for a term of 20 years including a grace period of 4 years, and on such other
terms as are specified in the attached draft Loan and Guarantee Agreements
and that the Executive Directors adopt a resolution to that effect in the
form attached (No\. 5)\.
Eugene R\. Black
Attachments (5)
November 19, 1962
Washington, D\. C\. | APPROVAL |
P174867 |  The World Bank
Horn of Africa - Ground Water for Resilience (P174867)
Project Information Document (PID)
Concept Stage | Date Prepared/Updated: 16-Apr-2021 | Report No: PIDC30538
Apr 11, 2021 Page 1 of 16
The World Bank
Horn of Africa - Ground Water for Resilience (P174867)
BASIC INFORMATION
A\. Basic Project Data OPS TABLE
Country Project ID Parent Project ID (if any) Project Name
Eastern Africa P174867 Horn of Africa - Ground
Water for Resilience
(P174867)
Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead)
AFRICA EAST Feb 04, 2022 Mar 28, 2022 Water
Financing Instrument Borrower(s) Implementing Agency
Investment Project Financing Somalia - Ministry of Somalia - Ministry of Energy
Finance,Ethiopia - Ministry and Water Resource
of Finance & Economic (MoEWR), Ethiopia - Ministry
Development,Djibouti - of Water Irrigation and
Ministry of Finance,Kenya - Energy, Djibouti - Ministry of
Ministry of Agriculture and Water,
Finance,Intergovernmental Kenya - The Ministry of
Authority on Water, Sanitation and
Development,Sudan - Irrigation (MWSI),
Ministry of Finance and Intergovernmental Authority
Economic Planning on Development (IGAD),
Sudan Ministry of Irrigation
and Water Resources
Proposed Development Objective(s)
To strengthen the resilience of targeted entities and selected communities to cope with and adapt to climate shocks
through an enhanced management and use of groundwater resources\.
PROJECT FINANCING DATA (US$, Millions)
SUMMARY-NewFin1
Total Project Cost 325\.00
Total Financing 325\.00
of which IBRD/IDA 325\.00
Financing Gap 0\.00
DETAILS -NewFinEnh1
Apr 11, 2021 Page 2 of 16
The World Bank
Horn of Africa - Ground Water for Resilience (P174867)
World Bank Group Financing
International Development Association (IDA) 325\.00
IDA Credit 320\.00
IDA Grant 5\.00
Environmental and Social Risk Classification Concept Review Decision
High Track I-The review did authorize the preparation to
continue
B\. Introduction and Context
Regional Context
1\. The Horn of Africa is a region characterised by a complex development context, with varying degrees of conflict
and vulnerability, and social, political, and economic variations between and within countries (Table 1)\. For the purpose
of this project, the Horn of Africa (HoA) includes Djibouti, Ethiopia, Kenya, Somalia and Eritrea (Annex 1, Map 1)\. High
poverty levels in the HoA are most prevalent in the northern parts of Kenya, Somalia and Eritrea (Annex 1, Map 2)\. A
large portion of households remain vulnerable to poverty, with consumption levels only marginally exceeding the poverty
line\. Some of the countries suffer from protracted conflict and political strife, forced displacement and the regionâs overall
vulnerability context is characterised by challenges of underdevelopment, resource scarcity, economic shocks, food
insecurity, and increasingly, climate change impacts\.1
Table 1\. HoA Socio-economic Indicators
Populat GDP GDP Poverty HDI* Primary Secondar Life
ion (current growt headcount (2019) School y School expectanc
growth US$) h ratio at (countryâs Enrolmen Enrolmen y at birth
Country (annual (billions (annu US$1\.90/ position out of t t (years)
%) ) al %) day 189 countries (% gross) (% gross)
(2011 PPP) and territories)
(% of
population)
Djibouti 1\.6 3\.01 8\.4 17\.0 0\.524 70\.3 51 67
(position 166)
Ethiopia 2\.6 84\.27 6\.8 32\.6 0\.485 101\.0 35 66
(position 173)
Kenya 2\.3 87\.78 6\.3 37\.1 0\.601 103\.2 \. 66
(position 143)
Somalia 2\.8 \. \. \. \. \. \. 57
1Osiam, S; Indasi, V; Zaroug, M; Endris, H; Gudoshava, M; Misiani, H; Nimusiima, A; Anyah, R; Otieno, G; Ogwana, B\. 2018\. Projected climate over
the Greater Horn of Africa under 1\.5C and 2C global warming\. Environmental Research Letters, Volume 13, Number 6\.
Apr 11, 2021 Page 3 of 16
The World Bank
Horn of Africa - Ground Water for Resilience (P174867)
Eritrea \. \. \. \.
0\.459 68\.4 48 66
(position 180)
Source: World Bank, World Development Indicators database, 2018\. https://data\.worldbank\.org/indicator\. 2
2\. The HoA is home to a rapidly growing population of over 190 million people, with a combined Gross Domestic
Product (GDP) estimated at US$170 billion\. Approximately 70% of the population live in rural areas and exhibit high
levels of poverty, ranging from 69\.4% in Somalia, to 22\.5% in Djibouti\. The regionâs population is also growing quickly and
is expected to reach 250 million by 2030\. Most of the population is poor and relies on rainfed agriculture for its livelihood,
with a climate characterized by short, irregular and unpredictable rainy seasons and recurrent droughts\. High rates of
youth unemployment increase young peopleâs susceptibility to illicit activities and high-risk behavior\.3
3\. The region is also characterized by high levels of fragility, conflict and violence (FCV)\. According to the World
Bank Group FY21 List of Fragile and Conflict-Affected Situations, Somalia is experiencing a high intensity conflict and
high institutional and social fragility; Eritrea is experiencing high institutional and social fragility, and Ethiopia, Kenya
and Djibouti are heavily affected by FCV-associated stresses\. The civil war in Yemen, the current situation in Ethiopiaâs
Tigray region, and the tensions between Kenya and Somalia around the Beled-Hawo area, add additional challenges to
the regionâs grow and development pathway\. Transboundary spillover effects from regional conflicts can trigger an
increase in forced displacement\. The Horn is home to a large number of forcibly displaced people\. In 2020, the
Population of Concern to the United Nations High Commissioner for Refugees (UNHCR) in these five countries reached
7,025,025, a figure that includes refugees, asylum-seekers, returnees, internally displaced persons (IDPs) and stateless
persons\.4 Considering the FCV-water nexus is key to ensuring peace-building potential of water investments\.5 Ethiopia,
Kenya and Eritrea are home to various Sub-Saharan African Historically Underserved Traditional-Local Communities
(SSAHUTLC)\.
4\. The borderlands of the HoA have long been synonymous with marginalization, entrenched poverty, weak
state presence, conflict and violence, forced displacement and environmental degradation\.6 Vulnerability in the
borderlands has been exacerbated by significant climate change risks, including erratic and decreasing rainfall that have
contributed to food insecurity and increased tensions over scarce natural resources\. Home to large pastoral and semi
pastoral communities with a growing young population,7 the regionâs borderlands are located either on top or near
major groundwater aquifers, some of which are transboundary (Annex 1, Map 3)\. Communal conflicts such as farmer-
pastoralists or refugees-host communities disputes, are more likely to occur in areas where access to water is challenging
and where groundwater governance is weak\. Enhancing access to groundwater sources can contribute to addressing
drivers of fragility in the region, including water-related communal disputes\.8 Social inclusion in groundwater use and
2 The HDI is a summary measure for assessing long-term progress in three basic dimensions of human development: a long and healthy life, access
to knowledge and a decent standard of living\. Source: UNDP Human Development Reports, 2020\. http://hdr\.undp\.org/en/countries
3 Vemuru, V\., Sthephens, M\., Sarkar, A\., Roberts, A\., Baare, A\. (2020), From Isolation to Integration: The Borderlands of the Horn of Africa , World
Bank, Washington D\.C\. 2020\.
4 UNHCR, 2020\. Global Trends â Forced Displacement in 2019\. Geneva: UNHCR\.
5 Sadoff, C\., Borgomeo, E\., and de Waal, D\. 2017\. Turbulent Waters: Pursuing Water Security in Fragile Contexts\. Washington, DC, World Bank\.
6 Ibid,
7
In Kenya, over 60% of the population is under the age of 25 and in Somalia an estimated 70% is under the age of 30\. Source: Vemuru, V\.,
Sthephens, M\., Sarkar, A\., Roberts, A\., Baare, A\. (2020), From Isolation to Integration: The Borderlands of the Horn of Africa , World Bank,
Washington D\.C\. 2020\.
8 Ibid\.
Apr 11, 2021 Page 4 of 16
The World Bank
Horn of Africa - Ground Water for Resilience (P174867)
management also remains a challenge\. Women in rural areas are often the main fetchers of water to the households
and walk long distances to boreholes experiencing multiple security and protection risks, including gender-based
violence (GBV)\. Womenâs participation in the formal decision-making spaces that govern groundwater remains
secondary\. Within this context, strengthening groundwater management and use can benefit local livelihoods and
regional security, reducing fragility and fostering cross-border economic connectivity\. National and regional action on
groundwater management and use can foster sustainable, win-win solutions for both sides of the border\. SSAHUTLC are
among the most vulnerable groups in this subregion\.
5\. The HoA is characterized by high climate variability, and it will suffer significant impacts as a result of climate
change\. A significant part of the region is composed of arid and semi-arid lands (ASALs), where approximately 30% of
the total population is found\. The region has been affected by longer dry periods since the second half of the 20th
century, experiencing several episodes of catastrophic and intense drought\. Average temperatures in the region will rise
by up to 1\.5°C in the next 20 years, and up to 4\.3°C by the year 2080\.9 Changes in both rainfall and temperature are likely
to have significant effects on the water cycle and on water resources, on drought frequency and intensity, as well as on
erratic floods and untimely precipitation patterns\. Increasing inter-annual variation in the length of the rainy season is
affecting the groundwater recharge, exacerbating the vulnerability of ASALs\. Groundwater is often the main source of
water in these areas,10 having the greatest potential to improve water security and to enable a range of socio-economic
benefits (e\.g\., strengthened livelihoods, health)\. Climate shocks are key sources of vulnerability\. Somalia, which
experienced 32 disasters between 1934 and 2000, and 17 disasters between 2000 and 2017 â the equivalent to one
disaster per year\. Nearly 300,000 people died during the drought/famine of 1992, and 20% of the population was
displaced\.11 In 2011, the East Africa drought killed more than 250,000 people, displaced almost one million people, and
devastated the agriculture and livestock sectors\. Drought struck Somalia again in 2016/17, causing losses in crop
production, livestock and livestock-related products, estimated at USD 1\.7 billion\.12 More recently, a succession of
drought and flood events stemmed from a strong El Niño and the Indian Ocean Dipole, producing extraordinary rainfall
on the Arabian Peninsula and in East Africa\.
6\. There is increasing political momentum in the HoA for strengthening resilience to climate change, among other
shocks and stressors\. While there is no standard definition of the term âresilienceâ, for the purposes of this Program it
refers to the capacity of people, assets or institutions to absorb, adapt and potentially transform in the face of the
impacts of (short term) shocks and (long term) stressors\.13 The Covid-19 pandemic has further accentuated the
importance of resilience building\. The pandemic is likely to have a substantial negative effect on household income,
possibly undermining the regionâs welfare gains of the past decade\. The ongoing economic crisis is projected to have a
significant impact on reversing the gains in poverty reduction which have been achieved â with Sub-Saharan Africa (SSA)
likely to see up to 40 million people being pushed into extreme poverty,14 as per estimates taking the pandemic into
account\. Impacts are particularly devastating in the Horn, with the pandemic contributing to worsen the already
precarious living conditions of vulnerable households through job loss, price shocks, weakening human capital and other
9 IPCC (2015) Climate Change 2014: Impacts, Adaptation and Vulnerability, Global Water Partnership Eastern Africa and the IPCC, 2015
10
Stefan D¨oring (2020)\. Come rain or come wells: How access to groundwater affects communal violence\. Political Geography, Volume 76, 102073\.
ISSN 0962-6298\. DOI 10\.1016/j\.polgeo\.2019\.102073
11 World Bank Group, 2019
12 WB, 2018\. Somalia Drought Impact and Needs Assessment, Volume I, Synthesis Report\. The World Bank, the United Nations and the European
Union\.
13
WB (2017) âOperational Guidance for Monitoring and Evaluation (M&E) in Climate and Disaster Resilience-Building Operationsâ?, Resilience M&E
(ReM&E) initiative\.
14 https://www\.worldbank\.org/en/region/afr/overview
Apr 11, 2021 Page 5 of 16
The World Bank
Horn of Africa - Ground Water for Resilience (P174867)
adverse factors\. The overall water demand for WASH-related purposes has increased in the subregion, adding pressure
on scarce resources and capacity\.15 The pandemic has disproportionately affected the forcibly displaced, limiting the
mobility of persons and goods through the regionâs borders, and increasing water demand in refugee camps -most of
which are located in ASAL across border areas- and in refugee and IDPs-hosting locations in urban and rural centers\.16
Compounding the effects of Covid-19, countries in the region have been hit by a confluence of negative factors including
desert locust, political disruption, communal tensions, internal displacement and, more recently, armed conflict in
Ethiopiaâs Tigray region,17 heightening the urgency of enhancing resilience and supporting national strategies for
âbuilding back betterâ\.
7\. Investments in groundwater can play a key role in strengthening resilience to climate and FCV shocks affecting
the HoA region\. Groundwater plays a crucial role in the economy of the HoA, and constitutes one of the main sources
of drinking water during times of drought\.18 It is estimated that at least 400 million people in Sub-Saharan Africa (about
36% of the total population of Africa) source their domestic water supply from groundwater\. This figure can go much
higher in the HoA, where rainfall variability is high\.19 Groundwater offers natural storage of a different magnitude than
annual rainfall or river flow, is less impacted by evaporation losses, and has longer detention time than surface water\.
As a consequence, groundwater is better buffered compared to surface water, and therefore is more resilient to
droughts over multiple years\. While no significant long-term regional decline in groundwater storage has been observed
in the past 20 years despite shorter term variability and longer-term decline (>1000 years) associated with increasing
aridity, the increasing use of groundwater for irrigation and the fast-expanding urban population in the region is raising
the demand for the resource\. At the same time, while fragility levels vary across geographic subregions, water resource
scarcity and lack of natural resource sharing agreements between states (e\.g\., on transboundary rivers and aquifers)
constitute drivers of fragility\. Tensions related to water resources and water security can affect or exacerbate protracted
and non-international armed conflicts, tensions between national and sub-national government entities, uneven
territorial development and geopolitical interests, among others\. Strengthening national and regional capacities for
collaborative management of TBA is key to address drivers of conflict and fragility\.
8\. Five countries (Djibouti, Eritrea, Ethiopia, Kenya and Somalia) launched the Horn of Africa Initiative (HoAI) to
forge closer economic ties in the sub-region, highlighting the importance of regional cooperation to build resilience\.
The initiative was formalized on October 18, 2019 on the sidelines of the World Bank Group/IMF Annual Meetings\. The
countries agreed on priority projects and programs that will constitute the initiative (requiring financing of up to $15
billion), which is being developed by the countries with support from the African Development Bank (AfDB), the
European Union (EU) and the World Bank (WB)\. During a Ministerial Roundtable held in October 2020, the HoA Finance
Ministers reiterated the initiativeâs critical role in helping the region overcome the âtriple crisisâ of Covid-19, desert locust,
and climate shocks\. The Ministers requested to further strengthen the resilience and human capital pillars of the HoAI
to help deal with the ongoing crisis and identified groundwater among the priority areas of action to strengthen the
regionâs resilience\. This project is being supported under the Resilience Pillar of the HoAI\.
15 IOM, 2021: East and Horn Covid 19 Response\. Situation Report 41\. 27 January 2021\. IOM\.
16 UNHCR, 2020\. East and Horn of Africa, and the Great Lakes Region\. COVID-19 External Update #24\. UNHCR\.
17 International Crisis Group, 2020\. Steering Ethiopiaâs Tigray Crisis Away from Conflict\. Briefing 162 â Africa\. 30 October 2020\. ICG\.
18 IWRA, 2018\. Policy Brief, International Water Resources Association (IWRA), Number 9, May 2018\.
19 Environmental Research Letters, Volume 14, Number 9\.
Apr 11, 2021 Page 6 of 16
The World Bank
Horn of Africa - Ground Water for Resilience (P174867)
Sectoral and Institutional Context
9\. Groundwater is a largely decentralized resource that is widely available in the HoA region, both within national
borders and across transboundary areas\. Often available at less than 100 m depth, it constitutes an important source
for rural and small town (piped) water supply and is the largest freshwater reservoir which is annually recharged and not
affected by evaporation\. Aquifers provides a medium to store water, which can be used to prepare for and respond to
the impacts of drought, among other shocks, as well as to adapt to climate change impacts (e\.g\., diversify livelihoods,
reduce the dependance on erratic rainfall)\. Groundwater is often of good quality and protected against man-made
pollution\. Due to limited quantitative information on groundwater resources, groundwater storage is commonly omitted
from assessments of freshwater availability\. The HoA has a groundwater storage area of 34,344 km 3 (Djibouti 171 km3,
Eritrea 333 km3, Ethiopia 12,700 km3, Kenya 8,840 km3 and Somalia 12,300 km3)\.20 This area includes both shared/TBAs
and country-bound aquifers\. However, for most sub-Saharan Africa countries including in the Horn, groundwater use
remains low\.21 On average, 1\.5% of the cultivated land in the HoA is equipped for irrigated agriculture, and out of this,
only 3\.4% is equipped for irrigation using groundwater\.22 Deeper aquifers are within reach but remain either untapped
or inadequately studied, despite their potential for the regionâs resilience\.23 Most of the region has moderate
groundwater availability (with aquifer productivity of 1-5 liter/second) and some pocket areas with high productivity (5-
20 liter/second) (Annex 1, Map 4)\. Groundwater use for irrigation holds potential for increased soil carbon or avoided
degradation/erosion, thus contributing to strengthen the regionâs response to climate change related challenges\. The
region is known to have 11 transboundary aquifers (TBA)\. The high yielding productive aquifers are located along cross-
country border areas, including the area between Uganda and Kenya, Somalia and Kenya, Eritrea and Ethiopia, and
Djibouti and Ethiopia\.24 Transboundary aquifers (TBAs) in the HoA are estimated to cover more than 187,000 km2 in
area, and vary in size from 10,000 to 50,000 km2\. Most TBAs are located in sparsely populated dry lands of the HoA, with
a population density of less than 20 people/km2 and annual rainfall below 700 mm/year\. In these areas, groundwater
constitutes the main drinking water source, are key for rural livelihoods and livestock rearing, and are also used for urban
water supply\.25 Groundwater is also one of the main sources of water for the estimated 4 million of refugees and 9
million and internally displaced persons (IDPs) in the Horn\. An important number of refugee camps and informal
settlements are located in borderland areas that coincide with transboundary aquifers\.
10\. The Intergovernmental Authority for Development (IGAD) is leading the coordination of the regionâs response
to key challenges, including through IGADâs Drought Disaster Resilience and Sustainability Initiative (IDDRSI), the IGAD
Support Platform for refugees 26, IGADâS Livestock Policy Initiative, increased regional collaboration in response to the
desert locust crisis, and IGADâs multi-country projects directed resilience-building among pastoral and agro-pastoral
communities in cross-border areas\. Due to their transboundary nature, the location of key regional aquifers largely
coincides with areas of fragility and displacement, and with key livestock corridors along the regionâs borderlands\. They
20 A M MacDonald et al 2012 Environ\. Res\. Lett\. 7 024009
21 Cobbing, Jude & Hiller, Bradley, 2019\. "Waking a sleeping giant: Realizing the potential of groundwater in Sub-Saharan Africa," World
Development, Elsevier, vol\. 122(C), pages 597-613\.
22 Siebert et al\., 2010\.
23 Tuinhof, A\. et\.al\. 2020\. Groundwater Management presentation â WBG and CIWA\.
24 A\. M\. MacDonald et al\., 2012 Quantitative maps of groundwater resources in Africa, Environ\. Res\. Lett\. 7 024009\.
25 NIJSTEN, G\.-J\., Journal of Hydrology: Regional Studies (2018), https://doi\.org/10\.1016/j\.ejrh\.2018\.03\.004
26 A regional effort under the Global Compact on Refugees (GCR)- aimed at providing support to solving complex or protracted refugee situations in
the HOA\. The World Bank, EU, Germany, UNHCR and the UNDP are members of the Platformâs Core Group\.
Apr 11, 2021 Page 7 of 16
The World Bank
Horn of Africa - Ground Water for Resilience (P174867)
also coincide with the âclustersâ of focus of IGAD, as show in Figure 1, demonstrating the close linkages that exist between
water resources, forced displacement, fragility, livelihoods and resilience building in the region\.
Figure 1\. Overlap between (a) the location of trans-boundary aquifers (TBA) in the HoA, (b) location of
refugee camps and IDP Centers, (c) livestock trading routes and (d) IGAD Clusters\. Sources: IGRAC/TWAP
2015, IGRAC/TWAP 2015; UNHCR, 2021; Chatham House 2010; IGAD, 2020\.
11\. Whilst groundwater plays a crucial role supporting social and economic development, the resource is far from
being adequately understood and utilized\. Groundwaterâs potential is constrained by challenges related to institutions,
information, infrastructure and inclusion (the âFour Iâs) (Annex 1, Figure 5), as highlighted below:
- Challenges related to institutions include limited capacity of water authorities, lack of enforcement of planning
and regulations, and lack of coordinated, cross-scale (i\.e\., regional, national, local) monitoring systems\. The
groundwater policy environment in the Horn remains weak, as national water policies tend to have a heavy surface
water bias\. Groundwater quality is impacted by multiple water using sectors â domestic wastewater, industrial
wastewater, mining waste, and naturally occurring contaminants\. Activities outside the water sector, including
land use, urbanization, and agriculture on groundwater recharge areas impact the resourceâs recharge rate,
quantity and quality\. Robust groundwater management requires protecting recharge areas, protecting water
quality, and using storage deliberately, among others\.
- In terms of groundwater information, the sub-sectorâs potential, level of current use, distribution and quality
are largely unknown\. There is a lack of systematic data and information on the resource, and the systems for
Apr 11, 2021 Page 8 of 16
The World Bank
Horn of Africa - Ground Water for Resilience (P174867)
gathering, collating and analyzing information are inadequate\. The region also lacks targeted groundwater
monitoring to support the management and regulation of water allocation and use\. Reasons include the lack of
clear institutional arrangements and responsibilities, insufficient resourcing, lack of technical expertise, and a
disconnect between database management and retrieval systems\.
- The infrastructure investments needed to extract groundwater, as well as for storage and distribution systems,
among others, remain low, contributing to the under-utilization of the resource\. Challenges include limited
access to the resource (e\.g\., boreholes, access roads), steep technical requirements to identify and exploit the
resource due to deep aquifers, as well as insufficient infrastructure to respond to the increasing needs of rural and
urban stakeholdersâ for domestic and industrial water supply and sanitation, livestock keeping and agriculture\.
Developing water infrastructure and investing in water retention and irrigation infrastructure can play a key role
in the regionâs poverty reduction and food security, which are crucial to enhance climate resilience (e\.g\., water
retention and irrigation contribute to the ability of communities to absorb the impacts of drought, to bridge dry
periods, and to adapt through livelihoods diversification)\.
- Local readiness and community inclusion are key to ensure that vulnerable communities are effectively engaged
and prepared to play an active role in the management and use of local groundwater resources\. This involves
the sustainable use of the resource as drinking water or for irrigation, its use as part of local livelihoods, as well as
the involvement of women and other vulnerable groups in local planning and monitoring\. Innovative, cost-
effective and inclusive solutions needed to address inefficient water use, increased salinization, and water logging,
and help to improve irrigation, among other income-generation opportunities that support preparedness and
adaptation to climate shocks and other stressors\. Women and girls in rural areas play a leading role in providing
water for the household and spend a disproportionate amount of time fetching water from public surface and
groundwater sources\.27 Securing communitiesâ active participation in the different phases of the project cycle
contributes to the sustainability of the investments, promotes social inclusion, and reinforces community-level
resilience\.28 The community driven development approach is notably pertinent to contexts affected by FCV, and
to work with traditionally marginalized groups\.
12\. While these challenges are even more evident and acute at the level of transboundary aquifers, regional
groundwater collaboration is still at its nascency\. Except for the Ethiopia-Djibouti water project (2015),29 a US$329
million initiative funded by the Exim Bank of China, the region lacks a solid foundation in joint groundwater monitoring,
governance and development of the shared resources\. In addition to limited capacity and information, the lack of trust
between the countries, the lack of a strong convening forum, and the broader political economy of the region have
contributed to the underutilization of transboundary groundwater sources\. Efforts conducted by regional stakeholders
such as IGAD (e\.g\., under the CIWA funded HoA Groundwater Initiative, P169078) are not bearing the required traction,
mainly due to limited institutional capacity and experience, and constraints to becoming a strong convening center\.
27 Nigussie, L\.; Barron, J\.; Haile, A\. T\.; Lefore, N\.; Gowing, J\. 2018\. Gender dimensions of community-based groundwater governance in Ethiopia:
using citizen science as an entry point\. Colombo, Sri Lanka: International Water Management Institute (IWMI)\.
28
Maheshwari, B\. (et al), 2014\. The role of transdisciplinary approach and community participation in village scale groundwater management:
insights from Gujarat and Rajasthan, India\. Water 6(11): 3386-3408\.
29 This a bilateral arrangement whereby Ethiopia agrees to provide water free of charge for Djibouti for the 30 years\. The project includes
construction of water wells, reservoirs and 102km water distribution pipeline to supply groundwater from Ethiopia's Hadagalla town to Djibouti's
key towns of Ali-Sabieh, Dikhil, Arta and the capital\. The project is completed and functional providing water for more than 700,000 residents in
Djibouti\.
Apr 11, 2021 Page 9 of 16
The World Bank
Horn of Africa - Ground Water for Resilience (P174867)
Apart from this experience, there are no known ongoing efforts for information sharing and monitoring, joint governance
and development of shared aquifers in the sub region\. Remaining challenges include the harmonization of systems,
methods and data formats for effective information sharing across aquifer boundaries\.
13\. The current status of groundwater institutions, information, infrastructure and inclusion differs among
countries, evidencing the importance of context-appropriate solutions that, over time, could be aligned and
complement each other to maximize transboundary benefits\. Different approaches in addressing issues related to
national and transboundary aquifers are needed in order to take into account the specific country context and the
political economy of the borderlands\. In Kenya and Ethiopia these aspects are reasonably well developed, but they need
to be further strengthened in order to address an increasing water demand and to improve drought resilience\. In the
case of Somalia and Djibouti, the groundwater situation is weakened by higher aridity, while Somalia faces challenges
related to lower and more sparse population density and insecurity\.
14\. Despite these disparities, the potential for regional collaboration around groundwater is huge\. Building and
consolidating such collaboration will require a gradual, long-term process addressing the following aspects:
a) While most of the large groundwater aquifers are transboundary, the region lacks functioning platforms (e\.g\., in
the form of transboundary commissions, basin authorities or others) to facilitate dialogue, information exchange,
joint governance and monitoring\. Despite ongoing efforts by IGAD, and the countriesâ good will to advance
regional dialogue on shared transboundary aquifers, there is limited country capacity and low regional
cooperation towards the achievement of common goals in this area\.
b) While countries are endowed with huge potential aquifers confined within national boundaries, groundwater
data, information, and knowledge sharing mechanisms remain weak\. Slow progress on establishing a groundwater
knowledge base and adequate infrastructure, building institutional capacity and operationalizing information
exchange mechanisms continue to hamper progress in this front\. The limited knowledge base on groundwater
constrains planning and informed decision making, as well as the lack of effective mechanisms for information
sharing within and between countries\.
c) The uneven capacity among countries in the region requires both tailored and coordinated solutions\. The sub-
region comprises two set of countries: Somalia (high-intensity conflict)30, and Djibouti, Ethiopia and Kenya, with
more robust institutions and higher capacity\. These asymmetries need to be addressed as part of groundwater
strategies, while seeking to strengthen synergies and build trust towards future regional cooperation\.
d) The skills and the knowledge needed to explore and understand groundwater resources, as well as the technology
to exploit it and ensure its rational use, are expanding globally\. However, the HoA region is not benefiting from that
progress\. Advancements in hydro geophysics, in smarter, cost-effective sensors for continuous monitoring and real-
time application, and in solar pumps, among others, are not penetrating the sub-region to the desired level\.
Groundwater mapping using high resolution satellite data and remote sensing/GIS analysis provide a quick and solid
basis for boreholes located in shallow and deep aquifers, and for the selection and design of appropriate Managed
30
As per the WBG FY21 List of Fragile and Conflict-affected Situations
Apr 11, 2021 Page 10 of 16
The World Bank
Horn of Africa - Ground Water for Resilience (P174867)
Aquifer Recharge (MAR) structures\. However, follow up and implementation are often delayed due to the lack of
capacity by responsible entities\.
Relationship to CPF
15\. The project is aligned with the WBGâs Africa Regional Integration and Cooperation Strategy Update (FY21-
FY23)31, with the 2020-2025 WBG Strategy for FCV, the 2016-23 WBG Gender Strategy, and the WBG Action Plan on
Adaptation and Resilience\. Mainstreaming climate change and addressing climate resilience constitute key priorities in
the World Bankâs 2025 climate change targets\. The 2025 Action Plan outlines a strong commitment to improve the
planning and implementation of interventions to address more robustly and systematically climate-related risk\. Under
its âreinforcing resilienceâ thematic pillar, the WBâs Africa Regional Integration strategy seeks to enhance resilience to
shocks and promote effective management of challenges that cut across boundaries\. The pillar focuses on agro-
pastoralism; food security and climate change; conflict and forced displacement; and transboundary waters and natural
resource management\. The HoA is among the strategyâs priority FCV regions\.
16\. The project is also aligned with the WBâs Country Partnership Strategies of participating countries\. The
country partnership strategies and engagement frameworks of Djibouti, Ethiopia, Kenya, Somalia32, include a strong
focus on water, and recognize the role of water access, sustainable management and improved governance in
achieving the goals of economic cooperation, as outlined below:
a) Djibouti Country Partnership Strategy (CPS) Program\. Until FY17, Djiboutiâs CPS included reducing
vulnerability in the country as the first pillar, being water mobilization one of the key lending elements\. As
mentioned in the Program, âthe CPS program will aim to address the following challenges: the lack of access to
basic infrastructure, including water and agro-pastoral resources in rural communities and water in poor urban
areas of Djibouti-Ville; and the countryâs poor resilience to climate change and natural disastersâ? (CPS FY14-17,
signed March 13, 2014, Report No\. 83874- DJ)\.
b) Water is also one of the main areas of focus of Ethiopiaâs Country Partnership Framework (CPF) FY18- 22\.
Water is addressed in one of the main CPF targets, as follows: âthe number of people with access to improved
water sources will increase by one fifthâ?\. In particular, the CPF Focus Area 2- Building Resilience and
Inclusiveness- includes increased access to safe water as one of the main objectives (CPF FY18-22, signed May
22, 2017, Report No\. 115135-ET)\.
c) The Kenyaâs CPS addresses water security as a main topic under Domain 1 : âCompetitiveness and
Sustainability -- Growth to Eradicate Povertyâ?\. At the same time, improved water sources development is a key
outcome of Domain 2: âProtection and potentialâ?\. Clean water delivery is considered essential for human
development in Kenya\. Special emphasis is made on improving access to water services in urban areas, as
engines of growth (CPS FY14-20, signed June 2014, Report No\. 88940v2)\.
d) The Somalia Country Partnership Framework includes selected activities based on the three filters: (a) building
on the World Bank Group comparative advantage in Somalia; (b) addressing conflict drivers; and (c) managing
access and security\. Investing in water infrastructure, environmental management, and agricultural innovation
to diversify and strengthen resilience of dry-land rural communities were specifically integrated into the CPF
31 WBG (2020) âSupporting Africaâs Recovery and Transformation: Regional Integration and Cooperation Assistance Strategy Update, FY21-FY23\.
32 At the time of this projectâs preparation, there is no CPS available for Eritrea\.
Apr 11, 2021 Page 11 of 16
The World Bank
Horn of Africa - Ground Water for Resilience (P174867)
(Objective 2\.4) under its second area of focus, which aims at restoring economic resilience and opportunities
(CPF2019â2022, Signed September 2018, Report No\. 124734-SO)\.
17\. The projectâs objectives and approach are also aligned with IGADâs Drought Disaster Resilience and
Sustainability Initiative (IDDRSI)\. Cross-border cooperation is a key feature of IDDRSI\. This initiative promotes cross-
border cooperation and articulated solutions, including ecosystem-based management in cross-border ecological zones,
capacity building, community cooperation and harmonized policies and procedures, while also recognizing that
individual IGAD member states may have their own specificities and areas of emphasis\.33 The project will also integrate
activities in selected transboundary areas that coincide with IGADâs geographical âClustersâ (identified based on their
demonstrated importance in terms of human and animal cross-border movement, and the need for regional
cooperation)\. This will allow to reinforce ongoing resilience building efforts in borderlands, as well as to strengthen
IGADâs capacity to foster cross-country collaboration\.
18\. The project has strong linkages and alignment with other HoA projects, including those supported under the
HoAI\. The project will build on their experience and results of similar regional initiatives, to the extent possible\. These
include the Development Response to Displacement Impacts Project in the HOA (DRDIP) (P161067) (Kenya and IGAD)
and P152822 (Djibouti, Ethiopia, Uganda and IGAD); the Pastoralism and Stability in the Sahel and Horn of Africa Project
(P153713); the Regional Pastoral Livelihoods Resilience Project (P129408); the North and North Eastern Development
Initiative (NEDI) in Kenya, and the Nile Cooperation for Results Project (P130694)\. The project will maintain a close
coordination with the proposed HoA Borderlands project, which was also identified as a priority for action under the
HoAI\. Additionally, the project is in line with the African Groundwater Strategy Note Assessment of Groundwater
Challenges & Opportunities in Support of Sustainable development in Sub-Saharan Africa34, aimed at supporting
groundwater development and management of investments in the region\.
C\. Proposed Development Objective(s)
19\. To strengthen the resilience of targeted entities and selected communities to cope with and adapt to climate
shocks through an enhanced management and use of groundwater resources\.
Key Results (From PCN)
20\. Achievement of the proposed PDO will be measured mainly using the following outcome indicators: (i) number of
beneficiaries with improved groundwater access for consumption, including women; and (ii) number of beneficiaries
with improved groundwater access for production, including women; (iii) number of national and regional groundwater
information systems providing validated data and analyses to decision makers\.
D\. Concept Description
21\. This project corresponds to âPhase 1â of the Program\. Withing the context of the broader Program, the project will
contribute to build trust and relationships, and to diffuse tension among HoA countries by supporting selected cross-
33 IDDRSIâs cross-border cooperation is structured around a cluster approach through multi-sectoral interventions guided by the priority
intervention areas (PIAs) of the IDDRSI Strategy\. https://resilience\.igad\.int/
34 Wijnen,M\. Marinus P; Barghouti,S\.; Cobbing,J\.; Hiller,Bradley T\.; Torquebiau,R\.(2018) Assessment of groundwater challenges & opportunities in
support of sustainable development in Sub-Saharan Africa (English)\. Washington, D\.C\. : World Bank Group\.
Apr 11, 2021 Page 12 of 16
The World Bank
Horn of Africa - Ground Water for Resilience (P174867)
border projects (i\.e\., IGAD clusters) through small-scale sub-projects to address the water deficit and reduce conflict
potential\.
22\. The Projectâs PDO is to increase the capacity of targeted HoA national and regional entities and communities to
manage and use groundwater sustainably\. Key terminology is defined in Annex 4\. The core âresilience questionsâ that
inform the projectâs design from a resilience perspective (i\.e\., resilience of whom, to what, why, where and how) are
detailed in Annex 5\. The projectâs structure (components 1-3) is strongly rooted in the need for cross-scale solutions to
build resilience to climate shocks across levels (local, sub-national, national and regional levels) (Figure 4)\.35 The bank
has appraised the countriesâ visions on regional and national priorities for groundwater, and each country has prepared
a proposal that articulates their contribution to furthering groundwater management in the region\. A summary overview
of the projectâs approach in each country is provided in Annex 6, and the proposals will be detailed in the forthcoming
PAD\. The implementation arrangements of the project components are country specific\. These arrangements will be
further detailed in the forthcoming PAD, considering the range of capacities required to achieve the PDO (e\.g\., capacity
to explore groundwater potential, capacity to implement decentralized CDD programs), as well as plans to adapt to the
different structures of government and service delivery across the HoA\. In order to address the challenges related to the
âFour Iâsâ described above, the project is structured around two main components, described below\.
The Phase I of the Program includes the following components:
Component one (IDA US$ 51\.5m, CIWA US$ 3\.5m): Strengthen groundwater institutions and information\. This component
is focused on activities aimed at strengthening key regional and national entities that play a role in the regionâs
groundwater management and use, as well as on the information needed to support it\. The focus on groundwater
information and expertise under this component includes novel mechanisms for knowledge sharing on groundwater
among countries of the region and across levels, including exchange visits of country experts, collaborative programs with
local universities including exploration campaigns and youth training/internships programs, and documentation and
dissemination of newly acquired knowledge\. It also includes the use of innovative approaches and new technologies to
enhance information sharing, data collection and analysis\.
Component two (IDA US$ 199m, CIWA US$ 1m): Support infrastructure development and community-level use of
groundwater\. It will support infrastructure and implementation through groundwater development investment
operations such as small-scale irrigation investments, peri-urban solar pumped groundwater supply schemes, sand dam
pilots for community gardens, nature-based solutions for enhanced groundwater recharge, ecosystem-based approaches,
among others\. The component will support climate-informed feasibility studies and infrastructure development,
community engagement activities promoting the efficient use of groundwater resources, sustainable water management
practices, etc\.
Component three (IDA US$ 44\.5m, CIWA US$ 0\.5m): Support for project management, knowledge and operations\. This
component will finance the operational costs of the Project Management Units (PMUs) in participating countries, as well
as provide project coordination and fiduciary support\. It also covers a Contingent Emergency Response (CERC)
subcomponent that will support immediate and rapid response emergency needs\.
35
While the projectâs working definition of resilience includes transformative capacity, the project scope is focused on streng thening
absorptive/coping capacity (preparedness and response to short term climate impacts), and on adaptive capacity (adjustment to change in the
medium term), recognizing that transformation takes place in the long-term / beyond the timeframe of the project\.
Apr 11, 2021 Page 13 of 16
The World Bank
Horn of Africa - Ground Water for Resilience (P174867)
Legal Operational Policies Triggered?
Projects on International Waterways OP 7\.50 Yes
Projects in Disputed Areas OP 7\.60 TBD
Summary of Screening of Environmental and Social Risks and Impacts
\.
\.
CONTACT POINT
World Bank
Erwin De Nys, Victor Vazquez Alvarez
Lead Water Resources Management Specialist
Borrower/Client/Recipient
Somalia - Ministry of Finance
Ethiopia - Ministry of Finance & Economic Development
Djibouti - Ministry of Finance
Kenya - Ministry of Finance
Intergovernmental Authority on Development
Apr 11, 2021 Page 14 of 16
The World Bank
Horn of Africa - Ground Water for Resilience (P174867)
Sudan - Ministry of Finance and Economic Planning
Gibril Ibrahim
Mr\.
info@mof\.gov\.sd
Implementing Agencies
Somalia - Ministry of Energy and Water Resource (MoEWR)
Abdirizak Mohamed
Mr\.
abdirizakmm4@gmail\.com
Ethiopia - Ministry of Water Irrigation and Energy
Lakew Zebene
Dr\.
abrhaadu@gmail\.com
Djibouti - Ministry of Agriculture and Water
Kaireh Said
Mr
sakayou@yahoo\.fr
Kenya - The Ministry of Water, Sanitation and Irrigation (MWSI)
Juma Chrispine Omondi
Mr
cojuma2004@yahoo\.com
Intergovernmental Authority on Development (IGAD)
Fred Mwango
Mr\.
Fred\.Mwango@igad\.int
Sudan Ministry of Irrigation and Water Resources
Yasir Mohamed
Dr\.
info@wre\.gov\.sd
Apr 11, 2021 Page 15 of 16
The World Bank
Horn of Africa - Ground Water for Resilience (P174867)
FOR MORE INFORMATION CONTACT
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 473-1000
Web: http://www\.worldbank\.org/projects
APPROVAL
Task Team Leader(s): Erwin De Nys, Victor Vazquez Alvarez
Approved By
APPROVALTBL
Country Director: Claire Kfouri 29-Jun-2021
Apr 11, 2021 Page 16 of 16 | APPROVAL |
P003218 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No\. 24444
IMPLEMENTATION COMPLETION REPORT
(IDA -26980)
ONA
CREDIT
IN THE AMOUNT OF SDR 41\.2 (US$60\.0 MILLION EQUIVALENT)
TO THE
REPUBLIC OF ZAMBIA
FOR AN
AGRICULTURAL SECTOR INVESTMENT PROGRAM
6/30/2002
Rural Development Operations
Eastern and Southern Africa
Africa Region
This document has a restricted distribution and may be used by recipients only in the performance
of their official duties\. Its contents may not otherwise be disclosed without World Bank
authorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective 06/21/2002)
Currency Unit = Zambia kwacha
At appraisal 700 kwacha = US$ I
US$ I = 4,500 kwacha at completion
FISCAL YEAR
January I December 31
ABBREVIATIONS AND ACRONYMS
ACF ASIP Consultative Forum
ACP Agricultural Conmmercialization Program
ADSP Agricultural Development Support Program
ASIP Agricultural Sector Investment Program
CDT Cotton Development Trust
DACO District Agricultural Coordination Office (Officer)
DCA Development Credit Agreement
FMU Financial Management Unit
GART Golden Valley Agricultural Research Branch
HIPC Highly Indebted Poor Country's Initiative
IFAD International Fund for Agricultural Development
LASDP Letter of Agriculture Sector Development Policy
MAC Ministry of Agriculture and Cooperatives
MAFF Ministry of Agriculture, Food, and Fisheries
NORAD Norwegian Agency for Development Cooperation
SAR Staff Appraisal Report
SIDA Swedish International Development Cooperation Agency\.
SCRB Soils and Crop Research Branch
RIF Rural Investment Fund
UNDP United Nations Development Program
Vice President: Callisto Madavo
Country Manager/Director: Yaw Ansu
Sector Manager/Director: Karen Brooks
Task Team Leader/Task Manager: Tekola Dejene
ZAMBIA
AGRICULTURAL SECTOR INVESTMENT PROGRAM
CONTENTS
Page No\.
1\. Project Data 1
2\. Principal Performance Ratings I
3\. Assessment of Development Objectives and Design, and of Quality at Entry 2
4\. Achievement of Objective and Outputs 5
5\. Major Factors Affecting Implementation and Outcome 10
6\. Sustainability 11
7\. Bank and Borrower Performance 12
8\. Lessons Learned 15
9\. Partner Comments 16
10\. Additional Information 18
Annex 1\. Key Performance Indicators/Log Frame Matrix 19
Annex 2\. Project Costs and Financing 22
Annex 3\. Economic Costs and Benefits 26
Annex 4\. Bank Inputs 27
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 30
Annex 6\. Ratings of Bank and Borrower Performance 31
Annex 7\. List of Supporting Documents 32
Annex 8\. Beneficiary Survey Results 33
Annex 9\. Stakeholder Workshop Results 48
Prolect ID: P003218 Project Name: AGRICULTURAL SECTOR
INVESTMENT PROGRAM
Teant Leader\. Tekola Dejene TL Unit: AFTRI
ICR Tvpe: Intensvne Learning Model (ILAI) ol/ICR Report Date\. dline 30, 2002
1\. Project Data
Namne: AGRICULTURAL SECTOR INVESTMENT L/CITF Number: IDA-26980
PROGRAM
Couintill/Department ZAMBIA Region\. Africa Regional Office
Sector/sl\.bsector: AA - Agriculture Adjustment
KEY DATES
Original Revised/Actual
PCD\. 07/02/1986 Eflective\. 12/22/1995 12/22/1995
Appraosial 06/30/1994 MTR: 06/25/1998 06/25/1998
Approval: 03/30/1995 Clomingg 12/31/1999 12/31/2001
Borrower/lntplenmentiig Agenci': REPUBLIC OF ZAMBIA/MINISTRY OF AGRICULTURE AND
COOPERATIVES
Othe r Partners IDA, GTZ, EU, AFDB, IFAD, NORAD, FINNIDA, Dutch AID,UNDP, JICA,
SIDA, Belgium, USAID
STAFF CLirrent At Appraisal
Vice President\. Callisto E\. Madavo Edward Jaycox
Comntm-i' Manager: Yaw Ansu Phillis Pomerantz
Sector Manager: Karen Mcconnell Brooks Jean-Paul Chausse
Team Leader at ICR: Tekola Dejene Nwanze Okidegbe
ICR Prinmary A uthor: Charles Bevan
2\. Principal Performance Ratings
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly
Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)
Outf }(le'\. U
Sustainahiliti' L
Instittltional Development Impact: M
Bank Perlbrinance: S
Borrower Performnance: S
QAG (if available) ICR
Qualifr at Entry:
Project at Risk at Any TDIe\. Yes
The outcome rating is for the original objectives, which did not change during program implementation\.
The other ratings are for the reoriented program, following midterrn review\.
QAG Quality of Supervision Assessment was carried out in 2000; supervision was rated satisfactory\.
The project was at risk in 1996, 1997 and 1998\.
3\. Assessment of Development Objective and Design, and of Quality at Entry
3 1 Original Ohjective\.
The overall objective of the Agricultural Sector Investrnent Program (ASIP) as originally formulated was
to support the medium and long-term goals of the government for agriculture: improving household food
security, promoting better use of natural resources, generating incomes and employment, and increasing
export earnings and contributing to the balance of payments\. The program would achieve these objectives
through a sectorwide approach based on the principles of (a) providing national coverage, (b) implementing
the program within the institutional framework of the Ministry of Agriculture and Cooperatives (MAC), (c)
pooling donor funds and channeling them in support of government's priorities through MAC, (d)
developing common implementation arrangements amnong donors, (e) introducing a flexible work program
by annually conducting reviews and carrying out strategic planning, (f) decentralizing funds and decision
making authority to the lowest level of government capable of handling the responsibility, and (g)
promoting participation of beneficiaries\. At the time the program was prepared, various donors were
supporting over 180 freestanding projects in support of agriculture in Zambia, and overlap and duplication
were commnon\. The ASIP aimed to bring these donor-assisted projects under one program\. IDA was to be
a donor of last resort, making up shortfalls in funding from other donors or from the government\.
While the overall objective is reasonable for a long-term program expected to last 15 to 20 years, it was too
broad, ambitious, and complex for a four-year program\. More narrowly specified objectives would have
enabled the Bank and government teams to both monitor and evaluate progress in implementing the
program and in achieving development impact\. The sectorwide approach of achieving the objective was
also inappropriate, given Zambia's unsupportive macroeconomic and institutional context of the time, a
precondition for the success of sectorwide approaches\. Throughout the 1990s, and continuing to the
present Zambia has experienced persistent macroeconomic instability\. Moreover, the implementing agency,
MAC, lacked the capacity to effectively implement the 17 subprograms that comprised this comprehensive
ASIP\. Finally, only a few donors active in Zambia were committed to the approach\.
3\.2 Revised Objective
Following the midterm review, it was felt that objectives should be defined for the IDA-supported activities
independently of those specified for the program as a whole\. The objectives for the IDA-supported
activities were to (a) support the increased the efficiency and productivity of dominant crops by developing
and disseminating improved technologies; (b) establish an institutional structure designed to provide
cost-effective agricultural services; (c) establish a decentralized implementation mechanism and
participatory approaches that empower communities and their representatives; (d) assist in institutional
development including training, policy formulation, and monitoring and evaluation; and (e) increase farm
incomes and export earnings\. Additional objectives were to support government's efforts to privatize
agricultural enterprises, and to promote development of agribusiness enterprises and farmers' organizations\.
The Development Credit Agreement (DCA) was not amended to reflect the changes in objectives because
the overall development objectives remained the same: to improve household food security, promote better
use of natural resources, generate incomes and employment, and increase export earnings and contribute to
the balance of payments\. The DCA was amended to reflect changes in the allocation of proceeds of the
Credit\.
3\.3 Original Component\.s
-2 -
The program comprised four broad components:
(1) Policy and institutional improvements (US$28\.4 million at appraisal, of which US$11\.5 million
was to come from IDA)\. This included policy and institutional reforms in marketing and standards
(eliminating subsidies to marketing parastatals), food security, rural finance, land use and tenure, livestock,
and reform of agricultural institutions\.
(2) Public investment (US$182\.7 million, of which US$34\.0 million was from IDA) to complement
and support policy and institutional improvements\. Investments were to be made in agricultural research,
extension and information, livestock production and health services, fisheries development for smallholders,
farm power and mechanization, rehabilitation of small-scale irrigation facilities, and agricultural training\.
The component provided support for transport, operating costs, staff training, replacement of equipment
and minor civil works\.
(3) Private sector development (US$85\.6 million, none from IDA)\. This comprised multiplication
and distribution of seeds for smallholders, development of viable rural financial institutions, and new
product development to encourage private firms to diversify into nontraditional exports\.
(4) Pilot investment schemes (US$53\.3 million, of which US$14\.5 million was to come from IDA)\.
This included support to establish a rural investment fund to support small-scale capital investments in
rural communities on a matching grant basis, and support for the privatization of state farms\.
The program was to be executed over four years\. Overall responsibility for implementing the program
rested with MAC\. Provincial and district level government entities were to be delegated increasing
responsibility for implementing activities within their regions as their capacity grew\. Private sector
agencies were to handle the program's private sector development component\. Participating banks were to
handle the rural finance component\. The agricultural steering committee was to be responsible for
coordinating the implementing the various activities of the program and formulating sector policies\. MAC
was to be restructured and new institutional arrangements put into place\. The financial management and
procurement systems were to be strengthened through implementation of recommendations of a Price
Waterhouse report completed in September 1994\. A number of multilateral donors, notably Intemational
Fund for Agricultural Development (IFAD), United Nations Development Program (UNDP), and IDA
agreed to incorporate their ongoing and new projects into the ASIP framework from the start\.
Although the components and subcomponents were appropriate for achieving the long-term objectives of
the program, their number and complexity were beyond the capacity of the implementing agency to handle\.
It was also unrealistic to expect that the implementing agency could be restructured and new institutional
arrangements established in a short time, while at the same time implementing the activities of the program\.
3\.4 Revised Componenits
Following the midterm review conducted in June 1998, the Bank task team decided that IDA would no
longer serve as the donor of last resort, but would instead focus on a limited number of core activities\.
While the program's components and 17 subprograms remained the same, IDA would focus on:
(1) Agricultural services (US$34 million from IDA, 61 percent of total base cost)\. This included
support for agricultural research and extension in districts not supported by other donors, including
linkages between research and extension, technology generation in crops, soil management, animal
-3 -
husbandry and health, farm management (including conservation farming), and the like\.
(2) Rural investment fund (US$ 10 million, 18 percent of total base cost)\. This included support to
expand the program started under the ASIP to cover more farmer groups\.
(3) Capacity building (US$11\.5 million, 19 percent of total base cost)\. This comprised support for
analysis of sector performance, monitoring and evaluation, and selected initiatives to upgrade skills of the
ministry, especially at the provincial and district levels\.
In addition, IDA agreed to, in collaboration with other donors, assist with the implementation of pilot rural
finance schemes that MAC and the Bank jointly identified and prepared\. However, action was not taken on
the rural finance pilots, since the government was more interested on setting up a major agricultural credit
institutions rather than pilot schemes\.
Fundamental changes in the management and implementation of the program were introduced\. These
entailed limiting the role of MAC to facilitation and regulation only, transferring planning and
implementation responsibilities to districts and communities, implementing a financial management system
that ensured the flow of funds to districts and agreed cost centers was timely, and creating a process that
enabled districts to access technical support from provincial or head offices of government entities\. Donors
opted to support a loosely-defined coordination mechanism and to continue to implement their projects
based on annual or multi-year agreements with the government\. An ASIP consultative forum (ACF) was
created to facilitate policy discussions among stakeholders\.
3\.5 QuahtYn it Entri'\.
Quality at entry is rated unsatisfactory\. Many important actions were taken to ensure quality at entry\.
For example, objectives of the program were closely aligned with the Bank's country assistance strategy
that was reviewed by the Board on March 10, 1994, and with the government's development priorities\. The
program was designed to address problems with the management of development programs in Zambia that
were highlighted in a country portfolio performance review undertaken in 1994\. These problems included a
lack of government ownership of donor-assisted projects, overcentralization of program management, and a
proliferation of autonomous program management units that undermined rather than supported creation of
government capacity\. Care was taken to actively involve all major stakeholders in preparing the program\.
Government's commitment to policy and institutional reforms was expressed through its issuance of its
Letter of Sector Development Policy and seemed secure\. Joint stakeholder and government annual planning
and review exercises were introduced to ensure flexibility in the implementation of the program\.
Unfortunately, the design and preparation of the program involved significant weaknesses that should have
been dealt with prior to entry\. First, the program designers should have anticipated and prepared for the
difficulties of starting implementation before the new institutional arrangements were in place\. Second, the
task team should have done more to assess the capacity of the implementing agencies and of their
provincial and district office and to develop programs to build capacity where it was lacking\. They also
should have carried out a thorough institutional assessment to define the roles of the various actors\. Third,
the Bank task team should have recognized major risks and specified measures to mitigate them\. For
example, the task team should have noted the risk to implementation posed by a much slower than expected
restructuring of MAC and establishment of sound financial management and procurement systems, and
developed measures to address these risks\. Fourth, given that coordination of donor support is a key
element of the sectorwide approach, the task team should have reached a consensus with major donors on
the appropriateness of the sectorwide approach for Zambia before launching the program\. Instead, the
- 4 -
program went forward without the support of many major donors\. Fifth, modalities for decentralizing
implementation should have been defined and agreed with the government prior to program launch, rather
than being left to be worked out during the initial months of the program\. Sixth, the task team should have
specified priorities among the 17 subprograms, so that support could be channeled to them in the event of
overall funding shortfalls\. The Bank did not carry out a QAG assessment at entry\.
4\. Achievement of Objective and Outputs
4\.1 OiItconwe/aCchiei,el7entol/ oblec'ti' P\.
Achievement of the broad objectives of the ASIP is generally unsatisfactory\. Most of its objectives were
not met\. The food production index fell from 130 in 1995 (1981 =100) to 128 in 2001\. Agricultural gross
domestic product barely rose from 395 billion kwacha in 1995 to 419 billion kwacha in 2001\. During this
period, agricultural production fluctuated significantly around a stagnant mean\. Agricultural productivity
continued its long-term decline\. The yields per hectare of maize fell slightly during the years of the
program; it was 1\.6 tons per hectare in 1995 compared with 1\.5 tons in 2001\. Moreover, net agricultural
incomes fell from 70,000 kwacha in 1995 to 62,000 kwacha in 2001\. However, the objective of increasing
export earnings from agriculture were met\. Agricultural exports increased dramatically, particularly of
nontraditional exports such as horticulture and floriculture\. The total value of agricultural exports rose
from US$55 million in 1995 to US$160\.3 million in 1998, although it declined to US$125 million in 2001\.
Moreover, while agriculture did not perform well, the mining, manufacturing, and services sectors of
Zambia's economy performed even worse\. During 1995-2001, the contribution of agriculture to gross
domestic product rose from about 16 percent to 22 percent\.
The narrower objectives specified at the midterm review for the IDA-supported activities have been
substantially met\. Although time is too short for increases in the productivity of dominant crops (maize,
cotton, sorghum, and others) to be evident, the research system has developed and released 21 new varieties
of seeds and introduced farm management practices that more and more farmers are adopting (see annex
I a)\. A new governance structure to provide cost-effective agricultural services has been created\. The
extension system has been completely transformed, and service providers are now accountable to farmers
and local government rather than to the central ministry\. The research system is being reformed along lines
recommended in a study of the system jointly carried out by the government and the International Services
for National Agriculture Research\. The reforms are expected to make the extension and research systems
more responsive and accountable to farmers, agribusiness, and other users of research outputs, and more
effective overall\. A decentralized implementation mechanism, and participatory approaches that empower
communities and their representatives has been established\. The farmer groups and communities have been
empowered with the transfer of resources directly to their accounts to allow them to carry out their projects
and community action plans\. District agricultural committees have been created and made responsible for
overseeing the district agricultural activities\. The hiring of qualified staff has strengthened the district
agricultural coordination offices (DACO)\. The flow of funds to districts and communities has also been
significantly improved\. Institutions have been strengthened through provision of training and the
establishment of systems of monitoring and evaluation\. Budgets agreed at the beginning of the year for
each district are now being replenished immediately when the districts account for their expenditures\.
4\.2 Ottptuts by, components:
Component 1: Agricultural services (US$32\.6 million, 54 percent of total base cost)
The outputs of this component, which consist of extension and research, are satisfactory\. Outputs of the
extension subcomponent are marginally satisfactory\. Extension services have been completely reformed
5 -
under the project\. The participatory extension approach has been introduced in 27 (of 73 districts) and
four provinces, replacing the travel and visit system\. Using this approach, field extension agents help
groups of farmers analyze their problems and seek self-help solutions wherever possible\. An average of
175,000 farmers were adopting one or more technologies introduced through the extension system,
(although the target was 250,000 farmers per year)\. In addition, a steadily increasing number of field
demonstrations were held, with 1,050 being conducted in the 2001, compared with 221 in 1996\. According
to surveys, about three-quarters of farmers adopt the improved technologies within a year of exposure\.
Farmers have diversified away from maize, most likely in response to the decline in subsidies for maize
production and marketing and in response to the advice and training provided by extension agents on
alternative cops\. Maize accounted for 70 percent of cultivated area in the 1980s; this has now declined to
52 percent\. Farmers are increasingly cultivating crops such as cassava, cotton, groundnuts, sweet potato,
and tobacco, rather than millet, sorghum, beans and sunflowers\.
The seed multiplication and distribution scheme under the extension subcomponent is rated highly
satisfactory\. The scheme is now established as a commercial and farmer-based seeds system throughout
Zambia\. The Bank with various donors and nongovernmental organizations developed the capacity of
about 43,000 small-scale farmers in rural areas to produce and market seeds of improved varieties of
mainly the traditional staple food crops (maize, sorghum, pearl and finger millet, paddy rice, cassava and
sweet potatoes) and legumes (groundnuts and cowpeas)\. This has been strengthened by the decentralization
of seed quality control services and the formulation of Quality Declared Seed class standards that regulate
seed production among smallholder farmers\. Every year, smallholder seed farmers produce about 1,500
tons of seeds, and sufficient planting materials to cultivate 3,000 hectares of cassava and sweet potatoes\.
The rural seed initiatives account for 13 percent of the country's seed production; they provide improved
seeds to about 54,000 farmers every year\.
Seed growing has become a major source of income for smallholders that produce seeds\. The profits
obtained are strengthening entrepreneurship and hence the sustainability of the seed provision system\. The
number of seed testing laboratories has increased from I to 5 with the licensing of private laboratories and
establishment of satellite seed testing laboratories\. The number of licensed seed inspectors was 50 in 2001
against zero in 1996\. The decentralization and licensing of seed quality control services has led to an
improvement in efficiency and timeliness in the provision of seed quality control services to the seed
industry\. This supports the development of the seed industry\. The institutional arrangement in place for
the coordination of rural seed multiplication programs is harmonizing approaches, avoiding duplication of
resources, and broadening coverage of the initiatives\. This has led to an increased appreciation of the
initiatives, which have increased, from four in 1996 to 15 in 2001\.
The soil fertility initiative and conservation farming activity under extension is also rated satisfactory\.
These practices allow farmers to preserve soil fertility without using chemical fertilizers, which with the
end of subsidies have become too expensive for many farmers to buy\. More than 1,200 field extension
workers have been trained in the technologies, and they, in turn, have trained thousands of smallholder
farmers\. It is estimated that the total number of farmers (mainly small-scale) practicing the techniques is
over 90,000\. In some agroecological regions of the country, maize yields rose from 90 kilograms per
hectare to nearly 150 kilograms per hectare\. The number of farmers trained in on-farm seed multiplication
has risen from about 4,000 in 1996 to about 11,000 in 2001, with about 70 percent of those participating
eventually adopting the improved seeds\. Unfortunately prolonged and severe droughts have drastically
reduced farm output during 2000 and 2001, affecting thousands of farm families\.
The outputs of the research subcomponent are also satisfactory\. The Soils and Crops Research Branch has
released improved seeds and planting materials for many important crops, including maize, sorghum,
-6 -
millets, groundnuts, beans, cowpeas, wheat, sunflower, cassava, and sweet potato\. Improved varieties are
given to ZAMSEED for multiplication and sale to farmers\. The research system also produced and
introduced to farmers many new technologies\. These include the low-cost, effective irrigation technologies
like treadle pumps and artisan drip and bucket irrigation systems, the Magoye Ripper for conservation
tillage, legume inoculants, and agroforestry species to improve soil fertility\.
Public-private sector partnerships in research have been successfully established by converting public
research organizations into trusts that are managed by independent boards accountable to major
stakeholders\. The Golden Valley Agricultural Research Trust is one of two trusts that has done well\. This
trust derives its income from its commercial farming operations (50 percent), contract research (10
percent), donor support (35 percent), and government contribution (5 percent)\. Commercial farm
operations perform a dual function, generating income from sale of output and disseminating knowledge of
successful farming practice through demonstrations\. The Cotton Development Trust was established in
1999 and is at a formative stage\. It expects to obtain 40-60 percent of its funding from a levy on cotton
delivered to ginneries\. It is envisaged that the remainder of its funding needs will come from contract
research (25 percent), and from contributions of donors and the govemment (15 percent)\. The full
establishment of the trust awaits the passing of a cotton act, which will legalize the collection of the levy
from ginners\. The board of trustees of the Cotton Development Trust represents all the principal
stakeholders in the cotton industry\. The board has already agreed in principle on the collection of a levy for
funding research\.
Component 2: Rural investment fund (US$17\.1 million - 29 percent of total base cost)
Outputs of the rural investment fund have been satisfactory\. Despite initial problems with the design and
implementation of the fund, its achievements have been impressive\. The fund has financed economic and
social infrastructure to relieve both production and marketing constraints of farmers\. Between 1996 and
December 2001 the fund financed nearly 1,800 subprojects (dams, warehouses, boreholes, bridges, roads,
dip tanks, poultry operations, pig farms, fish farms, and the like) in every district of Zambia at a total cost
of US$17\.0 million\. The geographical distribution of projects reflects the fund's objective to target poverty
reduction, with subprojects per district ranging from 56 in the Copperbelt to 357 in the drought-prone
Southem province and 377 in the underdeveloped Northern province\. The fund has had a wide-ranging
impact in generating incomes directly and indirectly for farmers, workers, and entrepreneurs\.
According to a beneficiary assessment of the rural investment fund (annex 8\.1 and 8\.2), farmers are very
enthusiastic about and interested in the program\. Some of the subprojects have significantly increased
income, enhanced household food security, and improved the overall well-being of the rural population\.
For example, by reducing farmers' dependency on uncertain rainfall in dry Zambia, the irrigation and
fishponds projects have contributed to both an increase in income and a reduction in the uncertainty of
income\. An important share of project benefits has accrued to women\. Boreholes and wells were the
largest category of subprojects under the program accounting for 36 percent of subprojects and 30 percent
of disbursements\. These save beneficiary women considerable time and improve the quality of their lives\.
The improved household nutrition and income from the irrigation facilities and fishponds have also
addressed the concems of women\. Underutilization of some of the subprojects, such as sheds and dip
tanks, is the main weakness of the rural investment fund that will need to be addressed in future operations\.
The weakness arises from poor planning, but also from a culture of dependency in which farmers expect
the govemment to cover the working capital requirement of investments provided on a grant basis\. In
addition to providing infrastructure, by delegating responsibility for subproject development and
management to local government and communities, the rural investment fund has created capacity at local
levels that can be used to undertake future development projects\. This is an intangible, but perhaps the
- 7 -
most important, benefit of the rural investment fund program\.
Component 3: Capacity building (US$3\.9 million - 7\.2 percent of total base cost)
The output of the capacity building component of the reoriented program was satisfactory\. In the area of
policy and planning, the program established management information systems capable of tracking
expenditures and physical progress of program components and subcomponents by implementing units of
MAC, such as the Soils and Crops Research Branch, the Seed Control and Certification Institute, Animal
Production, Fisheries and Extension\. Significant improvements in reporting progress on implementation of
work programs has resulted\. Progress was also made in decentralizing formulation and implementation of
the annual work plans and budgets\. However, management information systems that bring together
information produced by different units were not developed during the life of the program, although this
was one of its objectives\. To improve monitoring of crop, livestock and fisheries production, the program
supported five post harvest surveys during 1996-2001 and three crop forecasting surveys\. Capacity within
the government's central statistics office to carry out surveys and analyze their data was permanently
strengthened as a result\. The MAC publishes annually a bulletin of agricultural statistics on the basis of
the survey data\. Data from the post harvest and crop forecasting surveys also provide vital information for
the analyses of sector performance (conducted in 1997, 1998, 1999 and 2000) and preparation of national
accounts\.
This component supported numerous studies and strategic planning exercises\. For example, through this
component:
* A critical review of the role and function of the Ministry of Agricultural Cooperatives (MAC, formerly
MAFF) was completed\. This serves as a guide for donor support to the sector\.
* An agriculture sector public expenditure review was conducted\. This provided critical information to
decision makers on the size and composition (by subsectors and expenditure categories) of spending in
the sector, its efficiency in producing results, and quality of the accounting and monitoring systems\.
Over 15 studies covering major subsectors and important sector themes were completed\. These are
providing important background infornation for the preparation of the successor program to the ASIP\.
* The draft national agriculture policy, now awaiting approval of the new government, was prepared\.
* The agriculture commercialization program was prepared and is now the main government document
providing direction for sector development\.
Financial management improved once procedures recommended at the midterm review were
implemented\. Records and accounts were maintained in accordance with internationally accepted
accounting practices and principles as prescribed in the Credit covenants and government financial
regulations\. Audited annual financial accounts for IDA and other donor programs funded through
MAC were completed within nine months of the end of the financial year, as stipulated in the
DCA\. This was a big improvement over performance prior to the midterm review, when audits
were delayed due to inadequate capacity within central and district financial management units\. In
addition, the capacity of the procurement and supply unit was significantly strengthened following
the midterm review through technical assistance provided by the Swedish International
Development Cooperation Agency\. The strengthened capacity of the financial management and
procurement and supply units helped in the marked improvement in disbursements of IDA funds
under the program from just 7 percent in 1998 at the time of the midterm review to 97 percent in
December 2001 at Credit closing\.
-8 -
4\.3 Net Present Valite/Economic rate ofretlrn\.:
At appraisal, an econometric analysis was undertaken based on an assessment of the annual growth on
agricultural GDP that would need to take place to justify the level of ASIP investments\. This ICR does not
attempt to repeat the exercise because the program was not implemented as originally designed and time to
closing was too short to ascertain development impact\. Moreover, the benefits from the newly refocused
interventions are difficult to quantify by their nature\. Therefore, the ICR has opted for a more general
discussion of the impact of the program on the sector and on beneficiary farner groups\.
There has been an apparent shift in crop production at the national level from maize to other crops\.
According to the survey data, the maize cultivation area decreased by about 22 percent between
1990-2000\. Soybean and sunflower cultivation areas have also decreased significantly\. These crops have
been substituted by an increase in cotton (65 percent) groundnuts (76 percent), cassava (65 percent) and
potatoes (54 percent) during the same period\. The data suggests that Zambian farmers have diversified
considerably in the past decade, reducing the maize cultivation area from 70 percent to 55 percent, most
probably in response to the decline in fertilizer subsidies\.
Agricultural exports also increased dramatically in the last ten years\. In 1990, agricultural exports
accounted for less than 2 percent of total export value and in 1996 and 2000 increased to 10 percent and 20
percent, respectively\. Of the total nontraditional exports, the share of agriculture exports was 37 percent in
1996 and 55 percent in 2000\. The sector also provides considerable forward and backward linkages\.
Most of the manufacturing output, which accounts for 10- 12 percent of the GDP and about 75 percent of
the manufacturing sector output\. Almost the same percentage of employmnent is generated from
agro-industries (food, beverages, tobacco, textiles, leather, and the like)\.
An assessment of the economic impact of other related activities, such as, extension, research, training and
some of the fund interventions, can only be qualitative or, at best, theoretical extrapolations of very limited
data\. The Beneficiary Assessment (BA) of the fund indicates that farmers and community members greatly
value the subprojects, and are willing to pay 25 percent of the subproject costs for their realization\. The
irrigation subprojects have generated increased income\. According to the midterm review carried out in
1998, the irrigation projects for coffee farmers generated incremental farm incomes of about US$500 per
hectare, achieving rates of return of 15 to 20 percent on investments\. It is estimated that current retums
from irrigated coffee and vegetables are about the same or higher\. The dams and storage sheds have had
mixed effects so far, but they have potential for greater benefits once plans for full use of the facility are
developed and implemented\.
4\.4 Financial r ate * 'retulrn\.
The staff appraisal report did not include a financial analysis of the project\. A financial analysis was not
undertaken for the Implementation Completion Report\.
4\.5 Instituttional development Inmpact\.
Institutional development is rated satisfactory\. After the midterm review, the Bank worked closely with
MAC (MAFF became MAC in 2000, following its restructuring) to complete the restructuring process that
started before the Credit became effective with a view to speed up the implementation of the IDA-supported
activities\. New technical staff were selected on a competitive basis to fill positions created within the
restructured MAC\. The quality of new staff was high and management of district level operations
significantly improved\. Moreover, district agricultural coordination offices were created that were
-9-
technically, administratively, and financially unified and integrated\. Before the reorganization, district staff
were accountable to departments at headquarters, making it virtually impossible for the DACOs to have a
say on issues that may well affect district operations\. In the new MAC, the district agricultural
coordination offices are responsible for all agricultural activities of their districts and staff in the district
report to them\. Funds comes directly to the district and are distributed among priority activities that have
been agreed with the staff of the ministry and with district agricultural committees\. Provincial offices are
no longer responsible for implementation\. Their role is now to coordinate district activities, to monitor and
evaluate project implementation and impact, and to provide technical backstopping to district offices that
request assistance\. MAC's central office is responsible for reviewing annual plans and budgets, monitoring
implementation, and assisting provincial and district offices resolve problems\.
The district agricultural committees, established as part of the institutional reforms, started playing a key
role in the implementation at the local level of the ASIP's activities\. These committees are made up of
district level representatives of civil society and the public sector\. They are responsible for overseeing the
district's agricultural activities and are empowered to make critical decisions on allocation of resources
approve subprojects and agricultural activities in the districts\. The committees contributed to the
successful operation of the rural investment fund by appraising, approving, and monitoring the
implementation of subprojects\. The participatory extension approach should substantially strengthen
extension services\.
The rural investment fund has been instrumental creating capacity of local government entities and farmer
organizations to undertake development projects\. The fund has tested, refined, and developed an effective
mechanism for delivering funds to communities to invest in small-scale infrastructure projects\.
The agricultural consultative forum is another institutional innovation that evolved from the midterm
review\. This forum brings together all stakeholders (nongovernmental organizations, private sector actors,
donors, and representatives of farmers and the government) to discuss and reach consensus on national
agricultural policy issues with a view to advising policy makers and take actions as needed\.
5\. Major Factors Affecting Implementation and Outcome
5 1 Factors outtside the (ontlrol o/ governmenwt oi- iniplem,ew'ting agencl
The influence of factors outside of the government's control on program outputs has been substantial\.
Droughts reduced crop output in 1996, floods diminished production in 1998, and droughts and floods
severely cut output in 2001\. Cattle diseases decimated Zambia's cattle population starting the early 1 990s\.
Another serious problem affecting the performance of the program, and of agriculture in general, is
HIV/AIDS\. Zambia has arnong the world's highest prevalence of HIV/AIDS, with well over 20 percent of
the population ages 15 to 49 infected with the virus\. Many of MAC's trained staff have fallen ill or died,
and of those that remain healthy many have had to take time off from work to care for ill family members
or attend funerals\. Farmers, the beneficiaries of the program, have been similarly affected by HIV/AIDS\.
Finally, low international prices of copper, the country's main export, reduced govemment revenues
starting in the late 1990s, affecting its ability to finance its development programs, including ASIP\.
5\.2 Factors generall/v s,tlect to goveLrnment o(ontrol\.
The influence of factors within government's control have also been significant\. Excessive growth of the
money supply has contributed to the sharp depreciation of the kwacha, from 700 kwacha per US$1 in 1995
to 4,500 kwacha per US$I in 2001\. This has made it difficult or impossible for small farmers to purchase
imported inputs, such as fertilizer\. The depreciation of the currency has promoted agricultural exports, but
- 10 -
this has benefited primarily large, commercial farmers\. Real interest rates have been high, upwards of
50%, making it difficult for farmers to access credit\. Sector policies have been erratic\. Although
government policy has been to withdraw from the distribution of fertilizer and other inputs, the marketing
of maize, and the provision of agricultural credit, it has continued to play a large role in these areas, but
one that has varied from year to year\. This has discouraged private actors from providing these services,
so in years when government lacks resources, farmers are left without access to critical services\.
Government also provided inadequate budget allocations to fund its commitments to counterpart funding\.
Finally, after the tranfer of the Minister and PS that were the program's chief champions, government
failed to appoint officials who were committed to the program to key positions in the implementing agency,
and awareness of the importance of the program among supporting organizations diminished\.
5\.3 Factors gener-alih' subject to imp/lenmenting agencl control\.
Factors within the control of the implementing agency, MAC, had an important impact on program
outputs\. MAC's capacity to manage even the reoriented program was limited\. Coordination between
MAC's departments and units were poor, and linkages between headquarters and MAC's provincial and
district offices inadequate\. MAC's units for planning, market information, and monitoring and evaluation,
were weak and efforts to strengthen them unsatisfactory\. MAC's weaknesses in financial management and
procurement led to significant delays in implementation during the initial years of the program, and
disbursements lagged well behind the program timetable until the program was reoriented in 1998\.
5\.4 Costs and financing\.
The staff appraisal report estimated the total program costs (including contingencies) to be US$350 million
over four years\. Of this, US$60 million was to come from the IDA Credit, US$140 rnillion was to come
from the government and beneficiaries, and US$150 million was to come from other donors (Annex 2A)\.
The actual program costs amounted to US$249\. Funding from the IDA Credit totals US$54 million (annex
2B)\. Government's contribution was US$89 million, and donors' contributions were US$105 million\.]
6\. Sustainability
6\.1 Rationale for sListainahilit' r-ating\.
Sustainability of the outputs of the IDA-supported activities of the reoriented program is rated as likely\.
The susuainability of prograrn outputs will depend on the generation and adoption of better agricultural
technology, which themselves will depend on the effectiveness of the research and extension systems\. Both
the research and extension systems of Zambia have been strengthened under the program\. The research
system, particularly the Soils and Crop Research Branch, now has the capacity to initiate new research and
to complete ongoing research programs\. The government views agricultural research as a priority, and has
included research as an activity for funding in fiscal 2002 under the Highly Indebted Poor Country's
Initiative (HIPC)\. Additional resources for research will be mobilized from other donors and from the
IDA-supported successor program to ASIP, expected to be approved in fiscal 2003\. The two research
trusts are likely to be sustained\. The Golden Valley Research Trust is already largely self-financing\. It has
won the confidence of most donors and private firms, and many are likely to contract the trust to carry out
research during the next few years\. The Cotton Development Trust will be self-financing if the national
assembly passes a proposed law that will enable it to charge a levy on ginned cotton and if cotton prices are
adequate to encourage farmers to grow the crop\. Until then, MAC is expected to continue providing the
trust with the funds it needs to operate\.
The sustainability of the extension program is likely\. The extension program is likely to become
- 11 -
increasingly effective and responsive to farmers needs-and therefore sustainable-with its ongoing
transformation away from the training and visit model towards the participatory extension approach that
provides extension services on demand\. About 40 percent of extension agents have now been trained in the
new approach; by 2004 all will have received training\. The system has been implemented in 27 districts
out of a total of 73, and it will be scaled up to cover the entire country as quickly as staff can be trained\. It
is planned to shift costs of funding the extension services to local government and to farmers to ensure that
services match demanac, which is necessary to guarantee the long-termn sustainability of the system\.
Creating a system in which farmers request and contribute towards the costs of services also opens the
system to a multiplicity of service providers who compete for business\. Donors, MAC staff at all levels,
farmers' groups, nongovernmental organizations, and other stakeholders support the new concept\.
The sustainability of the achievements of the seed multiplication and distribution component is likely\.
Farmers produce and market the seeds for profit\. The government's role is limited to providing technical
assistance and to setting and enforcing standards\. Five seed testing laboratories are established in strategic
locations (Copperbelt, North Western, Central), and are fully equipped and operating successfully\. Several
donors, including the UNDP, SIDA, and the Norwegian Agency for Development Cooperation (NORAD),
continue to provide support to Seed Standards and Multiplication, variety testing and registration, seed
testing, seed inspections, etc\. activities\.
The sustainability of the soil fertility initiative and conservation farming is also likely\. Farmers recognize
the benefits of the low or no cost techniques to enhance soil fertility and to raise agricultural productivity,
and on their own continue to apply the practices once they have learned how to use them\.
The outputs of the rural investment fund are likely are likely to be sustained\. Communities themselves
select the subprojects and contribute to their costs by donating either labor or financial resources\. An early
problem with the flmd-failure to give adequate attention during project preparation to issues of operation
and maintenance -has been rectified, and communities are now experiencing few problems operating and
maintaining their infrastructure\.
The government has prepared a program to follow the ASIP, the Agricultural Commercialization Program,
and has requested assistance of donors to implement it\. SIDA, the Finnish International Development
Agency, and NORAD have selected elements they wish to support\. Other donors, including IDA, will soon
specify activities for which they will provide assistance\. The government is also preparing for IDA
financing the Agricultural Development Support Program\. This program will support the policy and
institutional reforms and the investment activities needed to promote growth of agricultural productivity in
Zambia that were started under ASIP\.
6\.2 Transition arrUagn-ement to reggular operlationi%\.
The program has been implemented through existing government structures, so the transition to regular
operations will not be difficult\. However, the Ministry will be confronted with shortage of funds to carry
out activities at a level it used to implement activities before the closing of the IDA Credit\. To reduce the
shortfall in funding, the government has made provisions in its budgetary allocations for 2002, to use HIPC
resources to fund the previously IDA-supported activities\. Some donors have programs that would
partially cover the Ministry's requirement for activities that used to be covered by IDA\. For instance,
USAID is supporting Policy and Planning Branch, which IDA used to support\. Similarly, SIDA provides
assistance to seed multiplication , conservation farming and mobilization of farmer organizations\.
7\. Bank and Borrower Performance
- 12 -
Bank
7\. I Leniding\.
The Bank's overall performance in lending was marginally satisfactory\. The Bank's performance in
identification was unsatisfactory\. At the time of identification, the sector investment concept was very new
and the conditions under which it would work little understood\. Despite the limited experience, program
designers did recognize that two preconditions were needed for success: (1) a supportive macroeconomic
and institutional environment, and (2) agreement among key donors to pool their funding and follow
common implementation arrangements\. Both preconditions were absent in Zambia at the time the concept
was proposed\. Zambia was experiencing macroeconomic instability, including high inflation and rapid
currency devaluation during the first half of the 1 990s\. Moreover, donors were divided on the use of the
proposed basket-funding mechanism\. Many donors felt the Bank was aggressively driving the process and
was not giving others the chance to understand the concept and participate in the program\. As a result, the
ASIP become known as a World Bank program, which is far from its intention of promoting government
ownership\.
The Bank's performance in preparation was marginally satisfactory\. The Bank fielded three missions
during preparation, comprising world renowned experts in rural development, extension, and public sector
management\. Despite considerable efforts by the Bank, however, many weaknesses in preparation
remained\. Such an innovative, ambitious, and complex program requires detailed preparation of policy and
institutional reforms and investment activities to succeed\. Yet, the institutional analysis undertaken was not
adequate to clarify the roles and functions of government entities at various levels and reveal serious
weaknesses in implementation capacity\. A more thorough analysis may have led the Bank and governnent
teams to develop much more comprehensive plans to strengthen capacity or to take another approach to
support sector development\. It was envisaged that many of the responsibilities for implementation would
be decentralized to local government offices and communities, yet the mechanisms for transferring funds to
local government were not specified and the means of building local capacity unclear\. The Bank also left
the implementation of strengthened financial management and procurement arrangements until after the
start of programn execution\. This lack of detailed preparation contributed to the problems encountered
during the first two years of the program\.
The Bank's performance in appraisal was marginally satisfactory\. The Bank fielded three missions during
appraisal, comprising experts in financial management, agricultural economics, agricultural production,
economics, land use, disbursement, procurement, planning and budgeting, and operations (including sector
investrnent specialists)\. The Bank's safeguard policies were discussed and agreed with the government\.
Because the project was expected to have few if any negative environrmental impacts, it was classified
category B\. An environmental mitigation plan was developed to address any potentially adverse
environmental impacts arising from the program\. In addition, ASIP included a detailed program
implementation manual with implementation arrangements for each subcomponent, including activities,
organization and management, cost estimates, and performance indicators\. However, many aspects of
appraisal were unsatisfactory\. Appraisal of government's commitment was unsatisfactory\. Government's
commitment to the program concept was much weaker than its Letter of Sector Development Policy
indicated, a matter that other donors raised with the Bank team\. The Bank team should have listened more
carefully to the views of others\. Appraisal of the capacity of the implementing agency and the capacity for
financial management and procurement was inadequate\. Communications with donors were not regular
and open, contributing to distrust\.
7\.2 Supervision-
- 13 -
Bank supervision was satisfactory\. Supervision of the program was intensive from the beginning\. The
Bank fielded 18 missions during the program's six years of implementation\. Missions included experts in a
wide range of fields, including sector investment programs, financial analysis, procurement, agriculture,
economics, agricultural services, and private sector development\. They did not, however, include
specialists on community driven development or on operations of social funds\. This was a deficiency
considering that the rural investment fund was a major element of the program\. The Bank team was
optimistic that actions specified during appraisal would be carried out as agreed and that program activities
would start on time\. The Bank sent special implementation support missions to Zambia to help the
government initiate and operate the program successfully\. After one year of implementation it became
clear that the program was not working as intended\. The Bank team considered various options to address
the problems, including canceling the Credit\. However, a lack of continuity of Bank task managers delayed
decisions until nearly three years after the program started\. An agreement was reached during the midterm
review to refocus IDA's support on core activities\. However, a formal restructuring should have been
undertaken at this time, with the program description modified in an amendment to schedule two of the
DCA to reflect the significant shift that took place away from a sector investment approach towards a
traditional lending model\. The Bank provided intensive supervision support for the reoriented program,
proactively identifying emerging problems and addressing them before they became unmanageable\. The
involvement of both country office staff and sector managers in the implementation process helped to
improve its implementation\. Performance with implementation progress of the program was consistently
rated satisfactory\. The Quality Assurance Group reviewed in 2000 the supervision of the program and
rated it satisfactory\.
7\.3 Ovevall Bank per/orlna?nce
The Bank's overall performance was satisfactory\. The Bank developed and introduced a new concept for
improving the performance of public sector management and the agricultural sector in Zambia\. The overall
approach was grounded in the belief that development assistance would be more effective if funds of all
donors were combined and used to support government's own sector development programs, rather than to
support donor-driven stand-alone investment projects\. The Bank then devoted substantial human and
financial resources to prepare, appraise, and supervise the program\. It also acted flexibly to reorient the
program when it became clear the sector investment approach was not working\. Finally, it intensively
supervised implementation of the reoriented program to ensure that it succeeded\.
Borr-owver
7\.4 Preparation:
The Borrower's performance in preparation was unsatisfactory\. Although the Borrower requested and
actively worked to prepare the program, it did not undertake the policy and institutional reforms that were
prerequisites to success\. The Borrower prepared the 16 subcomponents that comprised the program, but
did not formulate clear plans to implement, which made it difficult to translate strategies into action\. Like
the Bank, the government failed to recognize weaknesses in its capacity to implement such a complex
program, and did not, therefore, develop plans to increase capacity\. It also underestimated the time that
would be needed to complete the reform process\. In sum, the government overestimated its readiness to
undertake the program and minimized the challenges it faced\.
7\.5 G(ov'ernniewt wipf/)lemenlt'imta perlorm1an U\.
The Borrower's performance in implementation was unsatisfactory\. Following the elections of 1996, the
main champion of the approach left office, and the government's commitment to ASIP waned\. The
government did not comply with some of the assurances it provided at negotiations\. In particular, it did not
- 14 -
fully implement policies laid out in its Letter of Sector Development Policy to liberalize markets and to
withdraw from its extensive involvement in the economic activities\. The minister of agriculture also
unilaterally disbanded the agricultural sector steering committee probably for political reasons\. This
eliminated the body that was meant to provide independent oversight and policy advice\. The government's
performance improved following the midterm review\. Despite its slow progress in reforming the civil
service, it completed the much delayed restructuring of MAC and placed staff in key positions at
headquarters and provincial and district offices\. The ministry of finance started releasing counterpart funds
quarterly, although it stopped in 1999 when serious revenue shortfalls arose\. It also assigned qualified
accountants to MAC's financial management unit\. Finally, it opened up to the advice of the independent
Agricultural Consultative Forum\. However, the government failed to address other important issues that
ultimately limited the program's development impact\. The government's erratic implementation of sector
reforms in fertilizer distribution, provision of credit, and maize marketing undermined the program's
objective to stimulate private sector development\. Its declining budgetary allocations to the sector also
contributed to its subpar performance\.
7 6 Implementing Agenci\.
The performance of the implementing agency was marginally satisfactory\. Prior to the midterm review, the
performance of the implementing agency was unsatisfactory\. While it was undergoing its restructuring, it
did not implement any subprograms\. Following the midterm review, performance improved\. MAC
implemented most of the recommendations of the midterm review\. It adopted the recommendations of an
international consulting firm hired to design a financial management system, and provided intensive training
to its staff on how to use it\. MAC implemented a new financial management system that allowed funds to
flow directly to districts and cost centers\. This led to significant improvements in the rate of disbursement
of IDA resources; nearly 90 percent of the Credit was disbursed following the midterm review, although
only 7 percent had been disbursed before then\. Procurement performance also markedly improved\.
Improvements in project management led to more rapid implementation of community-level projects
through the rural investment fund\. Despite the improvements in MAC's performance following the midterm
review, several weaknesses remained\. Its policy analysis and monitoring and evaluation capacities
remained underdeveloped\. This is due to the poor compensation offered compared with the private sector,
which has led to rapid turnover of staff and difficulties in attracting new and qualified staff\. Moreover,
MAC officials at headquarters did not provide strong leadership for implementation of the program\. The
program's ultimate success is due mainly to the strong commitment of district staff to its implementation\.
The closing date of the Credit was extended twice\.
7 7 Overall Borrower perorlnance:
The Borrower's overall performance is rated marginally satisfactory\. Although performance during the
initial years of implementation was poor, the government and the implementing agency improved their
performance significantly following the midterm review\. It is on the basis of this improved performance
that the satisfactory rating is given\.
8\. Lessons Learned
For a complex institutional reform program to succeed it is essential that there is sustained and
broad-based commitment to, and ownership of proposed changes\. A major weakness of ASIP was that
it was dependent on the championship of a few officials who had moved on by the time ASIP became
effective\. An assessment of ownership and commitment requires a great deal of caution and broad-based
commitment avoids sudden erosion as experienced in this program\.
- 15 -
The sequence of institutional and policy reforms should be carefully planned and executed\. The
attempt to carry out institutional (restructuring, decentralization) and policy reforms (credit policy, input
marketing policy, output marketing policy, land policy) while implementing sector-wide initiatives was
difficult for a weak implementing institution like MAC\. The reform strategy should have concentrated on
sequencing the reforms and building on what had been successful, while redressing those that proved
difficult to implement\.
Transitional measures and expected output should be clearly defined\. A transitional period was
necessary to put in place the institutional framework and pilot certain initiatives\. The output expected from
these activities carried out during the transition should have been clearly defined so as not to create high
expectations\. Institutional development takes time, and it takes time to see responses to the stimulus
provided by the reforms\. Therefore, the expected output of programs such as ASIP should be realistic\.
For complex projects and programs it is essential that there is a unit fully responsible for the
day-to-day running of the operation\. On the grounds of sustainability, the ASIP avoided the creation of a
project implementation unit and decided to use existing structures to implement the program\. The
weaknesses of project implementation units are discussed in the SAR, but experiences in the
implementation of complex programs like ASIP through an existing structure was not mentioned\. It is not
clear on what basis this implementation arrangement was selected over the project implementation unit\. As
a long-term program, it would have been prudent to start with a small project implementation unit in the
first phase and transfer responsibilities to new or existing structures in subsequent phases as capacity
develops\.
Risks and mitigating measures should be identified realistically\. During the course of ASIP's
preparation, and at the time of Board presentation, a number of risks were identified; notably, questions
were raised about ASIP's implementation when the restructuring of MAC had not been completed\. No
provision was made for any delays in the restructuring of MAC\. Similarly, no provision was made for the
risk of government failing to adopt and implement the Letter of Sector Policy Development\.
9\. Partner Comments
(a) Borr- oei/iimplellleinting agency'\.
The Agriculture Sector Investment Program was prepared in 1994-95 and launched in January 1996 as an
innovative approach to rationalize and coordinate over 180 ongoing and prospective agricultural projects
financed by 15 donors\. With management capacity at Ministry of Agriculture Food and Fisheries (MAFF)
overtaxed, ASIP provided a framework to consolidate project management and achieve efficiencies in
disbursement and procurement (MAFF changed to the Ministry of Agriculture and Cooperatives (MAC),
effective January 2000)\. The ASIP closed on 31 December, 2001 after two one-year extensions\.
Under ASIP the Government prepared 17 sub-programs/components for donor funding\. Bilateral and
multilateral donors agreed to designate which components of the Government-prepared program they would
support and then channel their financing through a single fund, or "basket" administered by the Ministry of
Agriculture, Food and Fisheries (MAFF)\. The single basket concept meant that accounting; disbursements
and procurement would be unified across all participating donors\. Stakeholders, who were involved in the
preparation of ASIP, had high expectations that the program would bolster the agriculture sector, which
had been suffering from drought, the side effects of structural adjustment and the collapse of the sector's
credit institutions\.
- 16 -
IDA was a major financier of the ASIP\. At the initial stages of ASIP, the proposed IDA credit of US $60
million (17% of appraisal estimated ASIP costs) was to finance mainly parts of the research, extension,
training, institutional support and land sub-programs and investment activities under the rural investment
fund in the pilot schemes component\. However, in 1998, at the Mid-term Review (MTR) the IDA portion
of the program was restructured with the components financed by IDA reduced to three; (i) agricultural
services, (ii) capacity building and (iii) the Rural Investment Fund (RIF)\. This was to ensure greater
responsibility for administration and financial management, which by then was transferred to the Districts\.
After the MTR, implementation accelerated and ultimately 91\.5% of the original $60 million IDA
allocation was disbursed\. The ASIP closed on 31st December, 2001 after two one-year extensions\.
There were a number of issues that impeded the development impact of ASIP\. At the outset, there were
high expectations for the ASIP by stakeholders\. Politicians fueled expectations among farmers particularly
that there would be credit to which they would have ready access\. This was however not the case as an
Agricultural Credit Component was never funded\. The thwarted expectations hurt future cooperation with
ASIP\.
Protracted MAFF restructuring hampered implementation capacity\. Both Government and the Bank
greatly underestimated the time and cost required to restructure\. An outside body independent of MAFF to
ensure an improved institution should have done MAFF restructuring\. There was also slow compliance
with the conditions of the policy-based loans, sectoral policy, privatization, and Governance reduced the
flow of funds to ASIP\.
Government involvement in the preparation of the components was not strong\. ASIP sub-programs were
not well defined as would have been the case with a traditional project approach which disappointed
donors, and caused them to revert to the traditional individualistic project approach\. All sub-programs
were nationwide, had unrealistic funding requirements and often did not have clear strategy\. The
nationwide emphasis was one reason for the high original estimated cost of ASIP\.
Donor participation also limited ASIP's impact\. Bi-lateral donors did not want to relinquish control over
their funds and were not enthusiastic about the basket concept of ASIP, which was a reason why the donor
funding in ASIP fell well short of plan\. Finally, the World Bank did not take adequate time to assess and
nurture wider donor support\. This created the perception that ASIP was a World Bank Project\.
The preparation and design stages of ASIP are rated unsatisfactory on both the Government and IDA sides\.
However, all subprograms with the exception of the Policy and Planning subprogram are rated satisfactory
for implementation after the mid-term review\. Similarly, the IDA and the Government performances are
rated satisfactory for implementation and supervision\. Sustainability of the ASIP as a program is rated
highly unlikely\. Gains achieved under ASIP are not sustainable for several reasons\. The design and
preparation did not provide for post-programn maintenance and replacement of resources purchased under
the project\. In addition, the under implementation of the private sector portion of ASIP meant that
activities that would more likely be sustained according to private sector incentives were not carried out\.
Most public sector activities were carried out, but are not sustainable without follow-up donor assistance\.
The overall rating for ASIP is satisfactory\.
The Government project completion report is a result of discussions with stakeholders, review of
the many preparation and evaluation documents on ASIP and intensive meetings of the ASIP
Task Force, including a four-day seminar covering the major issues of ASIP\.
(h) Co/inancunrs\.
- 17 -
The other donors involved in ASIP have not prepared any written evaluations of ASIP\. It is, however, quite
clear that all participating donors have lost confidence in one of the key concepts of ASIP, that is, 'pooled
funding'\. As a result, they have reverted to supporting their individual projects, within a very loosely
defined ASIP framework
(c) Other partners (NGOs/private sector):
N\.A\.
10\. Additional Information
Zambia's economy, including the agriculture sector, remains in a critical state, mainly as a result of policy
failure and economic mismanagement\. Moreover, as Zambia's economy slides into recession with the
collapse of the mining sector, and natural man-made disasters (drought and the HIV-AIDS pandemic)
compounding the problem, the question of what to do in the agriculture sector to diversify the economy and
increase agricultural growth becomes more and more urgent\.
- 18 -
Annex 1\. Key Performance Indicators/Log Frame Matrix
Outcome / Impact Indicators:
Indicator/Matrix Projected In last PSR -Actual/Latest Estimate
Agricultural GDP (million 1994 constant 1995 baseline 395, target 466^ 419
kwacha)
Total value of agricultural export (USS 1995 baseline 55\. target 140 125
million)
Food production index 1981=100 1995 baseline 130\. target 170 128
Land productivity (average yield per hectare 1995 baseline 1\.6\. target 2\.2 1\.5
of maize) tons
Net annual agricultural income per farn 1995 baseline 70,000, target 95,000 62,000
household (1994 kwacha)
* 1977 prices and 1994 prices respectively\.
Baselincs and targets as presented in the staff appraisal report\. For additional performance indicators sec annex I table I B\.
Output Indicators:
lndlcator/MatrHx Projected In last PSR Actual/Latest Estimate
A\. Policy and Institutional Improvement Restructuring Delay in completing the restructuring was
constraint
Decentralization Following midterm review, implementation
decentralized and district agricultural
committees and DACOs given more
responsibility\.
Establish financial management unit to The financial management unit not functional
handle basket funding" until after the midterm review; basket funding
not implemented\.
Uberalze input suppty and crop markets; Markets for input and output liberalized; trade
remove trade restrictions\. restrictions removed; but govemment
interventions In fertilizer, credit, and maze
markets continued\.
Take action to improve smallholder access to No action taken, limited progress\.
credit
B\. Public Investment - Establish the Golden Valley Agricultural Established\.
Agricultural Research and extension Trust
Undertake research on basis of farmer A total of about 34 varieties released;
demand reportedly are in demand by communities\.
Assist farmers to increase production The T&V was replaced by the participatory
through adoption of proven agricultural extension approach;
technologies/practIces Adopton rate ranges from 15 to 95%
Improved animal health services and disease Percentage of farmers accessing livestock
control, and husbandry practices\. extension and veternary services fell\.
C\. Private sector development - Seed Establish farmer-based commercial seed About 8,000 growers engaged in seed
multiplication and distribution multplicaton and distdbution system\. production for commercial purposes and
system In place\.
Support smaliholder and commercial Share of nontraditional exports rose
farners to diversify into nontraditional signflcanUy, more than doubling the 1996
exports, vel\.
D\. Pilot Investment Fund Buid the production capacity of small scale Over 1\.800 rural investment fund subprojects
Rural Investment fund farners by providing matching grants for were funded at US$17 million\.
small scale capital investment
Prtvatize state and parastatal farm land State farms privatized immadiately and did
not need support of the program\.
End of project
1999 figure (initial official closing target of prqlect\. timc serics data is available in annex la)\.
Constructed based on the staff appraisal report\. For additional perfornmancc indicators sec annex Ia\.
- 19-
- 20 -
Annex la
Annex la\. ASIP: Key Performance Indicators (Revised)
1998 1999 2000 2001
Target Actual Target Actual Target Actual Target Actual
A\. Agricultural Extension
Number of farmers 150 175 185 145 200 140 250 200
adopting one or more
technologies ('000)
Field demonstrations 2500 2300 3,200 2,300 4300 8,000 8,000 10,500
(farmer fields) I_I
Field demonstrations, 85 70 85 68 85 73 85 72
(adoption rates))
B\. Soiis and Crops
Research Branch
Number of varieties 15 3 3 6
released
Breeder and foundation
seeds released (MT): 30 52 33 45
Quantity of seed produced 3032 3481 2825 18262
from SCRB varieties (MT)
C\. Seed Control and
Certification Institute
Seed testing (number) 3,000 2,980 4,000 6,500 5,000 4,200 6,000 4,400
Seed production by the 1,500 2500 2,500 3000 2,800 3590 3,000 3700
informal sector (MT) I
Seed production by Seed 7,031 6,737 10,600 15,100
Companies (MT) I
Cassava (cuttings, '000) 1,000 700 5,000 4,230 10,000 8,120 20,000 14,509
Sweet potato (vines, '000) 2,000 1,500 4,000 2,840 2,500 2,030 5,000 3,617
D\. SFI and CF
Number of farmers trained
in CF related technologies: 15,000 32,414 6,000 12,777 20,000 30,000 20,000 12,000
Quantity of legume seed 8,000 12,000 8,000 9,600 10,000 20,250 15,000 22,000
supplied (kilogram)
Farmers adopting 20,000 39,246 20,000 26,000 30,000 25,391 30,000 20,000
conservation farming
E\. Rural Investment fund
Number of subprojects 80 211 317 445 200 776 200 245
completed
Matching grant fund 1,200 2,800 3,000 3,144 2,000 5,302 2,655 3,178
disbursed - US$, ('000)
F\. M&E
Surveys PHS & PHS & PHS & PHS PHS PHS PHS NA
CFS CFS CFS
Sector performance SPA- SPA- SPA SPA SPA SPA SPA NA
analysis (SPA) MTR MTR
Source: Ministry of Agriculture, June 2002
Abbreviations: CFS=crop forecast survey; PHS=post harvest survey; SFI=soil fertility initiative; CF=conservation
farming; MTR=midterm report\.
- 21 -
Annex 2\. Project Costs and Financing
Table IA: Original Project Cost by Component (in US$ million equivalent)
*-rjwCo lt-By Component ' \. l milion : S$ million
1\. Institution building
a\. MAFF headquarters"* 10\.5 61\.5 585\.7
b\. Policy and planning, M&E 11\.6 6\.1 52\.6
c\. Financial management unit 1\.6 0\.7 43\.8
d\. Standards 4\.7
Subtotal 28\.4 68\.3 240\.5
2\. Public investments
a\. Research 58\.0 20\.8 35\.9
b\. Extension and information 35\.0 14\.6 41\.7
c\. Animal production and health 48\.3 13\.4 27\.7
d\. Fisheries development 16\.6 6\.4 38\.6
e\. Farm power and mechanization 3\.1 3\.0 96\.8
f\. Irrigation 6\.7 13\.4 200\.0
g\. Agricultural training 15\.0 4\.2 28\.0
Subtotal 182\.7 75\.8 41\.5
3\. Private sector development
a\. Seed multiplication and distribution 4\.2 3\.1 73\.8
b\. New product development 6\.0 -
c\. Rural finance
Agricultural inputs 56\.0
Marketing and trade 19\.4 6\.2 32\.0
Subtotal 85\.6 \. 9\.3 10\.9
4\. Public investment schemes
a\. Rural investment fund 27\.0 17\.0 63\.0
b\. Privatization of state farms 26\.3 -
Subtotal 53\.3 17\.0 31\.9
Total baseline costs shown by component 350\.0 170\.4
Total baseline costs not shown by component 78\.3
Total Baseline Costs 350\.0 248\.7 71\.1
Physical Contingencies
Price Contingencies
Total Project Costs 350\.0 248\.7 71\.1
Total Financing Required 350\.0 248\.7
* Because a portion of the expenditure is not identified by subprogram, the percentage values shown above
do not tell the whole story\. In the first three years of the program, the FMU did not keep records by subprogram\.
** Disbursement to provinces and districts are made through headquarters, therefore a much higher figure is
shown for MAFF headquarters\.
- 22 -
Table IB: IDA-supported Project Costs by Corm onent (revised) (in US$ million equivalent)
Cmost ney1 pnt ';nt US$ million' U L _
1\. Institution building
a\. MAFF headquarters** 0\.0 0\.2
b\. Policy and planning, M&E 8\.0 3\.0 37\.5
c\. Financial management unit 1\.0 0\.7 70\.0
d\. Standards 2\.5 0\.0
Subtotal 11\.5 3\.9 33\.9
2\. Public investments
a\. Research 21\.5 21\.0 97\.7
b\. Extension and infommation** 4\.0 7\.7 192\.5
c\. Animal production and health 0\.0 0\.0
d\. Fisheries development 0\.0 0\.0
e\. Farm power and mechanization 0\.0 0\.0
f\. Irrigation 0\.0 0\.0
g\. Agricultural training 8\.5 3\.9 45\.9
Subtotal 34\.0 32\.6 95\.9
3\. Private sector development
a\. Seed multiplication and distribution 0\.0 0\.0
b\. New product development 0\.0 0\.0
c\. Rural finance 0\.0 0\.0
Agricultural inputs 0\.0 0\.0
Marketing and trade 0\.0 0\.0
Subtotal 0\.0
4\. Public investment schemes
a\. Rural investment fund 10\.0 17\.1 171\.0
b\. Privatization of state farms 4\.5 0\.0
Subtotal 14\.5 17\.1 117\.9
Total Baseline Costs 60\.0 53\.6 89\.3
Physical Contingencies
Price Contingencies
Total Project Costs 60\.0 53\.6 1
Total Financing Required 60\.0 53\.6
* Note: Because of the depreciation of the dollar against the SDR the loan amount declined to $55,447,215\.00
on December 31, 2001\. Disbursement out of this loan amount is 97%\.
** Expenditures on fisheries, animal husbandry, irrigation, seed multiplication, conservation farming, and the
like are included under agricultural extension\.
Table IC: Project Costs by Procurement Arrangements, Original
(Appraisal Estimate) (US$ million equivalent)
- 23 -
Procurement Method1
Expenditure Category ICB NCB Other2 N\.B\.F\. Total Cost
1\. Civil Works (rehabilitation) 0\.00 7\.00 0\.80 0\.00 0\.00
(0\.00) (6\.80) (0\.70) (0\.00) (7\.5)
2\. Goods (vehicles and equip\.) 19\.50 1\.00 1\.20 0\.00 0\.00
(19\.50) (0\.90) (1\.00) (0\.00) (21\.4)
3\. Credit 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
4\. Rural Investment Fund 0\.00 0\.00 10\.00 0\.00 0\.00
(0\.00) (0\.00) (10\.00) (0\.00) (10\.00)
5\. Technical Assistance 0\.00 0\.00 6\.60 0\.00 0\.00
(mainly short-term) (0\.00) (0\.00) (6\.60) (0\.00) (6\.6)
6\. Training 0\.00 0\.00 10\.40 0\.00 0\.00
(0\.00) (0\.00) (10\.40) (0\.00) (10\.4)
7\. Recurrent Costs /a 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00)
8\. Incremental Recurrent 0\.00 0\.00 5\.10 57\.40 62\.50
Costs lb (0\.00) (0\.00) (4\.10) (0\.00) (4\.10)
Total 19\.50 8\.00 34\.10 288\.40 350\.00
__________________________ (19\.50) (7\.70) (32\.80) (0\.00) (60\.00)
1/ Figure in parentheses is the respective amounts financed by the IDA Credit and includes contingencies\.
2/ NBF mean not Bank-financed (includes elements provided under parallel co-financing procedures, consultants
under trust funds, any reserved procurement and any other miscellaneous items)\. The procurement
arrangements for items listed under "Other" and details of the items listed as NBF need to be explained in
footnotes to the table\.
la Includes staff salaries, and staff allowances and expenses\.
lb Includes travel and subsistence, operating and maintenance costs, and other miscellaneous operating costs\.
Table 1D: Project Costs by Procurement Arrangements for IDA Supported Components
(Actual/Latest Estimate) (US$ million equivalent)
- 24 -
Procurement Method'
Expenditure Category ICB NCB Other2' N\.B\.F\. Total Cost
1\. Civil Works (rehabilitation) 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
2\. Goods (vehicles and equip\.) 0\.00 0\.00 0\.00 0\.00 0\.00
(4\.7) (2\.8) (1\.7) (0\.00) (9\.2)
3\. Credit 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
4\. Rural Investment Fund 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (17\.1) (0\.00) (17\.1)
5\. Technical Assistance 0\.00 0\.00 0\.00 0\.00 0\.00
(mainly short-term) (0\.00) (0\.00) (4\.6) (0\.00) (4\.6)
6\. Training 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (3\.9) (0\.00) (3\.9)
7\. Recurrent Costs /a 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
8\. Incremental Recurrent 0\.00 0\.00 0\.00 0\.00 0\.00
Costs /b (0\.00) (0\.00) (18\.8) (0\.00) (18\.8)
Total* 4\.7 2\.8 46\.1 2\.0 53\.6
(4\.7) (2\.8) (46\.1) (0\.00) (53\.6)
Note: Estimate is still provisional due to incomplete information for 1996 and 1997\.
l Figures in parenthesis are the amounts to be financed by the IDA Credit\. All costs include contingencies\.
2/ Includes civil works and goods to be procured through national shopping, consulting services, services of contracted
staff of the project management office, training, technical assistance services, and incremental operating costs
related to (i) managing the project, and (ii) re-lending project funds to local government units\.
- 25 -
Annex 3\. Economic Costs and Benefits
- 26 -
Annex 4\. Bank Inputs
(a) Missions:
Stage of Project Cycle No\. of Persons and Specialty Performance Rating
(e\.g\. 2 Economists, I FMS, etc\.) Implementation Development
Month/Year Count Specialty Progress Objective
Identiflcation/Preparaffon
1992
11/11/1992 8 Team leader, economist,
financial analyst, banking
specialist, grassroots institutional
specialist, irrigation specialist,
agriculturist,agricultural
economist\.
03/30/1993 1 Economist\.
11/07/1993 5 Coffee specialist, economist,
operations and sector specialists\.
Appraisal/Negotiation
03/24/1994 14
07/24/1994 14 Financial analyst/team leader,
sector investment specialist,
agricultural economist,
agriculturalists (2), financial
analyst, economists (5), land use
specialist, disbursement officer,
procurement officer, lead
specialist, planning and
budgeting specialist\.
11/8/1994 4 Sector investment specialist,
economist, planning and
budgeting specialist, operation
specialist\.
Supervision
06/12/1995 7 Sector investment specialist, S S
planning and budgeting
specialist\.
11/21/1995 3 Sector investment specialist, S S
planning and budgeting
specialist, financial analyst\.
03/15/1996 6 Sector investment specialist/team S U
leader, natural resource
management specialist, financial
analyst, planning and budgeting
specialist, operations officer\.
06/28/1996 Sector investment specialist/team S U
leader, natural resource
management specialist, financial
- 27 -
analyst, agriculturalist,
economist, operation officer\.
02/24/1997 9 Agriculturalist, sector investment S U
specialist, natural resource
management specialist,
operations officer, training
specialist, agricultural
economists, economists,
anthropologist, agricultural
services specialist\.
08/15/1997 1 Agricultural economist/task S U
manager
11/24/1997 9 Agricultural economist/task S U
manager, agriculturalists (2),
agricultural services specialist,
financial analyst, operations
analyst, disbursement and
procurement specialist, irrigation
engineer, private sector
development specialist\.
03/28/1998 4 Agricultural economist/task S U
manager, agriculturalist,
agricultural service specialist,
financial analyst\.
07/04/1998 4 Agricultural economist/task S U
manager, agriculturalist,
agricultural service specialist,
irrigation specialist\.
12/03/1998 7 Agricultural economist/task
manager, agriculturalist,
financial analyst, agricultural
officer\.
03/19/1999 3 Agricultural economist/task
manager, agriculturalist,
financial analyst, agricultural
officer\.
07/29/1999 4 Agricultural economist/task S
manager, financial analyst,
agricultural officer,
agriculturalist\.
12/17/1999 8 Agricultural economist/task S S
manager, agriculturalist,
agricultural officer, financial
analyst, economist, economist\.
02/16/2000 4 Economist/team leader,
(limited) economist, agricultural specialist\.
06/15/2000 1 Economist/team leader, S S
economist\.
09/19/2000 5 Economist/team leader, S S
economist, financial analyst,
agriculturalists (2)\.
04/10/2001 2 Economist/team leader, S S
- 28 -
economist, agricultural specialist\.
07/12/2001 2 Economist/team leader, S S
economist, agriculturalists\.
!2/?
ICR
03/04/2002 4 Agricultural service
specialist/team leader,
research management
specialist, policy analyst,
economist\.
(b) Staff:
Stage of Project Cycle Actual/Latest Estimate
No\. Staff weeks US$ ('000)
Identification/Preparation 589\.1 931\.0
AppraisaVNegotiation 151\.6 558\.7
Supervision 446\.2 1,768\.8
ICR
Total 1,186\.9 3,258\.5
- 29 -
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components
(H=High, SU=Substantiai, M=Modest, N=Negligible, NA=Not Applicable)
Rating
Macro policies O H O SU * M O N O NA
ISector Policies O H O SU * M O N O NA
Z Physical O H O SU OM O N * NA
F Financial O H O SU * M O N O NA
F Institutional Development 0 H 0 SU * M 0 N 0 NA
FEnvironmental O H * SU O M O N O NA
Social
Z Poverty Reduction OH O SU * M O N O NA
X Gender O H * SU O M O N O NA
El Other (Please specify) O H OSUOM ON * NA
F Private sector development 0 H 0 SU * M 0 N 0 NA
I Public sector management 0 H 0 SU * M 0 N 0 NA
Li Other (Please specify) O H O SUOM O N * NA
- 30 -
Annex 6\. Ratings of Bank and Borrower Performance
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)
6\.1 Bankperformance Rating
Lending OHS OS OU OHU
F Supervision OHS OS OU O HU
F Overall OHS * S O U O HU
6\.2 Borrowerperformance Rating
F Preparation OHS OS * U OHU
Government implementation performance O HS O S * U 0 HU
Implementation agency performance O HS O S O U 0 HU
9 Overall OHS OS Ou O HU
- 31 -
Annex 7\. List of Supporting Documents
1\. The World Bank, Staff Appraisal Report, Zambia: Agriculture Sector Investment Program, March
13, 1995\.
2\. The World Bank, Development Credit Agreement, June 7, 1995\.
3\. Institute of Economic and Social Research, Draft Factor Affecting Agricultural Production in
Zambia, prepared for MAFF, April 1997\.
4\. Ministry of Finance and National Planning, Macroeconomic Indicators, December 2001, Lusaka,
Zambia\.
5\. Ministry of Agriculture and Food and Fisheries, 1999/2000 Agricultural Statistics Bulletin,
Lusaka Zambia, 2002\.
6\. Kane Consults, & Ruralnet Associates, Sector Performance Analysis of the Agricultural Sector
Investment Program (ASIP) 2000/2001, MAFF, January 30, 2002\.
7\. DSI-Southem Africa, Financing the Agricultural Sector Investment Program (ASIP) in Zambia, A
GTZ Funded Study, November 2000\.
8\. FAO, Rural Investment Fund, Final Assessment, Mackrandilal and Mudenda, February 2002
9\. Institute for African Studies, University of Zambia, Agricultural Sector Performance Analysis,
Vol\. 2, prepared for MAFF, August 1996\.
10\. Institute of Economic and Social Research, University of Zambia, Agricultural Sector Investment
Program, a Mid-term Review, prepared for MAFF, June 1998\.
11\. Ministry f Agriculture, Food and Fisheries, ASIP Successor Program - Soils and Crops Research
Component, September 2001\.
12\. Ministry of Agriculture, Food and Fisheries, Extension at Crossroads: A Review of Agricultural
Extension in Zambia, June 2000\.
13\. Ministry of Agriculture, Food and Fisheries, Is the Glass Half-Empty or Half - Full?, An Analysis
of Agricultural Production Trends in Zambia, Food Security Research Project, October 2000\.
14\. Ministry of Agriculture Food and Fisheries, Beneficiary Assessment of the Rural Investment Fund,
September 2000\.
15\. Ministry of Agriculture, Food and Fisheries, Program Completion Report for ASIP, February
2002
- 32 -
Annex 8\. Beneficiary Survey Results
Annex 8\.1 Rural Investment Fund - Beneficiary Assessment
I\. Introduction
1\. The Rural Investment Fund (RIF) commissioned the Participatory Assessment Group (PAG) to
undertake a Beneficiary Assessment (BA) study whose purpose is to find out Farmer Group/Community
(FG/Community) members' views on key issues that relate to project implementation\. This is with a view to
improve upon RIF's program\. Over the past four years of its existence RIF has supported more than 700
agricultural related projects throughout the country\. The issues looked at during the BA include project
identification and prioritization of felt needs; information flows regarding RIF; use and control of funds;
strength and weakness of community organizations; communities view of the procedures used to appraise,
approve and monitor sub-projects; factors affecting timely implementation of sub-projects; local
government involvement; sense of project ownership; sustainability and benefits derived from the
sub-projects in RIF supported activities derive, etc\.
2\. Qualitative participatory research methods and tools have been used in generating the information
being analyzed and reported in this document\. These tools were used in such a systematic manner that they
also produced quantifiable data\. 31 RIF supported projects have been visited and studied\. These are
scattered in 20 different districts in all the nine provinces of Zambia\. The projects represent all the project
types funded by RIF which include storage and market sheds, water projects, i\.e\. wells, bore holes, dams,
canals, etc\. They also include dip tanks, poultry houses and piggeries as well as roads and bridges\. The
majority of interviewees (88%) consisted of ordinary FG/Community members\. The views generated by
these were triangulated and amplified by other stakeholders in RIF supported projects\. These are staff from
MAC and members of District Agriculture Committees (DACs)
II\. Key Findings
3\. All the 31 RIF supported projects respond to FG/Community felt needs\. About 90\.3 percent were
identified by FG/Communities\. The remaining 10 per cent by other individuals like staff from the MAC\.
Although all the 31 supported projects respond to felt needs and the majority were identified by the
FG/Communities themselves mention should be made of the forces and factors external to the
FG/Communities, which greatly influence the decision regarding which project, among so many, they give
priority\. These forces include what were often referred to as "district priorities", politicians and the often
very powerful District Agricultural Co-coordinator (DACO) of MAC\.
4\. The major sources of information regarding RIF comes from MAC staff, i\.e\. the DACO and
extension officers; other sources include the radio, newspapers, televisions and people who travel from one
place to another\. While all know that RIF assists with finances, many particularly women did not know the
amounts of these funds, how they are used and who controls them\. In many cases not even the project
Executive Committee (EC) nor the DAC had this vital infornation\. This is because often funds are
controlled from the Center, Lusaka\. This was despite the EC having been told to open a bank account into
which RIF funds, which they would control, would be deposited\. Inadequate information on funds tends to
demoralize FG/Communities especially their leaders who feel powerless\. Suspicions of misuse of funds is
created and often become reason for non-completion or poor workmanship of projects\. Lack of control of
project funds does not in any way build the capacities of beneficiary communities; if anything it
disempowers them\.
- 33 -
5\. Strongly felt needs coupled with good community organization and leadership, which closely liaises
with the DACO and transparency through adequate information flows contribute towards effective
FG/Community self-management, mobilization and motivation\.
6\. FG/Communities have been required to contribute 25 per cent of the total cost of their respective
project\. This contribution largely takes the form of labor, namely, digging trenches, bringing construction
materials to project sites, etc\. Cash contributions are also made in all project sites\. Some offer the use of
their tools to project implementation\. Major problems faced in making these contributions are transport
since much of the materials are heavy (sand, stones, water), time lag that often occurs between project
approval and funding, inability to raise the cash contributions and being overworked by RIF funded
projects especially if some FG/Comnmunity members decide to drop out\.
7\. About 40 per cent of the projects studied did not experience any time lag between the various
project phases\. The rest did, especially between project approval and disbursal of funds\. In three cases, it
lasted as much as 24 months and had the effect of demoralizing FG/Community members many of whom
dropped out\.
8\. MAC staff at district level are involved in disseminating information on RIF, assisting communities
to apply for RIF funds, appraising and monitoring projects\. Those mentioned in particular are the DACO,
the extension staff, and staff from the Technical Services Branch\. Staff from other government
departments, especially Water Affairs and Roads does also assist especially in project design\. Private
business contractors are involved especially in big projects like dams\.
9\. District Agricultural Committees (DACs) were found not to be as effective as desirable largely
because of inadequate resources to support their RIF related work\. This often leaves DACOs to do this
work on their own\. This makes it easy for powerful forces like politicians to exert their undue influence in
project identification\.
10\. FG/Community members unanimously said they own RIF supported projects\. What has brought
this sense of ownership are:
* the 25 per cent contributions to project implementation
* the strong felt need for the project
* they are the ones who derive benefits from it
* the fact that they and not RIF or anybody else identified the project\.
11\. This sense of ownership was said to contribute considerably to project sustainability\.
Communities would not wish to forfeit the benefits they derive from R\.IF funded projects if these facilities
disintegrate\. This factor was said to contribute to sustainability\. So is the fact that FG/Communities are in
charge of the project through their leaders, the Executive Committee\.
12\. 19 of 25 completed projects have put in place maintenance committees to ensure sustainability
of facilities created or rehabilitated with RIF support\. Besides, these committees levy user-fees, which are
meant for maintenance\.
13\. Despite having been in operation for only about 4 years, in some districts much less, a number of
important benefits have already been acknowledged\. The main ones being:
* Improvement in the quality of life brought about by, among other things, clean water which
reduces diseases while providing opportunities for vegetable, fruit and fish farmning which in tum
- 34 -
improves the diet and consequently the health status of the community;
* Improved quality of life has also been achieved through increased cash incomes brought about by
creation and improvements of storage and market sheds, roads and bridges and also fish farming,
and vegetable gardening;
* Community empowerment has also been mentioned as a big benefit; indeed, the most often cited
benefit of RIF supported projects\. This empowerment takes two forms, namely:
a) better community organization inspired and fostered by working together on RIF supported
projects; and,
b) acquisition of technical skills for relatively simple constructions and repairs\.
14\. Most interviewees are happy with the 25 per cent they contribute towards the implementation of
RIF supported projects\. This is because, among other things, it creates a sense of ownership over facilities
being provided and also because it takes the form of labor which is shared by many people to make it light\.
FG/Communities are very happy with the assistance given by RIF in the creation and rehabilitation of
agricultural infrastructure\. However, they would like RIF to enlarge its scope of eligible projects by
including the provision of the means with which to start utilizing the infrastructure created or rehabilitated\.
In other words, do not only provide the storage shed to store crops or the dip tank; provide the inputs, i\.e\.
credit for seed and fertilizers or dip tank chemicals to enable FG/Communities start utilizing these facilities
to the maximum\.
III\. Recommendations:
15\. Many of these recommendations are drawn from the foregoing paragraphs and indeed from the rest
of the report\. Others were specially suggested by interviewees\.
A\. Project identification
16\. Issue raised: While all projects that are and have been funded by RIF correspond to
FG/Community felt needs some influential individuals tend to exert undue influence on the identification of
projects for RIF Support\. In some cases district guidelines favor one or another type of project thus
discouraging others, which may be more important to the community In others, politicians largely
determine choices\.
17\. Recomnnendations:
* strengthen DACs by providing them with resources, mainly transport and money, to enable them
hold regular meetings;
* enlarge membership of RIF stakeholders and DACs to include other government departments in
order to avoid situations whereby DACOs are forced to act solo;
* sensitize politicians into RIF guidelines and procedures;
* where necessary review RIF district guidelines to enable different parts of the district benefit from
RIF support\.
B\. Information Flows, Transparency and Community Capacity Building
18\. Issue raised: Inadequate information flows especially regarding amounts and use of project
finances were found in many projects\. Women in particular experienced this dearth of information\. In
addition, by denying communities the opportunity to be in full control of their projects, including the
finances, RIF tends to disempower and not--build-the capacities of these communities\.
- 35 -
19\. Recommendations
* ensure adequate information flows through such mechanisms as project launches and regular
FG/Community meetings at which minutes are taken and read\.
* empower FG/Communities through the ECs by making them truly responsible for project funds
through participation in the disbursement of RIF's funds\. In other words, MAC's Financial
Management Unit (FMU) should hand over the functions of funds control to beneficiary
communities like the Micro projects Unit/ZAMSIF is doing, while RIF, and not FMU, does the
disbursements from Lusaka\.
C\. Community organization and project ownership and project sustainability
20\. Issues raised: Effective community organization coupled with good leadership which adequately
responds to FG/Community felt needs and the 25 per cent contributions have been found to nurture the
sense of project/facility ownership which in turn contributes greatly towards project sustainability\. Major
obstacles to community contributions include inadequate transport especially for heavy and bulk
construction materials, which often have to be carried on the head for long distances\.
21\. Recommendations:
* RIF to include transport in its 75 per cent contributions in cases where it is felt necessary;
* All should share lessons learnt in some projects regarding the resolution of problems like that of
transport\.
D\. Time lag
23\. Issue raised: Delays between the various project phases have been found to play a negative role in
the implementation of RIF funded projects\. They have had the effect of demoralizing FG/Community
members and their leaders\.
24\. Recommendations:
* Minimizing delay in processing project applications and especially in the disbursement of funds\.
* The newly created Provincial Technical Review Team PTRT should not lengthen but shorten the
bureaucratic processes as it should emphasize more on decentralization of the process than on
adding yet another step or stumbling block on the way\.
E\. District Involvement
25\. Issue raised: MAC staff at district level and to an extent those from departments of Roads and
Water Affairs play key roles in the implementation of RIF supported projects\. However, some feel they are
not adequately remunerated for their involvement in RIF supported activities since they feel this is
additional work\. DACs rarely meet because of inadequate resources\. This Forces the DACO to take
important decisions on his own\.
26\. Recommendations:
* MAC should be very clear to its staff and those from other government departments who work on
RIF supported projects regarding whether involvement in these projects attracts additional
remuneration or are part of their daily work for which they receive a salary at the end of the month\.
* RIF should ensure that DACs hold regular meetings' preferable quarterly, by providing the
necessary financial resources\.
* DAC membership should include more people from other government departments than is currently
- 36 -
the case\.
F\. Projects Benefits and RIF Mandate
27\. Issue raised: There already exists an impressive and long list of benefits which FG/Community
members and in some cases even non- members derive from RIF supported projects\. However, full
utilization of these facilities established with RIF support is often restricted by insufficient resource base on
the part of the beneficiaries\. At the sarne time RIF has not reached all corners of the districts and the
country\.
28\. Recommendation: While making every effort to sensitize and reach even the remotest parts of the
country, RIF should review its mandate and consider providing resources, on credit basis, which will enable
project beneficiaries to fully utilize the facilities that have been created or rehabilitated with its assistance\.
Annex 8\.2: Rural Investment - Final Assessment
1\. A pilot Rural Investment Fund (RIF) was included under ASIP to provide matching grant funds to
smallholder farmer and other rural groups for small-scale capital investments\. A wide range of crop and
livestock production activities and related support services would be eligible for support; beneficiaries
would be required to make a counterpart contribution; RIF would build on recent experience in Zambia
with similar donor-supported program, including the Social Investment Fund (ZAMSIF) supported by IDA
and community development funds supported by GTZ, IFAD and other donors, and attempt to consolidate
these in an effort to reach all vulnerable groups in rural areas\. The program would emphasize capacity
building\. It would work with groups of a manageable size and support training to help them become
self-reliant and capable of operating efficiently\. Total costs were estimated at US$27\.0 million over four
years, of which US$10\.0 million would be drawn from the IDA Credit, with co-financing expected from
EU, AfDB, IFAD and SIDA -- as well, presumably, as required GRZ and beneficiary contributions,
although the specific financing plan was not shown\.
2\. During implementation, RIF guidelines were developed and progressively revised enabling the
Fund to finance three types of activity: small-scale grants to groups for construction and rehabilitation of
rural infrastructure projects, such as dams, community roads, boreholes and pumps, dip tanks, storage
sheds, bridges, market sheds, fish ponds, poultry houses and piggeries, weirs and irrigation furrows,
afforestation; capacity-building of farmer groups in subproject preparation, implementation and
maintenance; and capacity-building of MAC staff to assist farmer groups to prepare, appraise, supervise
and monitor sub-projects\. Below is a cumulative summary table of sub-projects funded through the RIF:
Rural Investment Fund (Rll): Projects Funded 1996-2001
- 37 -
Project Type No\. projects Total cost Av\. Cost
ZKW ZKW
mn mn
Boreholes & wells 673 12,271\.4 18\.2
Dams 123 10,204\.7 83\.0
Roads & bridges 341 7,070\.3 20\.7
Marketing & storage sheds 278 6,036\.2 21\.7
Irrigation furrows & canals 139 1,964\.8 14\.1
Animal production sheds 52 1,019\.6 19\.6
Livestock dip-tanks 74 644\.6 8\.7
Fish ponds 69 631\.6 9\.2
Afforestation 7 115\.2 16\.5
Total 1,756 39,958\.4 22\.81
Source: Republic of Zambia, RIF, Draft Final Assessment
3\. Despite experience in Zambia with similar projects, the RIF component of ASIP was somewhat
sketchily prepared and, not surprisingly, encountered major implementation difficulties at the outset\.
Principal design deficiencies were: (a) ambiguity as to whether RIF was intended as a pilot or full-scale
operation; although designated a 'pilot investment scheme' in the SAR, the specific approaches or methods
to be tested were not specified in the SAR nor in the Implementation Manual, and initially it appeared that
the Borrower had been left to decide how to proceed\. The RIF was costed at US$27 million, far beyond the
reasonable needs of any pilot project; and although difficulties were encountered from the onset, it was only
after two years,with a handful of projects approved, that the difficulties were resolved and project
implementation picked up; (b) a misplaced assumption at appraisal (consistent with the overall ASIP
philosophy) that RIF could successfully be operated through MAC's existing structures; the scheme only
got underway after being given some managerial autonomy from MAC and a manager and accountant were
hired from outside the ministry; (c) a failure to address the whole 'social capital' issue, even though the
enterprises envisaged for management by farmer groups and cooperatives were clearly unsuitable with long
and checkered histories in Zambia; (d) inadequate provision for capacity building, especially for farmer and
staff training in participatory planning and project management methods (remedied with ASIP's subsequent
shift from the T&V system to a more participatory extension approach); and (e) a serious lack of attention
to the operational and financial viability of sub-projects and thus of RIF as a whole\.
4\. That these design problems were all, with varying degrees of success, addressed after the mid-term
review represents one of ASIP's positive achievements\. According to the Final Assessment Report (FAR)
prepared as input to possible RIF follow-up operation, RIF has been able to achieve its objectives\. RIF has
been successful in meeting its primary objective of providing support for small-scale infrastructure in rural
communities\. There is little doubt that RIF was, and remains, the most appreciated component of ASIP
among local communities, elected officials and the MAC, as it provides beneficiaries with tangible benefits\.
The FAR considers the major strength of RIF to be its efficiency as a delivery mechanism of much needed
infrastructure to small farmers\. It should also be recognized that the RIF Secretariat has been diligent in its
management and reporting duties, especially in the last two years, as evidenced by the timeliness and
content of its regular progress and special reports\.
5\. As documented in the FAR and other reports, there are some areas which need improvement,
particularly, in view of a proposed IDA follow-up operation\. RIF is funded only through the end of 2002
- 38 -
by HIPC and the Netherlands (Western Province)\. There are two kinds of RIF subprojects: community
infrastructure projects, such as feeder roads, bridges, markets, dams and water supply; and agricultural
income-generating or other directly production-related investments, such as animal health and production
facilities, fishponds and crop storage sheds\. Communities have been willing to provide a substantial
contribution, mainly in the form of labor and material, for the construction of small infrastructure projects\.
It is perhaps too early to assess their long-term commitment benefits and sustainability, but in general the
community infrastructure projects are found useful and are much appreciated by the local people, although
issues have arisen in some cases over maintenance responsibility\.
6\. Difficult problems have arisen in some category of subprojects directly related to production that
face an uncertain future\. Quite frequently the Bank is blamed for its unwillingness to permit disbursement
of the Credit for financing of working capital requirements, which beneficiary groups are supposed to find
from their own resources or through credit\. The Bank was clearly correct (on efficiency and equity
grounds) in resisting a generalized opening of the tap for funding of 'working capital'\. However, as the
FAR points out, RIF as a pilot project could and should first have deliberately tested: "the ability of groups
of small farmers to plan, implement and manage [such projects] in Zambia where supporting services were
weak or nonexistent\. This fundamental aspect of the program was ignored or forgotten almost from the
beginning"\.
7\. Looking ahead, the FAR concludes: "The percentage of farmer groups capable of managing
productive income-generating enterprises is likely to continue to be low\. Altemative ways of promoting
these enterprises needs to be found\." A number of useful recommendations for consideration under a
possible follow-up operation are provided:
* Financing of working capital for groups with demonstrated high levels of social capital\.
* Scaled down projects for individual management within the group, with repayrnents used to finance
other members\.
* Lower contributions from vulnerable groups\.
* More detailed treatment of social capital in determining eligibility of groups for financing\.
* Strengthening of financial capacity at district and FG level to manage a larger number of smaller
projects\.
8\. In researching alternative ways to promote viable and sustainable enterprises for Zambian
smallholder farmers, a central issue receiving GRZ and donor attention is creating synergy among projects
implemented at the community level\. For example, in preparation of the Government's forthcoming
Agricultural Commercialization Program (ACP) which is expected to provide a more cohesive framework
for developing the sector, merging the separately evolved RIF and ZAMSIF structures and procedures for
planning and financing community infrastructure projects should be explored as an option\. This option
could preserve RIF's privileged access to MAC's extension staff structure in rural areas as well as the
accumulated management experience and databases of both funds\.
9\. Additional issues that demand close attention for any RIF follow-up project include: poverty
targeting; gender strategy; clarifying the roles of District Development Committees (DDC), District
Agriculture Committees (DAC), and District Agricultural Coordinators (DACO) of MAC in project
promotion and selection; arrangements for technical review/coordination/approval of projects at provincial
level; and monitoring/evaluation arrangements at the center including use of their outputs\.
- 39 -
Annex 8\.3: Agricultural Extension Sub-Component
A\. Introduction
I The main feature of the extension sub-sector in Zambia is the dominance of MAC\. The Ministry
extension operates largely through the Department of Field Services (DFS), although extension -- animal
production and health -- is also practiced by the Department of Research and Specialist Services and, to
some extent, by other technical departments and branches\. MAC operates through some 72 District
offices\. The interface with farmers takes place in some 1500 camps, staffed by one Camp Extension
Worker (CEW)\. Due to staffing and logistical problems, many of these, especially, in remote areas, are not
staffed\. Subject Matter Specialists (SMS) based in the Districts provide technical support for the camp
staff\. MAC currently has close to 2500 extension staff working at all levels\.
2\. Government expenditure for agricultural extension is very low\. In fact, total government
expenditure for the agriculture sector as a ratio of total government expenditure is one of the lowest in
Africa\. The share of the MAC in government expenditure declined from about 11% in 1994 to about 2\.5%
in 1999\. The shares of other sectors at the same time have been 22, 12, 12,10 and 11% for general
services, defense, education, health and debt services, respectively\. With the MAC budget, the allocation
for agricultural extension is roughly 20% including wages, salaries and O&M\.
3\. Beginning in the 1980s with an IDA supported National Agricultural Research and Extension
Project (ZAREP), the MAC agricultural extension service expanded rapidly to provide nationwide
coverage\. The extension methodology embraced the training and visit system\. The service was generally
highly regarded but the perceived success of the service, however, was considerably influenced by the then
policy environment, which resulted in severe market distortions due to subsidized product and input prices\.
These distortions encouraged maize production and a heavy use of fertilizer\. Traditional food security
crops gave way to hybrid maize even in areas where it was not suited agronomically \. Extension and
research focused on increasing crop production, especially maize, through the use of high input technology,
the real cost and economics of which was highly distorted\. Since pan-territorial prices prevailed and the
state marketing boards guaranteed both prices and markets, nationwide maize production increased rapidly\.
The result of these policies is a lingering "maize psychology" among a majority of smallholders (and to
many extension staff) notwithstanding the negative economic and risk factors in many areas\.
4\. Changes in government policy in the early 1990s resulted in increasing fiscal constraints\. Due to
high costs, both the subsidies and the extension system, therefore, became unsustainable\. These saw the
MAC extension service become increasingly less effective and the proportion of funds available for meeting
operational costs declined steadily as did total government allocations to agriculture\. Overall, although
there are exceptions, the MAC extension system as practiced in the majority of districts is having
comparatively little, if any, impact on agricultural output, sustainable rural development and poverty
reduction\.
B\. The Main Issues for Extension in Zambia
a) Policy Issues
5\. Government commitment to private sector development and the role of MLAC\. Given the need
to accelerate agricultural growth, improve food security, expand exports and reduce poverty, together with
the government's increasing fiscal constraints, a major change is required in the role of non-state sector
- 40 -
extension service providers\.
6\. Decentralization and the role of local government\. Decentralization of authority to local
government is an integral part of enhancing rural development effectiveness\. Under the decentralization
process rural service providers become accountable to local government and farmer organizations for their
performance\. This results in greater responsiveness by service providers to district rural development
priorities\. The role of District Councils in monitoring extension service efficiency, including that of MAC,
would be progressively enhanced\. A clear commitment to this strategy would be required both by central
government and by MAC\.
7\. Rural infrastructure\. The poor state of rural infrastructure, especially rural roads, is a major
impediment to more market integration of rural communities\. Lack of access especially during the wet
season, seriously affects extension programs and the provision of a wide range of rural services\. Travelling
long distances over very poor roads also increases transaction costs for all service providers and for farm
families and would be agribusiness entrepreneurs\.
b) Institutional Issues
8\. MAC restructuring, core functions and service conditions\. Given the role proposed for MAC
under the successor program of fostering the expansion of non-state sector extension and the
ever-decreasing govenmment funds, there is an urgent need for MAC to focus its resources more effectively\.
The Ministry is over-stretched\. It is trying to do too much with too little and consequently not doing it well\.
Identification of core functions including those that could be privatized or commercialized wholly or partly
would facilitate more efficiency and effectiveness\.
9\. Staff service conditions need to be improved throughout the Ministry\. One of the core reasons for
the comparative ineffectiveness of MAC is its inability to recruit and retain highly qualified staff in a
number of key areas such as policy and strategic planning\. Moreover, the difficulty in attracting staff to
lower level field positions is increasing\. Front line field staff are ultimately the key to the Ministry's
achievement of the sectoral goals\. Too many Camp and Block situations are characterized by poor housing,
limited access, the lack of mobility and low salary packages for field staff\.
10\. MAC management and operational culture\. Due to its perceived inability to achieve results, the
Ministry is becoming increasingly marginalized\. Donors and other sector players are seeking other avenues
to channel support to the rural and agricultural sector\. MAC comprises well-educated and competent staff,
but their effectiveness is severely constrained by the operating and management system\. As a result, there is
a lack of discipline, professionalism and responsiveness\.
11\. Strategic planning for extension\. Strategic planning is a serious weakness for all MAC programs
including extension\. Strategic clarity and focus is lacking\. Likewise, there is no link between projects,
program and work action plans with sectoral and sub-sectoral goals\. The problem is compounded by
management inefficiency and poor direction\. The extension sub-sector lacks a strategic vision\. The longer
term development of extension should take place within the framework of a vision\. Among other things, the
vision should outline the likely future structure and ownership of extension services within Zambia\. It
should also broadly define the future role of the various actors\. The comparative advantage and
complementarity of the actors should be reflected in the vision statement\.
12\. Chronic under-funding and the resultant misalignment of resources with capacity to deliver\.
MAC extension is chronically under-funded\. This has resulted in a mismatch between available financial
resources and the capacity to deliver: it is trying to do too much with too little\. A rationalization of services
- 41 -
is needed urgently if effectiveness is to be improved\.
13\. Weak demand capacity within rural farming communities\. A long history of passive
acceptance of extemal service provider attitudes and practices combined with government and donor
approaches has created a deep-seated dependency psychology among many rural communities, which has
led to disempowerment\. Low productivity, low income levels and poverty serve to exacerbate this problem\.
The result is an almost nonexistent demand capacity arnong the target communities\.
14\. Farmer organizations\. The deregulation of the economy and the end to controlled prices for
agricultural products and inputs, witnessed the virtual collapse of the cooperative movement\. More
recently, the Govenmment has fostered the formation of some 3000 cooperatives, the overwhelming majority
of which are not functional or self-reliant\. This action has only served to perpetuate the dependency
psychology and further erode self-reliance\. The result is the virtual absence of strong FOs able to assume
the role of service providers, reduce transaction costs and develop linkages with input suppliers and the
market\.
3\. Operational Issues
15\. Extension accountability for performance\. Under the current transfer of technology
extension paradigm the service is supply driven\. It responds to higher level directives and decides what
service customers should receive\. Too often, there is a lack of responsiveness and accountability for
performance to the real customers, the rural communities\. The Participatory Extension Approach (PEA)
now being implemented in some areas will partially remedy this situation\. It will not, however,
fundamentally change the line of accountability for performance\. Financially empowering communities to
employ the service provider of their choice would reverse the line of accountability and make extension
truly demand driven\.
16\. Inadequate response by extension to the changed economic enabling environment\. In
general, MAC extension has been slow to adjust the technologies it recommends to the changed institutional
and economic enabling environment\. In too many cases the recommendations made to farmers remain
highly "production" oriented without adequate regard to cost-effectiveness and risk factors\. Despite the
drastic change in the terms of trade for maize, for example, the high input cost, high-risk technology
continues to be recommended by many extension workers\. This reveals a lack of understanding of the effect
economic changes should have on technology recommendations\. It also reveals inadequate knowledge of
alternative, lower cost, lower risk technology alternatives\.
17\. Inter-sectoral linkages and access to information\. Weaknesses in linkages and information
flows lead to inefficiency, duplication and lost learning opportunities\. Linkages and coordination between
sectoral stakeholders and between other rural development stakeholders are at best tentative and
inconsistent\. Research and extension linkages are, for the most part, incoherent\. Large amounts of
information on Zambian agricultural and rural development are available\. It is, however, highly fragmented
and not easily accessible\. The flow of information from headquarters to the districts and from the districts
to field staff and to other stakeholders, and vice versa, is weak\. Subject matter specialists at MAC
headquarters, in the provinces and districts do not have ready access to technical and statistical
information, making it difficult to keep up with technology advances\. Coordination and information
exchanges between MAC technical departments and sub-programs are inadequate\.
C\. New Vision and Strategy for Extension
18\. To overcome these weaknesses, the MAC introduced the Participatory Extension Approach
- 42 -
in selected districts of its operation in 2000\. To a greater or lesser extent, the new approach addressed
these issues through a coordinated and integrated program involving a plurality of service providers\. It also
aimed to promote the coordination of interventions of other service providers such as health, education and
nutrition, which have a significant impact on rural family well-being and thereby agricultural productivity\.
1\. The Goal or Long-Term Outcome of the Program
19\. The long-term goal of the new extension program would be sustainable economic growth
leading to poverty reduction and improvedfood security and livelihoodfor ruralfarm families\.
2\. The Purpose or Immediate Objective
20\. The purpose or immediate objective of the interventions of the new extension program
would be to put in place a more responsive, flexible, demand-driven, efficient and sustainable extension
delivery system\.
3\. The Outputs/Results
21\. The outputs/results arising from the program interventions would be:
(a) Increased and diversified agricultural output and productivity, improved rural incomes and
enhanced rural family well-being;
(b) A decentralized, more sustainable, demand-driven extension system embracing a plurality of
providers;
(c) Improved coordination and linkages between research and extension and between all relevant rural
service providers;
(d) Enhanced organizational efficiency and effectiveness within MAC;
(e) Increased and diversified agricultural output and productivity, improved rural incomes and
enhanced rural family well-being;
(f) A decentralized, more sustainable, demand-driven extension system embracing a plurality of
providers;
(g) Improved coordination and linkages between research and extension and between all relevant rural
service providers;
(h) Enhanced organizational efficiency and effectiveness within MAC\.
4\. The Strategies
22\. The following strategies would enable the achievement of these outputs:
* expanding the role of a plurality of non-state (for the purposes of this paper the terms non-state and
non-government are deemed to include all service providers outside of the government service (local and
central) be they private for profit businesses, private consultants, nongovernment organizations (NGO)
both domestic and international, agribusiness and marketing houses, extension providers) and
progressively reducing the role of MAC as an extension service provider;
* building functional capacity and generating demand capacity within communities through
empowerment and by facilitating access to financial resources to enable the partial funding of
approved conmuunity action plans;
* strengthening the decentralization process by piloting the gradual transfer of responsibility for
service provision, including financial management and accountability, to selected District Councils
and FOs;
- 43 -
* expanding and deepening the people focussed PEA to empower communities and farm families to
define their own development priorities and service requirements;
* strengthening linkages and coordination between state and non-state rural service providers;
* improving the responsiveness of the MAC management and the decision-making process;
* facilitating strategic partnerships between agribusinesses and community-based organizations;
* promoting the development of sustainable, economically viable and risk-minimal technologies in
full partnership with farmers with strong emphasis on natural resource conservation;
* using monitoring and participatory impact evaluation as a force for change within communities and
within organizations such as MAC\.
Annex 8\.4: Agricultural Research Component
A\. Introduction\.
1\. The Republic of Zambia Agricultural Research and Extension Project (ZAREP) was the
forerunner of ASIP and its activities were integrated into ASIP in 1996\. ZAREP was intended to
rationalize the research infrastructure and decentralize the research planning process, making it more
relevant to farmers' needs\. The Project supported the formulation of a National Research Action Plan
(NRAP), which outlined the major changes called for in infrastructure and organization\.
2\. NRAP established a research enterprise based on three agro-ecological regions largely determined
by the strength of annual rainfall patterns\. It ensured a rational distribution of Regional Centers, Research
Stations and subsidiary facilities, closing several sites deemed to be redundant\. The research organization
was restructured into a number of Commodity and Specialist Research Teams\. Chief Agricultural Research
Officers (CARO) in charge of Regional Centers were given an enhanced role in determining research
priorities and formulating research proposals\. Research Extension Liaison Officers were abolished and
Farming Systems Research Teams given the mandate of linking research with extension and farmers\.
3\. Key components of the management of research were the establishment of a Research Data
Archive, listing all past trials to the 1950s, and the introduction of a Current Research Management
Information System (INFORM) for planning and costing future research\. The Mid-Term Review of
ZAREP recommended the formation of a self financing research trust, the Golden Valley Agricultural
Research Trust (GART)\. ZAREP and ASIP provided equipment, vehicles and operational funds, while the
Civil Works component provided laboratory and office blocks\.
B\. Soils & Crop Research Branch\. (SCRB)
4\. Agricultural research in Zambia falls under the Department of Research and Specialist Services of
the Ministry of Agriculture and Cooperatives: Animal Health & Production and Fisheries are also separate
branches within the same department\. Agricultural research, therefore, in the context of this report, is soils
and crop research performed within the Soils and Crop Research Branch (SCRB) and the Agricultural
Research Trusts\.
5\. The mission of the SCRB is to generate and adapt crop and soil technologies in order to increase
agricultural productivity and diversify production\. This includes the development of low cost sustainable
- 44 -
farming systems for all major agro-ecological zones and farrn sizes through the participation of both the
public and private sectors in research activities\.
6\. The SCRB, with Mount Makulu as its Central Research Station, comprises four commodity and
discipline based divisions, each in the charge of a Chief Agricultural Research Officer (CARO) and Central
Services (Biometrics, Library, Documentation, Training) under a Principal Agricultural Research Officer
(PARO)\. Each research division is composed of several research teams, each with a different research
commodity or objective\. There are also three designated agro-ecological regions with Regional Research
Centers and Technology Assessment Sites (TAS) for adaptive research\. Research in each region is under
the charge of a CARO, but discipline chiefs remain in charge of work done in their disciplines across the
regions\.
7\. The overall body in charge of Soils & Crop research planning is the Research Management Team
(RMT) comprising the Deputy Director and 7 CAROs\. The principal functions of RMT are:
* production of annual work plans and budgets;
* the conduct of planning and regional meetings;
* participation in regional network meetings;
* production of quarterly and annual reports; and
* soliciting funds from donors\.
8\. The research planning cycle begins in June/July each year at research stations, where researchers
present the results of their current research and proposals for the following year's work to a varied group of
stakeholders including extension staff, NGOs and farmer groups\. These meetings are followed by national
planning meetings in September/October where the fully analyzed results of the past year are presented and
work for the following year proposed\. These meetings provide the opportunity for peer review and
discussion as well as comment by regional staff before final decisions are taken on the composition of the
following year's program\. The national meetings are attended by a wide audience of research and
extension workers, NGOs, farmers' representatives, university staff and Research Trusts\. Finally, in
March/April regional meetings take place in the field to inspect the experiments approved at the previous
year's planning meetings\.
9\. To help in the planning of research, two databases, originally developed under ZAREP, are used\.
The Research Archive lists details of all research trials carried out since the 1950s\. It is intended to help in
identifying gaps in research and preventing repetitions of earlier research\. The second database is a Current
Research Management Information System (INFORM) in which all current research is described and
costed\.
10\. SCRB's achievements cover new low cost irrigation technologies and conservation tillage
implements (Magoye Ripper) as well as adapted pest control technologies (Larger Grain Borer and
Cassava Green Mite)\. Since 1995, 54 new crop varieties have been released to farmers in Zambia\. These
were: maize (15), sorghum (7), wheat (4), sunflower (3), pearl millet (2), finger millet (1), beans (3),
groundnuts (4), cowpeas (2), cassava (7), pigeon pea (1), cotton (2), sweet potato (3) and vegetables (1)\.
The Ministry of Agriculture granted Zamseed exclusive rights to all new varieties produced by SCRB, for
which Zamseed was expected to pay royalties\. Zamseed took up the new varieties and between 1996 and
2001 sold seed to the value of US$7,796,285 without paying any royalties to SCRB for their share of these
sales\. This led to the development of a Seed Policy in 1999 in which it was recommended that Zamseed's
exclusive rights to SCRB varieties be cancelled\. Furthermore, with the establishment of commercial seed
firms in Zambia after 1991, it was proposed that Plant Breeders' Rights be established so that SCRB could
benefit from the sale of its varieties\. Legislation has been prepared and is ready for submission to
-45-
Parliament\.
C\. Agricultural Research Trusts\.
11\. The Golden Valley Agricultural Research Trust (GART) was established under ZAREP/ASIP\. It
comprises three farms: Research Farm (Golden Valley, Chisamba) - 1306 ha; Commercial Farm (Chaloshi)
- 1340 ha; and Livestock Development Center (Butoka) - 9070 ha\. GART is governed by an independent
Board of Trustees and SRCB is represented on the Board\. GART's research is formulated within four
strategic themes:
* improvement and promotion of conservation farming;
* contract research and scientific technical partnerships;
* development and promotion of smallholder and livestock farming systems; and
* development of innovative commercial farming\.
12\. Out of a total staff of 265, there are 35 designated research staff and 22 administrative staff\.
Income is derived principally from commercial farming operations (50%) with 35% coming from donors,
10% generated by contract research and 5% from GRZ through the Ministry of Agriculture and
Cooperatives\. Commercial farm operations perform a dual function, generating income from produce and
providing demonstrations of optimum farming practice for farmers and extension staff field days\.
13\. The Cotton Development Trust was established during ASIP from which it received its initial
funding\. It is situated on Magoye TAS and expects to receive between 30-40% of its funding from a levy
on cotton delivered to ginneries\. It is anticipated that the remainder of its funding will come from donors
and GRZ with a small proportion (<5%) from contract research\. The full establishment of the CDT awaits
the passing of a Cotton Act to legalize the collection of the levy\. The Board of Trustees represents all the
principal stakeholders in the cotton industry, which has already agreed in principle on the collection of a
levy for funding research\.
D\. Links\.
14\. Linkages are important to ensure that research is relevant to farmers' needs and is made available
for farmers' use\. On the research side, Farming Systems Research teams are mandated to provide links to
farmers and the extension service\. For their part, the extension service relies on their Subject Matter
Specialists (SMS) to link extension with the research program\. These links work, after a fashion, but the
consensus view of Provincial Agricultural Coordinating Officers (PACO) was that the abolition of
Research Extension Liaison Officers (RELO) had weakened links between research and extension\.
15\. Within the research system itself, the need to make research demand-driven and relevant to
farmers' needs has decentralized the process and increased the importance attached to research proposed by
the Regional Centers and their supporting TAS\.
16\. The yearly cycle of research program approval now starts with proposals put forward from
Regional Centers, each of which is in the charge of a CARO, who canvasses the views of farmers and
extension agents locally to establish their research needs\.
17\. Links between Research Trusts and SRCB are established mainly at two levels\. SCRB is
represented on the Board of Trustees of both GART and CDT, and there is reciprocal membership of
planning committees\. Research Trust personnel, however, do not attend the SCRB planning meetings\.
Another aspect of linkage is the outsourcing of research projects by SCRB with the Research Trusts as
- 46 -
contract research\. This enables SCRB to pay for needs research that would otherwise not be done because
SCRB is not equipped to do it\.
-47 -
Annex 9\. Stakeholder Workshop Results
Introduction
The Ministry of Agriculture and Cooperatives (MAC) organized an ASIP Stakeholder Evaluation
Workshop during the visit of the ICR Mission\. The Ministry sent out the invitations and made the
necessary logistical arrangements, with FAO financial assistance, and chaired the Workshop, while the
mission prepared an issues paper\. This was circulated before the start of the workshop and was used to
introduce each of the discussion sessions\. The six discussion sessions were organized around the following
topics:
A\. Restructured ASIP, What Has Actually Been Achieved, Compared With Its Revised
Performance Objectives?
B\. The Original ASIP Preparation Process: What Lessons Can Be Drawn For Possible Future
Operations?
C\. Implementing Restructured ASIP, What Progress Was Made In Addressing
Agricultural Sector Policy Issues?
D\. How Has ASIP Contributed To Strengthening of Agricultural Technology Generation and
Dissemination?
E\. Rural Investment Fund (RIF) - How Well Is It Doing?
F\. Concluding Issues
A\. RESTRUCTURED ASIP, WHAT HAS ACTUALLY BEEN ACHIEVED, COMPARED WITH
ITS REVISED PERFORMANCE OBJECTIVES?
Presentation of Issues by Mission (Mr Ephrem Asebe)
Problems identified at mid-term for ASIP indicated a disappointing performance and loss of confidence by
key stakeholders, including:
* absence of a supportive environment for the implementation of the program;
* design limitations particularly as related to the program's management structure;
* adverse effects of a long drawn-out restructuring process; and,
* reduced agricultural expenditures that threaten the program's sustainability\.
It was asked why there was an apparent divergent trend in the total cultivated area, according to the PHS
data available for the last five years\.
One speaker thought that the explanation was crop diversification: the figures in Table 2 did not include
cassava and other root crops, whose area had greatly increased\. But another speaker said there were serious
problems with the data and questioned their source\. Dr Mwale, CDT, said that there had been a significant
shift from maize to cotton in some areas; however, cotton production had not kept pace due to the weather
and a shortage of inputs\. Ms Mweetwa doubted the veracity of the aggregate agricultural production data
for the country, since she already discovered serious inconsistencies in the official CSO data for Central
Province\. The chairman explained that CSO had done a one-time Agricultural Census of Zambia and
performs annual post-harvest surveys; MAFF draws from these survey data for its statistics on production
but controls neither collection nor analysis of the data and in fact the whole system should be revisited\.
- 48 -
A discussion followed about whether there had been a general shift from maize toward traditional crops, as
suggested by one speaker, since at the same time there had apparently been an increase in exports, which
were all nontraditional crops\.
Ms Sitwala (PACO-Lusaka) cautioned that while export crops had indeed increased, they were produced
by only a limited number of growers and most smallholders did not participate\. She also thought it
inappropriate for commercial growers to have benefited from funds provided under ASIP\.
The overall conclusion of this discussion was that it was very difficult to see whether ASIP had made any
difference to Zambia's agricultural production, exports and imports, not only because of data problems but
also because any trends were obscured by huge inter-annual fluctuations for weather or other reasons\.
B\. THE ORIGINAL ASIP PREPARATION PROCESS: WHAT LESSONS CAN BE DRAWN
FOR POSSIBLE FUTURE OPERATIONS?
Presentation of issues by mission (Mr C\.J\. Bevan):
I \. Was the preparation process rushed; should it have waited for: a) a clear vision/strategic plan for the
sector b) the reorganization of the MAFF c) the establishment of an effective Financial Management
System?
2\. Was it too innovative/ambitious? Was it realistic to expect a weak ministry to reform its management
practices and procedures, and for it to adopt and adapt to liberalization policies in a matter of
months?
3\. Did it depend too much on individuals rather than institutions, both within MAFF & World Bank?
4\. What evidence was there of real GRZ ownership, and of full commitment to ASIP by other donors?
5\. Were the objectives of ASIP (e\.g\., household food security, better use of natural resources, income
generation and increasing export earnings) sufficiently linked to proposed ASIP
interventions/investments?
6\. Did the preparation (SAR) reflect a sufficient understanding of Zambia and GRZ procedures and
systems?
7\. Did ASIP documentation (SAR, PIP) adequately spell out GRZIMAFF roles and responsibilities?
Did they for instance indicate how ASIP would assist with decentralization and deconcentration?
8\. Was 'Basket Funding' a realistic mechanism on which to construct ASIP?
9\. Was there sufficient linkage between the Policy Letter in the SAR and the proposed ASIP
interventions?
10\. Was the Economic Analysis method proposed in the SAR realistic or too academic?
11\. Were the risks fully evaluated and articulated?
12\. If we were starting the process of preparation now, what would we do differently?
Record of Discussion
Time allowed for ASIP preparation\. One speaker thought the ASIP preparation process had definitely
been rushed and should have awaited completion of the restructuring of MAFF, which was by then already
underway\. The chair intervened to say that at the beginning of ASIP preparation, around 1993,
restructuring of MAFF (which came out of a larger program for public sector reform) was not yet
envisaged\. Mr Nkatiko said that preparation of ASIP had not been at all rushed, and was substantially
completed before MAFF began its restructuring\.
Capability of MAFF to undertake ASIP\. A MAFF speaker said it was not so much that MAFF was a
-49 -
weak ministry, but that it should have had an independent body to oversee its restructuring\. Another (a
PACO) asserted that MAFF's real weakness was that it did not listen to its own people in the provinces\.
Role of individuals rather than institutions\. A speaker gave the example of the abrupt decision to
privatize veterinary services, which he said had been done to benefit well-placed individuals and had not
been subject to any real consultation process, even within the ministry\.
Ownership of ASIP\. PACO NW Province doubted that there had been full GRZ or donor ownership of
ASIP\. The University of Zambia representative agreed, saying ASIP was imposed on Zambia by the Bank,
and some of the bilateral donors had felt the same\. Another questioned how much real consultation on ASIP
had taken place with intended beneficiaries\. The chairman, Mr A\.K\. Banda, commented that some
cooperating partners had other assistance priorities and procedural constraints that prevented them from
fully supporting ASIP\.
Relationship of ASIP objectives to proposed interventions\. PACO Central Province, Ms Mpeetwa, said
this relationship had been unclear throughout the project's duration\. For example, the ultimate beneficiaries
were not empowered to avail themselves of privatized agricultural services (e\.g\., for animal health),
because they did not have the necessary income or bargaining power\. The Secretary of the NAPSF (a local
NGO) said the problem was quite simply the lack of responsiveness of the top to the real problems of the
poor\. The WB representative, Mr Mwanakasale, cautioned that the issue of GRZ political ownership had to
be analyzed more finely\. The chair agreed, pointing out that while these matters were decided at political
level, many branches of society - including farmers, academics and industry - had been involved\.
However, farmers don't generally display 'ownership' of goods or services for which they don't have to
pay\.
Adequate understanding by the WB of Zambian and GRZ conditions\. There was not time for a full
discussion but the chairman said that perhaps the Bank's understanding had been inadequate\.
Due to lack of time other points were left for discussion during the aftemoon session\.
C\. IMPLEMENTING THE RESTRUCTURED ASIP, WHAT PROGRESS WAS MADE IN
ADDRESSING AGRICULTURAL SECTOR POLICY ISSUES?
Introduction of Issues by Mission (Mr Chris Redfem)
The MTR workshop of June 1998 agreed that, "while the performance of ASIP had been disappointing and
had lost the confidence of most stakeholders", the program could be revitalized and put back on track\. The
MTR Report had identified five main issues associated with the design and implementation of ASIP:
1\. the need for renewed GRZ commitment to a coherent and consistent sector policy framework;
2\. the need to refocus public expenditures for agriculture on a smaller set of functions, sustainably
performed by the public sector;
3\. the need to revisit the institutional and management framework for implementing ASIP, including
strengthening of coordination and consultation structures for and between its private and public
aspects;
4\. the need to arrive at a coherent private sector development strategy; and
5\. the need to review and upgrade the financial management framework for ASIP\.
How well had the restructured ASIP been able to respond to each of these challenges?
- 50 -
Record of Discussion
1\. Sector Policy Framework
Dr Hoffman: a draft NAP document was circulated to donors for comment in late 1999 or early 2000,
under Minister Desai; he recalled it looked rather like the ASIP policy framnework: since then, nothing more
had been seen\. Could the MAF indicate what had happened with this initiative? The chair said a response
would be forthcoming from the Director of MAC-PCD\.
2\. Refocusing of Public Expenditure
Mr Kalumba: the assumption of long-term donor funding for certain functions e\.g\. research proved
unfounded i\.e\. pledges were not always fulfilled\.
Dr Mulenga: privatization policy was decided very suddenly in the livestock sub-sector\.
Mr Haachinda: very often, the private sector just wasn't there or ready to take over\.
Ms Sitwala: after the MTR, there was no more funding for upgrading of MAF housing at district level, nor
for extension staff vehicles\.
Mr Nkatiko: after the MTR, the GRZ said it would withdraw from fertilizer distribution, and consequently
dropped coops in favor of farmer associations; now it was swinging back to coops again\. This perpetual
state of flux in policy makes rural development work very difficult, and loses credibility with the farmers\.
Mr Mwanakasale: after MTR, WB agreed with GRZ to disburse direct to the districts, to better reflect the
local priorities, even if some other useful but less urgent MAF activities might have to be reduced or hived
off to commercial sources of funding (such as the CDT)\. This exercise meant that the MAF had to define
its objectives clearly\.
A speaker said that the RIF was just such an example: What exactly were its objectives? To be seen to do
something to assist the rural communities, or to help them stand on their own feet?
Another speaker said that ASIP funds were not disbursed directly from MOF to DAC: in fact, they always
transited through MAF headquarters, with resultant overhead costs and delays\.
3\. Institutional and Management Framework for Implementing ASIP
A speaker said that creation of the ACF had been appreciated by the private sector, especially on the issue
of fertilizer distribution\.
Dr Hoffman: he found the DACs also useful, even though at district level comrnmerce was not represented
from the private sector, only small-scale farmers\. It would be useful to have representation from traders, if
a true public-private sector dialogue were to take place\.
Mr Haachinda: underlined the role of farmer organizations in empowering farmners whose voices would
otherwise not be heard\.
- 51 -
Another speaker suggested that many fanner organizations were formed only in order to have access to
subsidized inputs\.
Mr Nkatiko: mentioned that there were also commodity-based growers' associations, such as those for
tobacco and coffee (also cotton), which played a role\.
Ms Sitwala: the role of farmers' organizations was a very changeable one in Zambia, reflecting frequent
shifts in government policy\. MAC was now working with farmer clubs\.
Dr Hoffman: how it all worked was very dependent on local conditions; however, one could generalize that
whenever an organization was imposed from outside, such as a coop for getting fertilizer or a farmers
group for getting a RIF project, then it was almost certainly going to be unsustainable\.
4\. Private Sector Development Strategy
It was felt that this topic had already been adequately discussed\.
5\. Financial Management Framework for Implementing ASIP
Mr Nkatiko: after MTR things had improved but there were still delays in getting GRZ counterpart
funding\. Also, funding was not always provided according to the approved budgets: for example, the RIF
would get funding when other programs did not\.
Dr Mwale: the innovation of monthly disbursements had been unrealistic and thrown everything out of
order (Government runs a cash budget and could not adopt quarterly releases as originally envisaged,
although there were times this was complied with) : they should have kept the old system of quarterly
release of funds, which worked better\. He also stressed the need for government to adopt more flexible
financial procedures if public-private partnerships such as CDT were to be workable\.
The chairman pointed out the importance of ensuring that financial and procurement procedures were
compatible, since procurement was crucial for the implementation of major programs such as ASIP\.
Another speaker said the FMU could not be blamed for all the financial management problems that had
been experienced: some were caused from outside (such as by the MOF), others by an over-ambitious
expectation of GRZ counterpart funding capacity\.
D\. HOW HAS ASIP CONTRIBUTED TO STRENGTHENING OF AGRICULTURAL
TECHNOLOGY GENERATION AND DISSEMINATION?
1\. Research (Facilitator: Mr D\.C\.M\. Corbett)
How has ASIP contributed to improved research output? Are research facilities better as a result of
ASIP?
Mr Nkotiko (PACO, Southern Province) thought that facilities were not generally better as a result of
ASIP\. Dr\. Mwale (Director, CDT) thought there had been some isolated improvements, but not overall\.
Some offices and houses had been provided and field layouts improved\. Mr Seshekanu (PACO, Eastem
Province) was of the view that the system managed to maintain what was there with slight improvement\.
Mr Nkotiko stated that emphasis on some regional centers had led to some improvement in crop research
infrastructure, but livestock research had died\. Ms Mweetwa (PACO, Central) thought that there had been
some structural improvement and Mr Hachiinda (National Association for Peasants and Smallholder
- 52 -
Farmers) stated that there was need for much more improvement in facilities\.
Is research planning improved as a result of ASIP? And does research under ASIP meet farmers'
needs better?
These were taken together\. Mr Seshekanu pointed out that for the first time, under ASIP, farmers were
involved in the research planning process\. Mr Hachiinda said that farmers' needs were not being met but
Mr Nkotiko differed, and stated that there was an improved mechanism for planning research, which
addressed farmers' needs and worked through regional research\. Mr Hachiinda felt that there were too few
research stations\.
Does Research Under ASIP Feed into Regional Programs of Research?
Mr Hachiinda said that there were problems in terms of priorities and this was reflected in the regional
research programs\. Mr Kaluba (PACO, Luapula) noted that regional research programs were based on the
observed comparative advantage for each site, which meant that some research programs relevant to local
farmers might not be addressed in the nearest regional research program\.
Does Research Funding Meet Operational Needs?
The unanimous view was that it did not\.
Has ASIP Contributed to Better Staffing of Research?
Dr Mwale stated that very little long-term training was undertaken in ASIP, so there was no improvement
in staff quality\. Mrs Sitwala (PACO, Lusaka) thought that in this respect ASIP had done more harm than
good\. Mr Nkotiko stated that staffing of research was affected by the Cabinet Office imposition of a freeze,
which prevented replacement of staff lost for any reason\. Mrs Sitwala noted that staff were leaving for
better-paid jobs in the private sector\.
Has ASIP Led to More Autonomy for Agricultural Research?
Mr Kalumba stated that research needed to be demand driven, better integrated, but not necessarily
autonomous\. Mrs Sitwala said that research needed Government support so could not be autonomous\. In
clarification, Mr Bevan pointed out that there was a view in some countries that research should be
independent of the funding Ministry\. There was felt to be a need for freedom from domination by officers
of the responsible Ministry, not politicians, so that decisions relating to research could be made
independently by the research organization\. Dr Mwale stated that the research sector remained under the
Ministry of Agriculture so there was no change in autonomy\. Mr Mulumba pointed out that increased
autonomy had not been an ASIP goal\. Mr Seshekanu felt that the research planning process introduced
under ASIP demonstrated increased autonomy\. Dr Mwale said that an autonomous research body would
have its own rules and procedures: research workers remained subject to the Government General Orders
so were not autonomous\.
Has Establishment of Research Trusts under ASIP Contributed to:
* Improved research overall?
* Improved research dissemination?
* More relevant research?
- 53 -
* Effective coordination of research at all levels?
These questions were taken as one because of shortage of time\.
Mr Nkotiko stated that the Cotton Development Trust (CDT) was relatively new and had not received as
much attention as the longer established Golden Valley Agricultural Research Trust (GART)\. He felt that
GART had moved away from smallholder needs and instanced the cost of livestock produced for sale to
farmers, which was out of the financial reach of smallholders\. CDT had not yet finalized its financing
arrangements and it was still too new to express an opinion on it\. Dr Mwale explained that CDT had only
been established for two seasons and had received little funding so far\. The cotton research program was
restricted and was expanding going out to farmers with an extension and training program deriving from
the program on agronomy and breeding\.
Has ASIP Improved Linkages:
* Between central research programs and regional research?
* From research to extension?
Both questions were taken together\. Dr Mwale believed that new procedures developed during ASIP had
led to better links between central and regional research, with research needs of the regional centers
achieving more importance\. On research/extension links, Ms Mweetwa believed that in general links were
now not so good with the loss of the fornal links that operated through Research/Extension Liaison
Officers\. Mr Chivunda (MACP FS-Extension) agreed that there was now no functional liaison\.
2\. Participatory Extension Approach (Facilitator: Mr Charles Bevan)
* Have all PACOs and DACOs received training in the PEA; and was the training provided
sufficient?
* How easy/practical was it to retrain staff in PEA?
* What additional skills do field staff need to be able to undertake problem census/problem
solving discussions with farmer groups?
* Is PEA subject to the same logistical constraints (transport and communications) as other
extension approaches?
* What are optimal farmer group: field agent ratios for effective implementation of the PEA?
* What back up support do field agents need from DACOs and PACOs?
* Is it possible to monitor & evaluate achievements of PEA, if so how?
Record of Discussion
Support for PEA: a speaker clarified that not all PACO/DACO had received PEA training under the
IDA-funded ASIP: PACO had only received a short awareness training course, and the DACO only in four
ASIP pilot provinces\. In the Southem Province they had pioneered the introduction of PEA with help from
other donor-finded projects (e\.g\. GTZ and IFAD)\. In the NW Province they had piloted PEA in 3 out of 7
districts with non-IDA resources\. In Luapula, PEA training had been provided under a Finnish project\.
Speakers were concemed that IDA should not claim all the credit for introduction of PEA, which had been
piloted in Zambia with assistance of other agencies\.
Training priorities for PEA: staff training presented some problems at first, and some difficulties persist
- 54 -
in training staff in communications skills\. Training is also quite costly\.
Staff also need special training in such fields as cooperative establishment and management, marketing and
simple business skills like book-keeping\.
PEA is subject to the same basic constraints of logistics, communications, staff technical skill and
dedication as any other extension system\.
Each field agent can realistically handle up to 20 farmer groups, each of about 30 farmers\.
Field agents need to be supported by mobile DACOs\.
A major weakness of PEA to date has been the failure of Agricultural Training Colleges to adjust curricula
to the requirements of the PEA system\.
It is possible, in principle, to monitor PEA by asking farmers to complete a simple M&E questionnaire
forn for their group\.
E\. RURAL INVESTMENT FUND (RIF) - HOW WELL IS IT DOING?
Introduction of issues by mission (Mr Chris Redfem)
Utilization and Sustainability Issues\. A recent evaluation by consultants, while recognizing that the
achievements of RIF have been impressive, points to a problem of under-utilization of some of the
infrastructure financed by RIF, such as dams, storage sheds and dip-tanks\. The mission has seen some
evidence of this phenomenon in its short field visit\. The reasons no doubt vary, but a view exists that a sort
of dependency syndrome has been created among Zambian villagers, which accentuates difficulties in
obtaining their contribution to start-up of revenue-earning and O&M of community infrastructure
subprojects of the RIF\. This possibly has something to do with the consultants' finding that "The RIF
experience has exposed a major weakness of the group approach - the difficulties in managing production
activities"\. Do participants share this diagnosis and, if so, what would they prescribe in order to improve
the long-term benefits of RIF sub-projects and thus make the RIF as a whole more sustainable?
Technical design of subprojects: are some of the utilization problems already identified related to
technical design deficiencies and, if so, how could these be avoided or minimized in future?
Equity and gender objectives: we understand these were discussed during the MTR and subsequently, but
do RIF stakeholders feel satisfied that these are now being satisfactorily addressed?
Relationship with other financing mechanisms: how does or should the RIF work with other sources of
funding for small-scale rural infrastructure, such as ZAMSIF and the new micro-credit project? (A possible
related question is whether the present RIF structure has the capacity to work with a variety of funding
sources and requirements, but that probably goes beyond our own TOR)\.
Decentralization and transparency issues: how vulnerable is the RIF to potential misdirection of its
funding from various quarters, and is its present structure and organization adequately capable of
withstanding such pressures?
Record of Discussion
- 55 -
Mr Haachinda: Complementarities were not adequately taken account of in project design: poor utilization
of RIF projects may simply reflect the failure of other components of the ASIP program\. He also thought
the MAF might be sitting on some RIF supplementary funds agreed by the WB\.
Dr Mwale: RIF projects should be 'demand-driven'; but beneficiaries should also be encouraged to
constitute their own funds\.
Ms Mweetwa: There is a need for better pre-project sensitization, so that people can know what to expect
from RIF and what is expected of them: for example, in the case of dip-tanks they need to be told up-front
who is responsible for paying for purchase of the chemicals\. They can easily be confused by misleading
information on things like this\.
Mr Nkatiko: RIF would have benefited from an earlier introduction of training in PEA, which includes
essential tools such as PRA needed for facilitating a participatory needs assessment and project selection:
in the absence of PEA the start-up of RIF was premature and the selection of some inappropriate projects
inevitable\.
Follow-up activity after project construction should not necessarily be done by RIF staff: in case of dams,
for example, it should be done by staff of the Irrigation Branch\.
Mr Kalumba: the context in which RIF projects were prepared was flawed by a misconception about
ASIP: expectations were created of huge increases in crop production, requiring investment in additional
on-farm storage, which did not materialize and led to misplaced investment\.
Dr Hoffman: RIF projects have not in general been properly appraised: for example, group capability is
not looked at from a social point of view to judge if capable of supporting proposed agricultural production
projects (which are often inconsistent with traditional organization in Zambia)\. The DACs have failed in
this role, which they should perform a key role, because they are afraid to go against the MAF who
dominate the appraisal process\. This problem continues\.
On the distinction between social infrastructure and revenue-generating projects, GTZ has found the same
experience with the RIF-type project it has started in the Southem Province, where most requests are for
the latter type of project but quite a lot do not perform to maximum potential\. For example, many dams
have been built but remain unutilized for irrigation, which makes them uneconomic\.
TSB often don't talk with other SMS about relevant technical aspects, so no one takes care of O&M work\.
As a result, many community dams become 'RIF dams', which was not, of course, the intention\.
Mr Chipulu: said he was aware of the limitations of the existing RIF and accepted most of what had been
said as true\. He agreed that the social infrastructure type of project like feeder roads and bridges generally
presented fewer problems of utilization and sustainability than the income-earning projects managed by
groups\. As RIF coordinator he needed clear policy guidance from the RIF Steering Committee about
various issues, such as whether the RIF should provide supplementary project financing to take care of
working capital for income-eaming projects, normally considered the responsibility of the project
beneficiaries\. It had been suggested that it could be helpful if RIF provides beneficiaries in advance with
'business models' of such projects, but policy guidance was still needed\.
- 56 -
Dr Mulenga: suggested that in some cases the problem of under-utilization of facilities funded by RIF may
be because they don't really reflect the felt needs of the community concerned but of a locally influential
person\. The pre-project sensitization and awareness process needed strengthening in order to minimize this
risk\.
Ms Sitwala: said she shared the concern over Point 1\. One reason why it has become a problem is that the
ASIP component for rural finance development never got off the ground and this has seriously affected the
sustainability of some RIF projects\.
Mr\. Kalumba: the 'demand-driven' nature of RIF projects often detracts from their technical or economic
soundness: there is not adequate technical vetting or follow-up of the proposals by MAF staff\. Chairman
pointed out inconsistency of this remark with that of the GTZ participant who said that MAF dominates the
appraisal process\.
Dr Hoffman: responded that the DPC should at the least be involved in the planning and appraisal process
of RIF projects, in order to bolster their technical soundness\.
Mr Sishekanu: Eastern province has a farmer-driven credit facility funded by ADF, and operated through
a commercial bank, with MAF doing farmer training\. He would like it to link with RIF\.
Mr Nkatiko: Southem province has two similar funds, the Community Development Fund (CDC) for
community infrastructure and the Rural Development Fund (GTZ-RDF) for income-generating projects\.
They are working quite well and missions interested in RIF should come and have a look at them\.
F\. CONCLUDING ISSUES
Presentation of Issues by the Mission (Mr Charles Bevan)
I \. Were the preconditions and guiding principles necessary for successful implementation of ASIP in
place?
2\. Based on the result summarized above, what lessons can be drawn for future design of agriculture
sector projects/programs conceming:
a\. The policy framework;
b\. The pre-conditions;
c\. The guiding principles outlined above?
3\. Can the pattem of resource allocation indicated above lead to sustainable impact?
4\. Given the national scope of ASIP, did the resources allocated meet the minimum threshold level
necessary to have impact on the ground?
5\. Did the mid-term review address all the essential issues for the way forward?
6\. In what respect do we have progress post-mid-term? What must be done in future design of
projects?
Record of Discussion
A shortage of time meant that the discussion concentrated on the last-listed issue, no\. 6\.
Ownership\. Participants agreed that strong ownership of the program was vital, and this could best be
demonstrated by Government committing and making available its own resources\. Furthemmore, at the
- 57 -
preparation stage the amount of the GRZ contribution should be realistically assessed\.
Local circumstances\. There was general agreement that there should be full consultation at the preparation
stage of all local stakeholders, and that ASIP design should have better reflected Zarnbian circumstances
and conditions\.
Implementation\. One participant commnented on the lack of an implementation plan for ASIP, and the
frequent swings in Govemment policy with regard to fertilizer importation and distribution that severely
inhibited ASIP implementation\.
Evaluating the results\. A speaker said it was very difficult to assess ASIP properly because, as discussed
in session A, the statistical database for agriculture was so weak\. The MAFF should take ownership of it
once more and make a better job\.
- 58 -
LIST OF PARTICIPANTS
Mr\. A\.K\. Banda Director, MAC-PCD (chairman)
Mr\. Mulumba MAC-PSU (deputy chairman)
Mr\. Chivunda MAC-FS-Extension
Mr\. Chipulu MAC-RIF Coordinator
Mr\. Martin Liywalii MAC-PPB (Workshop Organizer)
Mr\. Sikaona MAC-PPB (Assistant Organizer)
Dr\. Nyirenda MAC-Solwezi
Ms\. Mweetwa MAC-Central, Kabwe
Dr\. Mulenga MAC-Copperbelt, Ndola
Mr\. Kalumnba MAC-Luapula, Mansa
Mr\. Nkatiko MAC-Southern, Choma
Mr\. Sishekanu MAC-Eastern, Chipata
Ms\. Sitwala MAC-Lusaka Province
Dr\. Mwale Cotton Development Trust
Mr\. Mike Tembo MOFNP
Dr\. Maimbo University of Zambia
Dr\. R\. Hoffman GTZ-ASSP, Choma, Southern Province RDP
Ms\. Liselotte Marohn GTZ-ASSP, Choma, Southern Province RDP
Mr\. A\. Mwanakasale World Bank, Lusaka Office
Mr\. Haachinda National Association for Zambian Peasants & Small-Scale Farmers
Mission Members:
Mr\. Charles Bevan Agronomist/Extension Specialist (FAO-CP, Mission Leader)
Dr\. DCM Corbett Ag\. Research Specialist (Consultant)
Mr\. Chris Redfern Ag\. Policy & Institutions Specialist (Consultant)
Mr\. Efrem Asebe Project Economist (Consultant)
- 59 -
MAP SECTION
22' 24' Z A M B I A Yt 23' $ _ _\. - r, \. u 92qengena/te 3 \. IBRD 26328
AGRICULTURAL SECTOR INVESTMENT PROGRAM \ /K 9 R'\ *&TA N Z A N I A
NAT ONAL PARKS /
* REGONALSTATICONS - MAIN ROADS -7 F KPA Li ok '
R RESEARCH STATKINS RAILWAYS A A 5 lAJyn
O TECHNOLOGYXASSESSMENT SITES 4 INTERNATIONAL AIRPORT ,0
GOLDEN VAULEY AGRICULTURE RESEARCH TRUST + AIRFIELDS
RISERS
SWAMPS MP,
§ NATIONAL CAPITAL * BW
f PROVINCE CAPITALS k MISA F
N - - DIYTRICT BOUNDARIES DIwTR C B L
- PROVINCF AOIINDAR FS 'N
INTERNAIIONAL BOUNDARIES L N 0 R T H A R N 0
ECOLOGICAL BOUNDARIES
A N GC 0\ ) C Hbm (A
IA \.;/ + A A I S- R\.j E > U0 H A W A
24' /5~~""BSTSLNANAL NAN ____~MA
>\7 5 A 4\.ITR 1''
i +,-g tE''S,'R,& '0~~ IJ N G- r
E- Sowz H E KI - |MBA B \ E-
A N G O L A '~~~~~~~~> _ ~ ~ ~ ~ ~ MUA u I, wlul-' K|
Zy A M IB | A t~5O; n oRea \. h \.u bU@I Y A T A
3 22 z ,_ EOTSWANA ro/oes 2,8 3,Dv I _ fCOe9E9\.
IMAGING
Report No\.: 24444
Type: ICR | APPROVAL |
P057176 | Report No\. PID6951
Project Name Sri Lanka-Postal Sector Reform Project
Region South Asia
Sector PSD
Project ID LKPA57176
Borrower Government of Sri Lanka
Implementing Agency Sri Lanka Post
Transworks House
Colombo 1
Sri Lanka
Tel: 941 328 301
Fax: 941 440 555
Date of this PID October 9, 1998
Tentative Appraisal Date December 1998
Tentative Board Date July 1999
Background
Sri Lanka Post (SLP), currently a department of the Ministry of Posts,
Telecommunications and Media, is characterized by inefficient operations, poor
quality of service, and a lack of customer and commercial orientation\. Due to
under-investment in the sector, the postal network is in poor condition and
requires significant investments for modernization and rehabilitation\. SLP's
substantial operating losses, totaling Rs 4,106 million over the past ten
years (in nominal terms), are a significant fiscal drain on the Government\.
In addition, the financial services business of SLP is ineffective as a
channel for savings mobilization and funds transfer, despite having access to
a huge network of retail outlets and a large customer base\.
The Government of Sri Lanka is seeking to transform the national postal
service into an efficient, high quality provider of both postal communication
and financial services\. It is undertaking a comprehensive postal reform
program to rapidly improve the quality of service and financial performance of
SLP with technical and investment assistance from IDA\. The reform strategy
involves policy reform, institutional reform, commercialization of operations,
and introduction of new technology\. SLP will be converted into a state-owned
corporation with full operating autonomy and commercial freedom to enter into
private sector partnerships\. The scope of SLP's monopoly will gradually be
reduced to encourage greater private involvement in the sector and develop a
competitive environment in the postal service, while a regulatory body will be
established within the Ministry to regulate reserved services\. A voluntary
separation program and operations improvement plan will be undertaken to
maximize efficiency\. Post offices will be transformed into modern,
attractive retail outlets providing a diversified portfolio of market-driven
products and services (such as e-mail, fax, internet)\. Counter automated will
be introduced to improve the speed and accuracy of transactions, and modern
accounting systems will be introduced to improve financial management\.
The financial services business of SLP will also undergo a dramatic
rehabilitation and reform effort\. The Government would like to use the
financial services system as a vehicle to increase savings mobilization and
provide a convenient means for funds transfer, particularly for those
consumers whose needs are not being addressed by Sri Lanka's banking system --
rural residents, low-income communities, small enterprises, senior citizens,
students, etc\. The Government's strategy to reposition postal financial
services is to enter into a strategic partnership with an experienced
financial institution in order to attract significant investments in the
financial services infrastructure and supplement the lack of institutional
capacity within SLP\.
Project Objectives
The objective of the project is to rehabilitate, renew, and strengthen
the national postal network and institutional capacity of the sector in order
to: (i) sustainably and effectively provide reliable, efficient, low cost
postal communications service to all citizens of Sri Lanka; and (ii) use the
national postal network to promote savings mobilization and funds transfer,
especially in the rural areas and among low-income communities\.
Project Description
The proposed project is comprised of three main components:
I\. Network Strengthening
(i) Transformation of 50 post offices into modern, new type post offices
with
counter automation for mail and financial services (investment; TA)
(ii) Strategy for reconfiguration of retail network (TA)
II\. Institutional and Regulatory Reform
(iii) Establishment of regulatory capacity (TA)
(iv) Capacity development through structured training programs (TA)
(v) Financial advisory services for strategic partnerships in postal
financial services and commercial communications services, such as
E-mail, fax (TA)
III\. Operational Improvement
(vi) Decentralization of sorting function; mail operations equipment
(investment)
(vii) Voluntary separation program (TA)
(viii) Introduction of commercial accounting systems (investment)
(ix) Strengthening of delivery fleet (investment)
Project Financing
The project will be financed jointly by the World Bank (66%) and the
Government of Sri Lanka (34%)\.
Project Implementation
The Borrower is the Government of Sri Lanka\. The project will be
implemented by Sri Lanka Post over a five year period\. A Project Management
-2 -
Unit (PMU) will be responsible for overall project management and
coordination\.
Project Sustainability
The sustainability of the project requires full support of labor and
management during project implementation\. Government is required to provide
financial support to Post Office (about Rs\. 700 million) during first five
years of reform program\. This figure, however, is much less than the
potential financial drain on the Government if no reform is undertaken (by
about Rs\. 4-5 billion)\.
Lessons from Similar Projects
Although there are very few Bank projects that address postal sector
reform, there are many lessons from developed and developing countries around
the world that have undergone reform of their postal service\. International
best practice indicates that for postal sector reform to be successful and
sustainable, it needs to be comprehensive in scope, and must address the
institutional, regulatory, and policy environment under which the postal
service operates\. Reflecting this notion, the project was developed as part
of a comprehensive reform program for the postal service\. The overall reform
program supports postal policy reform, institutional restructuring and
development, legislative reform, regulatory reform, capacity strengthening,
operational improvement, infrastructure strengthening, human resource
development, and product and service diversification and development\.
International experience also suggests that for developing countries in
particular, significant investment outlays are required because often the
sector has been the victim of long standing government neglect\. The Postal
Reform Project is addressing this problem by allocating investments for
priority areas with the objective of rapidly developing internal cash
generation capacity\.
Poverty Category
Not applicable
Environmental Aspects
The environment category is C, since no potential environmental impact from
project implementation seems likely\.
Program Objective Categories
The primary program objective category is private sector development, although
the project also supports economic management objective by facilitating the
financial self-sufficiency of the postal service\.
Contact Point: The InfoShop
The World Bank
1818 H Street, N\.W\.
Washington, D\.C\. 20433
Telephone No\. (202)458 5454
- 3 -
Fax No\. (202) 522 1500
Note: This is information on an evolving project\. Certain activities and/or
components may not be included in the final project\.
Processed by the InfoShop week ending October 9, 1998\.
- 4 - | APPROVAL |
P073307 | Report No\. PID10298
Project Name Ethiopia-National Fertilizer Sector\.
Project (NFSP)-Supplemental Credit
Region Africa
Sector Agriculture and Environment
Project ID ETPE73307
Borrower Federal Democratic Republic of Ethiopia
Implementing Agency National Fertilizer Industry Agency
Environmental Category C
Date PID prepared for NFSP April 12, 1995
Date PID Prepared for this
NFSP-Supplemental Credit April 30, 2001
Project Appraisal Date
Original Project June 28, 1993
Project Appraisal Date
Supplemental October 16, 2000
Project Board Approval
Date - NFSP June 13, 1995
Projected Board Approval Date
for Supplemental June 14, 2001
1\. Country and Sector Background:
Ethiopia's population of 62\.8 million is the second largest in sub-Saharan
Africa, and its per capita income of US$100, the second lowest\. Social
indicators are among the lowest in the world, with a gross primary enrollment
ratio of 43 percent, life expectancy of 43 years, and infant mortality of 107
per thousand\. Income poverty remains more severe in rural areas (44 percent)
than in urban areas (33 percent)\.
The Government of Ethiopia has adopted an Agricultural Development-Led-
Industrialization (ADLI) policy under which agricultural development is the
main engine for economic progress\. In the early 1990s, Government identified
two avenues for increasing production: (a) area expansion via extensive
mechanized farming and intensive commercial agriculture; and (b) increased
land productivity in smallholder agriculture\. However, area expansion raises
many problems and is unlikely to address food shortages in the short to
medium term\. Therefore, land productivity improvement appears to be the best
option to address food shortages in the short to medium term\.
Fertilizer Sub-sector\. Fertilizer consumption in Ethiopia has grown rapidly
from a negligible 3,500 tons in the early 1970s to 290,000 tons in 1999\. This
is still a low level of about 30kg/ha\. The bulk of fertilizer (85 percent) is
used by small farmers, most of whom are in the highland areas that account
for 60 percent of cropped areas\. Food grains (teff, wheat, barley, maize, and
sorghum) are the largest consumers of fertilizer, accounting for nearly 95
percent of fertilizer use\. Technical and financial aspects of fertilizer
application have been studied for many years in Ethiopia and have confirmed
the profitability of its use\. Data on fertilizer profitability in different
crops and soil situations point to Value Cost Ratios (VCR) ranging between
2\.2 and 4, i\.e\. above the VCR level of 2\.0, generally considered a minimum
necessary for profitable application by farmers\.
2\. Project Objectives:
The objective of the National Fertilizer Sector Project and the proposed
Supplemental Credit is to help Ethiopia achieve accelerated and sustainable
growth in agricultural production and productivity with a view to improving
food security and reducing poverty\. Towards this end the NFSP sought to
support policy reforms, strengthen institutions, address demand and supply
side constraints and support measures and initiatives to maintain and enhance
soil fertility and environmental conservation\. The Supplemental Credit would
support the realization of these objectives by ensuring continued and
adequate availability of fertilizers in the crop years 2001 and 2002\.
3\. Rationale for Bank's Involvement:
The latest Country Assistance Strategy, dated August 19, 1997, identified
agriculture/environment as one of the leading sectors with the potential to
make a major contribution to economic growth, poverty reduction, and food
security\. In addition, in response to the consequences of severe drought in
2000 and the two-year war with Eritrea, the Bank issued an Interim Support
Strategy (ISS) in November 2000\. The ISS is designed to assist Ethiopia in
addressing the human, material and financial destabilization caused by the
war, while simultaneously re-engaging on core development issues\. With
respect to development issues, reducing food insecurity has been identified
as one of the most critical areas that will continue to receive Bank's
attention\. Widespread famine has in the past exacted a devastating human toll
in Ethiopia\. The need to ensure that adequate food supplies are available,
particularly in years affected by drought , has been a major concern of the
central and regional authorities\.
Past Bank operations have supported policy reforms and measures to ensure
sustainability of agricultural growth including increasing agricultural
yields and developing the livestock sector\. IDA-funded projects which
included a completed small scale irrigation project and the ongoing Seeds and
Fertilizer projects were designed to enhance agricultural productivity and
food security through a considerably wider use of improved farm inputs\. These
projects are supported by an IDA funded Agricultural Research and Training
Project\. Given IDA's involvement in the agricultural sector wherein it has
played a key role with significant support of the donor community, it is
important to continue and consolidate the reform process in the farm input
sub-sector\.
4\. Project Description:
The NFSP, with an estimated cost of US$ 230 million, was approved in June
1995 and it was declared effective in February 1996\. IDA supported the
project with a credit of SDR 82\.9 million (US$120 million equivalent at the
time of negotiations); the Government was expected to contribute US$20
- 2 -
million, and others including fertilizer importers and donors were to
contribute US$90 million\. The project consists of three components\. The first
component relates to capacity building and comprises institutional
strengthening and human resources development; the second component addresses
fertilizer supply and demand constraints; and the third component relates to
soil fertility management and environmental conservation including the
construction of rural soil testing laboratories\.
The NFSP Supplemental Credit would address the incremental funding needs for
fertilizer imports, brought about by the anticipated large increase in
fertilizer consumption due to government's large extension intervention
program, and expected increases in irrigation\. It would be used to finance
the foreign exchange component of the incremental consumption of fertilizer
for the crop years 2001 and 2002 aggregating to about 130,000 tons of DAP
and 70,000 tons of urea, estimated to cost about US$44 million\.
5\. Project Financing:
Total supplemental project cost is estimated at US$46\.2 million, with a
foreign exchange component of US$44 million (95 percent)\. IDA would
contribute US$ 44 million under the supplemental credit for the upcoming 2001
and 2002 crop seasons\.
6\. Project Implementation:
The National Fertilizer Industry Agency (NFIA) will continue to be in charge
of the overall implementation and coordination of project activities
including activities under the Supplemental Credit\. Imports of fertilizer
will also continue to be implemented by private importers and the
Agricultural Inputs Supply Enterprise (AISE), under international competitive
bidding procedures acceptable to the Bank\. There would be no new
conditionalities under the supplemental credit\.
7\. Project Sustainability:
The consolidation of the current momentum and the further expansion of
fertilizer use clearly hinge on an even greater role of private sector
involvement in input supply, including the development of partnerships
between foreign and local firms\. The unprecedented increase in the number of
private importers of fertilizer, from one to six between 1994 and 1999, bodes
well for private sector development in this sub-sector\. The establishment of
a private sector-driven farm input supply system within the country will be a
key policy objective for the follow-on project\.
In addition, as the long-term sustainability of the emerging demand of
fertilizer depends on the improvement of the Value Cost Ratios of fertilizer
use, three key issues need to be considered\. First, the grain marketing
system suffers from inefficiencies owing to poor road infrastructure and
large market segmentation; but the ongoing Bank-funded Road sector
development program is expected to address this issue\. Second, most of the
fertilizer applications by farmers still follow blanket recommendations by
crop, but the planned preparation of soil fertility maps based on soil test
results from the rural soil testing laboratories constructed under the NFSP,
is expected to provide a basis for updated recommendations tailored to the
needs of different soil types; this would enhance the efficiency of
-3 -
fertilizer use\. Third, there is scope for enhanced management of fertilizer
supply chains, as well as for greater competition in local marketing of
fertilizer \. These issues are expected to receive focussed attention in the
proposed follow-on project\.
8\. Lessons Learned from Past Operations in the Country/Sector:
The Government of Ethiopia has been very preoccupied with boosting the
agricultural supply response capacity in order to sustainably address the
country's food insecurity problems\. This concern largely explains
Government's heavy-handed role in fertilizer distribution through the
National Extension Intervention Program (EIP)\. Under this program, the
regional governments provide bank credit guarantee on fertilizer for
participating farmers, and have been involved in bulk procurement of
fertilizers from domestic public and private sector importers and
distributing them to EIP farmers\. Because of the large scope of the EIP which
accounts for over two-thirds of the fertilizer consumption, the unintended
consequence is that the fertilizer marketing system has been drifting from a
system in which private wholesalers and retailers play a key role\.
Consequently, the main lessons learned are that IDA lending for the
development of farm input use should explicitly recognize that (i) private
sector agents have shown their capacity to play a key role in input supply,
and that it is time for government to "leave the market", and (ii)
government should focus on the demand side, i\.e\., the very important and
unfinished agenda of maximizing the economics of input use by farmers,
through training for the efficient and balanced use of inputs, dissemination
of market price information, credit, training of service cooperatives in
procurement management, etc\. These elements are part of the building blocks
of the planned follow-on project, and as noted above, some related
preparatory studies are being carried out under the current fertilizer
project\.
9\. Program of Targeted Intervention (PTI): Yes
10\. Environmental Aspects (including any public consultation):
The Ethiopian authorities have established a mechanism for the annual
compilation and maintenance of a database on the impact of fertilizer use on
the environment\. In this context, the Environmental Protection Agency (EPA)
has put in place 32 sites in four major fertilizer consuming regions\. The
annual tests that were conducted after the 1999 cropping season show that the
nitrate and phosphate content in underground water was significantly below
the threshold level acceptable to the World Health Organization (WHO)\. The
use of fertilizers at current levels thus poses no significant environmental
risks\. Similar testing conducted by EPA for the year 2000 season is under
analysis and review\.
11\. Contact Point:
Team Leader
Amar Jit S\. Sodhi
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
-4-
Telephone: (202) 473-7266
Fax: (202) 473-5147
The InfoShop
The World Bank
1818 H Street, N\.W\.
Washington, D\.C\. 20433
Telephone: (202) 458-5454
Facsimile: (202) 522-1500
This PID was processed by the InfoShop during the week ending May 11, 2001\.
VCR are the ratio of incremental production due to fertilizer over the cost of
fertilizer application, whereby all other factors of production are maintained constant\.
CIF prices of Urea and DAP decreased by 55 percent and 26 percent respectively between
1997 and 2000\. Although the Birr depreciated by only 22 percent during the period, retail
DAP prices actually increased by 17 percent, and urea prices decreased by 17 percent only\.
This may have been partly due to the removal of the subsidies in 1998, but which alone
cannot explain this situation\. The studies mentioned above (para 15) are expected to shed
light on these issues and generate an action plan\.
- 5 - | APPROVAL |
P089929 | Page 1
PROJECT INFORMATION DOCUMENT (PID)
APPRAISAL STAGE
Report No\.: AB1258
Project Name
Rio Grande do Norte Integrated Wter Resources Management
Region
LATIN AMERICA AND CARIBBEAN
Sector
Irrigation and drainage (70%); General water, sanitation and flood
protection sector (30%)
Project ID
P089929
Borrower(s)
STATE OF RIO GRANDE DO NORTE
Implementing Agency
State Secretariat of Water Resources (SERHID-RN)
Brazil
Environment Category
[
]
A
[X] B [ ] C [ ] FI [ ] TBD (to be determined)
Safeguard Classification
[
]
S
1
[X] S
2
[
]
S
3
[
]
S
F
[
]
TBD (to be determined)
Date PID Prepared
November 23, 2005
Date of Appraisal
Authorization
November 30, 2005
Date of Board Approval
July 11, 2006
1\.
Country and Sector Background
Economic Management
\.
Braz
ils economic management remains strong\. The country continues to operate
the trio of fiscal balance, inflation targeting, and very limited exchange rate intervention that it has been
utilizing since January 1999, when the
Real
was allowed to float\. There is no sign that the countrys
commitment to this strategy will decrease\.
Water Resources
\.
There is more freshwater available per capita in Brazil than in other upper-middle
income countries, but it is extremely unevenly distributed\. Brazil has 5,700 km
3
of water availability,
which is 12 percent of the worlds total\. About 73 percent of Brazils freshwater is concentrated in the
Amazon River Basin, whereas the semi-arid Northeast region, with 35 percent of the population, has only
three percent of the countrys water resources\. In the industrialized South and Southeast regions, with
nearly 60 percent of the population, water pollution and availability problems are severe\. Almost all
rivers crossing urban areas are highly polluted, affecting the health of poor populations, causing
environmental damage, and increasing the cost of water treatment for downstream users\.
In 1997, the National Water Resources Management System (SINGERH) was created through law
nº9433/1997, with the main objectives of coordinating the integrated water management system and
implementing the National Water Resources Policy\. In 2000, the National Water Agency (ANA) was
also created and is responsible for the implementation of this Policy\.
Since 1997, major achievements have been reached such as: development and/or implementation of legal
and institutional frameworks in the states to promote efficient water resources management; many
important watershed plans, operational plans, feasibility studies, and engineering designs; and creation
and/or strengthening of several water user associations, water basin committees and national and state
water resources councils, and water resources information systems\.
Although good progress has been made in water resources management (WRM), there is still a long way
to go to achieve sustainable and efficient WRM\. Problems with water supply, sewage, and solid waste
collection services affect many smaller towns with scant financial and managerial capacity to address
them\. While overall access of Brazils urban households to water supply service is high, at about 90
Page 2
percent, coverage varies considerably from region to region and state to state, and quality differs
dramatically from one part of a city to another\. Some 56 percent of urban households are connected to a
sewage system and 16 percent have septic systems, but the unevenness of coverage is even more dramatic
for sanitation than for water supply\. Little of the collected wastewater is treated, adding to health hazards
and environmental degradation, especially in urban areas\. Water supply and sanitation coverage is
highest in the relatively affluent South and Southeast and lowest in the poorer states of the North and
Northeast\. A large part of the unserved population lives in peri-urban areas, slums (
favelas
), and smaller
towns, with mainly lower-income populations\.
2\. Objectives
The project development objective is to promote economic, social and environmentally sustainable
development through the implementation of an integrated water resources management system\.
Additionally, the project will support the preparation of a water sector strategy and long-term investment
program that will pursue an adequate supply and an efficient use of water resources, key elements to
support the States overall sustainable development and reduce the vulnerability of the rural poor to
cyclical droughts\. Regarding essential infrastructure, the project will focus mostly on water supply in poor
rural areas, including rehabilitation and expansion of both drinking water supply networks and pilot
interventions to improve irrigation schemes\.
The results of the projects interventions will be measured by the achievements made in the contributions
made to three key areas: (i) the development of an improved legal framework and strengthened
institutional setup for efficient WRM by the state; (ii) the development and satisfactory implementation of
planning, information and operation instruments for WRM; and (iii) the promotion of an optimized water
resources supply through the rational use of natural resources and the expansion and improvement of the
coverage of the water supply systems\.
3\.
Rationale for Bank Involvement
In spite of past efforts to develop irrigation, water supply and sanitation infrastructure for the states
poorest citizens, there is a need for additional work to promote a more efficient use and maintenance of
infrastructure, and its rational expansion with due consideration to the environmental and social factors
involved\.
Given the Banks expertise in WRM issues, the GoRN has requested the Banks long-term commitment
and financial support through this and a follow-up operation to the strengthening of the water resources
sector in the State\. Lessons learned from the long-term involvement of the Bank in the rural development
and water resources sectors of Brazil, especially in decentralized and participatory projects, and the
Banks international and regional experience in implementing a diverse set of rural development projects,
give the Bank a comparative advantage over other lenders to assist the State Government with the
implementation of a project to improve water management in an integral and integrated fashion\.
Over the past ten years, the Banks support to water resources management (WRM) in the Northeast has
been particularly strong\. The Bank has implemented PROÁGUA/Semi-Arid, which financed WRM in all
states in the region and is executed in RGN by SERHID, and the Rural Development Projects (RPRPs,
formerly known as RDPs/PAPPs) at the state level\. Both projects have supported the States effort to
improve the water resources management system and the supply of water to small, scattered rural
populations\. In addition, the Bank has supported three WRM projects in Ceará (PROURB, Ceará Water
Pilot and PROGERIRH) and a state project in Bahia (PGRH)\. Indeed, the WRM systems developed in
Ceará and Bahia are regarded as models in Brazil and have provided lessons learned to other states in the
Page 3
region\. Furthermore, the Bank financed the PMSS project to modernize the sanitation sector in the
country\. The proposed project would be an additional piece in a large mosaic of bank assistance to WRM
in the Northeast\.
In addition, the State can count on the continuation of the work initiated by PROÁGUA/Semi-Arid as the
federal government will soon begin the preparation of PROÁGUA National with a strong vision toward
water resources management\.
In the South, the Bank is supporting two different kinds of projects: (i) natural resources management and
integrated ecosystem management projects in the states of São Paulo and Rio de Janeiro, and (ii)
integrated rural projects, with a focus on natural resources management activities and rural poverty
alleviation, in the states of Santa Catarina, Paraná and Rio Grande do Sul\. Experience gathered from the
implementation of these projects is providing relevant information regarding the consideration that must
be given to land use changes as part of water resource planning\.
The Banks experience can also help complement the activities of other projects in the sector that are not
framed within an integrated approach to WRM\. This has been reflected in one of the key strategic aspects
of the projects design, which is its pursuit of complementarity with other projects and programs being
implemented in the state and the sector\. Besides the Bank, a number of national and international agencies
are executing projects and actions that deal in some way with water resources in the State of Rio Grande
do Norte\. Noteworthy among these are the: (i) KfW, the German development bank, which has an
operation in the final processing stage to finance part of the sewage system of the city of Natal, an activity
aimed at preserving the groundwater quality of the coastal aquifer, currently affected by nitrates; and (ii)
Caixa Econômica Federal (CEF), the Federal Governments official bank, which is financing several
CAERN activities in line with diagnostic studies financed by PMSS, including the expansion of water
supply systems connected to the Monsenhor Expedito pipeline, a rather complete program to control
losses in water distribution systems, and an Institutional Development program\.
Thus, the Bank is in a unique position to contribute to the development and implementation of a project to
support the States long-term vision for sustainable development through enhancing the institutional,
operational and policy framework for better water resources management\. The Banks experience will
also help to strengthen the programs links to other State policies regarding enhancement of poverty
reduction and economic growth\. It can also help define supply and demand interventions leading to the
rehabilitation, improved maintenance and operation, and further development of critical infrastructure
where it has the greatest efficiency and distributional impact\. By promoting the sustainable use of both
existing and future water infrastructure as well as developing the necessary institutional and operational
structures for improved water resources management, the Bank will contribute to alleviating the
vulnerability of the states poor to cyclical drought and provide them with improved access to quality
potable water and increased irrigation water\.
4\. Description
The proposed project will have the following components:
Component 1: Institutional Development and Water Resources Management Instruments
(US$15\.9M, 26\.6% of project cost)\. The objective of this component is to improve the States WRM
capabilities and develop adequate WRM instruments\. Project activities will be directed mainly at
consolidating the design and operation of an integrated water resources management system, with
effective stakeholder participation and using the watershed as the basic territorial management unit, to
ensure equitable and efficient development that is socially, economically and environmentally
sustainable\. This component has five subcomponents: (1\.1)
Improvement of the Legal and Institutional
Page 4
Framework
,
(1\.2)
Water Sector Planning Instruments
,
(1\.3)
Information Instruments
,
(1\.4)
Operational
Instruments
and (1\.5)
Studies and Special Projects\.
Target groups
include:
public water agencies, including SERHID, IGARN and CAERN; other water
users and their associations; SEPLAN and the state government
Main outcomes
include
:
improved institutional and legal framework for the water sector, water rights
system and water charges system implemented, consolidation of water users associations, water
resources management plan, public water resources emergency plan, water resources monitoring network,
studies related to water availability and use, and system to monitor and evaluate implementation of the
governments public investment programs\.
Component 2: Natural Resources Conservation and Protection
(US$7\.6M, 12\.7% of project cost)\.
This component will support the preservation of water quality; improve the efficiency in water use
through reducing water losses in state-owned public water supply infrastructure, improving water
conservation in agricultural and industrial activities, and generating water-saving technologies, including
using treated wastewater; and promote the adoption of sustainable agricultural practices on irrigated
lands\. There are four subcomponents: (2\.1)
Microcatchment pilot projects
,
(2\.2)
Prevention of Losses in
Public Water Distribution Pipeline Networks
,
(2\.3)
Uses of Treated Wastewater
and (2\.4)
Sediment
Control
Target groups include:
water users in the pilot microcatchments and in the state as a whole, and public
water agencies
Main outcomes include:
implementation of natural resources management plans (pilot projects) in two
microcatchments; improved maintenance, operation and billing and collection system of water
distribution pipeline networks to prevent water losses; improved and expanded water treatment plants
with design of incentive schemes to promote use of treated wastewater; construction of about 580 small
soil retention schemes in streams or brooks located in areas of heavy erosion, to control sedimentation
and improve water quality\.
Component 3: Water Infrastructure
(US$34\.1M, 57\.0% of project cost)\. The objectives of this
component are to enhance the states water management capabilities and to improve general water
availability through the provision of technical and financial assistance to improve water availability
through the rehabilitation of existing infrastructure, the construction of new water infrastructure works,
and improved water supply for very poor dispersed rural populations, including improved irrigation
efficiency\. There are four subcomponents: (3\.1)
Rehabilitation and Maintenance of Existing Water
Infrastructure
,
(3\.2)
New Water Infrastructure
,
(3\.3)
Water Supply Systems for Small Rural Communities
,
and (3\.4)
Pilot Sub-projects for the Rehabilitation and Modernization of Small Farmer Irrigation
Schemes
\.
Target groups include:
the states poor rural population, including small farmers in the pilot
microcatchments; water users throughout the state and their associations; water management and supply
entities throughout the state
Main outcomes include:
rehabilitation, maintenance and improved operation of 40 existing dams and
reservoirs for multiple use; improve water intake and expand coverage to another 7 poor municipalities of
the Monsenhor Expedito Water Distribution System thereby improving the reliability of water supply to
the population of about 170,000 people currently served by the system; construction of small water
supply systems to supply drinking water to about 120,000 people that currently live without adequate
Page 5
water supply in rural areas; and reha
bilitate and modernize small farmer production systems in the Seridó
and improve the water resources management system in the area through participatory pilot sub-projects\.
Component 4: Project Management
(US$2\.2M, 3\.7% of project cost)\. This component will be
responsible for overall project execution and the Monitoring and Evaluation System, as well as the
preparation of the Phase II Bank Loan\. There are four subcomponents: (4\.1)
Project Management
,
(4\.2)
Monitoring and Evaluation
,
(4\.3)
Support to Preparation of the Second Phase
and (4\.4)
Project
Communication and Dissemination
\.
Target groups include:
SERHID; water users and public water agencies throughout the state
Main outcomes include:
PMU established and effectively implementing project actions; project M&E
system in operation; project Information and Communication Program functioning; and Phase II agreed
and prepared\.
5\. Financing
Source: ($m\.)
BORROWER 23\.90
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
35\.90
Total
59\.80
6\. Implementation
The Borrower will be the State of Rio Grande do Norte\. SERHID will be the project executor, with the
help of the State Secretariat for Planning and Finance (SEPLAN/RN), the State Secretariat for
Agriculture, Livestock and Fisheries (SAPE/RN) and the Seridó Sustainable Development Agency
(ADESE) as implementing partners\. The bulk of the activities will be implemented by SERHID either
directly or through its affiliated agencies - the State Institute for Water Management (IGARN) and the
State Water and Sewage Company (CAERN)\. SEPLAN, through the State Environmental and Economic
Development Institute (IDEMA/SEPLAN) will assist in the implementation of the Microcatchment and
Rehabilitation and Modernization of Small Farmer Irrigation Schemes pilot sub-projects in components 2
and 3, respectively\. Also, ADESE will assist in the implementation of the Water Supply Systems for
Small Rural Communities in Component 3\. The capacities of these agencies were evaluated by Bank
specialists, and actions required to overcome the institutional weaknesses detected are addressed in the
institutional strengthening subcomponent (1\.1)\.
In addition to centralizing financial management and procurement activities, SERHID will have overall
responsibility for the project implementation which is organized at three different levels: (i) a decision-
making level, through a Project Management Council presided by SERHID and composed of SEPLAN
and SAPE\. This Council will make major decisions about the project, such as: (i) approval of the
Operational Manual, approval of Annual Operation Plans (POAs), and definition of policies\. It will meet
annually, with the Project Manager (based in the PMU) acting as the Councils executive secretary; (ii) an
advisory level, through an Executive Forum formed by one representative of each co-executor and
presided by the Project Manager\. It will meet on a quarterly basis and deliberate on all operational aspects
of the projects day-to-day management, such as: articulation of the participation of the various actors in
project implementation, ongoing evaluation of project progress and the resolution of conflicts that may
exist among project participants; and (iii) a wholly managerial level, composed of a Project Management
Unit (PMU) within SERHID the joint participation of State Government and six SERHID technicians
who will hold key management positions, and a group of technicians experienced in project
implementation recruited from the private sector who will perform the technical/operational duties needed
for the management of a project of this nature, when necessary\. The PMUs duties will include day-to-day
Page 6
management functions, management of the project cycle and activities, the administrative and financial
management of the project, reports and audits, and coordination with the World Bank\.
In addition to being responsible for managing the overall program, the PMU and SERHID will also be
responsible specifically for activities under Component 1,
Institutional Development and WRM
Instruments
,
with the exception of the M&E system for state programs under subcomponent 1\.5\. This will
be managed by SEPLAN\.
In Component 2, Natural Resources Conservation and Protection, the PMU will handle the subcomponent
dealing with the control of losses in State infrastructure and projects for the re-use of treated wastewater
and the construction of siltation dams\. This component will also include the participation of EMATER
and EMPARN in the implementation of the soil conservation and microcatchment subcomponents, and of
CAERN in the control of losses in distribution systems\.
Component 3, Water Infrastructure, will also be managed by SERHID, through the PMU, with the
participation of EMATER and EMPARN in irrigation, and of ADESE in the development of guidelines
for the sustainable operation of small-scale water systems\. Component 4, Program Management, will be
under the responsibility of SERHID and the PMU\.
More details on institutional as well as financial, and procurement aspects are included in Annexes 6
(Implementation Arrangements), 7 (Financial Management and Disbursement Arrangements), and 8
(Procurement)\.
7\. Sustainability
The main objective of the Project is to improve the current water resources management system, thus
contributing to rational investment decisions and allocation of resources which will contribute to the
sustainable development of the water sector\. Furthermore, the planned pilot activities in both irrigation
development and natural resource management will contribute to the establishment of sound basis for a
future economic and environmentally sustainable development in these two areas\.
Sustainability of the projects actions depends on the existence of a clear, capable structure for the
management of water resources and on the appropriate management and operation of the states water
resources infrastructure\. This will be ensured through (i) the institutional strengthening of the public
entities and other stakeholders involved in water management in the state, (ii) the dissemination of
lessons, watershed plans and water resources information to increase the engagement of water users in
decision making; (iii) the development of cost recovery mechanisms to ensure adequate A, O&M of
hydraulic infrastructure; and (iv) the improved management and operation of the states water resources
infrastructure through the creation or strengthening of water users associations\.
Both of these processes have already begun and, as mentioned in Section 2 above, over the last decade the
state has invested approximately US$ 200 million in the implementation of water infrastructure and in the
management of water resources\.
8\.
Lessons Learned from Past Operations in the Country/Sector
The Bank is supporting a number of projects in the RGN and the region\. PROÁGUA/Semi-arid and the
state water resources projects in Ceará and Bahia have been providing valuable lessons concerning
effective measures to improve water resources management at the State level\. The Rural Poverty
Reduction Projects (RPRPs, or PCPRs formerly known as PAPPs), two of which were implemented by
the State of RGN, are providing lessons related to the financing of small-scale rural infrastructure, such as
Page 7
water supply systems for rural communities, and other type of investments that are identified, operated
and maintained by poor rural communities\. Drawing on lessons learned from the long term Bank
involvement in the water and sanitation sector in Brazil, work supported by the PMSS project has
confirmed many suspected weaknesses in the States water supply and sanitation sector, including
CAERN debts in excess of 200% of annual revenues and a tariff structure inconsistent with a sound
economic and fiscal situation\. An in-depth study of physical and financial losses in the water distribution
systems operated by CAERN will be undertaken during project implementation with the financial
assistance of CEF and the technical supervision of the Executing Unit of the proposed project\.
The following lessons gleaned from the Banks projects in the region were taken into consideration in the
design of the project:
Integrated Water Resources Management (IWRM)\.
Establishment of an IWRM approach at the basin
and local level is essential to reconcile cross-sectoral water demands\.
Strong Borrower Commitment and Ownership\.
The Governments explicit commitment to the activities
proposed assures an efficient, smooth and fast implementation and the project will leverage this
commitment to ensure the project achieves its development objective and sustainability\.
Conflict Resolution\.
Inter-sectoral allocation of water is a sensitive issue, involving high political costs
and challenging decision-making issues\. Facilitating consensus among the various parties, conflict
resolution mechanisms and clearly delineated areas of authority and responsibility, is crucial\.
Cost Recovery, Water Tariffs and Tradable Water Rights
\.
When there is competence in the institutional,
legal and regulatory frameworks for water rights system, Bank experience shows that rational water use
can be supported through the establishment of water rights, with water charges reflecting adequate cost
recovery\. In addition, effective collection of water charges is a function of the stakeholders' participation
in the process and appreciation of the benefits to be derived from the system\. Introduction of water use
charges prior to delivering demonstrable benefits to users inevitably results in controversy and lack of
adequate collection experience\. Experience points to the need for sound educational and public
information programs to preempt such problems\.
Decentralization and Beneficiary Participation\.
Bank experience has confirmed the need to decentralize
and promote stakeholder participation in WRM\. Bank projects in the Northeast have demonstrated that,
while firm government commitment to the project objectives is absolutely essential to help compensate
and overcome institutional weaknesses, the stronger the participation of users and their sense of
"ownership", the more successful the project will be in achieving its development objectives and
sustainability of its actions\.
Project Focus\.
Past experiences have shown that projects which focus solely on infrastructure works are
often unsustainable and that in order to increase the likelihood of sustainability, it is important to promote
a
balance between resource management and infrastructure\.
Implementation of a comprehensive set of technical, economic, financial, environmental and social
criteria to ensure sub-project sustainability
\.
The experience of PROÁGUA/Semi-Arid has shown that
clearly defined criteria for the eligibility of infrastructure works is necessary to ensure sustainability of
such activities\. These criteria would be incorporated and adjusted to the proposed project in order to
ensure sub-projects sustainability\.
9\.
Safeguard Policies (including public consultation)
Page 8
Safeguard Policies Triggered by the Project
Yes No
Environmental Assessment
(
OP
/
BP
/
GP
4\.01) [x]
[
]
Natural Habitats (
OP
/
BP
4\.04) [x]
[
]
Pest Management (
OP 4\.09
)
[x] [
]
Cultural Property (
OPN 11\.03
,
being revised as OP 4\.11)
[ ]
[x]
Involuntary Resettlement (
OP
/
BP
4\.12) [
]
[x]
Indigenous Peoples (
OD 4\.20
,
being revised as OP 4\.10)
[ ]
[x]
Forests (
OP
/
BP
4\.36) [
]
[x]
Safety of Dams (
OP
/
BP
4\.37) [x]
[
]
Projects in Disputed Areas (
OP
/
BP
/
GP
7\.60)
*
[
]
[x]
Projects on International Waterways (
OP
/
BP
/
GP
7\.50) [
]
[x]
10\. List of Factual Technical Documents
Project Document for
Programa de Desenvolvimento Sustentável e Convivência com o Semi-Árido
Potiguar
Report of Panel on Dam Safety
Banco do Nordeste (1997),
Execucao de Servicios Técnicos sobre a Demanda de Agua no Nordeste
,
Relatorio Final,
Cecilia Menon Moita et al\., (1998),
Metodologia de Avaliacao Economica e Financiera de Projectos a
experiencia do PMSS II
,
(Brasilia: IPEA)
Cummings, Ronald, Ariel Dinar and Douglas Olson (1996),
New Evaluation Procedures for a New
Generation of Water-Related Projects
,
World Bank Technical Paper Nr\. 349
,
(Washington, D\.C\.: The
World Bank)
PBLM- Consultoria Empresarial S/C Ltda\. (1997),
Excecucao de Servicios Tecnicos sobre a Demanda
de Agua no Nordeste, Relatorio Final
,
(Banco do Nordeste)
Powers, Terry A\. and Carlos A\. Valencia 1978),
Modelo de Simulación de Obras Públicas (SIMOP)\.
Manual del Usuario
,
(Washington, D\.C\.: Inter-American Development Bank, IDB)
World Bank, 2004,
Brazil: Irrigated Agriculture in the Brazilian Semi-Arid Region: Social Impact
and Externalities
,
Washington, D\.C\. Report No\. 28785-BR
11\. Contact point
Contact: Alvaro J\. Soler
Title: Sr\. Rural Development Specialist
Tel: (202) 473-1985
Fax: (202) 522-3132
Email: asoler@worldbank\.org
12\. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
*
By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the
disputed areas
Page 9
Telephone: (202) 458-5454
Fax: (202) 522-1500
Web: http://www\.worldbank\.org/infoshop | APPROVAL |
P088575 | Page 1
INTEGRATED SAFEGUARDS DATASHEET
APPRAISAL STAGE
I\. Basic Information
Date prepared/updated: 10/17/2005
Report No\.: AC1820
1\. Basic Project Data
Country: Ecuador
Project ID: P088575
Project Name: EC-Health Insurance Project
Task Team Leader: Carlos Marcelo Bortman
Estimated Appraisal Date: October 17,
2005
Estimated Board Date: January 19, 2006
Managing Unit: LCSHH
Lending Instrument: Adaptable Program
Loan
Sector: Health (70%);Other social services (30%)
Theme: Other communicable diseases (P);Health system performance (P);Other social
protection and risk management (P)
IBRD Amount (US$m\.):
90\.00
IDA Amount (US$m\.):
0\.00
GEF Amount (US$m\.):
0\.00
PCF Amount (US$m\.):
0\.00
Other financing amounts by source:
BORROWER
50\.00
50\.00
Environmental Category: B - Partial Assessment
Simplified Processing
Simple []
Repeater []
Is this project processed under OP 8\.50 (Emergency Recovery)
Yes [ ]
No [ ]
2\. Project Objectives
The main objective of the proposed project is to assist the Government of Ecuador (GOE)
to extend health coverage to targeted low-income groups who otherwise have no access
to health care with the goal of reducing infant, child and maternal mortality, as well as
reducing the level of health inequalities between provinces and income quintiles\. The
APL would finance the implementation of PROAUS (Universal Health Insurance
Program), extending health insurance coverage to individuals in income quintiles 1 and 2
over a period of 8 years or less\. In the first phase of the APL, PROAUS (Universal
Health Insurance Program) coverage would be initially extended to 860,000 individuals
in income quintiles 1 and 2 living in the municipalities of Quito and Guayaquil, as well as
those living in Canton Santa Elena and from the provinces of Tunguragua, Cotopaxi,
Chimborazo and Bolivar\. By the end of the implementation of APL1, 1\.4 million people
would be covered and served by PROAUS\. Extending coverage should be accompanied
by an 8 percent reduction in infant mortality rate (IMR) and under-5 mortality rate
(U5MR), and by 12 percent in maternal mortality ratio (MMR) in enrolled populations in
project provinces and municipalities, as well as 5 percent reductions in the ratios of IMR,
U5MR and MMR between 1-2 and 4-5 income quintiles\. The project would contribute
substantially to Ecuadorâ
s
ability to meet the MDGs for health by 2015\.
Page 2
The project should also meet a secondary but similarly important objective of changing
the operational culture of the health care systems\. The implementation of this project
should provide a new incentive framework through new payment arrangements and a
more market-driven approach to the contracting of services by the AUS (Universal
Health Insurance) Corporation, promoting operational effectiveness, quality
improvements and efficiency\. The project should also set the correct incentives for
enrollment, monitoring and actual delivery of services\. By the end of APL Phase 1,
contracts including this new incentive framework would be signed with the
municipalities of Quito and Guayaquil, and with providers in at least 4 provinces\.
Further, the project should also contribute to the process of decentralization in the health
sector by transferring responsibility to contract services from the MOH to the AUS
Corporation and to selected municipalities\.
Lastly, the project should contribute to strengthening the monitoring, evaluation and
audit network of PROAUS\. This would include the strengthening of the Health
Management Information Network for both the AUS Corporation and its providers, as
well as supporting external financial and technical audit\.
3\. Project Description
A
two phase APL project is proposed in the amount of US$90 million in the first phase
(2006-2008), with two components: component 1 would establish and finance the
institutional development of PROAUS; and component 2 would strengthen its
monitoring, evaluation and continuous auditing capacity\.
Component 1\. Establish, develop and initial financing for the Extension of Health
Coverage Program (PROAUS) (Loan US$74 million - GOE US$5 million)\.
This component would finance, through direct transfers to the AUS Corporation,
conditional reimbursement of capitation premiums to fund partial expenditures incurred
by PROAUS in the payment of services to providers\.
The design of the PROAUS involves the following core items:
a)
Eligible population
Persons (any age) in the first and second quintile\. The beneficiaries should be registered
in the first and second quintiles of
Sistema de Identificación y Selección de
Beneficiarios de los Programas Sociales (SELBEN) with 860,000 to be included in the
first year, scaling up to 1,357,000 over the subsequent 2 years in the first phase of the
project\. In the first phase the project would include populations in quintiles 1 and 2 from
the municipalities of Quito and Guayaquil, Canton Santa Elena and from the provinces of
Tunguragua, Cotopaxi, Chimborazo and Bolivar\.
b)
Benefit Package
The initial package to be covered by PROAUS would cover prevention at individual and
community levels, and treatment of prioritized health conditions as defined in the
Page 3
Conjunto Garantizado de Prestaciones (CGP) in 2004\. The cost of the benefits
guaranteed by the government per capita was estimated at US$82 per annum in a
consulting study by the Johns Hopkins Bloomberg School of Public Health\. However,
the AUS Corporation would pay only 20 percent of this cost to the MOH which is the
incremental cost of additional care per patient above the financing for fixed-costs already
received through budget transfers\. As well, where the private provider is already
receiving funding from the government to pay for patient services (i\.e\., Sociedad de
Lucha Contra el Cancer (SOLCA), Sociedad de Beneficiencia), the AUS Corporation
would negotiate to pay a reduced percentage of the per capita rate to reflect the
incremental cost of services delivered\.
c)
Payment mechanism from AUS Corporation to providers
The AUS Corporation would use a mixed approach to the payment of providers:
i\.
Community Level Services: capitation plus an incentive bonus\.
ii\.
Individual Level Preventative Services: capitation\.
iii\.
Individual Level Primary Care: payment per event following technical and
financial verification\.
iv\.
Individual Level Secondary and Tertiary Care Services: Production-based
reimbursement following technical and financial verification\.
Funds would be reimbursed from the Bankâ
s
loan
to the AUS Corporation via a
single account of the National Treasury on the basis of bi-monthly transfers\.
Disbursement of loan proceeds would be done on a capitation basis (similar to an
insurance premium) against the certified enrollment list of PROAUS in a scheme similar
to projects recently approved by the World Bank Board (Argentina - Provincial Maternal-
Child Health Investment Project) for expenditures incurred by the Government for
extending universal health insurance to the target population\. Transfers would be subject
to reporting documentation on the population covered in quintiles 1 and 2, purchase of
services and other specific indicators to be included in the contract between the
Corporation and providers\. The transfer to be financed by the loan is conceptually
equivalent to a contribution to finance the cost of the premium for a traditional health
insurance scheme\.
To set correct incentives, the cash transfer of the capitation payment would be
conducted in two installments: (i) 60 percent would be disbursed immediately after the
providerâ
s register has been certified by the auditing unit of the AUSCorporation; and
(ii) 40 percent would be disbursed periodically (in principle X months) after verification
and certification by the same unit of the AUS Corporation that the provider met the
production targets according to selected tracers \. The more tracers achieved the higher
the percentage of the remaining capitation payment received\. Hence, disbursements of
loan proceeds for the capitation payment expenditure category would be made against the
certified â
quasi-billâ
and the certified tracer reports submitted by participating
providers\. A list of tracers would be included in the Operational Manual\.
Page 4
d)
Evaluation of results
A
monitoring, evaluation and audit system would be developed with the support of
component 2\. It would be comprised of a register of enrollees, including demographic
data and the reference provider, indicators of service production, and data on community
monitoring such as satisfaction surveys and household utilization audits\. These data
would form the basis of disbursements to providers subject to verification of enrollment
and service production\. In addition, the system would contribute to the further
refinement of the resource allocation formulae\.
e)
Impact of the purchasing agent on the provider side
An essential part of the reform is the creation of a new institution (AUS Corporation)
that would receive resources from the central Government for the purchase of essential
services from providers for the poor\. This design raises potential questions regarding: (i)
availability of provider capacity to meet the additional demand for services; (ii) increased
funding to the public sector and its potential fiscal implications; (iii) generating of a non-
competitive environment for private providers; and (iv) additional fragmentation in an
already fragmented health system\.
The reform is being designed taking into consideration supply-side constraints and
attempts to avoid potential inflation of health services generated by the purchase of
essential services for the poor\. During the first APL phase, services would be purchased
for the targeted population mainly from Ministry of Health facilities and Social Insurance
institutions\. Given that the targeted population would be largely located in marginal
urban areas and rural areas, a large part of the provision of services would come form the
SSC which has an estimated excess capacity of about 40 percent\. Investments in
additional public sector infrastructure are not considered in this proposed Project but the
MOH included in its budget some resources to continue a basic certification process of
primary health care facilities\. Thus, the purchase of services for the targeted population
constitute an additional demand for health services from population groups which are
currently not covered by social insurance and the additional demand would be met using
idle health providing capacity\.
An additional concern is that the purchase of services from public sector facilities and
social insurance institutions would imply an increase in supply-side subsidies generating
unfair competition for the private sector providers\. The purchase scheme has been
designed to minimize this risk\. As mentioned in item 2, only 20 percent of this cost
would be paid to the MOH, which is the incremental cost of additional care per patient
above the financing for fixed-costs already received through budget transfers\. As well,
where the private provider is already receiving funding from the government to pay for
patient services\.
PROAUS is initially contemplated to cover 860,000 people in the lowest two quintiles\.
As the coverage expands beyond this number (in 3 to 4 years) services would also be
purchased from the private sector\. The average amount to be paid per capita to the
Page 5
private sector would be 100 percent so as to establish an equal playing field between
public and private providers with the selection of provider left to the beneficiary
population\.
Finally, PROAUS would not constitute additional fragmentation of the health financing
systems in Ecuador\. The beneficiary population of PROAUS is currently not covered by
insurance and the health services would be paid out of general revenues\. Thus there is no
additional fragmentation of risk pools\.
Component 2\. Institutional Strengthening of Management Information Systems for
Monitoring, Evaluation and Continuous Auditing (US$12 million)
This component would support: (i) the strengthening of the Health Management
Information Network for both AUS and its providers; (ii) provide technical assistance and
personnel training that would support the setting of contracts, provider payments and
project reimbursement; (iii) this component would also support external financial and
technical audit (i\.e\., medical audits, household utilization audits)\. Component 2 would
fund software, hardware, technical assistance and training\. Disbursement for this project
would be based on standard mechanisms for investment projects via a special account
subject to documentation of eligible expenditures\. AUS Corporation would begin by
using the existing information system of the ISSFA (Armend Forces Social Security
Insitute)\. As well, AUS Corporation through its technical assistance would learn from
best international practice implementing similar information systems\.
4\. Project Location and salient physical characteristics relevant to the safeguard
analysis
The project will be located in Ecuador and will cover the following municipalities of
Quito,Guayaquil and Canton Santa Elena and the provinces of Tunguragua, Cotopaxi,
Chimborazo and Bolivar\.
5\. Environmental and Social Safeguards Specialists
Ms Yewande Aramide Awe (LCSEN)
Ms Ximena B\. Traa-Valarezo (LCSHS-DPT)
6\. Safeguard Policies Triggered
Yes No
Environmental Assessment (OP/BP 4\.01)
X
Natural Habitats (OP/BP 4\.04)
X
Forests (OP/BP 4\.36)
X
Pest Management (OP 4\.09)
X
Cultural Property (OPN 11\.03)
X
Indigenous Peoples (OD 4\.20)
X
Involuntary Resettlement (OP/BP 4\.12)
X
Safety of Dams (OP/BP 4\.37)
X
Projects on International Waterways (OP/BP
7\.50)
X
Projects in Disputed Areas (OP/BP 7\.60)
X
Page 6
II\. Key Safeguard Policy Issues and Their Management
A\. Summary of Key Safeguard Issues
1\. Describe any safeguard issues and impacts associated with the proposed project\.
Identify and describe any potential large scale, significant and/or irreversible impacts:
The project will not finance any health care infrastructure or directly procure medical
supplies\. Consequently, the project is not expected to have any significant or direct
environmental safeguard impacts\. It is recognized, however, that the increase in coverage
could potentially lead to increased generation of healthcare wastes in health
establishments that participate in the insurance scheme that will be supported by the
proposed project\.
2\. Describe any potential indirect and/or long term impacts due to anticipated future
activities in the project area:
Not applicable
3\. Describe any project alternatives (if relevant) considered to help avoid or minimize
adverse impacts\.
Not applicable
4\. Describe measures taken by the borrower to address safeguard policy issues\. Provide
an assessment of borrower capacity to plan and implement the measures described\.
Regulations exist for the adequate management of wastes from health establishments,
including infectious and special wastes (Registro Oficial No\.106\. January, 1997)\.
Furthermore, according to information received from the Ministry of Health,
implementation of a Program for Management of Hospital wastes (Programa de Manejo
de Desechos Hospitalarios) was initiated by the Ministry of Health in 1996\. Information
presented by this program indicates that there have been improvements in healthcare
waste management\.
In order to take precautions against any potential environmental impacts of the proposed
project, as part of the contracts between the AUS Corporation and the healthcare
providers, the healthcare providers provide evidence that their existing or planned
healthcare waste management, storage, collection, treatment and disposal systems are
adequate and can accommodate any additional waste quantities that could occur as a
result of the expanded coverage\. This requirement will also be reflected in the Loan
Agreement and Operational Manual for the project\.
An Indigenous and Afro-Ecuadorian Peoples and Gender Plan (IPP) has been
formulated by the GOE to incorporate the participation of autochthonous peoples during
project design and particularly during implementation, monitoring, social auditing, and
participatory evaluation\. The Indigenous and Afro-Ecuadorian Peoples Plan has four
parts:
a)
Participatory Monitoring\. The aim is to create a â
social
control/auditingâ
network at the central level (Confederaci
ón de Nacionalidades y
Pueblos del Ecuador (CODENPE), Confederación de Afro-Ecuatorianos (CODAE),
Page 7
Dirección Nacional de Salud de Pueblos indÃgenas (D\.N\.S\.P\.I\.)), at the provincial,
municipal and local levels (Juntas Parroquiales), where the information of one level is
transmitted to the immediate higher level\.
b)
Inclusion of â
Intercultural Healthâ
in
the Basic
Health Service Package
tobecontracted by AUS\. The objective is to ensure Indigenous and Afro-Ecuadorian
people in quintiles 1 and 2 have access to AUS services providers\. This will be done in
two steps: (1) Contract a study that compiles knowledge and experience on Intercultural
Health Care practices in the three regions of Ecuador; and (2) Contract the elaboration of
a
Manual of Intercultural Health Practices that can be incorporated in the Basic Health
Care Package covered by AUS\.
c)
Promotion and Dissemination of AUS to beneficiaries in quintiles 1 and 2 through
the Indigenous and Afro-Ecuadorian organizations and D\.N\.S\.P\.I\., radio spots, theatre
groups, posters\.
d)
Training of health care package providers, on Intercultural Health practices\.
5\. Identify the key stakeholders and describe the mechanisms for consultation and
disclosure on safeguard policies, with an emphasis on potentially affected people\.
Important stakeholders are Ministry of Health, SODEM (Secretaria Nacional de los
Objetivos del Milenio), CODENPE, CODAE, and the National Directorate of Indigenous
Health at the MOH\. Ministry of Health and SODEM will disclose the Environmental
Assessment (EA) and Indigenous Peoples Plan (IPP) through their web pages\.
B\. Disclosure Requirements Date
Environmental Assessment/Audit/Management Plan/Other:
Date of receipt by the Bank
10/13/2005
Date of "in-country" disclosure
10/20/2005
Date of submission to InfoShop
10/17/2005
For category A projects, date of distributing the Executive
Summary of the EA to the Executive Directors
Indigenous Peoples Plan/Planning Framework:
Date of receipt by the Bank
09/28/2005
Date of "in-country" disclosure
10/20/2005
Date of submission to InfoShop
10/17/2005
*
If the project triggers the Pest Management, Cultural Property and/or the Safety
of Dams policies, the respective issues are to be addressed and disclosed as part of
the Environmental Assessment/Audit/or EMP\.
If in-country disclosure of any of the above documents is not expected, please
explain why:
C\. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the
ISDS is finalized by the project decision meeting)
Page 8
OP/BP/GP 4\.01 - Environment Assessment
Does the project require a stand-alone EA (including EMP) report?
No
If yes, then did the Regional Environment Unit review and approve the EA
report?
No
Are the cost and the accountabilities for the EMP incorporated in the
credit/loan?
No
OP/BP 4\.10 - Indigenous Peoples
Has a separate indigenous people development plan been prepared in
consultation with the Indigenous People?
Yes
If yes, then did the Regional Social Development Unit review the plan?
Yes
If the whole project is designed to benefit IP, has the design been reviewed
and approved by the Regional Social Development Unit?
Yes
BP 17\.50 - Public Disclosure
Have relevant safeguard policies documents been sent to the World Bank's
Infoshop?
Yes
Have relevant documents been disclosed in-country in a public place in a
form and language that are understandable and accessible to project-affected
groups and local NGOs?
No
All Safeguard Policies
Have satisfactory calendar, budget and clear institutional responsibilities
been prepared for the implementation of measures related to safeguard
policies?
Yes
Have costs related to safeguard policy measures been included in the project
cost?
Yes
Does the Monitoring and Evaluation system of the project include the
monitoring of safeguard impacts and measures related to safeguard policies?
Yes
Have satisfactory implementation arrangements been agreed with the
borrower and the same been adequately reflected in the project legal
documents?
Yes
D\. Approvals
Signed and submitted by:
Name
Date
Task Team Leader:
Mr Carlos Marcelo Bortman
Environmental Specialist:
Ms Yewande Aramide Awe
Social Development Specialist
Ms Ximena B\. Traa-Valarezo
Additional Environmental and/or
Social Development Specialist(s):
Approved by:
Regional Safeguards Coordinator:
Mr Jean-Roger Mercier
Comments:
Sector Manager:
Ms Mary T\. Mulusa
10/17/2005
Comments: Mary Mulusa, Acting Sector Manager | APPROVAL |
P175820 |  The World Bank
Resilience, Entrepreneurship and Livelihood Improvement Project (P175820)
Project Information Document (PID)
Appraisal Stage | Date Prepared/Updated: 25-Feb-2021 | Report No: PIDA31246
Feb 24, 2021 Page 1 of 16
The World Bank
Resilience, Entrepreneurship and Livelihood Improvement Project (P175820)
BASIC INFORMATION
OPS_TABLE_BASIC_DATA
A\. Basic Project Data
Country Project ID Project Name Parent Project ID (if any)
Bangladesh P175820 Resilience,
Entrepreneurship and
Livelihood Improvement
Project
Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead)
SOUTH ASIA 15-Feb-2021 28-May-2021 Agriculture and Food
Financing Instrument Borrower(s) Implementing Agency
Investment Project Financing Government of Bangladesh Social Development
Foundation
Proposed Development Objective(s)
Improve livelihoods of the poor and extreme poor, enhance their resilience and support rural entrepreneurship in
project areas
Components
Component A: Community Institutions and Livelihood Development
Component B: Business Development and Institutional Strengthening
Component C: Project Management, Monitoring and Learning
Component D: Contingent Emergency Response Component (CERC)
PROJECT FINANCING DATA (US$, Millions)
SUMMARY -NewFin1
Total Project Cost 341\.00
Total Financing 341\.00
of which IBRD/IDA 300\.00
Financing Gap 0\.00
DETAILS -NewFinEnh1
World Bank Group Financing
Feb 24, 2021 Page 2 of 16
The World Bank
Resilience, Entrepreneurship and Livelihood Improvement Project (P175820)
International Development Association (IDA) 300\.00
IDA Credit 300\.00
Non-World Bank Group Financing
Counterpart Funding 41\.00
Borrower/Recipient 40\.00
Local Beneficiaries 1\.00
Environmental and Social Risk Classification
Moderate
Decision
The review did authorize the team to appraise and negotiate
Other Decision (as needed)
B\. Introduction and Context
Country Context
1\. Bangladesh has made rapid social and economic progress in recent decades, reaching lower
middle-income status by 2015\. Officially reported gross domestic product (GDP) growth averaged close
to 6 percent annually since 2000 and accelerated to over 8 percent in FY19\. Strong labor market gains
contributed to a sharp decline in poverty, with the national poverty rate falling from 48\.9 to 24\.5 percent
between 2000 and 2016, while extreme poverty declined from 34\.3 to 13\.0 percent\.1 However, the pace
of poverty reduction slowed in recent years even as growth accelerated, particularly in urban areas and
in the west of the country\. Similarly, the progress on shared prosperity slowed between 2010 and 2016
after a decade of improvements, with annual consumption growth of the bottom 40 percent trailing that
of the overall population (1\.2 versus 1\.6 percent)\. Bangladesh entered the COVID-19 crisis with a relatively
strong macroeconomic position\. Garment exports and remittances narrowed the external deficit in recent
years and international reserves were adequate\. While tax collections are amongst the lowest in the
world, under-execution of the budget has contained the fiscal deficit, which has been below 5 percent of
GDP since FY01\. As a result, public debt is low and stood at 33\.7 percent of GDP at the end of FY19\.
2\. A modest deceleration of growth in the first half of FY20 turned into a sharp decline after the
COVID-19 pandemic caused major disruptions to economic activity\. In the first half of FY20 (July to
December 2019), growth decelerated as slower global trade and deteriorating external competitiveness
lowered exports and tighter access to finance constrained private investment growth\. With declining
1 Household Income and Expenditure Survey, 2000/01 through 2016/17\.
Feb 24, 2021 Page 3 of 16
The World Bank
Resilience, Entrepreneurship and Livelihood Improvement Project (P175820)
readymade garment (RMG) orders, exports declined by 5\.8 percent (y-o-y) during this period\. A sharp
contraction in capital goods imports (3\.4 percent, y-o-y) suggests private investment also declined\.
Growth during the first half of the year was primarily supported by remittance-fueled private
consumption\. The initial phase of the pandemic in early 2020 disrupted the supply of intermediate goods
from China, reducing manufacturing output\. As the pandemic intensified abroad, export orders from
Europe and the United States declined precipitously\. The government implemented a national shutdown
from March 26 to May 30 to control an accelerating domestic outbreak of the virus\. Control measures
resulted in a sudden stop of many sectors\. Consequently, real GDP growth is estimated to have
decelerated to 2\.4 percent in FY20\. Vulnerability in the banking sector remains high, with officially
recognized non-performing loans (NPLs) accounting for 8\.9 percent of total loans in September 2020\. Due
to deviations from international recognition, loss provisioning, capital calculation standards, and the
moratorium on loan repayments after the COVID-19 outbreak, the actual extent of financial sector risk is
likely higher than its share suggests\. With 5\.0 percent in December 2020, inflation remained benign\.
Declining imports and surprisingly large inflows of remittances, which increased by over 30 percent (y-o-
y) in the first seven months of FY21 (July to January), contributed to a current account surplus in FY21 so
far\.
3\. The pandemic has impacted poor households and micro and small enterprises\. The Bangladesh
Business Pulse Survey by the World Bank Group, based on interviews conducted with 500 micro, small,
and medium enterprises (MSMEs) in July 2020, shows that 94 percent of businesses have experienced
sharp drops in sales, 83 percent of firms have made losses and 33 percent of firms have not been able to
pay installments on existing loans\. A staggering 37 percent of Bangladeshâs workers have lost their jobs,
temporarily or permanently\. The first wave of the World Bankâs COVID-19 household monitoring survey,
conducted in June/July 2020 in slum and non-slum areas in Dhaka and Chittagong, shows that about 23
percent of the poor stopped working after the national shutdown announced in March 25\. Of the surveyed
people, 80 percent of wage workers and 94 percent of own-account workers were earning lower than
usual\. Median wages for salaried and daily workers declined by about 37 percent compared to usual
earnings right before COVID-19\. A different survey led by BRAC, the largest non-government organization
(NGO) in Bangladesh, indicated that urban and rural poor suffered an income loss of 75 percent and 62
percent, respectively\.2 The income shock led to a decline in food expenditure in both rural and urban
areas\. A micro-simulation conducted by the World Bank Poverty and Equity Global Practice indicates that,
on average, per capita household consumption could decline by 13 percent, implying that as much as 21
million people could face their income dropping below the poverty line\. The second round of the World
Bankâs COVID-19 household monitoring survey, conducted from September 2 to October 11, shows signs
of recovery in employment and earnings\. The share of adults working in the week preceding the interview
rose 10 percentage points between July and September 2020, driven by respondents who had been
unemployed or absent from work during the first round\. Employment recovered faster in Chittagong,
reaching pre-COVID-19 levels, while Dhaka remained about 14 percentage points below pre-COVID-19
employment levels\. Earnings and revenues have not recovered fully, and salaried and wage workers still
report substantial uncertainty about keeping their jobs\.
4\. COVID-19 has darkened the economic outlook, but economic activity is forecast to pick up again
in FY21\. Amid lingering impacts from the pandemic on domestic activity and persisting disruptions in
major export markets, a mild recovery is forecast for this year\. The unprecedented uncertainties related
2Livelihoods, Coping and Support During COVID-19 Crisis\. BRAC Institute of Governance and Development (BIGD) and Power and
Participation Research Centre (PPRC), June 2020\.
Feb 24, 2021 Page 4 of 16
The World Bank
Resilience, Entrepreneurship and Livelihood Improvement Project (P175820)
to COVID-19 are likely to further dampen private investment\. Weaker demand and more severe financing
constraints may continue to weigh on industrial production, while the flooding in early FY21 may hamper
agriculture production\. Inflation is projected to remain close to target\. The fiscal deficit is likely to rise as
recurrent expenditure on social protection measures is expected to remain elevated in the near term, and
capital expenditure to increase\. The recovery in subsequent years is expected to be gradual, with the
waning of pandemic related economic disruptions partly offset by increasing fragilities in the banking
system\. The recent rise in remittances is unlikely to persist, as thousands of migrant workers returned
home3 and the prospects of hiring new workers in the Gulf Cooperation Council (GCC) countries remain
grim\. Declining remittance inflows could reduce household income and slow private consumption growth,
the main engine of the economy\.
5\. Bangladesh is extremely vulnerable to the effects of climate change\. The Global Climate Risk
Index ranks Bangladesh as the worldâs seventh most affected country over the period 1999 -2018\.4 Rising
temperatures leading to more intense and unpredictable rainfalls during the monsoon season and a
higher probability of catastrophic cyclones are expected to result in increased tidal inundation\. It is
estimated that a one-meter rise in sea levels would submerge 18 percent of arable land in coastal areas\.5
Recent studies estimate that by 2050 Bangladesh could have 13\.3 million internal climate migrants\.6
Additional rural-urban migration would have significant consequences for air and water pollution and
unsustainable consumption of natural resources, while putting additional pressure on urban labor
markets\. Addressing climate risks is increasingly urgent to ensure sustainable economic development of
the country\.
Sectoral and Institutional Context
6\. Despite substantial improvements in past decades, poverty and vulnerability remain high in
Bangladesh\. From 2000 to 2016, the countryâs poverty rate was divided in half, with 25 million people
escaping poverty over the period\. Concurrently, improvements were recorded in nutrition and life
expectancy, in access to electricity, clean water and sanitation, and in access to education, among others\.
However, about 1 in 4 Bangladeshi still lived in poverty in 2016 and 1 in 8 lived in extreme poverty and
were unable to afford a basic food consumption basket\. In addition, more than half of the population are
considered vulnerable to poverty\.7
7\. Rural areas are home to most of the countryâs poor\. Even though rural poverty fell from 52
percent in 2000 to 27 percent in 2016, 80 percent of Bangladeshâs poor are still to be found in rural areas\.
Furthermore, 55 percent of the non-poor have consumption levels just above the poverty line, and their
vulnerability of falling back into poverty is high\. Improvements in education, reductions in household size,
and expansions in access to electricity and other assets all contributed to this poverty reduction in rural
areas, but these improvements were not evenly distributed spatially, making some of the non-poor more
vulnerable than others to slippage below the line\. This can be seen in recent increases in poverty in the
countryâs Western (rural) divisions\.
3 According to the Ministry of Expatriates' Welfare and Overseas Employment, more than 100,000 Bangladeshi workers
returned home between April and September\.
4 Germanwatch (2020) Global Climate Risk Index 2020\.
5 UNFCC (2007) United Nations Framework Convention on Climate Change\.
6 World Bank (2018) Groundswell: Preparing for Internal Climate Migration\.
7 World Bank (2019)\. Bangladesh Poverty Assessment: Facing old and new frontiers in poverty reduction\.
Feb 24, 2021 Page 5 of 16
The World Bank
Resilience, Entrepreneurship and Livelihood Improvement Project (P175820)
8\. Recurrent movement in and out of poverty also partly reflects the vulnerability and informality
of jobs\. Many rural households derive income from multiple sources, reflecting a rapidly transforming and
interconnected economy\. While 40 percent of rural households derive income only from agriculture, 43
percent of rural households derive income from different sectors (agriculture, industry, and services)\. A
workerâs type of employment (i\.e\. daily laborer, self-employed, or salaried) is, however, a better poverty
predictor\. Rural employment largely consists of informal self-employment activities, followed by daily
wage arrangements\. Day labor is much more prevalent among the poor, with 45 percent of them engaged
in this type of work\. Within agriculture, about 1 in 4 workers are daily workers\.8
9\. Stark gender disparities exist in womenâs livelihood and entrepreneurship opportunities\. While
female labor participation in rural areas has been rising steadily up to 36 percent, it remains markedly
lower than menâs 82 percent labor force participation\.9 63 percent of employed women work in
agriculture, which is also a sector where women earn the least\.10 Womenâs representation in agriculture
is nearly double that of men\. The âfeminization of agricultureâ? has not translated into higher incomes
because women are largely involved in unpaid farm activities\. Gender disparity is apparent in the types of
earnings sources that women rely on\. Women work mostly at or near home and in unpaid work\. Sixty-
nine percent of working rural women work inside their homes, while almost all men work outside their
homes\.11 It is estimated that rural female agricultural workers constitute the largest share of Bangladeshâs
unpaid employment\.12 Another study highlighted the gender gap within agricultural employment, where
50 percent women reported engaging in livestock and 22 percent in unpaid farm activities, whereas only
4 percent of men reported working in livestock and only 4 percent were unpaid\. Furthermore, womenâs
entrepreneurial activity in Bangladesh is low, particularly in rural areas\.13 Out of the 500 MSMEs surveyed
in the Business Pulse Survey, only 19 percent were women-owned\.14 Among beneficiaries of the Nuton
Jibon Livelihood Project (NJLIP, P149605), 15 percent of the self-employed women lead agri-based
enterprises\. Among women, female-headed households face additional challenges and tend to have lower
income levels\.15 Given the large representation of women in agriculture and the gender gaps, prioritizing
higher income activities for women is important for rural income growth as well as womenâs economic
empowerment\.
10\. The gender gaps derive from several underlying barriers limiting womenâs ability to develop and
scale livelihood and entrepreneurship activities\. Barriers include: (i) Social and cultural barriers to take up
economic enterprise; (ii) Poor access to capital and financing options; (iii) Lack of knowledge and access
to productive resources and technology; (iv) Limited skills and access to skills training; (v) Poor knowledge
and access to markets; (vi) Poor knowledge and access to professional networks and associations; and (vii)
8 World Bank (2020)\. Bangladesh Rural Income Diagnostic\.
9 World Bank (2020)\. Bangladesh Rural Income Diagnostic\.
10 Although gender wage gaps are reducing over the year, women earn the least in agriculture sector and gender gap continues
to exist
11 Solotaroff, Jennifer L\.; Kotikula, Aphichoke; Lonnberg, Tara; Ali, Snigdha; Pande, Rohini P\.; Jahan, Ferdous\. 2019\. Voices to
Choices: Bangladesh's Journey in Women's Economic Empowerment\. International Development in Focus\. Washington, DC:
World Bank
12 Solotaroff, Jennifer L\.; Kotikula, Aphichoke; Lonnberg, Tara; Ali, Snigdha; Pande, Rohini P\.; Jahan, Ferdous\. 2019\. Voices to
Choices: Bangladesh's Journey in Women's Economic Empowerment\. International Development in Focus\. Washington, DC:
World Bank
13 Aktar, M\., Abdullah, A\., Jantan, A\., & Hossan, D\. (2020)\. Factors Influencing Entrepreneurial Success Among the Rural Women
Entrepreneurs In Bangladesh\. International Journal of Business and Economy, 2(3), 42-58
14 Kader, Ananya W\. & Pattanayak, Maoranjan\. 2020\. Business Pulse Survey: Impact of COVID-19 on MSMEs in Bangladesh
15 SDF Management Information System (MIS)\.
Feb 24, 2021 Page 6 of 16
The World Bank
Resilience, Entrepreneurship and Livelihood Improvement Project (P175820)
Mobility constraints\.16 In addition, for rural women entrepreneurs a number of issues hamper their
businesses and keep them from maximizing economic benefit\. For instance, work opportunities as
vendors, purchasers, or middlemen are greatly restricted for women due to limitations placed on their
mobility\.17 Women entrepreneurs in rural areas furthermore lack the physical space to sell goods or
services as well as supportive market infrastructure\. Some 34 percent of woman entrepreneurs report
that a major impediment to SME development in Bangladesh is peopleâs perceived discomfort with
women doing business\.18
11\. Agriculture is a key driver in poverty reduction, but declining agricultural productivity growth
hinders the development of the rural economy\. It is estimated that agriculture accounts for 38 percent
of rural householdsâ income\.19 The agriculture sector contributed to 69 percent of overall poverty
reduction between 2000 and 2010\. Its contribution to poverty reduction was however much more modest
from 2010 to 2016 (27 percent) due notably to a slowdown in agriculture growth over the period, which
was itself the result of the lower total factor productivity (TFP) growth â from 2\.4 percent in 2001-10 to
1\.0 percent in 2011-16 â along with a continuous decline in the growth of input use\.20 Given that evidence
suggests a 10 percent increase in agricultural incomes generates a 6 percent increase in non-agricultural
incomes through strong forward and backward linkages,21 the slowdown in agricultural growth is posing
a serious challenge for both the farm and the non-farm rural economy\.
12\. Despite emerging market opportunities for productive diversification and increased value
addition, on-farm and off-farm constraints are slowing down the modernization of the agri-food sector\.
Since the 1980s, Bangladesh has made significant policy reforms with agricultural input market
liberalization (particularly fertilizer and irrigation) and the National Seed Policy that have largely
contributed to achieving near self-sufficiency in rice production\.22 The dominance of one crop brings,
however, the risk of reducing income generation potential for smallholder farmers and limits the
availability of diverse and nutrient-rich diets of poor farming households focusing on rice production\. In
addition, with rapid urbanization and fast income growth, dietary patterns are changing in the country
with the demand for eggs, fruits, meat and fish expected to expand by more than 50 percent by 2030\.
Domestic production faces challenges in meeting that growing demand for higher value commodities,
which has resulted in a three-fold increase of food imports from 2007 to 2017 to US$10\.7 Billion\. These
challenges fall under three broad categories: (i) On-farm productivity constraints; (ii) Off-farm value
addition and commercialization constraints; and (iii) Cross-sectoral enablers\. Bangladesh is not
competitive in terms of yields for many products compared to its regional peers and world averages\. Main
productivity constraints include land fragmentation and informality in land rental markets, limited access
to quality seeds for non-paddy crops, limited knowledge and adoption of good agricultural practices (GAP)
reflected in imbalanced use and overuse of inputs, and limited use of farmer aggregation models, which
constrains the delivery of extension services, accessing finance, and market linkages\. Key constraints
16 World Bank (2020)\. Bangladesh Rural Income Diagnostic\. Poor access to financing options is further hindered by womenâs low
asset ownership\. Among rural women, 13 percent solely or jointly own agricultural land and 7 percent own nonagricultural land,
compared to 70 percent and 86 percent of rural men, respectively\. IZA Institute of Labor Economics, Germany\.
17 Asadullah, M\. Niaz, & Wahhaj, Zaki\. 2016\. Missing from the Market: Purdah Norm and Womenâs Paid Work Participation in
Bangladesh\.
18 Makino, Yuka; Brahmam, Maya; Vargas, Juan Carlos; Yoon, Sulhee\. 2019\. Economic Empowerment of Women through Resilient
Agriculture Supply Chains: A Geospatial and Temporal Analysis in Southwestern Bangladesh\. World Bank, Washington, DC
19 Bangladesh Bureau of Statistics (2019)\. Report on Agriculture and Rural Survey 2018\.
20 World Bank (2020)\. Promoting Agri-Food Sector Transformation in Bangladesh: Policy and Investment Priorities\.
21 World Bank (2016)\. Dynamics of Rural Growth in Bangladesh: Sustaining Poverty Reduction\.
22 World Bank (2016)\. Dynamics of Rural Growth in Bangladesh: Sustaining Poverty Reduction\.
Feb 24, 2021 Page 7 of 16
The World Bank
Resilience, Entrepreneurship and Livelihood Improvement Project (P175820)
hindering off-farm value addition and commercialization include the limited number of formal off-takers,
inadequate and costly marketing infrastructure and logistic services, and inadequate upholding of
appropriate food safety practices and product quality standards\. These productivity, value addition, and
commercialization related constraints are exacerbated by other cross-sectoral issues such as access to
finance and overall investment climate and competitiveness challenges\.23
13\. Weather and climate change-related risks also impact rural incomes and rural poverty
negatively, especially among households engaged in agriculture\. Bangladesh is particularly vulnerable to
adverse climate events and to climate change impacts\. Climate disasters have both direct effects (such as
loss of lives and productive assets) and indirect effects (such as loss of employment and income, reduced
access to products and services, and opportunity cost of resources that need to be diverted to relief and
rehabilitation), as well as disrupting effects on rural economies, accelerating rapid urbanization, and
migration\. Limited opportunities for women to access institutions that help increase adaptive capacity,
entrenched social norms, mobility constraints and access and ownership of assets increase womenâs risks
to climate change-related impacts\.24 Agricultural incomes are especially vulnerable to extreme weather
events\. Climate change is already affecting agricultural production through temperature increases, sea
level rise, saltwater intrusion, rainfall variability, and extreme weather events\. Increased temperature
could lead to a decline in crop yields of pulse, vegetables, and wheat, oilseeds in the range of 6 to 9 percent
compared to scenario without climate change\. Increased soil and water salinity due to sea level rise is
expected to result in a 15\.6 percent yield reduction in high-yielding rice varieties by 2050\.25 Soil salinity is
affecting 62 percent of coastal land, and sea level rise may reduce available cropland by about 25 percent
in coastal divisions of the country\. Unseasonal and extreme events affect crops and increase the risks of
infestations\. Late monsoon arrival can lead to water stress\. Results from the CERES-Rice model indicate
that high water stress during flowering and maturing stages can lead to rice yield losses as high as 70
percent\.26
14\. The COVID-19 crisis is threatening to reverse the progress made on rural poverty reduction\. The
impact of the pandemic on poverty is expected to be greater in urban areas, which are estimated to see
a percentage point rise of 15 versus a slower rise in rural areas of 11 percentage points\. However, this
means that rural poverty will rise to 36 percent as a result of COVID-19 (versus 32 percent in urban
areas)\.27 A large share of non-farm employment in sectors impacted by the pandemic takes place in the
countryâs rural areas\. Most producers, processors, traders, and logistics companies along the agri-food
supply chain experienced incomes losses triggered by supply chain disruptions and reduced demand\. This
was particularly acute for value chain actors producing and selling perishable goods and livestock
products, such as vegetables, poultry, eggs, and milk\.28 This is part of the ânew poorâ phenomenon
overtaking rural areas in Bangladesh as a result of the COVID crisis\.
15\. COVID-19 has further undermined womenâs economic opportunities and outcomes\. The sharp
differences between men and womenâs earning sources in terms of income generation activities and rural
entrepreneurship have further widened due to the pandemic\. The increase in womenâs care
23 World Bank (2020)\. Promoting Agri-Food Sector Transformation in Bangladesh: Policy and Investment Priorities\.
24 Ahmad, Nilufar (2012)\. Gender and Climate Change in Bangladesh\. The Role of Institutions in Reducing Gender Gaps in
Adaptation Program\. Washington, DC: World Bank
25 World Bank (2019)\. Bangladesh: Climate-Smart Agriculture Investment Plan\.
26 Iqbal, K\. and Siddique, A\. 2014\. The impact of climate change on agricultural productivity: evidence from panel data of
Bangladesh\. Discussion Paper 14-29\. Available at: http://econpapers\.repec\.org
27 World Bank (2020)\. Losing Livelihoods: The Labor Market Impacts of COVID-19 in Bangladesh\.
28 World Bank (2020)\. Bangladesh Rural Income Diagnostic\.
Feb 24, 2021 Page 8 of 16
The World Bank
Resilience, Entrepreneurship and Livelihood Improvement Project (P175820)
responsibilities has affected their ability to take on paid work\.29 Women are also likely to be at a greater
risk of increasing indebtedness since many microfinance borrowers are women\.30 Lockdown and
additional economic stresses have increased the risks of gender-based violence (GBV) and medium-term
risk of child-marriage\. BRAC documented a nearly 70 percent increase in reported incidents of violence
against women and girls in March and April 2020 compared to the same time the year before\.31 This is a
major concern as Bangladesh already has high prevalence of GBV with over 70 percent of married women
reporting intimate partner violence in their lifetime\.32 Reducing the economic stresses within households
and restoring womenâs income generating capacity and livelihoods, always important, has become critical\.
16\. The World Bank supported NJLIP has been successful in contributing to poverty alleviation in
rural areas, while strengthening beneficiariesâ resilience to shocks like the COVID -19 pandemic\. The
project has implemented livelihood approaches that have reached over one million beneficiaries, of which
over 90 percent were women\. From 2015 to 2020, over 80 percent of the poor and extreme poor in project
villages took loans from Village Credit Organizations and over 40 percent of beneficiaries saw their income
increase by at least 30 percent\. With the projectâs support, the livelihoods of many beneficiaries shifted
away from insecure and low-paid wage employment, such as casual day-labor in both agriculture and non-
agriculture sectors, towards greater self-employment through livestock rearing, income generating
activities (IGA) in crop and fisheries subsectors and non-farm enterprises\. Prior to the COVID-19 outbreak,
over 50,000 of the targeted 400,000 households had graduated out of poverty and positive trends of
health and nutrition had been observed\. NJLIP beneficiaries are now facing challenges induced by the
pandemic that reduce their ability to carry out IGAs\. Based on a survey completed by the Social
Development Foundation (SDF) in November 2020, 76 percent of NJLIP beneficiaries have suffered a
decline in their regular income, raising the risk of seeing these beneficiaries fall back into poverty\.
However, surveyed beneficiaries proved more resilient to the crisis than people surveyed in the control
group\. NJLIP beneficiaries were 16\.5 percent more likely to earn income from non-farm self-employment,
had suffered less from food shortages in the four weeks preceding the survey (11 percent versus 15
percent for the control group), and were likelier to report having some form of savings (89 percent of
respondents versus 59 percent)\.
C\. Proposed Development Objective(s)
Development Objective(s) (From PAD)
To improve livelihoods of the poor and extreme poor, enhance their resilience and support rural entrepreneurship in
project areas\.
Key Results
17\. Key indicators to measure the achievement of the PDO include:
29 Surveys in late March 2020 in Dhaka and Chittagong found that the percent of males and females who stopped working were
approximately equal, at 23 and 24 percent, respectively; however, of those who stopped working, women were more likely to
leave the labour force; 80 percent of men versus 66 percent of women were seeking work\. World Bank (2020)\. Losing Livelihoods:
The Labor Market Impacts of COVID-19 in Bangladesh\.
30 World Bank (2020) Protecting the most vulnerable during and I the aftermath of COVID-19 Pandemic
31 https://www\.hrw\.org/report/2020/10/29/i-sleep-my-own-deathbed/violence-against-women-and-girls-bangladesh-barriers
32 Bangladesh Bureau of Statistics 2015\.
Feb 24, 2021 Page 9 of 16
The World Bank
Resilience, Entrepreneurship and Livelihood Improvement Project (P175820)
i\. Number of beneficiaries with an income increase of at least 30% from income
generating activities and increased employment (of which, female);
ii\. Share of beneficiaries changing poverty status (of which, female);
iii\. Producers and rural entrepreneurs with increased income of at least 40% (of which,
female);
iv\. Share of beneficiaries with improved resilience (of which, female); and
v\. Share of beneficiaries who are satisfied of project activities\.
D\. Project Description
18\. The proposed project will provide immediate livelihood support for rural communities, and
primarily women, while contributing to building back better in a resilient way\. The project adopts the
approach of the Nuton Jibon Livelihood Improvement Project (NJLIP, P149605), which documented great
success in reaching the poor and poorest, and will tailor livelihood opportunities in order to respond to
the following urgent needs: (i) Respond to the impact of the COVID-19 pandemic and climate-induced
events such as cyclone Amphan on the livelihood of vulnerable rural households and support recovery
and resilience building; (ii) Help rural households graduate out of poverty through income-generating
activities (IGA), as well as skills development and employment support; (iii) Support NJLIPâs current
beneficiaries who have fallen back into poverty because of recent crises; and (iv) Support rural
entrepreneurship for sustained post-COVID-19 economic recovery\.
19\. The project will have four components:
i\. Component A: Community Institutions and Livelihood Development
ii\. Component B: Business Development and Institutional Strengthening
iii\. Component C: Project Management, Monitoring and Learning
iv\. Component D: Contingent Emergency Response Component (CERC)
20\. Component A â Community Institutions and Livelihood Development (US$254 million IDA)\. The
objectives of this component are to: (i) Mobilize poor and extreme poor households of the selected
project villages by forming and strengthening community institutions; (ii) Provide technical and financial
support for livelihood improvement and small-scale infrastructure development; and (iii) Provide
technical and financial support for health and nutrition improvements\. This component will also
strengthen awareness about social and cultural norms that constrain women and exclude marginalized
groups, as well as increase beneficiariesâ understanding of climate change and risks and promote activities
to strengthen climate resilience and build back in a sustainable, climate-resilient manner\. These activities
are critical because of beneficiariesâ high exposure and vulnerability to climate change\. This component
will finance: (i) Setting up offices for cluster field facilitation and mobilization, staff and other costs related
to providing technical support; and (ii) Village-level community plans for (a) technical support to
community groups and institutions, (b) cash transfers to the poor and vulnerable, (c) loans for income
generating activities, (d) small-scale climate-resilient infrastructure development, and (e) technical and
financial support for health and nutrition\.
Subcomponent A\.1: Development and Strengthening of Community Institutions (IDA: US$48 million)
21\. This subcomponent will mobilize, develop, and strengthen self-reliant community organizations
in each of the villages targeted by the project, which will in turn be able to support beneficiaries as
described in the next subcomponents\. This subcomponent will finance setting up offices for cluster field
Feb 24, 2021 Page 10 of 16
The World Bank
Resilience, Entrepreneurship and Livelihood Improvement Project (P175820)
facilitation and mobilization, as well as staff and other costs related to providing technical support to
establish village-level community institutions and strengthen their development\.
Subcomponent A\.2: Financing of Community Plans (IDA: US$200 million)
22\. This subcomponent will support the financing of community plans to: (i) Establish and build the
capacity of community groups and institutions; (ii) Provide cash transfers to the poor and vulnerable; (iii)
Provide loans to beneficiaries for operating IGAs; and (iv) Finance prioritized small-scale infrastructure\.
These community plans will be funded by transferring project funds to a Village Development Fund (VDF)
in each village targeted by the project\. Each VDF will then consist of four sub-funds: (i) Institutional
Development Fund; (ii) Poverty Alleviation Fund; (iii) Revolving (Shabolombi) Fund; and (iv) Construction
Works Fund\.
Subcomponent A\.3: Health and Nutrition Support (IDA: US$6 million)
23\. This subcomponent will support improved health and nutrition in each village through a number
of targeted activities\.33 These activities will be funded by transferring project funds to the Health and
Nutrition Support Committee (HNSC) in each village targeted by the project\.
24\. Component B â Business Development and Institutional Strengthening (US$40 million IDA, US$1
million Local Beneficiaries)\. The objectives of this component are to: (i) Establish second-tier institutions
to ensure the sustainability of village institutions; (ii) Increase livelihood opportunities of the poor and
extreme poor by organizing them in producer groups (PGs), cooperatives or federations, improving their
market and business orientation, and developing linkages and partnerships with market actors and service
providers;34 (iii) Support rural entrepreneurship to enhance livelihoods and resilience; and (iv) Ensure skills
development training and sustainable employment for the un/underemployed youths and returning
migrants and immigrants\. Activities also include awareness raising about climate change and risks, and
adaptation and resilience building practices among targeted PGs, rural entrepreneurs, youth and migrant
returnees and promotion of climate-smart practices as well as opportunities for income diversification to
increase livelihood resilience\. This component will finance: (i) The first two years of operations of RELI
Cluster Community Societies; (ii) Technical and financial support to PGs and rural entrepreneurs; and (iii)
Technical and financial support to youths and returning migrants\.
Subcomponent B\.1: Development and Strengthening of Second-tier Institutions (IDA: US$9 million)
25\. This subcomponent will help create and support the operations of second-tier institutions called
RELI Cluster Community Societies (RCCS) at cluster level and RELI District Community Societies (RDCS) at
district level to support the networking and aggregation of the village-level community institutions
created under Component A\. These second-tier institutions take over the support and development
function for their village institutions and monitor their performance, while also seeking potential options
for economic growth and service provision for the village institutions or groups of beneficiaries they
oversee\. This subcomponent will finance the first two years of operations of these RCCSs by transferring
33 Given the high prevalence of GBV, activities raising awareness on GBV risks and services available for support will also be
carried out\.
34 Producer groups are primarily composed of female beneficiaries\.
Feb 24, 2021 Page 11 of 16
The World Bank
Resilience, Entrepreneurship and Livelihood Improvement Project (P175820)
project funds to an Institutional Development Fund (IDF) for their first year of operation and a
Performance Support Fund (PSF) for their second year of operation\.
Subcomponent B\.2: Commercial Agriculture and Rural Entrepreneurship (IDA: US$17 million; Local
beneficiaries: US$1 million)
26\. This subcomponent will seek to support the growth of the rural economy by supporting the
formation and development of producer groups (PGs) and rural enterprises\. PGs and rural entrepreneurs
will receive both technical assistance from local service providers (LSPs) contracted by the project and
direct financial support from the commercial agriculture and rural entrepreneurship (CARE) fund following
a productive partnership approach\.
Subcomponent B\.3: Employment Generation Support (IDA: US$14 million)
27\. This subcomponent will help un/under employed youths35 and jobless migrant / immigrant
returnees, including climate migrants, residing in villages supported by RELI to acquire marketable skills
and access employment opportunities\. This subcomponent will finance technical support, the cost of skill
development training, and a stipend program for meritorious students to improve their access to higher
education\.
28\. Component C â Project Management, Monitoring and Learning (U$6 million IDA, US$40 million
Government of Bangladesh)\. This component will support project management, as well as monitoring
and continuous learning throughout the life of the project\. It will cover the operating costs of SDF at
national, regional, and district levels, including salaries and office operating costs\. IDA will finance some
of the non-staff operational costs, whereas all staff costs and remaining non-staff operational costs will
be financed by counterpart funding\.
29\. Component D â Contingent Emergency Response Component (US$0 million IDA)\. This CERC is
included under the project in accordance with OP/BP 10\.00, paragraphs 12 and 13, for situations of urgent
need of assistance\. This will allow for rapid reallocation of project proceeds in the event of a natural or
man-made disaster or crisis that has caused or is likely to imminently cause a major adverse economic
and/or social impact\.
\.
\.
Legal Operational Policies
Triggered?
Projects on International Waterways OP 7\.50 Yes
Projects in Disputed Areas OP 7\.60 No
Summary of Assessment of Environmental and Social Risks and Impacts
\.
35 Youths in Bangladesh are people between 18 and 35 years of age\.
Feb 24, 2021 Page 12 of 16
The World Bank
Resilience, Entrepreneurship and Livelihood Improvement Project (P175820)
The project is rated âmoderateâ? both on environment and social risk categorizations\. The main anticipated E&S risks
and impacts are likely to relate to: (1) occupational and community health and safety, (2) water, air & noise pollution,
soil contamination, solid waste generation and management, (3) ensuring appropriate benefits to the marginalized
and disadvantaged groups including the indigenous peoples from the project activities; (4) managing and mitigating
the SEA/SH risks and (5) risk of child labor\. All of which need to be addressed\. However, most of the activities are
expected to have localized and reversible negative but insignificant environmental and social impacts\.
The borrower will develop a Stakeholder Engagement Plan (SEP) proportional to the scale and complexity of the
project and its associated risks and impacts\. The client will engage in meaningful consultations with all stakeholders
throughout the project life cycle in particular, to the inclusion of women/girls and vulnerable and disadvantaged
groups and as well as the indigenous communities\.
The constructions of Community Infrastructure Works (CIW) are small buildings in semi-urban settings and
contractors are likely to hire labors from the community without creating any labor influx\. The project supported rural
livelihood activities, especially the agricultural activities, are unlikely to hire outside labor\. Even the small home-based
manufacturing units will employ labor from the community\.
Resource efficient construction materials will be encouraged to use for building construction which may eventually
reduce local air pollution indirectly\. Other pollution prevention and use of bio-fertilizer and bio-pesticides are
encouraged\.
Many of the project activities, such as cash transfer, carry inherent risks of SEA/SH given the current characteristics of
Bangladeshi society, especially in the rural areas\. The ESMF will lay down the process for carrying out screening of
SEA/SH related risks and measures to be taken\.
The project does not anticipate any land acquisition\. The small amount of land required for the project will be
ensured through âwilling-buyer willing-sellerâ? modality or voluntary land donation\. The detailed guidelines for both
will be included the projectâs Environmental and Social Management Framework (ESMF)\. This framework approach is
adopted as the projectâs locations at community level are not yet identified\.
The ESMF will also consider the borrowerâs E&S systems, carry out an institutional capacity assessment, and identify
disadvantaged and vulnerable people in the context of the project\. Following the guidelines of the ESMF, the
borrower will prepare a Project Operational Manual (POM) that will lay down the detailed operational and
implementation procedures of the project activities at the field/community level\. When the communities at the sub-
project will be identified, they will be screened, and an ESIA and/or ESMP may be carried out and prepared, as
needed\.
The project will include the indigenous peoples as beneficiaries for which the ESMF will include the broad guidelines
and based on this, during implementation stage, the borrower will prepare sub-project specific Indigenous Peoples?
Plan, as relevant\. Similarly, the project does not anticipate any labor influx\. The community level small constructions
will be essentially undertaken by the communities themselves and only on exceptional cases that require skilled labor
(such as mason, mechanics, etc\.), these will be outsourced\. The projectâs Labor Management Procedures (LMP) will
include relevant provisions for managing labor influx and measures against child and forced labor along with a labor
specific Grievance Management\.
Feb 24, 2021 Page 13 of 16
The World Bank
Resilience, Entrepreneurship and Livelihood Improvement Project (P175820)
The project will prepare and SEA/SH Management Plan that will include specific GM and as well as provision for
SEA/SH specific service providing organizations\. The projectâs Stakeholder Engagement Plan (SEP) will identify all
relevant stakeholders including the approaches to engage with them\. The SEP will be prepared and disclosed prior to
appraisal\.
The key points identified in the ESMF along with the other ESF documents mentioned above will be incorporated in
the ESCP\.
E\. Implementation
Institutional and Implementation Arrangements
30\. The project will be implemented by the Social Development Foundation (SDF), an autonomous
ânot-for-profitâ? organization established in 2001 under the Ministry of Finance\. The project will keep
the institutional structure of NJLIP, with an SDF National Office, Regional Offices, District Offices, and
Cluster/Field Offices, as well as a Project Advisory Committee with appropriate representation of key
ministries and agencies\. The project will be implemented in accordance with the rules and procedures
agreed upon in the Project Implementation Plan (PIP), the Community Operational Manuals (COM), and
the Human Resources Policy and Manual\. The PIP, COM, and the Human Resource Policy and Manual are
to be submitted to IDA and found satisfactory prior to effectiveness of the project\. The documents will
outline the roles and responsibilities of SDF, other stakeholder and community organizations and provide
details of project processes and implementation steps\. The operational documents will be developed and
improved to respond to lessons and experiences gained under previous projects\. These documents will
be reviewed periodically by the GoB and IDA with stakeholder participation\. Any changes to these manuals
and operational documents will require prior approval from IDA\. IDA approval will also be required for
any changes to SDFâs Articles of Association\.
31\. Board of Directors\. The task of controlling and directing the formulation and administration of
SDFâs policy will primarily be the responsibility of its Board of Directors whose members are selected by
the Ministry of Finance from a General Body whose members are also appointed by the Ministry\.
32\. SDF\. The overall responsibility of achieving Project Development Objectives (PDOs) and
implementing the project on time will be superintended by SDFâs National Office, which will be
responsible for monitoring of project activities, quality control and compliance, communications and
governance\. Five Regional Offices will be set-up to operate as decentralized locations overseeing project
activities within their jurisdictions\. District Offices will be responsible primarily for supporting and
facilitating the implementation of activities by the field teams\. All project activities at the âclusterâ level
will be implemented by Cluster Offices each supporting about 25 to 30 villages\.
33\. Community-level Institutional Arrangements\. RELI Groups (RG) will be initiated in each village
for savings and internal lending\. They will be comprised of 10 to 15 members, with priority given to
extreme poor, unemployed women and youth\. RGs elect the Executive Committee, or Gram Samiti, which
is responsible for implementing VDF activities in the village\. Apex bodies at village level, or Gram
Feb 24, 2021 Page 14 of 16
The World Bank
Resilience, Entrepreneurship and Livelihood Improvement Project (P175820)
Parishads, independently appoint Social Audit Committees for providing oversight of all village activities
and funds\.
34\. Local governments\. An MoU will be signed between SDF and the Local Government Division
under the Ministry of Local Government, Rural Development and Co-operatives to provide a framework
for the collaboration of local government bodies with SDF during project implementation, as well as with
RELI Community Societies past project completion\.
\.
CONTACT POINT
World Bank
Jean Edouard Albert Saint-Geours
Senior Economist
Samina Yasmin
Agriculture Economist
Borrower/Client/Recipient
Government of Bangladesh
Monowar Ahmed
Secretary, Economic Relations Division
secretary@erd\.gov\.bd
Implementing Agencies
Social Development Foundation
A\.Z\.M\. Sakhawat Hossain
Managing Director
md@sdfbd\.org
FOR MORE INFORMATION CONTACT
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 473-1000
Web: http://www\.worldbank\.org/projects
Feb 24, 2021 Page 15 of 16
The World Bank
Resilience, Entrepreneurship and Livelihood Improvement Project (P175820)
APPROVAL
Jean Edouard Albert Saint-Geours
Task Team Leader(s):
Samina Yasmin
Approved By
Practice Manager/Manager:
Country Director: Mercy Miyang Tembon 26-Feb-2021
Feb 24, 2021 Page 16 of 16 | APPROVAL |
P154680 | PROJECT INFORMATION DOCUMENT (PID)
ADDITIONAL FINANCING
Report No\.: PIDA27709
Project Name Tana & Beles Integrated Water Resources Development Additional
Finance (P154680)
Parent Project Name Tana & Beles Integrated Water Resources Development (P096323)
Region AFRICA
Country Ethiopia
Sector(s) Flood protection (40%), Forestry (30%), Public administration-
Agriculture, fishing and forestry (15%), General transportation
secto r (10%), Water supply (5%)
Theme(s) Water resource management (50%), Rural services and
infrastructure (25%), Participation and civic engagement (25%)
Lending Instrument Investment Project Financing
Project ID P154680
Parent Project ID P096323
Borrower(s) Federal Ministry of Finance and Economic Development
Implementing Agency Ministry of Water and Energy
Environmental Category B-Partial Assessment
Date PID Prepared/Updated 02-Jun-2015
Date PID Approved/Disclosed 03-Jun-2015
Estimated Date of Appraisal 25-May-2015
Completion
Estimated Date of Board 21-Jul-2015
Approval
Appraisal Review Decision
(from Decision Note)
I\. Project Context
Country Context
Ethiopia is a large and geographically diverse country, with 98 nations, nationalities and peoples,
93 languages, a total population of about 90 million , and a population growth rate of 2\.6 percent
(2013)\. At that rate, the United Nations (UN) estimates that Ethiopiaâs population will reach 130
million by 2025, and it is projected to be among the worldâs ten largest countries by population in
2050\. IDA commitments to Ethiopia in recent years have been over US$1 billion per year\. Making
progress on the two goals of the World Bank Group (WBG) in Ethiopia is therefore important both
for global progress and for the country itself\.
Ethiopia remains one of the worldâs poorest countries, but has achieved high levels of economic
growth, and made substantial progress on social and human development over the past decade\. The
Page 1 of 6
countryâs per capita income of US$470 (2013) is substantially lower than the regional average of
US$1,257 and among the ten lowest worldwide\. Ethiopia is ranked 173 of 187 countries in the
Human Development Index (HDI) of the UN Development Programme (UNDP)\. Economic
growth, however, has helped reduce poverty in both urban and rural areas\. Since 2005, 2\.5 million
people have been lifted out of poverty, and the share of the population below the poverty line has
fallen from 38\.7 percent in 2004/05 to 29\.6 percent in 2010/11 (using a poverty line of close to US
$1\.25/day)\. Ethiopia is among the countries that have made the fastest progress on the Millennium
Development Goals (MDGs) and HDI ranking over the past decade\. It is on track to achieve the
MDGs for gender parity in education, child mortality, HIV/AIDS, and malaria\. Good progress has
been made in universal primary education, although the MDG target may not be met\.
Ethiopiaâs constitution establishes a federal, democratic system\. Ethiopiaâs current government
system was established in the early 1990s by the Ethiopian Peopleâs Revolutionary Democratic
Front (EPRDF), which took over the country in 1991, after militarily defeating the previous régime\.
Decentralization of governance to the regional and woreda levelsâa woreda is a district with an
average population of 100,000âhas been actively pursued since 2003\. Ethiopia marked an
important milestone with the appointment of H\.E\. Hailemariam Desalegn as Prime Minister in
August 2012, in the first peaceful and constitutional transition of power in Ethiopiaâs modern
history, following the death of Meles Zenawi who had led Ethiopia since the EPRDF took power\.
National elections took place on May 24, 2015, and EPRDF are widely assumed to have won
comfortably although final results are not yet available\. AU observers have concluded that these
elections were calm, peaceful and credible in providing an opportunity for the Ethiopian people to
express their choices at the polls\.
The GoE is currently implementing its ambitious Growth and Transformation Plan (GTP;
2010/11-2014/15), which sets a long-term goal of becoming a middle-income country by 2025,
with growth rates of at least 11\.2 percent per year during the plan period\. To achieve the GTP goals
and objectives, the GoE has followed a âdevelopmental stateâ model with a strong role for the
government in many aspects of the economy\. It has prioritized key sectors such as industry and
agriculture as drivers of sustained economic growth and job creation\. The GTP also reaffirms the
GoEâs commitment to human development\. Development Partners have programs that are broadly
aligned with GTP priorities\. A successor to the GTP, covering 2015/16 to 2020/2021, is currently
under preparation\.
Sectoral and institutional Context
The WBG Country Partnership Strategy (CPS) for FY2013-2016 sets out the principles for
engagement within this framework, as recently reviewed in the 2014 CPS Progress Report \. The
CPS supports the GoE in implementing the GTP\. It includes two primary pillars, and seven
strategic objectives\. Pillar One (Fostering competitiveness and employment) aims to support
Ethiopia in achieving the following strategic objectives: (i) a stable macroeconomic environment;
(ii) increased competitiveness and productivity (a particular focus for IFC); (iii) increased and
improved delivery of infrastructure; and (iv) enhanced regional integration\. Pillar Two (Enhancing
resilience and reducing vulnerabilities) aims to support Ethiopia through: (v) improving the delivery
of social services; and (vi) comprehensive social protection and risk management\. The CPS also has
a foundation of (vii) good governance and state building\. In line with the GTP, gender and climate
change have been included as cross-cutting issues in the CPS\. The CPS Progress Report
reconfirmed these strategic objectives, while noting the WBG will place renewed emphasis on a
Page 2 of 6
stable macroeconomic environment; increased competitiveness and productivity; regional
integration; and the urbanization process\.
II\. Proposed Development Objectives
A\. Current Project Development Objectives â Parent
Develop enabling institutions and investments for integrated planning, management and
development in the Tana and Beles Sub-basins\.
III\. Project Description
Component Name
Component A: Sub-basin Resources Planning and Management
Comments (optional)
Component Name
Component B: Natural Resources Management Investments
Comments (optional)
Component Name
Component C: Growth Oriented Investment Facilitation
Comments (optional)
All remaining activities under Component C were canceled in the third restructuring due to
recommendations made during the project's mid-term review\.
Component Name
Component D: Project Management
Comments (optional)
IV\. Financing (in USD Million)
Total Project Cost: 5\.10 Total Bank Financing: 5\.10
Financing Gap: 0\.00
For Loans/Credits/Others Amount
BORROWER/RECIPIENT 0\.00
International Development Association (IDA) 5\.10
Total 5\.10
V\. Implementation
The proposed Additional Financing for P096323 was requested by the Government of Ethiopia
Ministry of Finance and Economic Development on December 31, 2014 in order to make up a
shortfall in project financing due the depreciation of the Special Drawing Right (XDR)\. Since the
Project was signed for XDR27\.4 million, the depreciation in the XDR resulted in the Projectâs
Page 3 of 6
nominal US$ equivalent being reduced from US$45\.0 million to US$ 41\.7 as of the end of
December 2014, representing a financing gap of US$3\.83 million (or 8\.5% of the original total
funds)\. Since December, the XDR has further depreciated with the US$ equivalent of the Credit
being US$38\.0 million as of June 1, 2015 \. It should be noted that the Project has disbursed the
majority of its funds under more favorable terms; therefore the total historical disbursement to date
of US$38\.8 million is higher than the nominal amount available to the project, making the actual
projected shortfall US$3\.81 million\. Tables 1, below, indicates the breakdown of the Additional
Financing requested from IDA from the Government of Ethiopia\. More detailed cost tables outlining
the current financial situation of the Project and the need for additional financing are found in
Annex 2\.
In addition, the Government has requested an extension of the project closing date by one year in
order to complete on-going tasks, consolidate deliverables, and fully achieve the Project
Development Objective\. The one year extension will result in approximately US$1\.3 million in
additional operating costs\.
The project is considered well performing and thus eligible for Additional Financing in line with the
OP 10\.00 requirement\. ISR ratings for implementation progress (IP) and development objectives
(DO) have been consistently rated as moderately satisfactory for the past 18 months (since October
2013) and the Project remains in compliance with key loan covenants including auditing and
financial management reporting requirements\.
The original project cost was US$69\.85 million to be implemented over five years from May 2008
until September 2013\. The project is financed by four sources as follows:
a\. IDA (XDR27\.4 million or US$45\.0 million equivalent at signing), which is currently over
93% disbursed;
b\. Government of Finland (GoF) (EURO 5\.0 million, approximately US$8\.0 million), which
were for watershed management activities of Component B only and have been fully disbursed
(Trust Fund closed on September 30, 2014);
c\. Government of Ethiopia (GoE) (US$5\.38 million), which is currently 47% disbursed; and
d\. Local Communities (US$11\.47 million), which is an in kind contribution for watershed
management activities of Component B that has been fully utilized\.
Over the course of its implementation, the project has been carefully monitored by the Bank Team
in order ensure delivery against the DO\. At mid-term review, it was clear that Component C:
Growth Oriented Investment Preparation was not going to deliver; therefore, the project was
restructured cancel remaining Component C activities and re-allocate the remaining funds to the
other components\. The Mid-term restructuring was, at the request of Bank Management, split into
three, the latter two being contingent on delivery of agreed milestones designed to keep the project
on track\. In total, the project has been restructured five times, including two extensions of the
closing date - in summary the changes introduced were:
a\. The first restructuring, dated July 1, 2010 extended the date for requiring the establishment
of the Beles Subbasin Organization (BeSBO) from December 31, 2009 to December 31, 2010;
b\. The second restructuring, dated October 18, 2011, updated the higher level results indicators
based on the outcomes of the mid-term review;
c\. The third restructuring, dated April 2, 2013, revised the Project Development Objective,
Page 4 of 6
amended Component C: Growth Oriented Investment Preparation to deliver only activities already
accomplished, and updated the higher level results indicators;
d\. The fourth restructuring, dated August 23, 2013, extended the closing date to September 30,
2014 contingent on the achievement of milestones agreed at the time of the third restructuring; and
e\. The fifth restructuring, dated September 4, 2014, extended the closing date to July 31, 2015
contingent on the achievement of milestones agreed at the time of the fourth restructuring\.
VI\. Safeguard Policies (including public consultation)
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment OP/BP 4\.01 â
Natural Habitats OP/BP 4\.04 â
Forests OP/BP 4\.36 â
Pest Management OP 4\.09 â
Physical Cultural Resources OP/BP 4\.11 â
Indigenous Peoples OP/BP 4\.10 â
Involuntary Resettlement OP/BP 4\.12 â
Safety of Dams OP/BP 4\.37 â
Projects on International Waterways OP/BP 7\.50 â
Projects in Disputed Areas OP/BP 7\.60 â
Comments (optional)
The proposed Additional Finance does not require any changes to the Safeguards triggered by the
project\.
VII\. Contact point
World Bank
Contact: Catherine Signe Tovey
Title: Sr Water Resources Spec\.
Tel: 5358+6131 /
Email: ctovey@worldbank\.org
Contact: John Bryant Collier
Title: Senior Environmental Specialis
Tel: 473-8551
Email: jcollier@worldbank\.org
Borrower/Client/Recipient
Name: Federal Ministry of Finance and Economic Development
Contact:
Title:
Tel: (251-11) 552-014
Email: infomofed@mofed\.gov\.et
Implementing Agencies
Name: Ministry of Water and Energy
Contact: Asmamaw Kume
Title: Director
Tel: 251912142271
Email: asmamawkume@yahoo\.com
Page 5 of 6
VIII\. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Web: http://www\.worldbank\.org/infoshop
Page 6 of 6 | APPROVAL |
P166415 | FOR OFFICIAL USE ONLY
Report No: PAD3550
INTERNATIONAL DEVELOPMENT ASSOCIATION
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED CREDIT
IN THE AMOUNT OF SDR 299\.9 MILLION
(US$425\.0 MILLION EQUIVALENT)
TO THE
UNITED REPUBLIC OF TANZANIA
FOR A
HIGHER EDUCATION FOR ECONOMIC TRANSFORMATION PROJECT
May 4, 2021
Education Global Practice
Eastern and Southern Africa Region
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective March 31, 2021)
Currency Unit = Tanzanian Shilling (TZS)
US$1 = TZS 2318\.64
US$1 = SDR 0\.70561173
FISCAL YEAR
July 1 â June 30
Regional Vice President: Hafez Ghanem
Country Director: Mara K\. Warwick
Regional Director: Amit Dar
Practice Manager: Safaa El Tayeb El-Kogali
Task Team Leaders: Roberta Malee Bassett, Nkahiga Mathus Kaboko
ABBREVIATIONS AND ACRONYMS
ACE Africa Center of Excellence
AF Additional Financing
APIU Agency-level Project Implementation Unit
ARU Ardhi University
ASA Advisory Services and Analytics
BOT Bank of Tanzania
CAG Controller and Auditor General
COSTECH Commission for Science and Technology
COVID-19 Corona Virus Disease 2019
CPF Country Partnership Framework
DFIL Disbursement and Financial Information Letter
DP Development Partner
DSSI Debt Service Suspension Initiative
DUCE Dar es Salaam University College of Education
E&S Environmental and Social
ESCP Environmental and Social Commitment Plan
ESDP Education Sector Development Plan
ESHS Environmental and Social Health and Safety
ESIA Environmental and Social Impact Assessment
ESMF Environmental and Social Management Framework
ESMP Environmental and Social Management Plan
ESS Environmental and Social Standards
FM Financial Management
FYDP Five-Year Development Plan
GBV Gender-Based Violence
GDP Gross Domestic Product
GER Gross Enrollment Ratio
GoT Government of Tanzania
HEET Higher Education and Economic Transformation
HESLB Higher Education Student Loans Board
HR Human Resources
ICR Implementation Completion and Results Report
ICT Information and Communication Technology
IDA International Development Association
IFMIS Integrated Financial Management Information System
IFR Interim Financial Report
IPIU Institute-level Project Implementation Unit
IRR Internal Rate of Return
ISIP Institute Strategic Investment Plan
ISR Implementation Status and Results Report
LMIC Lower Middle-Income Country
M&E Monitoring and Evaluation
MJNUAT Mwalimu Julius K\. Nyerere University of Agriculture and Technology
MKUZA Mpango wa Kukuza Uchumi Zanzibar Awamu ya tatu (Zanzibarâs Strategy for Growth and
Reduction of Poverty)
MoCU Moshi Cooperative University
MoEST Ministry of Education, Science and Technology
MoFP Ministry of Finance and Planning
MTEF Medium-Term Expenditure Framework
MU Mzumbe University
MUCE Mkwawa University College of Education
MUHAS Muhimbili University of Health and Allied Sciences
MUST Mbeya University of Science and Technology
NFAST National Fund for Advancement of Science and Technology
NM-AIST Nelson Mandela African Institute of Science and Technology
NOCP National Open Competitive Procedures
NPIU National Project Implementation Unit
NPV Net Present Value
ODeL Open, Distance and e-Learning
OUT Open University of Tanzania
PASET Partnership for Skills in Applied Sciences, Engineering and Technology
PDO Project Development Objective
PIU Project Implementation Unit
PMT Project Management Team
POM Project Operations Manual
POPSM Presidentâs Office Public Service Management
PP Procurement Plan
PPP Public Private Partnership
PPSD Project Procurement Strategy for Development
R&D Research and Development
RAP Resettlement Action Plan
RPF Resettlement Policy Framework
RSIF Regional Scholarship and Innovation Fund
SCF Special Commercialization Fund
SEA Sexual Exploitation and Abuse
SEP Stakeholder Engagement Plan
SEQUIP Secondary Education Quality Improvement Project
SE-UDSM School of Economics - University of Dar es Salaam
SIA Social Impact Assessment
SMIS Skills Management Information System
SPD Standard Procurement Document
SSA Sub-Saharan Africa
STEM Science, Technology, Engineering and Mathematics
STEP Systematic Tracking of Exchanges in Procurement
STHEP Science and Technology Higher Education Project
STI Science, Technology and Innovation
SUA Sokoine University of Agriculture
SUZA State University of Zanzibar
SW Staff Week
TASAF Tanzania Social Action Fund
TCU Tanzania Commission for Universities
TEMIS Tertiary Education Management Information System
TTL Task Team Leader
TVET Technical and Vocational Education and Training
UDOM University of Dodoma
UDSM University of Dar es Salaam
UNESCO United National Educational, Scientific and Cultural Organization
UNICEF United Nations Childrenâs Fund
UPIU University-level Project Implementation Unit
USIP University Strategic Investment Plan
WBG World Bank Group
WHO World Health Organization
ZSGRP Zanzibarâs Strategy for Growth and Reduction of Poverty
The World Bank
Higher Education for Economic Transformation Project (P166415)
TABLE OF CONTENTS
DATASHEET \. 1
I\. STRATEGIC CONTEXT \. 8
A\. Country Context\. 8
B\. Sectoral and Institutional Context \. 10
C\. Relevance to Higher Level Objectives\. 14
II\. PROJECT DESCRIPTION\. 16
A\. Project Development Objective \. 16
B\. Project Components \. 16
C\. Project Beneficiaries \. 26
D\. Results Chain \. 27
E\. Rationale for World Bank Involvement and Role of Partners\. 27
F\. Lessons Learned and Reflected in the Project Design \. 28
III\. IMPLEMENTATION ARRANGEMENTS \. 29
A\. Institutional and Implementation Arrangements \. 29
B\. Results Monitoring and Evaluation Arrangements\. 31
C\. Sustainability\. 31
IV\. PROJECT APPRAISAL SUMMARY \. 32
A\. Technical, Economic and Financial Analysis \. 32
B\. Fiduciary\. 34
C\. Legal Operational Policies \. 37
D\. Environmental and Social \. 37
V\. GRIEVANCE REDRESS SERVICES \. 39
VI\. KEY RISKS \. 40
VII\. RESULTS FRAMEWORK AND MONITORING \. 44
ANNEX 1: Implementation Arrangements and Support Plan \. 62
ANNEX 2: Performance Agreements \. 72
ANNEX 3: Climate Change Mitigation and Adaptation Measures \. 73
ANNEX 4: Economic and Financial Analysis \. 76
ANNEX 5: Adjustments to the Country Program in Response to COVID-19 \. 83
DATASHEET
BASIC INFORMATION
BASIC_INFO_TABLE
Country(ies) Project Name
Tanzania Higher Education for Economic Transformation Project
Project ID Financing Instrument Environmental and Social Risk Classification
Investment Project
P166415 Substantial
Financing
Financing & Implementation Modalities
[ ] Multiphase Programmatic Approach (MPA) [ ] Contingent Emergency Response Component (CERC)
[ ] Series of Projects (SOP) [ ] Fragile State(s)
[ ] Performance-Based Conditions (PBCs) [ ] Small State(s)
[ ] Financial Intermediaries (FI) [ ] Fragile within a non-fragile Country
[ ] Project-Based Guarantee [ ] Conflict
[ ] Deferred Drawdown [ ] Responding to Natural or Man-made Disaster
[ ] Alternate Procurement Arrangements (APA) [ ] Hands-on Enhanced Implementation Support (HEIS)
Expected Approval Date Expected Closing Date
27-May-2021 31-Jul-2026
Bank/IFC Collaboration
No
Proposed Development Objective(s)
To strengthen the learning environment and labor market alignment of priority programs at beneficiary higher
education institutions and improve the management of the higher education system
Page 1 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
Components
Component Name Cost (US$, millions)
Strengthening the Learning Environments and Labor Market Alignment of Priority
329\.00
Programs
Strengthening the Management of the Higher Education System 78\.00
Project Coordination and Management 8\.00
Unallocated 10\.00
Organizations
Borrower: United Republic of Tanzania
Implementing Agency: Ministry of Education, Science and Technology
PROJECT FINANCING DATA (US$, Millions)
SUMMARY -NewFin1
Total Project Cost 425\.00
Total Financing 425\.00
of which IBRD/IDA 425\.00
Financing Gap 0\.00
DETAILS -NewFinEnh1
World Bank Group Financing
International Development Association (IDA) 425\.00
IDA Credit 425\.00
IDA Resources (in US$, Millions)
Credit Amount Grant Amount Guarantee Amount Total Amount
Tanzania 425\.00 0\.00 0\.00 425\.00
Page 2 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
National PBA 425\.00 0\.00 0\.00 425\.00
Total 425\.00 0\.00 0\.00 425\.00
Expected Disbursements (in US$, Millions)
WB Fiscal Year 2021 2022 2023 2024 2025 2026 2027
Annual 0\.00 65\.00 99\.00 98\.00 84\.00 69\.00 10\.00
Cumulative 0\.00 65\.00 164\.00 262\.00 346\.00 415\.00 425\.00
INSTITUTIONAL DATA
Practice Area (Lead) Contributing Practice Areas
Education
Climate Change and Disaster Screening
This operation has been screened for short and long-term climate change and disaster risks
SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT)
Risk Category Rating
1\. Political and Governance â« Moderate
2\. Macroeconomic â« Moderate
3\. Sector Strategies and Policies â« Moderate
4\. Technical Design of Project or Program â« Moderate
5\. Institutional Capacity for Implementation and Sustainability â« Moderate
6\. Fiduciary â« Substantial
7\. Environment and Social â« Substantial
8\. Stakeholders â« Moderate
9\. Other â« Substantial
10\. Overall â« Moderate
Page 3 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
COMPLIANCE
Policy
Does the project depart from the CPF in content or in other significant respects?
[ ] Yes [â] No
Does the project require any waivers of Bank policies?
[ ] Yes [â] No
Environmental and Social Standards Relevance Given its Context at the Time of Appraisal
E & S Standards Relevance
Assessment and Management of Environmental and Social Risks and Impacts Relevant
Stakeholder Engagement and Information Disclosure Relevant
Labor and Working Conditions Relevant
Resource Efficiency and Pollution Prevention and Management Relevant
Community Health and Safety Relevant
Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Relevant
Biodiversity Conservation and Sustainable Management of Living Natural Not Currently Relevant
Resources
Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Relevant
Local Communities
Cultural Heritage Relevant
Financial Intermediaries Not Currently Relevant
NOTE: For further information regarding the World Bankâs due diligence assessment of the Projectâs potential
environmental and social risks and impacts, please refer to the Projectâs Appraisal Environmental and Social Review
Summary (ESRS)\.
Page 4 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
Legal Covenants
Sections and Description
Section I\.A\.(a) of Schedule 2 to the Financing Agreement:
By no later than six (6) months after the Effective Date, GoT to establish (and maintain throughout implementation)
a national steering committee (NSC), chaired by the Permanent Secretary of MoEST, to provide policy and strategic
guidance on the implementation of the Project\.
Sections and Description
Section I\.A\.(b) of Schedule 2 to the Financing Agreement:
Government of Tanzania (GoT) to establish by effectiveness (and maintain throughout implementation) a National
Project Implementation Unit (NPIU) responsible for the day to day implementation and coordination of the Project\.
Sections and Description
Section I\.A\.(c) of Schedule 2 to the Financing Agreement:
GoT to establish within six (6) months of effectiveness (and maintain throughout implementation of Components
2\.2(a) and 2\.2 (b)(ii)) a Grant Selection Committee for the screening and award of ISIP Grants and Competitive
Grants\.
Sections and Description
Section I\.A\.(d) of Schedule 2 to the Financing Agreement:
By no later than three (3) months after the Effective Date, GoT to select and engage (and maintain throughout
implementation) the services of a procurement consultant to assist the NPIU\.
Sections and Description
Section I\.B\.1 of Schedule 2 to the Financing Agreement:
GoT to prepare and formally adopt by effectiveness (and follow/apply throughout implementation) a Project
Operation Manual (POM) satisfactory to the Association\.
Sections and Description
Section I\.B\.2 of Schedule 2 to the Financing Agreement:
GoT to prepare and formally adopt within nine (9) months of effectiveness (and follow/apply throughout
implementation of the ISIP Grants and Competitive Grants) a Grants Manual satisfactory to the Association\.
Sections and Description
Sections I\.C\.1 & 2 of Schedule 2 to the Financing Agreement:
GoT to: (a) cause competitively selected public universities and priority institutions to prepare individual USIPs for
their financing under USIP Grants and submit such USIPs for the Associationâs review and no-objection prior to their
approval; and (b) enter into USIP Grant Agreements with competitively selected public universities and priority
institutions on terms and conditions approved by the Association\.
Sections and Description
Sections I\.D\.1 & 2 of Schedule 2 to the Financing Agreement:
Page 5 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
GoT to: (a) cause TCU, HESLB and COSTECH to prepare individual MASIPs for their financing under MASIP Grants
and submit such MASIPs for the Associationâs review and no-objection prior to their approval;and (b) enter into
MASIP Grant Agreements with TCU, HESLB and COSTECH on terms and conditions approved by the Association\.
Sections and Description
Sections I\.E\.1 & 2 of Schedule 2 to the Financing Agreement:
GoT to: (a) cause public higher education institutes to prepare individual ISIPs for their financing under ISIP Grants;
(b) have the Grant Selection Committee screen those ISIP proposals as per the Grants Manual, and decide on the
final award of the ISIP Grants; (c) submit such ISIPs and ISIP Grant for the Associationâs review and no-objection
prior to their approval; and (d) enter into ISIP Grant Agreements on terms and conditions approved by the
Association
Sections and Description
Sections I\.F\.1 & 2 of Schedule 2 to the Financing Agreement
GoT to: (a) publicly call private universities to submit proposals aimed at supporting academic staff development in
priority health sector programs and strengthening the labor market orientation of such programs in accordance
with the Grants Manual; (b) have the Grant Selection Committee screen those proposals and the respective
applicants as per the Grants Manual, and decide on the final award of the Competitive Grants; and (c) enter into
Competitive Grants Agreements with the selected private university on terms and conditions approved by the
Association\.
Sections and Description
Sections I\.H\.1 & 2 of Schedule 2 to the Financing Agreement
GoT to prepare and furnish to the Association by not later than May 15 of each year throughout implementation, a
work plan and budget, and the proposed financing plan for the next fiscal year of Project activities\.
Sections and Description
Sections I\.I\.1 & 2 of Schedule 2 to the Financing Agreement
GoT to ensure, and cause the beneficiary higher education institutions and subsidiary agencies to ensure, that the
Project is: (i) carried out in accordance with the Environmental and Social Standards; (ii) implemented in
accordance with the ESCP, including provision of sufficient funds, and the maintenance of policies, procedures and
qualified staff as specified in the ESCP\.
Sections and Description
Section I\.C\.7 of the Schedule to the Project Agreement:
GoT to establish, publicize and maintain, and cause the beneficiary higher education institutions and subsidiary
agencies to establish, publicize, maintain and operate an accessible grievance redress mechanism for the Project\.
Conditions
Type Financing source Description
Effectiveness IBRD/IDA Article 4\.01 (a) to the Financing Agreement:
Page 6 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
The Recipient has prepared and adopted the Project Operations
Manual in form and substance satisfactory to the Association,
pursuant to Section I\.B\.1 of Schedule 2 to the Financing Agreement\.
Type Financing source Description
Effectiveness IBRD/IDA Article 4\.01 (b) to the Financing Agreement:
The Recipient has established and staffed the National Project
Implementation Unit, in a manner and substance satisfactory to the
Association, pursuant to Section I\.A(b) of Schedule 2 to this
Agreement\.
Type Financing source Description
Disbursement IBRD/IDA Section III\.B\.1 (b) of Schedule 2 to the Financing Agreement:
No withdrawal to be made under Category (3) (i\.e\. ISIP Grants and
Competitive Grants) until and unless the Recipient has established
the Grants Selection Committee and adopted the Grants Manual\.
Page 7 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
I\. STRATEGIC CONTEXT
A\. Country Context
1\. Tanzania is a geographically large, diverse, and strategically important lower middle-income country (LMIC) on
the Indian Ocean\. Out of 54 African countries, Tanzania is the fifth largest in terms of population, the ninth largest in
terms of the size of economy (e\.g\. by Gross Domestic Product [GDP] in US$), and the thirteenth largest in terms of
geographical area\. Solid income growth over two decades has led the country to reach LMIC status in July 2020\.
2\. The graduation from low income status reflects sustained macroeconomic stability as well as the countryâs rich
natural resources endowment and strategic geographic position\. Macroeconomic stability has been crucial to
Tanzaniaâs growth: inflation rates have been low â below 5 percent since 2018 â and sustainable fiscal and current-
account deficits have been financed by a combination of domestic and external sources\. Over the past two decades,
investment has been a key driver of economic growth\. The rise in overall investment translated into a sustained
accumulation of capital stock and has consistently accounted for roughly two-thirds of real GDP growth\.
3\. Coronavirus Disease 2019 (COVID-19) has negatively impacted Tanzaniaâs macroeconomic performance â
decelerating GDP growth in 2020 â although Tanzania is one of the few economies in the region that avoided
recession\.1 The global economic slowdown adversely affected Tanzaniaâs export- oriented industries, especially tourism
and traditional exports, and has caused a drop in foreign investment\. The exception is gold mining which has benefitted
from rising prices since the onset of the pandemic\. Although the government did not impose a lockdown, the pandemic
initially spurred precautionary behaviors that slowed down domestic economic activity\.
4\. Tanzaniaâs vulnerability to the global pandemic remains high, and risks are tilted to the downside\. Under a
severe outbreak, Tanzaniaâs health care system would become heavily strained, and social distancing would paralyze
most manufacturing and services\. In early 2020, the Government of Tanzania implemented critical measures aimed at
containing the spread of the COVID-19 and encouraged people to avoid unnecessary movements, practice hand hygiene
and social distancing; and identified several public and private hospitals that would serve as isolation centers for people
infected with COVID-19\. The government reported COVID-19 cases up to April 28, 2020\. Availability of official
information on COVID-19 infection and mortality rates is important in assessing the effectiveness of national public
health response\. In February 2021, the Minister of Health, Community Development, Gender, Elderly and Children
restarted efforts to contain the pandemic, urging the general public to take precautionary measures against the spread
of infectious diseases including COVID-19, and urged wearing of masks, avoiding overcrowding in hospitals, and
continued education of the population by health professionals\. See Annex 5 for more details\.
5\. The poverty rate in Tanzania has been declining gradually\. The national poverty headcount has improved from
34\.4 percent of population in 2007 to 28\.2 percent in 2012 and further to 26\.4 percent in 2018\. Despite Tanzaniaâs
impressive GDP growth between 2012 and 2018, poverty reduction slowed, and growth has become less inclusive\.
Inequality has also risen during this period\. The international poverty headcount (US$1\.90/day at 2011 purchasing
power parity) remained high and unchanged during this period, at 49 percent\. With a Human Capital Index of 39 in 2020,
Tanzania is ranked among the bottom 25 countries, at 152 out of 174\.
1 Tanzania Economic Update 15th Edition, 2021
Page 8 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
6\. As a lower middle-income country, Tanzania requires sustained, steady growth while offering a more inclusive
set of economic opportunities to improve living standards for the majority of Tanzanians\. National aspirations laid out
in the Tanzania Development Vision (TDV) 2025 are to transition to a middle-income country with a high level of human
capital development, characterized by improvements in the quality of livelihood of the people\. Tanzania has made
improvements in life expectancy, infant mortality, primary and secondary school enrollment rates, gender equality, and
access to health, electricity, water, and sanitation\. However, there is still a large agenda ahead to sustaining growth over
the medium term; improving the inclusiveness of growth to reduce poverty; and strengthening upward economic
mobility and economic security for the population\.
7\. The short supply of workers with relevant
Figure 1\. Employment Share by Major Sector
skills is a major constraint to economic
Source: Integrated Labor Force Survey 2001, 2006 and 2014
expansion\. A gradual shift in employment away
from agriculture (which has seen a decrease of
13\.5 percent from a high of 80\.5 percent in 2001) 2001 80\.5% 2\.6% 16\.9%
to industry and services (which have increased 2006 76\.5% 4\.2% 19\.3%
by 3\.9 and 9\.6 percentage points, respectively)
occurred between 2001-2014 (Figure 1)\.2 2014 67\.0% 6\.5% 26\.5%
Employment growth in services accelerated over
0% 20% 40% 60% 80% 100%
the period 2006â2014, with around 10
percentage points annual growth in services Agriculture Industry Service
such as wholesale and retail, restaurants and
hotels, transport, storage, and communication\. Sustaining this economic transformation will be challenging, as about
40 percent of Tanzanian firms identified inadequate relevant workforce skills as a key business constraint, compared to
the Sub-Saharan Africa (SSA) average of 23 percent\.3
8\. Catering to the skills needs of high-skills firms in urban areas is particularly important\. High-skill firms are likely
exporters, Information and Communication Technology (ICT) or other innovating firms\. They are exposed to greater
competitive pressures from international trade or technological changes and/or introduce new products or processes
into the market\. As a result, they have a greater need for higher-level skills than firms serving the domestic market, and
skills gaps pose a greater constraint to their operations than to low-skill enterprises\.4 For over 45 percent of high-skill
firms, skills shortages constitute major operational difficulties, compared to 37 percent of low-skills firms\.5
9\. A more strategic mix of education and skills will help Tanzania develop its productive sectors6 and create jobs
for the growing number of youth entering the labor market\. This is important, as about 800,000 to one million young
people have been entering the labor market every year since 2015, with mostly low and medium levels of education
and skills\.7 By 2030, this number is projected to reach 1\.6 million per year\. While the fast expansion of the youth
demographic is a challenge, it also represents a unique economic opportunity, if efficient workforce and skills
2 Integrated Labor Force Survey 2001, 2006 and 2014\. The most recent Integrated Labor Force Survey Data is from 2014\.
3 Tanzania Enterprise Survey 2013\. This is the most recent data available\.
4 The share of high skills firms is 50 to 63 percent across sectors, and 36 to 43 percent across regions, but the majority is located in the greater Dar
es Salaam region\. (TESS 2015)\.
5 TESS 2015, and Exports and Job Training, Paulo Bastos, Joana Silva, and Rafael Proença, World Bank Policy Research Working Paper 7676, 2016\.
6 Governmentâs key priority sectors include productive sectors (agriculture, mining, and manufacturing) and economic inf rastructure (energy, ICT,
transport and tourism)\.
7 Moreno and Tanaka, 2015, Education Attainment Projections for Tanzania, World Bank\.
Page 9 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
development policies are implemented\.
10\. Shortage of skilled workers across essential sectors such as health and education is a big challenge\. The shortage
of human resources in the health sector stands at 52 percent\.8 Changes in the pattern of diseases from infectious to
non-communicable diseases has expanded demand for expertise in a variety of specializations and areas with serious
human capital shortages including specialists in emergency and critical care, as well as behavioral change\. Similarly, the
education sector is in need of a greater number of skilled teachers, particularly in mathematics and sciences\.
11\. Having attained lower middle-income status, Tanzania should continue to invest in reforms throughout its
education pipeline that will lead to a skill composition of the workforce of at least 26 percent medium-skilled and 12
percent high-skilled, based on estimates in the National Skills Development Strategy 2016/17-2025/26\. While urban
workers with completed basic education are needed for many small, often informal businesses, higher skilled workers
are critical to the emergence of a diversified, sustainable economy\. Currently, only 16\.6 percent of the Tanzanian
workforce is medium-skilled and 3\.5 percent high-skilled\.9 Despite steady expansion in access to education, in 2014,
only 9 percent of the labor force had completed secondary education and just 1\.3 percent had attended university\.10
Enrollment in Technical and Vocational Education and Training (TVET) and universities is still low\.
B\. Sectoral and Institutional Context
12\. Tanzaniaâs higher education enrollment in recent years has fluctuated but is currently at 6\.1 percent and below
the Sub-Saharan Africa average (9\.4 percent)\.11 In Tanzania, a completed university education yields an average annual
income 3\.5 times higher than a completed upper secondary education\. The number of students enrolled in higher
education institutions nearly doubled from 111,533 in 2016/17 to 211,558 in 2017/18 due to improvements in
infrastructure and initiatives to provide higher education loans, but subsequently fell to 181,897 in 2018/19 as a result
of closures of programs in private institutions determined to be of poor quality\. Correspondingly, during the same
period, the Higher Education Gross Enrollment Ratio
Figure 2\. Higher Education Gross Enrollment Ratio
(GER) rose from 6\.9 percent to 8\.5 percent and then
(%), 2018
dropped to 6\.1 percent12, which is below the SSA Source: MoEST data and World Bank EdStats
average, and those of Tanzaniaâs neighbors: Kenya and
15
Rwanda (Figure 2)\.13 In 2018/19, a total of 154,758 11\.5
9\.4
students were enrolled in Bachelorâs, Masterâs, and 10 6\.7 6\.1
PhD programs at 41 public and 43 private higher 5
education institutions, and another 27,139 students
attended non-degree courses\.14 Tanzania continues to 0
Sub-Saharan Kenya Rwanda Tanzania
lag behind the region in upper secondary enrollment
Africa
with a GER of 7 percent, compared to Rwanda (30
percent) and Burundi (44 percent) which partly explains for the low enrollment at higher education\.15
8 Tanzania Human Resource for Health Information System 2020
9 National Skills Development Strategy 2016/17-2025/26
10 Integrated Labor Force Survey 2014\.
11Ministry of Education, Science and Technology (MoEST) Annual Education Sector Performance Review (AESPR), 2019
12 AESPR 2019
13 World Bank EdStats 2018
14 AESPR 2019
15 World Bank EdStats, 2018; UNESCO Institute of Statistics, 2018
Page 10 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
13\. Student demand for higher education is expected to surge by 2030, so the tertiary education system (public and
private) must expand and be of better quality to accommodate these additional students\. According to projections
(Figure 3), it is expected that demand for seats at the higher education level will more than double and increase to
between 483,000 and 598,000 by 2030\.16 Without investments across the sector, there will be a shortage of
infrastructure, teaching equipment and academic staff with advanced training\. This expansion of capacity cannot be
remedied by public provision alone and will require reforms in the operating environment of private universities\.
Figure 3: Total Enrollment Projections in Higher Education17
Source: Tanzania Public Expenditure Review FY19: Are Resources and Policies Aligned?
14\. Gender inequality in lower levels of education (especially upper secondary) persists at the university level,
though the gender parity index in higher education has improved from 56\.5 percent in 2013 to 67\.4 percent in 2018\.18
About 40\.3 percent of students in higher education were women in 2018;19 the proportion is much smaller in science,
technology, engineering and mathematics (STEM) programs (33\.6 percent), especially Engineering (19\.6 percent),
Mining and Earth Sciences (25 percent) and ICT (27\.7 percent)\.20 With the exception of Mining and Earth Sciences, the
female graduation results are significantly lower than the enrollment proportion (14\.7 percent in Engineering and 25\.1
percent in ICT)\. The male-female differences in enrollment arise from a smaller share of girls transitioning from lower
to upper secondary schools and again from upper secondary to university compared to boys\. Of the students that pass
the O-level and A-level exams, 46 percent and 42 percent were female, respectively\.21 The World Bank-supported
Secondary Education for Quality Improvement Project (SEQUIP, P163439) includes interventions to address this
persistent problem\. The factors contributing to low female participation in STEM in Tanzania are being studied under
an ongoing World Bank analytical work effort (P175073)22; however common drivers of gender gaps in STEM worldwide,
16 Tanzania Public Expenditure Review FY19: Are Resources and Policies Aligned?
17 Scenario 1: Annual growth rate of higher education entrants from other types of education (i\.e\. other types of post-secondary institutions) is
zero; Scenario 2: Annual growth rate of higher education entrants from other types of education is 3 percent; Scenario 3: Scenario 1 plus
automatic promotions and abolition of Form 2 exam in secondary; and Scenario 4: Scenario 2 plus automatic promotions and abolition of Form
2 exam in secondary\.
18 MoEST AESPR 2019
19 ibid
20 Basic Education Statistics Tanzania (BEST) 2019
21 MoEST AESPR 2019
22 The title of the analytical work is Leveraging Technology and the Private Sector to Meet the Increasing Demand for Quality Higher Education
Page 11 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
especially in computer science, physics and engineering programs include the weaker sense of belonging among women
in such programs signaled by their masculine cultures, biases against womenâs competence in these fields, limited
pipeline of female STEM students and lack of sufficient early experience with these subjects\.23 In addition, a study on
women in STEM PhD programs in SSA found that womenâs PhD completion was influenced by having a child, having a
female supervisor, limited gender policies and practices at their institutions, and sexual harassment by faculty\.24 The
gender imbalance in higher education exacerbates inequalities elsewhere in Tanzania, such as fewer women leaders in
research and innovation, government, professions, businesses and civil society organizations, and among universitiesâ
faculties as well\. Only 27\.4 percent of academic staff at universities are women, due to the lower share of female
students in higher education overall, but also likely due to greater difficulties in getting permanent positions, promotions
and access to research funding and leadership positions\.25 The low representation of women among academic staff can
also negatively impact the number of female university students as there are fewer role models\.
15\. Although there is a need for higher skilled workers in the economy, many recent university graduates struggle
to find jobs, at least in part due to skills mismatches\. Skills mismatches usually occur when: (i) academic disciplines are
not in line with demand on the labor market; (ii) curricula are outdated and the content of programs have limited labor
market relevance and emphasis on practical experience and soft skills; and (iii) teaching and learning facilities and
technologies are outdated\. The small size of the formal labor market also exacerbates graduatesâ unemployment\.
16\. Demand-side considerations underscore the need for greater numbers of students in disciplines and programs
sought after by employers, such as engineering, agribusiness, tourism, and climate change\. Most students currently
pursue studies in general humanities and social sciences\. Only 26 percent of students at universities study STEM
subjects, although there is a large deficit of professionals in these fields\.26 This is largely due to low enrollment and
available spaces in science streams at the secondary level\. As a result, enrollment in sciences at post-secondary and
post-graduate levels is low, in turn resulting in a shortage of well-trained lecturers in these programs, further limiting
spaces for students\. For example, there are inadequate numbers of electrical, civil, mining and minerals, and mechanical
engineers, geologists and hydrology specialists\.27 The discovery of oil and gas deposits is expected to expand the energy
and construction sectors and create 20,000 to 35,000 new jobs each that need the aforementioned skilled personnel\.
17\. The overall quality of post-secondary academic programs is low and does not prepare university graduates
adequately for current and future formal jobs or self-employment\. The weak teaching and learning environment and
inadequate support in terms of remediation, supervision and physical resources contribute to poor quality of training\.
Infrastructure, equipment and resources such as laboratory spaces, sufficient internet bandwidth and access to
electronic journals are limited\. The insufficiency of necessary lab equipment and materials is especially problematic for
faculty seeking to conduct relevant, modern research\. Currently, funds for research are inadequate, leading to weak
production of novel findings, application of research to addressing local challenges, and impactful innovations\.
Employers note weak technical, English, computer, soft skills and labor-market readiness of graduates\.28 A 2015
Government study on skills gaps in the tourism and hospitality industry found that employees often possessed the
23 Hammond, Alicia; Rubiano Matulevich, Eliana; Beegle, Kathleen; Kumaraswamy, Sai Krishna\. 2020\. The Equality Equation: Advancing the
Participation of Women and Girls in STEM\. World Bank, Washington, DC\.
24 Fisher M, Nyabaro V, Mendum R, Osiru M\. 2020\. Making it to the PhD: Gender and student performance in sub-Saharan Africa\. PLoS ONE 15(12):
e0241915\.
25 MoEST BEST 2018
26 MoEST AESPR 2019
27 ibid
28 World Bank, Tanzania Enterprise Skills Survey 2015
Page 12 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
requisite formal credentials for employment but lacked the relevant skills (technical and behavioral) to perform their
job satisfactorily\.29 Few (if any) practical training and internships are available for students to better understand the real
world of work\. At the post-graduate level, some Tanzanians pursue Masterâs and PhDs abroad, often due to a perception
of low quality or the lack of desired programs in Tanzania and the greater international orientation and/or reputation
of programs outside Tanzania\.
18\. There is a shortage of well-trained lecturers, and the majority of academic staff use traditional teaching
methodologies\. Due to a wave of age-related retirements and the recent recruitment of talented lecturers into positions
within the Government, there are limited university lecturers, particularly in STEM areas\. The proportion of academic
staff with a Masterâs degree is 51\.6 percent while instructors with a PhD account for only 32\.6 percent of the total
teaching staff\.30 In addition, many lecturers are not trained in the use of the latest technical developments and global
knowledge in their fields, and use outdated, mostly lecture-based, teaching methodologies, limiting the development
of adequate competences among students through group work, projects, presentations and other such approaches\.
19\. Given the significant resource and capacity constraints, most higher education institutions are not currently
able to access or use modern technologies to deliver training\. There is limited integration of digital content and
applications, innovative pedagogical approaches using technology, information management systems and other ICT in
the delivery of higher education\. Broadband is readily available to faculty and students only in some universities\. Few
higher education institutions use Open Educational Resources\. While some local digital content is available for use by
universities, licensing issues discourage innovative ideas and technology uptake\.
20\. Finally, the global pandemic has reinforced the need for higher education institutions to develop thoughtful
resiliency plans\. Tanzania experienced a relatively short period of school closures\. Universities closed in March 2020
and reopened in early June, with measures in place to support safe in-person delivery\. Nonetheless, the Government
is mindful of the need to invest in robust ICT and networking technologies in all its universities, to prepare for any
prolonged remote delivery in the future\. This focus on resilience will allow for increased international and domestic
collaboration\. There is considerable scope for technology to enable universities to promote more personalized learning,
encourage greater collaboration and increase access to larger groups of students with more flexible learning options\.
21\. To address the above challenges, planning and management of the higher education system needs to become
more evidence-based and agile\. More specifically, universities as well as regulatory and financing agencies need to use
more cost-effective, innovative, adaptive, data-driven, and sustainable approaches in the following areas:
(a) Quality assurance process for assessing and registering institutions and accrediting programs of study and
curricula\. Though a process exists, it is neither effective in ensuring and raising the quality of university programs
and involving the private sector, nor in streamlining the process of professional certification of students\. For
example, medical graduates of a private university did not receive their medical licenses by the Medical Council
of Tanganyika, the professional body, as they did not consider the program adequate, although it had been
accredited by the Tanzania Commission for Universities (TCU)\.
(b) Sustainability and efficiency of higher education financing, particularly the higher education student loans
scheme, as this is already a substantial burden on the government budget due to growing demand, but also the
need for increased resource mobilization among universities\.
(c) Business and governance environment for private universities, many of which are small and struggling to expand
29 MoEST, 2015, Human Resource Needs and Skill Gaps in the Tourism and Hospitality Sector in Tanzania
30 MoEST BEST, 2018
Page 13 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
or offer higher quality programs\. Competition with well-managed, high quality private universities can raise the
game of public universities, as well as help with the expansion of student spaces\. In addition, a fair playing ground
with respect to student fees is important to promote a competitive environment between public and private
funded universities\.
(d) Higher education data systems: The most basic data on higher education is available at universities, TCU, and to
some extent the Higher Education Student Loans Board (HESLB)\. However, improvements and data linkages
between universities and agencies of the Ministry of Education, Science and Technology (MoEST) will help
establish a robust data management system that enables innovative planning and decision-making\.
22\. The World Bank-supported Science and Technology Higher Education Project (STHEP, P098496) provided critical
support to universities and regulatory and financing institutions during the period 2008-2016\. The project was
successful in: (i) contributing to expansion of teaching and research in universities such as the University of Dar es
Salaam, Sokoine University of Agriculture, State University of Zanzibar and many others; (ii) increasing the number of
graduates from science and technology degree programs from 1,312 in 2007 to almost 7,000 in 2015 by constructing
new facilities and increasing lecturers with Masterâs and PhDs in key disciplines; (iii) increasing degree-holding secondary
school teachers in mathematics, sciences and English from 172 in 2007 to 5702 in 2015; (iv) connecting all 28 public
universities to the national broadband backbone, increasing their high speed internet capabilities despite inadequate
funding to improve internal network systems and equipment; and (v) strengthening higher education regulatory and
financing regimes, such as enhancing the sustainability of the HESLB, which experienced an improvement in timely loan
repayment from 5\.6 percent (2007) to 50 percent (2016) through digitization of records etc\.
23\. Regional Initiatives like the Eastern and Southern Africa Higher Education Centers of Excellence (ACE II,
P151847) and the Partnership for Skills in Applied Sciences, Engineering and Technology (PASET) are also playing an
important role in contributing to building capacity for teaching, research, and innovation\.
(a) The ACEII project supports post-graduate education and research in selected higher education institutions in
Eastern and Southern Africa\. Four Tanzanian institutions, two at Sokoine University of Agriculture (SUA) and two
at Nelson Mandela African Institution of Science and Technology (NMAIST), receive grants to improve graduate
training in the areas of industry, agriculture and health, to address specific development challenges in the region\.
(b) PASET is a pan-African initiative that seeks to buildâfrom the technical/vocational level to higher education and
researchâa technical and scientifically skilled labor force to support priority sectors in SSA\. Two of the key higher
education initiatives under PASET are the Regional Scholarship and Innovation Fund (RSIF) and the Regional
Benchmarking of SSA Universities\.31 The RSIF is supported through the Africa Regional Scholarship and Innovation
Fund for Applied Sciences, Engineering and Technology (P165581)âas well as by several SSA countries in the
region, the Government of Korea, and other stakeholders in and outside SSA\. Tanzanian students have benefitted
through competitive access to the RSIF PhD scholarships in regional universities of repute, while some universities
have participated in the Regional Benchmarking which provides them a strategic direction on the improvements
needed for quality service delivery and student outcomes\.
C\. Relevance to Higher Level Objectives
31 The RSIF seeks to serve as a sustainable pan-African science-fund RSIF that finances PhD scholarships, research and innovation in applied science,
engineering and technology fields at competitively selected SSA institutions in partnership with top international partner institutions\. It prioritizes
women and young African faculty without PhDs\. PASETâs Benchmarking initiative, also offers governments and universities in the region a way to
strengthen the availability of data which can be used for performance assessment and quality improvement\.
Page 14 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
24\. The proposed HEET project will directly contribute to Pillar 2 of the World Bank Group Country Partnership
Framework (CPF) for Tanzania FY18-FY22 (Report No\. 121790-TZ): boost human capital and social inclusion by
improving the quality of higher education and promoting labor market relevant high-level skills development in order
to address critical skills gaps in graduates to benefit the economy and to promote increased access to higher education
for women\. Through a sector-based approach, the proposed HEET project is designed to identify and address higher
skills and innovation requirements for priority sectors in Tanzania, thereby contributing to the development of other
pillars\. The project is also relevant to the adjusted country program in response to COVID-19 (Annex 5)\.
25\. HEET will support Tanzaniaâs Third National Five-Year Development Plan (FYDP III)32 â Realizing Competitiveness
and Industrialization for Human Development â and Zanzibarâs Third Strategy for Growth and Reduction of
Poverty/Mpango wa Kukuza Uchumi Zanzibar Awamu ya tatu (ZSGRP/MKUZA III)\.33 The FYDP III emphasizes
education and capability development and includes key interventions for higher education, notably: (i) broaden access
to student loans, especially for sciences, mathematics, special and rare cadre courses; (ii) increase university enrollment
and graduates especially in science and mathematics disciplines; (iii) promote gender equity in university enrollment;
(iv) raise the percentage of high-skilled population; (v) increase spending on innovation-related research and
development (R&D); (vi) promote and support use of advanced ICT in teaching and learning; and (vii) improve
infrastructure in training institutions for special and rare cadres\.34 In addition, promoting human capital development
is a key results areas for ZSGRP/MKUZA III, with projected increases in skills development and employability\.
26\. HEET builds on past and ongoing World Bank-supported operations at the country and regional levels\. It will
build on the successes of the STHEP to further strengthen universities and regulatory and financing agencies\. In addition,
it will strengthen systems building on ongoing initiatives supported by the Education and Skills for Productive Jobs (ESPJ)
Program (P152810)\. HEET will use findings and recommendations of the analytical work on âleveraging technology and
the private sector to meet the increasing demand for quality higher education in Tanzaniaâ (P175073) to enable the
MoEST and target universities supported under the HEET project to enhance their use of education technology, support
greater gender parity, and strengthen engagement with private providers of higher education at the system level\. At
the regional level, HEET will build on and reinforce outcomes of the ongoing regional ACE II project (P151847) in
Tanzania\.
27\. At the global level, HEET will contribute to Tanzaniaâs progress towards the Sustainable Development Goals
(SDGs) on education, specifically: (a) Target 4\.3 - access to quality technical, vocational and higher education; (b) Target
4\.4 â increase the number of people with relevant skills for financial success; and (c) Target 4C - increase the supply of
qualified teachers with special focus on science and mathematics\.
28\. HEET is also aligned with the World Bankâs guidance for responding to COVID -19 in the higher education
sector\.35 Recognizing the challenges brought on by the COVID-19 pandemic, the HEET project will strengthen Tanzaniaâs
response capacity and resilience to the current, and any similar future, shock\. Every institution and agency supported
under the project will build pandemic/disruption response and resilience activities into their strategic investments\. Such
responses include investing in hardware and software for digital delivery, upgrading of facilities to support agile
32 Tanzania, Ministry of Finance and Planning, 2021, Third National Five-Year Development Plan 2021/22-2025/26\.
33 ZanzibarStrategy for Growth and Reduction of Poverty ZSGRP III/MKUZA III 2016-2020\. The Revolutionary Government of Zanzibar\.
34 Tanzania, Ministry of Finance and Planning, 2021, Third National Five-Year Development Plan 2021/22-2025/26\. Draft Plan, March\.
35 World Bank, 2020, The COVID-19 Crisis Response: Supporting Tertiary Education for Continuity, Adaptation and Innovation\.
https://openknowledge\.worldbank\.org/handle/10986/34571?show=full
Page 15 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
movement between distance and in-person learning, and improved learning science acumen, to promote academic staff
capacity building for better teaching and learning measurement and achievements\. MoEST will also endeavor to
institutionalize a crisis preparedness and response plan to enable it to respond to future national, regional and global
emergencies\.
II\. PROJECT DESCRIPTION
A\. Project Development Objective
PDO Statement
To strengthen the learning environment and labor market alignment of priority programs at beneficiary higher
education institutions and improve the management of the higher education system\.
PDO Level Indicators
(i) Students and faculty participating in internships/fellowships/forms of placement in industry, companies or research
institutions (sub-indicators for gender, individuals with disabilities, and students/faculty ratios) (number)
(ii) Degree programs within priority areas that are aligned to labor market needs (number)
(iii) Students benefiting from direct interventions to enhance learning (corporate indicator) (sub-indicators for gender,
individuals with disabilities) (number)
(iv) Active use of a Tertiary Education Management Information System (TEMIS) (yes/no)
(v) Higher education institutions supported by the project that achieve a minimum threshold of the annual targets set
in the performance agreements (number)
B\. Project Components
29\. The Project will provide a combination of university-level investments in improving the quality of learning
environments and programs, and Ministry-level interventions that enhance the management of the higher education
system and support a conducive policy environment\. These interventions are organized under three components\.
Component 1: Strengthening the Learning Environments and Labor Market Alignment of Priority Programs (US$329
million equivalent)
30\. This component will focus on strengthening and building the capacity of 14 public higher education institutions
to become high quality centers of learning focusing on priority areas \. The Government identified 14 priority areas
based on key disciplines required to build an industrial economy and propel forward Tanzaniaâs development agenda\.
These disciplines are aligned with the priority economic sectors identified in Tanzaniaâs National Skills Development
Strategy 2015/16-2025/26, Vision 2025 and the Education and Training Policy 2014, as having the greatest potential for
growth over the coming decade and which function as cross-sector enablers\. The 14 priority areas are: (i) engineering
and technology; (ii) ICT; (iii) material sciences; (iv) health sciences; (v) urban and environmental engineering and
technology; (vi) renewable energy; (vii) water resources; (viii) climate change; (ix) agriculture and agribusiness; (x)
wildlife conservation; (xi) tourism and hospitality; (xii) academic industry linkages; (xiii) humanities; and (xiv) education\.
31\. The project will finance the implementation of institution-specific University Strategic Investment Plans (USIPs)
Page 16 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
that detail activities to meet the strategic objectives of improving the learning environment at the institution and
enhancing the labor market alignment of priority degree programs\.36 The USIP activities will be organized into three
internally-focused areas to improve teaching and learning and three externally-focused areas to strengthen research
and industry linkages (Figure 4)\. Areas to improve teaching and learning include: (i) renovation and/or construction of
energy efficient infrastructure including lecture halls, laboratories and workshops that promote accessibility for those
with disabilities and address gender considerations and safety concerns; (ii) capacity building of academic staff and
university leadership including awareness on emerging environmental issues and teaching and advising students with
disabilities; and (iii) curriculum review and reform, which will include introduction of innovative pedagogy and
responsiveness to growing climate change issues\. Areas to strengthen research and industry linkages include: (i) industry
and private sector partnerships; (ii) promoting self-generated income through revenue-earning activities; and (iii)
promoting applied research and innovation\. Each higher education institution has developed a USIP that addresses its
unique needs, challenges and context and has received technical assistance under the project to strengthen their plans
and incorporate good practices that have demonstrated success in similar contexts globally\.
Figure 4: USIP Areas
Note: PD = Professional development; VLE = Virtual Learning Environment
32\. The HEET project will place a strong emphasis on the use of digital technology by universities to deliver training
and manage administrative services\. There will be a focus on digitalizing all HEET project supported campuses and
strengthening the capacity of universities to deliver online learning in order to build resilience to respond to shocks like
the COVID-19 pandemic and ensure learning continuity\. This online learning infrastructure will also help increase access
36 About 260 priority degree programs are expected to be supported under the project
Page 17 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
to higher education for the growing youth population, as well as support new blended learning approaches that combine
in-person instruction and virtual learning with potential for partnerships with international institutions of repute\. In
addition, universities will invest in digital platforms and efficiency enhancement systems by modernizing the
management of administrative processes such as admissions, registrations, learning management and support services\.
Activities will include establishing the required ICT infrastructure for smart classrooms, virtual learning environments,
workshops and campuses; improving connectivity including through greater linkage with the Tanzania Education and
Research Network; digitizing learning materials and library resources and upgrading existing digital materials; training
and exposing academic staff in pedagogies for Open, Distance and e-Learning (ODeL) programs; enhancing interactive
online teaching and learning and providing support to students and staff on the same; training university staff to develop
at least basic digital skills competency; and establishing digital platforms for core academic and administrative services\.
These activities will be embedded within the three USIP areas for teaching and learning\. Partnerships with private sector
providers of online learning resources and platforms will also be leveraged to promote blended learning and distance
learning programs\.
33\. To help engage relevant industry professionals in the design and delivery of priority degree programs and
ensure their alignment to market needs, Industry Advisory Committees (IACs) will be set up at each institution\. These
Committees will be responsible for supporting the review and update of program curricula, advising on applied research
and innovation activities including facilitating transfer of technology across industry to faculties in universities, and
supporting with outreach to the private sector for functional partnerships with universities and community\. Each IAC
will be composed of experienced professionals engaged across Tanzaniaâs industries of relevance to the programs on
offer at the respective faculty/college and will be constituted by beneficiary higher education institutions according to
Terms of Reference agreed with the MoEST\. The IACs will meet at least twice a year and will work closely with the
internal quality assurance units at each institution, which will also be strengthened under this component to ensure that
all priority degree programs are accredited and meet national standards established by regulatory bodies under MoEST\.
Universities will also pursue industry and private sector partnerships through internships and placements for students;
faculty training; collaborations on research and innovation such as grants from industry for young entrepreneurs or joint
applications for funding; support to establish career offices at universities; course offerings by visiting faculty from
industry, mentorship programs; support to establish career offices at universities among others\. IAC members will play
an important role in identifying and facilitating such partnership opportunities\. A national workshop will be held with
members of the all the IACs to ensure harmonized understanding of the roles and responsibilities, accountability
measures and functionality with exposure to good practices of similar bodies in well-performing education systems\.
34\. The USIPs will also include interventions to enhance gender equitable participation in priority degree programs\.
Each institution is required to integrate activities to address gender issues and encourage greater participation and
retention of women in higher education programs, particularly in STEM disciplines\. These activities include but are not
limited to: (i) developing outreach programs to sensitize female secondary school students and communities about
university programs, especially in STEM areas, and dispel misconceptions about womenâs STEM capabilities; (ii)
preparing an institutional-level implementation plan, where absent, to operationalize the national gender equity
strategy, to attract and retain women in priority degree programs and monitor progress towards targets which may
include establishing a gender desk to support implementation of activities; (iii) creating safe environments in the
institutions by promoting practices and implementing national policies and guidelines to safeguard against gender-
based violence (GBV) and sexual exploitation and abuse (SEA), and establishing confidential GBV management processes
with linkages to the national policing systems; (iv) introducing mentorship programs for women, especially in STEM
areas; (v) constructing climate smart hostels/dormitories with renewable energy sources for women; (vi) ensuring all
Page 18 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
newly constructed infrastructure are designed/configured to provide a safe and conducive learning environment for
female students, to enable them to build careers in higher education without interruptions; and (vii) increasing
representation of women among academic staff and university leadership\.
35\. In addition, universities will aim to foster more inclusive and equitable environments for students with
disabilities\. Facilities constructed and renovated under the project will consider inclusivity elements per global
standards and will be accessible to students with special needs\. Institutions will also develop the capacity of academic
staff to support and cater to the training needs of students with disabilities\. In addition, MoEST will create centers of
excellence for inclusive education at specific universities where the majority of students with disabilities are currently
enrolled\.37 Investments will be concentrated at these universities to offer high-quality training, infrastructure and
equipment for students with varied disabilities\. This will include renovation and rehabilitation of classrooms and lecture
rooms to suit the needs of special needs education; construction or renovation of hostels to provide accommodation
for students with disabilities; establishing specialized examination rooms; creating resource rooms with specialized
equipment for disabled students; and introducing and/or strengthening existing academic and administrative support
services for students with disabilities to promote their retention, graduation and entry into the workforce\.
36\. Each institution will sign a performance agreement with the MoEST based on their respective USIPs\. These
agreements will define annual performance indicators and milestones that promote shared governance and
accountability whose achievement will be monitored by MoEST\. Such performance contracts promote mission-driven
strategic initiatives, institutional management as well as increased autonomy that improves the operational quality of
these institutions\. Negotiated performance agreements also encourage greater institutional ownership and more buy-
in for difficult reforms, such as changing teaching practices or engaging private sector in curriculum reforms and
university research projects\. Taken together, the USIPs and the corresponding performance agreements will promote a
culture of effective management and shared governance with MoEST and higher education institutions by emphasizing
autonomy, accountability, quality, and institutional ownership (See Annex 2 for more details)\.
37\. The 14 higher education institutions to be supported under the project are divided into two clusters â 11
competitively selected institutions and three priority universities\.
Sub-component 1\.1: Expanding capacity of existing public universities to offer quality priority programs (US$219
million equivalent)
38\. This sub-component will focus on strengthening and building the capacity of 11 competitively selected public
universities around Tanzania by financing their individual USIPs, focusing on the priority areas\. The competitively
selected universities to be supported under this sub-component by allocated funds are presented in Table 1\.
39\. A transparent, criteria-driven selection mechanism was used to select the institutions to be supported under
this sub-component\. Eleven higher education institutions submitted concept notes for evaluation\. An Independent
Evaluation Committee (IEC) was constituted by MoEST to evaluate the proposals submitted by institutions and identify
the best proposals for financing under the project\. The criteria for evaluating the proposals included alignment to the
HEET project vision and PDO, alignment to the priority areas, evidence of innovation in proposed new programs and
37The universities are: Muhimbili University of Allied Sciences; University of Dodoma; Moshi Cooperative University; Dar es Salaam University
College of Education; Mkwawa University College of Education; Sokoine University of Agriculture; Mbeya University of Science and Technology;
University of Dar es Salaam; and Open University of Tanzania
Page 19 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
pedagogy, technical capacity of the institution, extent of gender mainstreaming, and sustainability of the program
beyond the project among others\. All 11 institutions were found to meet the minimum criteria for selection and were
recommended for funding\. Allocation of funds for each institution was made based on their proposals with science and
technology-based institutions receiving higher allocations due to the need for laboratory and workshop equipment\.
40\. The USIP for the University of Dar es Salaam (UDSM) will include a special allocation for the School of Economics
(SE-UDSM) which is expected to play a significant role in spearheading business initiatives nationally and was therefore
identified as a priority by the IEC\. The allocation will strengthen the capacity of SE-UDSM to produce skilled and
professional personnel that plan for and monitor the economic prospects and performance of the priority sectors\. The
HEET project support will enable SE-UDSM to: (a) design and or strengthen programs on offer with special focus on
economic research, including data collection and analysis; national and sub-national revenue generation; pricing of
goods and services including exports and imports; labor needs and employment forecasting; and integrated and
sustainable development planning with a focus on climate adaptation and mitigation with application of early warning
systems generated data; (b) build the capacity to develop and disseminate integrated short- and medium-term
economic planning models for use by the public and private sectors; (c) access international expertise needed to improve
the quality of labor market assessments and data analysis for informed economic and development planning; and (d)
conduct outreach to sub-national and regional administration levels with an aim to promote the collection and use of
economics related data for quality, evidence-based development planning\.
Table 1: Competitively-Selected Public Institutions Supported Under Sub-Component 1\.1
Institution Funding allocation
(US$ million)
1 University of Dar es Salaam (UDSM, including the School of Economics) 39\.5
2 Sokoine University of Agriculture (SUA) 32\.0
3 Mbeya University of Science and Technology (MUST) 31\.5
4 Ardhi University (ARU) 29\.0
5 University of Dodoma (UDOM) 23\.0
6 Mzumbe University (MU) 21\.0
7 Nelson Mandela African Institute of Science and Technology (NMAIST) 10\.0
8 Open University of Tanzania (OUT) 9\.0
9 Moshi Cooperative University (MoCU) 8\.0
10 Dar es Salaam University College of Education (DUCE) 8\.0
11 Mkwawa University College of Education (MUCE) 8\.0
Sub-component 1\.2: Promoting excellence in development of human resources of underserved areas in the Lake Zone
and neighboring regions, and Zanzibar (US$110 million equivalent)
41\. This sub-component will focus on supporting quality higher education in underserved areas in Tanzania with
prioritized investments in human resources development for health and agriculture \. It will finance the USIPs of the
following three universities that were identified as priority institutions by the IEC:
(a) Muhimbili University of Health and Allied Sciences (MUHAS), Mloganzila campus: The HEET project will expand
and improve the quality of training programs delivery at the Mloganzila campus of MUHAS\. The campus hosts the
state-of-the-art Mloganzila Hospital, which was constructed to support quality graduate training in medicine and
allied fields, including specialized medical staff in emerging non-communicable diseases\. HEET financing will be
used to support climate smart construction and/or refurbishment of essential academic infrastructure such as
Page 20 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
lecture halls, classrooms, staff offices, laboratories, student social support rooms and student hostels; installation
of energy saving teaching and learning equipment including lab equipment and ICT infrastructure necessary for
quality training programs; and staff development through specialized graduate training\.
(b) Mwalimu Julius K\. Nyerere University of Agriculture and Technology (MJNUAT), Butiama: MJNUAT is the only
public university in the wider underserved agricultural area of Lake Victoria and aspires to play a âcenter of
excellenceâ role for environmentally sensitive agricultural training\. As a relatively new university, MJNUAT-
Butiama needs to set up essential infrastructure including lecture halls, laboratories, equipment and machinery
and other key facilities to serve as a leading center for research and innovation in agricultural technologies\. The
HEET project will finance investments towards such energy-efficient infrastructure as well as activities to
strengthen the capacity of academic staff in new pedagogical approaches that embrace online teaching methods
and improve awareness on climate change mitigation and adaptation issues; set up online learning platforms;
update curricula; and promote linkages with industry\.
(c) State University of Zanzibar (SUZA): The Zanzibar government is expected to absorb nine local colleges in Zanzibar
and the Pemba region and incorporate them as a part of SUZA\. The project will facilitate the integration of colleges
into SUZA including the consolidation of management structures, academic processes, and coursework in addition
to improvements in the academic infrastructure and strengthening the quality of higher education training\.
Table 2: Public Institutions Supported Under Sub-Component 1\.2
Institution Funding allocation
(US$ million)
1 Muhimbili University of Health and Allied Sciences (MUHAS), 45\.5
Mloganzila campus
2 Mwalimu Julius K\. Nyerere University of Agriculture and Technology 44\.5
(MJNUAT), Butiama
3 State University of Zanzibar (SUZA) 20\.0
Component 2: Strengthening the Management of the Higher Education System (US$78 million equivalent)
42\. This component will focus on enhancing the management of the higher education system\. A first sub-component
will strengthen the capacity of key government departments and agencies responsible for the effective oversight and
delivery of higher education in Tanzania\. It will target MoEST which comprises two departments responsible for higher
education, research and innovation - the Department of Higher Education and the Department of Science, Technology
and Innovation\. It will also promote reforms and improved operational capacity and delivery at three key Ministerial
agencies â the Tanzania Commission for Universities (TCU), the Higher Education Studentsâ Loans Board (HESLB), and
the Commission for Science and Technology (COSTECH)\. A second sub-component will help strengthen public-private
partnerships (PPPs) in higher education as well as finance quality improvements in select private universities and non-
university institutions deemed critically important for the strategic management and delivery of quality instruction\.
Sub-component 2\.1: Strengthening the capacity of MoEST and its subsidiary agencies (US$59\.9 million equivalent)
43\. Similar to the university support in Component 1, this sub-component will finance ministry- and agency-level
reforms through the implementation of individual Ministry and Agency Strategic Investment Plans (MASIPs)\. The
MASIPs will target investments towards improving the management, institutional development, regulatory frameworks,
and capacity for research and innovation of the higher education and financing systems to enable post-secondary
education institutions to thrive\. This sub-component will finance the implementation of MASIPs from the MoEST, TCU,
Page 21 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
HESLB, and COSTECH supporting activities described below through technical assistance, training, technical studies,
capacity enhancement and knowledge exchange events\.
(a) MoEST: MoEST leads the effective development of policies for higher education, R&D and innovation, and
mobilization of resources for enhanced access, quality and equity in higher education in Tanzania\. The HEET
project will provide support to the MoEST for activities such as but not limited to: (i) technical assistance to
develop a variety of robust tools and frameworks including for tracking graduates from priority programs (and
publishing regular reports), capturing resource mobilization and allocation by higher education institutions,
promotion of Public, Private Partnership, and monitoring and evaluating the higher education system among
other areas; (ii) upgrading the ICT infrastructure to support operations including the TEMIS in concert with TCU;
(iii) providing scholarships to support the capacity building and advanced training of university leadership and
academic and technical staff (particularly young lecturers who need to upgrade towards full academic careers
and build their research capacity, and technicians to support practical training and research undertakings); (iv)
through establishment of linkages with the Tanzania Social Action Fund (TASAF) beneficiary registry, providing
scholarships to female students from low-income households, who lack qualifications for direct admission, to
access a one-year foundation course at the Open University of Tanzania\. This is intended to enable them to join
any science degree program of choice upon graduation from the course; (v) building the technical and
administrative capacity of core staff at MoEST, MoFP, and key sector ministries; (vi) verification of construction
activities including the development of an effective verification tool and maintenance guidelines, and site visits;
(vii) technical assistance and capacity building to enable MoEST to provide guidance to universities on acquisition
of new teaching and learning materials (laboratory and workshop equipment) in terms of adequacy and
specifications; (viii) development of a crisis and climate change preparedness and response plan and guidelines;
(ix) development of an inclusive education strategy based on an assessment of the needs, challenges and
constraints faced by students with disabilities in accessing and completing higher education; (x) verification of
the implementation of activities to address gender issues, climate change and crisis preparedness at the
institutional levels; (xi) development of requisite science, technology and innovation (STI) policies, guidelines and
roadmaps including the National Research Priorities, National Technology Roadmap, and National STI Strategy to
support the utilization of technology and innovation across the sector; and (xii) support for oversight of national
STI policies and activities\.
(b) TCU: This agency plays an important role in regulating the quality and relevance of programs and systems at
universities, supporting their management and operations, and advising the Government on higher education
matters\. The HEET project will support TCU in the following key areas: (i) strengthening accreditation and quality
assurance including for ODeL programs through technical assistance to review and update curriculum design,
quality assurance and accreditation guidelines and standards informed by international best practices; (ii)
capacity building for academic staff and leadership at universities on the updated guidelines and standards to
facilitate proper set up of institutional-level quality assurance units; (iii) facilitating development of labor market
aligned programs at institutions by financing labor market surveys and stakeholder forums; (iv) promoting equity
in the higher education system through the development of a national and institution-specific gender-sensitive
admissions and university leadership policy and guidelines including on gender discrimination and GBV; (v)
strengthening the capacity of university leadership on good governance practices and academic policies; and (vi)
improving efficiency of data management in collaboration with the MoEST by upgrading the TEMIS to online ICT
systems and integrating management information systems\. Private higher education institutions will be able to
benefit from this support to TCU through the improved regulatory policies and guidelines on program
accreditation and opportunities for capacity building on quality assurance\.
(c) HESLB: As the body in charge of managing higher education loans, HESLB has a critical role in addressing the
Page 22 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
financial constraints facing Tanzanian students looking to pursue higher education\. The HEET project will support
HESLBâs operations to: (i) improve sustainability and equity dimensions of the financing scheme; (ii) improve
efficiency of loan management (identification of beneficiaries, loan disbursement, and loan recovery) through a
robust performance review of HESLB and support for business process re-engineering; (iii) strengthen linkages
with relevant stakeholders through integration of HESLB systems with databases of higher education institutions,
TCU, TASAF, National Identification Authority, and employers among others; (iv) identify opportunities for public-
private partnerships; and (v) build capacity of HESLB staff to manage the loans program\.
(d) COSTECH: This body is in charge of promoting scientific research, technological development and innovation
nationally as well as advising the Government of Tanzania on such matters, thereby supporting Tanzaniaâs
industrialization agenda\. The HEET project will provide support to COSTECH for the following activities: (i)
construction of a Technology Innovation Support Center and equipping it with scientific lab equipment; (ii)
promoting applied research and innovation capacity through the development and operationalization of
instruments and guidelines for the management of intellectual property rights (IPRs) as well as establishment of
technology transfer facilities to support innovation; (iii) building functional linkages with the private
sector/industry by supporting the development of start-ups and preparing tools to promote collaboration
between industry and universities; (iv) developing databases to collect data on national STI indicators as well as
research and innovation projects from R&D and higher education institutions; and (v) establishing a Special
Commercialization Fund (SCF) within the National Fund for Advancement of Science and Technology (NFAST) to
promote the self-generation of funds from research and innovation\. Operational guidelines of the SCF will be
endorsed by MoEST and integrated into the Project Operational Manual (POM) during project implementation\.
Table 3: Government Bodies/Agencies Supported Under Sub-Component 2\.1
Department/Agency Funding allocations
(US$ million)
1 Ministry of Education, Science and Technology (MoEST) 42\.9
2 Tanzania Commission for Universities (TCU) 5\.0
3 Higher Education Student Loans Board (HESLB) 4\.0
4 Commission for Science and Technology (COSTECH) 8\.0
44\. As with the universities in Component 1, each subsidiary agency will sign a performance agreement with the
MoEST based on their respective MASIPs\. The agreements will define annual performance indicators and milestones
that promote shared governance and accountability whose achievement will be monitored by MoEST\.
Sub-component 2\.2: Promoting quality improvements in select non-university higher education institutions and
promoting public private partnerships in the delivery of programs in priority areas (US$18\.1 million equivalent)
45\. This sub-component will promote quality improvements in targeted institutions not eligible for inclusion in the
USIP initiative but deemed critically important for strategic management and delivery of quality instruction as well
as promote public-private partnerships (PPPs) in priority area programs\. These investments will include grants for
public higher education institutes for statistics, accountancy, and financial management; analytical work on how best to
utilize private sector partnerships to enhance the quality and value of higher education in Tanzania; and small grants to
targeted private institutions delivering excellence in STEM fields\. The grant-funded interventions will be independently
managed and will target capacity building, curricular reforms, and digital investments at the grant-receiving institutions\.
46\. Five higher education institutes managed under the Ministry of Finance and Planning (MoFP) and identified as
Page 23 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
priority institutions for their provision of excellent, practical training in key fields of accountancy, statistics, and
financial management will be supported\. The institutes are: Institute of Financial Management, Eastern Africa
Statistical Training Centre, Institute of Rural Development and Planning, Tanzania Institute of Accountancy, and
Institute of Accountancy Arusha\. Grants will be awarded to these five institutions through a non-competitive process
that will involve the evaluation of proposals for relevance, impact, efficiency/effectiveness in design, and
implementation and sustainability plans\. These proposals will be reviewed and advised on by a Grants Selection
Committee, comprised of relevant subject-area experts and the terms of reference of which will be defined within the
Grants Manual\. The grants scheme, the terms of which will also be detailed in the comprehensive Grants Manual, will
prioritize institutional investments in curricula alignment with labor market needs, digital and ICT infrastructure and
delivery, and capacity building activities for academic staff and institutional management\. Once the grant is awarded,
each institution will develop an Institute Strategic Investment Plan (ISIP) based on the USIP template, to ensure
continuity in the monitoring and evaluation (M&E) of the implementation progress of each recipient institution\.
47\. This sub-component will also finance PPPs in higher education through: (a) technical studies on how PPPs may
be most effectively used to support improved delivery and/or services for higher education institutions in the Tanzanian
context\. The studies will also examine approaches to strengthen linkages between higher education institutions and
private sector employers and research collaborators in order to improve the quality and relevance of higher education
programs in Tanzania; and (b) competitive grantsâthe parameters and guidelines for which will be detailed in the Grants
Manualâ to support academic staff development in priority health sector programs at private universities\. Grants will
be awarded to selected private universities through a competitive process that will involve the evaluation of proposals
by a Grants Selection Committee comprised of senior academic staff and relevant subject-area experts constituted by
the MoEST\. The proposals will detail the degree programs in priority health sector fields to be targeted and the capacity
building for academic staff to be undertaken by the universities to strengthen the labor market alignment of the
programs\. The selection criteria, number and size of the grants will be carefully considered and developed to include
the wide-range of private universities including faith-based universities and will be documented in a Grants Manual to
be prepared within nine months of the projectâs effectiveness date\.
Table 4: Other Activities Supported Under Sub-Component 2\.2
Department/Agency Funding allocation
(US$ million)
1 Supporting Non-University Higher Education Institutes in Statistics, 17\.0
Accountancy and Financial Management
2 Supporting Public-Private Partnerships 1\.1
(a) Technical study on PPPs 0\.1
(b) Competitive grants for private universities 1\.0
Component 3: Project Coordination and Management (US$8 million equivalent)
48\. This component will serve to build capacity within the MoEST to manage the day-to-day implementation and
coordination of the HEET project, as well as monitor and evaluate its impact\. It will support the establishment of an
efficient National Project Implementation Unit (NPIU), including a project coordinator; deputy project coordinator;
financial management (FM) and procurement staff; environmental and social (E&S) safeguards staff; M&E staff; civil
engineer, and advisors/coordinators for private sector engagement, infrastructure development, gender
mainstreaming, inclusive education, and education technology\. It would finance the salaries, where applicable, and
capacity building of NPIU staff, as well as the operational costs of project implementation\. This component would
Page 24 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
provide funds for the NPIU to carry out the following activities: (i) coordination of activities across institutions; (ii)
procurement and FM of MoEST-implemented activities; (iii) ensuring compliance with and monitoring the
implementation of E&S safeguards provisions; (iv) M&E including impact evaluation efforts/analytical studies/surveys;
(v) establishing and operating a grievance redress mechanism (GRM) for the project; and (vi) audits of project financial
statements and all financial documents\.
Unallocated (US$10 million equivalent)
49\. An amount of US$10 million will be designated as unallocated funds\. This will serve as a planning reserve to
buffer for future demands or unforeseen but necessary activities critical to achieving the PDO and will be allocated
during the projectâs mid-term review\.
50\. The proposed HEET project will use an Investment Project Financing (IPF) instrument for a total amount of
US$425 million equivalent\. The Project will be implemented over five years from 2021 to 2026\.
Table 5: Project Financing by Component
No\. Component Name Allocation
(US$ Millions)
1 Strengthening the Learning Environments and Labor Market Alignment of Priority Programs 329\.0
1\.1 Expanding capacity of existing public universities to offer quality priority programs 219\.0
1\.2 Promoting excellence in development of human resources of underserved areas in the Lake Zone 110\.0
and neighboring regions, and Zanzibar
2 Strengthening the Management of the Higher Education System 78\.0
2\.1 Strengthening the capacity of MoEST and its subsidiary agencies 59\.9
2\.2 Promoting quality improvements in select non-university higher education institutions and 18\.1
promoting public private partnerships in the delivery of programs in priority areas
3 Project Coordination and Management 8\.0
4 Unallocated 10\.0
Project Total 425\.0
Climate Change and Disaster Risk Assessment and Mitigation Measures
51\. Evidence from the climate change and disaster risk assessment for the project indicates that: (a) the country
continues to experience various forms of climate change and variability including coastal flooding, flash flooding and
droughts which have negative impacts on the economy and communities; (b) 70 percent of all natural disasters in
Tanzania are climate change-related, while increasing temperatures and erratic rainfall patterns cause certain diseases
to increase; and (c) agriculture is the backbone of Tanzaniaâs economy but it is heavily reliant on rain-fall, which has
been decreasing season to season with resultant negative impacts on crop yields due to floods and droughts including
reduced water availability\. Uneven seasonal distribution of rainfall and increased temperature are major concerns for
the area\. 38 Mitigation priorities at the country level include expansion of natural gas and renewable energy (geothermal,
solar, hydro and wind) coupled with sectoral priorities in transport, forestry and waste management\. Adaptation
strategies are being implemented through ongoing efforts in agriculture, forestry, energy, coastal zones, water, health
38 Kangalawe, R\.Y\. M\., Mungâongo, C\.G\., Mwakaje, A\. G\., Kalumaga, E\., and Yanda, P\.Z (2017); âClimate change and variability impacts on agricultural
production and livelihood systems in Western Tanzaniaâ in Climate and Development\. Volume 9\. 2017 â Issue 3\.
Page 25 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
and tourism coupled with improvements in early warning systems, institutional capacity and coordination\.
52\. The HEET project contributes to the ongoing and planned mitigation and adaptation efforts through several
channels, details of which are elaborated in Table 3-1 of Annex 3 by component\. Climate change mitigation measures
will be integrated in several interventions including curriculum updating; formation of global partnerships for blended
programs on environmental issues; strengthening the higher education system resilience to emergencies; adoption of
energy efficient architectural designs for the new buildings to name a few\. With respect to adaptation, some examples
of measures that the HEET project will undertake include supporting improvements in the delivery of updated curricula
that integrate climate change issues including developing capacity of respective beneficiary institutions; supporting the
revision of infrastructure planning guidelines and maintenance policies for water supply and sanitation facilities; and
instituting mandatory continuous professional development on climate change for all faculty members\.
C\. Project Beneficiaries
53\. The project will support an estimated 116,500 direct beneficiaries, including the following:
(a) Students enrolled in the priority degree programs in the 14 higher education institutions supported by the
project\. These students will benefit from labor-market responsive curricula, collaboration efforts with private
sector, improved facilities and equipment, and other activities implemented under the USIPs\.
(b) Faculty and staff of the 14 higher education institutions who will have access to training opportunities,
exposure to new pedagogical methods and resources, and an improved teaching and research environment\.
(c) Staff of the MoEST and its agencies as well as key sector ministries who will benefit from capacity building,
more efficient business processes, and knowledge sharing activities\.
(d) Young lecturers and technical staff who will receive scholarships to pursue advanced degrees (Masters, PhD)\.
(e) Students, faculty and staff of the higher education institutions managed under MoFP that receive grants under
the project for quality improvements in public financial management programs\.
(f) Students, faculty, and staff of the private universities that receive grants under the project for quality
improvements in priority STEM programs\.
54\. The project will also impact a number of indirect beneficiaries such as:
(a) Students, faculty, and staff of non-priority degree programs at the 14 higher education institutions who will
have access to better infrastructure and connectivity and will benefit from spillover effects to other programs\.
(b) Employers and industry partners, including private sector companies and public entities, who can hire more
highly skilled graduates and access applied research emerging from universities in priority areas for growth\.
(c) Students and staff of secondary schools who will benefit from well-trained teachers graduating from the
teacher training colleges supported under this project\.
(d) Civil society members engaged in higher education who will be able to operate within a more enabling policy
and operating environment\.
(e) General Tanzanian population who will benefit from high-quality higher education institutions that will train
skilled professionals and drive research and innovation to support national development\.
Page 26 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
D\. Results Chain (see Figure 5)
E\. Rationale for World Bank Involvement and Role of Partners
55\. The World Bank has been the leading systematic and consistent external funder of higher education in Tanzania
for decades\. Existing national resources are limited for development of the higher education sector, and no other
significant, comprehensive support from other Development Partners (DPs) is currently available\. Only 1 percent of the
higher education sector budget is supported by DPs, compared to the DPsâ support for about 7 percent for t he entire
education sector\. The World Bank also adds considerable value through its project implementation support by bringing
a wealth and diversity of experience from its higher education work across the world\. The World Bankâs global role and
substantial expertise in higher education put it in a unique position to share technical knowledge that is informed by
lessons from projects implemented in SSA and globally\. In addition, its convening power is crucial to help bring together
stakeholders from government, industry, universities, regional bodies, and international partners\. The World Bankâs
strong fiduciary oversight helps effective project implementation and supports building government capacity, making it
an attractive partner for governments\. Finally, the robust E&S safeguards required by the World Bank helps to protect
and promote the interests of vulnerable groups and ecosystems as well as build government capacity to do the same\.
Figure 5: Results Chain
Page 27 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
F\. Lessons Learned and Reflected in the Project Design
56\. The proposed HEET project benefits from lessons learned under the STHEP, as well as other World Bank-financed
higher education projects implemented in the region and globally\. Some of the key lessons include:
(a) Competitive selection of universities: STHEP showed that competitive selection of universities to benefit from
project activities was an effective approach, as it allowed the project to finance higher education institutions
through sub-grants based on comparative advantages\. The HEET project uses a competitive selection process
with an independent evaluation committee using transparent criteria and based on the submission of proposals\.
(b) Preparation of Strategic Investment Plans: Following the model of the Africa Centers of Excellence (ACE) Projects
(P126794, P151847) and East Africa Skills for Transformation and Regional Integration Project (EASTRIP, P163399),
the universities to be supported by the HEET project are required to prepare USIPs to enable them to prioritize
investments according to their strategic objectives\. The USIPs were developed during the preparation of the
project in order to get ready for implementation and serve as the frameworks for the performance agreements
to be negotiated between the institutions and the Government of Tanzania\.
(c) Effective governance and management: World Bank-supported projects around the globe have proved that
performance-based financing is a useful tool to promote effective governance and management of programs as
well as encourage greater institutional-level ownership\. The HEET project design incorporates performance
agreements between the MoEST and the selected public universities as well as MoEST agencies whereby
incentives will be provided against the achievement of specific performance indicators\. This approach also
promotes greater autonomy at the institutional level and supports the potential for expanded use of performance-
based agreements in future higher education financing reform efforts\.
(d) Inclusion of demand-side considerations in project design: World Bank-supported projects implemented
worldwide have also shown the importance of addressing demand-side constraints in the project design in order
to have more effective and lasting outcomes\. The HEET project targets demand-side challenges faced by female
students by promoting safe environments at higher education institutions through the introduction of national
and institutional-level gender policies and guidelines, providing flexibility in class schedules, and supporting
scholarship programs for women from low-income households for a one-year STEM foundation course, among
other activities\. In addition, the HEET project will support the HESLB to improve its efficiency and diversify
financing products in order to tackle financial constraints encountered by higher education aspirants\.
(e) Integrated systems approach for greater impact: STHEP and other World Bank-financed projects have
demonstrated the importance of using a systems approach with complementary investments at the university
and sector levels in order to have a bigger impact\. This design is mirrored in the HEET project with investments
targeted towards universities based on their USIPs as well as to government institutions including MoEST, TCU,
COSTECH and HESLB to improve the policy environment, quality assurance mechanisms, and data collection
systems\.
(f) Building capacity at the institutional level: Drawing on lessons learned from the SSA region, the HEET project
emphasizes the need to build the capacity of the higher education institutions to implement projects instead of
focusing on implementation solely at the Ministry level\. Each university supported under the project will have its
own unit with expertise on FM, procurement and environment and social safeguards to implement the project\.
Evidence from the ACE I project has shown that institutions with such dedicated units perform better than those
without\. How the gained capacity is transitioned to the regular implementing departments of the university by
the close of the project will be regularly monitored to ensure sustainability\.
Page 28 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
III\. IMPLEMENTATION ARRANGEMENTS
A\. Institutional and Implementation Arrangements
57\. The proposed HEET project is designed to have interventions at the university level and national level, the latter
encompassing key departments and agencies under MoEST\. Accordingly, the project has a two-tiered implementation
structure with a total of 18 project implementation units (PIUs) (see Figure 6)\.
(a) At the national level, a National Project Implementation Unit (NPIU) will be established in the MoEST led by the
Department of Higher Education in collaboration with the Department of Science, Technology and Innovation\. It
will be responsible for key project functions including project coordination, procurement, FM, and M&E (the NPIU
composition is described under Component 3)\. Similarly, an Agency-level Project Implementation Unit (APIU) will
be established at each of the MoEST agencies â TCU, HESLB and COSTECH â to manage project activities for that
agency\. The NPIU will work with coordinators from the APIUs on day-to-day project implementation and
management and will coordinate all TA support to Ministerial agencies and project-supported universities\.
(b) At the university level, a University-level Project Implementation Unit (UPIU) will be established at each
university with similar coordination and management functions\. Since interventions at the university level will be
multidimensional encompassing different colleges, departments, disciplines, and programs, a senior staff at the
level of the Deputy Vice Chancellor will be appointed to lead the UPIU with support from another senior staff
member as needed\. Additional members representing participating colleges/departments/programs will also be
appointed to join the team depending on the nature of the project support to a respective university\.
58\. Each UPIU and APIU will be headed by a coordinator and have staff responsible for FM, procurement, E&S
safeguards, and M&E\. Other thematic focal point coordinators will be incorporated based on key project activities
with universities and agencies\.
Figure 6: Project Implementation Arrangements
Note: Solid arrow signify reporting relationship; dotted arrows signify close working relationship
Page 29 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
59\. Five non-university higher education institutes under the MoFP will also establish Institute-level Project
Implementation Units (IPIUs) as a condition and component of their successful grant investment plans\. The IPIUs will
be established with staffing structures similar to the UPIUs prior to the disbursement of grants proceeds to the awarded
institutes\. The requirements for the IPIUs, including fiduciary and environmental and safeguards capacity assessments,
will be defined in the Grants Manual\.
60\. A National Steering Committee (NSC) will be established with representatives from key project stakeholders
including the central Government, national higher education institutions and public/private sector institutions to ensure
political commitment and linkage with the world of work\. The NSC responsibilities will include (i) overseeing and
providing policy and strategic guidance on the project implementation; (ii) advocating for and promoting coordination
and collaboration between higher education providers, research and innovation institutions, and public/private sector;
(iii) acting as a liaison between the project and Government and private sector at large; (iv) approving the yearly Annual
Work Plan and Budgets prepared by the NPIU; and (v) carrying out high-level monitoring and supervision of project
activities, including reviewing the project reports\. The composition of the NSC is included in Figure 7 and the Terms of
Reference of members will be provided in the POM\. The NSC will be supported by a Technical Committee, which will be
chaired by the Director of Higher Education (MoEST), with members drawn from NPIU staff, Project Coordinators/
Leaders of higher education institutions, MoEST responsible directors and Agencies, the MoFP Director of Policy and
Planning, and MoFP institutes\.
61\. The National Project Coordinator (NPC), head of the NPIU, will be the Secretary to the NSC\. The NPC will work
closely with project coordinators at the university and agency levels to ensure smooth project implementation\.
Figure 7: National Steering Committee39
62\. A Project Operations Manual (POM), prepared and adopted before project effectiveness and maintained by the
NPIU, will contain detailed operational procedures and technical and organizational arrangements for project
implementation\. This will include, among others areas: (a) the composition and allocation of functions and
responsibilities among implementation units; (b) FM arrangements; (c) M&E arrangements for the USIPs and MASIPs as
39 The research and innovation institutions are ones other than COSTECH
Page 30 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
defined by the performance agreements between MoEST and the respective beneficiary universities and subsidiary
agencies; (d) procurement management procedures; (e) internal and external audit requirements; (f) quality assurance
standards, protocols and review mechanisms; (g) M&E framework and protocols, and reporting and communication
requirements under the project; (h) guidelines for assessing the potential E&S impacts of project activities and designing
appropriate mitigation, management and monitoring measures in accordance with the ESSs and the Environmental and
Social Commitment Plan (ESCP); and (i) protocols for operation of the project-level GRM\.
B\. Results Monitoring and Evaluation Arrangements
63\. The Skills Management Information System (SMIS) established under the Education and Skills for Prospective
Jobs (ESPJ) Project (P152810) captures data for tertiary education and is maintained by MoEST\. The system includes all
information related to accreditation, programs, student data (both enrollment and graduation) and enrollment
capacities\. The system will be strengthened to ensure all relevant data for higher education are captured\. The SMIS will
be supported by the department of IT and statistics to ensure technical and professionalism in data management\.
64\. Monitoring project implementation: At the national level, the MoEST, via the NPIU, will be responsible for the
coordination of collection, documentation, analyses and compilation of data from all participating universities and
agencies to produce national quarterly and annual reports\. At the university and agency level, each institution will be
primarily responsible for the progress of its activities and will report its progress and challenges to the MoEST through
quarterly and annual progress reports\. MoEST will oversee the overall progress of activities and provide guidance for
the smooth implementation of the activities defined in the USIPs\. Each university and agency will have a designated
M&E expert as part of the implementation team who will be responsible for data collection and reporting\.
C\. Sustainability
65\. The project is expected to be sustainable as a result of the interventions at the institutional and national levels \.
The development and implementation of USIPs by each of the selected institutions will promote institutional ownership,
autonomy, and accountability\. The USIP instrument is complemented by performance agreements, which will enhance
the long-term capacity for sector governance and management, as well as leading to a modernized, agile model for
potential financing reforms for the sector\. In addition, the activities included under the USIPs are expected to build the
capacity of technical teams as well as university leadership, improve income generation, and establish private sector
partnerships, thereby contributing to management and financial sustainability of the institutions after the project\. In
addition, the updated programs and quality assurance systems will continue after the project\.
66\. At the national level, the MASIPs identify strategic actions and investments to strengthen the management of
the higher education sector\. Through the financing of these MASIPs, the project will support capacity building for MoEST
and its regulatory agencies as well as technical assistance for policy development and strategic reforms\. This will
strengthen the Ministryâs management capacity, its ability to strategize, plan and monitor activities, as well as its
capacity to create an enabling policy environment for innovation and growth, which will contribute to sustainable
reforms and long-term benefits for the higher education sector\.
Page 31 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
IV\. PROJECT APPRAISAL SUMMARY
A\. Technical, Economic and Financial Analysis
Technical Analysis
67\. The HEET project design is based on globally recognized approaches to build stronger higher education systems
as well lessons learned from past World Bank-supported higher education and skills projects as described previously\.
This includes the use of a competitive selection process to identify the institutions to be supported by the project; the
use of institution-specific strategic investment plans (USIPs and MASIPs) to promote autonomy, accountability and
ownership; the introduction of performance agreements between the MoEST and the higher education institutions to
strengthen the links between certain forms of financing and institutional quality, governance and sector management;
the inclusion of activities to address demand-side constraints for female students in particular by ensuring safer spaces
at universities and providing scholarships for a foundational STEM course; and the use of a system-approach that
addresses institutional-level and system-level needs to enhance the projectâs impact\.
68\. HEET will address gender gaps in the Tanzanian higher education sector through a variety of targeted activities
based on regional and global good practices\. To address the unequal enrollment of female students in higher education,
particularly in STEM fields, the project will provide scholarships to women for a foundational STEM course; and support
the MoEST and agencies to introduce gender-friendly admissions policies, university leadership guidelines and policies
including on gender discrimination and GBV as well as support for more female leaders and academic staff\. Each
beneficiary university will include varied interventions to improve female participation and outcomes for women and to
create safer spaces for female students and faculty in their respective USIPs\. Mentorship programs and role models in
the form of more female instructors, supervisors and leaders have been shown to boost girlsâ confidence and interest
in pursuing and completing higher education, especially STEM programs, and increase their sense of belonging\.40 This is
complemented by sensitization campaigns that raise awareness among communities, families and secondary school
female students about the opportunities and benefits of higher education and can dispel misconceptions and biases
that prevent girls from enrolling in STEM programs\.41 Best practices also show that gender-sensitive learning
environments, including facilities with nursing rooms or dormitories for female students can promote womenâs
participation in higher education programs\. The project will include additional activities, as needed, to reduce gender
gaps in higher education STEM programs that emerge from the World Bank analytical work expected to be completed
in 2021\.
69\. The project will set and monitor gender equity targets, particularly enrollment of female students in STEM
programs and introduction of institutional-level implementation plans to operationalize national gender strategies
to promote equitable participation in higher education\. Other key indicators such as students benefitting from
interventions to enhance learning, students/faculty participating in internships/fellowships and project beneficiaries will
also be tracked by gender\. Finally, the performance agreements will require institutions to meet some minimum gender
considerations, such as establishment of guidelines/codes against GBV and sexual harassment and ensuring new
40 Hammond, Alicia; Rubiano Matulevich, Eliana; Beegle, Kathleen; Kumaraswamy, Sai Krishna\. 2020\. The Equality Equation: Advancing the
Participation of Women and Girls in STEM\. World Bank, Washington, DC\.
41 The AAS\. 2020\. Mukhwana A\.M\., Abuya T\., Matanda D\., Omumbo J\., Mabuka J\. Factors which Contribute to or Inhibit Women in Science,
Technology, Engineering and Mathematics in Africa\. Nairobi\.
Page 32 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
infrastructure accommodates needs of female students and faculty, in order to continue to receive project funds\.
70\. The HEET project will also proactively address climate-change issues affecting Tanzania\. Tanzania experiences
droughts, flash flooding and coastal flooding and has seen an increase in the temperature and rainfall in recent years\.
HEET will help to mitigate and adapt to these climate change issues through energy-efficient and climate-smart
construction and rehabilitation of infrastructure; updates to curricula to ensure inclusion of climate change issues,
capacity building of faculty and staff to increase knowledge and awareness on emerging climate change topics and
challenges; and research on climate change and renewable energy which are priority areas targeted by the HEET project\.
71\. The project will promote opportunities for greater collaboration between the higher education sector and the
private sector\. While the private sector is still relatively small in Tanzania, particularly in terms of employment, HEET
will provide frameworks that incentivize greater collaboration with private enterprises, including both private providers
of higher education and private sector consumers of higher education outputs (including graduates and knowledge
products)\. With regard to private providers, the project will support quality assurance improvements via grants
programs and include private higher education institutions in reformed quality assurance frameworks and regulations\.
In terms of the labor and innovation ecosystems, each funded university is required to develop an IAC, to provide
strategic advice and access to external contexts for students and faculty to engage more fully with the private sector\.
72\. The project will strengthen the capacity of Tanzaniaâs higher education sector to respond to COVID-19 and
future disruptions\. Every higher education institution and agency supported will build pandemic response and resilience
activities into their USIPs and MASIPs such as investing in hardware and software for digital delivery, upgrading of
facilities to support agile movement between distance and in-person learning, strengthening capacity for quality
assurance of online learning, and improving learning science acumen to promote capacity building for better teaching
and learning measurement and achievements\. MoEST will also develop a crisis preparedness and response plan\.
Economic and Financial Analysis
73\. The economic analysis shows that the project is economically viable with Net Present Value (NPV) of US$2,270
million and Internal Rate of Return (IRR) of 23 percent\. The direct economic benefit of the project combines the present
value of increased lifelong earnings of the project beneficiaries, who would not have completed the program without
the HEET project, through increased employment rates and increased wages due to quality improvement in relevant
skills and market relevant research activities boosting local economies\. The primary direct project beneficiaries are
students enrolled in degree-granting programs in priority areas in selected public universities\. It is assumed that the
project will have a positive impact on enrollment rates in these priority areas (with incremental annual increase up to
25 percent, resulting in a baseline of 40,000 students and an increase to 100,600 students during the project
implementation period (2021-2026))\. In addition, the improvement in teaching quality and labor market alignment
along with more research and industry partnerships can be expected to have an impact on overall labor market
outcomes (better employment and wage) for the beneficiaries\. The cost of the project includes the estimated project
expenditure plus the private cost of higher education, including tuition and maintenance for four years and the foregone
earnings during the average two additional years of education\.
74\. Expected impacts of the project\. Investments in the learning process (physical investment in space and learning
technology as well as teaching professionalsâ quality) can increase studentsâ satisfaction and expectations of the benefits
of university education, resulting in higher demand for the priority areas in the selected universities and increasing
Page 33 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
retention through the university cycle\. It is empirically shown that the improvement in university learning environment
has positive impacts on studentsâ perception on teaching quality,42 and studentsâ perception is shown to be a strong
predictor of college retention, especially during the first and second years\.43\. Collaboration between universities and
university-industry partnership will have a positive impact on the local economy, generating demand for high skilled
workers\. University-industry partnerships have shown positive impacts including synergies between basic and applied
science, lowering labor cost, raising revenues from innovative products, improvement of market oriented research
capacity and positive societal spillovers across health, sanitation, agriculture, energy, etc\.44 Also, incentivizing university
patenting is empirically shown to have large long run employment and payroll per worker impact\.45\.
B\. Fiduciary
(i) Financial Management
75\. The FM assessment for the project was carried out for the 18 proposed implementing institutions in accordance
with the World Bank Directive: Financial Management Manual for World Bank Investment Project Financing Operations
issued on February 10, 2017 and effective retrospectively from March 1, 2010; and the World Bank Guidance: Financial
Management in World Bank Investment Project Financing Operations issued on February 28, 2017 and effective
retrospectively from February 24, 2015\. The FM assessment considers the degree to which: (a) the budgeted
expenditures are realistic, prepared with due regard to relevant policies, and executed in an orderly and predictable
manner; (b) reasonable records are maintained and financial reports produced and disseminated for decision-making,
management, and reporting; (c) adequate funds are available to finance the project; (d) there are reasonable controls
over project funds; and (e) independent and competent audit arrangements are in place\.
76\. FM risk assessment and mitigation measures\. The overall FM risk for the project is assessed as Substantial\. Key
risks include: (i) coordination of multiple PIUs to ensure compliance to FM reporting and auditing requirements; (ii)
channeling of funds disbursed to the PIUs in a timely manner to avoid possible delays in project implementation; (iii)
different levels of capacity of the FM staff in the hosting institution which may impact proper maintenance of accounting
records; (iv) different capacities of PIUs internal control systems including available policies and procedures in place to
safeguard project funds; and (v) limited capacity of internal audit teams in different institutions to frequently conduct
internal audit reviews\. These challenges will be addressed by ensuring the PIUs will have qualified staff for the
coordination of FM matters including disbursements, financial reporting, and auditing\. The PIUs should each have a
qualified Project Accountant with experience in managing project financial requirements\.
77\. Planning and Budgeting: Hosting institutions will prepare a work plan and budget on an annual basis and submit
42 Hill,
Mary C\., and Kathryn K\. Epps\. "The Impact of Physical Classroom Environment on Student Satisfaction and Student Evaluation of Teaching
in the University Environment\." Academy of Educational Leadership Journal 14\.4 (2010): 65-79\.
43 Schreiner, Laurie A\. âLinking Student Satisfaction and Retention\.â Azusa Pacific University\. (2009)
44 Adams, J\., E\., Chiang and J\. Jensen âThe Influence of federal laboratory R&D on industrial researchâ, NBER working paper 7612 \. (2000)
Azoulay, P\., Ding, W\., Stuart, T\. âThe Effect of Academic Patenting on (Public) Research Output\.â NB ER Working Paper 11917 (2006)
Bishop, K\., DâEste, P\., and Neely, A\. âGaining from interactions with universities: multiple methods for nurturing absorptive capacityâ, Research
Policy, 40 (1), (2010) Pluvia Zuniga, âThe State of Patenting at Research Institutions in Developing Countriesâ, World Intellectual Property
Zucker, L\.G\., Darby, M\.R\., Brewer, M\.B\. âIntellectual Human Capital and the Birth of U\.S\. biotechnology Enterprises\.â America n Economic Review,
88 (1), (1998)
45 Hausman, Naomi\. âUniversity innovation, Local Economic Growth, and Entrepreneurshipâ Harvard University (2012)
Industry intensity measures the extent to which an industry is likely to be affected by innovation produced at nearby universities\.
Page 34 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
to the NSC for approval\. The approved budget will be submitted to the World Bank before the beginning of the fiscal
year (by June each year)\. The MoEST will develop a timeframe for institutions to submit their budget for consolidation
and inclusion in the Medium-Term Expenditure Framework (MTEF) of MoEST\.
78\. Accounting arrangements: Each PIU will have dedicated Project Accountants responsible for supporting project
implementation\. The qualification and experience of appointed Accountants will be communicated to the World Bank
prior to the request for first disbursement for clearance\. Institutions such as MJNUAT, MUST, DUCE and HESLB with
inadequate accounting staff capacity will be required to hire experienced Accountants dedicated for the project\. In
addition, to strengthen the capacity, the World Bank will conduct project FM training for appointed project Accountants
within the first year of operation\. Detailed processes to be followed at the institutional level are documented in the
Financial Procedure Manual (which will be part of the POM)\. Some institutions do not have accounting software and
maintain accounting records in Excel (for example, MJNUAT and SUZA)\. In order to keep track of project accounting
records, institutions will maintain separate project records depending on the capacity of the accounting software in
place\. PIUs will ensure institutional financial accounting records and the MoEST IFMIS are regularly updated with project
affairs\.
79\. Internal controls including internal audits\. Each institution will be responsible for developing internal controls
system to ensure the PDO is achieved in an effective and efficient manner\. Project-specific internal control systems to
manage project financial risks and safeguard project assets will be documented in the POM\. Operational effectiveness
of the internal controls systems will be monitored by the internal audit departments of respective institutions\. It is
expected that internal audit reviews for the project will be conducted at least twice per annum\. The adequacy of capacity
of internal audit staff will be compensated by additional site visit reviews to the implementing institutions conducted
by the internal audit team of the MoEST\. Internal audit reviews conducted by the Ministry will use the existing reporting
framework to the Ministry Audit Committee, however copies of their reports should be communicated and shared with
the respective institutions for further follow up and implementation of audit recommendations\.
80\. Funds flow arrangement: Detailed procedures, responsible personnel and timelines for funds requisition and
transfers will be defined in the POM and Grants Manual with implementing institutions\. PIUs may request disbursement
through any of the following options: (i) Advanced method; (ii) reimbursement method; or (iii) direct payment method\.
More detailed disbursement arrangements are provided in the Disbursements and Financial Information Letter (DFIL)\.
81\. Financial reporting: Project implementing agencies will prepare and submit to the World Bank two sets of reports:
(i) unaudited interim financial reports (IFRs) for disbursement purposes; and (ii) audited annual financial statements\.
82\. External audits: The MoEST will contract the Controller and Auditor General (CAG) to audit the annual financial
statements of the project\. Audited financial statements and management letters will be submitted by the PIUs to the
World Bank through the client connection system within six months after the end of financial year\.
83\. FM action plan\. The World Bankâs FM team will provide capacity building and implementation support over the
projectâs lifetime\. The project will be supervised on a risk-based approach\. Supervision will cover but not be limited to
desk review of audit reports and IFRs\. Site visits will be conducted at least twice per annum based on current assessed
risks and may be adjusted when the need arises\.
(ii) Procurement
Page 35 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
84\. Procurements under the proposed project will be carried out in accordance with the following World Bank
procedures: (a) the World Bank Procurement Regulations for IPF Borrowers (November 2020) and (b) âGuidelines on
Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grantsâ, dated
October 15, 2006, and revised in January 2011, and revised as of July 1, 2016\.
85\. A Project Procurement Strategy for Development (PPSD) and the Procurement Plans (PP) for each Implementing
Institution have been prepared\. The Borrower has also prepared a consolidated PPSD identifying optimum procurement
strategies for meeting the development objectives of the project, based on which the PP for the first 18 months for each
Implementing Institution has been prepared, setting the selection methods to be used by the Borrower in the
procurement of goods, works, non-consulting services, and consulting services under the project\. The PPSD market
assessments found that there is an adequate number of building construction firms (local and foreign) and a large pool
of consulting firms (local and foreign) that are likely to bid for the envisaged buildings and associated works to be
constructed and participate in the selection process for the consulting services opportunities, respectively\. Based on
previous experience, Implementing Institutions have always received adequate number of bids from suppliers, service
providers and contractors in the local market which sufficed the required needs\. The local market for goods and non-
consulting services is very competitive as there are many capable firms to provide the required goods and services to
be advertised by the Implementing Institutions\. The PP for each Implementing Institution will be updated at least every
12 months, or as required, to reflect the actual project implementation needs\. Each update shall require World Bank
approval and will be publicly disclosed in accordance with the World Bank disclosure policy\.
86\. Systematic Tracking of Exchanges in Procurement (STEP)\. The World Bankâs STEP system will be used to prepare,
clear, and update PPs and conduct all procurement transactions for all implementing institutions of the project\.
87\. A Procurement Capacity Assessment of the Implementing Institutions was carried out in April 2020: The
assessment reviewed the organizational structure for implementing the project, functions, staff skills and experiences,
adequacy for implementing the project, and the interaction between the projectâs staff responsible for procurement
activities and the relevant departments within the agencies and other government agencies\. The assessment revealed
that some of the Implementing Institutions have no prior experience in World Bank operations\. Furthermore, the
assessment revealed (i) PIUs staff have inadequate experience in managing procurement of complex works, goods and
consulting works; in accordance with World Bank procurement guidelines/regulations and procedures, including use of
STEP; (ii) staffing levels are inadequate to cope with volume of procurement transactions; (iii) PIUs and User
Departments staff have inadequate knowledge and skills/experience in contract management; (iv) records management
systems are inadequate; (v) inadequate office space and office facilities; and (vi) low capacity in managing / supervising
ESHS and SEA in the procurement process by both Borrower and construction industry\.
88\. Identified risks, mitigation measures, capacity building and action plan agreed\. The overall project procurement
risk was assessed to be âHighâ\. The residual risk after implementation of the mitigation measures is âSubstantialâ\. To
address capacity gaps and mitigate the risks identified, procurement capacity needs to be strengthened\. To ensure
quality of documentation from the institutions, a Procurement Specialist, experienced in World Bank procurement
procedures will be hired to review documentation from the institutions before the institutions upload in STEP\. The
procurement specialist will also build capacity and assist in managing procurement activities of the institutions\. All
Implementing Institutions will also prepare a capacity-building program for the PIUs and User Departments which will
articulate areas to be strengthened, and capacity strengthening activities to be undertaken\. There will also be need for
Page 36 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
a procurement assistant experienced in STEP, to support the institutions with issues related to STEP\.
89\. Procurement oversight and monitoring arrangements\. The World Bank exercises its procurement oversight
through a risk-based approach comprising prior and post reviews as appropriate\. Since the assessed procurement risk
rating is âHighâ, the Borrower shall seek the World Bankâs prior review for contracts of value equivalent to the thresholds
as detailed in Table 1-3 in Annex 1\. The capacity assessment of the implementing agencies recommends one
implementation support mission every six months to visit the field to carry out post review of procurement actions\.
\.C\. Legal Operational Policies
\.
Triggered?
Projects on International Waterways OP 7\.50 No
Projects in Disputed Areas OP 7\.60 No
\.
D\. Environmental and Social
90\. The E&S risks for the proposed project activities are rated as Substantial due to likely impacts anticipated during
project implementation and the limited experience of the implementing agencies in applying the ESSs\. The project
will apply the Environmental and Social Framework (ESF) through the Environmental and Social Standards (ESSs) for E&S
risk management\. The main impacts of the project will emanate from the physical construction activities proposed in
the participating institutions\. The cumulative impact, which is likely from the works and presence of contractors and
machinery at each targeted institution, calls for careful supervision to avoid occupational health and safety incidences\.
91\. Component 1 of the project will finance construction of critical university infrastructure (such as lecture halls,
labs, dormitories, staff offices, etc\.), which are likely to generate unfavourable and site-specific construction related
E&S risks and impacts\. The proposed investments will be built on sites within the premises of the beneficiary institutions
in accordance with the existing masterplans\. Potential impacts at the participating institutions are related to: (i) waste
generated at construction sites which can pollute land and water bodies (cement mixing areas, metal, wood and paint
residues, diesel, used electronics equipment and other residues); (ii) open pits (for construction materials, waste or
water can cause accidents); (iii) food residues, which can attract disease causing organisms; (iv) cutting of trees for
building material; (v) noise from machinery and exhaust from diesel engines of transport trucks (transporting equipment
and materials); (vi) occupational health and safety incidents; and (vii) traffic disruption and road accidents; amongst
others\. Component 2 and Component 3 are not anticipated to lead to physical E&S footprints\.
92\. The main potential social issues, that can be mitigated/managed are related to: (i) labor and working conditions
of construction contractors as delineated under ESS2; (ii) community health and safety as indicated in ESS4; (iii) potential
loss of crops or assets in University land or requiring acquisition of extra land; (iv) ensuring participation of vulnerable
groups46 (as defined under ESS7) through equitable access to project benefits and opportunities; and (v) risks related to
exclusion of stakeholders consultations and engagement as implied in ESS10\. Other risks are related to GBV/SEA of
46Under the HEET project, the term âvulnerable groupsâ has been used to define communities that are described in ESS7 of the project ESCP and
meet the criteria set out in paragraphs 8 and 9 of the standard\. Vulnerable persons may include but are not limited to women and differently abled
persons\.
Page 37 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
students and workers at university, related to disabilities and inclusion or exclusion (mainly during operation), and
transmission of diseases\. These potential impacts and risks will be site-specific and are unlikely to cause serious adverse
effects to communities and the environment if appropriate mitigation and management measures are in place\.
93\. E&S Management\. The HEET project is anticipated to comply with requirements of all the ESSs (ESS 1 - ESS10)
with exception of ESS 9 which is not considered relevant\.47 On the Borrowerâs side, key national regulatory requirements
for E&S that will be applicable will also be observed to ensure that potential mitigation measures are adequately
covered\. All participating institutions will be responsible for the application and compliance with the ESF and ESSs\.
94\. Four instruments have been prepared by the project to manage the E&S risks\. These are: (i) Environmental and
Social Management Framework (ESMF); (ii) Resettlement Policy Framework (RPF); (iii) Stakeholder Engagement Plan
(SEP); and (iv) ESCP\. These four instruments have been consulted upon and finalized\. The instruments were disclosed
on the Governmentâs website on March 17, 2021, and on the World Bank website on March 18, 2021\. The project will
prepare, consult, adopt and disclose Labor Management Procedures (LMP) three months after effectiveness\. The project
will also strengthen sexual harassment policies at the participating universities to address GBV/SEA and strengthen
prevention and response in a university context through both the project design as well as complementary actions that
will be detailed in a Project GBV Action Plan under development and that will be ready three months after project
effectiveness\.
95\. A review of compliance with the ESSs will be regularly undertaken at the level of the implementing institution\.
Each institution will be responsible for managing E&S requirements under their mandate\. Since the designs of the
proposed investments, their exact location, and core areas of impacts, extent, magnitude, and duration of impacts are
yet to be specified, the project has prepared an ESMF\. The assessment of E&S risks and impacts of all proposed project
investments/activities will be guided by the ESMF\.
96\. The project ESMF includes: (i) screening criteria to identify any subprojects with potential significant irreversible
adverse impacts on natural habitats, physical cultural resources and existing land uses so that alternative sites can be
identified or if necessary exclude the subproject; (ii) supervision and reporting procedures; (iii) mitigation measures etc\.;
and (iv) guidance on engagement as per the SEP\. The Borrower will assess the subprojects according to the same risk
categories described in ESS1 and manage, supervise, and monitor the environmental risks and impacts of the
subprojects through the project life cycle\. Thus, Environmental and Social Impact Assessments (ESIAs) and or
Environmental and Social Management Plans (ESMPs) will be guided by the E&S screening criteria from the ESMF\. All
subprojects will be required to develop a site-specific ESMP taking into consideration the Environmental, Health and
Safety Guidelines (EHSGs) of the World Bank to define specific mitigation and prevention measures to prevent and
reduce risks and impacts\. Social Impact Assessment (SIA) will be conducted three months after the projectâs
effectiveness to determine the extent of the social risks related to inclusion and discrimination of vulnerable individuals
and groups including people with disabilities\. The project will mainly be implemented within universitiesâ boundaries
thus an RPF has been prepared to provide guidance on preparation of site-specific Resettlement Action Plans (RAPs) if
universities need extra land outside their compound or for mitigating the loss of crops or assets in existing land\. Site
47 ESS 1: Assessment and Management of Environmental and Social Risks and Impacts; ESS 2: Labor and Working Conditions; ESS 3: Resource
Efficiency and Pollution Prevention and Management; ESS 4: Community Health and Safety; ESS 5: Land Acquisition, Restrictions on Land Use and
Involuntary Resettlement; ESS 6: Biodiversity Conservation and Sustainable Management of Living Natural Resources; ESS 7: Indigenous
Peoples/Sub-Saharan African Historically Underserved Traditional Local Communities; ESS 8: Cultural Heritage; and ESS 10: Stakeholder
Engagement and Information Disclosure\. ESS 9 on Financial Intermediaries is not considered relevant under this project\.
Page 38 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
specific ESMPs (and RAPs where applicable) will need to be approved and implemented in line with the respective
schedules before the construction activities can start\.
97\. The implementing agencies will deploy these tools accordingly during all phases of the project/sub-project
cycle, i\.e\. from design to decommissioning phase\. Both existing and those impacts that may be generated during
implementation phase will be mitigated and monitored to ensure compliance with the World Bank ESF and the national
environmental permitting requirements\. Moreover, these tools will be applied to ensure that the E&S concerns are
integrated into decision making process and foster desirable project outcomes in all spheres\.
98\. The capacity of the MoEST and implementing institutions in managing E&S risks based on the implementation
of previous education projects involving infrastructure activities is inadequate\. Capacity concerns will need to be
addressed as part of project implementation\. Institutional arrangements and coordination of E&S aspects/ ESF at the
ministry will need to be enhanced during project implementation\. Each implementing institution will have E&S staff
responsible for managing, monitoring, and reporting on the implementation of E&S measures\.
99\. Strengthening of capacities and definition of roles and responsibilities on E&S management will be defined in
E&S safeguard documents and other operational manuals\. The ESMF has provided roles and responsibilities and an
institutional arrangement for E&S management under the project\. These roles and arrangements will be further defined
in the POM\. It is understandable that since the ESF is new and there are several actors involved in the project, with
limited knowledge of the ESF as well in E&S issues, there will be a need for additional resources for training and capacity
building at all project levels\.
100\. Citizen engagement\. The project design will ensure that the stakeholder engagement process is broad enough to
include those who may be affected, those who are potential beneficiaries, also those with interests in the project
activities\. The SEP has identified stakeholders noting that this process will continue throughout implementation and
methods for engagement\. With meaningful consultations project stakeholders will have a chance to express their views,
feedback, concerns, risks and proposed changes and mitigation measures for the project activities\. These consultations
will be documented and disclosed in the format agreed with the World Bank\. The SEP also articulates a GRM that enables
any potential grievances to be captured at the initial stage and addressed prior to seeking recourse through the formal
legal justice system\. The project will review and strengthen the GRM at the implementing institutions to ensure that all
project beneficiaries and community members, especially vulnerable groups have access to it\. The GRM will also be
responsive to GBV/SEA issues\. Once the site-specific sub-projects are defined, public consultations will be organized
within the project area to target project beneficiaries and the surrounding community and integrate their feedback into
interventions\. These consultations will also inform project beneficiaries and affected communities about the existence
of the GRM, its procedures, communication channels, entry points and response times\. Citizen engagement will be
monitored by measuring institutionsâ resolution rates of grievances, i\.e\. share of registered grievances registered that
are addressed or resolved within the stipulated timeframe and service standard\. Institutions will publish periodic GRM
reports showing the grievances registered, resolution rates and how the issues were resolved\.
V\. GRIEVANCE REDRESS SERVICES
101\. Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported
project may submit complaints to existing project-level grievance redress mechanisms or the WBâs Grievance
Page 39 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
Redress Service (GRS)\. The GRS ensures that complaints received are promptly reviewed in order to address project-
related concerns\. Project affected communities and individuals may submit their complaint to the WBâs independent
Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with
its policies and procedures\. Complaints may be submitted at any time after concerns have been brought directly to
the World Bank's attention, and Bank Management has been given an opportunity to respond\. For information on
how to submit complaints to the World Bankâs corporate Grievance Redress Service (GRS), please visit
http://www\.worldbank\.org/en/projects-operations/products-and-services/grievance-redress-service\. For
information on how to submit complaints to the World Bank Inspection Panel, please visit www\.inspectionpanel\.org\.
VI\. KEY RISKS
102\. The overall residual risk to the achievement of the PDO has been assessed as âModerateâ\. Although the majority
of risk categoriesâsuch as political and governance, macroeconomic and technical designâhave been rated moderate,
some particularly important risk categories, such as fiduciary and environmental and social, have been assessed as
âSubstantialâ\. The most important risk factors are the gaps in FM and procurement capacity at the implementing
institutions and their limited experience in applying ESSs to manage the E&S risks from the implementation of activities
under the project\. These risks are being mitigated through capacity building for implementation units and by allowing
for localized oversight throughout implementation\. As most of the risk mitigation measures will be gradually rolled out
during implementation, residual risks will be proactively monitored and updated during project implementation\.
Table 6: Key Risks and Mitigation Measures
Risk Category and Key Risks Summary Mitigation Measures Residual Risk
Political and Governance: Moderate ⢠The HEET project team will work Political and Governance:
⢠The main risk is a change in government priorities in close collaboration with Moderate\. The ability of HEET to
with respect to the education sector, which would MoEST and MoFP to ensure mitigate this risk is limited, but the
make implementation of innovative activities in the alignment of priorities\. likelihood that political and
project more challenging\. governance factors could
significantly impact the PDO is low
to moderate as education quality
improvement is expected to remain
the Governmentâs strategic priority
for the foreseeable future\.
Macroeconomic: Substantial ⢠Higher education institutions Macroeconomic: Moderate, as
⢠The existing economic slowdown may result in supported under the HEET higher education institutions have
decreased revenues for planned education sector project will include activities in some capability to mobilize
financing, including for the higher education sub- their USIPs to increase self- resources for investment\.
sector\. This could pose a risk to the ability of MoEST generated income through
and higher education institutions to scale up commercialization of research,
delivery to larger student populations and renting of facilities and so forth\.
undertake investments complementary to HEET These initiatives will provide
that are necessary to support/sustain quality them with resources, other than
learning environments and management of the public funding, to undertake
system\. necessary investments\.
Sector strategies and policies: Substantial ⢠The HEET project will support Sector strategies and policies:
⢠There is no current plan or strategy for higher capacity building for MoEST staff Moderate, as the adoption of a
Page 40 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
education, and while the Education Sector on management of the higher higher education strategy/ plan and
Development Plan (ESDP) 2016-2021 includes a education system as well as update of the Higher Education Act
section on higher education, it does not sufficiently technical assistance to are government-level policy actions
take into account recent policy changes (notably the strengthen/develop policies and that fall outside the operational
impact of the Fee Free Basic Education Policy), and strategies in specific areas such scope of the HEET project\.
lacks sufficient detail on the strategic development as science, technology, and
of the sub-sector, including on financial innovation\.
implications\.
⢠The Higher Education Act needs to be updated to
include changes in the higher education ecosystem,
as the last update of took place in 2005\. Therefore,
the framework for higher education needs to be
further clarified, which creates a possible risk in the
operating environment for HEET\.
Technical design of the project: Moderate ⢠The HEET project has engaged Technical design of the project:
⢠While the technical design of the project is extensively with the Moderate, as capacity building for
straightforward and has been heavily vetted by implementing institutions and challenges encountered upon use of
stakeholders and the World Bank, there is a will continue to work with them the instruments will be rolled out
moderate risk that adaptation measures at MoEST to ensure proper understanding during project implementation\.
and the implementing institutions may require extra and ownership of the HEET
time to adjust to the USIP and MASIP instruments project design, USIP and MASIP
and performance agreements introduced under the instruments, and performance
project\. agreements\. Workshops will be
held as needed to provide
support to the PIUs at the
different institutions\.
Institutional capacity for implementation and ⢠The project will support capacity Institutional capacity for
sustainability: Substantial building of universities, MoEST implementation and sustainability:
⢠The capacity gaps at universities, MoEST and the and the regulatory agencies\. Moderate, due to relatively high
regulatory agencies could pose a potential risk to ⢠The project will also be sensitive capacity of the universities and
timely and adequate implementation of activities\. to the contributions of civil agencies given past and ongoing
Activities under the project, especially the USIPs, society and engage them to MoEST experience with
need close monitoring and supervision to ensure ensure stakeholders are implementing World Bank projects
that they are on track, in line with the work plans, informed of the project
and achieving the indicated results\. Strong objectives and can contribute to
supervision by university leadership and MoEST is community-level M&E of
critical to assessing any implementation hurdles and activities\.
resolving them in a timely manner\.
Fiduciary: High ⢠The project will have qualified Fiduciary: Substantial, as the
⢠The gaps in capacity for FM and procurement at the staff for the coordination of FM majority of capacity building
implementing institutions (as detailed in the matters such as disbursements, activities will be rolled out during
previous section) could impact the smooth financial reporting, and auditing, project implementation\.
implementation as per the envisioned timeline and including a Project Accountant at
timely reporting on the use of funds\. each PIU\.
⢠For procurement, to ensure
sustainability, apart from
recruiting a Procurement
Specialist to review documents,
Page 41 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
build internal capacity and assist
in managing procurement
activities, all implementing
institutions will prepare a
capacity-building program for
the PIUs and User Departments
which will articulate areas to be
strengthened, capacity
strengthening activities to be
undertaken, and the duration of
each activity\.
⢠A procurement assistant
experienced in STEP, will support
the institutions with issues
related to STEP\.
Environmental and Social: Substantial ⢠The project will clearly define the Environmental and Social:
⢠The likely E&S impacts of project activities roles and responsibilities of E&S Substantial, due to the number of
anticipated during implementation and the limited management in the ESMF, POM construction activities expected in
experience of the implementing institutions in and other E&S safeguard the beneficiary institutions and as
applying the ESSs pose risks to the safe documents and project manuals\. training on applying ESSs will be
implementation of activities\. ⢠All participating institutions will rolled out during project
⢠The main impacts of the project will emanate from be responsible for the implementation\.
the physical construction activities proposed in the application and compliance with
participating institutions\. The cumulative impact, the ESF and ESSs and each
which is likely from the works and presence of implementing institution will
contractors and machinery at each targeted have E&S staff responsible for
institution calls for careful supervision to avoid managing, monitoring, and
occupational health and safety incidences\. reporting on the implementation
of E&S measures\.
⢠Training and capacity building of
staff will be provided under the
project\.
Stakeholders: Moderate ⢠The project has and will continue Stakeholders: Moderate, as
⢠Resistance from university staff and students to the to engage stakeholders on the consultations will continue to take
projectâs efforts to introduce pedagogical objectives, importance and place during project
innovations, updated curricula and more technology expected benefits of the project implementation to address new
in the delivery of training may pose some risk to the activities and consult them for concerns that may emerge\.
successful implementation of activities meant to feedback\.
strengthen the learning environment\. ⢠The project will also have a GRM
⢠Concerns from communities and groups on to receive and address concerns
construction, renovation and other similar activities from stakeholders in a timely
could cause some delays or changes to activities\. manner\.
Page 42 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
Other: Substantial ⢠The project will support the Other: Substantial, as the
⢠The unprecedented COVID-19 pandemic could have development of contingency emergence of new variants of the
a considerable impact on the implementation of plans at the national and COVID-19 virus and related
project activities, though measures have been taken institutional levels and bolster unknown impacts may affect the
to control the spread of the virus across Tanzania\. online learning infrastructure\. ability of higher education
For example, procurement of materials for institutions and MoEST to
construction activities may be affected as a result of implement elements of the project
continued disruptions in global supply chain, and as the local, regional, and global
partnerships with industry in some sectors may be situation with respect to the
challenging given the difficult macroeconomic pandemic evolves\. Widespread
situation\. internet connectivity also remains
limited\.
\.
Page 43 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
VII\. RESULTS FRAMEWORK AND MONITORING
Results Framework
COUNTRY: Tanzania
Higher Education for Economic Transformation Project
Project Development Objectives(s)
To strengthen the learning environment and labor market alignment of priority programs at beneficiary higher education institutions and improve the
management of the higher education system
Project Development Objective Indicators
RESULT_FRAME_TBL_ PD O
Indicator Name PBC Baseline Intermediate Targets End Target
1 2 3 4
Strengthen learning environments and labor market alignment of priority programs
Students and faculty
participating in internships/
apprenticeships/ attachments/
fellowships/ a form of 16,000\.00 16,000\.00 23,300\.00 32,500\.00 48,500\.00 70,400\.00
placement in
industries/companies or
research institutions (Number)
Female (Number) 6,200\.00 6,200\.00 9,100\.00 13,000\.00 20,300\.00 30,300\.00
Students and faculty
members with disabilities 110\.00 110\.00 180\.00 300\.00 470\.00 700\.00
(Number)
Students (Number) 14,800\.00 14,800\.00 21,700\.00 30,600\.00 46,100\.00 66,900\.00
Page 44 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
RESULT_FRAME_TBL_ PD O
Indicator Name PBC Baseline Intermediate Targets End Target
1 2 3 4
Faculty (Number) 1,200\.00 1,200\.00 1,600\.00 1,900\.00 2,400\.00 3,500\.00
Degree programs within
priority areas that are aligned
6\.00 29\.00 66\.00 102\.00 187\.00 260\.00
to labor market needs
(Number)
Students benefiting from
direct interventions to
0\.00 40,000\.00 51,900\.00 65,100\.00 80,900\.00 100,600\.00
enhance learning (CRI,
Number)
Students benefiting from
direct interventions to
0\.00 15,600\.00 20,200\.00 26,000\.00 33,900\.00 43,200\.00
enhance learning - Female
(CRI, Number)
Students benefiting from
direct interventions to
0\.00 140\.00 210\.00 340\.00 540\.00 720\.00
enhance learning - students
with disabilities (Number)
Strengthen management of the higher education system
Active use of a Tertiary
Education Management
No No Yes Yes Yes Yes
Information System (TEMIS)
(Yes/No)
Higher education institutions
supported by the project that
achieve a minimum threshold
0\.00 0\.00 5\.00 9\.00 12\.00 14\.00
of the annual targets set in the
performance agreements
(Number)
Page 45 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
PDO Table SPACE
Intermediate Results Indicators by Components
RESULT_FRAME_TBL_ IO
Indicator Name PBC Baseline Intermediate Targets End Target
1 2 3 4
Strengthening the Learning Environments and Labor Market Alignment of Priority Programs
Higher education institutions
that have established an
Industrial Advisory Committee 0\.00 11\.00 14\.00 14\.00 14\.00 14\.00
(Number)
MoUs/ agreements/ letters of
intent to partner signed with
industry, private sector 25\.00 55\.00 89\.00 128\.00 167\.00 210\.00
companies or employers
(Number)
Facilities that are newly
constructed/ rehabilitated/
equipped at the higher
education institutions 0\.00 30\.00 120\.00 230\.00 350\.00 370\.00
supported by the project
(Number)
Lecture Halls and Seminar
0\.00 13\.00 60\.00 99\.00 125\.00 130\.00
Rooms (Number)
Dormitories (Number) 0\.00 2\.00 4\.00 13\.00 34\.00 34\.00
Laboratories and
Workshops (Number) 0\.00 10\.00 44\.00 70\.00 104\.00 108\.00
Other (Number) 0\.00 5\.00 11\.00 48\.00 87\.00 98\.00
Priority programs using digital
technology in teaching and 50\.00 70\.00 100\.00 140\.00 165\.00 180\.00
learning (Number)
Page 46 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
RESULT_FRAME_TBL_ IO
Indicator Name PBC Baseline Intermediate Targets End Target
1 2 3 4
University staff and leaders
who receive training on
teaching and supporting 3\.00 400\.00 900\.00 1,400\.00 1,900\.00 2,500\.00
students with special
educational needs (Number)
Higher education institutions
with an implementation plan
for the national gender equity 0\.00 5\.00 9\.00 14\.00 14\.00 14\.00
strategy for higher education
(Number)
Priority programs that include
content on climate change
8\.00 28\.00 55\.00 85\.00 111\.00 167\.00
mitigation and adaptation in
their curriculum (Number)
Strengthening management of the higher education system
Tertiary education graduate
tracking reports published by 0\.00 0\.00 0\.00 1\.00 0\.00 2\.00
MoEST (Number)
National quality assurance
regime or system updated in
No No Yes Yes Yes Yes
line with international good
practices (Yes/No)
Students in STEM programs
33\.00 33\.00 34\.00 36\.00 38\.00 39\.00
that are female (Percentage)
Staff (academic and other)
enrolled in advanced degree
programs to upgrade their 0\.00 396\.00 767\.00 967\.00 1,100\.00 1,100\.00
capacity (Number)
Masters (Male) (Number) 0\.00 101\.00 182\.00 245\.00 280\.00 280\.00
Masters (Female) (Number) 0\.00 66\.00 120\.00 165\.00 197\.00 197\.00
Page 47 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
RESULT_FRAME_TBL_ IO
Indicator Name PBC Baseline Intermediate Targets End Target
1 2 3 4
PhD (Male) (Number) 0\.00 139\.00 273\.00 322\.00 355\.00 355\.00
PhD (Female) (Number) 0\.00 90\.00 192\.00 235\.00 268\.00 268\.00
Project coordination and management
Project beneficiaries (Number) 0\.00 44,800\.00 60,500\.00 77,100\.00 95,100\.00 116,500\.00
Project beneficiaries
(Female) (Number) 0\.00 17,400\.00 23,600\.00 30,800\.00 40,000\.00 50,100\.00
Project beneficiaries
(Persons with disabilities) 0\.00 180\.00 240\.00 390\.00 570\.00 740\.00
(Number)
Grievances received addressed
within stipulated timeframe 0\.00 50\.00 60\.00 70\.00 80\.00 85\.00
(Percentage)
IO Table SPACE
UL Table SPACE
Monitoring & Evaluation Plan: PDO Indicators
Methodology for Data Responsibility for Data
Indicator Name Definition/Description Frequency Datasource
Collection Collection
This indicator measures the
Students and faculty participating in total number of students MoEST collects data
internships/ apprenticeships/ and faculty from degree USIP Results from USIP Results HEIs (MoEST aggregates
Annual
attachments/ fellowships/ a form of programs in priority areas Framework Framework submitted HEI data)
placement in industries/companies or participating in internships, by each HEI
research institutions apprenticeships,
attachments, fellowships or
Page 48 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
a form of placement in
industries, companies or
research institutions in
fields related to the priority
areas targeted by the
project\.
Internship/ fellowships/
apprenticeships/
attachments refer to
practical training provided
for in the curricula, which
have defined
academic/industrial
competencies to be
acquired and undertaken for
not less than eight weeks\.
The data will be
disaggregated by gender,
students and faculty with
disabilities, and by student
vs\. faculty
MoEST to collect data
Disaggregated: Number of USIP Results from USIP Results HEIs (MoEST aggregates
Annual
Female female students and faculty Framework Framework submitted HEI data)
members by each HEI
Students and faculty members with Disaggregated: Number of Annual USIP Results MoEST to collect data
HEIs (MoEST aggregates
disabilities students and faculty Framework from USIP Results
Page 49 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
members with disabilities Framework submitted HEI data)
by each HEI
MoEST to collect data
USIP Results from USIP Results HEIs (MoEST aggregates
Disaggregated: Number of Annual
Students Framework Framework submitted HEI data)
students
by each HEI
MoEST to collect data
USIP Results from USIP Results HEI (MoEST aggregates
Disaggregated: Number of Annual
Faculty Framework Framework submitted HEI data)
faculty members
by each HEI
This indicator measures the
number of degree programs
within priority areas that
have developed/ reviewed
their curriculum in
consultation with labor
market stakeholders or
MoEST to collect data
introduced at least 2-
USIP Results from USIP Results HEIs (MoEST aggregates
Degree programs within priority areas months internships/ Annual
Framework Framework submitted HEI data)
that are aligned to labor market needs apprenticeships with
by each HEI
employers/industry to
ensure their orientation to
labor market needs\.
The engagement of labor
market stakeholders in the
curriculum
development/review will be
Page 50 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
established by means of
reports of the process
involved from the Industry
Advisory Committee and
Senate/College Academic
Boards\.
MoEST to collect data
USIP Results from USIP Results HEI (MoEST aggregates
Students benefiting from direct Annual
Framework Framework submitted HEI data)
interventions to enhance learning
by each HEI
MoEST to collect data
Students benefiting from direct USIP Results from USIP Results HEIs (MoEST aggregates
Annual
interventions to enhance learning - Frameworks Framework submitted HEI data)
Female by each HEI
MoEST collects data
Students benefiting from direct USIP Results from USIP Results HEIs (MoEST aggregates
Disaggregated by students Annual
interventions to enhance learning - Framework Framework submitted HEI data)
with disabilities
students with disabilities by each HEI
This indicator is important
for assessment of the M&E
function of the Ministry and Annual
will help to verify the report on the
Confirmation of
Active use of a Tertiary Education progress of project activities Annual status of MoEST
publication of report
Management Information System (TEMIS) as well as the management higher
of the higher education education
system\.
The active use of the TEMIS
Page 51 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
will be measured by the
annual publication of a
report on the status of
higher education using data
from the TEMIS (including
key indicators like student
enrollment and graduation
rates by discipline and
gender, number of faculty
by qualification level and
gender, number of degree
programs, etc\.)
This indicator focuses on the
implementation of the
activities specified in the
performance agreements of
the higher education
Performance
institutions supported by
Agreements
the project and ability of the
between
Ministry to manage the MoEST to verify
Higher education institutions supported MoEST and Ministry of Education,
performance agreements\. achievement of targets
by the project that achieve a minimum Annual higher Science and Technology
using USIP Results
threshold of the annual targets set in the education (MoEST)
In order for an institution to Frameworks
performance agreements institutions
be counted towards this
USIP Results
indicator, a minimum
Frameworks
threshold of the annual
targets laid out in each of
the performance
agreements must be
achieved annually, starting
in Year 2 â 60% in Year 2,
Page 52 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
65% in Year 3 , 70% in Year
4, and 75% in Year 5\.
ME PDO Table SPACE
Monitoring & Evaluation Plan: Intermediate Results Indicators
Methodology for Data Responsibility for Data
Indicator Name Definition/Description Frequency Datasource
Collection Collection
This indicator will track
whether higher education
institutions have established
an Industrial Advisory
MoEST to collect data
Committee\. The Industrial
Higher education institutions that have USIP Results from USIP Results HEIs (MoEST aggregates
Advisory Committee must Annual
established an Industrial Advisory Framework Framework submitted HEI data)
be established as per the
Committee by each HEI
composition required by the
MoEST and have clear TORs
in order for the institution
to be counted towards this
indicator\.
This indicator measures the
effort of higher education
institutions to improve the
labor market alignment of MoEST to collect data
MoUs/ agreements/ letters of intent to their priority area programs USIP Results from USIP Results HEIs (MoEST aggregates
Annual
partner signed with industry, private through Memoranda of Framework Framework submitted HEI data)
sector companies or employers Understanding (MoUs) or by each HEI
agreements or letters of
intent signed with industry
or private sector companies
or employers for
Page 53 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
collaboration on curriculum
reviews, internships,
research, innovation, etc\. in
the priority areas targeted
by the project\.
The
MoUs/agreements/letters
of intent must define at
least three specific areas of
collaboration in order to be
counted towards this
indicator\.
This indicator measures the
efforts to improve the
learning environments at
the higher education
institutions supported by
the project through the
construction or
MoEST to collect data
Facilities that are newly constructed/ rehabilitation of
USIP Results from USIP Results HEIs (MoEST aggregates
rehabilitated/ equipped at the higher infrastructure or equipping Annual
Framework Framework submitted HEI data)
education institutions supported by the of facilities (such as but not
by each HEI
project limited to lecture halls,
seminar rooms, dormitories,
laboratories, and
workshops) at these higher
education institutions\.
The indicator will be
disaggregated by the type of
Page 54 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
facility (lecture hall and
seminar rooms, dormitory,
laboratory and workshops,
other)
MoEST to collect data
USIP Results from USIP Results HEIs (MoEST aggregates
Disaggregated: Lecture halls Annual
Lecture Halls and Seminar Rooms Frameworks Framework submitted HEI data)
and seminar rooms
by each HEI
MoEST to collect data
USIP Results from USIP Results HEIs (MoEST aggregates
Annual
Dormitories Disaggregated: Dormitories Framework Framework submitted HEI data)
by each HEI
MoEST to collect data
USIP Results from USIP Results HEIs (MoEST aggregates
Disaggregated: Laboratories Annual
Laboratories and Workshops Framework Framework submitted HEI data)
and Workshops
by each HEI
Disaggregated: Other types
of facilities (examples may
include but are not limited MoEST to collect data
to offices for lecturers, USIP Results from USIP Results HEIs (MoEST aggregates
Annual
Other audio/visual technology Framework Framework submitted HEI data)
rooms, utility rooms among by each HEI
others)\. The institution must
specify the type of facility
when reporting data\.
This indicator measures the USIP Results MoEST to collect data HEIs (MoEST aggregates
Priority programs using digital technology Annual
number of priority programs Framework from USIP Results HEI data)
in teaching and learning
supported by the project at Framework submitted
Page 55 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
the beneficiary universities by each HEI
that use digital technology
(such as online courses,
MOODLE, augmented reality
etc\.) in instructional
practices and/or to aid
learning\. The data provided
to meet the indicator must
include a short description
of the type of digital
technologies being used in
the program\.
This indicator measures the
number of faculty members,
other staff and university MoEST to collect data
University staff and leaders who receive leaders who receive training USIP Results from USIP Results HEIs (MoEST to aggregate
Annual
training on teaching and supporting on teaching, supporting and Framework Framework submitted data from HEIs)
students with special educational needs handling matters related to by HEIs
students with special
education needs or
disabilities\.
This indicator measures the
implementation of the
national gender equity
MoEST to collect data
Higher education institutions with an strategy by higher education
USIP Results from USIP Results HEIs (MoEST aggregates
implementation plan for the national institutions\. The indicator Annual
Framework Framework submitted university data)
gender equity strategy for higher will track if higher education
by each HEI
education institutions have a time-
bound implementation plan
to execute the national
gender equity strategy for
Page 56 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
higher education\. To meet
this indicator, institutions
will have to provide
documentation/link to the
implementation plan\.
This indicator measures the
number of priority programs
supported by the project
that include content
focusing on climate change MoEST to collect data
Priority programs that include content on mitigation and adaptation in USIP Results from USIP Results HEIs (MoEST aggregates
Annual
climate change mitigation and adaptation their curriculum\. To meet Framework Framework submitted university data)
in their curriculum this indicator, institutions by each HEI
will be required to share
supporting
documentation/curricula on
the relevant content
included\.
This indicator measures the
Tertiary
capacity of the Ministry to
education
track graduates and Confirmation of
Tertiary education graduate tracking Annual graduates MoEST
therefore the impact of the publication of report
reports published by MoEST tracking
programs\. It is expected that
report
tracking reports will be
published every other year\.
This indicator measures the National Confirmation of links to
capacity of the Ministry to quality the updated national
National quality assurance regime or
regulate the quality of Annual assurance quality assurance MoEST
system updated in line with international
higher education programs regime or guidelines, frameworks,
good practices
taking into account global system standards or principles\.
good practices\. Data on this
Page 57 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
indicator must include links
to the updated national
quality assurance guidelines,
frameworks, standards or
principles\.
This indicator measures the
percentage of female
MoEST collects and
students out of the total
Students in STEM programs that are Annual TEMIS analyzes data from MoEST
enrollment in science,
female TEMIS
technology, engineering and
mathematics (STEM)
programs
This indicator measures the
number of staff (academic
and other) that are enrolled
in advanced degree List of
programs (Masters, PhD) in enrolled
MoEST to use data
order to enhance their students,
from scholarship
Staff (academic and other) enrolled in capacity\. The indicator will scholarship
Annual records, list of enrolled MoEST and HEIs
advanced degree programs to upgrade be disaggregated by type of records at
students and
their capacity degree program MoEST and
admissions letters
(Masters/PhD) and by admissions
gender\. To meet this letters
indicator, a list of the
enrolled students and
respective admission letters
will be required\.
This indicator measures the List of MoEST to collect data
number of male staff Annual enrolled from list of enrolled MoEST and HEIs
Masters (Male)
(academic and other) students, students, scholarship
enrolled in Masters degree MoEST schol records and admissions
Page 58 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
programs to upgrade their arship letters
capacity records and
admissions
letters
List of
enrolled
This indicator measures the MoEST to collect data
students,
number of female staff from list of enrolled
scholarship
(academic and other) Annual students, scholarship MoEST and HEIs
Masters (Female) records at
enrolled in Masters degree records and admissions
MoEST and
programs to upgrade their letters
admissions
capacity
letters
List of
enrolled
MoEST to collect data
This indicator measures the students,
from list of enrolled
number of male staff scholarship
Annual students, scholarship MoEST and HEIs
PhD (Male) (academic and other) Records at
records and admissions
enrolled in PhD programs to MoEST and
letters
upgrade their capacity admissions
letters
List of
This indicator measures the
enrolled MoEST to collect data
number of female staff
students, from scholarship
(academic and other)
Annual scholarship records, list of enrolled MoEST and HEIs
PhD (Female) enrolled in PhD programs to
records at students and
upgrade their capacity
MoEST and admissions letters
through scholarships from
admissions
MoEST
letters
Page 59 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
This indicator measures the USIP Results
total number of students, Framework,
MoEST collects data
faculty, university staff and MASIP MoEST, MoEST Agencies,
Annual from HEIs and MoEST
Project beneficiaries leaders and government Results HEIs
agencies
staff that directly benefit Frameworks,
from the projectâs TEMIS
interventions
This indicator measures the USIP Results
total number of female Framework,
MoEST collects data
students, faculty, university MASIP MoEST, MoEST Agencies,
Annual from HEIs and MoEST
Project beneficiaries (Female) staff and leaders and Results HEIs
Agencies
government staff that Framework,
directly benefit from the TEMIS
projectâs interventions
This indicator measures the USIP Results
total number of students, Framework,
MoEST collects data
faculty, university staff and MASIP MoEST, MoEST Agencies,
Project beneficiaries (Persons with Annual from HEIs and MoEST
leaders and government Results HEIs
disabilities) agencies
staff with disabilities that Framework,
directly benefit from the TEMIS
projectâs interventions
This indicator captures
citizen engagement\. It will
MoEST aggregates data
measure the share of
GRM from the higher MoEST, MoEST Agencies,
Grievances received addressed within grievances received related Annual
Reports education institutions HEIs
stipulated timeframe to the project that are
and agencies
addressed by the
implementing institutions
within the stipulated
Page 60 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
timeframe\.
ME IO Table SPACE
Page 61 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
ANNEX 1: Implementation Arrangements and Support Plan
Financial Management
1\. Introduction\. The FM assessment for the project was carried out for the 18 proposed implementing institutions
in accordance with the World Bank Directive: Financial Management Manual for World Bank Investment Project
Financing Operations issued on February 10, 2017 and effective retrospectively from March 1, 2010; and the World
Bank Guidance: Financial Management in World Bank Investment Project Financing Operations issued on February 28,
2017 and effective retrospectively from February 24, 2015\. The FM assessment considers the degree to which: (a) the
budgeted expenditures are realistic, prepared with due regard to relevant policies, and executed in an orderly and
predictable manner; (b) reasonable records are maintained and financial reports produced and disseminated for
decision-making, management, and reporting; (c) adequate funds are available to finance the project; (d) there are
reasonable controls over project funds; and (e) independent and competent audit arrangements are in place\.
2\. FM risk assessment and mitigation measures\. The overall FM risk for the Project is assessed as Substantial\. Key
risks include:
(i) Coordination of multiple PIUs to ensure compliance to FM reporting and auditing requirements;
(ii) Channeling of funds disbursed to the PIUs in a timely manner to avoid possible delays in project
implementation;
(iii) Different levels of capacity of the FM staff in the hosting institution which may impact proper maintenance
of accounting records;
(iv) Different capacities of PIUs internal control systems including available policies and procedures in place to
safeguard project funds;
(v) Limited capacity of internal audit teams in different institutions to frequently conduct internal audit reviews\.
3\. These challenges have been proposed to be addressed by ensuring the PIUs (NPIU for MoEST, APIUs for MoEST
agencies and UPIUs for universities) will have qualified staff for the coordination of FM matters including disbursements,
financial reporting and auditing\. The MoEST, agency and institution-level PIUs should each have a qualified Project
Accountant with experience in managing project financial requirements\.
4\. Planning and Budgeting:
a\. Hosting institutions will prepare a work plan and budget on an annual basis and submit to the NSC for approval\.
The approved budget will be submitted to the World Bank before the beginning of the fiscal year (by June each
year)\. The project budget will be prepared in line with the government budget calendar, Budget Act of 2015, and
Budget Regulations of 2015\. The budget preparation process will be championed by the Planning and Budgeting
departments of respective institutions\. The MoEST will develop a timeframe for institutions to submit their budget
for consolidation and inclusion in the MTEF of MoEST\.
b\. Budget allocation will be identified by the project budget code\. Budget execution will be traced by reporting
expenditure in respective project budget codes in the integrated financial management information system
(IFMIS)\. In addition, each implementing agency will maintain copies of the project budget and budget execution
records in their financial accounting systems\.
c\. The World Bank will monitor budget performance on quarterly basis by analyzing the budget to actual costs\.
Budget performance and explanations for significant variation will be reported to the World Bank through IFRs on
Page 62 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
a quarterly basis\. In case the project will require budget reallocation during project execution, a concurrence from
the World Bank will be requested\.
5\. Accounting arrangements:
a\. Accounting Staff: Each PIU will have dedicated Project Accountants responsible for supporting project
implementation\. Project Accountants will be responsible for all accounting tasks including processing of
disbursement requests, maintenance of proper accounting records and financial reporting\. The responsible
Accountant should be experienced in managing project finances\. The qualification and experience of appointed
Accountants will be communicated to the World Bank prior to the request for first disbursement for clearance\.
b\. This assessment identified the following staff capacity gaps: (i) Newly formed institution, MJNUAT has three staff
who joined the institutions in a period of less than two years\. These staff do not have job descriptions defining
their duties and responsibilities; (ii) some institutions have less than four Accountants, thus an additional duty of
running the project may be burdensome (for example, MUST, DUCE, HESLB)\. Such institutions will be required to
hire experienced Accountants dedicated for the project\. In addition, to strengthen the capacity, the World Bank
will conduct project FM training for appointed project Accountants within the first year of operation\.
c\. Accounting systems: FM procedures are broadly guided by the Public Finance Act of 2001 (revised 2004), its
regulations and other circulars issued by MoFP from time to time\. Detailed processes to be followed at the
institutional level are documented in Financial Procedure Manuals which will consider general accounting
practices including approval hierarchies and segregation of duties, management of bank accounts including
payment process and bank reconciliations\.
d\. Allocation of accounts codes in Chart of Accounts is broadly guided by the Accountant General coding system\.
However, each institution uses a different accounting package\. The package mostly used is the Votebook financial
management system which is a locally developed software to suit education operations\. The central government
uses a new integrated FM system with effect from the current fiscal year 2020/2021\. The new system, âMfumo
wa Ulipaji Serikaliniâ (MUSE) is developed inhouse by MoFP\. The previously used IFMIS Epicor has been phased
out\.
e\. Some institutions do not have accounting software and maintain accounting records in Excel (for example MJNUAT
and SUZA)\. In order to keep track of project accounting records, institutions will maintain separate project
records depending on the capacity of the accounting software in place\. PIUs will ensure institutional financial
accounting records and the MoEST IFMIS are regularly updated with project affairs\.
6\. Internal controls including internal audits
a\. Internal controls\. Each institution will be responsible for developing internal controls system with the aim of
ensuring the project objectives are achieved in an effective and efficient manner, the project produces reliable
financial reports and observes compliance with the financing agreement, laws and regulations governing the
project\. Project-specific internal control systems to manage project financial risks and safeguard project assets
will be documented in the POM including oversight mechanisms, delegation of authorities and responsibilities,
competency requirements for the project finance team, financial policies and procedures to be followed by the
project, record keeping arrangements and reporting protocols\. The MoEST will enter into performance
agreements with implementing institutions\. The agreements will provide guidance on implementation plans
and operations including detailed benchmarks, expected deliverables and outcomes, and M&E timeframes\.
b\. Internal audit\. Operational effectiveness of the internal controls systems will be monitored by the internal audit
departments of respective institutions\. The internal audit departments will use guidelines and tools issued by the
Internal Auditor General\. Results of internal audit reviews will be communicated to the Audit Committee of
Page 63 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
respective institution for further action\. The scope of the internal audit approach will be based on risks perceived
by the internal audit department of the respective institutions\. It is expected that internal audit reviews for the
project will be conducted at least twice per annum\.
c\. In most institutions, internal audit departments are understaffed with the number of staff ranging between one
to four staff\. The adequacy of capacity of internal audit staff will be compensated by additional site visit reviews
to the implementing institutions conducted by the internal audit team of the Ministry\. Internal audit reviews
conducted by the Ministry will use the existing reporting framework to the Ministry Audit Committee, however
copies of their reports should be communicated and shared with the respective institutions for further follow up
and implementation of audit recommendations\.
7\. Funds flow arrangement
a\. Disbursement to Project Implementing Units at national-level, agencies and universities: Each implementing
institution will operate a designated project bank account at the Bank of Tanzania (BOT) in US dollars\. Requests
of funds from the World Bank HEET project will be disbursed from the World Bank into the respective Designated
Account at BOT based on the terms defined between MoEST and the implementing institution\. Each institution
will maintain a project specific bank account in commercial banks for local currency transactions\. Payments to
contractors and suppliers in US dollars will be made directly from either the Designated Account, the MoEST or by
the World Bank upon request (refer to available Direct Payment and Special Commitment methods below)\. Grants
to the higher education institutes under MoFP and private universities will be disbursed from MoEST to the
awarded institutions\. Details will be included in the Grants Manual\.
b\. Disbursement requests are lodged to the World Bank through the client connection system\. When requesting
disbursement of funds from the World Bank, institutions will prepare and submit via MoFP, cash forecast based
on activity and expenditure plans on a quarterly basis\. In parallel with the use of the client connection system, the
project will be registered in D-Fund (Direct to Project funds) Management Information System hosted by MoFP
where records of all issues pertaining to project activities, budget, receipts and payments of funds from BOT
designated account will be maintained\. The project will retain all original documents and records of payments
made\. Detailed procedures, responsible personnel and timelines for funds requisition and transfers will be
defined in the POM with implementing institutions\.
c\. Disbursement methods: Depending on the need, PIUs can apply any of the options below to request for
disbursement: (i) Advance method â where disbursement to the project will be made by submitting a withdrawal
application request to the World Bank with a six months cash forecast\. The initial cash forecast will be prepared
based on an annual work plan and procurement plan submitted to the World Bank for approval\. Subsequent
withdrawal applications will be based on rolling six months forecast reported in quarterly unaudited IFRs and in
line with the annual work plan and budget\. However, due to current restrictions over lapsed loans in the country
portfolio, initial advance method will only be used once restrictions are lifted; (ii) Reimbursement method - will
be used to reimburse the project for the pre-financed eligible expenditure; (iii) Direct payment method - will be
used when the project requests the World Bank to make payments directly to third party (contractors or service
providers) for eligible expenditures; and (iv) Special commitment method - the World Bank may pay amounts to
a third party for eligible expenditures under special commitments entered into, in writing, at the Borrowerâs
request and on terms and conditions agreed between the World Bank and the Borrower\. More detailed
disbursement arrangements are provided in the DFIL\.
8\. Financial reporting
Page 64 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
a\. Project implementing agencies will prepare and submit to the World Bank two sets of reports: (i) unaudited IFRs
for disbursement purposes; and (ii) audited annual financial statements\.
b\. Project implementing agencies will submit to the Bank unaudited IFRs not later than 45 days after the end of each
quarter\. IFRs will be submitted to the Bank through the client connection system\. IFRs are expected to include (i)
a statement of sources and uses of funds; (ii) explanations of variations between budget and actual expenditure;
(iii) bank reconciliation statements; (iv) designated account reconciliation with World Bank records in client
connection; and (v) cash forecast for the next six months\. The format and contents of the IFR are included in the
DFIL\.
c\. Project annual financial statements will be prepared in accordance with International Public Sector Accounting
Standards accrual basis of accounting issued by the International Federation of Accountants\.
9\. External audits
a\. The Controller and Auditor General (CAG) of the United Republic of Tanzania has a mandate to audit all public
institutions and projects\. The exclusive powers are mandated in Article 143 of the Constitution of the United
Republic of Tanzania of 1977, Public Audit Act no\. 11 of 2008 and the Public Audit Regulations of 2009\. The CAG
discharges this responsibility either directly or through private auditors contracted as agents\. The CAG conducts
the audit in accordance with International Standards of Supreme Audit Institutions (ISSAIs)\. The MoEST will
contract the CAG to audit the annual financial statements of the project\. Terms of Reference for the external
audit will be developed after the project is effective\.
b\. Audited financial statements and management letters will be submitted by the PIUs to the Bank through the client
connection system within six months after the end of financial year\. While management letters will remain
confidential, audited financial statements submitted to the World Bank will be made available to the public in
accordance with the World Bank Policy on Access to Information 2010\.
10\. FM action plan\. The World Bank will provide capacity building and implementation support over the projectâs
lifetime\. The project will be supervised on a risk-based approach\. Supervision will cover but not be limited to desk review
of audit reports and IFRs\. Site visits will be conducted at least twice per annum based on current assessed risks and may
be adjusted when the need arises\.
Table 1-1: Specific actions required for the project
Responsible Required action Due date Conditionality
Institution
All institutions Capacity building training on World Bank FM Within three months Not applicable
procedures after effectiveness
All institutions Submission of proposed project accountants Before first Condition for
(names and qualifications) to World Bank for disbursement request disbursements
clearance\. made\.
Project Accountant will be a key contact person
on matters pertaining to disbursement,
financial reporting and auditing\.
MoEST in Establishment of detailed budget mechanism, By project effective date Effectiveness
collaboration with fund flow and reporting framework between
implementing MoEST and other implementing agencies\. The
Page 65 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
Responsible Required action Due date Conditionality
Institution
agencies arrangements will be included in project POM\.
MoEST Contract CAG to audit the project\. TORs for the Within three months Not applicable
audit should be cleared by the World Bank after effectiveness
Procurement
11\. Procurements under the proposed project will be carried out in accordance with the following World Bank
procedures: (a) the World Bank Procurement Regulations for IPF Borrowers (November 2020) and (b) âGuidelines on
Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grantsâ, dated
October 15, 2006, and revised in January 2011 and revised as of July 1, 2016\.
12\. A PPSD and the PP for each Implementing Institution has been prepared\. The Borrower has also prepared a
consolidated PPSD for each institution, identifying optimum procurement strategies for meeting the development
objectives of the project, based on which the PP for the first 18 months for each Implementing Institution has been
prepared, setting the selection methods to be used by the Borrower in the procurement of goods, works, non-consulting
services, and consulting services under the project\. The PPSD market assessments found that there is an adequate
number of building construction firms (local and foreign) and a large pool of consulting firms (local and foreign) that are
likely to bid for the envisaged buildings and associated works to be constructed and participate in the selection process
for the consulting services opportunities, respectively\. Based on previous experience, Implementing Institutions have
always received adequate number of bids from suppliers, service providers and contractors in the local market which
sufficed the required needs\. The local market for goods and non-consulting services is very competitive as there are
many capable firms to provide the required goods and services to be advertised by the Implementing Institutions\. The
PP for each Implementing Institution will be updated at least every 12 months, or as required, to reflect the actual
project implementation needs\. Each update shall require World Bank approval and will be publicly disclosed in
accordance with the World Bank Access to Information policy\.
13\. STEP\. The World Bankâs STEP system will be used to prepare, clear, and update PPs and conduct all procurement
transactions for all implementing institutions of the project\.
14\. Procurement templates\. The World Bankâs Standard Procurement Documents (SPDs) shall be used for
procurement of goods, works, and non-consulting services under the Open International Competitive Procurement
(OICP) approach\. Similarly, selection of consultant firms shall use the World Bankâs SPDs, in line with procedures
described in the Procurement Regulations\. While approaching the national market using National Procurement
Procedures, the National Standard Bidding Documents may be used with appropriate modifications acceptable to the
Bank and additional annexes to incorporate the Bankâs Anti-Corruption Guidelines, universal eligibility, and the World
Bankâs right to inspection and audit\.
15\. National Open Competitive Procedures (NOCP)\. NOCP may also be used, provided that such procedures are
consistent with the following requirements as provided in paragraph 5\.4 of the Procurement Regulations: (a) there is
open advertising of the procurement opportunity at the national level; (b) the procurement is open to eligible firms
from any country; (c) the request for bids/request for proposals document shall require that bidders/proposers
Page 66 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
submitting bids/proposals present a signed acceptance at the time of bidding, to be incorporated in any resulting
contracts, confirming application of, and compliance with, the World Bankâs Anticorruption Guidelines, including
without limitation the World Bankâs right to sanction and the World Bankâs inspection and audit rights; (d) procurement
documents include provisions, as agreed with the World Bank, intended to adequately mitigate against environmental,
social (including SEA and GBV), health, and safety (âESHSâ) risks and impacts; (e) contracts have an appropriate allocation
of responsibilities, risks, and liabilities; (f) contract award information is published; (g) the World Bank has rights to
review procurement documentation and activities; (h) there is an effective complaints handling mechanism; and (i)
records of the procurement process are maintained\. If necessary, the World Bankâs SPDs may be used for NOCP, in
agreement by the World Bank\.
16\. Other national procurement arrangements (other than NOCP) that may be applied by the Borrower (such as
limited/restricted competitive bidding, request for quotation/shopping, direct contracting) shall be consistent with the
World Bankâs core procurement principles set out in paragraph 5\.3 of the Procurement Regulations and ensure that the
World Bankâs Anticorruption Guidelines and Sanctions Framework and contractual remedies set out in its Legal
Agreement apply\.
17\. Publication (advertising)\. The Borrower is required to prepare and submit to the World Bank a General
Procurement Notice which will be published in United Nations Development Business online (UNDB online) and on the
World Bankâs external website through STEP\. Specific Procurement Notices (SPNs) for all procurement under
International Competitive Procedures and Requests for Expressions of Interest for all consulting services estimated to
equivalent to US$300,000 and above shall be published in UNDB online and the World Bankâs external website through
STEP and at least one newspaper of national circulation in the borrowerâs country or in the official gazette or on a widely
used website or electronic portal with free national and international access\.
18\. Public procurement in Tanzania is governed by a law effective July 7, 2016, the Public Procurement (Amendment)
Act No\. 5 of 2016, construed as one with the Public Procurement Act No\. 7 of 2011 and the associated Regulations\.
Under the amended Act, procurement functions remain decentralized to procuring entities with the Public Procurement
Regulatory Authority (PPRA) continuing to provide oversight functions for public procurement\. In addition, the amended
Act has maintained the definitions of fraud and corruption with regards to coercive practices, collusive practices, and
obstructive practices\. The amended Act has however introduced, among others: (i) mandatory inclusion of local firms
and experts in consultancy contracts; (ii) domestic preference to both international and national competitive bidding;
(iii) a requirement to set-aside contracts to be used for capacity building of local firms; (iv) a requirement to set-aside
contracts below a set threshold to be awarded to local firms only; (v) negotiations with the lowest evaluated bidder to
reduce price in the case of goods, works and non-consulting services; (vi) fixed budget method for goods, works and
non-consulting services; and (vii) established and approved procurement standards by the Government\.
19\. The amended act has been reviewed by the World Bank and found to be satisfactory to a large extent, except
for the following provisions: (a) there will be no preference accorded to domestic suppliers and contractors under
National Competitive Bidding for goods, non-consulting services, and works under this project; (b) there should be no
mandatory requirements for inclusion of local experts and firms for the consulting assignments; (c) negotiations with
the lowest evaluated bidder to reduce price in the case of goods, works, and non-consulting services where competitive
methods have been used shall not be allowed; (d) the fixed budget method shall not be used for goods, works, and non-
consulting services; and (e) procurement standards established and approved by the Government may be used,
provided that they are not restrictive\. Furthermore, in accordance with paragraph 5\.4 of the Procurement Regulations,
Page 67 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
the following shall be observed: (a) the request for bids/request for proposals document shall require that
bidders/proposers submitting bids/proposals present a signed acceptance at the time of bidding, to be incorporated in
any resulting contracts, confirming application of, and compliance with, the World Bankâs Anti-Corruption Guidelines,
including without limitation to the World Bankâs right to sanction and the World Bankâs inspection and audit rights, and
(b) rights for the World Bank to review the Borrowerâs procurement documentation and activities\.
20\. A Procurement Capacity Assessment of the Implementing Institutions was carried out in April 2020: The
assessment reviewed the organizational structure for implementing the project, functions, staff skills and experiences,
adequacy for implementing the project, and the interaction between the projectâs staff responsible for procurement
activities and the relevant departments within the agencies and other government agencies\. The assessment revealed
that most of the Implementing Institutions have no prior experience in World Bank operations\. Furthermore, the
assessment revealed that (i) PIUs staff have inadequate experience in managing procurement of complex works, goods
and consulting works; in accordance with World Bank procurement guidelines/regulations and procedures, including
use of STEP; (ii) inadequate staff to couple with volume of procurement transactions; (iii) PIUs and User Departments
staff have inadequate knowledge and skills/experience in contract management; (iv) inadequate records management
system; (v) inadequate office space and office facilities; and (iv) low capacity in managing /supervising ESHS and Sexual
Exploitation and Abuse (SEA) in the procurement process both borrower and construction industry\.
21\. Identified risks, mitigation measures, capacity building and action plan agreed\. The overall project procurement
risk was assessed to be âHighâ\. The residual risks after the implementation of the mitigation measures is âSubstantialâ\.
To address capacity gap and mitigate the risks identified, procurement capacity of the Implementing Institutions needs
to be strengthened\. To ensure quality of documentation, a Procurement Specialist will be recruited, to review
documents from the institutions before being uploaded in STEP\. The procurement specialist will also build capacity and
assist in managing procurement activities of the institutions\. All Implementing Institutions will also prepare a capacity-
building program for the PIUs and User Departments which will articulate areas to be strengthened, capacity
strengthening activities to be undertaken, and the duration of each activity\. There will also be need for a procurement
assistant experienced in STEP, to support the institutions with issues related to STEP\.
Table 1-2\. Procurement Risks and Mitigation Measures
Risk Mitigation Measure Time Frame Responsibility
PIU staff have inadequate Provide training in World Bank procurement procedures
Throughout
experience in managing and processes\. For sustainability reasons, IAs will prepare a
project
procurement of complex capacity-building plan for the PIUs and technical
implementation
works, goods, and consulting departments\. MoEST/
works, in accordance with Recruit a Procurement Specialist to review documentation After Project Universities
World Bank procurement from institutions being uploaded in STEP effectiveness
guidelines/regulations and Recruit a Procurement Assistant to assist institutions with After Project
procedures and use of STEP\. issues related to STEP effectiveness
Inadequate staff to couple Deploy/Recruit enough staff with the knowledge and After project MoEST/
with volume of procurement experience of the World Bank procurement procedures\. effectiveness Universities
transactions
Page 68 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
Risk Mitigation Measure Time Frame Responsibility
Inadequate skills and Conduct trainings tailored for contract management, Throughout MoEST/
knowledge in contract disputes, and claims management for PIUs and technical project Universities
management, disputes, and departmentsâ staff\. implementation
claims management
Inadequate storage and Establish a sound filing and records management system\. Throughout MoEST/
record management system project Universities
implementation
Lack of awareness and low Create awareness and conduct a training on ESHS to the Throughout MoEST/
capacity of the local potential contractors and consulting firms\. Further, project Universities
construction industry to contracts should have adequate provisions of ESHS implementation
comply with ESHS requirements and effective contract management
requirements\.
22\. Procurement oversight and monitoring arrangements\. The World Bank exercises its procurement oversight
through a risk-based approach comprising prior and post reviews as appropriate\. The World Bank sets mandatory
thresholds for prior review based on the procurement risk rating of the project\. The requirement for a prior or post
review shall be specified in the PP\. The World Bank will carry out post reviews of procurement activities undertaken by
the borrower to determine whether they comply with the requirements of the Legal Agreement\. The World Bank may
also use the services of the PPRA for carrying out post reviews for the project\.
23\. Since the assessed procurement risk rating is âHighâ, the Borrower shall seek the World Bankâs prior review for
contracts of value equivalent to the thresholds as detailed in Table 1-3\.
Table 1-3: Thresholds for procurement approaches and methods
Thresholds for Procurement Approaches and Methods (US$ millions)âGoods, Works, and Non-Consulting
Services
Category Prior Review Open Open Request for Quotation
(US$ millions) International National (RfQ)
Works â¥5 ⥠15\.0 < 15 ⤠0\.2
Goods, IT, and non- ⥠1\.5 â¥5 <5 ⤠0\.1
consulting services
Thresholds for Procurement Approaches and Methods (US$, millions) â Consulting Services
Category Prior Revie Short List of National Consultants
(US$, millions) Consulting Services Engineering and
Construction Supervision
Consultants (Firms) ⥠0\.5 ⤠0\.3 ⤠0\.3
Individual Consultants ⥠0\.2 n\.a\. n\.a\.
24\. Frequency of Procurement Implementation Support\. In addition to the prior review supervision to be carried out
by the World Bank, the capacity assessment of the implementing agencies recommends one implementation support
mission every six months to visit the field to carry out post review of procurement actions\.
Page 69 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
Strategy for Implementation Support and Resource Requirements
25\. The strategy for implementation support has been developed based on the nature of the project, its design and
risk profile\. The objective of the implementation support is to provide the client with flexible and efficient guidance and
support to mitigate risks\. The approach has a strong focus on transparent and regular communication with all actors
involved in the project (such as the MoEST, various PIUs [NPIU, APIUs, UPIUs], selected institutions, etc\.)\. Strong
communication channels and links will be established with all the actors in order to ensure adequate and relevant
implementation support\.
26\. Implementation support will cover technical, fiduciary, social, environmental and safeguards issues\. It will
comprise: (i) review missions; (ii) regular technical meetings and field visits by the World Bank between review missions;
and (iii) internal audit and FM reporting\.
Table 1-4: Implementation Support Plan
Partner
Time Focus Skills Needed Resource Estimate
Role
Task Team Leaders (TTLs):
Technical knowledge and 15 Staff Weeks (SWs)
Technical Review and
experience in higher education, Higher Education Specialist:
Support
planning and capacity building 9 SWs
Institutional
arrangements and Task/project/team TTLs: 15 SWs N/A
project supervision management, operations, Operational Officer: 9 SWs
First twelve coordination and team planning and coordination
months leadership
Technical knowledge and FM specialist: 6 SWs
FM/Procurement
experience in FM and Procurement specialist: 6
Training and Supervision
procurement SWs
Technical knowledge and Environmental Specialist: 3
Environment and Social
experience in environment and SWs
Monitoring and
social risk assessment and Social Safeguards Specialist:
Reporting
impact management 3 SWs
TTLs: 12 SWs
Technical knowledge and
Technical Higher Education Specialist:
experience in higher education,
Reviews/Support 9 SWs
12-48 planning and capacity building
months
Institutional Task/project/team
TTLs: 12 SWs
arrangements and management, operations,
Operations Officer: 9 SWs
project supervision planning and coordination
Page 70 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
coordination and team
leadership
M&E arrangements Technical knowledge and
M&E Specialist: 5 SWs
review experience in M&E
Technical knowledge and Environmental safeguards: 3
Environmental and Social experience in environmental SWs annually
monitoring and reporting and social risk assessment and Social Safeguards: 3 SWs
impact management annually N/A
FM monitoring and Technical knowledge and
FM specialist: 4 SWs
reporting experience in FM
Procurement Technical knowledge and Procurement specialist: 4
management experience in procurement SWs
Table 1-5: Task Team Skills Mix Requirement for Implementation Support
Skill needed Number of Staff Weeks Number of Trips
Per Fiscal Year
Program Management (TTL and Co TTL) 30 Field trip as needed
Higher Education Specialist 9 Field trip as needed
Operational Officer 9 Field trip as needed
M&E Specialist 5 Field trip as needed
Economist 4 Field trip as needed
FM Specialist 6 Field trip as needed
Procurement Specialist 6 Field trip as needed
Environment Specialist 3 Field trip as needed
Social Safeguard Specialist 3 Field trip as needed
Administrative Support 10 Field trip as needed
Page 71 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
ANNEX 2: Performance Agreements
1\. Each higher education institution and Ministry agency supported by the HEET project will negotiate
performance agreements with the MoEST based on their respective final USIPs/MASIPs\. The performance agreements
are expected to promote mission-driven strategic initiatives and institutional management as well as increased
autonomy of the institutions, to improve the operational quality of these institutions\. Negotiated performance
agreements also encourage greater institutional ownership and more buy-in for difficult reforms, such as changing
teaching practices\. Taken together, the USIPs/MASIPs and the corresponding performance agreements will promote a
culture of effective management and shared governance with MoEST and higher education institutions by emphasizing
autonomy, accountability, quality, and institutional ownership\.
2\. The performance agreement will define performance indicators that, at a minimum, correspond with the results
indicators identified under the HEET project, namely:
(a) Student and faculty participating in internships/fellowships/a form of placement in industries/companies or
research institutions (disaggregated by gender, persons with disabilities, and student and faculty ratios)
(b) Degree programs within priority areas that are aligned to labor market needs
(c) Students benefitting from direct interventions to enhance learning (disaggregated by gender and students with
disabilities)
(d) Establishment of an Industry Advisory Committee
(e) MoUs/agreements/letters of intent to partner signed with industry, private sector companies or employers
(f) Facilities that are newly constructed/rehabilitated/equipped at the institution
(g) Priority programs using digital technology in teaching and learning
(h) University staff and leaders who receive training on supporting students with special education needs
(i) Development of an implementation plan for the national gender equity strategy on higher education
(j) Priority programs that include content on climate change mitigation and adaptation in their curricula
3\. Each higher education institutionâs and agencyâs performance will be measured against its success in meeting
or surpassing annual performance targets for each of these indicators as stipulated in the USIP/MASIP Results
Framework and the performance agreement of that institution\. In addition, each institution will be required to meet
some minimum gender considerations in order to continue to receive funds from the Project\. These minimum
considerations include establishment of guidelines/codes of conduct to protect women against gender-based violence
and sexual harassment and ensuring any new infrastructure accommodates the needs of female students and faculty\.
4\. The performance agreements will also require each higher education institution and agency to have a robust
M&E team led by an M&E expert within its UPIU or APIU\. The M&E team will be responsible for responsible for carrying
out routine M&E for the institutionâs activities, collecting data towards the performance indicators, and submitting
quarterly and annual reports describing progress towards achieving the annual targets to a national-level M&E
specialist/team constituted within the NPIU\. The national M&E specialist/team will verify the achievement of targets
and consider institutional reports for submission to the NSC\.
5\. Should an institution not show evidence of progress toward achieving stipulated performance targets according
to the timeline for implementation detailed in the performance agreement, MoEST, in consultation with the World Bank,
may re-allocate funding from a non-performing institution to another\.
Page 72 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
ANNEX 3: Climate Change Mitigation and Adaptation Measures
Table 3-1: Climate Change Mitigation and Adaptation Measures
Component Activity Climate Actions
Curriculum updates Mitigation: support delivery of updated curriculum content for raising
and introduction of awareness on climate change mitigation (greenhouse gas) especially in the
innovative priority areas of renewable energy, water resources, climate change tourism
pedagogy in the and hospitality, wildlife conservation, agriculture and agribusiness, urban and
priority degree environmental engineering and technology\. Coupled with this is the
programs (sub- possibility of drawing on global partnerships for blended programs on
component 1\.1 & environmental issues and their management for greater quality programs
1\.2) packages\. Learning from Tanzaniaâs experience with COVID-19, innovations
in programs delivery will integrate blended learning including development
and delivery of online course content to strengthen higher education systems
resilience in emergencies\. Student assessments will be updated to reflect
improvements in delivery of this content including responsiveness to remote
learning\.
Adaptation: Support to all improvements in the delivery of these curriculum
Component 1: and build capacity to integrate climate change in the curriculum review
Strengthening processes\. This includes the growing climate change issues and changing
the Learning climatic patterns within the identified program areas of respective target
Environments institutions\. Coupled with this is the integration of content on climate change
and Labor adaptation including national and sub-national impacts of climate change as
Market well as flood responses given the high frequency of floods in some areas of
Orientation of Tanzania\. This will be complemented by inclusion of content on water
Programs in conservation methodologies as well as local adaptation approaches in
Priority Areas agriculture including drought tolerant and disease resistant crop yields to
grow the capacity needed to support communities in the drought affected
areas\. Regular engagement with the private sector as well as partnerships
with international universities of repute will be leveraged to the extent
possible\. Disposal of depreciated technological hardware modalities will be
stressed right from the start to ensure safe management of the facilities and
equipment right from installation\. Manuals and guidelines will be added to
ensure that support for staff capacity development and skills updating is
continuous\. Online programs delivery will continue to further support
continuity of learning during emergencies like COVID-19\.
Need-based Mitigation: Adoption of energy efficient architectural designs for the new
construction or buildings that will be constructed in each of the benefitting higher education
rehabilitation of institutions\. This will embrace adoption smart energy building techniques
infrastructure at including installation of renewable energy sources like solar power systems
the respective for lighting, wind powered water systems where applicable, and energy
institutions (sub- smart appliances for the facilities to be constructed and or rehabilitated with
Page 73 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
components 1\.1 support from the HEET project\. Such facilities include but not limited to
and 1\.2) lecture halls and laboratories, as well as gender and disability responsive
sanitation and waste management facilities\.
Adaptation: Adaptation measures, including revision of infrastructure
planning guidelines as well as maintenance policy for water supply and
sanitation facilities will be integrated in the construction of new or
rehabilitated university infrastructure\. Key adaptation strategies of facilities
include but not limited to structural strengthening, rainwater
harvesting and recycling in water-scarce areas, drainage improvement
for flood control, use of weather-resistant material\. This may also
require updates of the construction and maintenance manuals used by the
Estates Departments of respective universities, coupled with capacity
development on the demands of smart construction and building
maintenance technologies\. Gains will be realized over time as universities
continue to use the climate smart designs and technologies\.
Professional Mitigation\. HEET project will contribute to the updating of faculty membersâ
development of knowledge and skills on emerging environmental issues and ensuring
academic staff and integration of these elements in the updated university curriculum for the
university respective priority degree programs\. Inclusion of content on climate change
leadership (sub- mitigation (greenhouse gas) in programs to update faculty skills and materials
components 1\.1 & will be ensured\. The capacity development programs have potential to be
1\.2) buttressed with events to expose staff to regional or international
universities of repute that have effective climate change mitigation efforts\.
Adaptation\. Instituting mandatory continuous professional development on
climate change for all faculty team members will be essential in ensuring
continuity of the capacity development effort\. This will be complemented by
committed financing to this initiative\.
Educational Mitigation: Students will benefit from the revised university curriculum for
opportunities for the priority programs that will integrate topical issues on climate change,
the beneficiary learning materials, newly constructed and rehabilitated climate smart
students of the learning environments, and knowledge transfer from faculty with updated
updated curriculum knowledge, skills and exposure in environmental management issues\.
for the priority
Adaptation: Student cohorts over the years will benefit from the regularly
programs (sub-
updated curriculum on environmental issues; changing patterns of rains and
components 1\.1 &
floods; and emergency responses to the natural disasters\. In addition,
1\.2)
continued use of the updated civil works with climate smart designs will be a
continuous engine of change not only for the universities but all student
cohorts across universities resulting in wider benefits for the country and
world at large\.
Mitigation\. M&E of climate change impacts will be an integral part of the
Enhancing national
national capacity enhancement program of SE-UDSM in planning and
capacity to plan,
forecasting of economic trends\. This will entail data and forecasting models
forecast, and
Page 74 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
monitor economic on weather and climate changes and how they impact economic activity at
trends (sub- the national and sub-national levels which will be available for potential use
component 1\.3)\. by various stakeholders\.
Adaptation\. Skills enhancement in economic planning, monitoring and
forecasting will embrace capacity development in the integration of national
climate adaptation plans including linkages with line sectors mandated to
develop such plans\.
Strengthening Mitigation\. Through the support to TCU and the directorate of higher
system level education, a costed crisis and climate change preparedness and response
coordination, plan and guidelines will be developed; including ensuring integration of
management and emergency resilience standards of higher education programs in the updated
regulations (sub- quality assurance and accreditation standards for universities to ensure
component 2\.1) continuity of learning\.
Adaptation\. Implementation of the developed crisis and climate change
preparedness and response plan as well as continued assessment of the
extent to which developed higher education programs adhere to the
Component 2\.
emergency resilience standards that guarantee continuation of learning
Strengthening
during crisis\.
management
Strengthening Mitigation: Research on climate change mitigation is one of the potential
of the higher
STEM Research researches and innovation areas that COSTECH will explore in a bid to
education
Capacity and promote development of technologies for sustainable development\. The
system
training (sub- capacity of staff and leadership of MoEST and its agencies will also be
component 2\.2) strengthened to include climate change indicators and considerations in their
operations across the higher education sub-sector\.
Adaptation: Continuous research and promotion of climate smart
technological innovations will overtime generate signification contributions
to adaptation strategies\. The accumulation of skilled personnel with
knowledge and skills in climate change management and climate smart
techniques will strengthen the systemâs ability to adapt to emerging
challenges\.
Component 3\. Mitigation\. Development of M&E systems for the HEET project will entail:
Support for establishment of solid data backup systems for the TEMIS to ensure data
Project safety at all times; civil works monitoring to ensure adherence to established
Coordination standards that reduce education facilitiesâ exposure to climate change-
and induced natural disasters; and capacity strengthening of personnel including
Management skills development in climate change issues and how they affect HEET project
operations\.
Adaptation\. Established data systems and skilled personnel will continue to
support the management of operations in the higher education subsector
during crises beyond HEET project\.
Page 75 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
ANNEX 4: Economic and Financial Analysis
Financial Analysis
1\. Tanzaniaâs economy has been growing at a steady pace with the real GDP growth rate around 5 to 7 percent since
2010, though there has been deceleration in growth in 2020\. The total government spending has been increasing steadily
from TZS 13\.5 trillion in 2011/12 to TZS 33\.1 trillion in FY2019/20 (Table 4-1)\. Funding for the education sector has been
declining in nominal and real terms since 2017/18, however, as a share of total government spending and GDP and
remains below the Southern African Development Community proposed protocol of 25 percent of budget and 5 percent
of GDP\.
Table 4-1\. Government spending, GDP and education budget (in TZS million)
Education
Government Gross Domestic (% of budget Education
Year Expenditure Product (GDP) Education budget excluding CFS) (% of GDP)
2011/12 13,525,895 58,147,423 2,283,000 16\.9 4
2012/13 15,119,644 67,647,292 2,890,149 19\.1 4\.3
2013/14 18,248,983 77,790,294 3,171,631 17\.4 4
2014/15 19,649,500 88,447,352 3,465,101 22\.7 3\.9
2015/16 22,495,500 101,355,820 3,870,178 24\.0 3\.8
2016/17 29,500,000 113,553,411 4,768,358* 22\.2 4\.1
2017/18 31,711,986 122,835,229 4,706,362 21\.2 3\.8
2018/19 32,475,950 133,119,208 4,641,498 20\.9 3\.5
2019/20 33,105,410 143,258,565* 4,511,789 17\.9 3\.1
Source: BEST 2016, Financial statement from Ministry of Finance 2018; AESPR Draft 2019/20; Minister of Finance and Planning
Budget Speech; National Bureau of Statistics, * projection; CFS = Consolidated Fund Services
General impact of higher education and its relation to economic growth in Tanzania
2\. Through the five-year ESDP (2016/17-2020/21), Tanzania has committed to providing twelve years of free and
compulsory basic education to all children and to the progressive expansions of TVET to continue developing a
sufficient stock of skilled human resources to achieve semi-industrialized middle-income country status by 2025\. The
ESDP report of 2019, however, states that the universalization of basic education has the largest financial implications
and simultaneously pursing other potential initiatives such as the expansion of higher education sub-sector, without
significantly increasing the proportion of national resources allocated to the education sector will be impossible\. In terms
of financing source, 91 percent of the total budget is planned to be sourced domestically, and 7 percent from foreign
sources\. The total financing gap is around 1\.5 percent for the entire education sector, which is about US$180 million
(Table 4-2)\.
3\. In the first phase of ESDP (2015/16-2020/21), about 9 percent is allocated to higher education out of the total
education sector recurrent budget, while the higher education proportion of the total development budget is 36
percent\. The high share of the development budget is mainly for financing of student loans â 50 percent of the total
higher education budget, while only 10 percent of the total higher education budget, is allocated to investment in
Page 76 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
infrastructure and quality (Table 4-3)\.
Table 4-2\. Source of Funding and Financing Gap â All Education Sectors (in TZS billion)
2016/17 2017/18 2018/19 2019/20 2020/21 Total
Domestic funding
Total projected costs 4,029 4,810 5,258 5,779 6,312 26,189
Financing from domestic sources 3,682 4,378 4,785 5,220 5,783 23,847
Financing gap on domestic resources -347 -432 -473 -559 -529 -2,341
Gap as % of projected expenditures -8\.6% -9\.0% -9\.0% -9\.7% -8\.4% -8\.9%
Contributions from DP
Commitments from partners 383 382 366 411 399 1,941
Remaining financing gap 35 -50 -107 -148 -131 -401
Remaining gap as % of projected expenditures 0\.9% -1\.0% -2\.0% -2\.6% -2\.1% -1\.5%
Remaining gap in US$ (million) 15\.8 -22\.5 -47\.9 -66\.3 -58\.5 -179\.5
Source: ESDP 2015/16-2020/21 updated in 2019
Table 4-3\. Higher Education Budget Allocation in ESDP 2015/16-2020/21 (in TZS billion)
2016 2017 2018 2019 2020 Total
(1) Total Recurrent 314\.3 310\.2 326\.1 353\.6 356\.7 1,661\.0
(% of HE, out of total recurrent) 10% 9% 9% 9% 8% 9%
(2) Total Operational/development 468\.1 527\.4 536\.3 514\.1 514\.2 2,559\.9
(2\.1) Operational Budget - Infrastructure, Quality 40\.5 99\.8 108\.7 86\.5 86\.6 422\.1
(2\.2) Student Loans 427\.6 427\.6 427\.6 427\.6 427\.6 2,137\.8
(% of HE, out of total development budget) 52% 43% 36% 31% 29% 36%
(3) Total Budget 782\.4 837\.6 862\.4 867\.7 870\.9 4,220\.9
(% of HE, out of total ESDP) 19% 17% 16% 15% 14% 16%
Note: ESDP projected cost based on Governmentâs revised simulation in 2019\. Total recurrent includes salary and non-salary
recurrent expenditure at universities\. HE = higher education
4\. In higher education, DPsâ contribution is limited in both amount and areas of support\. Only 1 percent of the
higher education sector budget is supported by DPs, compared to the DPsâ support for about 7 percent for the entire
education sector\. Table 4-4 shows that among the three projects supported by DPs, two projects focus on capacity
development of teaching professionals by supporting existing teaching universities, and the other one is the ACEII project
supported by the World Bank, which aims to strengthen specialization and collaborations between university network in
the Eastern and Southern African region\. For the next phase of the ESDP, up to now, there is no certain commitment
from DPs except the proposed HEET\.
Table 4-4\. DP contribution in Higher Education 2015/16-2020/21
DPs Projects Amount Period Coverage Implementing partners
Capacity Development for
Mathematics Teaching in Dodoma,
Rural and Remote CAD $3\.2 Morogoro,
Canada Communities in Tanzania million 2012-17 Iringa University of Alberta
Page 77 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
DPs Projects Amount Period Coverage Implementing partners
African Centre of
World Bank Excellence (ACEII) US$24 million 2016 National MoEST/PO-RALG
United Nations UNESCO-China Funds-in-
Educational, Scientific Trust Project on MoEST/ Open University
and Cultural âEnhancing Teacher of Tanzania/ University
Organization Education for Bridging the of Dar es Salaam/ Public
(UNESCO) Education Quality - Phase II US$234,350 2017-19 National Teachers' Colleges
Source: ESDP 2015/16-2020/21 updated in 2019
5\. Higher education is already experiencing a financing gap with regard to meeting increasing demand without
substantial investment in infrastructure or other quality improvements\. The first phase of the ESDP is budgeted based
on lower levels of higher education enrollment, which is projected to be around 177,835 in 2021, however, the actual
enrollment reached 181,897 in 2018/19 and it is expected to increase with increasing secondary education graduation
(Figure 4-1)\. Furthermore, this enrollment level is too low to achieve the Governmentâs development vision\. Currently,
the number of annual higher education graduates is around 40,000; in order to have achieved the Governmentâs
intermediary goal of 80,000 by 2020/2021, approximately 300,000 students were required to have enrolled in higher
education\. Given the current enrollment trends along with policies in basic and secondary education and the population
growth, it is projected that higher education enrollment could be expected to reach 300,000 only by 2025/26 (Figure 4-
2)\.
Figure 4-1\. Higher Education Enrollment (number)
350,000
300,000 300,000
250,000
225,330
200,000 177,963 181,897 189,291 177,835
150,000
100,000 104,894
50,000
2015 2016 2017 2018 2019 2020 2021
ESDP Enrollment projection for budget allocation
Actual Enrollment
Target (govt to achieve 80,000 HE graduate)
Source: ESDP 2015/16-2020/21; AESPR 2020
6\. Based on current enrollment trends, it is projected that the total budget will increase substantially in 10 years
from TZS 985 billion in 2020 (AESPR budget estimate) to TZS 1710 billion in 2030 (prediction)\. This translates into about
a 5\.6 percent increase in annual budget\. If the budget increase is assumed to mirror real GDP growth, the 5\.6 percent
increase in annual budget was in an achievable range before the pre-economic crisis caused by the COVID-19 pandemic\.
However, this does not include necessary investments for quality improvements or strategic development investments
for priority areas\. Furthermore, this level of annual budget increase seems currently unlikely, given the deceleration in
real GDP growth rate in 2020 in Tanzania\.
Page 78 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
Figure 4-2\. Higher Education Budget Projection â 10-year projections (without COVID-19)
1,600,000 449,186
500,000
1,400,000
301,022 400,000
1,200,000
1,000,000 300,000
800,000
600,000 463,249 200,000
400,000 767,168 100,000
200,000 378,219
- -
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Public Subsidy Student Loan Enrollment projection
Note: Enrollment simulation from scenario 1 in PER 2019, updated unit-cost for recurrent
expenditure (public subsidy)
7\. The student loan financing gap is projected to rise to at least TZS 607 billion by 2030\. Assuming a continuing 4
percent rate of annual recovery of outstanding loans, the rate as of 2018, the value of this financing gap is projected to
more than double from the 2020 level of TZS 286 billion (Figure 4-3)\. The 2019 Public Expenditure Review recommends
that the Government continue with their ongoing efforts to increase the repayment rate to 7-10 percent across all
borrower cohorts, or 50-60 percent of loans currently in active repayment schedules, in order to respond to the rising
demand for student loans\. The HESLB has undertaken substantial reforms in the past eight years to better target students
based on financial needs and improve timely loan repayment, resulting in dramatic improvements over the past decade
(from 7 percent in 2010 to 50 percent in 2016)\. In addition to the on-going effort, HESLB will benefit from refining the
targeting mechanism for eligible students (means testing criteria), further strengthening loan recovery efforts, and
exploring options for commercial student loans\.48
Figure 4-3\. Student Loan Financing Gap, 10-year projection
1,000,000
900,000
800,000
700,000
600,000 607,050
500,000
400,000
300,000 286,243
200,000
100,000
336,240
177,005
-
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Repaid Loan Financing Gap
Source: Tanzania Public Expenditure Review 2019
48 Tanzania Public Expenditure Review FY19: Are Resources and Policies Aligned?
Page 79 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
Economic Analysis
8\. The economic analysis shows that the proposed project is economically viable with NPV of US$2,270 million
and IRR of 23 percent\. It uses cost-benefit analysis with NPV and IRR for the proposed project\. The direct economic
benefit of the project combines the present value of increased lifelong earnings of the project beneficiaries who would
not have completed the program without the HEET project through increased employment rate and increased wages due
to quality improvement and market relevant research activities boosting local economies\. The primary direct project
beneficiary is students enrolled in degree-granting programs in priority areas in selected public universities through
Component 1\. It is assumed that the project will have a positive impact on enrollment rate in priority areas (with an
incremental annual increase up to 25 percent, from a baseline of 40,000 to 100,600 at completion) during the project
periods (2021-2026) as well as internal efficiency gain (university degree completion rate increase from 70 percent to 73
percent due to the project)\. In addition, the improvement in teaching quality and labor market relevance along with more
research and industry partnerships will have an impact on overall labor market outcomes (better employment and wages)
for the beneficiaries\. The cost of the project includes the estimated project expenditure plus the private cost of higher
education including tuition and maintenance for four years and the foregone earnings during the average two additional
years of education\.
Expected impacts of the proposed project
9\. The investment in various aspects of the learning process (physical investment in space and learning technology
as well as teaching professionalsâ quality) can increase the studentsâ satisfaction and expec tations of the benefits of
university education, resulting in higher demands for the priority areas in the selected universities and increasing
retention through the university cycle\. It is empirically shown that the improvement in learning environment in
universities has positive impact on studentsâ perception on teaching quality,49 and the studentsâ perception is shown to
be a strong predictor of college retention, especially during the first and the second years\.50\.
10\. Collaboration between universities and university-industry partnership will have positive impact on local
economy, generating demand for high skilled workers\. University-industry partnership has shown positive impacts in
various aspects for both research institutes and industries\. This includes synergies between basic and applied science,
lowering labor cost, raising revenues from innovative products, improvement of market oriented research capacity and
positive societal spillovers across health, sanitation, agriculture, food, energy, and etc\.51 Also, incentivizing university
patenting is empirically shown to have large long run employment and payroll per worker around the universities, with
0\.5 standard deviation increase in payroll and 0\.04 standard deviation increase in employment number with respect to 1
49 Hill, Mary C\., and Kathryn K\. Epps\. "The Impact of Physical Classroom Environment on Student Satisfaction and Student Evaluation of Teaching
in the University Environment\." Academy of Educational Leadership Journal 14\.4 (2010): 65-79\.
50 Schreiner, Laurie A\. âLinking Student Satisfaction and Retention\.â Azusa Pacific University\. (2009)
51 Adams, J\., E\., Chiang and J\. Jensen âThe Influence of federal laboratory R&D on industrial researchâ, NBER working paper 7612 \. (2000)
Azoulay, P\., Ding, W\., Stuart, T\. âThe Effect of Academic Patenting on (Public) Research Output\.â NBER Working Paper 11917 (2006)
Bishop, K\., DâEste, P\., and Neely, A\. âGaining from interactions with universities: multiple methods for nurturing absorptive capacityâ, Research
Policy, 40 (1), (2010)
Pluvia Zuniga, âThe State of Patenting at Research Institutions in Developing Countriesâ, World Intellectual Property
Zucker, L\.G\., Darby, M\.R\., Brewer, M\.B\. âIntellectual Human Capital and the Birth of U\.S\. biotechnology Enterprises\.â America n Economic Review,
88 (1), (1998)
Page 80 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
standard deviation increase in industry intensity\.52
Assumptions and Parameters
11\. The assumptions and parameters used to calculate the economic benefit and cost of the HEET is shown in Table
4-5\. Given the uncertainty of its impacts in terms of the magnitude, the NPV and IRRs are calculated from low (20 percent
annual increase in beneficiary numbers and 0\.5 percent wage premium) to high (30 percent annual increase in beneficiary
numbers and 1 percent wage premium) impact scenarios\.
Table 4-5\. Input parameters
Value Note
Impact on enrollment and retention
Increase in students enrolled in 40,000 at baseline to
priority areas in the project 100,600 at completion Incremental annual increase up to 25%;
supported universities (base scenario) sensitivity analysis of 20 to 30% annual increase
Completion rate: 70% (current) to 73% (2 years
Increase in completion rate 3% after the project starts)
Labor market impact
7% unemployment rate for university graduate,
Increasing employment 1\.5% ILFS 2014
Monthly income for university graduate: TZS
1,000,626 in 2014, ILFS 2014
Increasing salary (wage Monthly income for no university level tertiary
premium) 0\.5% to 1% education: TZS 610,704 in 2014, ILFS 2014
Cost
Private cost 4,629,815 Tuition plus maintenance cost, yearly (TZS)
Opportunity cost of 4-year university degree:
Opportunity cost (forgone Monthly income for no university level tertiary
earnings) 610,704 for 2 years (TZS)
Other parameters
Discount rate 6% Assumption
Exchange rate 0\.00043 US$: TZS (January 2021)
12\. Under the base scenario of 25 percent increase in student beneficiaries, the NPV of the project is US$2,270
million and the IRR is 23 percent\. Even with a lower impact scenario of 20 percent increase in student beneficiaries the
project is likely to yield an NPV of US$1,586 million and an IRR of 22 percent\. These results justify the investment made
through the HEET project\.
52Hausman, Naomi\. âUniversity innovation, Local Economic Growth, and Entrepreneurshipâ Harvard University (2012)
Industry intensity measures the extent to which an industry is likely to be affected by innovation produced at nearby universities\.
Page 81 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
Table 4-6\. NPV and IRR across the scenarios (in US$ million)
Annual increase of students enrolled in priority areas
Up to 25%
20% incremental increase 30%
Wage premium 0\.5% NPV US$1,586 US$2,270 US$2,668
IRR 22% 23% 23%
1% NPV US$1,677 US$2,374 US$2,779
IRR 23% 23% 24%
Page 82 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
ANNEX 5: Adjustments to the Country Program in Response to COVID-19
1\. Health impact\. A full assessment of the COVID-19 health situation in Tanzania is difficult\. Tanzania reported its
first COVID-19 case on March 16, 2020, and as of April 29, 2020, recorded a total of 509 cases with 21 deaths\. Since
then, the Government of Tanzania (GoT) has not issued data on COVID-19 cases and deaths, and this has impeded
understanding of the full state of the pandemic in the country\. Following a second surge of COVID-19 cases and deaths
since December 2020, as witnessed across the eastern and southern Africa region, on February 24, 2021 the Minister of
Health, Community Development, Gender, Elderly and Children urged the public to protect themselves against COVID-
19\. The World Health Organization (WHO), United Nations Childrenâs Fund (UNICEF), and the World Bank Group (WBG)
have urged the Government to re-start public reporting of COVID-19 infections and deaths, and ensuring interventions
are in line with global standards and epidemiological trends, as well as planning for vaccine deployment to protect lives\.
2\. Economic impact\. COVID-19 has negatively impacted Tanzaniaâs macroeconomic performance â decelerating GDP
growth in 2020 â although Tanzania is one of the few economies in the region that avoided recession\.53 The global
economic slowdown adversely affected Tanzaniaâs export-oriented industries, especially tourism and traditional
exports, and has caused a drop in foreign investment\. The exception is gold mining which has benefitted from rising
prices since the onset of the pandemic\. Although the government did not impose a lockdown, the pandemic initially
spurred precautionary behaviors that slowed down domestic economic activity\.
3\. Distributional impact\. The COVID-19 pandemic could push an additional 600,000 people below the national
poverty line\. While the poverty headcount ratio at the national poverty line has declined modestly over time, falling
from 28\.2 percent of the population in 2012 to 26\.1 percent in 2019, Tanzaniaâs rapid population growth rate has caused
the number of people living below the national poverty line to steadily increase\. In 2020, the pandemic-induced
economic slowdown caused the poverty rate to rise to an estimated 27\.2 percent, compounding the effect of population
growth on the absolute number of people living in poverty\. Because a large share of Tanzaniaâs population is close to
the poverty line, even a mild economic shock can push numerous households into poverty\. The impact of the crisis has
been especially acute among households that rely on self-employment and informal microenterprises in urban areas\.
4\. Government response\. In March and April 2020, the authorities implemented movement restrictions, including
bans on large gatherings (except religious services), school closures, and the cancellation of international flights\. The
restrictive measures were eased from May 2020, however, as the Government announced a drastic drop in COVID-19
infections\. The Government supported the private sectorâs efforts to cope with the economic impact of the pandemic
by expediting the verification and clearance processes for value-added tax payments and refund arrears, while
expanding the coverage of social security schemes to support vulnerable households\. The BoT reduced the discount rate
and the minimum reserve requirement to inject liquidity into the financial system\. These measures were moderate
relative to those implemented in many other countries in the region, however\. A National Response Plan for COVID-19
was developed, in alignment with the WHOâs COVID-19 Global Strategic Preparedness and Response Plan\. The Plan
mobilized support from DPs with primarily grant financing of approximately US$68 million\.
5\. Participation in the Debt Service Suspension Initiative (DSSI)\. A preliminary Debt Sustainability Analysis update
(April 2020) indicates that Tanzania remains at low risk of debt distress\. Official bilateral and multilateral creditors
continue to be the major financiers\. Tanzania is participating in the COVID-19 DSSI of the G20 and is currently assessing
53 Tanzania Economic Update 15th Edition, 2021\.
Page 83 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
the level of resources which would be freed up\.
6\. Vaccination\. Tanzania is eligible for the COVAX Facility, a global effort aimed at delivering COVID- 19 vaccines to low-
and middle-income countries\. The GoT is yet to apply for accessing this Facility which is advised by the technical agencies
(WHO and UNICEF) who also call for the adoption of international standard responses, including COVID-19 vaccine
deployment targeting high risk groups (frontline health care workers; and people above the age of 65 and with
comorbidities)\. The GoT has established a Technical Committee to assess the effectiveness of available vaccines with
the view to recommending the most viable option(s)\.
7\. WBG Response\. The Government has not sought financing from the World Bank Groupâs COVID-19 Multiphase
Programmatic Approach (MPA)\. World Bank COVID-19 support has hitherto primarily been through: (a) the US$3\.79
million COVID-19 Pandemic Emergency Financing Facility Project (P174366) to strengthen capacity for laboratory
diagnosis and management of COVID-19 cases, financed under the Pandemic Emergency Financing Facility (Table 5-1);
and (b) the Strengthening Primary Health Care for Results program (P152736)\. The World Bank is a contributor to the
Health Basket Fund which has provided US$6\.5 million to support provision of personal protective equipment to primary
healthcare facilities nationwide\. In addition, the Tanzania Urban Resilience Program (P159779) has supported
promotion of risk awareness in urban areas through an Information, Education and Communication campaign package\.
The WBG, in coordination with participating DPs, agreed to temporarily suspend the health and education
conditionalities linked to the payment of cash transfers for poor households beyond supporting, on an exceptional basis,
a double payment for Productive Social Safety Net (P165648) project beneficiaries, to provide them with an extra buffer
during a time of crisis\. In addition, the World Bank has provided analytical input to support GoTâs pandemic response,
including a note outlining the impact of COVID-19 from a social protection perspective, with policy options designed to
protect poor and vulnerable households\. All active projects are ensuring COVID-19 sensitivity, and all new project
financing is being screened for potential COVID-19 response focus\. The World Bank is leveraging its ASA portfolio to
strengthen the evidence base to inform COVID-19 sensitivity in development programming\.
8\. Use of IDA19 resources\. Tanzaniaâs indicative IDA19 PBA is around US$2 billion\. The World Bank will ensure that
projects financed under Tanzaniaâs IDA19 country allocation are well-aligned with both the objectives of the CPF (FY18-
22) and key IDA19 priorities, including a strong focus on human capital and infrastructure that directly benefits the
poorest\. Tanzania could avail itself of financing available under the COVID-19 MPA for COVID-19 vaccines; however, at
present, it has not indicated interest in this option\.
9\. Development Partners\. Donors supporting the Governmentâs response plan include the International Monetary
Fund (US$14\.3 million under Catastrophe Containment and Relief Trust), the African Development Bank (US$50\.7
million); the Arab Bank for Economic Development in Africa (US$1\.7 million), the European Union (US$44\.2 million),
South Korea (US$0\.5 million), the Global Fund for AIDS, Tuberculosis and Malaria (US$6\.2 million), along with others\.
Table 5-1\. Tanzania: FY21 indicative lending and restructuring program (as of February 25, 2021)
CPF Focus Relief Restructuring Resilient Recovery
Enhance productivity and accelerate
equitable and sustainable growth
US$3\.79 million Tanzania COVID-19
Boost human capital and social
Pandemic Emergency Financing
inclusion
Facility Project (P174366)
Page 84 of 85
The World Bank
Higher Education for Economic Transformation Project (P166415)
Modernize and improve the efficiency
of public institutions
Page 85 of 85 | APPROVAL |
P116734 | Page 1
INTEGRATED SAFEGUARDS DATA SHEET
CONCEPT STAGE
Report No\.: AC4680
Date ISDS Prepared/Updated: 09/15/2009
I\. BASIC INFORMATION
A\. Basic Project Data
Country: Lao People's Democratic
Republic
Project ID: P116734
Project Name: Lao Environment and Social Project - Additional Financing
Task Team Leader: Jitendra J\. Shah
Estimated Appraisal Date: August 10, 2009
Estimated Board Date: November 24, 2009
Managing Unit: EASTS
Lending Instrument: Specific Investment
Loan
Sector: Central government administration (48%);Forestry (25%);Other social services
(11%);Sub-national government administration (9%);General education sector (7%)
Theme: Environmental policies and institutions (33%);Participation and civic
engagement (17%);Water resource management (17%);Biodiversity (17%);Other social
development (16%)
IBRD Amount (US$m\.):
0\.00
IDA Amount (US$m\.):
3\.00
GEF Amount (US$m\.):
0\.00
PCF Amount (US$m\.):
0\.00
Other financing amounts by source:
BORROWER/RECIPIENT
0\.00
0\.00
B\. Project Objectives [from section 2 of PCN]
The project objectives will be the same as the original design:
#
The PDO is to assist the country to strengthen the management of environmental and
social issues associated with the sustainable use of natural resources in Lao PDR for enhancing
quality of growth and reducing poverty\.
#
Specifically, the project aims to: (a) strengthen institutions and instruments for
assessment, monitoring and compliance for environmental and social sustainability, and broaden
the constituency for environmental changes; (b) invest in on-the-ground environmental
improvement activities, with emphasis on sustainable biodiversity management, community
environmental management and livelihoods enhancements; and (c) operationalize the EPF to
become a permanent entity that is eligible to use NT2 revenues for priority environmental
protection activities by developing two Windows that serve as models for EPF operation and
potentially become permanent structure within EPF\.
Page 2
#
Three outcome indicators include: (1) improved policies and instruments are understood
by stakeholders, institutionalized within government agencies and system, and implemented by
technical competent staff; (2) selected protected areas and local communities benefit from
improved environmental management, and enhanced livelihood options; and (3) EPF is a
competent institution, eligible to received NT2 revenues\.
C\. Project Description [from section 3 of PCN]
The project comprises three components:
#
Component 1: Policy Implementation and Capacity Enhancement (PICE)\. This
component will strengthen at the national, provincial, and district levels: (i) environmental and
social safeguard policy formulation and implementation, including monitoring; (ii) integrated
river basin management; (iii) environmental and social capacity development focusing on
environmental assessment, compliance monitoring, and coordination; and (iv) environmental
education and awareness\. There would be about 10 large subgrants under this window\.
#
Component 2: Community and Biodiversity Investment (CBI)\. This component will
support initiatives to strengthen conservation practices and livelihood improvement activities in
and around protected areas (building on the conservation planning approaches developed for the
Nakai Nam Thuen National Protected Area and its corridor) and to improve localized
environmental conditions through partnership activities with communities, local governments,
and civil society organization, in Central Laos\. There would be about 6-7 large subgrants under
this window\.
#
Component 3: Management and Monitoring Support\. This component will support the
following activities: the day-to-day operation of the EPF, specifically PICE and CBI windows;
marketing and business development of the windows to assist beneficiaries to prepare sub-grants;
developing and implementing a monitoring, evaluation and dissemination process to assess
performance of the two windows, and training of WMU staff to perform all the above\.
Type of activities include: (i) capacity building grants for Component 1 which will include
studies, surveys, workshops, training, preparation of technical guidelines, monitoring and
assessment of environmental conditions, etc\.; and (ii) grants for protected area management and
community environmental management and community livelihood activities\. The project will
also support the sourcing of regional and/or international expertise to assist in the
implementation of some tasks for the project activities\.
D\. Project location (if known)
Lao PDR
E\. Borrowers Institutional Capacity for Safeguard Policies [from PCN]
Lao has been developing safeguards capacity over the years\. This project is to further strengthen
this capacity\.
F\. Environmental and Social Safeguards Specialists
Ms Manida Unkulvasapaul (EASTS)
Page 3
II\. SAFEGUARD POLICIES THAT MIGHT APPLY
Safeguard Policies Triggered
Yes No TBD
Environmental Assessment (OP/BP 4\.01)
X
Most of the subgrants will be related to training and capacity building of government
agencies at national and local levels to increase their ability to effectively implement and monitor
the EIA/SIA process, the management water resources in Nam Thuen-Nam Kading, the
management of protected area, and the development of conservation community network\.
However, given that the target provinces (Borikhamxai, Khammoune, and Savanakhet ) are
located in the central part of Lao which is rich in natural resources and inhabited by many ethnic
groups, some small subgrants may create negative impacts on local environment and
communities and trigger the Bank safeguard policy related to natural habitats, resettlement, and
indigenous people\. To address this concern, an Environment and Social Safeguard framework
(ESSF) has been developed to ensure that adverse impacts will not occur (via negative list) and
that appropriate actions will be undertaken to mitigate the impacts\. Bank consultation and post
review will ensure that the agreed actions are carried out and the ESSF is adequate\.
Natural Habitats (OP/BP 4\.04)
X
The subgrants will not create negative impact on natural habitats\. However, the target areas
are located in the areas that may involve sensitive natural habitat\. The ESSF has been designed
to address this issue\.
Forests (OP/BP 4\.36)
X
The project will not involve logging or large scale forest clearing as defined by the policy\.
Pest Management (OP 4\.09)
X
The project will not involve procurement of large scale pesticides as defined in the policy\.
Physical Cultural Resources (OP/BP 4\.11)
X
The subprojects are not located in any known archeological sites\.
Indigenous Peoples (OP/BP 4\.10)
X
Some subprojects are likely to be located in areas inhabited by ethnic minority groups,
however significant negative impacts are not expected\. To make sure that the ethnic groups are
properly informed and aware of the need to use natural resources sustainably and to protect
wildlife sactuary and protected area, prior consultation will be required during the development
and/or approval of the subgrant\. If significant impacts are expected, preparation of the Ethnic
Group Development Plan (EGDP) will be required\. This requirement is included as part of the
Ethnic Group Policy Framework (EGDP) which has been included in the ESSF\. In addition one
subgrant has been allocated to the Lao Front for National Construction for developing a national
guideline on consultation with ethnic groups, including training and capacity building activities\.
Several small subgrants have been allocated for the implementation support on the protected
areas of which one subgrant has been allocated for development of the national regulation for the
protected area and building management capacity of staff\. Consultation with local community
will be an integral part of the planning and consultation process\.
Involuntary Resettlement (OP/BP 4\.12)
X
Population relocation and major land acquisition is prohibited and this is included in the
negative list of the ESSF\. Small land acquisition can be proceed in line with the Resettlement
Policy Framework (RPF) which has been included as part of the ESSF\. Possible restriction of
natural resources used will be addressed through close consultation with the affected population,
and will require preparation of a Re
settlement Process Framework\. Close consultation and WB
Page 4
Safeguard Policies Triggered
Yes No TBD
post review during supervision will ensure that this issue is properly addressed\.
Safety of Dams (OP/BP 4\.37)
X
The project will not involve any construction of dam and thus will not involve dam safety\.
Projects on International Waterways (OP/BP
7\.50)
X
The project will not involve water resource development activities and thus will not involve
the international waters
Projects in Disputed Areas (OP/BP 7\.60)
X
All subprojects are not located in any know international disputed areas\.
Environmental Category:
B
-
Partial Assessment
III\. SAFEGUARD PREPARATION PLAN
A\. Target date for the Quality Enhancement Review (QER), at which time the PAD-stage ISDS
would be prepared: N/A
B\. For simple projects that will not require a QER, the target date for preparing the PAD-stage
ISDS: 09/04/2009
C\. Time frame for launching and completing the safeguard-related studies that may be needed\.
The specific studies and their timing
1
should be specified in the PAD-stage ISDS\.
The ESSF will be consulted with the local authorities, local communities, and representative
of ethnic groups in Borikhamxay province on 10-11 September\. If needed, the ESSF will be
updated and disclosed in the InfoShop and in-country\.
IV\. APPROVALS
Signed and submitted by:
Task Team Leader:
Mr Jitendra J\. Shah
09/09/2009
Approved by:
Regional Safeguards Coordinator:
Mr Panneer Selvam Lakshminarayanan
09/09/2009
Comments:
Sector Manager:
Mr Patrick Labaste
09/15/2009
Comments: Acting for M\. Lovei, Sector Manager, EASER
1
Reminder: The Bank's Disclosure Policy requires that safeguard-related documents be disclosed before appraisal (i) at the
InfoShop and (ii) in-country, at publicly accessible locations and in a form and language that are accessible to potentially affected
persons\.
Page 5 | APPROVAL |
P007413 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report Ne\. 5862
THE WORLD BANK
PROJECT PERFORMANCE AUDIT REPORT
JAMAICA SITES AND SERVICES PROJECT
September 26, 1985
Operations Evaluation Department
i1ds decauet ha a restrietd disrbutHe ad may be used by recipleafs OnlY in the performance of
teir elal dules\. Its c9fts may set otherwise be disclosed without World Bank aulherlason\.
ABBREVIATIONS
CBD - Caribbean Development Bank
DVCF - Development Venture Capital Finance Corporation, Ltd\.
EDCO - Estate Development Company
JDB - Jamaica Development Bank
JIDC - Jamaica Industrial Development Corporation
MOC(H) - Ministry of Construction (Housing)
MOH - Ministry of Housing
NPA - National Planning Agency
PAMCO - Project Analysis and Monitoring Company, Ltd\., an agency of the
Ministry of Finance and Planning (MOF)
PIC - Premier Investment Corporation
PIE - Post Implementation Evaluation
SAH - Start-a-Home
SIFCO - Small Industries Finance Corporation
SIH - Sugar Industry Housing Corporation
SSD - Sites and Services Division
UDC - Urban Development Corporation
USAID - United States Agency for International Development
PROJECT PERFORMANCE AUDIT REPORT FOR OFFICIAL USE ONLY
JAMAICA SITES AND SERVICES PROJECT
(LOAN 1003-JM)
TABLE OF CONTENTS
Page No\.
Basic Data Sheet\.0*\.********** 0\.
Bighlights\. iv
PROJECT PERFORMANCE AUDIT MEORANDUM
Io BACNGROUND\.*\. \.1\.I
Housing Sector\. \. \. 2
II\. PROJECT HISTORY\. * \. 3
Origins of the Project\. \. 3
Brief Synopsis of Execution of the Project\. 4
Sources of Informatici on Project\. 5
Conclusions of Prior Project Evaluation Reports\. 6
Project Components Defined\. \. 9
Project Accomplishmeris (Shelter Related Components)\. 11
Administration and Maintenance (Shelter Related
Components)\. \. 16
Other Comments on Sites and Services Components\. 17
(i) Project Design\. 0 \. \. \. 17
(ii) Project Execution\. \. 18
(iii) Economic Reevaluation\. \. \. 20
(iv) Cost Recovery\. \. \. \. \. 21
Accomplishments in Regard to Factory Construction
and Equipment for Industrial Enterprises
[Component (e) -\. 22
Accomplishments in Regard to Various Consultancies
[Component (f)], Training and Monitoring and
Evaluation (Component (g)1\. 24
Overall Cost of the Project\. 25
Policy Objectives and Accomplishments\. 26
Sustainability Issues\. \. 27
III\. POINTS OF SPECIAL INTEREST-\. \. 28
(a) Unresolved Conflict with Regular Organs of
Government\. 28
(b) The Government as Developer\. \. \. 29
(c) Socio-Political Considerations and the Bank\. 31
IV\. CONCLUSIONS\. o \. \. 32
This document has a restricted distribution and may be used by recipients only in the performance of
their oficial dudes\. Its contents may not otherwise be disclosed without World Bank authorization\.
TABLE OF CONTENTS (Cont'd\.)
Page No\.
TABLE I Project Costs\. \. \. \.m \. \. 35
FIGURES
1\. Self-Help Housing options\. 36
2\. Implementation Schedule: Programmed and Actual\. 37
3\. Implementation Schedule\. 39
ANNEXES
A\. Selected Documents and Data Available in Project
[excerpt from Ministry of Construction (Housing)
Completion Report, March 1983]\. 41
B\. Interim Special Report from the Public Accounts
Committee on Operation of the Sites and Services
Division of the Ministry of Housing\.* \. 45
C\. Key Issues and Policy Impact [excerpt from the Ministry
of Construction (Housing) Completion Report,
March 1983]\. \.ea\. 59
D\. Key Issues and Policy Impact (excerpt from Project
Analysis and Monitoring Company: Post-Implementation
Evaluation Report 1983)\. \. \.0 \. 63
E\. Government's Comments\. \. \. \. 65
PROJECT COMPLETION REPORT
I\. Introduction\. 69
II\. The Sector\. \. \. 69
III\. Project Identification, Preparation and Appraisal\. 69
IV\. Implementation \. 70
V\. Physical Performance \. \. 77
VI\. Institutional Analysiso\. 80
VII\. Financial, Social and Economic Performance\. 81
VIII\. Bank Performance\. \. \. 83
IX\. Conclusions\. 84
Annexes
1\. Reporting of Problems - Chronological Summary\. 87
2\. The Industrial Component \. \. 93
3\. Internal Economic Rate of Return\. 99
Photographs
Maps IBRD 10605
IBRD 10606
IBRD 10607
PROJECT PERFORMANCE AUDIT REPORT
JAMAICA SITES AND SERVICES PROJECT
(LOAN 1003-JM)
PREFACE
This report constitutes a performance audit of the Sites and
Services ProJect (Loan 1003-3M, US$12\.5 million of June 13, 1974)\. The final
disbursement was made January 18, 1983 and the balance of US$0\.35 million was
cancelled\. While the project was not cofinanced by USAID, that agency did
provide funds to refinance mortgages on some of the houses built on the sites
developed under the project\. The report consists of a Project Performance
Audit Memorandum (PPAM) prepared by the Operations Evaluation Department
(OED) and a Project Completion Report (PCR) prepared by the Latin America and
the Caribbean Regional Office\. A portion of this loan relating to small
scale industries has been the subject of another PCR which has already been
submitted to the Board [Project Completion Report on Jamaica Small Scale
Enterprise Development (Loans 1003 and 1609-JM), Report No\. 5374, December
27, 1984, SecM85-51]\.
The audit included reviews of the PCR, Appraisal and President's
Reports, the transcript of the Executive Directors' meeting when the project
was considered, Bank files and records, reports on the project prepared by
the Government, and field inspections and discussions by OED staff with offi-
cials of the Government and parastatal organizations and consultants during
an audit mission in January 1984 while auditing other projects in Jamaica\.
The audit found that the PCR and the Government's reports cover
many important aspects of the project and agrees generally with their sub-
stance\. However, the audit has noted significant data gaps and drawn same
additional conclusions concerning the design and execution of the project\.
The draft report was sent to the Borrower for comments, which have
been reflected in the PPAM and reproduced as Annex E\.
PROJECT PERFORMANCE AUDIT BASIC DATA SHEET
JAMAICA SITES AND SERVICES PROJECT
(LOAN 1003-JM)
KEY PROJECT DATA
Appraisal Actual or
Item Estimate Reestimate
Total Project Cost (US$u) 34\.9 /a 72\.3 /a
Overrun (%) - 107
Loan Amount (US$m) 15\.0 15\.0
Disbursed 15\.0 14\.7
Cancelled - 0\.3
Repaid as of June 30, 1985 3\.0
Outstanding) - 9\.1 /b
Date Physical Components Completed 12/77 02/83
Proportion Completed by Original
Completion Date (Z) 100 n\.a\.
Proportion of Time Overrun (Z) - 185
Economic Rate of Return (%) 14\.4 3\.4 Ic
Cumulative Estimated and Actual Disbursements
FY74 FY75 FY76 FY77 FY78 FY79 FY80 FY81 FY82 FY83
Estimated /d 0\.4 4\.7 10\.3 13\.1 15\.0 15\.0 15\.0 15\.0 15\.0 15\.0
Actual - - 1\.9 3\.2 4\.1 8\.4 9\.7 10\.5 13\.3 14\.7
Actual/Estimated (Z) - - 18\.5 24\.4 27\.3 55\.7 64\.5 70\.0 88\.5 97\.7
OTHER PROJECT DATA
Original
Item Plan Actual
First Mention in Files - 07/19/72
Government Application - 07/72
Negotiations - 01/74
Board Approval Date - 05/07/74
Loan Agreement Date - 06/13/74
Effectiveness Date - 09/04/74
Closing Date 02/28/78 06/30/82
Borrower Government of Jamaica
Executing Agency Ministry of Construction (Rousing)
Fiacal Year of Borrower April 1 - March 31
Follow-on Project Kingston Urban Transport
Loan Number 2389
Loan Amount (US$m) 16\.00
Loan Agreement Dqte 05/07/84
- ift -
MISSION DATA /e
Moath/ No\. of No\. of Staff- Date of
Item Year Weeks Persons Weeks Report
Identification 07/72 1 3 3 07/19/72
Preparation 09/72 2 3 6 10/24/72
Preparation 11/72 3 3 \.9 12/18/72
Preparation 04/73 2 3 6 Unknown
Appraisal 06/73 3 6 18 04/12/74
Post-Appraisal 08/73 2 1 2 Unknown
Supervision I 08/74 1 1 1 09/12/74
Supervision II 12/74 1 3 3 01/17/75
Supervision III 05/75 2 4 8 06/23/75
Supervision IV 10/75 2 4 8 11/03/75
Supervision V 02/76 1 2 2 03/23/76
Supervision VI 04/76 2 2 4 05/07/76
Supervision VII 08/76 2 2 4 08/31!76
Supervision VIII 01/77 2 3 6 02/05/77
Supervision IX 05/77 1 2 2 06/09/77
Supervision X 10/77 2 1 2 n\.a\.
Supervision XI 04/78 2 1 2 05/ /78
Supervision XII 08/78 1 2 2 08/29/78
Supervision XIII 12/78 2 3 6 01/19/78
Supervision XIV 04/79 1 2 2 05/09/79
Supervision XV 09/79 2 2 4 10/17/79
Sapervision XVI 03/80 1 3 3 04/23/80
Supervision XVII 07/80 1 2 2 09/05/80
Supervision XVIII 02/81 1 2 2 03/20/81
Supervision XIX 06/81 1 1 1 09/25/81
Supervision XX 10/81 2 1 2 12/22/81
Supervision XXI 04/82 1 2 2 05/28/82
Supervision XXII 06/82 1 1 1 07/19/82
CURRENCY EXCHANGE RATES
Name of Currency (Abbreviation) Jamaican Dollar (J$)
1974-April 1977 J$1\.00 - US$1\.10
April 1977-May 1978 Dual Exchange Rate System
May 1978 JS1\.00 - US$0\.645
December 1978 J$1\.00 - US$0\.590
May 1979-June 1982 J$1\.00 - US$0\.561
/a Includes land costs\.
7b Excluding exchange adjustment of US$-2\.66 million\.
7c- Based on the sites and services component only and excluding
specifically the community facilities element; the PCR provided this
calculation but the audit notes that the account of costs was incomplete
and in addition the ERR calculation excluded the costs of developing and
partially demolishing the sites and services infrastructure at the
Marcus Garvey site; if these costs were adjusted the ERR would be
somewhat lower\.
/d Includes industrial component\.
e Sites and Services component only\.
- iv -
PROJECT PERFORMANCE AUDIT REPORT
JAMAICA SITES AND SERVICES PROJECT
(LOAN 1003-JM)
HIGHLIGHTS
The overall goal of the project was to help alleviate urban
poverty in Kingston, Montego Bay, Spanish Town and May Pen\. Its direct
objectives were to bring housing, essential community services and job oppor-
tunities to the urban lower income groups, to demonstrate a better alterna-
tive method of providing such low cost housing, and to lead to improved
institutions for executing a long term program\. These objectives were not
achieved because: (i) costs were higher than forecast so that the lots were
priced out of the reach of lower income groups, despite a government subsidy
of over 60% of the cost (actually the average income level was the 68th per-
centile); (ii) the community facilities provided were mainly not used due to
lack of budgetary provision and interest from the parent ministries and
departments; (iii) the industrial financing component did not lead to invest-
ment in business closely accessible to the project sites (though it did
create some employment elsewhere in the Kingston area); (iv) the "self-help"
building system at first used was not successful and in its later modified
form was too expensive to constitute a demonstration model; and (v) none of
the institutions employed to execute the project have survived for the long
term\. However the slum (squatter) area upgrading appears, at least on a
qualitative judgement basis, to have been more successful\.
Points of particular interest include:
(a) the experimental nature of the self-help building system for the
sites and services parts of the project and its evolution into the
"Start-a-Rome" system which provided an initial habitable core; but
little of the building work to complete the houses was actually
performed by the lot holders themselves, and their employment of
contractors and building tradesmen on small scale operations makes
it doubtful whether it can be a low cost system (PPAM, paras\. 32,
33, 50 and 51);
(b) the slum (squatter areas) upgrading, although encountering delays
in connecting the utilities to individual lots, chiefly because of
slow administrative procedures in granting ownership titles, seems
likely to be relatively successful in providing a marked improve-
ment in amenities at modest cost (PPAM, paras\. 36 and 55);
(c) the numerous difficulties and delays in implementation which were
traceable to a variety of causes including, among others, the
excessively large scale of the project which applied a system with
limited prior experience in Jamaica or elsewhere, the inadequate
preparation and design of the technical aspects of the project, the
failure to enforce appropriate standards in procurement and cost
control which led to an investigatioa in the legislature and recom-
mendations by Jamaica's Auditor General all in the context of an
extremely unsettled political and economic environment (PPAM,
paras\. 21-25, 55);
(d) the "enclave" nature of sites and services and slum upgrading com-
ponents of the project which were run under the exclusive jurisdic-
tion of the central government's Ministry of Housing [later the
Ministry of Construction (Housing) ] leads to conflict with regular
organs of government, such as other ministries, planning agencies
and local authorities and makes it difficult to absorb the develop-
ments into the normal political/administrative establishment
(PPAM, paras\. 47, 79, 81, and 82);
(e) the Government undertaking the role of real estate developer, the
modalities for such a role and the appropriateness of the Govern-
ment's undertaking any such roles (PPAM, paras\. 83 and 84); and
(f) the socio-political aspects of the project for which the project
design made inadequate provision and which involved conflicts
between the national and local levels of government, where these
were controlled by different political parties, and rivalries
between political factions at the local level and which signif-
icantly contributed to the problems which plagued the project
including conflicts on the work sites, difficulties between various
organs of government and prolonged delays (PPAM, paras\. 88 to 91)\.
- 1 -
PROJECT PERFORMANCE AUDIT MEMORANDUM
JAMAICA SITES AND SERVICES PROJECT
(LOAN 1003-JM)
I\. BACKGROUND
General
1\. Jamaica is one of the larger islands in the Caribbean, about 150
miles where it is longest along the East-West axis and about 40 miles at its
widest point\. The center of the island is hilly to mountainous; the coastal
plains are relatively wider on the southern than the northern coast\. About
2\.2 million persons live in Jamaica, about 40% in towns over 10,000 inhabi-
tants and about 30% in the Kingston metropolitan area\. Nevertheless, rural
settlement remains significant with slightly more than a quarter of the
employed labor force, the largest single group, working in agriculture
(including forestry and fishing)\. However, distinctions between rural and
urban spheres are blurred due to a common pattern of people working in
several sectors and due to the short distances and good accessiblity of most
human settlements to each other\. Outside of metropolitan Kingston, the popu-
lation is rather evenly distributed in scattered farmsteads and over 1,100
small towns and villages\. After Kingston the next largest town, Montego Bay,
has less than one-tenth the inhabitants of the capital region\.
2\. Foreign trade has played a major role in Jamaica's economy for a
long time and many of the country's major urban settlements have grown up
around sea ports\. In recent years exports and imports have together amounted
to more than 75% of GDP\. Although export products take up two-thirds of
Jamaica's crop land, agricultural products are today greatly overshadowed as
foreign exchange earners by bauxite and alumina (about 50% of exports and
nonfactor services) and by tourism (about 20%)\. The mining of bauxite takes
place in several sites in the central regions of Jamaica while tourism is
concentrated along the north coast, particularly in the towns of Montego Bay
and Ochos Rios (about 80% of the beds)\. Each of Jamaica's main foreign
currency earners is subject to intense competition both worldwide and in the
Caribbean basin which gives special emphasis to effective cost control in
these vital sectors of the economy\.
3\. Jamaica has sought to diversify its economy both in agriculture and
industry through import substitution\. While the country is not self-suffi-
cient in food, value added of crops for domestic consumption is more than
four times the value added in export crops\. Industrial production is concen-
trated in and around Kingston and includes plants which also produce for
export, particularly to other Caribbean countries\.
4\. After a period of rapid growth in the 1960s and early 1970s, led by
bauxite and tourism, Jamaica's economy declined as it sought to cope with
grave social tensions due to high unemployment and successive external
- 2 -
shocks, such as oil price rises and world recession\. Inadequate private
savings, large government deficits and the departure abroad of many trained
Jamaicans created serious difficulties for the economy\. The project under
audit originated from this period and its implementation and initial results
reflect the turbulent condition of the times\.
Housing Sector
5\. The country had about 420,000 housing units in 1970 of which some
80,000 were built in the previous decade or at an average annual rate of
8,000 units\. As most units merely replaced others that were abandoned in
population shifts from the rural areas to the towns or that had become
unusable, the supply was inadequate to provide for the additional household
formation\. As a result many families had to double up in units\.
6\. A National Physical Plan for Jamaica published by the Government in
1971 projected that in the following 20 years Jamaica would increase its pop-
ulation by roughly one-third while doubling its urban population\. The Plan
proposed a doubling of industrial employment and sought to redirect indus-
trial and urban growth away from the Kingston area which would, nevertheless,
continue to account for about 40% of total population\.
7\. The 1971 Physical Plan estimated that Jamaica would need to produce
about 300,000 housing units by 1990 in order to overcome the existing deficit
and accommodate projected growth\. This meant that annual housing production
would nearly have to double from the historical rate, achieving a rate of
over 11,000 units per year in the early 1970s and nearly 17,000 in the later
1980s\. A large variety of government programs already existed in support of
the housing sector, some dating back nearly a generation to the colonial
period, including mortgage insurance, funding of building societies, various
financial supports by the Jamaica Mortgage Bank, government built houses for
sale on 25 year terms or for lease, capital subsidies to rural housing, urban
renewal and rehousing schemes, growth for indigent housing, and assistance to
housing cooperatives\.
8\. There also were aided self-help housing schemes which, according to
the Plan, had not been well received and were being phased out\. Assistance
was given to organizations whose members had been saving for housing with the
Government acq-iring land, funding infrastructure, housing materials and
technical assistance and the labor to be contributed by the prospective resi-
dents\. This scheme is rather similar to one included in the project which is
under audit\.
9\. The Plan noted a large oversupply of undeveloped lots due to
"premature" subdivision\. This, it was stated, resulted from land speculation
which the Plan proposed to dampen down by restrictive government policies\.
Instead the Plan advocated reliance on sites and services schemes (also
called planned self-improvement housing areas) which had a strong resemblance
to the approach adopted in the project under audit and which embodied the
following principles:
- 3 -
(a) Government to supply land to self-improvement communities in
Kingston and elsewhere in locations readily accessible to a variety
of employment sources and easily serviced from existing utility
networks\.
(b) Functional standards for street patterns and width, land set aside
for commercial use and full scope of social facilities, and lot
sizes small but large enough for backyard agriculture and cottage
industries\.
(c) Government to provide utility services\.
(d) Government to provide social services\.
(e) Security of tenure for residents who evidence desire to improve
their properties\.
(f) Exemption from existing building and land use standards\.
(g) Cost of utilities and land tenure to be nomaal to enable low
income people to participate\.
(h) Residents to build all or most of their houses over time, as means
available allow, with various schemes to provide materials and
technical advice and possibly "core" houses\.
(i) Community organizations to be encouraged\.
10\. The Plan did not comment on the similarities between the aided
self-help housing schemes and the sites and services schemes nor did it say
how the problems of the former would be overcome in the latter\. The Plan
emphasized that experimentation with various approaches would be essential
and that Jamaica's housing program would necessarily include a variety of
programs\.
II\. PROJECT HISTORY
Origins of the Project
11\. The National Physical Plan was reflected in a 1972 statement of
Government housing policy and all this coincided with an intensification of
the Bank's concern to help improve urban conditions\. The Bank's concern was
indicated by the establishment of the Urban Projects Department and the start
of a number of "Sites and Services" projects'/ aimed at providing housing
for urban lower income groups\. Accordingly, the Government's request in 1972
for such a project resulted in a period of preparation and a Bank Appraisal
Mission in June 1973\. The project was basically for sites and services,
together with upgrading of some squatter housing areas, but included also a
small industrial financing component to provide employment for those living
in the sites and services areas through small to medium scale industries\.
Loan No\. 1003-JM for US$15 million was signed June 13, 1974\.2/
Brief Synopsis of Execution of the Project
12\. None of the many reports produced so far on the yr%\.ject gives a
comprehensive account of the execution of the project althuugh the PCR con-
tains an annex listing major problems and Bank responses thereto\. It is a
long and complex story extending over some eight years to closing of the Loan
Account on January 13, 1983, at which time the project was not finished,
however\. On-site works by the Government and allocation of lots to
applicants were then still in progress and were continuing when the audit
mission was visiting Jamaica in January 1984\. Full occupation of all lots
and completion of the houses by many of the lot holders seem likelj to take a
number of years more\. The audit does not have the resources to provide a
detailed history of the project but will content itself with some references
to major trends\.
13\. The project was conceived on a grand scale in attempting to produce
housing in one scheme at rates approaching one-quarter of the previous
national annual out-turn in the sector\. It involved the employment of a
large number of consultants and contractors to design and execute costly
civil works; it required a large effort on the part of the Government not
only to oversee the design and construction work but to manage the allocation
of lots, the establishment and enforcement of cost recovery procedures and
the orchestration of the numerous Government agencies concerned with various
aspects of the scheme; it included a collateral scheme for financing of small
scale enterprises; finally, it had a significant number of complex studies\.
14\. Serious delays soon burdened the project for a number of reasons
examined elsewhere (see para\. 19(ii) below)\. Difficulties in execution
caused the project to be reshaped by dropping several components and,
1/ Under these projects the Government provided building sites which were
serviced with roads and utilities and were sold to individuals to build
houses on them\. There were variations among projects as to the amount
of servicing on each site before sale to the owners\.
2/ In addition to the Bank, several other foreign aid agencies were
involved in the 1970s in helping Jamaica's shelter sector both in sites
and services and squatter upgrading schemes, including USAID, the aid
agencies of The Netherlands and the European Common Market\. Except in
the case of USAID, the audit has not had the resources to discuss their
experiences in Jamaica's shelter sector with these agencies\.
-5-
eventually, by changing, some six years after the project started, from a
self-help to a contractor based system for construction of the "core"
houses\. The Government agency rpsponsible for executing the housing
components has been changed several times; including a shift from the
original Ministry of Housing (MOH) to the present Ministry of Construction
(Housing) [MOC(H)] and a spin off of several functions of the main
implementing unit into a separate government corporation\. The entity
responsible for handling the small scale industry lending underwent several
metamorphoses and the original intention of supporting industries accessible
to the housing schemes *,as abandoned\. Major studies also were executed
rather differently than indicated at appraisal\. The Loan Agreement was
amended on several occasions to reflect changes in the industrial component,
to accommodate alternative contracting procedures for the sites and services
component, to make alterations in mortgage terms for lot holders in response
to inflation and other changed conditions and (in 1981) to recognize the
dropping of several sites and services areas and the consequent reduction of
the number of units to be provided\.
15\. Contractual irregularities and difficulties in record keeping led
to an inquiry in Parliament in the late 1970s and to major efforts to
reestablish the project on a sound basis\. Consultants were hired to produce
cost estimates and establish the basis for cost recovery\.
16\. In the end, some two-thirds of the originally programmed sites were
finished; only a small fraction of these sites is occupied by fully finished
homes\. No estimate is available of when houses will be completed on the
remaining sites, most of which are still occupied by one room (plus kitchen
and bath) dwellings\. Slum improvement works have been completed in two areas
of Kingston\. Community facilities have been finished for both sites and
services and slum upgrading areas though in much reduced numbers\. Most of
these facilities, both in the sites and services and slum upgrading areas,
remain unused because the concerned agencies refuse to occupy them\.
Similarly, the municipalities have not yet accepted the sites and services
projects and the slum upgrading schemes for incorporation within the
municipal jurisdictions\. Efforts continue to activate community facilities
and to incorporate the housing selames into their surrounding communities and
a committee of senior Government nfficials is working on these problems\.
Sources of Information on Project
17\. There is a multiplicity of sources of information on the project,
yet some of the more basic and important points remain unclear\. For example,
cost and other data are not nrovided to enable effective numerical
comparisons to be made between the r:-iject's experimental "self-help" system
of providing only a serviced lot (with or without a basic habitable core),
leaving the allottees to build or complete the houses, and the alternative
provision, by tb\. '-vernment or private developers, of completed houses built
entirely by concractors\.
18\. Primary sources of direct or indirect information include periodic
statistical publications and annual reports produced by Government,
- 6 -
parastatal and other entities such as the Bank of Jamaica (price indices,
etc\.); the Department of Statistics (labor force and building activity); the
Caribbean Housing Finance Corporation and the City of Kingston Cooperative
Credit Union (statistics on mortgages); the Commission on Land Valuations
(land/site values and estimates of current rental values of houses); the
National Housing Trust, a Jamaican housing finance agency; and surveys,
progress and other reports of MOR and MOC(R) and of the parastatal
organizations and consultants employed on the project\. A partial bibliog-
raphy extracted from one of the previous evaluation reports on the project is
attached as Annex A\.
19\. In addition to the Bank's own Project Completion (PCR) several
other evaluation reports have previously been issued on the project:
(i) Public Accounts Committee: Interim Special Report on Operations of
the Sites and Services Division of the Ministry of Housing 1979
(Annex B);
(ii) World Bank (Operations Evaluation Department): Operational Policy
Review - Delays in Project Implementation, Report No\. 2946,
April 11, 1980;
(iii) Ministry of Construction (Housing): Completion Report, March 1983
(main findings of this report are excerpted as Annex B);
(iv) Project Analaysis and Monitoring Company (PAMCO): Post-Implementa-
tion Evaluation Report, 1983 (main findings of this report are
excerpted as Annex C);
(v) World Bank (Industrial Development and Finance Division 1, Latin
America and the Caribbean Regional Office): Project Completion
Report - Small Scale Enterprise Development (Loans 1003 and
1609-JM), Report No\. 5374, December 27, 1984\.
Conclusions of Prior Project Evaluation Reports
20\. While these reports deem the project to have made a favorable
impact on housing policy, many criticisms were made\. Some of the principal
ones may be summarized:
(a) Project Preparation
21\. This was inadequate\. At the time of appraisal only 3 of the 8
sites intended for "sites and services" development had detailed engineer-
ing\. Of the remaining 5, two (Bushy Park I and II in May Pen) were later
cancelled\. However, the other 3 sites had been chosen, and site lay outs and
design standards determined, but no topographic or engineering surveys had
been carried out\. This omission was serious since all 3 sites had severe
soils and drainage difficulties\. They were situated in swamps, close to sea
level, so that substantial land fill was needed to raise the building sites
above flood level and major drainage structures had to be built\. All three
-7-
sites were, therefore, far more expecsive to develop than had been forecast\.
In addition, two of them, Hunt's Bay I and II in Kingston, had problems of
industrial waste pollution\. No engineering had been undertaken for upgrading
the three squatter (slum) areas\. In these circumstances, it is clear chat
the original 15% allowance for physical contingencies and a 3 year construc-
tion period were unrealistic\.
(b) Project Contracting Procedures
22\. The reports, particularly that of the Public Accounts Committee
(Annex 1), drew attention to irregularities in contract procedures, especi-
ally in the early years of the project execution\. The criticisms include the
award of a number of contracts by negotiation instead of through bidding
(which the Region points out were approved by the Bank), the lack of adequate
analyses and recommendations for contracts where bidding was followed, the
absence of prequalification of contractors for major contracts, interim
payments to contractors in lump sums and not supported by measurements
related to the bills of quantities, inadequate, or absence of, documentation
of variations in the character or amounts of works and of the reasons and
extent of time extensions for contracts\. In addition, according to a 1980
consultant study on the execution of the project much of the work was done
without any contract at all\. The Region attributes some of the difficulties
to lack of clarity in the loan documents regarding the applicable contracting
procedures\. The Auditor General of Jamaica commented to the audit mission
that a major difficulty was that the Sites and Services Unit, later
designated Division (SSD), of the MOH was set up without proper statutory
status (e\.g\. government agency or statutory corporation) and the applicable
accounting standards thus were not determined\. The Bank in its loan did not
lay down the desired accounting standards for SSD and the project\. The
Auditor General suggested that some of the difficulties experienced under
this project would have been avoided if the applicable auditing standards had
been laid down and the Auditor General had certified that they were
implementable\. The Region also pointed out that the implementing unit lacked
experience in contract administration\. The Region also noted that by the
time the Committee report came out most of the contractual supervision
problems had been successfully solved and that the filling of the sites was
planned and executed "outside the Bank project"\.
(c) Project Management
23\. This was criticized as being weak, complex and without adequate
cost records\. Management was entrusted to the ad hoc SSD without adequate
consideration as to how it could obtain the necessary qualified and
experienced staff\. Clearly provision should have been made from the outset
for the unit to be supported by consultants with the necessary background\.
In the event, the unit was not properly staffed and this resulted in weak
management of the project, which in turn caused difficulties with appointing
and controlling a number of consultants for supervision, inadequate control
of contract procedures, and totally inadequate cost records\. In the first
year, expenditure on the project was not separated from other housing capital
- 8 -
expenditures of the HOC(H)\. Difficulties persisted for two or three years
before reasonably adequate accounts were established for each project to
enable accounting control to be exercised\.
(d) Contractor Supervision
24\. This was criticized as being weak\. Partly this stemmed from the
inadequate contracting procedures described in (b) above and from the lack of
experience of the implementing agency\. A further factor was the inadequacy
of the engineering and design, for example, for the three sites as described
in (a) above\. However, in addition, there were clearly weaknesses in the
supervisory staff and in their control, and in the systems of measurement,
record keeping and reporting which they were required to maintain\.
Consultants were employed for both design and supervision but their
effectiveness might have been significantly raised with greater guidance from
the Bank\. There were indications that the general laxity probably led to
irregularities, if not outright fraud, for example, through measuring the
quantities of fill material for the sites by the truckload (instead of
measured in place), for which the timed records of deliveries indicated
impossible turn-round times for some of the trucks\. The Region notes that
none of the earth fillwork was actually covered by Bank disbursements\. The
audit has not had the resources to check this point but believes such a
segregation of closely related arrangements and costs, even if it succeeds,
is not appropriate in a Bank project\.
(e) Community Facilities
25\. These are largely unused, some not completed, and many vandalized\.
Although slightly under half of the originally intended number of facilities
were built, and some of those left incomplete, the total cost was more than
double the estimate in J$\. The parent ministries, including Education for
the schools, of Health for the health centers and of Youth for the community
centers, failed to make the necessary budgetary provision and did not operate
the facilities\. The very limited use which has been made of some of the
facilities appears to have been through local effort\.
(f) Target Population
26\. At the time of appraisal the target population was between the 50th
and 60th percentiles on the urban income distribution curve for 75% of the
lots and at the 33rd percentile for the remaining 25% of the lots\. Because
of the steep rise in costs, and notwithstanding the raising of the level of
subsidy from about 30% to over 60%, the actual average income level of the
people who received the lots was about the 68th percentile, though it is
claimed that a small percentage reached down to the 33rd percentile\. Even
though the subsidy level was doubled, the project failed to reach the target
population and cannot be said to have provided housing for the urban poor,
even with the high level of subsidy\.
-9-
(g) Cost Recovery
27\. Cost recovery will fall far short of the proportion estimated at
appraisal\. The current estimate is for about 38% to be recovered instead of
71%\. Apparently the difference is due to the unavailability and unrelia-
bility of cost data at the time when the mortgages were calculated\. The rise
in the non-recoverable costs, that is the government subsidy, from the ori-
ginally estimated 29% to the presently estimated 62% appears to be inadver-
tent rather than the result of a conscious government policy\. The Region
observes that a system will need to be established to agree on adjustments in
recovery standards and income criteria in case costs exceed estimates\. Such
a system was unavailable in this case: moreover, the lack of cost data made
it impossible to tell mortgagors the extent of their obligations\.
28\. The audit notes that a very great effort has already been invested
in writing the various evaluation reports\. Yet a number of important factual
points remain obscure\. This suggests that the first priority in evaluation
work should be establishing the factual basis for evaluative judgment; it
also raises questions regarding the role of this audit as one of a series of
evaluations and the appropriate division of labor among various evaluation
authorities\. The audit does not wish to duplicate the analyses done previ-
ously but will concentrate on points where the analysis appears incomplete or
incorrect and on points where difficulties appear to be persisting\.
29\. Despite the somewhat sketchy history of the project given in the
PCR (dictated by the Region's instructions regarding the length of PCRs), the
audit does not attempt to describe the course of events in full\. Instead it
will outline the main components of the project, describe what was accom-
plished, and comment on cost and time performance and on institutions\. The
audit will also briefly describe the policy objectives of the project and how
it met those objectives\.
Project Components Defined
30\. The project components (Schedule 2 of Loan Agreement) were:
(a) development of about 6,000 building lots with municipal services,
including sewer,3/ water and electric power connections, with 3
options as to initial building development: Option I (40% of lots)
3/ The provision of sewer connections made the project areas quite
exceptional in Kingston where only 20% of the housing is connected to
the municipal sewer system\. The implications of this and similar
schemes on the capacity of the treatment plant and on the capacity of
Kingston Bay to absorb the effluent have not been examined in the
Appraisal Report nor is there a discussion of how the inclusion of sewer
services affected poverty orientation of the project\.
- 10 -
with only a party wali4/ and materials to build a sanitary core,
shelter and enclosure; Option II (40% of lots) with built sanitary
core and materials for shelter and enclosure; and Option III (20%
of lots) with built sanitary core and shelter (a roofed area) and
materials for enclosure (PPAM Figure 1 depicts the three options
graphically);
(b) community facilities for (a) consisting of nine primary schools, 14
day care centers/basic schools, eight health centers, 12 community
centers, five trade training centers, nine police posts and seven
market sheds;
(c) a construction materials fund to assist allotees in purchasing
building materials for extending their houses;
(d) upgrading of three slum areas, including the paving of roads and
footpaths, storm water drainage, water and power supply connections
and street lighting;
(e) financing of factory construction and equipment purchases for
industrial enterprises to provide training and jobs for the commu-
nities included in the project;
(f) consultancy services for (i) studies of the operations, programs
staffing, and structure of the MOH and (ii) a study of urban growth
and management and (iii) technical services for carrying out (e)
above and for the Ministry of Housing in completing detailed engi-
neering for (a) and (b) above;
(g) training staff of the MOR and for independent monitoring of parts
(a), (b), (c) and (d) above\.
31\. The costs for the entire project, and the accomplishments for the
sites and services component of the project are summarized in Table PPAM 1\.
However, qualifications must be expressed in regard to the cost figures, par-
ticularly for the early years when accounting was inadequate (para\. 24) and
the expenditures incurred for those periods must therefore be considered as
estimates\.
32\. Further qualification is needed in regard to the accomplishments\.
Not only were some items deleted as costs rose, but substantial changes were
made in the initial on-site building components provided before the lot
holders took over on the three later developments at Hunt's Bay I, Hunt's Bay
II and Catherine Hall\. Furthermore, there is a lack of information on the
amount, or cost, of the self-help work done by the lot holders to complete
their houses\.
4/ The sites were arranged so that neighboring houses would abut at the lot
line and water and sewer connections would also be located near the lot
line to permit a sharing of access piping\.
- 11 -
33\. The time of completion also needs clarification\. For this project
it has been deemed as essentially the time when the infrastructure and on-lot
development financed by the Government -ere completed\. However, not all the
lots were allocated at that time, and of course, it may be several years
before the self-help finishing of the houses by the lot holders is substan-
tially completed\. With these qualificatLons some comments may be made on the
accomplishments, first of components (a) through (d) above\.
Project Accomplishments (Shelter Related Components)
Development of 6,000 lots (Component (a)]
34\. A total of 4,732 lots were developed for housing\. The reduction
from the originally planned 6,000 occurred through the decision to convert
the first site, Marcus Garvey in Kingston, to industrial development instead
of housing, and the cancellation of the Bushy Park I and Bushy Park II
sites\. The building lot development works at Marcus Garvey, which had
already been carried out, were therefore largely demolished\. The reason
given for the change was that the site was not very suitable for housing and
is situated in a predominately industrial area and better suited for indus-
trial development\. However, the latest information available is that little
industrial development has in fact yet occurred at Marcus Garvey\.
35\. The first two sites, Camplands and Spanish Town, were developed
with the three options largely as described in paragraph 30(a) above\. There
were no significant problems with the location and physical development of
the sites\. However, major problems arose with the concept of providing only
basic services and without initial accommodation for the lot holder to live
on the lot while building or completing the house\. As a result, there were
major difficulties with vandalism and theft of materials\. This evidently
served to slow down the self-help building process\. While a number of houses
have been completed, some of them to very good standards, houses on many lots
are in a very incomplete stage, often not yet habitable\. Also a significant
number of lots appear to have been abandoned\. A small proportion of the lots
at Hunt's Bay I had also been developed with the same options at that stage\.
36\. Because of the somewhat poor performance of the lot holders with
developing the lots from the original very basic three options, the Govern-
ment reviewed the situation and decided on a new policy for the remaining
lots, to provide a ready-built "habitable core," known as a "Start-a-Home"
(SAH)\. This consisted of a bathroom, kitchen and single large living room\.
This has advantages in that the lot holder can live on the lot, thereby
avoiding paying rent elsewhere, and his presence on the site helps to safe-
guard building materials and works in progress either by self-help or by con-
tract\. However, it of course substantially increases the cost of the on-site
development, and therefore of the mortgage, including the downpayment\. The
end result is that of the 4,732 lots, 622 (13%) are Option I, 717 (15%) are
Option II, 240 (5%) are Option III and the remaining 3,154 (67%) lots are
Start-a-Home (SAH) type\.
- 12 -
Community Facilities [Component (b)]
37\. Of the total of 64 facilities intended to be provided, 28 were
built, although several of thesa were left incomplete\. Most, however, were
fully completed, including electrical and plumbing fittings, etc\. Unfortu-
nately, as the facilities were generally not used, a large proportion have
been vandalized, including the removal or smashing of doors, ceilings, elec-
trical and plumbing fittings, etc\. Moreover, the empty buildings presented
serious security and sanitation problems for these communities; they became
the focus of nuisance activities and, as observed by the audit mission, the
unused cesspool of one empty health center had become a site for dumping
trash\. The inability or unwillingness of the parent ministeries and depart-
ments to provide the services to go with these facilities has meant that the
major investment of around J$11\.3 million has so far been mainly wasted\.
Several reasons were cited for the failure of the community facilities to be
used\. An important factor was that planners had not reckoned with estab-
lished patterns in the provision of services\. In the case of schools for
instance, Jamaicans place heavy emphasis on education, make large scale use
of private schools and commonly send their children great distances for
instruction\.
Constructions Materials Fund [Component (c)]
38\. The purpose of the fund was to provide materials, in effect as
loans to be covered by the mortgages, to the lot holders to complete the core
units under the original concept of the Options I, II and III (para\. 30)\.
Most of the lot holders in the early schemes appear to have taken advantage
of the provision and a total of nearly J$3\.2 million was issued for this pur-
pose, compared with the estimate of J$1\.75 million\. The main problems appear
to have been administrative difficulties of the MOH and MOC(H) in handling,
issuing, and accounting for the materials\. Also, as noted in para\. 35, the
householders had difficulty in safeguarding their materials when they were
not living on the sites\.
Upgrading of Three Slum Areas [Compont (d)]
39\. Upgrading was carried out on the two slum "squatter" housing areas
of Cockburn Pen and Drewsland, both in Kingston, but the third squatter area
of Canterbury in Montego Bay was cancelled\. The two upgraded areas included
about 1,720 households\. The Cockburn Pen site is relatively small (about 300
households) and compact and the terrain is good\. No particular physical dif-
ficulties appear to have been encountered and the infrastructure costs, pro-
viding roads, water and electricity supplies were little more than the esti-
mates\. For Drewsland, however, the configuration is a long linear strip
along a large, paved gully and the infrastructure costs greatly exceeded the
estimates\. The major difficulty in both cases is with the legalization of
the lot holdings by the tenants\. Although all the land was virtually govern-
ment-owned, the administrative procedures seem to have been extre-mely long\.
Consequently, although the water mains and electricity lines had been con-
structed, in most cases connections had not been made to individual lots
since the utilities objected to such connections for unregistered lots\. As a
- 13 -
result, many lot holders had made their own illegal connections to the utili-
ties\. Municipal services (the naming of streets, the collection of trash,
etc\.) have also been refused so far on the ground that the installations do
not conform to standards and that the area can therefore not be incorporated
into the municipality's jurisdiction\. The houses are essentially of a make-
shift nature, constructed with largely non-standard type materials, such as
corrugated iron, partly stabilized earth blocks, and miscellaneous scrap
materials\. Most have fenced yards\. Nevertheless, the introduction of paved
roads, the financing of new latrine pits, and provision of some street light-
ing has affected a substantial improvement in the amenities of the squatter
areas\. These, the granting of legal occupancy rights to the squatters, and
the provision of individual water and electric power connections seem likely
to stimulate further self-help efforts to improve the *ouses\.
Costs of Components (a) through (d)
40\. It is not possible to make any accurate comparison of costs of the
various components of the project with the appraisal estimates because of the
lack of adequate rrcords, particularly in the earlier stages of the work, and
of the substantial changes which have been made in the on-site developments
at most of the sites\. Chief of the changes is the conversion of Marcus
Garvey to industrial use and the changeover to the SAB habitable core unit on
two-thirds of the sites instead of the original non-habitable provision of a
sanitary core (or materials to build it) in the Options I and II cases,
together with a small roofed-in area in the Option III case\. Also any over-
all comparison is made difficult by the cancellation of Bushy Park I and II
sites and services developments and of the Canterbury squatter slum area up-
grading site\. Furthermore, there was a substantial inflation and rise in
current costs during the construction period, but in the absence of data on
cash flow for each of the subproject-, it is difficult to convert the costs
from current JS to constant prices or to US$ equivalents\.5/ Nevertheless,
some indications may be given, at least in current J$ terms, from the infor-
mation set out in Table PPAM 1\.
41\. The first three sites developed were Marcus Garvey, Camplands and
Spanish Town and none of them was converted to the Start-a-Home system\.
Marcus Garvey was initially developed for housing lots and, before it was
changed to become an industrial site, the total cost of the infrastructure
plus on-site development was about JS4\.66 million compared with the estimate
5/ The completion of various sites and components of sites stretched over
many years with some elements being completed as early as 1976 and
others as late as 1983 (para\. 45 below)\. The course of inflation over
this period was from 100 at the end of 1974 to 129, 193, 318, and 426 at
the end of 1976, 1978, 1980, and 1983 respectively\. According to a
consultant's report in November 1980, which provided the basis for
switching from the self-help to the SAR concept, construction costs in
Jamaican currency under the project up to that time had risen 4\.25 times
as against an average rise in construction costs in Jamaica generally of
2\.5 times\.
- 14 -
of about J$1\.82 million, or about 2\.5 times the original estimate (excluding
the provision of materials for self-help)\. At Camplands, the final cost was
about J$3\.28 million (including materials) compared with the SAR estimate of
J$O\.98 million, or 3\.33 times the original cost\. Spanish Town cost about
J$4\.81 million against J$1\.26 million, or about 3\.83 times the SAR estimate\.
42\. Comparison of the remaining three sites and services projects,
Hunt's Bay I and II and Catherine Hall, is complicated by their conversion to
the SAH system\. However, the actual cost of Hunt's Bay I (including the SAH
contracts), was about J$17\.36 million compared with the SAR estimate (for the
original three options) of about J$3\.67 million, or 4\.73 times the SAR
estimate\. On this site 219 of the total of 1,076 lots were of the original
Options I-III and the remaining 857 were converted to SAH\. Hunt's Bay II and
Catherine Hall were both converted to the SAH system\. Their final costs were
about J$31\.50 million for Hunt's Bay compared with the SAR estimate of J$3\.23
million, or 9\.8 times the estimate; and Catherine Hall, J$17\.44 million
against the SAR estimate of J$1\.68 million, or about 10\.4 times the
estimate\. In each case, the SAR estimate was for the original Options
I-III\.6/
43\. Estimates cannot be made of the total costs of the houses since
there are no data of the costs of the "self-help" materials and labor pro-
vided by the lot holders to complete their houses nor of the costs incurred
when contractors or individuals were hired to do the work\. It seems that in
only a minority of cases did the householders themselves perform much of the
additional building work\. They are reported to have been hiring contractors
in some cases, though in most cases they appear to have hired individual
tradesmen and casual labor, with the householder buying the materials and
providing them to the workers engaged\. Perhaps the best indication of more
recent costs is with the SAH development at Hunt's Bay II and Catherine
Hall\. There, the total cost up to the time of handover to the lot holders
was about JS49 million, for a total of about 2,612 lots, giving an average
cost of around J$18,700 per lot (including the SAH habitable core unit)\. For
the earlier non-habitable sanitary core style Options I-111, the total infra-
structure/lot development cost for Camplands and Spanish Town was about
J$8\.09 million, for 1,045 lots, or an average of about J$7,740 per lot; these
developments were carried out several years ago, however, and therefore
reflect considerably earlier unit prices\.
44\. A comparison of the cost of community facilities on a site-by-site
basis is not possible because of the changes and cancellations\. Perhaps a
6/ The Government has commented as follows: "The audit portrays overruns
in time and cost as achieving gross proportions\. The report mentions
the factors which make accurate cost analysis difficult or impossible,
but does not consider these in arriving at figures for cost overruns on
the various sites\. The Housing Policy Document shows that the price
increases associated with the construction of a low-cost house were
almost 400% over the project period\. Coupled with this is the fact that
the project duration was underestimated at the time of appraisal, and
this invariably resulted in escalation"\.
- 15 -
very rough indication is that it cost about J$11\.34 million to build the 28
facilities (though some were incomplete), an average of about J$405,000 per
facility, whereas the SAR estimate was for J$5\.25 million for 66 facilities,
an average of about J$80,000 per facility\. Not only is the final cost per
unit about 5 times the estimate, but the total investment represents a very
serious waste of resources since the facilities are little used\.
Time to Complete Components (a) through (d)
45\. The question arises as to the meaning of "completion" for a project
of this kind\. The Government, in some cases, provided only a serviced build-
ing site and a party wall; in other cases it provided a constructed sanitary
core and in still others the SAH which had a habitable one-room core\. In a
wider sense, the project will only be complete when the lots have been allo-
cated and occupied and the lot holders have built their houses or added the
additional rooms, etc\., as the case may be\. This is likely to take some
years; even in the oldest and most developed sites the audit estimated that
some 20% of the lots remained unoccupied or abandoned and, according to
Government officials, no procedures or plans existed to repossess such lots
or put them to use\. In the various completion and evaluation reports, how-
ever, a narrower meaning of completion has been adopted, that is when the
physical components provided by the Government have been completed (serviced
lots and only limited on-site building), and not necessarily when all the
lots had been awarded to applicants\. PPAM Figures 2 and 3 reproduced from
the MOC(H) Completion Report show that completion of various sites and vari-
ous site components stretched over many years with some elements being com-
pleted as early as 1976\. On that more limited interpretation, completion was
in February 1983, compared with the appraisal estimate of December 1977, an
overrun of a little over five years\. That is an overrun of about 150% based
on the date of approval of the loan, but about 172% based on the estimated
construction period of three years\. As for the Lime when the lot holders
will have completed construction of their houses, this was estimated at
appraisal as two years after completion of the lots; that was by December
1979\. Clearly this process is going much more slowy than forecast and it is
difficult to estimate when the practical completion of the houses will be,
especially in the absence of data as to works so far carried out, but it
seems likely to be several years yet\. Furthermore, it could be asserted that
completion of the project should include finishing off those community facil-
ities left partly built, and vandalized, and satisfactory arrangements being
made for all the community facilities to be effectively used\. A Government
- 16 -
committee has been established for this purpose; the question arises whether
it would be appropriate for the Bank, as direct external sponsor of the pro-
ject, to take a role in this process\.?/
46\. For the upgrading of two slum (squatter) areas, the basic infra-
structure had been provided at a cost of about J$4\.4 million\. However, as
noted in para\. 39, individual water and electric power connections could not
be made as the lot holders had not yet been provided with legal titles\. It
may therefore be argued that this part of the project, also, cannot be con-
sidered completed until titles have been granted and the services provided to
individual houses\. /
Administration and Maintainance (Shelter Related Components)
47\. A further important point, on which little is said in the evalua-
tion reports, is the question of administration and maintainance\. The sites
and services and squatter upgrading components have been built as Central
Government "enclave" subprojects\. It appears to have been assumed that even-
tually they will be handed over to the local authorities (parishes) for
administration and maintenance\. So far there is no sign of this happening\.
Indeed, indications are that the local authorities may be reluctant to take
them over since they were little consulted on the projects' design or imple-
mentation and they do not appear to fit in altogether with the local author-
ities' ideas on planning and standards\. The Region notes that the municipal
authorities in Kingston were consulted a number of times\. The audit observes
that while these efforts were considerable, they did not result in concur-
rence by the municipal authorities\. The question of political/administrative
arrangements and maintenance are discussed further in Chapter III\. However,
it may be considered that the project is not really completed until satisfac-
tory permanent arrangements have been made for the administration and mainte-
nance of the subprojects\. The audit mission was cited various reasons why
the municipal authorities or the regular utilities were unwilling to accept
responsibility for the schemes\. These included among others the lack of
street lights at Catherine Hall and Hunts Bay, the disrepair of roads and
drains at Hunts Bay, the arrearages in water payment at Nannyville, and the
dimensions of roads at Spanish Town\. The problem of handing over has been
less noticeable in prior MOC(H) schemes because MOC(H) retained title until
the mortgages had been paid off\. Thus one of the innovative features of the
7/ The Government hae commented as follows: "There is a tendency to empha-
size that many aspects of the project failed to achieve their respective
goals and many processes appear to be incomplete\. But one may observe
that the concept of allottees assisting one another to complete their
houses has never been shown to work on a large scale, and on the other
hand, progressive development where allottees complete their dwellings
as their resources permit is by definition a continuous process lasting
many years\. In a sense the project is never 'finished' until the indi-
vidual household's shelter requirements are fully satisfied"\.
8/ See the Government's comments in footnote 7 above\.
- 17 -
project, the vesting of fee simple titles, led to unforeseen difficulties\.
The Region notes that the Ministries of Education and Health had been con-
sulted, to the point of delaying the project, on the design of facilities
which would eventually be operated by them and which they wanted and that
their refusal (as that of other agencies) to take over facilities is only due
to their current lack of budget funds\.
Other Comments on Sites and Services Components
48\. The project is something of an experiment and should be closely
monitored and reviewed from time to time over a prolonged period\. This
should be at least through the full completion of the houses and through the
setting up of permanent administrative/maintainance arrangements\. The moni-
toring should cover not only the physical and cost aspects, but also admini-
strative and social questions, including surveys of the views of the inhabi-
tants of the sites in regard to the various concepts tried, the location and
planning of the sites, the detailed lay out of the infrastructure and of the
on-site buildings, the administration arrangements for the projects, and on
the functioning of the services and on the maintainafce provided\. However,
at least some tentative components, or questions, may already be raised\.
(i) Project Design
49\. The site selection has been criticized, particularly in the cases
of Hunts Bay I and II and Marcus Garvey, at Kingston, and Catherine Hall at
Montego Bay\. A stated intention was that the sites should be close to
employment\. This has not generally proved to be the case, particularly as it
was not found practicable to incorporate the industrial component of the pro-
ject, which was intended to provide jobs at ready access to the housing
sites\. Also the four sites mentioned were situated in swamps, thereby
involving drainage difficulties and possibly health problems, especially as
the Hunts Bay site is traversed by drainage channels carrying industrial
effluent\. In any case the preparation of the swamp sites involved substan-
tial costs in landfill and drainage, in addition to the environmental penal-
ties\. The Government, in its comments, has noted that recent policies stipu-
late that town planning should play a major role in the approval of new
developments\.
50\. The lay outs of the housing lots have been criticized\. It is
appreciated that the lay outs were designed to provide a higher density than
normal in order to reduce costs of land, services, etc\. Nevertheless, the
opinions of a number of the residents suggested that a more carefully
detailed lay out could have produced benefits at little or no extra cost\. A
frequent matter for complaint was the arrangments for garbage collection and
disposal\. Frequently it was necessary for residents zo transport their gar-
bage rather long distances along accesses to their lots that amounted to
little more than footpaths\. As a result, vehicles could not travel through
the lot areas to reach frequent pick-up points\. Furthermore, the arrange-
ments for storage of the garbage pending collection were unsatisfactory\. The
receptacles were not well designed and were very close to houses\. This,
together with poor and infrequent arrangements for collection, caused severe
- 18 -
nuisance to the nearby residents\. In some cases, burning of the garbage in
the receptacles had been resorted to\. The end result was that on a number of
the developments residents were dumping garbage into drainage channels,
thereby causing an insanitary nuisance in dry weather and obstructing drain-
age in wet weather\.
51\. House designs also came in for criticism by the residents\. They
did not like the arrangement whereby the "sanitary core" waE located outside
the dwelling in Options I, II and III\. Those residents who had progressed
with building their houses had usually rearranged the sanitary services to
have indoor bathrooms, involving additional work and expense\. Equally, the
lay out of the SAH, or habitable core, type units which were later adopted,
were criticized by the occupants\. Although these included indoor bathrooms
and kitchens, the owners did not like the arrangement with the bathroom next
to the kitchen and opening directly into the living room\. They usually
rearranged this by moving the bathroom, with all its services, to be more
convenient for the bedrooms, again involving additional expense\.
52\. The standards of the lay outs of the lots and of the construction
of the houses do not conform with those of the local authorities (parish
councils) who were expected to take over the developments\. It is recognized
that the intention of the project was to reduce building costs\. Neverthe-
less, it appears that insufficient consideration was given to the best way of
relaxing standards to produce the maximum reduction in cost with a minimum
fall in utility and amenities and clearly the relevant local authorities
should have been brought in at the design stage\.
(ii) Project Execution
53\. The method of construction of the houses is an open question\. The
first and basic question, which does not yet Lppear to have been answered, is
whether the "self-help" building process is satisfactory or worthwhile\. At
first, the only options offered were for a serviced site with or without a
constructed sanitary core\. This proved to be unsatisfactory for the reasons
briefly described in para\. 35\. Subsequently two-thirds of the sites were
completed on the SAH basis, with a habitable core provided initially as des-
cribed in para\. 36\. This appears to have been more successful, but data are
lacking as to the completion rate by the lot holders and on the costs
involved\. The main advantage of the system seems to be to reduce the initial
cost, and thus the initial down payment and mortgage payments\. However, even
this feature does not seem to have brought the housing development within the
reach of the lower income groups, as noted in para\. 26\. Indeed, the end
result has been to heavily subsidize housing for people around the 68th per-
centile income group\.
54\. As for the cost of construction, it has not been demonstrated that
the self-help system necessarily is cheaper\. On the face of it, the house-
holder might be able to complete the house more cheaply partly through his
own labor and partly by hiring casual labor, etc\. However, in practice most
householders appear to have hired contractors to do the work, or have hired
- 19 -
tradesmen and have done only a limited amount of work themselves\. Further-
more, any reduction in costs through this method may have been offset by the
loss of economies of scale which might be expected with efficient larger
scale construction and the extra costs incident to frequent starts and stops
in construction\. Furthermore, only very limited investigations appeared to
have been carried out as to alternative methods of design and construction of
houses\. For example, it might be possible to devie- precast or prefabricated
unit types of construction for houses of a scaled down standard which might
be erected through competitive contracts at a total cost less than those
under the sites and services project and possibly more within the reach of
the urban poor, at least if given an equivalent subsidy\.
55\. The procurement procedures adop'-ed under the project give cause for
concern\. Although the loan agreement called for international competitive
bidding (ICB) this does not appear in practice to have been used\. There was
no prequalification of contractors, with the wide advertisement usually given
for ICB\. Advertisements were limited to local papers and embassies, merely
calling for bids\. In effect this amounted to local bidding since few, if
any, international contractors remained in Jamaica at that time\. Also, with-
out the prequalification advertisement procedure, it might have been diffi-
cult for outside contractors to inform themselves sufficiently about the pro-
posed contracts in time to submit bids\. As to the sizes of the contracts,
the total works of infrastructure and building construction ended up at about
J$90 million\. Even if this work were broken down into a considerable number
of lots, if suitable groupings had been made for bidding purposes, combina-
tions amounting to adequately sized contracts could have been formed which
might have attracted international bidders\. To make matters worse, many of
the contracts were not bid at all but were negotiated\. Thus not only the
international element but also the competitivc elemea was eliminated\. In
defense it was stated that the negotiated contraz\.ts, at least for the SAH
buildings (as contrasted to the infrastructure oi which they stand), were
financed wholly by the Government and did not invalve Bank financing\. How-
ever, there is still a question as to whether it should have been subject to
ICB since it remained part of the project\. Lt is particularly surprising
that ICB was not fully tried, in view of t'e known high cost of local con-
struction in Jamaica\. It could be argued that :he difficult conditions des-
cribed in the next paragraph would hae prevented any meaningful ICB in any
event\. It could equally be argued, however, that ICB would have provided an
avenue to overcome the difficulties and therefore deserved to be tried out\.
56\. The construction industry was In severe decline at the outset of
the project\. There was a serious deterioration in the overall economy,
together with political and labor troubles and violence\. These circum-
stances, including a serious fall off in the volume of work, and foreign
exchange difficulties making it hard to obtain necessary materials, equipment
and spare parts, caused foreign firms to pull out and many local firms to go
out of business or suspend operations\. The Bank financed projects, including
this one, did something to help reduce the severity of the depression and
contraction of the construction industry\. However, the prevailing circum-
stances undoubtedly added to the cost of the project, directly through the
effect on efficiency and, of course, through the effect of inflation and
devaluation of the currency\.
- 20 -
(iii) Economic Reevaluation
57\. The economic reevaluation in the M0C(H) Completion Report and in
the PCR have been based on the assumption that benefits are equal to the
imputed rental value of the houses in the sites and services schemes\. The
basis for the estimated rental value is not given in the documentation but
the audit gained the impression that rents were subject in Jamaica, as else-
where, to considerable variation depending, among other things, on location\.
The audit notes that Jamaica has a number of established real estate
appraisers who could have provided a more accurate estimate of the sales or
rental values of the houses built under the project\. Costs are based on the
expenditures on sites and services and on the on-site building work financed
by the Government, together with some assumed construction costs incurred or
to be incurred by the lot holders\. Little information has been provided as
to how these costs, particularly those involved in finishing the houses, have
been calculated\. Also, it has been assumed that the house construction works
on all the sites would be finished in 1987 and 1988\. At present this seems
doubtful\. The costs of the community facilities, and their share (30%) of
infrastructure costs, were excluded, as well as the cost of the Marcus Garvey
development (and its benefits if and when they materialize)\. Allowance of 3%
of the capital cost has been made for the cost of operating and maintaining
the infrastructure, but not for maintaining the houses, which may be a signi-
ficant omission\. On the assumptions made, the economic rate of return (ERR)
has been stated to be 3\.4% (as against an ERR at appraisal of 14\.4%)\. Due to
the lack of data, the audit has not been able to confirm this; however, if
adjustments were made to take account of the comments made earlier in this
paragraph, the ERR would be somewhat lower\.9/
58\. Economic reevaluation for the upgrading of the two squatter areas
has not been attempted\. However on a judgment basis this may well be one of
the unre worthwhile components of the project\. The infrastructure provided
has obviously contributed greatly to the amenities of these neighborhoods\.
However, there remain the problems mentioned in para\. 39 of the municipal
authorities of Kingston being unwilling to name the streets and institute
municipal services and of issuing proper titles to the occupants so that the
utility authorities would connect the water and electric power supplies to
the individual lots\. A Covernment committee is looking into these matters
(para\. 45) and provided the problems can be overcome, this part of the pro-
ject may be deemed successful\. The Government seems likely to use it as a
model to help guide future projects for upgrading slum areas\. An tnteresting
feature is that the Government decided to issue freehold titles instead of
leasehold\. This should encourage the lot holders to effect further improve-
ments to their properties and help them to obtain services from utilities and
possibly loans for further improvements\.
9/ The Region noted that the lack of maintenance costs for the houses was
counterbalanced by the exclusion of a residual value for the houses at
the end of the analysis period\. The audit is unable to weigh these two
factors though they would tend to offset each other\. The region also
indicated that a calculation had been made with the costs of Marcus
Garvey included which reduced the ERR to a lower value\.
- 21 -
(iv) Cost Recovery
59\. Full recovery of costs was not expected when the project was
appraised\. The actual costs to be recovered were left to be calculated at
the time the lots were being allocated and the leases drawn up\. A degree of
cross-subsidization was intended between the charges for the more fully
developed type lots and the least developed ones, with the idea of reaching
down to lower income groups\. In the end, this cross-subsidy was eliminated
and down payments were increased as well as charges made for the freehold
title of the land\. Nevertheless, major errors appear to have been made in
assessing the costs and mortgages\. This arose because of the inadequacy of
the accounting arrangements particularly in the earlier years of the pro-
ject\. As a result the mortgages were established at a level which the
Government estimates will recover about 38% of the cost instead of 71% indi-
cated at appraisal\. The Government subsidy element has, therefore, risen
from the appraisal estimate of 29% to about 62%\. The Government has recently
sought to raise mortgage payments for the lots at Spanish Town but the resi-
dents have resisted this and hired a lawyer to fight the matter\. A quantity
surveyor retained by the residents indicated to them that the book value of
their units was much above what their units were worth\. The Government, in
its comments, has observed that the low cost recovery in this project is in
conformation with other similar Bank projects in Botswana, Ivory Coast and
Tanzania where the rate of recovery ranged from 28% to 33%\. Moreover, the
Government noted that cost recovery performance should be judged in the light
that this is the first project of its kind attempted in Jamaica and that the
Government has embodied cost recovery in its National Housing Policy\.
60\. The costs which were intended to be recovered were the infrastruc-
ture costs (e\.g\. roads and drainage) less that proportion allocated to com-
munity facilities, on-lot development costs, the value of materials issued to
build the sanitary core and shelter, and an estimated value for the freehold
lots\. The infrastructure costs related to water, sewerage and electricity
were not charged, since it was deemed that these would be recovered through
the monthly utility user charges to be paid by the lot holders\. The audit
was not able to establish whether such charges do, in fact, recover costs\.
It appears that, as of March 1983, a typical mortgage in the self-help
schemes was about J$6,000 with yearly payments at about J$500; in the SAH
schemes the mortgage was about J$18,000 with yearly payments of about J$1,200
rising to about J$3,200 in the fifteenth year\. There is some indication that
investors are buying into SAH schemes; with a rental of JS200 per month per
room the returns are very attractive although the investor risks forfeiture
of the property if he is discovered\. Problems of this sort are an inevitable
by-product of schemes with heavy subsidies\.
61\. The mortgages for the SAH schemes, which represent the bulk of the
shelter schemes under the project, are based on an interest rate of 10% as
against a going commercial rate at the time of the audit mission of about
14%\. The latter rate barely covered the rate of inflation in 1983\. The SAH
mortgages are not level payment obligations but rise to nearly double the
first year's payment in the tenth year and to nearly triple in the fifteenth
year\. Whether the mortgagors will be able to afford such increases is
- 22 -
unclear unless there is sharp inflation\. In the latter case, however, the
interest subsidy would become progressively larger\. If level payments were
to have been applied from the start the schemes would have fallen outside the
Bank's income guidelines\.
62\. The Government has appointed several agents to collect the mortgage
payments\. These include a cooperative credit union and an affiliate of a
bank\. Data are not available as to the actual rates of collection\. However
the latest indications from the Government are that amounts varying between
70% and 90% are being collected from the various sites\. It is not known how
many are in arrears or in total default\.
Accomplishments in Regard to Factory Construction and
Equipment for Industrial Enterprises [Component (e)]
63\. This part of the project has already been included in the Project
Completion Report for the Jamaica Small Scale Enterprises Development Project
(Loans 1003 and 1609-JM), Report No\. 5374, dated December 27, 1984,
circulated with the Secretary's Report No\. Sec\. M85-51 of January 14, 1985\.
The audit did not review this part of the project in detail and will not
attempt to comment on the substance of the Project Completion Report\. It
sees no reason to disagree with the findings of the PCR that this part of the
project was not really appropriate for inclusion in a sites and services
project essentially concerned with providing shelter\. The original intention
of this industrial component was apparently to help industries which were
easily accessible to the housing developments being built under the project\.
However, this was found not to be practicable and in the end the small
industrial component with loan funds of US$1\.9 million was in effect added to
the US$7\.0 million of the Jamaica Small-Scale Enterprise Development Project
(Loan 1609-JM)\. There appears to have been considerable disagreement among
Bank staff as to the appropriateness of inclL-ing this component in a project
basically directed at shelter but the component was finally added to the
project as a policy matter\. Of the US$1\.9 million loan amount available from
Loan 1003-JM, US$573,000 was disbursed for direct lending on 26 projects
through the Government's Development Venture Capital Finance Corporation
(DVCF)10/ which was merged in 1980 into the Small Industries Finance
Corporfton (SIFCO)\.11/ After October 1981, a further US$998,000 was
disbursed in supporT of 13 projects for indirect lending through the
Government's Premier Investment Corporation (PlC)\. PIC formerly was an
affiliate of Jamaica's central bank, the Bank of Jamaica, but has now become
an affiliate of the reconstituted main development bank of Jamaica which is
called the National Development Bank (NDB), formerly the Jamaica Development
10/ DVCF was an affiliate of the Jamaica Development Bank (JDB) which
received the Bank's funds through subborrowing from the Government\.
11/ SIFCO and JDB remain legal entities but are concerned only with
collecting the loans made previously, SIFCO for small and medium
enterprises and JDB for large ones\. Both companies only have a skelton
staff\.
- 23 -
Bank (JDB)\. As of early 1984 Premier's functions were tn be merged into
NDB\.12/ Altogether, therefore, lending amounted to about US$1\.6 million on
39 projects\. Converted \.nto J$ equivalent at current rates, this came to
about J$2\.9 million, as shown in Table PPAM 1 in arriving at the total
project cost\.
64\. The audit notes that this component had been transferred through a
succession of corporate reorganizations from one entity to another\. This
made it difficult for the Bank to maintain an effective contractual relation-
ship with its lending partner in Jamaica and for the lending agency to search
out the sorts of clients that had been intended by the project and to provide
surveillance and technical aid\. These activities became very limited when
the lenders went into liquidation and their staff reduced to a token force\.
Moreover, both SIFCO and Premier expressed the view that the sort of socially
oriented development lending attempted in this project fell outside their
normal field of competence\. A special agency, the National Development Foun-
dation (NDF) was available to finance very small enterprises\.
65\. Mos of the projects were located in the Kingston area, though some
were as far as 30 miles away\. None were in the immediate vicinity of the
housing projects though some 25% were in the rough vicinity\. The small scale
industries were mostly in garment manufacturing, food processing and restau-
rants, and other small manufacturing and repairing operations\. Total employ-
ment created was stated to be initially about 460, later reduced by closures
to a little under 400\. About 15 of the firms were reported to have substan-
tial arrears of repayments of the loans\. The businesses concerned were not
thought to have had any significant effect on employment in the housing sites
constructed under the project\.
66\. Independently of the industrial enterprise component of the pro-
ject, a number of small scale commercial and industrial activities were noted
by the audit mission to be in operation in a number of the housing sites and
particularly in the squatter areas which were being upgraded\. No data is
available on these but small operations were noted by the audit mission in
road transport, manufacture of clay building products, baking, cigar manufac-
turing, dressmaking, and some retailing\. Whether these were in conformity
with land use regulations could not be determined\. However, some residents
at Hunt's Bay objected to the audit mission to the presence of shops in their
community\.
12/ Premier is down to two employees who are looking after a portfolio of
some 200 loans; with this small staff Premier is concentrating its
efforts on the problem cases and obviously can give no more than routine
review to most of the portfolio\. It's contact with the ultimate
recipients of its funds is limited because, unlike SIFCO, it made its
loans through intermediary commercial banks\. However, none of the 13
Bank financed loans are reported to be in default\. While all 13 loans,
both small and large, were reviewed by the Bank in Washington and while
the Bank provided guidance during this phase of loan implementation,
Premier had not at the time of the audit mission had any contact with
the Bank for more than one year\.
- 24 -
Accomplishments in Regard to Various Consultancies [Component (f)],
Training and Monitoring and Evaluation [Component (g)]
67\. The project provided consultancy services:
(i) for a review of the MOB;
(ii) to assist in an urban growth and management study;
(iii) to assist DVCF in carrying out part (e) of the project; and
(iv) to assist the MOH in completing detailed engineering for parts (a)
and (b) of the project;
it also provided training of staff of the MOH and monitoring and
evaluation of parts (a) through (d) of the project by the
University of the West Indies\.
68\. The Study of the MOH, later designated MOC(H), was undertaken for
the Ministry of the Public Service in the second half of 1976 by a Jamaican
firm of consultants, in association with five other firms\. The study des-
cribed serious deficiencies in the MOC(H)\. These included criticisms
particularly of its financial administration and accounting department which
was quite inadequate for management control to be effectively exercised in
formulating the budget and in controlling expenditures\. Criticisms were also
made of its planning and design, construction and maintenance, stores and
workshops and other operations\.
69\. The report noted that SSD had grown to employ more architects and
social scientists than the rest of MOR combined and made some proposals for
internal reorganization\. However, most of the report's recommendations con-
cerned improving the operation of the Ministry as it existed rather than a
more fundamental analysis of its role and structure: for example, the appro-
priateness of its various programs and how best they might be planned and
executed, its role in setting standards, policies and targets for the housing
sector and in undertaking research, the balance between private and public
housing, and the delegation of direct operating functioTLs to private or para-
statal b,dies\. The study noted there were four major public or quasi public
housing development agencies [one of them Sugar Industry Housing Ltd\. (SIR)]
and two major public housing finance agencies\. All were established in their
then corporate form ten or fewer years ago\. The report advocated merger of
all public or quasi public housing development agencies into MOB and amalga-
mation of the two main public housing finance agencies\. These recommenda-
tions were not put into effect\. Moreover, there is little evidence that much
change has occurred in the Ministry and no doubt those consultants' proposals
involving substantial upgrading of staffing and provision of accounting and
other equipment would run counter to the severe budgetary limitations of
recent years\.
70\. The Urban Growth and Management Study was undertaken by the
National Planning Agency of the Ministry of Finance instead of by consul-
tants\. The study was carried out from 1976 through 1978\. It concerned the
- 25 -
Kingston Metropolitan Area (actually extended to include a wider Kingston
Metropolitan Region) and indicated some policies for channeling growth; it
produced an outline five year forecast of investment needs for 1978-83
including those in the fields of Housing, Health, Public Utilities and
Education\. While the report was useful for indicating possible policies and
patterns of growth and development, the investment proposals could have only
limited application during a period of severe economic recession\. According
to the former official of the National Planning Agency who looked after the
work, the study had little direct impact but some Indirect results, particu-
larly in laying the groundwork for subsequent studies on such topics as pub-
lic cleansing\. However, the study's major recommentation for increased den-
sification (putting empty land into use) in Kingston was rejected by the
authorities\.
71\. Monitoring and Evaluation was provided by the Insttute of Social
and Economic Research of the University of the West Indies in Kingston\. A
number of reports were produced including one that raised questions about
allocation procedures and a collection of papers on the project in July
1978\. The reports were well written and thoughtful and identified many of
the problems which have been mentioned at various times including in this
audit particularly relating to the physical design of the project\. The
reports were relatively uninformative on managerial and procedural aspects of
the project\. These matters were treated in a series of reports by a Jamaican
management consulting firm (see para\. 68); they included an analysis for a
revised management system for SSD and analyses of project options at various
stages\. The provision for training of staff of the MOC(H) was eventually
used for training staff of the Sites and Services Project Unit\. While this
may have been of some help in the long run, it was no substitute for the con-
sultants' services which should have been provided from the outset to assist
in managing the project and for supervising the work and setting up a suit-
able accounting and costing system\. Consultants' assistance was made use of
for detailed engineering of the works included in the project and, contrary
to the implication in the PCR, (local) consultants were used for super-
vision\. The monitoring of the project was started by the University of the
West Indies, but was then abandoned apparently because of conflicts and
difficulties encountered in obtaining cost and other data\. There is no
indication of technical assistance for DVCF being provided under this
project, though technical assistance was provided under Loan 1609-JM\.
Overall Cost of the Project
72\. The total cost of the project in current J$ is estimated at
J$110\.45 million (Table PPAM 1)\. This compares with the appraisal estimate
of J$31\.71 million, giving an overrun of 248%; that is, the final cost was
almost 31 times the original estimate in JS terms\. As noted earlier, there
is some qualification as to the accuracy of the cost data available for the
sites and services components during the initial period of project implemen-
tation\. Nevertheless, the total is believed to represent substantially the
actual expenditure by the Government on the project\. There was, of course, a
rapid inflation during project implementation but project cost records have
not been kept in sufficient detail to allow recalculating the costs on a con-
stant price basis\. However, even If allowance is made for the inflation, the
overrun must have been substantial\.
- 26 -
73\. Virtually all the items increased significantly, except for the
small industries component where only a part of the provision was disbursed\.
In spite of cut-backs in the scope of the sites and services components,
there were major cost overruns in the infrastructure and on-site construction
costs, in the community facilities, in management of the project (not origi-
nally provided for), and a very large amount in the SAH contracts which also
were introduced during the course of the project\.
Policy Objectives and Accomplishments
(a) Objectives
74\. The overall goal of the project was to help alleviate urban
poverty\. More specifically, objectives were, as stated in the Appraisal
Report, "to bring housing, essential community services and job opportunities
to Jamaica's lower income groups to the maximum extent possible\." Further,
the project was made as large as possible to attempt to meet a proportion of
the backlog of housing and replacement requirements\. It was also intended to
demonstrate a more practical and desirable alternative to existing low cost
housing programs through being designed on the basis of what low in:ome
households could afford\. Finally, the project was expected to lead to inati-
tutional improvements which would provide executing capability for a long
term program\.
(b) Accomplishments
75\. The project did little towards achieving the overall goal of help-
ing combat urban poverty in Jamaica\. The principal component, sites and ser-
vices, which was aimed at providing low cost housing for lower income groups,
turned out to be much more expensive than forecast and appears to have been
almost entirely beyond the reach of the urban poor in spite of the Government
subsidizing the cost to the extent of over 60%\. Instead, the houses were
taken up by people averaging around the 68th percentile of the urban popula-
tion\. The subsidy, therefore, went to groups well above the median income
level\. The Government, in its comments, disagrees with the assessment that
the sites and services component did not help in alleviating urban poverty
because, according to the Government, the income group which is occupying
these houses would not have been able to afford similar houses in conven-
tional developments\. The audit notes that except in the case of the very
rich any subsidy may have the effect of making certain housing affordable to
a group; the issue is whether the group benefited can reasonably be counted
among the "poor"\.
76\. However, the much smaller component for upgrading of slum
(squatter) areas evidently did benefit lower income people\. Data are not
available as to the income levels of the communities served, but from visual
inspection of the neighborhoods it is reasonable to assume that the average
income level of the residents is below the median income level\. As the
Government is granting freehold titles to the squatters and is not recovering
costs of improvements from them, the lot holders are clearly receiving con-
siderable benefits\. The relatively modest expenditure of about J$4\.6 million
- 27 -
on infrastructure benefitted about 1,720 lot holders, that is a cost of about
JS2,700 per lot\. The Government, in its comments, has pointed out that the
success of squatter upgrading has led to its being declared public policy and
being used in many subsequent projects\.
77\. A further objective was to demonstrate a practical system for pro-
viding low cost housing affordable by low income households\. The principle
of providing sites and services had been accepted by the Government before
the Bank financed schemes\. But the project failed to demonstrate that this
concept is necessarily helpful in providing housing to low income groups\.
Moreover, there was a basic error of judgment in the design of the project\.
The experimental concept of self-help house building, starting with only a
sanitary core, should not have been attempted on such a large scale\. The
Government commented that the Bank, not the Government, was responsible for
the excessive scale of the project\. On the other hand, the limited upgrading
of the squatter areas component can be deemed successful and may influence
the Government to upgrade other similar areas\.
78\. The main sites and services component did not represent any change
in the Government's heavily subsidized provision of housing\. It did demon-
strate that provision of sites and services together with only minimal non-
habitable sanitary core facilities on the lots, for subsequent self-help con-
struction of houses by the lot holders, is not practical\. As a minimum, the
provision of a habitable SAH core is necessary if a self-help building system
is to be used\.
79\. A further objective which was not achieved was to provide community
services and job opportunities for the communities in the housing projects\.
Community facilities were built, but as noted above they have been almost
entirely unused because arrangements for them to be operated by the appro-
priate departments were ineffective\. Clearly such facilities should be pro-
vided by, designed by, or at least built in full cooperation with the author-
ities who are to operate them\. This was evidently not done under the
project\. The facilities appear to have been approached on an "enclave" basis
without reference to the location of existing facilities in the general area
and without a firm commitment from the departments or local authorities who
should operate them and provide budgets\. As to job opportunities, the small
industrial financing component, as noted in paras\. 62-64, was not successful
in establishing industries within the target housing communities, though it
did provide something like 400 jobs in other areas of the Kingston region\.
Sustainability Issues
80\. The audit is unable at this early stage to comment in detail on the
sustainability aspects of this project\. Difficulties have been noted in
administration and maintenance and in having the local authorities and the
utilities take over the sites and services and slum upgrading schemes (para\.
47)\. If these problems can be solved the slum upgrading schem3s may repre-
sent a permanent improvement of the living conditions of the inhabitants of
those schemes\. As pointed out in para\. 61, the mortgage payments for SAH
owners are to nearly double in 10 years and triple in 15 years and if the
- 28 -
owners are unable to meet these increases, the cost recovery feature may not
be sustainable unless there is more inflation in which case recovery will be
too low in real terms\.
III\. POINTS OF SPECIAL INTEREST
(a) Unresolved Conflict with Regular Organs of Government
81\. The concept of designing the sites and services component as an
enclave enterprise under the direct control of the MOC(H) carried the danger
of conflict with other government ministries and particularly with the local
government organizations (parishes)\. To overcome this danger a coordinating
committee was set up with representatives of a number of ministries and
departments\. However, this approach appears to have been cumbersome and not
suited to directing the management of a works project\. As a result it met
few times and was apparently ineffective\.
82\. In order to achieve the goal of providing low cost housing, the
MOC(H) sought to obtain sites which were as cheap as possible, including land
which was already owned by the Government, but which did not necessarily con-
form with the land use plans of the local authorities and of the Town
Planning Department (of the Ministry of Finance)\. These authorities normally
have to approve developments and subdivisions\. However, in this case the
MOC(H) had the legal authority to go ahead without such approval and appar-
ently it was not sought\. Consequently the local authorities did not feel
committed to the project\. Similarly, in regard to the standards of the
houses to be erected, the MOC(H) did not abide by the infrastructure stan-
dards and building codes normally enforced by the local authorities, thus
further alienating them from the project\. Such standards varied all over the
island\. In addition, the resaleability of houses is affected by their non-
compliance with code requirements because established mortgage institutions
are reluctant to provide credit for such dwellings\. The MOC(H) did provide,
in the arrangements with the occupiers in the self-help scheme, that all con-
struction would be in accordance with standards of the Town and Country
Planning Authority of Kingston and St\. Andrews Corporation or any other rele-
vant local or public utility authority, but this provision seems to have been
at odds with the practices of MOC(H) itself and was unlikely to be observed
by the occupants\. It may be inevitable that standards must be relaxed if
really low cost housing is to be achieved\. Nevertheless, it seems essential
that the choice of sites, their lay outs, and the relaxed standards of the
buildings, must be decided in collaboration with the local and other author-
ities involved\. Even if it is not legally required and even though it may
lengthen the time to prepare the project, this collaboration is essential if
major problems are to be avoided, particularly when it comes to trying to
hand over the completed developments for absorption into the normal local
administration of the local authority and, in the case of community services,
of the parent departments zoncerned\. This does not preclude a substantial
lowering of costs by significant reduction in standards, inder pressure from
- 29 -
the Government as necessary\. The aim should be to reach the maximum agree-
ment on how best to establish the lower standards in a manner which maximizes
cost savings but minimizes later administrative problems\.13/
(b) The Government as Developer
83\. Experience with this project poses the question whether the Govern-
ment is well suited to handle directly the development of low cost or any
other shelter systems, either by undertaking the land subdivision process
(through sites and services schemes) or by the construction of houses (in
whole or in part)\. From the outset of the project, the Government recognized
that the usual MOH organization was not geared to directing works projects
and set up an ad hoc project executing agency, the Sites and Services Unit,
later called the Sites and Services Division (SSD)\. But this did not prove
effective, as is shown by the many critical reports by Government and inde-
pendent agencies\. In addition to the usual difficulties of running what was
in effect an industrial operation within the constraints of a civil service
bureaucracy, from the outset the unit suffered from inadequate and inexperi-
enced staff\. The result was weak and ineffective management, planning,
design, supervision, administration and accounting\.
84\. To overcome the many problems and prolonged delays which occurred,
a number of parastatal agencies, and some private consultants, were engaged
at various times to help solve problems or to handle particular aspects of
the work\. In fact one of these organizations, the parastatal SIR in 1982
took over sone of the duties of the SSD which was dissolved; others were
transferred to another parastatal entity called Estate Development Company
(EDCO)\. Initially SIR looked after the construction of houses while EDCO was
concerned with infrastructure for human settlement\. Now both organizations
are engaged in both activities although EDCO alone is concerned with squatter
upgrading\. The role of SIH in SAB and similar schemes is not as developer
for its own account but as agent of MOC(H) for a fee\. Moreover, MOC(H)
retains for itself some important prerogatives including the selection of
contractors and the allotment of houses\. While SIH has completed the schemes
at Hunt's Bay II and at Catherine Hall quite expqditiously, it is not clear
whether an improved working of MOC(H), one of the original objectives of the
project, has been obtained\. The Government, in its comments, provides some
observations regarding the causes and future prospects of the administrative
problems of MOC(H)\.
85\. Moreover, the role of the Government and its various instrumentali-
ties in urban development and in the provision of shelter remains unclear\.
The need Lu rationalize these governmental activities was recognized at a
13/ The Government, in its comments, has observed: "Inter-departmental con-
flicts were cited as a major issue affecting performance on the pro-
ject\. But many of these conflicts resulted directly from specifications
which embodied the 'Sites and Services' principle\. The error, there-
fore, was in not appraising the impact that the experimental specifica-
tions would have on the local authorities"\.
- 30 -
seminar organized by L; ! Government in April 1979 in the results of the Urban
Growth and Management Study of the Kingston Metropolitan Region which was
executed with financial assistance from this project\. A variety of programs
exist side-by-side, some with long historical antecedents\. SIR, for
instance, a dependency of the Ministry of Agriculture, had its first line of
business in the provision of housing, for its own account and risk, for sugar
estate workers\. Another large parastatal, the National Housing Trust,
receives tax money as well as savings and provides subsidized home mort-
gages\. Government thus supports housing both as financier and as developer\.
The audit is unable to comment on the former role but believes that the
experience of this project raises tie question whether the actual land
development and home building functions, with their attendant risks and needs
for tight managerial controls, are an appropriate activity for MOC(H)\. In
its comments, the Government notes that it undertook the development function
because the private sector was unwilling to undertake the risks involved and
also observes that the present administration is seeking greater involvement
of the private sector in low income housing\. The audit notes the distinction
which needs to be made between the assumption of risk which may be a govern-
ment function and the actual execution of development which may not be appro-
priate for a public sector agency\.
86\. The problems which occurred in this project give emphasis to the
need to seek other institutional arrangements to produce low cost housing\.
For example, would it be more efficient for such housing to be provided
through the local authorities (parishes) perhaps with some modest subsidy
from the Government, as is done in some other countries? This might smooth
the way for the housing developments to be taken over by the local authori-
ties for administration and maintenance on a permanent basis\. Arranging for
these steps seems to be a major continuing problem with the present project\.
A further, and perhaps better alternative might be to encourage private
developers to provide such housing with suitable encouragement and assis-
tance, and possibly a degree of subsidy\. Such a solution would allow the
Government to act in a controlling function to ensure fair dealings and con-
formance to standards and avoid the Government's adopting some of the biases
of the commercial developer\.
87\. Even if it is decided to persevere with direct Government provision
of housing, considerably more effort should be made to adequately study and
try out alternative building systems, for example constructing completed
houses using precast or prefabricated units\. Although some effort in this
direction was made under the project, it does not seem to have been pursued
to the point of inviting competitive bidding for suitable systems\. The
Government might also attempt to provide housing as a "yardstick" for private
developers but if that were to be its aim it would need to compile much
better cost control and accounting records than it did in this project\. In
any case, the project demonstrates that it is unwise to tackle an experi-
mental system on a very large scale initially\. Pilot small developments
should first be tried out to establish whether the systems are practical\.
The Government, in its comments, has noted that the Bank, and not the Govern-
ment, was responsible for the decision on the scale of this project\.
- 31 -
(c) Socio-Political Considerations and the Bank
88\. It is perhaps unavoidable that there will be a political dimension
attached to providing low cost housing for lower income groups\. Indeed, the
provision to any income group of costly items such as land and houses at sub-
sidized prices is very likely going to attract political influences\. More-
over, in this project political considerations were exacerbated by the dis-
turbed conditions in the country\. During much of this period and particu-
larly in the vicinity of the project sites political tensions were high and
it has been reported that rivalries between opposing political factions led
to disturbed conditions, strikes, vandalism, and violence\. These conditions
probably had a significant effect on ti\.2 deteriorating economy and were
reported to have been a major factor in delaying the implementation of the
project\. In the case of the slum upgrading components these conditions pre-
vented Bank staff from making site visits during the last several years of
project implementation\. In addition, the national and local levels of the
Government were frequently controlled by different parties\. This made more
difficult the cozflicts which arose from the enclave approach of the project
(paras\. 80-81)\.1 /
89\. A particularly acute instance of these difficulties occurred at the
Marcus Garvey site in Kingston, which was said to have been perceived by one
party as an attempt by the other party to push into its area\.15/ Also the
Catherine Hall development at Montego Bay was said to have been similarly
perceived\. At the time the Bank seems to have been reluctant to acknowledge
that the disturbances and delays were largely of political origin\. Perhaps
devising an "arms length" method of selecting tenants for the houses
developed may be a key factor\. If the allocations are made according to
clear and impartial rules, it may be possible to defuse some of the political
tension\. Also if a system could be devised to use intermediary private
developers to handle the projects, it might help to reduce the preceived
direct control of the Government at either the central or local level\.
90\. The MOC(H) has a Community Services Department which origiL\.lly was
part of the SSD and was called the Social Services Division\. It was subse-
quently combined with MOC(H)'s Welfare and Statistics Section\. In addition
to research and surveys, the Community Services Department does a variety of
organizational, administrative, educational and promotional activities under
the heading of social work\. Some of these include educating the inh\.bitants
in MOC(H) housing schemes about their rights and obligations as owners and
tenants, establishing community organizations, setting up child feed\.g pro-
grams, youth clubs and teenage mothers' groups\. There are also economic
14/ The politically charged atmosphere in the project schemes was described
in a report of the monitoring and evaluation consultants (Experiment in
Low Income Housing in Jamaica: An Evaluation, p\. 237) as "the all
embracing monopoly exercised over community based political groups by
the traditional national party organization\."
15/ Ayres, Robert R\., Banking on the Poor, p\. 184\.
- 32 -
development efforts by helping in the craation of new businesses, by helping
them obtain finance from NDF (para\. 64), and providing management training to
small entrepreneurs\. The audit is unable to judge the scope and effective-
ness of these programs; however, the audit mission was informed that the com-
mendable efforts to promote community organization and leadership often
foundered on the larger political tension and that ssociations in some cases
had to be restarted several times\.
91\. The need to establish community organizationj in the MOC(H) schemes
and the difficulties in achieving this objective are partly due to separate-
ness of these schemes from their surrounding local political bodies\. The
April 1979 seminar on the results of the Urban Growth and Management Study of
the Kingston Metropolitan Region (para\. 84) emphasized as a major need
increased coordination of metropolitan urban growth at all levels of govern-
ment\. The seminar also dwelled on the relative weaknesses in terms of money
and staff of local governments in Jamaica and the parent ministry at the
national level and it deplored the lack of local autonomy and excessive cen-
tralization of functions delegated elsewhere to the local level\. To some
extent the enclave solution adopted by MOC(H) may thus only correspond to the
gaps at the local level; nevertheless, unless some means is found to give
effective expression to local political concerns and local political powers,
difficulties of the sort experienced in this project are bound to arise\.
IV\. CONCLUSIONS
92\. The story of this project is long and complex but has not yet
ended\. While the Bank's disbursements have been finished, many features of
the project remain incomplete\. At the time of the audit mission most of the
dwellings at Hunt's Bay and Catherine Hall only were one-room SAR units\. The
process of extending these units is underway but no estimates have been made
when it will be complete and how long the communities will be saddled with
the disruptions which the mission observed the building activity to be crea-
ting\. The earlier schemes continue to have a significant number of partly
built or empty lots which create nuisances for the communities\. All schemes
have community facilities which remain partly or wholly unutilized by the
intended agencies and with no plans existing for conversion to alternative
use\. Incorporation of the schemes into their respective municipalities and
public utility supply areas remains to be accomplished in most casis and no
creditable timetables for these goals have been established\.
93\. Though the audit has not analyzed the benefits and costs of com-
pleting the project quickly, the audit judges that this is desirable\. At the
same time, the audit withholds judgments on many aspects of the project as
future developments could affect the final outcomes in major ways\.
94\. The documentation on the project is voluminous w7t many elements of
its history remain obscure\. Nevertheless, it is clear, as several previous
evaluations of the project have concluded, that it had major deficiencies in
design and execut:on\. Many of these deficiencies it shares to a greater or
- 33 -
lesser extent with other projects in this and other sectors\. However, the
concurrence of such problems in this one instance marks the project as
unusual\. The deficiencies range from conceptual issues such as the location
of housing in industrial zones and technical problems such as soil investiga-
tion, to management of works and relations among governmental bodies\. In the
face of this multiplicity of problems, the audit saw limited merit in dwel-
ling on these one by one and has sought instead the underlying patterns and
forces which may explain what happened\.
95\. The problems arose partly as a result of undue optimism zad insuf-
ficient attention to detail\. Social imbalance also contributed to the d1ffi-
culties\. However, the audit believes that the project had major problems
because the housing development component cast the Government as a large
scale commercial entrepreneur and because both this and the slum upgrading
component were designed and implemented without much regard to the conven-
tional lines of governmental authority or the country's political environ-
ment\.
96\. The housing development component involved land subdivision and
housing construction on a scale not previously used in Jamaica by either the
public or private sectors\. Such schemes have proven very risky even under
private ownership due to critical marketing and cash flow problems\. It was
attempted here by an inexperienced organization hobbled by government pro-
curement and fiscal regulations\. Moreover, the attempt was made without pre-
paration of detailed plans and without study of the managerial needs\.
97\. Neither the housing nor the slum upgrading components were designed
in conformity with applicable land use regulations or the requirements of the
municipal or public utility authorities or other governmental authorities\.
They thus became legal enclaves within the urban environment\. The project
design implied that many of the rules were unneeded and socially undesir-
able\. In this respect the Government acted rather like private developers
who also typically argue against the cost increasing and profit eroding of
building codes and land use rules\. Whatev-- the merits of these rules, their
nonobservance has meant that the schemes found great difficulty in being
integrated into the community and that one of the objectives of such schemes,
namely to reduce the separateness of the poor, has been made more difficult\.
Moreover, by setting aside rather than reforming the rules, the project con-
tributed little to resolving the conflict between regulation and enterprise
and improving the environment for shelter development in Jamaica\.
98\. The nonobservance of rules also had political implications which
interfered with the project\. First, agencies who were not consulted or whose
standards were not observed naturally took the position that the facilities
which were created were not their creation or their responsibility\. Second,
the agencies and municipal governments often were controlled by political
groupings different from those of the Central Government which was sponsoring
the project\. Any jurisdictional question thus immediately took on an added
dimension which would have required careful consideration\. The project did
not address this problem or try to negotiate a formula for these delicate
jurisdictional issues\.
- 34 -
99\. As it considers the project incomplete, the audit has some diffi-
culty in assessing the project's policy impact\. Nevertheless, the audit con-
cludes that neither che self-help housing nor the employment nor the commu-
nity facilities features of the project have worked and that these attempted
innovations are not likely to have a long term impact\. The PCR notes (para\.
43) that the Government had not been persuaded to give up high design stan-
dards for housing and to abandon housing subsidies\. The audit agrees that
Government housing policy appears not to have changed in major ways although
the audit believes a thorough study of housing demand and finance is needed
to establish the parameters for a change in Government policy\. The audit
concludes, i\. contrast to the PCR, that it is too early to say that slum up-
grading has been accepted as public policy (no other schemes of this nature
have come to the audit's attention) and that recovery of site development
costs is accepted (the audit is unclear as to how much of the costs are being
recovered particularly as the audit is uncertain regarding the extent to
which interest charges are at market levels and the degree to which payments
are being made)\. The project has promoted the granting of freehold or long
term renewable land leases for the areas covered by this project; whether
this becomes a long term phenomenon depends on continuation of the Government
as a major subdivision developer which, as indicated above, itself raises
serious questions\.
â¢n-
ååå£ã
å
,!!ï¼ãï¼ãããããï¼
PROJECT PERFORMANCE AUDIT REPORT
JAMAICA SITES AND SERVICES PROJECT
(LOAN 1003-3K)
SELF HELP HOUSING OPTIONS
on" 1: Aft was OW M owtu"\. OPT" 2: ftrly wWk ld awvkam wd bWo mm
OPTUM 3: was, ld urvices,bWit me mW &*ulwL Thr"bodroWed- UmnbUWbye0-h@4 \.00
SCAL6 18-1
vow
PROJECT PERPORNANCE AUDIT REPORT
JAMAICA SITES AND SERVICES PROJECT
(LOAN 1003-JM)
IMPLEMENTATION SCHEDULE: PROGRAM ACTUAL
MAACS GNM!Y mm
DE LA VEGAUUUULUUS JDD #DFD FFt#é D#DF DFDd
ITS BAY 1I s
CATIERUNE HALL-* *--
COCNIIJRN PEN- - -
MROSTF F HOUSM
ORGANZATON S
URBAN GRDWTH &
MANMEMENT ST~ - - ------
1974 1975 1976 1977 1978 1979 1980 1981 1962 1963
-A~?UL GO~T
- 38 -
Fig\. 2: Implementation Schedule - Programmed and Actual
Notes
1/ Trogrammed schedule taken from Appraisal Report, op_cit\. The original
estimates were for 6,000 serviced lots and 2,750 households in thrie
\.upgrading sites\. Only 4,733 serviced lots were built and two sites
upgraded for an estimated 1,720 families\.
2/ Actual times include design & tender, construction of site and
on-lot infrastructure, housing units, community facilities, and
Start-A-Home\. Self-help work is shown with a different symbol\.
3/ Gap indicates no physical activity because of change in contractors\.
4/ Marcus Garvey site was changed into an industrial site after all
infrastructure and on lot-works were finished\.
5/ Programmed dates of completion for Start-A-Home units\.
61 Gap exists because of lack of co-ordination between activities\.
7/ A MC(H) organization study was not undertaken as such\. Several other
more specific studies were carried out in the context of the Sites
and Services Unit\.
PROJECT PERORMANCE AUDIT REPORT
JAMAICA SITES AND SERVICES PROJECT
(LOAN 1003-JM)
IMPLEMENTATION SCHEDULE
usi i Utn \.ms\.
(fi-i W&MSTfTÃ -m
cMff-unCnTE
~utv vs£anjis
Aaa ~A
essaU SamS?\. \.
~Cbre W N M i
CEIWL 551E C\.0TMET1mW
mi 4 ~n
COCSTT CLIES
asiOCATIWt i i-tU1P- -
CoInUTV ACES a
a-~ v&nuasrngfi-
M l QC9MM
~\. WU58\. l
Gæ-MTE V0LMST:Tø -
"MAA-C ioÂ~
AloCM nM\. - --CRMM
_____________1974 1975 1976 1977 1978 1979 1960 1961 1962 1983
ã¼ã¿ãä¸
ãªã¡â\.s æ¸ã¿ä»¤å¤ã¿ãR
- 41 -
AN= A
Page 1
Selected Documents and Data Available on Prolect
[excertp from Kinistry of Construction (Housing)
Completion Report, March 1983]
ne documents and other sources of Information consulted for
the elaboration of this report are listed herein by agency wbere they
can be found on file\. Agencies are listed in alLpbab*tical order\.
1\. Bank of Jamaica
Meareb Depiartment and Department of Statistics:
Inflator indices and projection of future inflation rates
- Cons price indices
2\. Caribbean Bousleg Finance g!Wration
- Annual financial statements
- Proposal for IIC(B) mortgage portfolio administration
- Statistical summary of wrtgage collections performance
3\. Ci!Z of Kington Cooperative Credit Union
- Record of payments made for do , self-help construction
materials loans and other fees for Nanmyville
- Record of mortgage payments for Nannyville\. Do Ls\. Vega (Bunts Say I
records are not yet availables because collections haw not started)
- Plan of mortgage accounts maintenance
- Annu-1 financial statements
4\. Commission of Land Valuations
Site and per lot ;,&-Iuatio;; of project lands for 2982
Criteria for land valuations
Estimates of current rental values of housing unit's at project
site locations, 1983
5\. Consultants
5\.1 Allison Pitter & S!R=, "An Alternative Use Evaluation of the
Wrcus Urvey sites -, s Location for the Ministry of
construction (Housinz)'% 1982
5\.2 Datacon Associates, Ltd\.
- A manaiewit accounting system for the Sites and Services Unit
of W(H), 1978/1979
- Self-help building materials account schedules for Namiyville,
De La Vega, and 11unts Bay I allottees\. 198211982
- Methodology for the calculation of mortgage amounts, 1982
- Mortgage schedules for Nannyville, Do La V*p, and Hunts Bay I
- Technical and Cost Re-Evaluation of the Sites and Services Program,
- JM Loan IW3, Submission of cost recovery computations, 1983
-42- ANNEx A
Page 2
6\. Department qf Statistics
\. Labor Force Sarvey reports
- Building Activity in Jamica, 1967-1975
- Building and construction statistics 1968-1978
- Kingston Household tacome Survey, Nov\. 1980
7Estate Develpm Comn (EDC)
- Oneallede books, 1979-1983
- Voucher listings per site, 1974-1979
- General payment vouchers file
- Financial statements (various periods)
- Construction contract files
- Consultant contract files
- Site plans
- Design standards
- Quarterly reports on status of construction activities
- Applications for Loan disbursement submitted to IBRD and CDB Loans
- Prechecked site boundary survey plans and tite sub-division plans
8\. Jamaice Industrial Development Corporation
- Marcus Garvey Industrial Estate: site design, building specifications,
schedule and cost estimates
- List of applicants for leasing factory space
- Status of occupancy and revenues of existing factory space"
9\. Jamaica National Investment Promtion Corporation
- List of applicants for leasing factory space
- PrOmtion program for Marcus Garvey industrial estate
10\. Ministry of Construction (Bousing)
10\.1 Coomunity Services Division
-Survey of Household Incomes in Squatter Settlements in Montego
Bay, Nov\. 1981
- Individual Project Allottees' files: declared household income
at time of allocation
10\.2 Estate Management Division
- Schedule of lands purchased and to be purchased for the project
10\.3 Financial Division
- Annual Budget estimates 1977-1983
10\.4 Legal Division
- File of legal documents signed by MC(R) and Project Allottees
10\.5 Office of the Minister of Construction (Housing)
- A National Housiag Policy for Jamaica, 1982
11\. Ministry of Finance and Planning
- IBRD Loan 1003-JM chronological file
- CDB Loans I/SFR-J\. 2/SFR-J, 3/SFR-J and 4/SFR-J files\.
- 43 -
ANNEX A
Page 3
12\. National Heuing Trust
- Survey of contrIbutor's acomes, 1981
- Construction price indices
13\. National Planning Agency
Urban Growth and Managmnt Study: Final Report, 1978
- conomc and Social Suvy,17-92
16\. Office of the Auditor General
- Sites ad krvices Division\. MCC)\. Audit reports\. queries, and
responses to queries, FT79-FT82
15\. Sugar Industry Housing, Ltd\.
- Construction contracts for Start-A-ome units
- Bi-monthly Progress Reports on the construction of Start-A-Home units
- Monthly Statements of Cash Received and Disbursed for the Construction
of Start-A-Home units, 1981-1983
-*Aanual Financial Statements
- Design Specifications for Scart-A-Home units
- Kay Indicators of construction progress (Management Control System)
- Practical completion reports for Start-A-Home units
16\. Task Force for the Management of Internationally Financed Projects
- HC(H) Sites and Services Project, Loan 1003-JM, Project Completion
Programe\. 1981
- NC (B) Sites and Services Project, Loan 1003-JM, Special Report on
the Status of Project Completion, 1982
- MC(H) Interim Report of the Government of Jamaica Mission to the
World Bank to Provide Basis for Discussion and Agreement on the
rinal Settlement of Accounts- Re: Loan 1003-JK, Sites and Services
Project, 1982
- IBRD, Report N9 294a-JM, Jamaica: Appraisal of a Sites and Services
Project, 1974
- IRD, Loan 1003,J, Loan Agreement and Project Agreement (1974),
Amendment of Loan and Project Agreements (1981)
- Functional Specification of Activities and Forms used in the process
of allocation of Start-A-Howe units
- Selection Criteria (competerized by IBM) for screening applicants for
Start-A-Home units and application forms
- Consultant's contracts
- Contracts with Mortgage Collection Agents
- Legal Docments to be signed by MC(K) and project beneficiaries
- Report of the Status of Title Transfer Activities
- Report to Nannyville and De La Vega Allottees on criteria used in
mortgage criteria
- File of Mortgage Account Queries Posed by Allottees
- Hethodology for the Resolution of Mortgage Calculation Queries
- File of Applications for Start-A-Home units received and processed
- File of Mortgage Schedules for Nannyville, De La Vega, and Bunts
Bay I Allottees
- File on the Promotion Campaign for the Sale of Start-A-Bome units
- 44 -
ANNEX A
Page 4
Task Force for the Management of Internationally Financed Projects
SFile of Construction Materials Loan Accounts for Mannyville, De La
Vega, and Runts Bay I
- Computer Sumary of the \.Characteristics of Applicants for Start-A-Bome
Units in ugston and Montego Bay
- Credit Screening Interviews for Eligible Applicants for Start-A-Home
Units: Completed Interviews Schedule
- Report on Procurement of Self-Help Construction Materials
- Minutes of Weekly Staff Metings
17\. University of the West Indies
Institute of Social and Economic Researcb
- Project Monitoring and Evaluation Reports
- 45 -
Page 1
INTERIM SPECIAL RFPORT
FRf4 THE
- PUBLIC ACCr4TS COWITTEE
ON
OPERATJOS OF THE SITES APO SERVICES OIVISIOH OF THE
MINISTRY OF HOUSING
At the request of Your Committee, the Auditor Aeneral conducted an investioa-
tion into the operations of the Sites and Services Pivision of the 14nistry
of Housino and submitted reports which indicated serious deficiencies in such
areas as the documentation relatina to award of contracts\. accountina controls\.
supervision of contracts ard centrol over cost overruns\. Based on the Auditor
General's Reports, the Accounting Officer in the Ministry of Housing and the
Director of the Sites and Services Division were examined at length by Your
Committee to determine what had pone wronq with the programme and the correctivr
measures beinq taken\. Your Committee also insnected topooranhical and aerial
nhotographs of the land area which comprised the Hunts Pay/Riverton City section
of the programme gnd heard evidence from reoresentatives of firms of architects
quantity surveyors and emineers who were ennaqed by the Sites and Services
Division\.
2\. This Report sets out the major weaknesses disclosed in the operations of the
Division\. steps already taken to improve the situation and Your Committee's
recommendations as to further remedial action necessary\.
3\. Conct aqd Financin,
Your Committee was informed that the schem-\. which commenced in the financial
year 1973/74\. was intended to provide employment and housinq accommodation
for families earnin less than $l,"00 per annum\. It is jointly financed
by the World Bank and the Government of Jamaica\. The oriqinal value of the
oroqramme was reported to be $310 of which the uorld Rank was to put up
54% and the Jamaica Government 46%\. Th, Qirector of Sites and Services
advised thmt thes prnsent estimated cost of the proqramme is aporoximately
$44 and the over-run would be borne in full by the Jluica fovernment\.
4\. Inadequate tccountinn Controls
The Auditor Aeneral reported that at the inception of the progremme the
accountine records maintained and the procedures adopted wore insufficient
to detect waste and ovzr-expenditure\. Accnuntina records wcre not kent to
reflect expenditure for different phases of onerations on the various schrms\.
-46
ANNEX B
Page 2
Instead all expenditure was charned to a sinale account under the Ministry's
Housing Fund's raoital Pead of Fstimtl-s and vouchers batched with other
Housinq Fund documents\. In the second v%\.r of operation \.charnes were cli\.ssified
and recorded in an iccount for cach Preect but thore was ne accnuntinn under
the various itcns of charge\. In addition th- sinale account was discontinued
and no other -nntrol account maintained, so it was nnt-possible to readily
identify the overall expenditure on the ornnraimme\. Since the Pivision was
physicall!, removed to offices at VR Scuth Camp Road on Ist Pecember, 1977,
there is evidence of better accountinn recnres and nrocedures tr previde thn
basis for improved accountaility with the noted exception of National Insurance,
P\.A\.Y\.E\. and Ntion\.-l Housin- Trust deductions to which reference is made at
parp\.nraphs 23 to ?7\.
5\. Your Comittee is pleased to learn that the accnuntin! controls have imoroved
but must renister its stronn disaporoval of the inadeounte system that existed
before and recommends that before any such new pro9r\.mme is implemente' in
the future, careful considcrations should be niven to the acc%untinr systems
and controls necessary to protect the oublic's interest and to Provide the
needed mananement informati-*n\.
C)\. Award of Contracts
The Auditor General reported that the process by which- contracts wer to have
been awarded required contractors to place competitive,tenders which should be
examined by the technical officers enraced by the Sites and Services Division
\.who would make reports and recommendations to the inistry\. However, nerusal
of the records produced disclosed only one rccasion on which there was
documentary evidence of a recommendation made by the Division to the Ministry\.
The Director of Sites and Services informnd Your Conmmittee that such recommenda-
tions were ubdally made by the consultants envaqed by the Division to the
Ministry\. Your Comittee was most concerned however that only in one instance
was the Auditor General afforded access to the technical assessment and
recommendations made regardinn t4e pzrsons to be awarded contracts\.
7\. The Auditor General further reported that when contractors were recuired to
pro-qualify for an award the Vorld Rank stioulated that their credentials
be communicated to the Bank for appraisal and anoroval before the conclusion
of the award\. These conditions were observed to have been complied with only
when a centract in the sum of 3,0l,825\.06 was awarded in June 1197S for the
development of Phase 1 of the Hunts Bay Project\. Another contract for
$5,959,742\.01 was awarded in January, 1977, to the same contractor for the
development of-Phase P\. but there was no evidence that the :re-qualification
exercises mentioned above were rereated\. The Director of Sites and Services
ANNEX B
- 47- Page3
advisod Your Committee that in some instances durina the tenderinn rocpAures
and prior to the award process\. the World Rank may htve had a mission in
Jamaica and anoroval for the award of certain contracts may have been made
here thus obviatina the need to transmit the infornation abroad\. The
Director explained that as far as the Hunts Pay Projett is concerned\. the
decision to award the second contract to the same contractor who did Phase 1
was taken by the ank and the Division subject to certain conditions, which
would prove more economical than noina out to tender annin\. and on the past
performance of the contractor on other jobs done for the Pinistry\. Your
Committee must express its total disaproval of the fAct th-it documentary
evidence in suoort of the Rank's nnnrovAl of the award of contract was only
made available to the Auditor Gencral in resoect of one contract and recomnends
that in future such rIocuments he properly filed, retained an" made available
for audit purroses\.
R\. Supervision of Works
The Auditor General reonrted that no documentation was seen that contractors
sut-\.itted work proqrammes for consiteratinn and approval before crmencinq
work\. Neither was there any indication th,t anproriate monthly or nuarterly
proqress renorts were submitted to the Ministry\. The Director of Sites and
Services informed Your Cramittee 'hat it was a renuirement for contractors
to submit work prnnrammes to the consultants enaaed by the Division before
work commenced and there could only be isolated cases in which this was not done\.
He explained\. however, that in many instances the work prenrammes were returned
by the consultants because they were considered inadequate\. He conceded that
the work proqrammes minht not have been part of the Division's documentation\.
9\. The Director also indicated that the censultants submitted quarterly renorts
to the Ministry and a cnpv was sent to the 4orld Bank\. In addition site meet-
inqs were held frcvn time to time between a representative from the Ministry
of Housinn\. the cnnsultant and the cnntractors to discuss pronrcss on the jobs\.
He admitted, however, that there v-rp certain thinns which had militated a!-nst
proper monitorinn of cnntracts\. These included the conditions on which
consultants were enpaned by the Division and the manner in which the Anticipated
costs of different items included in contracts were lumped tonether which made
supervision and control difficult\. He informeO Your Committee that a new set
of conditions for enaaewent of consultpnts had been developed and contr-icts
were now being preparer in sufficient detail to permit closer monitoring of
performance on each item of xexonditu,\.
10\. Your Committee was happy to learn that efforts were beino taken to inDrove the
supervision of contracts an! recnmmiends that in all cases ornper work prenraRMS
be submitted and approved before work comaenccs\. A copy of the approved work
orogranes and the nronross reports n3le by the consultants should form a
- 48- 3
page
part of the Divisiod's permanent records and be made available for audit\.
11\. Payments to Contractors
The Auditor Ceneral reported that payments to contractors wore mae on the
strenath of valuation certificates which showed block finres only with no
breakdrwn of the wrk bein paid for in accorance with aqreed specifications
and blls of quantities\. Other supportino Oncuments wore said to have been
rarely made available for Inspection\. In the form presented, the information
"as inadequate for the purposes of audit\.
The Director of Sites and Services indicated that at the ene of each contract
a final Certificate was prepared showinq all the details but conceded that
at the interim payment stages the procedure had been inadequate, and the
payment certificate has since been re-desinned to incluer\. the aertinent
details\. He indicated that some consultants were not happy with the chadre
as it meant more work and was considered by some as an infrin"meht on their
professionalism\. Your Committee fully supoorts the channe instituted and
recommends that a similar requirement should anply to all certificates on
which payments reiatin to contracts are made in the Public Service\.
12\. Variation on Contracts
It was reported that amounts specified in the bills of quantities an\.1 for
which contracts were awarded were usually exceeded\. Einhteen contracts with
originally arreed prices amountinn to $9\.n6,R7C\.67 reflected cost ever-
runs totallinn $3,02F\.Sf"\.2n\. Variation orders rrescnted amount to
$1,930,197\.19 only and in most instances the reasons prnvidel were vanue
and said to be mainly attributable to
(I) escalation in the price of materials
(ii) increases in labour cost , and
(iii)\. additions to the orininal contract\.
In the main, the supDortinn drcumentary evidence necessary to verify the'
computation and reasonableness of the additional cost was act produced\.
It was also disclnseO thst the time snecified in the contracts for cnmpletion
of work was usually exceeded without any documentation refAnctine formal
extension qranted an' there was no evidence that-any action was taken to
inflict the peialties relatinp to liouidated damanes\.
13\. The Accountino Officer in the Pinistry of Housin exrlained to Your
Committee that in relation to variatirn on contracts relianCe WaS nlnceO
on the consultinq Enninoers and quantity Surveyors\. The Director of-Sites
and Services indicated that the consultants wruld only confer with the
- 49 a
* 4 Am=K B\.
Page 5
Ministry whore the variation cnnstituted an item of work which was not already
priced in the bills of PuAntities\. He admitted that the documentation in the
Ministry relatinn to variations was inadequate and that much of tho infArmstion
would he in the office of the consultants\. He advised that the system nf apnrovinn
variations had been ovcrhaule since July, 197A, and the variation form re-
desinod to orovide the necessary details\.
14\. At the request of the Committce, a metinn was halA between the Auditor General,
the Director of Sites an#4 Services Division, an Pnninoor attached to the
Division\. a representative of nne of the finms of consultants used Iy the
Division and an officer frem the Pananement Services Division of the inistry
of the Public Service to examine the revised systmm and new variatir-n order
form\. The Auditor Goneral reported that the new variation form mnde nrovision
for disclosinn the likely causes of variations anO include" the followine
headin!s'
(i) material grice escalation\.
(ii) labour rate escalation-
(iii) exchanae rate
(iv) desin omission:
(v) quantities-
(vi) material unavailability:
(vii) extension of time-
(viii) desir!n mnjification-
(ix) chan-e in snecificatinn\.
15\. The new system fer inproval of variations recuires that minutes of moetinos
held 'etween the Sites and Services Divisinn, Resident Ennineers\. Consultants
and Contractors should be nreparec an! conies of these, alonr with other
supportinn data, should either he attached to the variation order or reference
Se
made on the order as to the file in which thev are !vailable\. The Resident
Enninecr is required to suhmit to the Division's head office, a monthly sunary
of import\.'int inforr-tion contained in Site diaries and the consultants are
required to submit nuarterly prnr-ss renrts on the contracts\. conins of which
are to be made available for audit\. The nnw variation order now renuires -
(i) the reconmeneatinn of the consultants
and the Division's Contracts anA Operations
anarors\.
(ii) the acceptance of the contractor: and
(iii) the approval of the Division's Project Diroctor\.
16\. In connection with the failure to annly the liquidated demanes clause where time
allowed on contracts was exceeOd the Director informad Your Ccwmittee that thr
relevant clause is weak, not easily applicable and as far as he is aware\. has nevpr
-50 -
hoon Invoked by the Ministry\. He said that from time to time contracts were
delayed for reasons over which the contractors had little or no control\. e\.r\.,
violence on site, rain, shortee of moteriais, strikes,\.etc\., and in such
circumstance$ adlitional time was allod\. No avised however that the
Mnister ha Indicated his intention to have th, liquidated datnes clause
Invoked wharo\.apnlicabie In the futurp\. 'The Committee recrmends that this be
effected without dWlay\.
17\. Your Committee was most dissatisfign with the Mnsatisfactory manner in which
variations were documntod anA supmrtd nrior tr July 1978\. and the fact that
so far orders in resroct mf variations totalline $1 ,09f,35? \.01 have net been
roducel to the Auditor Coneral for insnection\. Every vffort should tO made
to have those IncateO and resented fcr audit\. Your Crumittee notes\.the
efforts made by the Sites anti ServicPs Division to irrove the controls over
papents from variations on contracts anO believes that thp new system has a
numer of features which should te anrlind on an across-the-Hbar basis for
all contracts entered into by the Puhlic Service\. It recnmmnds that the
Ministry of Finance anrl Planninm and the Ministry of the Public Service shoul4
study this system and extract the relevant features which coulO form the basis
of a circular instruction relatinq tn the control of contracts\. Your Committee
also recommends that all extension of time arented to contracters should he
Properly documented and retainet' as part of the oermanent recorls, ant that the
liquidated damie clause be ro-examined anti approriate provisions made in all
contracts to orntect the nublic's interest anainst tinauthorised delays in the
execution of works\. Such a clause should be enforced in future\.
18\. Site Fillinn Derations
The Auditor General reported that contracts for site ffllinn should have been
awarded on a schedule of rates basis\. However his examination revealed that
the amounts awarded were estimted in block firuros\. Contracts were awarded
to private quarry owners to sunply narl and sand fillinn to various sites
and since they were resnonsible for nettine the materials to the site\.
private truck operators were enoaqed\. ehn the trucks were loaded at the quarry,
numbered tickets depicting the particulars of the vehicle, the amount of fillinm
loaded and-the-time of loadinn were issued to the truck drivers by the contractors'
employees\. The drivers were to nresent these tickets to the sunervisor on the
site when unloadine\. The supervisor would annend his siqnature as havino received
the material and return the tickets to the drivers\. The tickers were eventually
sent to the Ministry as supportino documents for claims made by the contractors
and attached to payment vouchers\. The tickets rere not filed in numerical or
chronological order and made verification of the payments extremely difficult\.
Instances\.wcre observed where tickets with higher serial nurbers bore earlier
times of loadinn than tickets with lower numbers for the samp trucks\. Cases
51-
Pag 7
were also noted where the time intervals betweon loads for particular trucks
mmr only three and seven minutes respectively, althouqh the return trip
from quarry to site renuires approximately Or% minutes\. No technical estimate
of fill rcquir\.mnts was produced to ho used as a means of check on the
claims for any niven area and it was not ascertained whether the capacity
of trucks conveina fill was Independently assessed on behalf of the Pinistrv\.
19\. The Director advised Your Committee that site fillina was done on Hunts Day
Phases 1\. 2, 3, and 4 projects\. In relation to Phases I and 2, a representative
of the Ministry was stationed at the ovarry to overlook loadinv operations
and to ensure that the trucks were properly filled\. In resoect of Phases 1
and 4, consultants were emplayed to supervise the delivery of marl and sand
to the sites on the Division's beh\.ilf\. Your Committee was told thit the
major problem encountered in those exercises was the determination of the
quantity of material sunolied and this had led to several disputes with the
contractors and drivers\.
20\. Your Committee was amazed to learn that the person who certified the delivery
of marl on jehalf of the Division was a timporary omployee who was oaid only
approximately SE per week\. and was not satisfied that that level of salary
could attract the riaht calibre officer who could properly carry out the
functions of certifyina the dt\.livoky of material costing approximately 2\.5
for Hunts Bay Phases I and 2\.
21\. Your Committee in an ittemnt to fully understand the factors that cortributed
to the supervisory problems experienced in the site filling operations and
the reasons for the substeintinl cost ovqr-runs on related contracts\. requested
the follmn! information
(1) a statement of the sources from which ff)i was
obtained, the name of the cnntractors ennaqed
and the neriod over which they were ennaged
(ii) the catooory of 1oloyee used as supervisor at the
site and a history of how many times the rersonnel
was channed at the nuarry and the sites*
(iii) the names\. cateonry and salary of the Ministry of
dousing employees whOn certified the nuantity
delivered to trucks leavinn th! quarry and how often
such persons were chanaed-
(iv) estimated\. and actual costs of site filling on Hunts
Pay Phases 1\. 2, 1 and 4*
(y) the role of the World Bank in financinn Phases 1 and
2 and the number'of units completed in each Phase
and the cost per unit* and
(vi) returns of V\.1\.S\., P\.A\.Y\.F\. and Hniinn Trust
contributions\.
-52 -
Page 8
In addition Your Comittee requested that the person responsible in the
inistry of Housin for Phases 1 and 2\. the consultinq firm enoaned on
Phases 3 and 4 and the staff responsible for checkine the loadina at the
quarry and the site, attend before the Comittee\.
2?\. To date Your Committee has not been supolied with all the information
reauested from tho 17th January\. 197, in particular that related to the
estimated And actual costs of site flllinn on Hunts Bay Phases 1, 2\.1 and 4\.
The Director assured Your Committee that the information existed but admitted
that difficulty was heino experienced in retrievinq it from the mass of
other Ministry records with which the data was interwoven\. He assured Your
Committee that more recently his Division had beon attem1tinn to nut in place
an informktion system "hereby such data\. as was renuested, could be speedily
retrieved\.
Statutory Deductions
23\. Your Committee was most alarmed to hear that the Ministry of Pousinn was not
complyine with certain of the statutory renulations relptinrt to ""\.tional
Insurance and Income Tax deductions from eployees\. Flany workers enoaged on
the Vinistry's work pronrames were said to have no Rational Insurance numbers
and so no deduction cards were maintained for them\. The Accountina Officer
said that deduction was nonetheless made and the amount paid over in a block
figure to the Collector of Taxes without supplvino any details as to the amount
contributed by each worker\. At a later staoe efforts were made to identify
the employees\. The Director informed Your Committee that he had on a number of
occasions issued "ational Insurance application forms to workers to be filled
out\. but the response was always poor\.
24\. Your Committee was shocked when further told that such oersons who failed to
comply with these requests were retained in novernment cployment\. and strone-
ly recommends that all persons ealoyed on the Ministry's projects who do not
have a Rational Insurance number be required to becon renistered without delay\.
Those who fail to do so within a reasonable time should be dismissed\. The
Pinistry must also take steps to ensure th3t the nncessary details are submitted
alone with the lodrment of National Insurance deductions to enable identifi-
cation of the contributors\.
25\. In evidence before Your Cowittee both the Accountino Officer and the Director
of Sites and Services anitted that in the -ast no deductions were made for
Income Tax from the wanes of persons emloyed on construction prriects\. The
reason niven was that in most instances there was a rotation of employees
about four times per year and therefore the salary paid to each worker 1y the
- 53 A 3
Ministry would not fall within the taxable rAnoe\. Your Camittee was alarmed
To learn that in further contravention of the Income Tax Act, no statutory
, return was beina made disclosina wanes paid to employees from whom no income
tax deductions were made\.
26\. Your Cmmittee informed the Accountina Officer that once employees rates of
pay fall within the taxable ranne then he has a statutory rnsnnsibilltv to
deduct tax and pay this over to the Commissioner of Income Tax\. If based on
the employees incane for the year\. they become entitled to a refund of tax,
this may be sounht from the Income Tax nenartntent\. The Committee advised the
Accountina Officer to ensure that deductions were commenced where anpropriate
and to comply with the other provisions of the Income Tax Act\.
27\. Your Committee is of the view that this failure to comply with the provisions
of the Income Tax Act and National Insurance Act, may not be sinoular to the
Ministry of Housing anti rccomenis that the Ministry of Finance issues an
appropriate circular to all 16inistries involved in the casual or temporary
employment of labour remindinn then of their statutory oblinations in these
natters\.
28\. Planning and Feasibility studies re land reclamation works:
Your Committee invited renresentations from the eneineerinn firms enqtaned by
the Sites and Services Division on the Hunts Bay projects to 'etermine what
systems were used in assessina\.soil conditions an\.4 in determininn the quantity
of fill renuired for each project\. Your Committee was told that in relation
to Hunts Pay Phases 1 and 2 an avoraisal was first done by the Ministry of
Housinq and later the World Bank had sent a team of experts who orepared a
comprehensive report\. Your Committee requested a cony but this was not providqt\.
Pith renard to Phases 3 and A a reorescntative of one of the cnnsultin'p firms
-indicated that his ornanization was enpaned to carry out studies to estimate
the cost of fillini those areas\. In daine so reference was made to the World
Bank study on Phases 1 and 2, and from his knetwledne of that stufy it shnuld
have orovided a reliable estimate of the fill required\. It was explained
that in addition to the existinn report and maps a 200 ft\. e!riI system had been
used in assessinr the nuantity of fill required fnr Hunts Bay Phases 3 anfd 4\.
24\. Your Committee was informed that there hem been a substantial over-run of fill
reouirement on Phases 1 and 2 but the exact finures were not orrvided althounh
Eq 3ted In thr case of Phase I the estimated nuantity of fill was W,00n
cubic yards but the final finure used was over 770,000 cubic yards\. The reason
niven for this excess were -
(a) the estimater elev-ation nf -fill was " ft\.
but ended up at 6 ft\. in some placesz and
54 -M
Page 10
(b) the estimatid are* of fill was 48 acres but finally
the area enMed un at 92\.7 acres\.
30\. Your Comittenr inquired why in view of the scientific planninn and studies done
the excess renuirement of fill provod so massive and was told that
(i) more debris than was estinated had to be removed'frea
the lower nart of the site-
(ii) the settlecwnt of marl wns exeossive\.
Your Committee was of the view that those were factors that the soil studies
should have disclosee\. It was inforneO that the qreater the number of bore-
holes used in th', snil tests the rre detailed and accurate the information
would bc\. It therefore asked %that additional cost would have been Incurred
to provide the desired infrrmation\. Th\., estimate sueested was anproximately
$15\.0011\. Your Comnittee was surprised that this additional expenAiture, which
was nanlnible in enmarisen to the cost ovor-run of anarnximately s70,000\.0G
(i\.e\. 300\.000 cubic yards at $1\.09 per cuhic yard\. was Prt incurred\.
31\. A renresentative of the consultin firm engars,e4 fAr the sumervision of the
clearinn of debris from the area, drainace work and dumpiniof marl and sand
for Hunts Bay Phases 3 anO 4, infnrmed Your rrmmittee thit on avr!rane a
return trio frnm the Ferry Ouitrry to the site would take about A5 minutes and
a truck would make about eiqht tri-'s ner day\. He advised that his firm hal
also encountered instances similar to those rpnrte-A by the Auditor fteneral
where trucks were reportin,: at 3 and 7 minutes intervals\. 4e further exeleined
that his firm had the Ounl rosnonsitility of checkinr the amount of fill
loaded and also ensurin-1 that the fill deposited is snread and comnacted te
reach the required levels of elevation\. He inicted that his firm employe!
purveyors to do the latter job but arreed with Your Cnnittee's view that
in future it wnule be hetter from a control noint of view if the two functions
were performe& by senarate firms\.
32\. Your Committee must ex-ress its ie' rnnc-irn at the anparent inadeouate
planninr and feasibility studies which resulted in ronr cost over-runs #n
Phases 1 an 2\. What is more alarminm is that in linht of the exrerience
ainMe on those twn phAsTs s-ifficient offort tines not ainear to have been
taken to remer!y the situation with re-:%rds to Phases 3 an1 4\. Yotr Crmmittea
was therefore confronted with a situation wiere messive eost over-runs have
taken place but because of inadenuate planninn and estimatinn\. the Division's
-failure to provide all the relevant data request& and the weaknesses Aisclescd
in the systm of sunnrvisinn the delivery of fill Pni in accountin- for Mis-
bursement made for matcrial sup-lied it is not nossihle to Oeterine how
much of thn additional cost is attribut!Ile to each facter\.
- 55 -
ANNEX E
Page 11
33\. The failure of the Sites and Services Division to Provide information
essential for a prooer assessmcnt of its performance and accountability
was a common feature of this investioation\. Despite reneated reouists
several extensions of time and the threat of subpoena, the Committee and
the Auditor general have to date not been afforded rc-ferrnce to the
following information-
(i) recommendations made by the Divisionk technical officers
concerning the award nf contracts except in one instance-
(ii) the World Bank's approval of the award of contracts,
with one exception-
(iii) work Proarmmes presented by cnntractors before
commencement of work:
(iv) variation orders for excess exoenditure of S1,906,352\.01
on contracts,
(v) estimated and actual costs of site fillina on Hunts
Bay Phases 1\. 2\. 3 and 4: and
(vi) a copy of the Vorld Rank's report on the Hunts gav projects\.
Your Committe2 nust stronaly condemn the Sites and Services Division for the
nnn-production of the abovamentioned information and wishes to renister its
total dissatisfaction of an accountino system and rooistry system which did
not allow the orompt availability of such dita\.
34\. In view of the substantial amount of money normally expcnded on land
reclamation works for site fill material Your Cnmmittoc makos the fellowing
recommendations which should not cnly apply to the Ministry of Housinn but
right across the Public Sector
(i) Detailed soil tcstina inclusive of anrced pattern of
closcly sited bore-holes should be carried out to
enable an accurate estim\.-t-i nf fill rcouirement tnd
costs to be nade and these costs should be th- basis
of a cost-henefit fesibilitv which shnuld he
documented for decision-plakina and available to
decision makers and public auditors\.
(ii) All contracts must be awarded on the basis of publicly
advertised coetitive tonler\.
(iii) All quarry wnrksrs, truck drivers \.ind loaders, check,?rs\.
and site wnrk\.-rs tn hr issued identification cards\.
Govcrnment should rrnvide idontification cards for its
workers whilc it would he the resoonsibility of cnn-
tractors to ensure that their workers are so supplied\.
A prener payroll is to he Drepared and maintained and
deductions for National Insurance National Housinn
Trust and Income Tax made\.
- 56 -
AMll \.
Page 12
(v) Where outside consultants are engaped the firm
responsible for supervisina the delivery nf marl
should not also be resprnsible for ensurinq that
marl deposite-I reaches the requireO levels of
elevation\. In view of the shortceminas of the
project under reiew different consultants and
suppliers of narl shnuld be enoaqed\.
!v) A hipher calibre of staff than the $S0 - S70 a
week temporary employee be ennagel to suqeivise
and check the deliverinn ef material t- construction
sites\. Such employees should be rotated on z
freauent basis\.
(vi ) Tickets of chits in support of material lelivered
should include ll rel!vant informatinn to enable'
verification and should be filed in chrenolr-ical
order and attached to the related ament vouchers\.
(vii) Detailed feasibilities and Bills of Ouantities
should be nreared by consultants on all aspects
of the nrrject inclusive of infrastructure\.and
buildinn construction\. All variations in ccst
must he docuwntd with anoropriate cm\.wents by
consultants for eac reference\.
(viii) All meetines of consultants, centractors, suopliers
and Mistries to he minut-!1 and conies circulatee
to relevant parties\.
(ix) No further work should be undertaken on this prrject
until these conditions are implemented\.
(6\.) Where contractors exceed the time allowed without
aDproval, the liquidator lamaes clause should be
enforced\.
(xi) Efforts must be made to secure the missin" documents
and vouchers immediately and have these submitted to the
Committee by the 12th December\. 1979\.
35\. YourCoittm had intended that this hnuld be a final Report\. but because rf
the extent to which important dncuments and information have nrt heen forth-
cominn and the work of the Committee frustrated\. this Report is beine treated
as an Interim PeDort with a final Report tn be submitted when thp outstandinp
data is presented\. In the event that the r%utstandinn information is not
furnished within the prescribed time\. your Committee inten1s to make further
comments on such failure\.
\. \.Chairman
\.
\. \. \. \. \. \. \.r\.
- 57 -
ANNEX B
APPENDIX Page 13
Consultants who appear-?d before the
PUBLIC ACCOUPTS COMITTEE ro the
Sites and Services Prnovmm
SWE OF CCNSULTPPT FIRM APEA OF PESPO?SIBILITY
Mr\. Eric Brown Precon Enrineerine- Clearine the area of debris,
(Principal) drainane wtorks, dumninn and
fillin- of narl in respect of
HB 3 and 4\.
Mr\. Bob illiams 'Hue Lycw Chin Wnrkee jointly with Precon ns
above\.
Mr\. Neville Betty Hill - Betty Soil Testin- HS 1 - I \.
Mr\. M\.R\. Fredericks Jentech Infrastructure dsinn to come
up with the final nrade level
of fill for HB I anO 2\.
Mr\. Kinrsley Rebotham Ci Plan Ltd\. Carried nut preliminary nlannin
studies of the project en
behalf mf the Ministry\.
-- K
- 59 -
ANNE C
Page 1
Key Issues and Policy Impact
[excerpt from Ministry of Construction (Housing)
Completion Report, March 1983]
A\. Project Issues
7\.01 At the start of this evaluation analysis, we were faced
with several questions regarding the performance of this project\. Some
of these the preceding analysis helped clarify, while others still
remain unanswered\. These key questions concern project physical design,
and institutional, economic and financial performance\. The following
paragraphs review the evaluation of the project from the point of view
of these key issues\.
1\. Design and Construction Issues
7\.02 (i) What levels of design efficiency were reached by the
project, and how can they be raiseda The efficiency of design for the
self-help project sites is that which had been programmed\. Nevertheless,
substantial cost savings could be generated by increasing site densities
even further, through the reduction of circulation and communal areas\.
Reductions in infrastructure costs, resulting from better site layouts
and from more economic standards, seem as pressing an issue as further
innovations in construction methods for housing superstructure\.
7\.03 (ii) What performance ratings apply to the different
construction methods used -n the project? The self-help construction
method did not succeed as envisaged\. As noted in Chapter III, it
is iortant to view self-help along with the concept of "progressive
development," or construction over time\. Given this, there are
distinct sociological, physical, and financial reasons why consolida-
tion using the self-help method wab discontinued\. First, instead of
moving onto a lot after enclosing a minimal living area, a pattern was
observed in which allottees continue to live in their original homes
during the construction period; many, in fact, did not move in until
the entire house was completed\. Second, without a minimum enclosed
space in which to store materia5and/or live, allottees had continual
problems with theft of building materials and lack of proper super-
vision of contractors\. Third, self-help construction as well as demand
for unsold lots was hurt by the withdrawal of a line of credit for
housing consolidation materials\. This phenomenon was especially
noticeable in hunts Bay I, where a substantial number of allocated
lots were abandoned\. Three methods of construction were used in
building the Start-A-Home units, one the standard traditional method
using reinforced concrete blocks and two methods using pre-fabricated
techniques\. Actual construction costs per unit varied both by site
and contractor for the same construction method used\. It appears,
therefore, that traditional construction methods, when properly-
administered and supervised (as in the management of Start-A-Rome
units by Sugar Industry Housing) were comparable in terms of cost-
efficiency with the pre-fabricated options used\.
- 60 -
ANNEX C
Page 2
2\. Institutional Issues
7\.04 ) Bov effective has the creation of a Sites and Services
Project Unit been in the promotion of sector institutional development?
There have been both positive and negative effects\. On the one hand,
the project unit caused a neglect of structural problems inherent in the
organization of the Ministry of Construction (Bonsing), withou, in
turn, providing a solid base for project implementation\. On the other,
the fact that the project unit demonstrated the desirability of moving
key housing production functions from the main housing policy offices of
MC(B), such as the delegation of many construction responsibilities to
EDCO and Sugar Industry 1ousing and mortgage collections to private
sector financial agents, has and should continue to have a positive
affect on the sector\.
7\.05 (ii) What can be learned from the failure of inter-
institutional coordination revealed by the low performance of comnity
facilitZes operations? Basically, the conclusion reached is that the
risks involved in fully servicing a housing site with these facilities
at the outset of site occupancy, are too high to be justifiable\. A
more efficient integration of housing and social services, can be achieved
over time, if the necessary land is reserved for this purpose within
each scheme\. The creation of large co-ordinating committees, molifies
very little the impact of genuine difficulties involved in coordinating
several institutional budgets, and in overcoming real budgetary
constraints\.
7\.06 - (iii) What alternatives exist to the system of allocations
used in the project? Allocations progressed slowly through most of
the project implementation period, and only in 1982 achieved a
desirable pace\. The process, nevertheless, remain time consuming and
difficult\. A possible alternative could be the use of financial agents
- such as C1FC and the National lousing Trust - for mortgage origination
in addition to mortgage collections, given an established policy for
the selection criteria\.
3\. Economic Issues
7\.07 The main economic questions are:
Ci) What is the economic impact of the observed delays
in Pro4ect implementation I Time is quite a sensitive factor in the
economic rate of return analysis\. Had benefit streams started 4 years
earlier, even with cost overruns of 54Z, the overall project rate of
return would have been 8\.1M\.
7\.08 (ii) Is the investment in Start-A-Romes, a proportionally
large and late investment decision - economically viable in the context
of this project? The overall rate of return estimated for the project
- 61 -
ANNEX C
Page 3
if Start-A-Homes were not built would decline from the observed 2\.32
to 1\. This results mainly from delays generated in imputed rental
benefits\.
7\.09 (iii) To what extent did the benefits of the project
reach the target popuation\. and what are the af fordability levels o4
the housing produced? Regarding levels of affordability, the sites an
services units, marketed at a &Di-plus subs14y level, are potentiaLly
affordable to families at the 22nd percentile of the urban income
distribution\. Start-a-bme units, on the other hand, are affordable
to families at the 60th ,ercentile, under the same assumptions\. In
teras of actual population served, both future and present project
beneficiaries tend to have incomes slightly above or at the ceiling
established as the target group of the project: 68th percentile on the
average, but a small percentage reaching down to the 33rd percentile
of the income distribution\. Actual demand response is the leading
factor in explaining the higher than intended incomes of the project
beneficiaries\.
7\.10 (iv) If the level of subsidies were half those actually
observed (as suggested at appraisal)\. hat would have been the impact
upon affordability levels? A full analysis of this scenario was not
made, but estimates show that, given project cost overruns to be higher
than household income growth, less subsidized sites and\. sevices units
would have been affordable to the '61:h percentile and Start-A-Home
units to the 70th percentile of the income distribution\.
4\. Financial Issues
7\.11 (i) What differences, if any, exist between the apparerv
and the net levels of project cost overruns? Chapter V shows that, ofhen
Start-A-Home costs are excluded from total expenditures, total cost
overruns are reduced from 54Z to 22%\. When inter-governmental transfer
payments for land are also excluded, total cost overruns are counter
balanced by other categories underspent, primarily community facility
costs, such that total project overruns drop to 1Z\.
7\.12 (ii) How much of total project cost is expected to be
recovered and what are the main factors that account for subsidies?
Direct and indirect projected revenues for the project correspond to
only 382 of total cost\. Since the cost recovery formula used is
basically the same as originally proposed, and since the anticipated
level of subsidy was 292 instead of the observed 62Z\. the difference
derives from faulty cost information at the time pricing decisions were
being made\. Better performance could easily have been achieved, if
financial accountability levels had been higher during project
implementation\.
- 62 -
ANNEX C
Page 4
B\. Policy Impact
7\.13 Rousing Investment Blend: Relative Importance of Urban
Upgrading\. The policy environment of the sector is now such different
than at the time of appraisal\. One main change is the relative higher
emphasis given to upgrading of existing squatter areas\. Although
upgrading was a minor component in this project, the idea introduced
develped through the intervention of other donors, and upgrading is
now a substantial part of total MC(B) housing program\. As a result,
it is expected that lower income groups who have failed to benefit in
a large way from self-help housing will benefit substantially from
this policy change\.
7\.14 Progressive Elimination of Subsidies\. Notwithstanding
the low cost recovery record of this project, present policy, while
keeping interest rate subsidies, calls for full direct-cost recovery\.
The means of achieving this goal are actually taking form\. The fact
that no gap now exists between unit allocation and initiation of
mortgage repayments, and *that MC(B) is removed from collection activi-
ties, point to much better cost recovery outcomes in future projects\.
7\.15 Legal and Financial Concomitants of Freehold Tenure\.
The shift from leasehold to freehold tenure represents a structural
policy change in more than one aspect\. Legally, it places MC(H) in the
position of having to finali-e all property title clearances early on
in the project cycle (in comparison with 10 to 15 years delays in the
old MC() schemes)\. For the first time, MC() has a full set of
appropriate legal documents for home buyers to sign at the time they
are allocated a unit\. Financially, freehold tenure not only relieves
MC(B) from the burdens of being one of the largest landlords in the
country, but also provides home buyers with a negotiable asset, which
extends significantly their credit potential for further investments\.
7\.16 Explicit Rousing Policy Statement\. Again, this
development cannot be attributed exclusively to the impact of the
project, but it benefitted from the lessons learned during project
implementation\. The Housing Policy for Jamaica 1/ is a strong
statement which commits, not only MCmB), but all major institutions
operating in the sector (including private sector ones) to strive
for better affordability levels, lover construction costs, and less
subsidies, in a concerted effort to increase the overall efficiency
of the Jamaican urban development process\.
1/ GOJ, A National Housing Policy for Jamaica, October 1982\.
- 63 -
ANNEX D
Page 1
Key Issues and Policy Impact
[excerpt from Project Analysis and Monitoring Company
Post-Implementation Evaluation Report 1983]
A f PROECT-IS
8\.01 A number of important issues have already been raised by the
PCR which the Government needs to take note but there are others which
though already implicitly raised by the PCR (paragraph 7\.01 to 7\.16 can
bear restating and these are:
(a) technical studies concernina the feasibility
of proJects should be ready prior to laon signatute\.
It is obvious from the history of the Sites & Services
project that sufficient information was not available
concerning the various\.sites prior to implementation and
this has lied to a great deal of loss in time as well as
in financial resources which could have been saved if
adequate information was provided about soil conditions
at the various project sites;
(b) the establishment of accounting systems and procedures
necessary to protect the public's interest and to provide
needed management information should be a condition for
first disbursement by the Ministry of Finance\.
Again the history of this project is replete with instances
where the Auditor General has requested information about
expenditure which has not been forthcoming because a proper
system of accounting and procedures was not established in
the first case;
(c) adequate provisions for the management of large projects
should be a precondition for cabinet approyal
The inadequacy of the project implementing unit to maqe
- 64 -
ANEX D
Page'T2
the project was recoanized at aporaisal and recommendations
were made for staffing the unit but this was not dealt
with until over three years later when the Bank threatened
+o with-hold disbursements\. Without proper staffina the best
system In the world will not work\.
(d) explicit recognition should be given to loan and project
conditions by executing agencies In their implementation
planning\. This is an area which is never\.generally piven due\.
recognition by executing agencies which sometims bring
them into conflict with funding agencies or as in the case
of Sites and Services to refusal by the Bank to reimburse
expenditure on contracts which were formalized contrary
to loan and project agreements and before the prior consent
of the Bank\. Though in this case the country did not lose
the foreign exchange entirely but the use of this scarce resource
was delayed long beyond the period when it should have been
normally available\.
- 65 -
ANNEX E
Page 1
MINISTRY OF FINANCE AND PLANNING
am 01sLT So sossnspfawenme 30 NATIDNAL HEROES CIRCLE\.
" "HIS 660M0INIONeA04 onwoseet n
AsaLUUl A\.D V\.I FOL,\.H\. P\.O\. Box St;&
so\. MansillKINGSTON\.
JAMAICA
30th May, 198S\.
Mr\. Yukinori Watanabe
Director
Operations Evaluation Department
The World Bank
1818 H Street NW
Washington D\.C\. 20433, U\.S\.A\.
Dear Mr\. Watanabe,
Many thanks for the draft Project Performance and Audit Report on the
Jamaica Sites and Services Project (Loan 1003-JM) forwarded with your letter of
April 12\. I am afraid that the Ministry of Construction (Housing) is not ready
to complete the consultative process here and will have communicated with you
to this effect\. As matters stand, it is unlikely that Government's views and
comments on the draft will be ready befofe mid-June\.
I can say at this stage, however, that the draft report is a most useful
document as it provides me with a strong reference point in my day-to-day search
for, and exploration of ideas and methodologies that might help the management
directorate to find the right answers to two difficult questions:
(i) what techniques can we use to ensure that a project does not
reach the stage where a firm investment decision is made
without a clearly defined mode of its execution, and adequate
provisions for recurrent operations?
(ii) what sort of compliance machinery should be in place to ensure
that identified problems of accounting, contract management,
supervision and reporting are dealt with purposefully and
expeditiously?
There are complling reasons for paying special attention to these questions and
I am now putting in place a small Unit which will work directly to me in following-
up specific problems as these are identified in PAMCo'b useful quarterly reports\.
The Unit will not just propose solutions but give practic\.,l help on a case by case
basis where possible\. Two such cases are being dealt with on this basis\.
Yours sin ,
\. W\. Milner
Financial Secretary\.
- 66
ANNEX 9
Page 2
MINISTRY OF CONSTRUCTION (HOUSING)
2 HAGLEY PARK ROAD\.
KINGSTON 10
HM/W\.8 June 26, 1985
Mr\. Yukinori Watanabe
Director
Operations Evaluation Department
The World Bank
1818 R Street, N\.W\.
Washington D\.C\. 20433
U\. S\.A\.
Dear Mr\. Watanabe:
Re: Project Performance Audit Report on
Jamaica Sites and Services Project
(Loan 1003-JM)
This is in reply to your letter of April 12, 1985
enclosing a copy of the first draft of the above captioned document\.
The analyses and conclusions contained therein were of great Interest
to this Ministry\. As requested in your letter, we take pleasure In
supplying comments on the report which are attached herewith\.
We trust that these comments will be of value to your
final report and look forward to receiving same\.
Yours sincerely
(Bruce Golding)
Minister of Construction\.
Enc1s\.
-67-
ANNEX Z
Page 3
COMNITS OF THE MINISTRT OF C1MNSTRUCTION ON
PROJECT PERFORMANCE AUDIT REPORT OF JAMAICA
SITES AND SERVICES PROJECT
The audit agrees with prior evaluation reports that the project
OED Comment: The was very poorly handled in all facets of Implementation\. The evidence
Government's ob- supports this conclusion\. Rovever, it was the Bank which made a basic
servation has been policy error in designing the projects too large at that time\. These
noted in paras\. designs were In effect superimposed on the fledging Project Unit without
77 and 87 adequate provision for consultant support in the areas of greatest need\.
d 8This resulted in the inexperienced implementing agency being overwhelmed by
the sheer size of the project and the insufficient preliminary engineering\.
One should also recall that the Sites and Services Concept was the result
of a search for new solutions to the problem of providing low cost housing
in developing countries\. Hence the project was of a somewhat experimental
nature, and neither the World Bank nor NDC(H) could have accurately
predicted the final outcome\.
OED Comment: The
Government's observa- It was suggested that because the final lot costs excluded the
tion on afforda- original target income group, the project did little to alleviate urban
bility and OED's poverty\. This statement seems inaccurate because the income group which
comnent thereon isactually did benefit would not have been able to afford houses in conventional
recorded in para\. developments\. In addition, the Squatter upgrading component was considered
75 and the Govern- so successful chat it was adopted as public policy and many such programmes
m ' were subsequently put into effect\.
ment a comment on
upgrading projects is Cost Recovery was said to be currently projected at 382 instead of
recorded in para\. the estimated 712\. The increase of Governmenc subsidies and insufficient
76\. recovery procedures are cited as reasons for the shortfall\. Although these
statements may be correct, they do not constitute a departure from the Bank's
DED Comment: The experience with other such projects\. While the Jamaican Government expects
Government's com- to recover 382 of costs, the recovery rates for similar projects in Botswana,
ments are recorded Ivory Coast and Tanzania range from 282 to 332\. It must also be noted that
in para\. 59\. this was the first attempt at full cost recovery on low income shelter schemes,
and while actual collections are slow due to the low earnings of allottees, the
principle of full cost recovery is now embodied in the National Housing Policy\.
The audit states that few recomendations for upgrading MOC(H)
OED Comment: The operations have been put into effect\. MDC(H) acknowledges the administrative
Government's and managerial deficiencies existing at the time of the project\. These
comments are resulted from the extreme difficulty the Ministry was experiencing in attracting
recorded in and retaining suitably qualified and experienced personnel\. However, in a
para\. 84\. subsequent move to increase efficiency In the construction agencies\. ECo was
created from the Old SSD with primary responsibility for Upgrading projects\.
while SIL was given responsibility for completing SAH projects\. MDC(R) is
also slated for a management audit to be conducted under the Administrative
Reform programme which the Government is currently undertaking\. Still, one
area of continued deficiency in MDC(H) is the lack of modern accounting
equipment, but this may be attributed to the severe budgetary constraints
with which the [ublic Sector has been operating over the past several years\.
/The Urban\.
- 68 -
ANNEX E
Page 4
OED Comment: The The Urban Growth and Management Study appeared to have little
Government's Impact at the time of thelaudit, but recenz policies stipulate that Town
comments are noted Planning should play a major role in the approval of new developments\.
in para\. 49\. This Is an attempt to avoid past errors of judgement in locating new
projects\.
OED Comment: The The audit portrays overruns in time and cost as achieving gross
Government's com- proportions\. The report mentions the factors which make accurate cost
ments are noted in analysis difficult or impossible\. but does not consider these in arriving at
paras\. 42 and 46\. figures for cost overruns on the various sites\. The Housing Policy Document
shows that the price increases associated with the construction of a low-cost
house were almost 4002 over the project period\. Coupled with this is the
fact that the project duration was underestimated at the time of appraisal,
and this invariably resulted in escalation\.
OED Comment: The There is a tendency to emphasize that many aspects of the project
vernment's com- failed to achieve their respective goals and many processes appear to be
ments are noted in incomplete\. But one may observe that the concept of allottees assisting
para\. 45\. one another to complete their houses has never been shown to work on a large
scale, and on the other hand, progressive development where allottees
complete their dwellingsas their resources permit is by definition a
continuous process lasting many years\. In a sense the project is never
"finished" until the individual household's shelter requirements are fully
satisfied\.
OED Comment: The Inter-departmental conflicts were cited as a major issue affecting
Government's corn- performance on the project\. But many of these conflicts resulted directly
from specifications which embodied the "Sites and Services" principle\. The
menits are noted in error, therefore, was in\.not appraising the impact that the experimental
para\. 82\. specifications would have on the local authorities\.
OED Comment: The In the light of the general performance of the Sites and
Government's com- Services Project, the audit questions the appropriateness of Government
ments and OED's acting as a developer\. However, one may consider that the Government
response thereto undertook what the Private Sector was unwilling to undertake due to the risks
are noted in involved\. The present administration is currently taking initiatives to
para\. 85\. secure greater involvement of the private seLtor in low-income development\.
- 69 -
JAMAICA - LOAN 1003-3M
SITES AND SERVICES PROJECT
PROJECT COMPLETION REPORT
I\. INTRODUCTION
1\. Loan 1003-JM for the JamaicQ Sites and Services Project was one
of the Bank's earliest efforts to respond to the problems of urban growth
and urban poverty\. It attempted to provide houses, community facilities,
and industrial jobs to 6000 lower income households\. Macroeconomic and
institutional problems plagued the project, and it was not Implemented
efficiently\. Cost and time overruns were very large, and the economic rate
of return dropped to only 3\.4%\. In the process, a great deal has been
learned by both the Government and the Bank\.
2\. This report covers the history of the project, analyzes its
strengths and weaknesses, and recounts the lessons learned\. Special
attention is paid to its performance with respect to four criteria:1/ a)
the extent to which it provided comprehensive services to the lower income
group; b) its policy impact; c) its Impact on institutional development;
and d) its economic justification\. The report is based on information in
the Staff Appraisal Report (No\. 294a-JM), the project files, and data
gathered by a project completion mission which visited Jamaica in October,
1983\.
II\. THE SECTOR
3\. During the early 1970's the Bank perceived that urban problems in
Jamaica related to -high rates of unemployment, maldistribution of income,
a shortage of housing for low-income families and a pressing need for
Improved community facilities and basic services"2/\. The causes were seen
as high rates of urban growth (3% per year), institutional weaknesses in
urban planning and the provision of basic city services, and misguided
policies which favored capital-intensive investments in the productive
sectors and overly expensive physical developments in the housing sector\.
III\. PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL
A\. The Process
4\. The Bank identified the project in July 1972, to respond to a new
housing policy announced by the Minister of Housing\. This policy was
generally consistent with an emerging awareness in the Bank of the problems
of urban poverty, and involved an approach similar to that which the Bank
had just approved in Senegal and was eager to have replicated in other
places\. Preparation and appraisal of the project was carried out rather
1/ These criteria are related to the stated objectives of the project\.
2/ All quotes in this paragraph are from the Summary and Conclusions
section of the Appraisal Report\.
- 70 -
rapidly between September 1972 and August 1973 by an ad hoc Sites and
Services Unit, established within the Ministry of Housing, and by 5 Bank
missions\. The project received Board approval on May 7, 1974\.
B\. Objectives and Description of Project
5\. Following the sector analysis (para\.3), the major goal of Bank
involvement was clear: to help combat urban poverty in Jamaica\. This goal
was made operational through a location-specific progran of "comprehensive"
direct services including "decent shelter for low-income families by
assisted self-help programs, jobs for those groups with the highest rates
of unemployment\., and supportive community facilities, such as day-care
centers, health clinics, schools and training facilities"\. The project,
which was seen as "first step to demonstrate the effectiveness of this
approach" 3/ consisted of: (a) development of six serviced sites4/
containingresidential lots, community facilities, and industries7 (b)
upgrading of three existing squatter areas; and (c) consultancy services\.
The serviced sites component was the largest element of the project\.
6\. In essence, the project tried to create an ideal enclave
community for poor people to serve as a showcase to the rest of
the country\. The demonstration of a successful project was to lead to
sound sectoral policies and institutions which, in turn, could deal with
the generic problems of urban poverty in Jamaica\.5/
IV\. IMPLEMENTATION
A\. History
7\. The project suffered from many implementation problems, inclu:ing
management deficiencies, insufficient counterpart finance, poor contract
performance, and physical problems with sites (see Figure IV-1 and
Annex 1)\. During the Start-up Period (1974-77), initial delays in staffing
the project unit, caused design and contracting delays\. By January 1976, a
poor macro-economic and political environment led to violence on project
sites, and a lack of investors for small industries and qualifie;1
professionals for project staff\. The industrial component had to be
restructured to remove its spatial focus; it became a traditional
development finance company operation to channel funds through Development
Venture Capital Finance Corporation (DVCF)\. After the election of 1976
political violence abated, but the management problems continued and in
August, 1977, half of the community facilities and one of the six sites
were dropped in light of Implementation delays\. During the Construction
Period (1978-80), consultancy work led to substantial management
improvements, including a better organizational structure, improved
staffing and procedures, better accommodation for the unit and a separate
3/ Fran summary and conclusions of SAR\.
4/ Canplands (Nannyville), Marcus Garvey and Hunts Bay (Seaview) in
Kingston; Catherine Hall in Montego Bay, Prison Farmlands (de la Vega)
in Spanishtown; and Bushy Park in May Pen\.
5/ This was explicitly stated in paragraph 3\.01 of the SAR\.
JAMAICA
SITES AND SERVICES PROJECT - LOAN 1003-JM
Occurrence of Major Problems
Implementation Schedule
AR 4974 4976 4976 1977 1979 1979 4980 1961 1982 1983
URORMWEQ 1 2 3 4 t121314 12 3 4 2 3 4 1 2 2 3 4 4 2 3 4 4 2 3 d1 3 2 3 4
1\. Manaaement & Coordhiation m we-as * a l
2 SQ&Vn
3\. FbxvacialManagement *E Em musU
4 COnhod Feormance
& vale M
6 Comfnutiflondacmrvan a*i ma Mr a
9\. ALOcalonm
9\. Loo elM\.
18 Malideace m
it\. Co1al ec q s w as m ama
- 72 -
account\. However, shortages in foreign exchange made it difficult to
obtain materials and spare parts, pre-election violence halted site
progress and sufficient counterpart funds were not available to finance
cost overruns\. Problems continued under the New Government (1981-83)\.
After the election in 1980, progress on the project deteriorated even more,
despite Government agreement to modifications designed to: (a) eliminate
building materials credits and some community facilities; and (b) merge
DVCF and another organization (SEDCO) into a new organization called the
Small Industries Finance Corporation (SIFCO)\. Staff morale dropped, and
most of the staff of the SSD resigned\. SIFO was not supported, and the
remaining funds in the industrial component were shifted to Premier
Investment Corporation (PIC)\. The Government balked at allocating lots
without construction materials credits and decided to erect a one-roan
house (called a "Start a Home") on each lot and to convert one cf the
nearly completed sites to industrial use\. After this restructuring,6/ a
foreign consultant helped initiate better procedures for cost recovery and
tenure\. However, problems remain in completing allocations, in maintaining
the sites and in operating community facilities\.7/
B\. Completed Project
11\. In the end, about 2/3 of the original project was actually
carried out; this included about 80% of the housing lots on 4 of the sites,
upgrading of two squatter areas, half of the community facilities and most
of the consultancy work (see Table IV-2)\.
C\. Implementation Schedule
12\. The project was supposed to have been completed in 3 ears (see
Figure IV-3)\. However, Implementation took nine years thus far /, even
though the project was significantly reduced and simplified\. The tine
overruns were caused by the following: an overly large and complex
project, failure to adequately plan implementation actions, deteriorating
macro-economic and political conditions, weak coordination among agencies,
poor management of the project unit, and physical problems affecting the
sites (high water tables, rains, etc\.)\.
D\. Reporting
13\. Quarterly progress reporLs, which were received rather regularly
until the end of 1981, assisted the Bank in following progress on the
6/ In December, 1981, the Bank agreed in principle to the restructuring
on the condition that certain quantitative targets were met within the
next six months with regard to construction, allocation, and cost
recovery\. Though implementation improved dramatically, the agreed
targets were not met by the due date\.
7/ During the PCR mission in October 1983, the Ministry of Finance and
Planning agreed to establish a committee of the relevant agencies to
tackle these problems in a concerted fashion\.
8/ Physical works were completed by December 1982, however work still
needs to be finished in allocations and operations\.
- 73 -
JAMAICA - SITES AND SERVICES PROJECT
(Loan 1063-JM)
Table IV-2: Project Description
Appraisal Revised/f Actual
Serviced Lots (number)
minimum construction/a 2,400 3,143 622
moderate construction7b 2,400 1,619 717
medium construction/c 1,200 353 240
complete house construction/d -- - 3, 154
Total 6,000 5,115 4,733
Community Facilities (number)
primary schools 7 7 4
basic schools 14 8 9/e
trade schools 5 1 1
community centers 12 8 6
health centers 8 6 3
market sheds 7 6 4
police posts 9 0 0
miscellaneous (industrial 0 3 3
training and promotion)
Total 62 39 30
Industrial financing included included included
(industries on (as IDF (as IDF
housing sites) operation) operation)
Upgrading sites 3 2 2
Consultancy work
MOC(H) study included included included
urban growth study included included included
monitoring included included included
engineering included included included
training included included included
/a Serviced lot plus erection by contract of a party wall which divided
houses from each other\. Building materials were provided to finish a
complete one-room house through self-help construction\.
/b Serviced lot plus erection of party wall and sanitary core\. Building
materials were also provided\.
/c Serviced lot, party wall, sanitary core, roof, floor and building
materials\.
/d Erection of a complete 1-room house prior to allocation\. No building
materials were provided\.
/e Of which 3 are uncompleted\.
/f In accordance with amendments approved February, 1981\.
IMWPLEMENTATION SCHEDULE: PROGRAED & ACTUAL
NANNYVILLE \.
MARCUS GARVEY
DE LA VEGA * ~ *tdsågiPi,D*
HUNTS BAY 11
CATHERINE HALL
DREWSL AND
COCKBURN PEN
MINISTRY OF HOUSIG -Go
ORGANIZATIC\.3 STUDÂ¥
UPBAN jROWTH
MAAGEMENT ST~V3 ÂÂÂÂÂÂ\.ÂÂ
1974 1975 1976 1977 1978 1979 1980 1961 1962 1983
-PROGRAMMED
ACTUAL CoWrRAcT
ACMIAL SELF-HELP
- 75 -
project, and were also used by the project unit for internal management
purposes\. Surprisingly, annual audits of project accounts were not
required\. However, the Government has done an excellent job in reviewing
the project experience through the preparation of completion reports by
both the Project Analysis and Monitoring Company (PAMCO) and the Ministry
of Construction (Housing) (MOC(H))\.
E\. Procurement and Performance of Contractors
14\. Though international competS'ive bidding (ICB) was anticipated
for all works, no international contractors submitted bids\. Even the
better known Jamaican construction firms were not attracted because the
works were incorrectly perceived as slum control and because contractors
were disillusioned by Government policies and did not want to become
involved with Government projects\. Those contractors who were selected did
not perform well, even considering the economic climate, either because
they were overextended financially (e\.g\. three community facilities
contracts to be executed simultaneously were awarded to one small firm), or
because they no longer wanted to retain a local presence (one fin was
reputed to have run down its local finances in favor of its overseas
commitments)\. Because procurement through bidding met with little success,
the Government tried to negotiate contracts whenever possible\. Two such
negotiated contracts were approved for disbursement by the Badk due to
special circumstances (i\.e\., to award the contract to a contractor who had
been successful in bidding on an adjoining site and to restart a contract
after the termination of an earlier effort)\. The remaining negotiated
contracts including the completed houses, a total contract padckage of
J$38\.9 (US$21\.8 million) and force account works (22% of all works) were
financed by the Goverment without Bank participation\.
F\. Cost and Financing
15\. In spite of the reductions in project scope, total project cost
exceeded the appraisal estimate by 244% in Jamaican dollars and 107% in
US dollars9/ (see Table IV-4)\. The cost overrun was caused by: (a) the
introduction of 3,154 completed one-room houses in the project\. This alone
accounts for 50% of the cost overrun (in Jamaican dollars); (b) a time
overrun of 6 1/2 years; (c) higher than expected inflation, particularly
in Jamaican currency10/; (d) failure at appraizal to include estimates for
construction management and site security; (e) inaccurate cost estimates at
appraisal -- particularly for land fill; (f) the extension of the Drewsland
upgrading area; and (g) unfavorable macro-economic and political conditions
which hampered contractors\. Estimates of expenditures may not be totally
accurate due to severe deficiencies in project accounting, particularly
during the early years of the project (1974-78)\. The Bank did not require
regular audits of project accounts, which might have helped to correct the
poor accounting procedures at the beginning of the project (see para\.13)\.
9/ The US$ cost overrun was less because the J$ dollar devalued by 50%
between 1977-1982 (see table on currency equivalents)\.
10/ Average yearly inflation of J$ was 18\.5% vs\. the appraisal estimate of
11 2/3%\.
- 76 -
JMAIC - IDA 1003-M
SIlES AM SWEIS POW
Table IV-4: Final Project Costs
Apprasal Z dang betmen
Falmate/a Ac~un1 /b apprasal æd arenal
BaklGvt\. Financed J! US Jn US% JS US$
1\. Infrastmeture ) 15\.6 16\.9 40\.8 30\.5 +161 + 80
2\. Lot Deeppne )
3\. C=munity Facilities 5\.3 6\.1 10\.5 6\.0 +98 - 2
4\. Imfitrie 3\.6 3\.9 2\.9 1\.6/c - 19 - 59
5\. Tedmical Assistance 1\.1 1\.2 3\.4 2\.0 +209 + 67
Sub-T~tal 25\.5 28\.1 57 4\. +126
Goverment FInan~
6\. Land Cæts 4\.4 4\.9 4\.4 4\.9/d 0 0
7\. Materials Fund 1\.8 1\.9 3\.2 2\.0 +77 + 5
8\. Campleted Hause - - 38\.9 21\.8 N\.A\. N\.A\.
9\. Mane and Security - - 5\.5 3\.6 N\.A\. N\.A\.
Sub-Total =\.2 52\.19 32\.3 +753 -7
Toal 31\.7 34\.9 109\.6 72\.4 +244 +107
a/ incr d[ng Cntngces\.
b/ Actual ependLture cuer a project ef re~r1 ecope (sæ Table IV-2)\.
_c/ InI Bark disburmnnt nly, sinc ta Is nct amilable yet n cplanentary fiancig\.
_ Actual cæts ver assmd to be the ae as £pprasal estimates, sinæ the land vwas already
wned by the Gomerntn at qwpraisal
- 77 -
16\. Unit cost overruns were even greater\. At appraisal unit costs
per lotl1/ were estimated at J$4,050 (US$4,500), including contingencies\.
Actual Unit costs at completion turned out to be JS21,200 (US$15,000)\. The
increased unit costs were due to high total cost overruns coupled with a
reduced project scope\.12/
17\. The total costs of US$72\.4 million equivalent were financed as
follows: Government through capital budget: US$29\.5 million equivalent;
Goverment through National Housing Trust US$21\.8 million equivalent; Bank
disbursements: US$14\.61 (US$390,000 was cancelled from the industrial
component of the loan at loan closing in June 1982); CDB: US$6\.53 million
during FY79-83\. Bank disbursement took place over 8 years during FY
1976-83\. Expected disbursement at appraisal was to be over five years
during FY 1974-78\.
V\. PHYSICAL PERFORMANCE
A\. Shelter
18\. Four thousand thirty three lots were completed, of which about
half were occupied by October 1983\.13/ The infrastructure, which was
constructed in accordance with design standards established at appraisal,
included lots of about 1010 square feet, asphalt roads and footpaths, and
individual water, sewer and electric connections\. Although efficient for
its time, significant Improvements in this field have been made since
appraisal; and it would now be possible to lower costs through improving
layouts, lowering design standards and providing communal rather than
individual services\. Unfortunately, the Government has been reluctant to
lower design standards in a significant way on new housing estates, because
it fears it will be associated with the creation of slums\.
19\. The amount of construction provided on each lot prior to
allocation changed considerably during project implementation\. Originally,
lots were to be provided with a party wall and, in some cases, a sanitary
core and shelter (roof and floor)\. Allottees were to receive sufficient
building materials to build at least one room of the house themselves or
through the use of hired labor\. The experience with self-construction was
mixed\. Many of the allottees finished high standard houses, using both the
11, Excluding upgrading and industries component\.
12/ Aside fran the specific problems which created high unit costs in this
project, unit housing costs in general are considered high in
Jamaica\. Possible explanations include: a) high construction
standards promulgated in the building code; b) inefficiencies in the
contracting industry partly caused by difficult labor problems; c) the
need for substantial imported materials with a high transportation
cost; d) insufficient competition among building materials suppliers\.
13/ Physical works on the major sites (with 2/3 of the total lots in the
project) were completed in December, 1982, so beneficiaries could not
occupy these sites until January 1983\. Settlement of benefliaries has
taken place since January 1983 on a phased basis of about 140 families
per month to allow for orderly processing\.
- 78 -
resources provided through the project and their own resources\. The cost
and quality compared favorably with contractor-built houses\. Other
allottees -especially the poorer ones- had problems in managing the
construction process and in finishing their houses\. The project unit also
had difficulties in managing the delivery of materials and supervising the
house building\. Thus, the new Government had contractors build one room
houses available for immediate occupancy and eventual expansion through
self-construction\. In retrospect, the concept of a one room house seems a
good idea\. However the costs would need to be much lower to make the
concept affordable to a median income family, which is the midpoint of the
target group in this project (see para\. 38)\.
20\. The selection of sites was poor, creating delays and cost
overruns\. Only two sites had suitable physical conditions\. The other four
sites had soil instability, high water tables, or bedrock near the
surface\. The site with bedrock was dropped from the project\. Two of the
sites suffered from air and water pollution from nearby industries, and one
of them (with 785 lots)14/ was turned over to industrial uses --
unfortunately,'only after J$7\.5 million had been spent on nousing
infrastructure\.
B\. Squatter Upgr&ding
21\. Though this was only a small component of the project (5% of
project cost in current Jamaican dollars), the experience was a good one\.
The community was involved in both planning the works and in providing some
of the labor (preliminary road works and moving fences for right-of-ways)\.
Leases were distributed following community consultation, and there is
evidence that some home improvements were stimulated (see photos)\. Because
this small demonstration component was successful, a much larger project
was subsequently financed by USAID\. The upgrading of squatter areas has
now become an accepted part of Jamaican shelver policy\.
C\. Community Facilities
22\. The housing sites were provided with community facilities,
including primary schools, basic schools, health centers, community centers
and market sheds\. The facilities were completed in 1982, but only four of
the 30 are being operated due to financial constraints facing the agencies\.
The number and design standard of community facilities are too generous\.
Although schools are certainly needed, the importance of the other
community facilities is not clear\. Also fixtures, furniture and equipment
for all the facilities should have been included in the original cost
estimates\.
14/ The Marcus Garvey site was turned into an industrial park/promotion/
training center specializing in the garment industry\. The community
facilities originally designed for housing residents have been adapted
for offices, training rooms and showrooms\. It is estimated that about
60% of the infrastructure provided for housing has been or will be
used\. The remaining infrastructure and all the party walls had to be
torn down\.
- 79 -
D\. Industrial Component15/
23\. This component was originally supposed to partially finance 10-20
industries to be established on the project sites, creating about 1000 new
jobs for site residents\. The original design of the component did not work
(see para\. 7)\. The component was restructured several times and eventually
became a traditional line of credit to small industry\. In the end, 43
industries received financing under the component\. This enabled the
creation of about 400 new jobs\. Though data is not available on specific
beneficiaries, none of the industries is near the housing sites, and it is
unlikely that site residents have benefited\.
24\. With hindsight, one can note several unrealistic expectations in
the original design: the industries planned were much larger than the
average in Jamaica (75 employees vs\. a median for Jamaica of 37); the
required debt-equity ratio (60:40) for the component was quite stringevt
given local conditions (debt - equity ratios of 75:25 and 85:15 were usual
locally); the industries were expected to hire residents of housing areas
before the residents had even been identified; and the component required a
level of coordination and management expertise which could not have been
expected from the identified institutions (para\.34)\. The worsening
macro-economic conditions also reduced the availability of willing
investors and attractive opportunities\.
25\. In any case, it is doubtful if a small component of this type
should have been included in what is essentially a shelter project, because
first, job creation issues cannot be solved within a specific neighborhood,
as was expected in the project; and second, the amount of attention
required to formulate, manage and supervise the component was
disproportionate to both the investment and its expected impact\.
E\. Technical Assistance
26\. Technical assistance was meant to cover two major studies and
other consultancy services and training\. The results were mixed\.
27\. The PIE calls the Urban Growth and Management Study "the most
unambiguously successful aspect of the project", and on balance, it did
achieve some useful results -including the identification of the proposed
FY84 Urban Transport Project\. It fell short of its full objective
however, partly because there was no money to implement the capital
program it proposed\.
28\. The Diagnostic Study of the Ministry of Housing was not fully
implemented\. Eventually, some of the funds were used to pay for needed
management consultancy work to strengthen the Project Unit\.
29\. Monitoring and Evaluction\. The University of the West Indies was
to have carried out independent monitoring and evaluation of the project,
but they abandoned the effort after two years due to conflicts with project
management\. In July 1978 monitoring and evaluation was turned over to the
15/ A full explanation of this component can be found in Annex 3\. Also
see the PCR on Loan 1609, the Small Industry Project (to be issued
March/April, 1984)\.
- 80 -
Community Development Department of the Project Unit\. Some surveys and
other studies were carried out successfully, but the work program was never
formalized, and the unit never applied for reimbursement from the Bank for
the work that was done\.
30\. Funds were also used for detailed engineering, a study of
industrialized building systems and for overseas training for 3 staff from
the Project Unit\. Provision should have also been made at appraisal for
consultant funds to cover construction supervision\.
VI\. INSTITUTIONAL ANALYSIS
31\. Most of the project institutions were managerially and
technically weak, and few have survived to the present day\. The
institutional aspects of the project were not carefully addressed at
appraisal, and many of the design problems could not be overcome during
implementation\.
A\. The Sites and Services Unit (SSD)
32\. The ad hoc unit set up in the Ministry of Housing (SSD) proved
competent in planning the project, and therefore, it was felt that they
should be responsible for implementation\. At the time, this seemed to be
the best solution to the lack of implementation capacity of the MOC(H)\. In
retrospect, the selection of SSD to implement such a large project was not
a good one\. SSD found it difficult to staff itself properly (the project
should have included provision for consultants to backstop staff), and
devising proper procedures for construction supervision and accounting took
a number of years\. By 1978, however, the unit was operating rather well,
and was called upon to implement projects financed by other international
assistance agencies (USAID and the Dutch Government)\. Unfortunately, the
SSD did not survive the change in Government (see para\.7), and its tasks
were taken over by the Sugar Industry Housing Corporation (SIR), by an ad
hoc task force, and by EDCO, a new housing corporation established under
the MOC(H) with specific responsibility for squatter upgrading\. Though
both SIH and the task force performed well, a permanent institutional
capacity for new shelter development still needs to be developed\.
B\. The Project Coordinating Committee
33\. Although the project was not very large in financial terms,
successful Implementation would have required the coordination and
cooperation of 18 different infrastructure, planning or financial
agencies\. Regular coordination between these agencies did not (and still
does not) exist\. Therefore, a Project Coordinating Committee, consisting
of representatives of the relevant agencies, was set up to perform tais
function\. The Coordinating Committee was not very effective, and only
seemed to have met at the insistence of Bank missions\. Coordination
problems were very serious\. Agencies did not approve plans in a timely
way, delayed in making infrastructure connections, and failed to take over
project facilities\. A substantial cause of these difficulties has been the
continuing fiscal crisis of the Government\. The Committee might have
worked out better, however, if, first, it had a clearly defined regular
function aside from the project, and second, it had been led by the
Ministry of Finance rather than the SSD\.
- 81 -
C\. The Industrial Component Institutions
34\. The original design of this component envisioned implementation
through two autonomous Government corporations\. The Jamaica Industrial
Development Corporation (JIDC) was to identify potential industries,
prepare feasibility studies and look for private entrepreneurs willing to
invest and manage the industries\. The Development Venture Capital Finance
Corporation (DVCF), an affiliate of the Jamaica Development Bank (JDB)
established in 1973, was to appraise the subprojects and arrange
financing\. Later, implementation was shifted to SIFCO and then to PIC
(para\.7)\. Except for PIC, which worked reasonable well, none of the other
agencies performed very well\. The PIE reports that "a Government Committee
reported that JIDC was absolutely lacking in both the commitment and the
competence required to fulfill its role in the project\." JDB, DVCF and
SIFCO also had serious management problems, and were understaffed and
undercapitalized\. In summary, it ia difficult to say that any real
institutional development has taken place under the component\.
VII\. FINANCIAL, SOCIAL AID ECONOMIC PERFORMANCE
A\. Cost Recovery
35\. The Loan Agreement set out detailed rules for recovering costs
through mortgages to beneficiaries\. The rules16/ were awkward to
implement successfully and several modifications were made during project
implementation, including: a) an increase in land charges which
accompanied the change from leasehold to freehold tenure; b) inclusion of
administration costs for the completed houses constructed in the project;
c) e;imination of a four year grace period before initiation of mortgage
charges; d) elimination of a cross-subsidy; e) an increase in the
downpayment from J$150 to J$500\. Even though these changes had the overall
effect of increasing cost recovery levels, the level of subsidy in the
project is much higher than anticipated at appraisal (62% vs 29% at
appraisal) due to the unavailability of cost data at the time mortgages
were calculated, and the need for negotiations with lot occupants created
by delays in the calculation of mortgages (which, in turn, was facilitated
by the extensive grace period\.) At the time of the PCR mission,
collections Lad just begun for most of the allocated lots\. Although what
is being collected is a very small portion of total costs, experience thus
far has been relatively good,17/ with about 70% of beneficiaries up to
date in their payments\.
16/ They referred to the recovery of housing infrastructure and core unit
costs over 25 years at an interest rate of 8-10% (the interest rate
was pegged below other interest rates in Jamaica)\. A four year grace
period was also included, during which time beneficiaries were to have
borrowed and repaid loans for house extensions provided through Credit
Unions\.
17/ Much of the arrears is due to administrative problems in starting
collections, not to an inability or an unwillingness of the
beneficiaries to pay\.
- 82 -
B\. Description of Benefits and Internal Economic Rate of Return
(TYRR) (see Annex 3)\.
36\. The IERR at appraisal was estimated at 14\.4% based on the costs
of the housing elements of the project and a quantification of benefits
from imputed rents, increased household earnings, reduced transport costs,
and decreased crime, public health and child welfare expenditures\. Since
the project was one of the first of its type to be financed by the Bank,
the methodology for deriving the IERR was not yet standardized\. In
retrospect, the assignment of benefits for decreased crime, health and
welfare is difficult to endorse since worthwhile data to support these
benefits are not available\. A recalculation of the appraisal IERR using
presently accepted methodology yields an IERR of 8\.4%\. This shows that
even at appraisal the project was not economically justified based on its
quantifiable expected benefits\. Given the difficult implementation
history, thi latest estimate of the IERR is even lower than the 8\.4%
derived in the modified appraisal analysis\. Based on the latest estimate of
housing related costs and benefits, (68% of total project cost) the IERR is
3\.4%, well below the opportunity cost of capital in Jamaica of 11%\.
37\. The IERR cannot fully account for all the benefits of the
project, which include: a) imputed rents for the lots; b) the generation of
400 permanent jobs as well as the enhancement of incomes through the
industrial component; c) the creation of about 94,000 man months of
temporary construction employment; and d) the provision of a higher level
of community services (should the community facilities start operation)\.
An in-depth survey was taken in September/October 1983 of households living
on the project sites, the majority of which are headed by women (as is the
case in Jamaica generally)\. This survey showed that, despite valid
complaints regarding the quality and timeliness of infrastructure and
community services and the presence of air and water pollution, the
majority of occupants were satisfied with their decision to purchase and
felt that they had bettered their standard of living\.
C\. Affordability and Distribution of Benefits
38\. At appraisal, the project was considered a poverty alleviation
effort, but the definition of the poor was much less rigorous than the one
used today\. The Loan Agreement (as amended) stipulated that 75% of site
occupants were to have family incomes of JS900 - J$1500 per year (the 33rd
to 66th percentile of the income distribution), with adjustments permitted
for inflationl8/\. The remaining 25% of occupants were to have incomes
below J$900 per year\. Despite the project's stated objectives, most of the
lots have been allocated to families from better-off groups\. The record is
better with the self-help sitesl9/ (with 29% of the lots in the project)
which are affordable (with the sUbsidy) to families earning a minimum of
about J$3000 per year (now the 30th percentile of the urban income
distribution)\. These sites were allocated to families earning under
18/ Originally, there was no adjutaments for inflation, however inflation
was much greater than originally expected, and during the course of
implementation the Bank agreed that target income levels should be
adjusted in line with the consumer price index\.
19/ Nannyville, de la Vega and Hunts Bay I
- 83 -
JS2,500 per year20/\. The remaining sitea21/, though theoretically
affordable (with the 62% subsidy) to families at the 60th percentile of the
income distribution, actually went, on the average, to families earning
J$7,860 (Kingston) and J$7,980 (Montego Bay) per year\. This is close to
the 70th percentile of the urban incase distribution, and represents a
violation of a covenant in the amended Loan Agreement which sets the
maximum incomes for beneficiaries at J$5,842 per year\. There are
mitigating circumstances, h-wever\. The sites were not very attractive due
to industrial pollution and swampy conditions, and an insufficient number
of households from the target group applied for them\. The universe of
potential beneficiaries therefore had to be progressively widened to
include households with somewhat higher incomes\. Also, it is extremely
difficult in Jamaica to correctly assess household incomes due to the
availability of transfers from overseas relatives, the prevalence of
informal (and sometimes illegal) incomes and the fluid nature of many
Jamaican families and relationships\.
39\. It is quite obvious that unit costs and subsidies must be reduced
if Jamaica is to produce housing which is affordable to the majority of its
residents and congruent with the resources of the country (see para\.19)\.
VIII\. BANK PERFORMANCE
40\. At the time of appraisal neither the Bank nor the Government had
significant experience in designing and implementing the new style of
integrated urban shelter projects\. For the Bank, lending for irban
projects began in FY72, and the Jamaica Sites and Services Project was the
ninth such loan\. With the benefit of 10 years of expe\.lence, one can see
that the appraisal was flawed\. For example, the appraisal team
underestimated the institutional problems, did not recognize
inconsistencies in the scheduling of Implementation, did not have firm cost
estimates for most of the project works, and went along with the selection
of poor project sites\. The management of the Bank liked the project,
though there were concerns expressed on project subsidies and
affordability, on the opportunity costs of land, on transportation to the
sites, and on the weaknesses of the Implementing agencies\. However, little
was said on matters related to many of the difficult-les which eventually
plagued the project, such as coordination among agencies and policies and
procedures for self-help construction and occupation\.
41\. Frequent supervision missions had mixed results\. Bank
involvement did contribute to some Improvement in Implementation\. For
example, the concerted efforts made in 1978 and 1982 to strengthen the
project were largely in response to Bank pressure\. On the other hand, the
Bank was not as effective as hoped\. Targets and key actions were agreed in
each mission, but usually the targets were not met\. In retrospect, there
were several ways in which the Bank could have been more forceful: a)
supervision missions could have set targets to meet the basic problems
(e\.g\. hiring of specific staff), rather than targets based on expected
outputs (e\.g\. finalized leases); b) problems could have been escalated to
20/ A recent survey showed that average household income on the self-help
sites is now J$7300 per year\.
21/ Seaview and Catherine Hall\.
- 84 -
the Ministry of Finance more often; c) the Bank could have suggested the
use of foreign consultants to fill local staffing gaps; and d) the Bank
could have insisted that project responsibilities be transferred to another
agency\.
IX\. CONCLUSIONS
42\. The original rationale for the project was to demonstrate the
possibility of creating model communities for poor people\. This did not
work because of failures both in concept and in execution\. In concept, it
is difficult to create orderly, fully employed and crime-free enclaves for
poor people in the midst of cities which do not fit that description\.
Businesses will not locate in a neighborhood or hire site residents unless
they maximize their profits by doing so; community agencies will not be
eager to extend generous assistance to a small group until more pressing
service needs (which may be in other parts of the city) are met, and crime
rates do not seem to be influenced much by pleasant environments in the
absence of jobs and other social changes\. Furthermore, successful
demonstrations ought to be accompanied by direct interventions in policy
formulation and institutional strengthening in order to be effective\.
Although this project included technical assistance for some such
interventions (in planning and housing institutional diagnosis),
insufficient attention was given to the community facilities, industrial
and infrastructural needs to have fully replicated the experience even if
it had been successful\. In execution, the failures were obvious\.
Macro-economic difficulties exacerbated the underlying problems of design
and management to frustrate the successful conclusion of the project\.
43\. How did the project meet the four major criteria set for it?
(para\. 2)\. First, it did not provide fully comprehensive services to the
lower income group because: a) the industrial component did not benefit
the people living on the housing sites; b) the community facilities are not
yet operating; and c) most of the people who benefited from the project do
not belong to the low income gro7ps originally targeted\. However, it did
provide housing, improved services, and some employment to many needy
people\. Second, the policy impact was mixed\. On the negative side, the
Government ;till does not recognize the necessity of drastically reducing
physical standards for new housing designed for the lower income groups\.
Instead, unrealistic standards are supported through large interest rate
subsidies channeled through the National Housing Trust\. More positively
the Government has moved in the right direction on some policy matters by:
a) recognizing the importance of upgrading squatter areas -- preAiusly
such areas were systematically cleared; b) improving the recovery of
development costs by increasing acrtgage charges and using agents for
collection; and c) adopting the une of freehold tenure for Government
housing projects\. Third, the inptitutional development effo-ts in the
project have not succeeded as hoped\. The MOC(H) is today nut much stronger
than it was at the beginning of the project, and none of the industrial
financing institutions have survived to the present day\. However, the
ex-post evaluation of the project by the MOF has led to some specific
guidelines for the preparation and approval of development projects by the
Government\. This should result in improvements in the future in all
development projects -even those unrelated to this sector\. And finally,
rearding t-\.e economic justification, the ex-post rate of return was only
3\.4, raing serious doubts whether the quantifiable benefits derived
- 85 -
from the project were sufficiently large to justify the use of public
resources\.
44\. The three major problems which hampered the success of the
project were the decline of the Jamaican economy, flaws in project
design22/, and the weaknesses of the Implementing institutions\. What if
anything could have been done to prevent these problems and what lessons
can be drawn for the future? The severe macro-economic decline could not
have been predicted at the time of appraisal, and the Bank and the
Government appropriately dealt with it by retaining a flexible attitude
with regard to modifications to the project\. Regarding the weaknesses
project design and institutions, a number of lessons have been learned\.
These lessons, which have already been incorporated into urban operations
approved after this project, include the following: a) first projects
should be relatively small (para\.12); b) expectations for social change
should be modest (para\.42); c) multi-institutional projects usually require
strong coordination arrangements (para\.33); d) small components for
industry should not ordinarily be included in shelter projects (para\.25);
e) Ministries of Finance, or agencies with general oversight
responsibilities, should be in charge of coordination committees (para\.33);
f) coordination mechanisms should not be specific to the project alone
(para\.33); g) the institutional aspects of projects need to be planned just
as carefully as the physical interventions (para\.31); h)special attention
should be given during preparation to the "soft" aspects of the project
(accounting, allocation, tenure, self-help constraction, etc\.) (para\.32j;
i) consultants should be made available to cover staffing deficiencies
(para\.42); j) audits of project accounts should be required (para\.13); k)
lengthy grace periods before repayment of mortgages should be avoided
(para\.35); h) implementation problems should be escalated to Ministries of
Finance (or similarly placed agencies) when significant improvements are
not made by Implementing agencies (para\.41); a) unit costs and subsidies
must be reduced to tackle housing problems in a meaningful way\. This
implies Governmental acceptance of much less costly design standards
(paras\.18, 39, and 43); n) sites affected by industrial pollution should
not be used for residential purposes (para\.20)\.
45\. In summary, the experience with regard to this project has
not been very positive\. The project was one of the earliest of the
Bank-supported sites and services projects, and there were numerous
deficiencies in design\. The economic situation in Jamaica deteriorated
during 1974-1981, with serious repercussions on project management and
implementation\. On the other hand, 4500 houses have been constructed,
squatter upgrading has been successful, and some industries received
finance at a time when it was essential\. More important, there have been
some positive impacts on policies and new approaches have evolved to cost
recovery and provision of tenure\.
22/ Including the deficiencies of the overall rationale (see para 43),
poor L lection of sites, the overly large size of the project, the
awkwar ess of cost recovery mechanisms and the overdesign of
community facilities\.
SjG -
1\.b il-lBII
fil 1 9 9 19 tl IIIk,
old
tt' kin
- 88 - ANN i
Page 2 of 6
Date cE1fetu
RePI,rt/LAtter (if applic\.) Major Probl
Note to FU fram Project 6/07/76 2/1 - Cm1 site not prooF ein ' psibluty ef
Officer teEdninr æntrt;
- Draslad work slr cde to seveæ at~sa of
Vloen~ in a~;
- inutril cpneit m s deg e n prnwo r in
jai d nar Sedsi~gsig\.
SuperdLcin Report 8/31/76 2/1 - Km=aru Gar~y still affeced by political violn and
- a seros re~er of inhstries copoat is eured
and pssible rede4g an be nm~ary
- onmeMn problems In SE Unit ay be In port eo
substandr physca cøndtL-e
letter to Permmnent 12/2/76 - - lad f axLtale staff to head SS Unit relting in
Secretary\. MR la& oE finmnerd1 cntrol of project andannsm=
and supervl~i cf self-belp conetmcrim ph~e
- agreent for mmngtrg SE project Lthin Mifistry is
not «tLgfactory and full-ti~e Project Directr still
re~ure\.
Ade Memire cf 1/16 - 27, - - - 3 =njor prob~n farim unit CI Mir~sry aE Hænsr:
1977 tssion sitich inch~rdr - inabilUty to adequately staff itself
Drector, Ur~en Projects - indamr y of Ministry cf ~min acg m=rg syst
Depurtnt to servl finncial ætrol requrem\.nr~ cE
project;
- inedNiate p~csial acomdatm cf unit witin
Ministry cE Hmig\.
Supervision Report 2/05/77 3/1 - lac of full-time project imnagr;
- ac of full-time Seri h~eas and support peEsæmn
wLtbin Finane Seim\.
- Note: ag~es\.r reached with Ministry of Hsing Mand
Bed that Project Unit will be shifted to NE\.
Supervision Report 6/09/77 3/2 - proposals for effective mmmmi cf project,
acceptnblc to Bak, should be prepaed and
implanrem by Augst, 1977\. Faing tis, the Bae
should ser~osly comider the cptiæcf suspaendLug
disbursemca this m-
Ltter to Per~nt 6/14/77 - - detnlr prqpoals for n~rigLag this project qhou
Secretary\. Mistry cf be prepared for approval by Bark ad ag~eed upon
Ræsing prqosals be inplem r~ within a timtable \.
-89 - ANE i
Page 3 of 6
Datof Roirg
epoEt/1,0~r (if applic\.) Major Prob~ '
In 9/T/, claified m a probl project die to folNIng
- at apprai~al, it aeed to set u8 apecial unit
for this project an fræ\. anet probls in:
\. inMIIIty to ree t mateMale staff into inistry of
dumnir -
\. inffie y of M sty of /odins net -orin
Wyt~ and lad& cf fin~nf= for defufeste\.nt;
\. poor m~rr cmfInn~ in M ~nsr of Eemin
\. lac of tap-~ee menmmøfenr to ade~aay plan and
direct project\.
Superv~so ~masn 12/6/77n - prnem~in and is~n at resfree to site stfill
10/26 - 11/22, 1977 bebind sch~de
ler to PS, Ministry of
Hmiir - pragress ~lw on m dmity falities\.
&upørvisi n Missio 3/M - 6117/78 -- - need iqila\.nrntfr d a øsutrai~ financial emitroi
4/24, 1978\. system for project;
Letter to PS, Minstry f - lack of dishroæe= en nm\.
mi
Supervisin RePort 8/29/78 2/1 - en~ty fac~Itieæ consntrf is lw
(817 - 14, 1978) - cost overu in J$ eat\. at 56Z, but due to rennt
Jam~ demda ~rm, O~Ue11 osts in LBS ~Lll be
clue to apprasal estiftes
- plta in Marmus Grey site are beiz advertised to
incoe grup belw $2,500, Badc age ~sæte is fnr
$2,0O edJlir;
- an positiv side, che hirlxg of Deputy Project Manar
to amiet a r\.
Supervislon Report 1/19179 2/1 - progress n cvil egLneerig constnction is slow,
haered by lack cf huildUig tria]s ad abor
problem;
- m mity facilitie lag behindlschMe&le de to delay
in c~ipetion of infrastmcture and indquate
planirg\.
Urban Grth ManaemEnt Study Ccpleted and dishmse nw arrent ih expenditur; lom exan~ to Deiamber 31,
1980\.
Letter to Ministry of Finn 1/25/79 - - Amnænta propsed to Lom Agremnt cf 6/74 to
from Program Director adify descriptin cf cntner contracts, 1a
-nitorirg prorires ad adjust qUlifyir~ ina
1e cf b~c i~ to ref]ect effects on
inEflåties-
*1~ I 'i
I I i
*
iii\.- '0 0
0
~w\.æ w
'IIi~
~iI
I I
I ~L'~ In
*Ii[ [ fl I[jiB j[*dI ~[ i It'~j**I~ LI
I
~ijJI iii; I\. I ! I
i~I R~R~ I
[IR~ I
[II I I ' ~
I I
D\.
-91- ARE i
Fage 5 of 6
Date oEf\.fa
Report,&tter (if qplic\.) Nador Proble
Suprdialm daalan
6/22 - 26, 1981
Superviaim Rport 9/25/81 3/3 - ÂÂnq n wu=rtafiz~ and sta erictm;
- merta~ny £ ftut project desi rmpled with ld
af ~ tue=\. to ~\.piad1f rustrmd project;
- delays in i~laenNT mat rea ry\.
Spervisim esin
10/22 - 2B, 1981
Supervis Report 12/22/81 3/2 - no p e a a11ocman, fli,,\.ti JE lese and
wort@W da=mma, diatribut af lee and
m-ti and ct recuwmey;
- Sites and Servi Unit ladrng projut± Director and
Jäanfe Gomernwet prqal - - prp t furth r d~ms in poject:
of 10/81 \. Marcs GrWv site unuld be used for s~al £nut~y
rahrthe h~nig
\. ah handig ~nuld be aub~tituted for oelf-m
contreran-
ED to Film\. frm Project Bak rep e - approu l for hll b " conolpt, proided
officer 1/8/82 requir\.imza are t reprdlg peed cf ntuction,
price rag, allacation, and amt recory\.
- no cc~m to clawl date af 6/30/82;
- wnld cosider prqpal to cigd of
prblamatic Haras Grvey sitä if prcpsal is
ne021Xu!\.Any and fimnacally feuible, cisteat dth
projec objaei and ets mle t sectoal
critera
- definitime mr21= ulan amffl~etin Q~er=-m and
SupervLi~n Report 5/28/82 2/1 =klnanna if project facUllea;
Supervisim Missin4/26 - 30, - feasiiJry study reuLmd for future uee af Naras
1982 Grey\.
- inadficit irtem aveiale to evä1\.ar Macm
ltter to Minister 6/2/82 Grey 's potetial for ixlstrial u~e
of Ca~trureim (ra~) - little adam on physical <eti1 i af con\. y
D3C-H) facL1ti and ometd CmOety facLutim not in
full operatim wr beimtrald
- mpeation a ei am ce af a0pered on-site
infrtrare not yet take oe by aathouiien\.
- Bak's agmer to Inåciall zwe of Hram Gr~ey
Letter to Direcror, Task 6/30/82 sites;
Frce, MWC-i - extrre~ for Boroar's auln\.amim cf mcpetian
report to March 31, 1983\.
-92 - An i
Page 6 of 6
Date cf R~
Eqrt/~tter (If Pro~\.) Hg]or Probs
Supenvisin Rport 7/19/82 2/1 - 1iUe1 tngdble prog~s d ca pi~A1 wev1r
af fnuiity ffci d ier~-foddm n <
inErtnÂzm a ma ty f=iis\.
- 93 -
Annex 2
Page 1 of 5
JAMAICA - SITES AND SERVICES PROJECT
THE INDUSTRIAL COMPONENT
A\. Introduction and Summary of Objectives
1\. The small to medium industries component of US$1\.9 million was designed
to link employment with low-cost housing\. It was to provide training and jobs in
an idle labor force and to help stabilize the newly created urban communities\.
2\. Specifically, a number of enterprises (10-20) were to be launched over a
three-year period, creating about 1,000 new jobs\. Besides satisfying the usual
feasibility criteria (economic, financial and technical), the subprojects were to
aim at high labor-intensiveness to be achieved as follows: small investment per
job created (approximately J$3,000 to J$5,000); lower level of required skills and
short training periods\. Since statistics of 1973/1974 show unemployment to be
highest among females between 15 and 24 years of age, it was decided to bias
employment towards young women (including simultaneous day-care facilities for
their children)\.
3\. Two major packages formed the industries component of the loan:
(a) Technological transfer - through the Industrial Development
Corporation (JIDC), a government institution which was staffed with
specialists in management, market analysis, product promotion,
factory layout and building, equipment and training\. JIDC was to
identify small to medium scale industries, prepare feasibility
studies and look for private entrepreneurs willing to invest in the
proposed industrial subprojectsl/ and bring in managerial
expertise\.
(b) Supervised credit - through the Jamaican Development Bank (JDB),
also a government institution, which in using its then existing
affiliate, the Development Venture Capital Financing Company (DVCF)
as its agent, was to appraise the individual subprojects and
arrange for the necessary direct financing\.
4\. The sectoral setting in which the Jamaican Small Scale Enterprises was
imbedded in 1973 revealed trends which indicated a dynamic expansion of the
manufacturing sector\. However, new or expanding industries did not match the
country's economic priorities considering the high level of unemployment\.
1/ Physical infrastructure such as land, labor and utilities were to be made
available on the proposed project sites to the entrepreneurs under the
following terms: land was to be rented from GOJ on the basis of fair
commercial value\. Factories were to be built by JIDC and sold back to the
enterprise (75% cash and 25% in the form of shares in the enterprise)\.
Annex 2
Page 2 of 5
Therefore, GOJ entrusted JDB with assisting small scale, labor-intensive
industries and as a result DVCF was created in 1973 as a subsidiary of JDB to
provide either loan or equity participation to the SSE sector\. Based on initial
encouragment from Jamaican private entrepreneurs, a favorable environment for
small-scale industry and some identified subprojects, the SAR expected it to be
reasonable for this component to be forthcoming\.
5\. At that time, JDB had other term funds (US$10\.0 million from IDB) which
covered JDB's normal required resources\. Nevertheless, JDB and the Bank
considered it desirable that additional Bank funds of US$1\.9 million should be
provided for the industries component because of the inter-relationship in the
provision of housing and employment to the same beneficiares, "so that the types
of subprojects and their scope were suitable and their preparation timed so as to
serve the objectives of the project"\.
6\. It was estimated that total expenditures would have been about
J$3,500,000 (including working capital) with a 45% foreign exchange component, or
about J$1,575,000 (US$1,750,000)\. The foreign exchange component was to include
all equipment purchases and about 30% of factory costs, but in order to facilitate
disbursement, it was agreed that Bank funds would be used to reimburse 75% of all
local or foreign fixed assets expenditures representing about 50% of total
expenditures including working capital costs\. The Government was prepared to bear
the foreign exchange risk, for which it charged a fee of 1% p\.a\.
7\. In addition to subloans and equity payments (which covered nost working
capital requirements), JDB was to provide the private enterprises with
complementary loan financing, as needed, for remaining equipment expenditure
(including installation)\.
8\. Proposed subprojects were to include the manufacturing of inexpensive
boys' clothes, fashion knits, dressed dolls, leather wallets and purses, and
ceramics and toys\.
B\. Appraisal outline\.
The SAR describes the component as consisting of "industrial financing
for small-to-medium-scale industries (e\.g\. garments, leather goods, ceramics,
toys) which will create additional employment at a low-cost per job ratio,
including supporting consultancy services\."
C\. Evaluation
9\. Factual Evidence
(a) At the closing date of the project, 43 new or expanded small or
medium-sized enterprises received financing\.
(b) Final disbursements amounted to US$1\.55 million, the balance of
US$0\.35 million was cancelled\.
(c) The number of jobs created was less than expected\. Between 350-400
jobs were provided as against 1,000, with an average cost per job
of US$5,000\.
Annex 2
Page 3 of 5
(d) That the enterprises financed are not located near any of the urban
sites completed under the serviced sites component of the project\.
Employment has accrued to people who were not living on the project
site\.
Loan fully committed 3/30/82 (including cancellation of US$350,000)\.
Loan fully disbursed 6/30/82 (including cancellation of US$350,000)\.
US$1\.9 million dollars for the industry component were used as follows:
Committed Disbursed Cancelled
PIC A* 578,066\.00 533,526\.05 44,539\.95
PIC B** 450,321\.39 444,105\.97 6,215\.42
Total PIC 1,028,387\.39 977,632\.02 50,755\.37
SIF0 201,417\.93 168,724\.01 32,693\.91
DVCF A 238,669\.80 404\.064\.03 267,130\.65
DVCF B 431,524\.76
Total DVCF 671,194\.56 404\.064\.03 267,130\.65
Total 1,899,999\.88 1,550,420\.07 350,579\.93
A 816,735\.80 937,590\.08 311,670\.60
B 1,083,364\.08 612,829\.99 38,909\.33
1,899,999\.88 1,550,420\.07 350,579\.93
(81\.6% of commitment) (18\.4% of commitments)
* A = Above the free limit (US$100,000) of subprojects\.
** B - Below the free limit of subprojects\.
10\. Problems, encountered with the project, could be divided into three
categories:
(a) Unrealistic nature of expectations;
(b) unfavorable investment climate; and
(c) little institutional commitment and competence\.2/
2/ Refer to the PCR for Loan 1609-JM for more details\.
- 96 -
Annex 2
Page 6 of 5
(a) At the time of appraisal, some 1,000 jobs were expected to be
generated from between 10-20 new or expanded enterprises, resulting in
an average employment size of between 50 to 100 per enterprise\. Against
these expectations, only little more than 1/3 (350) jobs were created
which were distributed in about 43 enterprises\. In retrospect, the
following evidence could explain the nonachievement of company size and
employment generation: In 1972, average employment (median) per
Jamaica, enterprise was only 37, with the majority falling well below
this figure\. It would have been doubtful, therefore, that many
entrepreneurs could have been found with the capability to manage a
labor force of between 50 to 100\. JDB/DICF simply did not find many
potential employers of such size\.
(b) Mid-way through the 1970s, the economic decline, which was not
foreseen at the time of project appraisal, showed private entrepreneurs
to become less and less inclined to invest\. Their unwillingness was
compounded by the fact that the Government would become a joint venture
partner in the projects (see footnote 1), at a time when it was
perceived that the Government was against the private sector and even
desired to substantially reduce it\. As much as the plans for the
industries component presupposed intimate association through the state
equity participation, only a few entrepreneurs were willing to face that
challenge\. Another aspect which hampered the use of the allocated funds
from the entrepreneurs' point of view was that one of the original
criteria for approval of a loan would have requested a debt-equity ratio
of an individual company not to be in excess of 60:40, whereas in
Jamaica, at that time, 75:25 or even 85:15 were common\.
(c) Apart from a somewhat unrealistic nature of expectations and the
lack of entrepreneurial interest, the institutional aspects contributed
substantially to the nonachievement of the project component
objectives\. As can also be seen in more detail in the forthcoming
project completion report on the integrated SSE loan 1609-JM to Jamaica,
the institutional Small Scale Enterprise scene (financial and technical
Assistance) was multifaceted and underwent numerous changes and
modifications, coupled with frequent mergers including changes of
policies and objectives\. However, at the closing date all institutional
efforts were in vain, since none of the financial institutions involved
under the loan in the direct lending process survived\.
11\. Since questions of institutional development will not be discussed
elsewhere in this report, the following two paragraphs focus on reasons why the
original design of the component could not be complemented successfully, and it
was necessary to restructure the institutional set-up of this component\.
(a) As mentioned above, the two financial agencies originally
implementing the industries component of Loan 1003-JM were JDB and
its affiliate DVCF\. JDB was given a significant role to play in
appraising and financing subprojects which were supposed to have
- 97 -
Annex 2
Page 5 of 5
been identified by JIDC\. By 1978, JDB had lost all interest in the
industrial component and had effectively shifted its
reponsibilities to DFCF/SIFCO\. JDB detached itself completely from
DFCF's role in the project and JDB's records reveal that no
complete information on the industry component was either sought or
recorded\.
(b) DVCF/SIFCO: As noted in (a), this company gradually assumed total
responsibility for the industrial component\. DVCF/SIFCO was
seriously understaffed and under-capitalized\. Progress was slow
and was directly influenced by the smaller than estimated demand
for funds\. Simultaneously, JIDC was shown to be incapable of
carrying out the necessary feasibility studies\. By 1981, seven
years after signing of the Loan Agreement, only US$0\.7 million was
committed\. In the same, year, the remaining uncommitted balance of
the industrial component of the Loan was transferred from SIFCO to
Premier Investment Co\.(PIC), an agency of the Bank of Jamaica which
administered these funds until the closing date\.
ä¸7å¤ä¸
æ¶æ¹ï¼ï¼ä¹ãå½äºãä¸æ¤
- 99
ANNEX 3
JAMAICA SITES & SERVICES page I of 8
INTERNAL ECONOMIC RATE OF RETURN
Appraisal Analysis - Description
1\. The economic justification of the project was based an an accounting
of the benefit and cost streams discounted over 40 years\. Benefits expected
to flow directly to participating households were measured In terms of
(1) imputed rental value of houses constructed under the project, (2)
Increased employment opportunities and earning ability brought about by
improved public services, and in some cases (3) economies In transport costs
brought about by locational advantages\. In addition some 6 percent of
benefits were to accrue to the economy in general from a reduction In the rate
of crime, in public health expenditure and In child welfare expenditures
within the communities affected\.
2\. Imputed rental values, the primary measure of household benefit from
the project sites, were estimated on the basis of market rentals for
comparable standard housing\. No rental premium was placed on Individual sites
arising from preferred location\.
3\. Benefits flowing to households from increased employment
opportunities and earning ability were established by estimating the size of
the labor force at each site and postulating a 5 percent reduction In the
unemployment rate and a 10 percent rise in labor productivity brought about by
the additional employment opportunities, job training, and -elated social
programs\.
4\. other benefits accruing to the rest of the economy in the form of
reduced crime, public health, and child welfare expenditures were measured by
assuming a reduction in the level of these expenditures for the population
located at each site\.
5\. The cost components were derived from (1) the market value of land
used by the project for housing, (2) the cost of building materials and
Infrastructure serving the housing units, (3) the expense of maintaining the
Infrastructure over the 40-year period, and (4) the value of self-help
labor\. The cost of industrial buildings and community facilities and the
share of Infrastructure serving them were excluded from the analysis\. In
total, about 69% of project costs were included In the analysis\.
6\. It was inaccurately assumed at appraisal that development of all
Infrastructure would take place during the first year and that all self-help
construction activity would take place over year's 2-6\.11 Thus the major
benefit (imputed rents) was assumed to start accruing-by year 2 with full
development occurring in the sixth year\.
1/ However, this was not consistent with the implementation
schedule of the project\.
- 100 -
ANNEX 3
Page 2 of 8
7\. Applying the above costs and benefit streams an internal rate of
return of 14\.4 percent was calculated\. Sensitivity analysis which shadow-
priced the value of unskilled labor to 50 percent of its financial cost to
reflect the high rate of unemployment for unskilled labor increased the total
project rate of return to 17 percent\. Further sensitivity analyses indicated
the following:
Sensitivity Analyses Rate of Return
Land cost (-10%) 14\.6%
Household benefits (-20%) 11\.4%
Delete rest of economy benefits 13\.6%
(welfare reductions, etc\.)
Delete rest of economy benefits, reduce
household benefits (-20%) and increase
cost of domestic materials (10%) 10\.1%
Value of unskilled labor (-50%) 17\.0%
Thus, the worst possible case postulated at appraisal indicated that the
project would yield a return of 10\.1 percent\.
Appraisal Analysis - Reassessment
8\. The project was one of the first of its type to be financed by the
Bank and the methodology of deriving the IERR was not yet standardized\. In
retrospect, the quantification of benefits for reduced crime, improved health
and welfare reductions is difficult to endorse since data to support these
benefits is difficult to measure\. In addition, a major flaw in the appraisal
analysis was the overly optimistic assumption about the rate of project
implementation\. The commencement of all rental benefits in year 2 represents
a major technical error in appraisal calculations because, first, it did not
agree with the construction schedule promulgated at appraisal and, second, it
reflected poor judgment since detailed engineering had not been completed for
most sites at appraisal\. Also the appraisal evaluation failed to analyze the
sensitivity of the overall rate of return to implementation delays, and did
not include the costs of construction supervision and site security in the
costs stream\. A more realistic recalculation of the appraisal IERR delaying
the start of benefits from year 2 to 6 and excluding the non-rental benefits
yields a rate of return of 7\.2 percent\. With the shadow pricing of unskilled
labor, this increases to 8\.4 percent\.
Latest Estimate of IERR - Sites and Services Component
9\. An economic reevaluation of the project discounting the principal
benefit and cost streams over 25 years was done for five of the eight project
sites\. The upgrading components and Marcus Garvey site are discussed
separately (paras 17 and 18)\. Costs and benefits were estimated in constant
March 1983 US dollars\. An overall rate of return of 3\.4 percent was obtained\.
10\. The benefit streams in this analysis were derived from imputed rental
values for each site estimated from surveys conducted by the PCR mission and
the University of the West Indies of selected project sites\. A weighted
average of 512 sq\. ft\. was used as the final house size per lot\. (See table
below)\. The assumed distribution of one, two, and three bedroom houses was
- 101 -
ANNEX 3
Page 3 of 8
10, 15, and 75 percent respectively\. A secondary benefit was the residual
value of land in the 25th year\.
Avg\. Monthly
Rental House House
Distribution $J Size Type
10% 200 288 sq\. ft\. 1 bedroom
15% 250 400 sq\. ft\. 2 bedroom
75% 275 512 sq\. ft\. 3 bedroom
The non-rental benefits amounting to some 23 percent of total benefits at
appraisal were excluded from this recalculation because the reduction in crime
and child welfare payments are both difficult to measure and forecast, and the
employment generation component was dropped from the project in 1977\.
11\. Costs were derived from (1) the market value of unimproved land for
the five sites; (Ii) Infrastructure and on lot costs; (111) self-help labor
and materials costs for construction of self-help homes and for the expansion
of start-a-home; (iv) technical assistance, project management, and other
administrative expenses (including site security); and (v) annual operation
and maintenance costs amounting to 3 percent of total infrastructure costs\.
Taxes and transfer payments were excluded, likewise the costs for community
facilities and the associated share of infrastructure\. Some 68% of the total
project costs were included in the analysis\.
12\. Infrastructure and lot costs were based on project financial
records and adjusted in the following ways: (i) thirty percent of
infrastructure costs were considered attributable to community facilities and
were excluded; (11) of the net costs, 35 percent were assumed to be for labor
and 65 percent for materials based on EDCO estimates; (iii) the distribution
of skilled and unskilled labor was e3sumed to be 38% and 62% respectively,
based on technical study estimates for contract labor used in minimal-shelter
construction; (iv) the value of unskilled labor was shadow priced at 50
percent of its financial value to take into account the high rate of
unemployment in Jamaica\. Self-help labor and material costs were valued at J$
40/sq\. ft\. based on PCR team interviews in Nannyville and estimates for final
start-a-bome costs per sq\. ft\. (J$ 45)\. The self-help costs are distributed
over a 6 year period, from the year of occupancy\. Technical assistance,
security and other costs were based on project financial records\. Coats which
are not site specific were distributed across the seven project sites
according to the ratio of each site-s total costs to project total costs\. All
costs and benefits including the acquisition cost of land are expressed at
their 1983 value\.
13\. Project benefits for the self-help sites were delayed until year 6
for Nannyville and de la Vega and year 8 for Hunts Bay I, or two years from
the date of allotment\. For the start-a-home sites, benefits began in year
11\. With such delays and cost overruns an overall internal rate of return of
3\.4 percent was calculated\. Separate rates of return for each site are
outlined below\. Testing the analysis for sensitivity to a 15 percent
reduction in benefits yielded an overall rate of return of 1\.1 percent\.
- 102 -
ANNEX 3
SPage 4 of 8
Benefits
Appraisal Actual Sensitivity Pour Tears
ERR % ERR % -15 Benefits Earlier
Nannyville & de Ia Vega 15\.0 2\.2 0\.2 4\.3
(Camplands & Prison Farmlands)
Hunts Bay I -0\.05 -2\.4 -0\.2
13\.8
Seavizu Gardens 3\.9 1\.4 9\.1
(Hunts Bay II)
Catherine Hall 14\.8 6\.0 3\.8 12\.5
Total Project 14\.4 3\.4 1\.1 7\.2
15\. Had the benefits of the housing components started to accrue 4 years
earlier, the rates of return would have been 4% for Nannyville, and De Ia
Vega, -0\.2% for Hunts Bay I, 9% for Seaview Gardens, and 12% for Cath\.-ine
Hall\. This scenario would have raised the overall project rate of return to
7 percent\.
16\. As estimated at appraisal the increase in the net expansion (4,733)
of the housing stock serving the low-Income market should reduce the cost of
housing services or lessen the rate of increase of these costs\. A second
income redistribution effect occurred owing to the difference between actual
monthly payments for new housing units and the higher value of imputed rents
which were based on actual market value for comparable housing units\.
Upgraded Sites
17\. The upgraded sites were not included in the above analysis because
reliable figures were not available from either the Commission of Land
Valuation or the Ministry of Construction to quantify changes in property
values brought about by the project\. These sites, among the most depressed in
Kingston, have not been visited officially since the end of civil works
construction in 1980 because of concerns for staff security\. Furthermore,
this small component accounting for less than 5 percent of total project costs
would not have significantly affected the overall rate of return\.
Marcus Carvey Site
18\. Some 785 serviced lots were completed and ready for allocation by
1980\. However a decision was taken in mid 1982 to change its use from
residential to industrial due to a lack of demand for the site because of,
among other things, its location in a zone of heavy industry\.-V Furthermore
an incremental cost benefit analysis showed that conversion to industrial use
would command a more favorable rate of return than continuation as a
2/ The Marcus Garvey site was selected at appraisal to locate
low income residential development although it had previously
been zoned for "industrial" use under the Kingston
Development Order of 1966\.
- 103 -
ANNEX 3
Page 5 of 8
residential site\. Costs are expressed in constant March 1983 prices and
include (1) capital costa including (a) historic adjusted costs for
development of infrastructure, on lot structures, community facilities for
residential use and technical assistance; and (b) coat of conversion to
industrial use; (11) capital replacement cogta at 3 percent of
infrastructure costs every 5 years and (iii) operating coats\. The principal
benefits include sale of Industrial lots upon completion\.
19\. Given the lengthy delays and high coat overruns incurred in
development and conversion of the Marcus Garvey site a negative rate of return
was calculated\. This reduced the overall project rate of return by 32 percent
from 3\.4 to 2\.3 percent\.
-104-
ANNEX 3
Page of 8
JAMAICA - SITES AND SERVICES PROJECT
APPRAISAL IERR
W RETAL BENEFITS ONLY
----DATA TABL E-----
40 YEARSt 1 COST STREAMSP 1 BENEFIT STREAMS\.
YEAR TOTAL COST TOTAL BENEFIT NET BENEFIT
1 13369\.00 0\.00 -13369\.00
2 699\.00 1439\.00 740\.00
3 699\.00 1583\.00 884\.00
4 699\.00 1727\.00 1028\.00
5 699\.00 1871\.00 1172\.00
6 699\.00* 2015\.00 1316\.00
7-40 337\.00 2161\.00 1824\.00
****RATE OF RETURN = 10\.950 +/- 0\.050 PERCENT****
( 50\.00 CHANGE IN C 1)
****RATE OF RETURN = 6\.r5o 4/- 0\.050 PERCENT****
- 105 -
ANNEX 3
Page 7 of 8
JAMAICA - LOAN 1003-JM
SITES AND SERVICES PROJECT
ACTUAL IEER
TOTAL PROJECT
(excluding Marcus Garvey)
Year Total Cost Total Benefit Net Benefit
1 16,411\.00 0\.00 -16,411\.00
2 2,182\.00 0\.00 - 2,182\.00
3 9,297\.00 0\.00 - 9\.297\.00
4 15,276\.00 0\.00 -15,276\.00
5 9,763\.00 0\.00 - 9,763\.00
6 9,321\.00 89\.00 - 9,232\.00
7 11,104\.00 963\.00 -10,141\.00
8 8,413\.00 2,677\.00 - 5,736\.00
9 7,830\.00 2,990\.00 - 4,840\.00
10 33,884\.00 11,738\.00 22,146\.00
11 8,569\.00 13,484\.00 4,915\.00
12 7,344\.00 15\.973\.00 8,629\.00
13 8,930\.00 17,165\.00 8,235\.00
14 8,293\.00 17,165\.00 8,872\.00
15 6,187\.00 17,165\.00 10\.978\.00
16 3,850\.00 17,165\.00 13,315\.00
17-24 4,126\.00 17,165\.00 13,039\.00
25 0\.00 441\.00 441\.00
Rate of Return - 3\.450 +/- 0\.050 percent
SENSITIVITY
-15\.00% Change in B 1)
Rate of Return - 1\.150 +/- 0\.050 percent
-toe'e
106 -3
A1MICA - U1MU AND LSVICES PMATECT
AM=UA ZmA
20WA PgAJMC
nlmaeMre awy
YEAR TOTAL COST TOTAL BENEFIT NET BENEFIT
1 19634,00 0\.00 -19634\.00
2 3821\.00 0\.00 -3821\.00
3 10142\.00 0\.00 -10142\.00
4 16705\.00 0\.00 -16705\.00
5 11994\.00 0\.00 -11994\.00
6 10999\.00 89\.00 -10910\.00
7 13550\.00 963\.00 -12587\.00
8 10033\.00 2677\.00 -7356\.00
9 9709\.00 2990\.00 -6719\.00
10 34156\.00 11738\.00 -22418\.00
11 9479\.00 23337\.00 13859\.00
12 8040\.00 17878\.00 9838\.00
13 9463\.00 17125\.00 7662\.00'
14 8819\.00 17165\.00 8346\.00
15 7194\.00 17165\.00 9971\.00
16 4361\.00 17165\.00 12804\.00
17 4627\.00 17165\.00 12538\.00
18 4618\.00 17165\.00 12547\.00
19 4607\.00 17165\.00 12558\.00
20 4867\.00 17165\.00 12298\.00
21 4582\.00 17165\.00 12583\.00
22 4568\.00 17165\.00 12597\.00
23 4553\.00 17165\.00 12612\.00
24 4534\.00 17165\.00 12631\.00
25 662\.00 441\.00 -221\.00
SSRATE OF RETURN - 2\.350 4/- 0\.050 PERCENT****t
SENSITIVITY
C -15\.00 X CHANGE IN 9 1)
***RATE OF RETURN - 0\.050 +/- 0\.050 PERCENT***
- \. -784ggg 77"0
FALMOUTH
mONmEGO B~4-
H N 0 V E R ^, S T J ANMES
T R E L A W
E T N O R L A N 0 1 1
1*
-- 1
Frankf eeId
S T E l Z A B ET
senu \C L Ab
BLACK RIVER
JAMAICA M A M C N E S T E
SITES & SERVICES PROJECT
PROJECT LOCATIONS
ARTERIAL ROADS -
SECONDARY MAIN ROADS
RAILWAYS
RIVERS
4 MAIN PORTS Bv
INTERNATIONAL AIRPORTS
LOCAL AIRPORTS
\. PRISH BOUNDARIES
TH'S MAP IS BASFD 04 9D 10605 CTO fER 1973
- COINTY BOUNDARPES A PoR14N OF PRU\.iCT INFORMATION HAS BEEN UPDATED
- INTERNATIONAL BOUNDARIES 7100- 77Â30
ç
l
-
;
ã
1
-
)
ã
l
å¯
34
in
C
Z\.,
4
0 :r
0
- Nt"
N
Wool
SANDY
GL
PAN15tt
TOWN
SPANISH TOWN
DawRns
pmd
JAMAICA
SITES AND SERVICES PROJECT
Kingston and Spanish Town Site Locations
Praiect areas:
Sites and services
Squatter upgrading
Central business districts
Built-up areas
Squatting areas
Main roads
Other loads
Railways Great
Rivers\. perennial S71f Pond
Rivers\. seasonal
Canals
Swamps
Altitudes over 750 meters
\. County boundary WIS MAP IS U4ASFD ON OBF40 101506 OCTOBER 1973\.
--- Parish boundary A PEIRTIONCIV PA(UICt IWOPSAMION MAS BEF14 UPDATED
;t4 Bridges 76W
I
굳
JAMAICA
SITES AND SERVICES PROJECT
Montego Boy Site Location
0 *51 2=
low
_18'27
Buill-up Omas
_Maen roads
-other
Rnelway CANM
Mangrove
Alt~ omr 200mftrs
THIS NAP 15 BAUD ON IBRI) 10IIIM\. OCTOBER IM
A PORTION OF PROJECT INFORNATION HAS BEEN ~TEIL
MONTEGO
BAY
,«ontego Bay
61
nu W0O ~1, w
om arom JW y~
C 4 T E Ri l N E
nu
L
_ýMONTEGO FREEPORT
T 0 R B, Ã Y CATHERNE
13 tw
AREA C* MAP
j A M A l C A
BOGUE
ýSLANDS
u 5 Aliw à i,
Ocean
om
BEUZE
caribbeva Soa
ELlft~
Oppc,bc
ORD 10607(PCR)
DECEMBER 1983
NORWOOD
BO TTOM PE2N
FARM PEN
THF
VILA
I !RWIN
AG FNA
T
 | APPROVAL |
P166206 |  The World Bank
Second Public Financial Management Capacity Strengthening-Additional Financing (P166206)
Combined Project Information Documents /
Integrated Safeguards Datasheet (PID/ISDS)
Appraisal Stage | Date Prepared/Updated: 27-Jul-2018 | Report No: PIDISDSA23971
Nov 10, 2017 Page 1 of 15
The World Bank
Second Public Financial Management Capacity Strengthening-Additional Financing (P166206)
BASIC INFORMATION
OPS_TABLE_BASIC_DATA
A\. Basic Project Data
Country Project ID Project Name Parent Project ID (if any)
Somalia P166206 Domestic Revenue P151492
Mobilization and Public
Financial Management
Capacity Strengthening
Project
Parent Project Name Region Estimated Appraisal Date Estimated Board Date
Second Public Financial AFRICA 26-Jul-2018 13-Sep-2018
Management Capacity
Strengthening Project
Practice Area (Lead) Financing Instrument Borrower(s) Implementing Agency
Governance Investment Project Federal Republic of Ministry of Finance,
Financing Somalia Puntland, Ministry of
Finance of Somaliland
Hargeisa, Ministry of
Finance Federal
Government
Proposed Development Objective(s) Parent
The Project Development Objective is to establish and strengthen institutional capacity for the management of public
funds inCentral Finance Agencies and targeted sectors\.
Proposed Development Objective(s) Additional Financing
To strengthen systems of domestic revenue mobilization, expenditure control and accountability in the Federal
Government, Puntland State of Somalia, and Somaliland\.
Components
Component 4: Public financial management reform oversight, coordination and management
Component 1: Strengthening Tax Policy and Inland Revenue Administration Systems
Component 2: Strengthening Systems for the Public Funds Management Transparency and Accountability
Component 3: Rapid Response Facility
Nov 10, 2017 Page 2 of 15
The World Bank
Second Public Financial Management Capacity Strengthening-Additional Financing (P166206)
PROJECT FINANCING DATA (US$, Millions)
SUMMARY -NewFin1
Total Project Cost 30\.00
Total Financing 30\.00
of which IBRD/IDA 20\.00
Financing Gap 0\.00
DETAILS -NewFinEnh1
World Bank Group Financing
International Development Association (IDA) 20\.00
IDA Grant 20\.00
Non-World Bank Group Financing
Trust Funds 10\.00
Somalia Multi-Partner Fund 10\.00
Environmental Assessment Category
B-Partial Assessment
OPS_TABLE_SAFEGUARDS_DEFERRED
âHave the Safeguards oversight and clearance function been transferred to the Practice Manager?â No
Decision
The review did authorize the team to appraise and negotiate
B\. Introduction and Context
1\. Somalia has achieved significant progress in laying the foundations for stability and development;
however, political and institutional gains must have tangible benefits for people if Somaliaâs transition is to
hold\. The Country Partnership Framework (CPF) for the period FY19-FY22 will increase citizensâ access to
services and help restore economic resilience â laying the foundations for longer-term poverty reduction and
inclusive growth\. The CPF is based on an analytical framework elaborated in the recently-concluded
Systematic Country Diagnostic as well as the outcome of country level dialogue between the World Bank
Group, its Somali partners and the international community\.
2\. Recent political and institutional gains reflect a country making a positive transition from acute
fragility and protracted emergency\. Agreement on a new federal structure, two peaceful transitions of power,
nascent resource sharing deals and a willingness to tackle vested interests - all signal a collective willingness
Nov 10, 2017 Page 3 of 15
The World Bank
Second Public Financial Management Capacity Strengthening-Additional Financing (P166206)
to move forward\. To secure the new political settlement, Somaliaâs emerging federal institutions are working
to generate dividends for people, by enabling access to basic services and that offer economic opportunities
for a fast-growing population\.
3\. Nevertheless, Somaliaâs long period of fragility has given rise to a dual development trap reflecting
systemic distrust, and acute vulnerability to repeated shocks\. The Systematic Country Diagnostic for Somalia
illustrates how radical depletion of human, natural and produced capital assets left nearly 70 percent of
Somalis in poverty, 14 percent displaced and the maternal mortality rate at 734 for every 100,000 births\. As
the Somalia Risk and Resilience Assessment notes, this development trap manifests itself in several ways\. In
the public sector, functional assignments of authority between the Federal Government of Somalia (FGS) and
Federal Member States (FMS) around revenue generation and policy making are still contested\. This
exacerbates a vicious cycle whereby weak domestic revenue exacerbate the FGSâ inability to restore basic
services, which have been fragmented and privatized by conflict\. This in turn increases ordinary Somalisâ
mistrust of the state\. Overcoming the dual development trap requires the restoration of citizensâ trust in
institutions by increasing access to services, strengthening systems for raising revenue and spending it wisely,
and building resilience to increasingly frequent climatic shocks\. The CPF therefore proposes to support
government priorities in two Focus Areas: (i) building institutions to deliver services and (ii) restoring economic
resilience and opportunities\.
4\. With debt arrears outstanding, Somalia is ineligible for assistance from International Development
Association (IDA) and other International Finance Institutions (IFIs) â but the Bank Groupâs re-engagement in
2012 funded by the Multi Partner Fund (MPF) has helped stabilize institutions and initiate IFI normalization\.
With support of eight key donors, the MPF has enabled the World Bank Group to support the strengthening
of federal institutions and establishment of basic economic regulatory foundations\. The MPF will remain the
core financing vehicle for the CPF â but will be complemented in FY19 by IDA Pre-Arrears Clearance grants of
$140 million targeting the key milestones to reach Decision Point under the Heavily Indebted Poor Country
(HIPC) Initiative\. Provided its reform momentum continues, Decision Point is feasible within the CPF period,
allowing Somalia access to concessional resources from IDA and other IFIs, together with investment of private
capital from the International Finance Corporation (IFC)\.
Sectoral and Institutional Context
5\. Addressing the multi-faceted governance challenges in Somalia requires the adoption of approaches,
which are: highly innovative; flexible; and balance between short medium and long-term reform strategies
and manages high transaction costs with multiple clients\. The Troika1 of World Bank Governance-focused
projects provides a foundation that is premised on the 2011 Recurrent Cost & Reform Financing (RCRF) with
a focus on strengthening legitimate institutions and governance as a sine-qua-non-to the provision of security,
justice and jobs for citizens â all of which are central to breaking the cycles of violence and setting the path
towards economic development\.
1
The Troika of Governance-focused projects include: The Capacity Injection project (CIP) with the objective of strengthening the
staffing and institutional capacity of selected line ministries and central agencies; (ii) the Recurrent Cost and Reform Financing Project,
aimed providing credible and sustainable payroll and to establish the foundation for efficient budget execution and payment systems for
the non-security sectors; and (iii) the PFM Capacity Strengthening Project which focused on improving the institutional capacity of
central finance agencies
Nov 10, 2017 Page 4 of 15
The World Bank
Second Public Financial Management Capacity Strengthening-Additional Financing (P166206)
6\. This Additional Financing supports DRM and PFM\. With regards to DRM, the Governmentâs strong
commitment to strengthening its institutional capacity for mobilizing and managing public funds is potentially
a game changer, and already yielding promising results\. Domestic revenue collection has increased markedly
from US$76 million in 2013 to US$143 million in 2017\. At 4% of GDP, tax revenues are, however, not adequate
to support Somaliaâs reconstruction and development agenda, and the FGS remains dependent on
development partners to finance capital expenditures\. Access to Pre-Arrears Clearance grant (PACG) is a major
step and intends to accelerate reforms required for International Development Association (IDA) arrears
clearance, and to help restore resilience\. Ultimately, the FGS hopes to normalize its relations with IDA and
other international financial institutions through the Heavily Indebted Poor Countries (HIPC) process\. This is
being undertaken in coordination with the International Monetary Fund (IMF) Staff Monitored Program\.
7\. With regard to PFM, substantial progress has been made to improve budget executionâthe variance
between actual and originally budgeted primary expenditure has reduced from a baseline measure of 45% in
December 2013 to 31% in December 2017\. Yet, expenditure management remains weak, as reforms critical
to minimizing arrears buildup and enhancing fiscal discipline remain outstanding\. At the same time, there has
been little progress on achieving targets to reduce the time to submit audit reports to Parliament\. While the
project has delivered very useful and relevant analytical work throughout implementation, there is need to
ensure that technical assistance reform recommendations are translated into tangible actions that can spur
growth in DRM and strengthen PFM\.
C\. Proposed Development Objective:
Original PDO
8\. The PDO of the original project is âto establish and strengthen institutional capacity for the
management of public funds in central finance agencies and targeted sectors\.â
Current PDO
9\. The current Project Development Objective is âTo strengthen systems of domestic revenue
mobilization, expenditure control and accountability in the Federal Government, Puntland State of Somalia,
and Somalilandâ\.
Nov 10, 2017 Page 5 of 15
The World Bank
Second Public Financial Management Capacity Strengthening-Additional Financing (P166206)
10\. The performance of the current project is satisfactory, and it has achieved tangible results\.
o The Somalia Financial Management Information System (SFMIS) configuration has enabled the Federal
Government of Somalia (FGS) Office of the Accountant General (OAG) to improve its day to day treasury
functions substantially\. Also, it has improved transparency in revenue collection and has set the
foundations for the implementation of the cash management & Treasury Single Account (TSA)\.
Furthermore, the payment module has been extended to the Central Bank to allow integration\. For the
first time the FGS recorded the 2017-18 budget in the system, resulting in the generation of the budget
utilization and revenue performance reports as well as unaudited Interim Financial Report (IFRs) for
Bank financed projects\.
o The Supreme Audit Institution (SAI) - FGS Office of the Auditor General - capacity assessment is at
advanced stages\. In addition, a framework for collaboration with the media and non-state actorsâ
which is a crucial element towards promoting outreach for the work of the Public Accounts Committee
(PAC)âhas been finalized\. Strategic plans have been prepared by the Offices of Auditor General of FGS
and of Puntland \.
o The Public Financial Management Professionalization activities are successfully completed for the FGS,
PSG, and Somaliland\. As a result, 53% registered students passed the certificate level PFM examination,
and 59% passed the procurement stream certificate level examination\. The PSG has followed up with
immersion of the participants\.
o Domestic resource mobilization technical assistance (TA) support has made improvements in the
efficiency and effectiveness of tax administration with the broader expectation of enhanced domestic
revenue collection\.
D\. Project Description
11\. The proposed AF and restructuring entail the following changes:
a\. Modification of the PDO to reflect the expanded scope of the project and new emphasis on
DRM;
b\. Introduction of a new US$12\.3 million component to scale up project activities aimed at
strengthening tax policy and inland revenue administration, which is potentially a âgame
changerâ as inland revenue, which has great revenue generation potential, has little support
if at all;
c\. Consolidation of the PFM related activities into one component of US$12\.7 million;
d\. An additional allocation of US$3\.0 million to extend project management and coordination
support in accordance with the new AF activities and extended timeline;
e\. Redesigning the Just-in-Time (JIT) Bank Executed support (Component 6) into Rapid Response
Facility (RRF) US$2\.0 million;
f\. Adjustments to the Results Framework and Monitoring to reflect the changes in the projectâs
design; and
g\. Extension of the project closing date from June 2020 to June 2022 to allow for successful
implementation of the projectâs original and new activities\.
Nov 10, 2017 Page 6 of 15
The World Bank
Second Public Financial Management Capacity Strengthening-Additional Financing (P166206)
Component 1: Strengthening Tax Policy and Inland Revenue Administration systems (US$12,300,000)
12\. The objective of this proposed new component is to strengthen tax policy and selected2 inland
revenue3 systems and capacity\. To this end, the component will support the following sub-components:
13\. Sub-component 1\.1: Improving organizational capacity for tax policy (US$750,000)\. This includes: (i)
establishing the tax policy unit (TPU) in the Ministry of Finance by supporting activities to crowd in support
for the TPU, definition of structure and job specifications, definition of linkages to the Attorney Generalâs
office and support in establishing legal or regulatory frameworks for access to tax payer and other data; and
(ii) support TPU in development of a credible and fair revenue policy, evidence based research, revenue
forecasting, and tax gap analysis capacity\.
14\. Sub-component 1\.2: Improving systems for inland revenue administration (US$10,250,000)\. This
sub-component includes: (i) Operationalizing large tax payer office; (ii) Business process mapping and
redesigning; (iii) Modernizing and automation4; and (iv) Capacity building\.
15\. Sub-component 1\.3: Tax payer education and facilitation to promote voluntary compliance
(US$1,000,000)\. This sub-component will include development and implementation of: (i) taxpayer
orientation/ socialization program; (ii) taxpayer service charter; (iii) facilitation and grievance redressal help-
desk; (iv) proactive disclosure of revenue performance reports; (v) tax forums; (vi) training curriculum; and
(vii) utilizing the Somalia Revenue Academy to equip the wider public with tax compliance skillsets and
knowledge\.
16\. Sub-component 1\.4: Supporting the Revenue Bill consultations and bridging operationalization
upon enactment (US$300,000)\. This sub-component includes: (a) support for FGS-led Revenue Bill5
consultation process with the FMS; (b) support to selected FMS (to be determined) to implement the enacted
revenue law, in addition to Puntland and Somaliland that are already in the project scope; and (c) analytical
work on revenue assignment and unbundling issues following the revenue bill consultation, and to help
operationalization upon the enactment\.
Component 2: Strengthening Systems for the Public Funds Management Transparency and Accountability
(US$12,700,000)
17\. This component consolidates the PFM activities into one component to focus on: (i) the
2 The Federal Government of Somalia has prioritized specific tax instruments including: Sales Tax; Excise Duty; Personal and Corporate
Income Tax; Rental Income Tax; Road Tax; Stamp Duty; Registration fee / levies, turnover tax\. A draft Revenue Bill has been developed
and is being processed to reform policy and administration of the above specific instruments\.
3
This scope of the support is limited to Inland Revenue, and based on the division of labor amongst development partners\. Support
to Customs reforms is being supported under a program mainly financed by DFID\. However, the Bank will deliver ASA & TA activities
to complement DFID support\. Using the Rapid Response Facility, the project is structured to take advantage and plug any emerging
gaps in improvements to the Customs performance\. This should help sustain dialogue around a major revenue stream for Somalia\.
Structural benchmarks under consideration by IMF include the following areas with accompanying TA to be provided by the Fund:
sales tax for domestic products/services (e\.g\. telecoms, utilities), turnover tax for large taxpayers, submission of National Revenue Bill
to parliament, fisheries licensing implementation, large and medium taxpayer office implementation\.
4 Support for automation shall be at Federal Government of Somalia and later rolled out to Puntland if Puntland adopts the revenue
bill\.
5
The bill development is being supported by the IMF Staff Monitored Program (SMP)\.
Nov 10, 2017 Page 7 of 15
The World Bank
Second Public Financial Management Capacity Strengthening-Additional Financing (P166206)
implementation of critical treasury management, control, budget execution, and accounting and reporting
reforms; (ii) deepening reforms targeted at enhancing transparency and accountability in the use of public
funds through strengthening key integrity pillars including supreme audit institutions (SAIs), external
oversight capacities, internal control systems, and the overall fiduciary environment; and (iii) expanding the
reach of the governmentâs PFM professionalization program\. The consolidated Component 2 will have three
sub-components, as follows:
18\. Sub-component 2\.1: Strengthening systems of treasury management, budget execution, accounting
and financial reporting (US$6,550,000)\. The objective of this sub-component (originally Component 2) under
the repositioned Component 2 is to institute essential controls needed to promote fiscal discipline,
transparency, and accountability\. At the FGS level, the additional resources will be used to ensure integrity of
the Somalia Financial Management Information Systems (SFMIS) by supporting the quality assurance of the
SFMIS and throughout the systemâs implementation and post-implementation phases, including Primary Data
Center (PDC); Disaster Recovery Center (DRC) that assure the timely recovery of data in case of any mishap\.
The proposed AF will also support sustainable management of the SFMIS through targeted institutional
capacity development programs\.
19\. In Puntland, additional resources will provide hands-on technical assistance support to the Office of
the Accountant General in areas such as financial reporting and expenditure management and control\. Given
the criticality of the Puntland Financial Management Information System (PL-FMIS) to improved transparency,
the AF will also support a systems audit to review potential gaps and data integrity issues that could endanger
sustainability of the solution\. The AF will also support capacity development activities targeted at improving
expenditure management and control, including implementation of government cash management policy\.
20\. In Somaliland, the additional resources will be deployed to specifically support Somaliland undertake
the following: (i) financial management technical assistance to the Office of the Accountant General (OAG)
focused on expenditure controls, cash management, accounting and reporting; (ii) implementation of
business process reengineering, including change management; (iii) implementation of Somaliland Financial
Management Information System (SL-FMIS) quality assurance, system security, business continuity, and
disaster recovery strategies; (iv) implementation of a cash management policy and establishment of a Cash
Management Unit at the OAG, amongst others\.
21\. Important to note is that the Central Bank of Somalia (CBS) is currently managing Subcomponent 2\.5
of the original project which includes Financial Accounting Control and Transactional Systemâ? (FACTS) and
Automated Transfer System (ATS+) with inbuilt i) real-time gross settlement (RTGS) ii) automated
clearinghouse (ACH) and iii) instant funds transfer (IFT) functions\. This subcomponent was not considered as
part of the PFM Reform Action Plan\. With this understanding, the scope of support under the AF will be limited
to the completion of ongoing FACTS activities\. Subsequent support to the CBS for the implementation of
balance of FACTS and ATS+ activities will be financed through the ongoing Somali Core Economic Institutions
and Opportunities Program (P152241)\.
22\. Sub-component 2\.2: Strengthening the integrity systems (US$4,050,000)\. The objective of this sub-
component (originally Component 3) is to ensure publication of timely and quality audit reports; improvement
in the percentage of expenditures represented by the government entities audited as part of total public
expenditures; and better follow up by Parliament of audit recommendations\. The AF will kick-off by supporting
Nov 10, 2017 Page 8 of 15
The World Bank
Second Public Financial Management Capacity Strengthening-Additional Financing (P166206)
delayed SAI institutional strengthening activities to fast track the audit of projects and Government-wide
Annual Financial Statements\.
23\. Separately, the sub-component will introduce âCentralized Multi-Partner Trust Funded (MPF)-project
auditâ? to support the projectâs annual and interim audits, and will extend periodic performance
monitoring across areas of limited/remote access (including emerging states)\. These new activities are
motivated by the lessons learnt from the twinning arrangement between the Office of the Auditor General
and audit firms providing TA in the audit of MPF/Single-Partner Fund (SPF)-funded projects\. In
implementing this activity of the subcomponent, the relevant cost-benefit analyses will be undertaken to
evaluate the pros and cons of engaging individual practicing auditors compared to firms\. The AF will seek
to formulate strategic linkages with regional Professional Association Organizations\. In line with the design
of the original project, the AF will support establishment of a national Institute of Certified Public
Accountants of Somalia (ICPAS) and its membership to Pan Africa Federation of Accountants and
International Federation of Accountants\. These activities were not undertaken initially because of the
resource constraints\. Government officials working across key PFM institutions and registered as CIPFA
students will be encouraged to register under appropriate ICPAS membership classification\.
24\. Lastly, the sub-component will also introduce an activity: Modernization of the Internal Audit function\.
Internal Audit is an essential component of a well-functioning internal control system, and over time it is
expected to play an important role in evaluating the effectiveness of control systems within the
Governmentâs strategic operations\. As part of the ongoing business process review, pre-audit of vouchers
should be the direct responsibility of the expenditure or payment section\. Given the importance of
Internal Audit, the AF will be supporting the operationalization of internal audit functions across the three
regions (FGS, PSS and SL)\. Initially, the Internal Audit function will be focused in undertaking risk based
systems audit, including projects activities at the FGS and States level\.
25\. Sub-component 2\.3: Professionalization of PFM staff (US$2,100,000)\. The objective of this sub-
component (originally Component 4) is to expand the support for the governmentâs professionalization
of PFM staff program\. The AF will help train more cadres and work with the FGS and the FMS to ensure
these qualified candidates are posted to the right functions and grades in the governments civil services\.
The project will gather gender data relating to this training to ensure a fair balance is accorded to all
gender\. This component will also explore the need of supporting some of the outstanding candidates,
who may want to further their education to gain a fuller professional qualification\. The Puntland
government has requested that the implementation of PFM staff Professionalization activities in Puntland
financed under the MPF (TF0A0388) be managed directly by the Puntland Ministry of Finance\. This request
is supported by the commitment of the PSS which is evidenced by the considerable number of qualifying
CIPFA and International Training Centre of the International Labor Organization graduates absorbed
within the Puntland Civil Service especially its PFM institutions, as well as the development of a PFM
Academy within the Puntland State University\. This approach is aligned with the World Bankâs Capacity
Development Strategy that encourages the use of domestic institutions as a sustainability strategy\. The
implementation of this sub-component therefore is aligned with the Capacity Injection Project and its
support to the establishment of the Puntland School of Public Administration\.
Component 3: Rapid Response Facility (US$2,000,000)\.
Nov 10, 2017 Page 9 of 15
The World Bank
Second Public Financial Management Capacity Strengthening-Additional Financing (P166206)
26\. The objective of the RRF is just in time support, responding to the authoritiesâ request for flexible
window in view of the evolving implementation environment, within the project to respond to these emerging
DRM and PFM priorities in a timely manner\. This request has necessitated the introduction of a âRapid
Response Facility,â? access to which will be based on a set of transparent criteria and the project results
achieved through DRM and PFM institutions of government without recourse to reallocation of project
proceeds or project restructuring as the case may be\. The RRF will support the three governmentsâFGS, PSG,
and Somaliland - and finance: (i) consultants; (ii) services; and (iii) consultations, workshop and focus-group
discussions; and (iv) work on case to case prior review basis\. Currently, the FGS has identified construction of
the Ministry of Finance (MoF), second phase, estimated at US$ 1,400,000\. The first phase of the MoF is
supported by the Swedish Embassy that is 99 percent complete supported by the United Nations Office for
Project Services (UNOPS)\. The project will endeavor to build the capacity of the respective PIUs in
environmental and social safeguards through training in order to ensure compliance with the policies
triggered under this project\.
Component 4: Public financial management reform oversight, coordination and management
(US$3,000,000)\.
27\. The AF proposes to reposition the original Component 5 and augment its financing to extend project
management and coordination support for the three governmentsâFGS, PSG, and Somaliland - in accordance
with the new activities and extended timeline\.
E\. Implementation
Institutional and Implementation Arrangements
28\. Existing implementation arrangements of the ongoing PFMCS project will be maintained, and
strengthened under the proposed AF\. This arrangement leverages lessons learnt from similar reforms in FCSs
with a deliberate attempt to use country systems instead of creating parallel Project Implementation Unit
(PIU)\. A Public Financial Management Reform Coordinating Unit (PFM RCU) in the Ministry of Finance and
Planning will anchor the reform and capacity building efforts\. A Government PFM Reform Coordinator will be
responsible for day-to-day coordination of the reform activities and serve as the key interlocutor for the
component implementation team (CIT) and ensuring proper sequencing of activities expected to be funded
by various donors\. Similarly, DRM RCU, reporting to the Director General Inland Revenue will anchor the
institutional capacity and systems DRM reform, led by the DRM Reforms Officer, who will be supported by the
DRM FM Officer, DRM Procurement Officer, DRM Communication Officer, and the DRM Monitoring and
Evaluation Officer\. These additional resources will support the Coordinator with the scaled-up DRM scope The
Technical Assistants will be shadowed by government counterparts in the CIT for skills transfer\. The CIT leaders
will be the core civil servants to be determined depending on functional aspects of the component and will
be directly responsible for day-to-day management of implementation and accountable for the reform
outcomes\. The Director-General, Ministry of Finance or the equivalent accounting / responsible officer of
government, will use the convening power of the ministry to provide strategic guidance for the reforms\.
29\. The PFM Reform Oversight Committee (ROC) chaired by the Prime Minister represents at managerial
level the key stakeholders\. The ROC has authority because they are the decision makers and responsible for
Nov 10, 2017 Page 10 of 15
The World Bank
Second Public Financial Management Capacity Strengthening-Additional Financing (P166206)
the commitment of human and financial resources needed to implement the strategy successfully\. The ROC
will report to the Office of the President that set the political tone for the broad governance reform agenda
and manage any resistance to the reforms\. The TSC members comprising of Heads of the various PFM
institutions and line ministries representing key front-line service delivery will be accountable for the success
of projects to implement the reform strategy\. Their responsibilities will be in addition to their normal work, it
is important that they direct the project by âmanagement by exceptionsâ, keeping regularly informed by the
Component Implementation Teams but only asking for joint decision making at key points in the project\.
30\. Details of Financial Management arrangements; flow of funds and banking arrangements; accounting
and internal control arrangements; financial reporting; and external auditing are provided in the project paper
of this additional financing\.
\.
F\. Project location and Salient physical characteristics relevant to the safeguard analysis (if known)
The project will be carried out with Somalia counterpart institutions in the Federal Government, Puntland
State and Somaliland\. The Ministry of Finance building, the only physical element of this project, is located
within the Villa Somalia complex\. The Ministry of Finance building has a ground floor plus three floors within
an existing footprint\.
G\. Environmental and Social Safeguards Specialists on the Team
Tracy Hart, Environmental Safeguards Specialist
Verena Phipps-Ebeler, Social Safeguards Specialist
Richard Everett, Social Safeguards Specialist
SAFEGUARD POLICIES THAT MIGHT APPLY
SAFEGUARD _TBL
Safeguard Policies Triggered? Explanation (Optional)
Environmental Assessment OP/BP 4\.01 Yes
Performance Standards for Private Sector
No
Activities OP/BP 4\.03
Natural Habitats OP/BP 4\.04 No
Forests OP/BP 4\.36 No
Pest Management OP 4\.09 No
Physical Cultural Resources OP/BP 4\.11 No
Nov 10, 2017 Page 11 of 15
The World Bank
(P166206)
Indigenous Peoples OP/BP 4\.10 No
Involuntary Resettlement OP/BP 4\.12 No
Safety of Dams OP/BP 4\.37 No
Projects on International Waterways
No
OP/BP 7\.50
Projects in Disputed Areas OP/BP 7\.60 No
KEY SAFEGUARD POLICY ISSUES AND THEIR MANAGEMENT
OPS_SAFEGUARD_SUMMARY_TBL
A\. Summary of Key Safeguard Issues
1\. Describe any safeguard issues and impacts associated with the proposed project\. Identify and describe any potential
large scale, significant and/or irreversible impacts:
The environmental category of this project is âBâ?, with OP 4\.01 Environmental Assessment applicable, due to the
construction completion (Phase 2) of the Ministry of Finance building in Mogadishu, as referenced in Component 3\.
The negative impacts of this construction are expected to be site-specific, reversible and can be readily mitigated\.
Phase 1 funding, previously provided by SIDA outside the scope of this project, provided for demolition of the previous
Ministry of Finance building on the same footprint as well as construction of the structural base and frame of the new
building\. Impacts are known, as the building is currently under construction, and include the following: (i) risk to
construction workers, including risks of falls; (ii) risk to adjacent properties and their inhabitants; (iii) risks associated
with construction debris management, including removal and disposal; (iv) construction-related noise, air pollution,
and traffic; and (v) increased demand for water and wastewater services, both during construction and operation\.
UNOPS has been contracted to manage the Phase 1 and Phase 2 construction\. It has subcontracted to an engineering
firm with worker health and safety and environmental management covenants\.
Safeguards requirements have been deferred, as provided for under paragraph 12(a) of the IPF Bank Policy, as the
project being prepared under condensed procedures\. A Terms of Reference for an Environmental Audit of Phase 1
and an Environmental Management Plan (EMP) for Phase 2 has been prepared during project appraisal\. The Phase 2
EMP, to include and build upon the Phase 1 Audit, will be prepared, reviewed, cleared, and disclosed both in the
World Bank external website as well as in-country prior to disbursement of funds related to construction completion\.
The EMP will provide provisions for UNOPS supervision of and reporting on construction contractor compliance with
both UNOPS and Bank environmental and social safeguards policies\. Other than construction completion of the
Ministry of Finance building, there are currently no other identified environmental impacts associated with DRM &
PFM AF\. If the RRF proceeds to finance another activity where environmental and/or social safeguards policies are
applicable, relevant safeguards documentation specific to that activity must be prepared, disclosed, and implemented\.
2\. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area:
The Ministry of Finance building is in a densely populated commercial district of Mogadishu\. As the building has been
constructed on the footprint of the previous Ministry of Finance building, most impacts have already been absorbed
during construction of the first Ministry of Finance building\. There are minor indirect impacts associated with
increased demand for water and wastewater services, to be provided through an on-site fresh water tank and fresh
water articulation system as well as a septic tank system\.
Nov 10, 2017 Page 12 of 15
The World Bank
(P166206)
3\. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts\.
The building has been constructed on the site of the previous building in order to minimize adverse impacts\.
4\. Describe measures taken by the borrower to address safeguard policy issues\. Provide an assessment of borrower
capacity to plan and implement the measures described\.
The government of Somalia has contracted to UNOPS management of Ministry of Finance building in order to assure
that international standards for building construction and worker health and safety are met\. Bid evaluation for
awarding the construction subcontract included the following proposal schedule technical review criteria: (i) assets,
including personal protection equipment and metallic scaffolding; (ii) insurances, including workersâ compensation
and employerâs liability insurance; (iii) subcontractors' health and safeguards management manual, plan, and
integration of own health and security management system with UNOPS health and safety requirements\.
5\. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies,
with an emphasis on potentially affected people\.
The key stakeholders for the DRMPFMCSP are the government employees as well as Federal Government of Somalia
citizens, who will benefit from the strengthening of the federal government tax base as well as increased efficiency of
the use of public funds\. With respect to the construction completion of the Ministry of Finance building to be funded
as part of Component 3, the key stakeholders are Ministry of Finance employees\.
OPS_SAFEGUARD_DISCLOSURE_TBL
B\. Disclosure Requirements (N\.B\. The sections below appear only if corresponding safeguard policy is triggered)
OPS_EA_DISCLOSURE_TABLE
Environmental Assessment/Audit/Management Plan/Other
For category A projects, date of
Date of receipt by the Bank Date of submission for disclosure distributing the Executive Summary of
the EA to the Executive Directors
"In country" Disclosure
OPS_EA_SG_DEFERRED_FCC_TABLE
The review of this Safeguards has been Deferred\.
Comments
OPS_COMPLIANCE_INDICATOR_TBL
C\. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the ISDS is finalized by the project
decision meeting) (N\.B\. The sections below appear only if corresponding safeguard policy is triggered)
OPS_EA_COMP_TABLE
Nov 10, 2017 Page 13 of 15
The World Bank
(P166206)
OPS_ PDI_ COMP_TA BLE
OPS_ALL_COMP_TABLE
CONTACT POINT
World Bank
Sher Shah Khan
Senior Public Sector Specialist
Frederick Yankey
Sr Financial Management Specialist
Borrower/Client/Recipient
Federal Republic of Somalia
H\.E\. Abdirahman Duale Beileh
Minister of Finance, Federal Government
abdirahmanbeileh010114@gmail\.com
Implementing Agencies
Ministry of Finance, Puntland
H\.E\. Abdullahi Said Arshe
Minister of Finance, Puntland
arshe@mof\.plstate\.so
Ministry of Finance of Somaliland Hargeisa
H\.E\. Yousuf Mohamed Abdi
Minister of Finance Development, Somaliland
m\.mdof@somalilandgov\.com
Ministry of Finance Federal Government
H\.E\. Abdirahman Duale Beileh
Minister of Finance
abdirahmanbeileh010114@gmail\.com
Nov 10, 2017 Page 14 of 16
The World Bank
(P166206)
FOR MORE INFORMATION CONTACT
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 473-1000
Web: http://www\.worldbank\.org/projects
APPROVAL
Sher Shah Khan
Task Team Leader(s):
Frederick Yankey
Approved By
Safeguards Advisor: Nathalie S\. Munzberg 29-Jul-2018
Practice Manager/Manager: Nicola Smithers 29-Jul-2018
Country Director:
Nov 10, 2017 Page 15 of 15 | APPROVAL |
P128511 |  PROJECT INFORMATION DOCUMENT (PID)
CONCEPT STAGE
Report No\.: PIDC261
Public Disclosure Copy
Project Name Second Namibian Coast Conservation and Management Project (P128511)
Region AFRICA
Country Namibia
Sector(s) Forestry (50%), General agriculture, fishing and forestry sector (50%)
Lending Instrument Specific Investment Loan
Project ID P128511
Focal Area Biodiversity
Borrower(s) Ministry of Environment and Tourism
Implementing Agency NACOMA
Environmental Category B-Partial Assessment
Date PID Prepared 01-Feb-2012
Estimated Date of Appraisal Completion 24-Jul-2012
Estimated Date of Board Approval 06-Dec-2012
Concept Review Decision Track II - The review did authorize the preparation to continue
I\. Introduction and Context
Country Context
Namibia is a middle-income country whose considerable successes rest on a strong multi-party parliamentary democracy that
delivers sound economic management, good governance, basic civic freedoms, and respect for human rights\. The greater part of
Namibia consistsof arid and semi-arid rangelands with little to no permanent surface water\. Namibia is divided into six geographical
regions: a) the Central Plateau where the majority of Namibiaâs population and economic activity is; b) the Namib desert; c) the
Escarpment where vegetation ranges from dense woodlands to shrubby areas; d) the Bushveld with flat and sandy soils covered
with savannah vegetation; e) the Kalahari desert which is home to the Succulent Karoo, an area with high proportions of endemic
species; and f) the Namibian Coastal and Marine region\. These regions support diverse ecosystems, habitats and abundant fauna
and flora\.
Public Disclosure Copy
Namibiaâs coastline extends some 1,570 km, from the mouth of the Orange River on the South African border, to the mouth of the
Kunene River on the Angolan border\. Namibiaâs ocean area has one of the highest primary production rates in the world and
provides critical renewable natural resources for the country\. It spans an area of 580,000 km2 and falls within the Benguela
Current Large Marine Ecosystem (BCLME)\. Shared with Angola and South Africa, this current supports vast populations of
commercially valuable fish species\. The inshore marine environment provides nursery habitats for many types of marine
organisms\. The hyper-arid Namibian coastal ecosystem is home to two globally important biomes (the Namib Desert and
Succulent Karoo biomes) and a significant and unique array of biological and ecological diversity, including uniquely adapted plants
and animals, rich estuarine fauna and a high diversity of migratory shorebirds and seabirds\. The coast supports several
internationally important coastal wetlands, such as the Kunene River Mouth, Cape Cross Lagoons, Mile 4 Salt Works, the 30
kilometers of beach between Swakopmund and Walvis Bay (including the Swakop River Mouth), Walvis Bay Wetlands, Sandwich
Harbor, Lüderitz Lagoon and the Orange River Mouth, some of which are Ramsar sites and others are Important Bird Areas\. The
wetlands at Walvis Bay, which include the Kuiseb River estuary, extend over some 35 to 40 km² and support migratory birds as well
as more than half of southern Africaâs flamingos\. The Benguela system is one of the most productive systems on the planet\.
Endemic dolphins, breeding Southern Right Whales, foraging threatened sea turtle species and many important seabird species
focus on the Namibian marine environment\.
In 2004, the Government of the Republic of Namibia (GRN) launched the Vision 2030, a 30-year planning framework for
sustainable development\. The framework promotes the development of natural capital through strategies for the sustainable,
equitable and efficient use of natural resources, maximizing comparative advantages and reducing inappropriate resource use
practices\. Vision 2030 prioritizes coastal governance under goal number 7: âConservation and management of biological diversity
along the coastal region of Namibiaâ?\. To this end, the Vision aims to ensure open, diverse, stable, and productive wetlands, coastal
and marine eco-systems by 2030\. It is also recognized that successful implementation of appropriate and effective climate change
adaptation and mitigation measures will contribute to the realization of Vision 2030 goals\. To realize the provisions of Vision 2030
and guide national development, the Government has developed National Development Plans (NDPs)\. The NPC coordinated the
formulation of the Third National Development Plan (NDP3) 2007/2008 â 2011/2012 in 2007\. This NDP3 supported ongoing
decentralization and identified key environmental concerns such as sustainable management of scarce water resources, biodiv
ersity conservation, pollution and waste management, sustainable energy development, capacity building, and sustainable
livelihood\. The NPC is currently preparing the Fourth NDP which continues to consider the economic value of Namibia's natural
capital\.
Sectoral and Institutional Context
The GRN has made significant progress on their biodiversity and climate change agendas\. The National Biodiversity Strategy and
Action Plan (NBSAP) was a ten-year strategic plan of action for biodiversity conservation that ended in 2010\. As an inter-sectoral
plan coordinated by the Ministry of Environment and Tourism (MET), the NBSAP provided guidance for the implementation of the
Public Disclosure Copy
Convention on Biological Diversity (CBD) to which Namibia is a signatory\. The NBSAP highlighted the need for support for
currently under-protected key ecosystems of biodiversity importance, adequate input into the process of zoning, development of
guidelines and environmental assessment of proposed aquaculture developments\. It also offered the Ministry of Environment and
Tourism (MET) the legal mechanisms for achieving the goal to develop management plans for the coastal parks\. Namibia is
currently formulating its second NBSAP and the proposed project would complement its outlined objectives \. In 2007, the GRN
passed an Environment Management Act which provides the environmental framework legislation for Namibia\.
In 2005, with support from the GEF/World Bank, GRN initiated the Namibian Coast Conservation and Management (NACOMA)
project establishing a strong platform for governance of the broader coastal landscape and seascape and strengthening the policy
framework for coastal governance through development of a draft National Coastal Policy (NCP)\. The project is closing in April
2012, and is already indicating gaps and needs in the future\. The NACOMA project supported the development of an integrated
coastal zone management policy (ICZM)\. The draft NCP promotes integrated and cooperative coastal governance and outlines a
vision for the coast that prioritizes sustainable development of coastal areas through equitable and integrated coastal management
that balances conservation and economic development\. Preparation of the draft NCP involved a highly participatory consultative
process that began in early 2006 and resulted in the publication of a Coastal Policy Green Paper in July 2009 and a White Paper in
December 2010\. The NCP is currently awaiting tabling by Cabinet but is anticipated for adoption before May 2012\. Once adopted,
it will provide key enabling mechanism for strengthening coastal governance in Namibia\. The NACOMA project also contributed to
the protection of coastal and marine biodiversity by assisting in the declaration of two new protected areas (Pas), the Dorob
National Park (DNP) and the Namibian Islands Marine Protected Area (NIMPA) and improving the governance of a number of other
coastal PAs (Skeleton Coast Park (SCP), Cape Cross Seal Reserve (CCSR), Namib Naukluft Park (NNP), Sperrgebiet National
Park (SNP), Sandwich Harbour Ramsar site and Walvis Bay Ramsar site)\.
In December 2011, the GRN concluded a significant milestone of its Climate Change Agenda, when they launched the Second
National Communication (SNC) at the UNFCCC COP 17 in Durban\. This Communication follows the UNFCCC guidelines and
includes information on Namibia's Greenhouse Gas Inventory for the year 2000, as well as measures to mitigate emissions and
adapt to climate change in key sectors\. Previous to this, the GRN had completed a number of in-depth studies including: the
vulnerability and adaptation assessment, sea level rise, technology needs assessment and GHG inventory (between 2010 and
2011)\. In November 2011, MET had finalized and launched the National Climate Change Policy (NCCP) that will support actions to
reduce the vulnerability of Namibians and various sectors to the impacts of climate change and build capacities at all levels for
implementation of climate change response activities\. Objective 2 of the NCCP is to develop actions and strategies for climate
change mitigation through the development and implementation of renewable energy and energy efficiency, Clean Development
Public Disclosure Copy
Mechanisms (CDM) and enhanced carbon sinks\. The White Paper on Energy recognizes the renewable energy potential of
Namibia in the form of rich gas reserves, hydropower, ocean energy and plentiful solar and wind resources\. The emphasis is to
promote the use of renewable energy through the establishment of adequate institutional and planning frameworks, the
development of human resources, public awareness, and suitable financing systems all link well to energy related climate change
issues\. It also focuses on energy efficiency, environmen tal impact assessments for major energy related development projects,
investment in renewable energy and rural electrification and solar water heating\. Namibiaâs Renewable Energy Project Phase
1from (2004 â 2007) helped remove barriers and develop general understanding and acceptance of the concept; Phase 2 (2008 â
2010) helped to implement activities\.
Despite NACOMAâs success in setting the initial stages for a strong policy and governance of the coastal marine ecosystems and
increasing protection of coastal biodiversity described earlier, the majority of threats and pressures on coastal resources from
burgeoning coastal development and industry continue to increase and intensify\. Growing economic development and human
activities along the coast and in the marine environment are leading to unprecedented migration, bringing with it uncontrolled urban
development that results in overuse and pollution of freshwater resources, an increase in industrial coastal and marine pollution,
degradation of water regimes for coastal wetlands, and other land and water degradation\. With its long coastline and important
fisheries sector, Namibia is vulnerable to the impacts of sea level rise and associated storm surges that can bring about
biogeophysical impacts such as coastal erosion; flooding, inundation and displacement of wetlands and lowlands; landslides; salt
water intrusion into freshwater aquifers and estuaries; and reduced protection from extreme storm and flood events\. Coastal
populations have a high dependence on aquifers and this constitutes a key vulnerability\. Coastal ecosystems provide services
such as provision of food, tourism/recreation, flood attenuation, and replenishment of groundwater\. But, Namibiaâs marine and
coastal areas are increasingly vulnerable to the negative impacts of climate change, especially in the growing urbanized locations
such as Walvis Bay\. The stresses on ecosystem services may affect the natural habitats as well as the human populations both
directly (flooding, coastal erosion, impact on harbors etc\.) as well as indirectly through marine and coastal ecosystem changes
(changes in fish populations and productivity impacting on the fishing industry as well as coastal biodiversity including endangered
seabirds)\.
With the wealth of analytical studies and policies on climate change, environmental management and integrated ecosystems
coastal management now in place, it is imperative to integrate the various sectors policies and ensure that different sectors of the
society, both NGOs and productive sectors work together with the government to ensure the sustainable development of Namibia\.
Different line ministries and the private sector have been participating in various NACOMA advisory groups and commissions and
there is an interest to harmonize development and ensure that the cost-benefits of different development options are well known\.
NACOMA Phase 2 funding is key to influence how all the policies and investments that will happen on the coast are incorporating
the values of biodiversity and ecosystems, stop land degradation and enhance the use of renewable sources of energy, as well as
reduce vulnerability to climate change\.
Public Disclosure Copy
Relationship to CAS
The proposed project is closely aligned with the WB's program in Namibia\. Support to the GRN on environment is, along with
education, listed as the top priority in the Interim Strategy Note â Engagement Framework for the Republic of Namibia (April 2007)\.
This is the document that currently guides WB engagement with Namibia and is currently being updated by a Country Partnership
Strategy (CPS) that is expected to coincide with the Fourth National Development Plan that the government is preparing\.
Technical assistance on natural resource management, water conservation, energy, and climate change are the major share of
financial resources that the WB has allocated to Namibia over the past years\. This emphasis reflects the centrality of
environmental sustainability for Namibia's economic development\. All major sources of economic growth and livelihood directly use
the country's biodiversity, natural resources, and services of the environment, and are vulnerable to climate change\. Realizing the
aspirations of Vision 2030 will require increased attention to a greening of the economy\.
II\. Proposed Global Environmental Objective(s)
Proposed Global Environmental Objective(s)
To maintream an integrated coastal zone management approach (ICZM) for the development of the Namibian coast\.
Key Results
- Area (km2) of terrestrial and marine ecosystems of biodiversity importance under effective management increased\.
- Number of people engaged in sustainable land and water use activities increased\.
- Integrated coastal zone management approach incorporated into planning, policy, institutions and investments at national,
regional and local levels by project end compared to baseline\.
III\. Preliminary Description
Concept Description
This project is expected to be funded by a US$3,577,000 GEF grant and US$17,332,000 in co-financing from GRN\. The
partnership between the GEF, the Government of Namibia and the private sector (tourism, fisheries and mining) is an innovative
and exciting approach to marine and coastal zone conservation and to mainstreaming integrated coastal zone management (ICZM)
in productive sectors in Namibia\.
Public Disclosure Copy
Coastal management in Namibia is currently on the cusp of success and failure\. The NACOMA project has supported essential
initial steps towards establishing an effective governance framework, promoting decentralized decision making and protecting key
marine and coastal biodiversity\. Ongoing support for coastal governance activities through this project are essential to: a) boost the
baseline of a developing, yet currently inadequate integrated coastal governance framework; b) strengthen newly proclaimed yet
ineffectively managed coastal and marine protected areas; c) support preliminary steps towards mainstreaming the ICZM approach
into production sectors; and d) bring new opportunities to integrate renewal energy programs in the National Coastal Policy\. In the
absence of support, there is a high likelihood of persistent degradation of high-value, unique biodiversity and natural resources and
loss of opportunities for sustainable coastal development\.
The proposed project would include three interrelated components and an administrative management component\.
Component 1: Implementation of the National Coastal Policy (NCP)
This component would conduct the following activities with GEF funds: a) an economic and environmental assessment of the
coastal tourism sector and recommendations to focus on how to incorporate an ICZM approach in policies and regulatory
frameworks and provide alternative benefits of tourism to production sectors; b) a strategy for renewable energy (including solar,
biogas, concentrated solar power and ocean) specifically for the coast\. This will be done jointly with coastal local authorities and
the energy and mining sectors; c) the development of tools for the sustainable land management and development practices in the
wider coastal landscapes and seascapes and of at least two certified coastal production landscapes and seascapes (i\.e\. fisheries
and mariculture, tourism or mining); and d) a study of the economic impacts of coastal erosion and climate change effects on
biodiversity, ecosystems and coastal inhabitants (including coastal Ramsar sites)\.
With counterpart funds, this component would support: a) the designation of the permanent institutional structure for the NCP and
the long term budgeting; b) the functioning of advisory mechanisms for collaboration and integration among sectoral agencies and
across multiple scales on sustainable coastal and ocean management issues ; and c) the influencing of key policies and regulatory
frameworks to incorporate marine and coastal biodiversity and renewable energy technologies in fisheries, tourism, energy and
mining\.
Component 2: Institutional Strengthening, Knowledge and Research for ICM
This component would conduct the following activities with GEF funds: a) the development of a monitoring system to ensure
compliance and enforcement of coastal regulatory framework at the national, regional and local level; b) the establishment of a
coastal and marine biodiversity information center and the upgrading of existing coastal information centers that will become a hub
for disseminating and communicating key information gathered by NACOMA on legislation, policies, best practices for the tourism,
fisheries and mining sector, biodiversity and ecological information, major potential threats\. The center will also play a critical role
for training and youth and volunteer programs to raise awareness about the values of the coast and marine natural resources\.
This component would conduct the following activities with counterpart funds: a) the functioning of inter-ministerial committees for
Public Disclosure Copy
integrated ocean and coastal management to monitor enforcement and compliance to the NCP including climate change mitigation
measures; b) co-financing of the coastal and marine biodiversity information center in cooperation with the private sector and other
donors; c) support awareness-raising initiatives and communication campaigns on coastal and marine biodiversity and climate
change mitigation (to support technicians in design, installation and maintenance of solar, biogas, concentrated solar and ocean
energy systems); and d) research projects on key coastal and marine biodiversity required to generate up to date information to
display at the center\.
Component 3: Coastal and Marine Protected Areas Investments
This component would support on-the ground investments within and outside coastal and marine protected areas\. The GEF fund
would finance: a) the infrastructure and equipment for Dorob National Park (DNP - 811,800 ha) and the development of
sustainable financing plans for the marine and coastal PA system (i\.e\. Namib-Skeleton Coast National Park made up of Skeleton
Coast Park (1,639,000 ha), Namib-Naukluft Park (4,976,800 ha), Sperrgebiet National Park (2,600,000 ha) and Namibian Islands
Marine Protected Area (1,180,000 ha); b) the implementation of a small and medium micro enterprises (SMME) program for: i)
rehabilitation of degraded lands with communities involvement around PAs and ii) piloting renewable energy technologies in the
coastal areas such as solar, biogas, concentrated solar and ocean energy systems where appropriate\.
This component would support with counterpart funds: a) the posting of new staff in the coastal zone to work on research, law
enforcement, crime prevention and tourism development; b) investments in some marine and coastal park infrastructure; and c) the
posting of more staff to improve management effectiveness of marine and coastal protected areas and to advise the fishing industry
on harvesting and reducing by-catch mortalities\.
Component 4: Project Management
This component would support the day to day operation of a project implementation unit responsible for the following functions: a)
administration; b) coordination; c) financial and audit management; d) procurement management; e) monitoring and evaluation; f)
fundraising; and g) reporting\.
IV\. Safeguard Policies that might apply
Safeguard Policies Triggered by the Project Yes No TBD
Environmental Assessment OP/BP 4\.01 â
Natural Habitats OP/BP 4\.04 â
Public Disclosure Copy
Forests OP/BP 4\.36 â
Pest Management OP 4\.09 â
Physical Cultural Resources OP/BP 4\.11 â
Indigenous Peoples OP/BP 4\.10 â
Involuntary Resettlement OP/BP 4\.12 â
Safety of Dams OP/BP 4\.37 â
Projects on International Waterways OP/BP 7\.50 â
Projects in Disputed Areas OP/BP 7\.60 â
V\. Tentative financing
Financing Source Amount
BORROWER/RECIPIENT 17\.32
Global Environment Facility (GEF) 3\.57
Total 20\.89
VI\. Contact point
World Bank
Contact: Claudia Sobrevila
Title: Senior Environmental Specialist
Tel: 473-5004
Email: csobrevila@worldbank\.org
Borrower/Client/Recipient
Name: Ministry of Environment and Tourism
Contact: Theofilus Nghitila
Public Disclosure Copy
Title: Director of Environmental Affairs
Tel: 0612842333
Email: tnghitila@yahoo\.com
Implementing Agencies
Name: NACOMA
Contact: Rod Brady
Title: Project Coordinator
Tel: 26464403905
Email: rbraby@nacoma\.org\.na
VII\. For more information contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 458-4500
Fax: (202) 522-1500
Web: http://www\.worldbank\.org/infoshop
Public Disclosure Copy | APPROVAL |
P004696 | D _ment Of
The World Bank
FOR OMCAL USE ONLY
Report No\. 6205
PROJECT COMPLETION REPORT
THAILAND
SIXTH HIGHWAY PROJECT (LOAN 1519-TH)
May 20, 1986
East Asia and Pacific Regional Office
This document has a restricted distribution and may be used by recipients only in the performance
of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
O OWQiAL UVE ONLY
TH* WORW SANK
Washntan\. D\.C\. 20433
US\.A
May 20, 1986
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Completion Report on Thailand Sixth Highway Project
(Loan 1519-TH)
Attached, for information, is a copy of a report entitled "Project
Completion Report on Thailand Sixth Highway Project (Loan 1519-TH)" prepared
by the East Asia and Pacific Regional Office\. Under the modified system for
project performance auditing, further evaluation of this project by the
Operations Evaluation Department has not been made\.
Attachment
This document has a festriteddinibuton and may be usd by rcipients only in he perfofmance
of their official duties\. Its contents may not otherwise be discimd without WnVA k^A-
FOR OMCUIL USE ONLY
THAILAND
SIXTH HIGHWAY PROJECT (LOAN 1519-TH)
PROJECT COMPLETION REPORT
Table of Contents
Page No\.
PREFACE \. i
BASIC DATA 5HEET* \.g \. ii
HIGHLIGHTS iii
I\. Project Background and Sectoral Settingtt\. ing\.o\. 1
II\. Project Formulation\.m u l a ti\. \.on\. 3
III\. Project Implementation\. \. *\. \.e\. 6
IV\. Project Cost and Bank Loan\.oo\.an\. 16
V\. Institutional Development\. \. \. \. \. \. * 18
VI\. Economic Reevaluation\. \.,\.e\.e\.g\. o*C@@ \.g\.g\. 19
VII\. The Role of the Bank\. 21
VIII\. Conclusions\. \. 21
Tables
1\.0 Project Implementation\. \. \. o 23
2\.1 Construction Contract Costs \. 25
2\.2 Equipment Contract Costs 26
2\.3 Consultant Contract Costs\. , \. *\. \. 27
3\.0 Actual and Forecast Project C os t s 28
4\.0 Traffic Volumes\. 29
5\.0 Vehicle Operating Costs 31
6\.0 Economic Rates of Return 34
7\.0 Actual and Forecast Disbursements\.00*0 35
8\.0 Compliance with Loan C on d i t i o n s 36
MAP
IBRD 12911R: National Highway and Provincial Road Networks
rThis document has a restricted distribution and may be ued by recipients only in the performane
of their oMcial duties\. Its contents may not otherwis be disclosed without World Bank authorization\.'
- i\.-
THAILAND
SIXTH HIGHWAY PROJECT (LOAN 1519-TH)
PROJECT COMPLETION REPORT
Preface
This is a Project Completion Report (PCR) of the Sixth Highway
Project for which Loan 1519 was approved in March 1978 for the sum of
US$110\.0 million\.
The PCR was prepared by the East Asia and Pacific TraDaportation
Division, based upon technical Report No\. PE-ll which was prepared by the Thai
Ministry of Communications\. The Bank's files have also been reviewed\.
The loan was closed on March 31, 1984\.
In accordance with the revised project performance reporting
procedures this report has been read in the Operations Fvaluation Department
(ORD) but the project was not audited by OED staff\. The draft Completion
Report was sent to the Borrower for comments; however, none were received\.
- ii -
PROJECT COOPLETION REPORT BASIC DATA SHEET
THAILAND - SIXTH MIGUWAY PROJECT (LOAN 1519-TN)
XEY PPOJCT DATA
Appraisal
ItO expectation Actual
Total Project Cost (US$ million) 206\.69 194 39
Underrun ,S) - 6\.00
Loan Amount (US$ million) 110\.0 -
Disbursed ) - 102\.57
Cancelled ) _ 7\.43
Repaid to ) ay 30\. 195 14\.66 15\.96
Outstanding to ) Me J\.95 95\.34 86\.61
Date Physical Compoiiits Completed I
Proportion Completed by Above Date (1) 75 100
Proportion of Time Undarrun or Overrun (2) - 40
Economic Rate of Return (2) 29 20
Institutional Performance Good Good
OTHER PROJECT DATA
Original Actual or
item _Plan REvisions Est\. Actual
First Mention in ?Iles or Timetable 14/73
Negotiations 1
Board Approval u8u
Loan Agreement Date
If fectiveneas Date
Closing Date
Borrower Ilnido of Thailan4d
Executing Agency MInistry of comaunications
Fiscal Year of Borrower October l-September 30
Follow-on Project Meae Frovincial loads Project
Loan Number 2035-TN
Amount (US$ million) 35\.0
Loan Atreement Date 08/131
MISSION DATA
No\. of No\. of Data of
Item Month, Year Weeks Persons Mun-weekr LR&ort
Identification 11/73 1\.0 1 1\.0 012574
Preparation I -07a 2 2\.0 12/2S17S
Appraisal - l 4\.0 2 8\.0 267
Total 6\.0 -11\.0S
Supervision I 79 1\.O'a 2 2\.0 /24/79
Supervision II 09 2 4\.0 0 /31/80
Supervision III 05/80 - a T -2\. 072980
Supervieion IV 1 2\.0/ 2 ___4\.0 083181
Supervision V 10/81 2 2\.0 18/81
Supervision VI 0/2lO 1 1\.0 82
Supervision VII 01/83T 4\.0 2 0t1/3
Supervision VIII 061 20a 1 2\.0 070683
Supervision xI l 1l1IT3I b 2 2\.0 1 2083
Supervision X 014+0tS8
Total 1\.
COUNTRY EXCHANaE RATES
Name of Currency (abbreviation) Baht ( B )
Period:
Appraisal Year Average 1977 Exchange Rate% US$1 - 20\.40
Intervening Vears Average 1978-83 US$1 - 21\.67
Completion Year 1984 US$1 * 23\.05
Overall 1i7 84 US$1 * 21\.60
/a Originally includivg supervision of Fifth Highway Project, and preparation of provincial roads project,
but nov adjusted for this project only\.
/b Originally including supervision of Fifth Highway Project, First and Second Provincial Roads Project\. but
now adjusted for thia project only\.
December 4, 1985
- iii -
THAILAND
SIXTH HIGHWAY PROJECT (LOAN 1519-TH)
PROJECT COMPLETION REPORT
Highlights
The Sixth Highway Project continued the Bank's assistance to the
Government of Thailand in improving its road network\. The project was
designed to meet increasing traffic volumes and develop the provincial, or
secondary, road network given the fact that the national highway network was
fairly well developed by the late 70s\.
The project achieved all of its objectives, despite some delays\.
The construction and improvement of roads which originally were unpaved or
impassable dirt tracks was carried out successfully\. All civil works were
executed by Thai contractors who were supervised by the staff of the Ministry
of Communications (MOC), assisted by a team consisting of local and foreign
consultants\. The maintenance program included under the project helped to
address the long outstanding issues related to inadequate road maintenance\.
The various studies produced detailed engineering for other provincial and
rural (tertiary) roads, as well as for inland waterways and coastal ports,
which are now being built under several follow-on projects\. The project
included technical assistance and training components that were designed to
help build up the MOC's two main departments concerned with roads - the
Department of Highways (DOH) and the Transportation Planning Unit (TPU)\.
There was also some technical assistance extended to the Ministry of the
Interior for a study of the reorganization of its rural roads organizations\.
Finally, although there was a slight cost underrun, the economic rate of
return was slightly below appraisal estimates due to slower than anticipated
traffic growth\. This rate was, however, still high enough to justify the
project investments\.
The outstanding features of this project were the development of
local consultants and contractors as well as the extensive institution
building in all road organizations\. It has left Thai road organizations with
increased capability to plan, design, supervise and construct road subsector
projects\.
THAILAND
SIXTH HIGHWAY PROJECT (Loan 1519-TH)
PROJECT COMPLETION REPORT
I\. PROJECT BACKGROUND AND SECTORAL SETTING
The Transport Sector
1\.01 For the past 20 years, the Thai economy has grown at an average rate
of about 7% per annum (p\.a\.) due primarily to its rapidly developing
agriculture sector\. This growth has generated a high demand for transport\.
To accommodate this demand, the Government undertook large transport
investments in successive five year plans and also helped to create a
generally competitive transport industry\. Today all Changwats (counties) are
interlinked by a road network, and transport services have penetrated most of
previously remote rural areas\. The country now has a reasonably good
transport system, though there is continued scope for further development\.
1\.02 The Thai Government's basic objective in the past has been to
increase transport capacity in line with projected traffic growth and to avoid
major bottlenecks\. This objective has largely been achieved\. Furthermore,
the transport system is reasonably balanced, as there is no substantial
uneconomic allocation of traffic among the various modes\. Road transport is
the predominant mode\. Roads (excluding urban traffic) carry about 77% of all
ton-km, followed by rail with 11%, and 6% each for inland waterways and
coastal shipping\. In passenger transport (again excluding urban traffic),
roads carry about 92% of passenger-km, against 7% carried by rail and 1Z by
other modes\. During the 1980s, the transport sector is expected to continue
expanding in step with, or slightly ahead of, GNP growth\.
1\.03 Large investments in transportation infrastructure have been
complemented by a considerable effort to improve the efficiency of the
transportation system through the establishment and strengthening of
institutions to plan, construct, maintain and operate the facilities and
services\. For example, at the recommendation of and with assistance from the
Bank, a Transport Planning Unit (TPU) was set up in 1977 in the Ministry of
Communications (MOC) to provide the MOC with the technical expertise for
transport planning, coordination and policy formulation\. Since then, the TPU
has received significant technical assistance under successive highway
projects and has developed into a reasonably competent planning and
coordination agency\.
1\.04 The Bank has played an active role in advising and assisting the
Thai authorities in pursuing their transport objectives\. A summary of Bank
transport investments follows:
- 2 -
Signing Amount
Project date Loan # ($ m)
1\. Hig4ways I 06/11/63 341 21\.9
2\. Highways II 06/24/66 455 31\.1
3\. Highways III 05/23/68 535 22\.3
4\. Highways IV 06/27/69 626 16\.8
5\. Highways V 12/26/72 870 22\.8
6\. Highways VI 03/23/78 1519 102\.6
7\. Bangkok Traffic Mgmt\. 12/04/78 1638 8\.1
8\. Provincial Roads 08/13/81 2035 35\.0
9\. Provincial Roads II 09/28/83 2311 100\.0
Subtotal 360\.6
10\. Railways I 10/27/50 35 3\.0
11\. Railways II 08/09/55 128 12\.0
12\. Railways III 04/28/61 280 14\.5
13\. Railways IV 06/01/73 898 14\.5
14\. Railways V 04/23/79 1662 16\.1
Subtotal 60\.1
15\. Ports I 10/27/50 37 4\.4
16\. Port II 10/12/56 151 3\.3
17\. Third Bangkok Port 08/06/70 702 12\.0
18\. Inland Waterways &
Coastal Ports 08/27/80 1889 53\.0
19\. Bangkok & Sattahip Ports 12/19/80 1918 47\.0
Subtotal 119\.7
Total 540\.4
The Road Subsector
1\.05 In order to meet the demand for road transport, since the 1960s, the
Government has been devoting around three-quarters of all transport investment
to roads\. Much of this originally went into developing adequate all weather
paved national roads to connect the principal population and agricultural
production regions with Bangkok\. Subsequently, emphasis was shifted to the
provincial roadn and lastly to the rural roads\. The public road network now
totals about 150,000 km, consisting of about 14,300 km of national (primary)
roads, 28,400 km of provincial (secondary) roads, and about 106,000 km of
rural (tertiary) roads\. Almost 100% of the national roads are paved\. About
16,700 km of provincial roads are improved (of which 70% are paved), and about
11,700 km are still unimproved\. An increasing length of older national and
provincial (paved) roads requires pavement rehabilitation and strengthening\.
There is also a great need to upgrade the unimproved provincial roads\.
1\.06 Motorized traffic on all public roads has steadily increased since
the sixties and seventies\. The number of registered four-wheel road vehicles
amounts to 14\.3 per 1,000 persons, a figure which compares to 15\.4 in the
Philippines and 48\.2 in Malaysia\. About 93% of non-urban traffic is concen-
trated on the national and provincial roads, where traffic volumes on some
sections exceed 10,000 vehicles per day\. During the past 20 years, traffic
growth ranged between 7% and 15% p\.a\. Traffic on national and provincial
roads is now projected to grow at an average of about 6% p\.a\. during the
eighties\.
1\.07 The first four Bank financed highway projects provided major
assistance to paving the national highways, in particular those radiating from
Bangkok towards the north, the southeast and southwest, and others within the
northeast\. The fifth highway project continued development of national roads
from Bangkok to various cities in the South east and northeast as well as four
provincial roads\. All of the projects also included components for: (a)
institution building in the MOC; (b) formulation and revision of transport
sector policies such as user charges; and (c) technical assistance and
provision of equipment for road maintenance and for equipment repair
workshops\. The policy changes supported by Bank projects included the
adoption of more appropriate road standards, pricing fuel (especially diesel)
to support energy conservation programs and to improve efficiency of road
transport, and a modified Government policy on toll roads requiring financial
and economic studies prior to levying tolls on any road\.
1\.08 When the sixth highway project was being considered, the national
highway system was fairly well defined and constructed\. Its expanuion was
limited to construction of a few new links a2d to widening certain heavily
used routes close to Bangkok\. The Government's emphasis was then shifting to
provincial roads and the Sixth project was designed to concentrate on their
construction and improvement\. This report reviews the progress made under the
Sixth project based on information provided by the Post Evaluation Section of
the Department of Highways (DOH) and a review of the Bank's files in
Washington\. Bank staff, who are familiar with the project have also
contributed to this review\.
II\. PROJECT FORMULATION
Preparation Stage
2\.01 The project arose out of the Government's recognition in the mid
19709 that Thailand's road network was inadequate to serve the rapidly
growing vehicle fleet and the increasing demand for road transport which was
accompanying the country's rapid development\. It was prepared with the
assistance of Australian consultants, in a joint venture with local
consultants, financed under the Fifth Highway project\. The consultants
carried out a two phase feasibility study from late 1973 through 1975 which
identified about 22 sections of high priority provincial roads suitable for
- 4 -
development\. The same consultants carried out detailed engineering of the
roads in 1976-77, which was substantially completed by the time of project
appraisal\.
Project Objectives
2\.02 The objective was to support the Government's development plan for
the provincial roads system which formed part of the Fourth Five Year Plan
(1977-81)\. In addition to this plan of construction and improvement, the
objectives also included (i) improving the maintenance of national highways
and provincial roads; (ii) planning and conducting studies of provincial roads
and rural roads to prepare future road improvement projects; (iii) preparing
studies of complementary development of inland waterways transport and coastal
ports; and (iv) providing technical assistance and training for both DOH and
MOC staff\.
Appraisal Stage
2\.03 The appraisal mission, composed of an engineer and an economist,
visited Thailand in October 1977 and reviewed the project documents\. These
included the detailed engineering, economic evaluation, bid documents and
other information requested previously by the Bank\.
2\.04 Only one real issue was raised at appraisal but several other topics
were discussed for which specific actions were to be agreed on at
negotiations\. The issue centered around the loan amount\. The then tentative
allocation was US$80 million which was inadequate to finance the entire
foreign exchange cost (US$132 m) for all the possible project items\. A loan
of US$100 m would suffice if 3 roads (totalling 208 km) were dropped from the
14 roads (totalling 887 km) appraised\. The other discussions were concerned
with traffic data collection, inadequate maintenance programs, construction of
key links to connect the project roads at Bangkok and paving of some other
supporting roads, and the Government's policies on toll roads\.
2\.05 Loan negotiations were held in Washington in January 1978\.
Discussions were successful and the Government and the Bank agreed on a number
of points, the principal ones being:
a) the loan amount would be US$110\.0 million, to cover eleven (11)
sections of provincial roads, totalling 671 km;
(b) the extension of the collection and analysis of traffic data would
include the entire provincial road system;
(c) an eight-year program of maintenance of the national highways would
be carried out in accordance with the recommendations of the Highway
Maintenance Study;
(d) the Government would construct satisfactory road links between Bang
Bua Thong and Thon Buri/Bangkok, and complete paving of the Chana-
Thepa-Patthani road;
(e) roads would be selected for feasibility studies and for subsequent
detailed engineering;
(f) tolls would not be introduced on any sections of the project roads
without first carrying out an economic and financial evaluation, and
agreement between tne Bank and the Government\.
Project Description
2\.06 The project, as agreed, consisted of the following:
(a) Construction and improvement, including bituminous paving, and
supervision by consultants, of 11 sections of provincial roads
totalling 671 km;
(b) an eight-year program of maintenance of the national highways and
provincial roads, including the procurement of road maintenance and
workshop equipment, with an initial supply of spare parts;
(f) a review by consultants of the national highway and provincial road
systems to establish priorities for improvement, and feasibility
studies by consultayts of about 1,500 km of roads (predominantly
provincial roads), followed by detailed engineering by consultants
of about 1,200 km; if found justified\. Also, a study by consultants
to prepare an investment program for rural roads in eight selected
Changwats;
(d) detailed engineering by consultants for improvements to the waterway
between Nakhon Sawan and Klong Toei (Bangkok Port), and for
construction of a port at Nakhon Sawan and related economic studies;
(e) a feasibility study of the improvement of about 20 coastal ports and
the preparation of a development program for them;
(f) technical assistarce by consultants:
(i) to the DOH, particularly for detailed planning and implementing
the agreed road maintenance program, and for training of staff;
and
(ii) to the MOC for training the staff of the TPU; and executing a
road user taxation study; and
(g) provision of fellowships for training staff of the DOH and TPU\.
2\.07 The appraisal report, No\. 1692a-TH was dated January 26, 1978\. The
project was approved by the Executive Directors in February 1978 and Loan
Agreement No\. 1519-TH (US$110\.0 million, for 20 years including 5 years of
grace with interest at 7\.45X per annum) was signed on March 23, 1978\. The
Loan agreement became effective on September 14, 1978\.
- 6 -
III\. PROJECT IMPLEMENTATION
Overview
3\.01 All road construction and paving was originally scheduled for
completion by May 1982 but, due to initial delays in contract awards and
subsequently during construction, some of the roads were completed anywhere
from four to eighteen months behind schedule\. Similarly, all other project
components suffered lengthy delays, most of which were due to budgetary and
administrative constraints\. Consequently, the original loan closing date of
December 31, 1982 was extended two times until March 31, 1984\.
Road Construction and Paving
3\.02 The project had been fully prepared before loan signature, including
detailed engineering, preparation of bid documents, and prequalification of
contractors for international competitive bidding\. In fact, bids had already
been invited for eight roads in late 1977\. The bids for the remaining roads,
Bang Bua Thong - Suphanburi, Ban Sali -Ayuthaya, and Sam Khok-Sena, were
received in Ncvember 1978, about six months behind the schedule\. The
contracts for these three roads were therefore awarded about ten months later
than originally scheduled, a somewhat lengthier delay than for the other roads
(two to three months)\. Bid prices were on the whole quite close to appraisal
estimates\. Although ICB was used and foreign firms took part in the bidding,
all contracts were won by Thai contractors\.
3\.03 The construction of four roads, Bo Phloi - U Thong, Bo Phloi - Dan
Chang, Had Yai - Semyaek Khuha and Had Yai - Chana, was completed before the
contract date and also before the original schedule anticipated at
appraisal\. Although acquisition problems for the Bo Phloi - U Thong and Had
Yai - Samyaek Khuha roads forced the contractors to alter their work programs,
this did not affect the overall completion schedule as the contractors were
able to regain lost time\. Changes were made during the construction of each
road (for Had Yai - Chana an additional bridge was constructed) but they were
all for less than the 10% of price variQtion allowed by contract\.
3\.04 The other seven roads were completed anywhere from four to eighteen
months behind schedule, largely because of the initial delays in bidding and
contract award\. They were also adversely affected by the very heavy monsoons
of 1978 and 1980 as well as a few cases of contractor difficulties\. The
reasons for delays (other than monsoon rains) are summarized below:
Completion
Road delay Reasons
1\. Nakhon Sawan- 7 months (a) Right-of-way acquisition;
Philsanulok (b) design changes during
construction
2\. Ban Chai Badan- 4 months (a) route realignment between
Dan Khun Thot km 31 and km 34 + 500;
-7-
(b) a need to rebuild
pavement which was damaged
because side drainage was not
provided;
(c) extending the road to
intersect with Highway 21\.
3\. Ban Bung- 7 months (a) right of way acquisition;
Klaeng (b) construction of an addi-
tional access road
4\. Ban Bung- 14 months (a) Right of way acquisition;
Ban Xhai (b) Repairs to sections
damaged by Petroleum
Authority of Thailand
(c) additional upgrading
works on adjacent road links
(10% of contract value)
5\. Bang Bua Thong - 18 months (a) Contractor's equipment
Suphanburi was not in good working
order;
(b) poor construction
techniques led to the rework-
ing of several paved areas;
(c) technical problems due to
difficult soil conditions;
(d) poor management and
adverse relations with
subcontractors;
(e) disputes over work
quality with the consultants;
(f) several changes,
including additional bridges,
during construction\.
6\. Ban Sali - 14 months (a) Difficult soil
Ayuthaya conditions;
(b) disputes among Joint
Venture partners on provision
of mutual access, damaged
works, etc\.,
(c) construction of 4
additional access roads
7\. Samkhok- 11 months Some minor changes involving
Sena additional works on bridges,
but work hod started nearly
10 months Late due to bidding
and contract award delays
3\.05 Overall road construction and paving was executed relatively well\.
The same consultants who carried out the feasibility studies and detailed
engineering of the roads were selected to assist the Department of Highways in
the selection of contractors and the supervision of construction\. The
consultants' contracts were signed on April 19, 1978\. Their supervisory
performance was satisfactory\. Reporting was prompt and in adequate detail for
monitoring project performance\. Relations with contractors were good except
on the Bang Bua Thong - Suphan Buri road where probleme occurred because of
poor management by the contractors\.
3\.06 In addition to these project roads, the DOH, in accordance with the
Loan Agreement, awarded contracts for constructing the link roads between Bang
Bua Thong and Bangkok Noi\. The construction of Bang Bua Thong - Taling Chan
section began on April 17, 1979, and was completed on November 1, 1981;
construction of Taling Chan - Bangkok Noi section began on March 23, 1979, and
was completed on January 10, 1983, except for an interchange at Taling Chan
for which a separate contract was completed on November 15, 1984\.
3\.07 The actual length of roads improved and constructed totalled 679
km\. The roads were handed over to the MOC field organizations for
maintenance\.
Maintenance of National Highways and Provincial Roads
3\.08 During the "Study of Highway Maintenance and Equipment Needs," which
was financed under the Fifth Highway Project Loan 870-TH, it was established
that a shortage of highway equipment, the age of the existing equipment fleet,
lack of funds and insufficient supervisory staff were all affecting highway
maintenance, in particular periodic maintenance\. At the time of the sixth
project negotiations, the MOC prepared budget estimates for 8 years of road
maintenance (FY78-86) which included the procurement of highway maintenance
equipment to replace worn out DOH equipment\. Arrangements for setting up a
revolving fund for the repair and replacement of maintenance equipment were
included in the project\.
3\. ' This component was to provide enough equipment for the DOH to carry
oul\. routine maintenance on the national and provincial road systems\. The
equipment was classified into six groups: group I: "vehicles," group II:
"other vehicles," group III: "heavy equipment," group IV: "compaction
equipment," group V: "tractors" and group VI "other equipment"\. The Bank
also agreed to the purchase of additional maintenance equipment (a 2-ton
tandem vibrating roller and a vibrating plate tamper) as well as to the
purchase of 24 Bailey bridges with 100 ft spans\. The ICB for the procurement
of highway equipment, except group I, was in August 1978, close to the
scheduled date\. The bidding for group I was on September 11, 1978 and for
additional equipment on May 30, 1980\. The World Bank guidelines for
Procurement were used by the Department of Highways\. The procurement of all
maintenance equipment was completed on February 2, 1982, about eleven months
later than scheduled at appraisal\.
3\.10 After considerable delay the "Revolving Fund" (a management system,
with internal 'hire' financing for road maintenance equipment) became
-9-
partially operational in late 1983\. The delays were due to problems with
administrative and budgetary procedures for operating the fund; these were
only solved after prolonged negotiations with the Ministry of Finance and
other Government agencies concerned, and final approval by the Cabinet\. It is
too early to judge properly the performance of this Fund mainly because it is
understaffed and has had difficulties with data flow, document control and the
computer capacity\. However, it has already improved the planning and
progranming of works in the districts and the efficient use of equipment\. The
Fund is being strengthened under the Second Provincial Roads project, Loan
2311-TH\.
Feasibility Studies and Detailed Engineering
3\.11 The Department of Highways planned to carry out a series of studies
of road improvement needs in order to establish a long-term plan for National
and Provincial road development and to prepare future road construction and
improvement programs for the Fifth Five-Year Plan (1982-1986)\. The studies
were in three stages: Stage I, an overall screening or pre-feasibility study
of the national and provincial roads, which would establish a priority order
for construction and improvement; Stage II, feasibility studies of the roads
found to have high priority; and Stage III, detailed engineering of roads
selected from those found to be economically feasible\. All studies were
financed under the Sixth Highway Project\.
3\.12 Proposals were invited from a short list of consulting firms and
the Department of Highways selected an American firm in a joint venture with a
Thai firm and negotiated with them\. This process, and the administrative
stages and approvals involved, took longer than expected and the contract was
awarded on April 23, 1979\. The study started in December 1979, about six
months later than originally scheduled\. The Stage I (Screening) Study was
performed over a ten-month period, and it had the following objectives:
(a) To screen all roads in the national and provincial road network and
establish an order of priority for their improvement at a
prefeasibility study level of detail;
(b) To identify individual road improvements which were likely to be
economically feasible in the period 1982-1986; and
(c) To recommend from these about 1,500 km of roads for which
improvement or construction should begin during the period 1982-
1986\.
3\.13 The Stage I study involved a preliminary review of the roads, to
evaluate the potential for supporting agricultural development and to
establish the physical conditions and traffic levels of the roads\. In total,
202 road links of approx\. 6,000 km in length were included in the study\.
Subsequent economic analysis in the Stage II study showed that 76 had rates of
return greater than 12% and 102 had rates greater than 7Z, the remainder had
lower rates\.
- 10 -
3\.14 For the Stage III detailed engineering study, the Department of
Highways selected the same consulting firms which had carried out the previous
study stages and negotiated a contract with them\. The contract was signed on
April 30, 1980\. The scope of work included the preparing of design guidelines
and standard drawings, supervising production of final designs and contract
documents and making recommendations to the Department of Highways for the
award of the construction contracts\. The task began in June 1980, somewhat
ahead of the schedule\.
3\.15 The roads were placed into three groups\. Group I comprised of 20
roads with a total length of approximately 778 km\. These were roads which had
been selected by the DOH, some of which were already under design by local
consultants\. For Group II there were 21 roads with a total length of 663
km\. These roads were initially considered to be likely candidates for final
design, based on the results of the screening study\. For Group III there were
32 roads with a total length of 918 km, these roads were selected during the
study\. Detailed engineering was substantially completed by September 1981 on
most of these roads\. Work on an additional group (23 roads of length
totalling 569 km) started in March 1981 and was completed by February 1, 1984\.
3\.16 This study was executed well and thb consultants' performance was
good\. Twenty four of these roads are now beiug constructed under the
Provincial Roads Project (Loan 2035-TH), and ten more were included under the
Second Provincial Roads Project (Loan 2311-TH)\. The remainder have been built
under ADB and OECF loans, and also by Government solely from its own budget\.
Rural Roads Study
3\.17 It had two main parts: (a) Organization and Maintenance Study:
aimed at recommending changes in the institution concerned with rural roads
(Ministry of the Interior), and particularly for setting up an adequate road
maintenance organization; and (b) Rural Road Development Study: aimed at
outlining a long-range program for improving rural roads, based on a screening
of the entire network, followed by the preparation of a five year improvement
program for priority roads\. Proposals were invited from a short list of
consulting firms, and after evaluation, the Government selected one American
firm and one French firm in joint venture with two Thai firms and negotiated a
contract with them\. The contract was &igned on September 16, 1980\. The study
started in October 1980, about twenty months later than originally scheduled
due mainly to difficulties in deciding which agency should be in charge of it\.
3\.18 With regard to Organization and Maintenance, the study's final
report found that in general there was enough staff in the various departments
of Ministry of the Interior (MOI) to handle responsibilities for the rural
roads\. However, to be more effective, a substantial reorganization was
required to clarify responsibilities and to reassign the staff in accordance
with needs\. The consultants put forward three alternative proposals for this
reorganization and for deployment of MOI staff to assist the Changwats\. These
consisted broadly of:
(a) formation of a new Department of Rural Roads which would consist
mainly of the roads staff of the office Accelerated Rural Develop--
- 11 -
ment (ARD) together with the smaller number of staff engaged on
rural road works in the Public Works Department (PWD) of the MOI\.
The other activities of the Office of Accelerated Rural Development
(ARD) would be distributed among the Royal Irrigation Department
(small dams, reservoirs and tanks, etc\.) and the Community
Development Department (social programs and well drilling)\. The
Public Works Department would continue with its present activities
less its rural road functions;
(b) formation of a Department of Rural Roads (as in (i) above) from the
rural roads staff of the ARD and the transfer of all other public
works of the ARD to the Public Works Department, and the transfer of
the ARD's social program to the Community Development Department;
and
(c) the combination of all public works activities, including rural
roads, of both the ARD and the PWD into one enlarged Public Works
Department and the transfer of the ARD's social programs to the
Community Development Department\.
3\.19 The consultants' proposals were submitted to the Government and were
reviewed by an Inter-ministerial Steering Committee\. Subsequently, the Bank
Mission of February 1982 was informed that the Government was considering a
variant of the Consultant's proposals (b) and (c) along the following lines:
Office of Accelerated Rural Development would be reconstructed as a Rural
Development Department, to handle rural roads functions including those
presently carried out by Public Works Department and with the rural roads
staff transferred from Public Works Department\. The Rural Development
Department would also continue to carry out the remaining public works
functions of the Office of Accelerated Rural Development, but the Office of
Accelerated Rural Development's social or non-works functions would be
transferred to the Community Development Department\. The Public Works Depart-
ment would become a Municipal Works Department, with its present functions
less rural roads\. However, in the final analysis, none of the proposals were
accepted by the Cabinet and no reorganization took place\.
3\.20 The other part of the Study of Rural Roads consisted of a screening
of the entire rural road network followed by feasibility studies of a selected
5,000 km\. The 5,000 km were selected from roads proposed by the Office of
Accelerated Rural Development, the Public Works Department and the
consultants' own list\. They were screened and ranked in accordance with their
priority rating and then weighted by region to give the overall balance
required by the Government: Northeast 50%, North 25%, South 10%, and Central
15x\. This 5,000 km was to form the bulk of the Government's five-year
development program for rural roads\. The detailed engineering of some of
these rural roads is to be carried out by the consultants financed under the
Provincial Roads Project (Loan 2035-TH)\.
- 12 -
Inland Waterways Study
3\.21 This study was actually the Phase III of an Inland Waterways project
proposal which consisted essentially of improving the Chao Phya river from
Angthong up to Nakhon Sawan in order to allow year round navigation, and the
building of a new inland port at Nakhon Sawan\. The earlier Phase I had dealt
with general problems of inland waterways in the central basin of Thailand and
emphasized the benefits of improving the Chao Phya and the Nan river
waterways\. Phase II provided a pre-feasibiliLy study of the improvement of
this waterway from Bangkok up to Uttaradit on the Nan river, and of new inland
ports in Nakhon Sawan, Tapan Hin, Phitsanulok and Uttaradit\. Phase III
included the feasibility study and design of the river section up to the port
of Nakhon Sawan\.
3\.22 The objective of the study was to determine the least cost develop-
ment of the inland waterway system, given the extensive dredging and mainten-
ance works involved\. In Thailand the main agricultural areas lie in the north
and northeast transportation corridors and to a lesser extent on the southern
peninsula\. Development of road systems in the two corridors, as proposed
under the Sixth Highway project, would result in the funnelling of agriculture
produce to the port of Nakhon Sawan on the Chao Phya river, which is the focal
point of the two corridors\. Products moving by river from NaKhon Sawon could
then be distributed either after transshipment at Klong Toei (Bangkok) or
directly, if barges are large enough, to coastal ports in the southern
peninsula; the reverse movement would also be feasible\. Furthermore, the use
of southern coastal ports in conjunction with their hinterland roads was
necessary to move exports to deep water ports\. Hence development of the
inland river port at Nakhon Sawan, improvement of waterways due north of it
and also due south to Bangkok, analysis of the coastal ports (para\. 3\.25) and
the required barge fleet, formed logical additions to the road systems slated
for development under this project\. The study therefore covered all aspects
of the project: economy, river, river craft, ports and port equipment\.
3\.23 After inviting proposals for Phase III from a short list of
consulting firms, the Harbor Department of the MOC selected the same French
firm which carried out the Phase II study and negotiated with them\. The
contract was signed on February 19, 1979, about seven months later than
originally scheduled at appraisal\. The work was completed about four months
behind the schedule\. The consultants recommended implementation of the
overall project\. The main recommendations were as follows:
(a) The Harbor Department of the MOC had the following alternatives:
either stop the sand dredging (for the construction industry) above
Ayutthaya and have a navigable waterway, or continue dredging and
eliminate navigation on the lower Chao Phya river\. Regular river
maintenance works, dredging and bank protection would nevertheless
have to be carried out\.
(b) The Harbor Department should encourage implementation of a pilot
project using a pushed barge convoy and the replacement of the
existing fleet by modern vessels\.
- 13 -
(c) The Harbor Department should assume financing and build all infra-
structure for the administrative area and general cargo terminal at
the port of Nakhon Sawan, whether they are publicly operated or
eventually leased\. The Harbor Department should also finance the
construction of the dry bulk terminal, mineral ores terminal, cement
terminal and petroleum products terminal at the port of Nakhon Sawan
and then lease them\.
3\.24 Some of the study findings, e\.g\. the Chao Phya river dredging and
the construction of the port at Nakhon Sawan form part of the current Inland
Waterways project, Loan 1889-TH\. A survey boat was also procured under the
sixth project\.
Coastal Ports Study
3\.25 A Coastal Ports study was included in the Sixth highway project to
survey complementary transport sector needs\. Commissioning of the study
reflected the need for a long term masterplan to make development of coastal
ports complementary to the overall strategy of developing deep-sea ports at
Bangkok, Songkhla, Phuket and Sattahip\. The coastal ports were originally
developed under private initiative to serve the local fishing industry and to
provide for domestic trade between isolated settlements at a time when land
transport was difficult or impossible, but their continued development had
become the responsibility of the MOC's Harbor Department\. At appraisal (see
para\. 3\.22) the Government wished to ensure that costal ports development be
coordinated with other transport improvements, in particular those to the
country's network of national and provincial roads\.
3\.26 The principal objectives of this study of approx\. 22 coastal ports
were first, to determine what operational improvements were needed, and
second, to establish the feasibility of improving facilities at these ports\.
Of the 22 ports included, only seven (Bandon, Pak Panang, Chumphon, Pattani,
Kantang, Krabi and Samut Songkhram) handled significant volumes of cargo
traffic; together they accounted for 60% of all coastal cargo handled outside
of Bangkok\.
3\.27 After inviting proposals from a short list of consulting firms, the
Harbor Department selected a British firm in a joint venture with a Thai firm
and negotiated a contract with them\. The contract was signed on February 2,
1979, about seven months later than originally scheduled\. The study was
completed about six months behind appraisal schedule\.
3\.28 The study was done in two phases\. The first phase included a
limited field inspection of the ports and led to the selection of a small
number of ports for more detailed study\. The second phase led to the recom-
mendations that (a) capital dredging should be undertaken at the ports of
Bandon, Ranong,[ Klong Tachin and Pattani; (b) a new trailing suction hopper
dredger should be acquired; (c) Fish Marketing Organization facilities at
Pattani should be improved; and (d) management of the Harbor Department
dredging activities should be reviewed\.
- 14 -
3\.29 The capital dredging at the ports of Bandon and Pattani was
included in the ongoing Inland Waterways Project, Loan 1889-TH\. The trailing
suction hopper dredger is also being procured under that project\.
Technical Assistance to the Department of Highways
3\.30 The objectives of this component were (a) to help the DOH establish
and operate a revolving fund, and (b) to strengthen highway maintenance
planning\.
3\.31 This component originated from the recommendations of the "Study of
Highway Maintenance and Equipment Needs," carried out in 1974-76 under the
Fifth Highway Project (Loan 870-TH), in which the concept of the Revolving
Fund for the procurement, maintenance and replacement of the highway mainte-
nance equipment fleet was described\. The revolving fund was to be part of a
general reorganization of the administration and organization of the
Department of Highways\. The "Study of Highway Maintenance and Equipment
Needs" also recommended that most periodic road maintenance work should be
performed by contract\.
3\.32 After inviting proposals for technical assistance services from a
short list of consulting firms, the Department of Highways selected an
Australian firm and negotiated a contract with them\. The contract was signed
on August 21, 1978, some six months later than originally scheduled\. The work
was completed about eleven months behind the schedule and was carried out in
three phases:
(a) preparation phase, to formulate and fixualize operating details;
(b) implementation and monitoring phase, covering the first full
financial year of revolving fund operation; and
(c) evaluation and modification phase, to make the necessary eperational
changes\.
The work was carried out by a team of three consultants, with some additional
input\. They also conducted ten seminars and training conferences in Bangkok
and elsewhere to train the staff of the revolving fund and to explain the
various procedures (repair and shop servicing, parts and supply, costs and
statistical records, fleet management and utilization, data management,
accounts, highway maintenance methods, etc\.) These seminars varied from two
days to one week\.
3\.33 The main recommendations were as follows:
(a) Revolving Fund
The revolving fund should be established in accordance with the
Regulations authorizing it, which were promulgated in August 1981\. The
Department of Highways should place the remainder of its equipment within the
ownership and management of the Revolving Fund, and at the same time,
incorporate the Mechanical Division within the Revolving Fund organization\.
In order to achieve this, consultants should be engaged\.
- 15 -
(b) Highway Maintenance
The Department of Highways should introduce computerized methods of
equipment scheduling and alr\., institute a highway maintenance costing system\.
(c) Computer
The Department of Highways should prepare all necessary computer
programs for efficient Revolving Fund operation, engaging consultants if
required, and should install remote entry and intelligent computer terminals
in all 12 field divisions\.
(d) Communications
The Department of Highways should provide vhf radio transceivers for
intra-field divisional communication\.
3\.34 Most of these recommendations are being implemented\. The revolving
fund unit was approved by the cabinet with a tentative start up date of
October 1, 1981; however, due to administrative and staffing difficulties, it
has only been financially operational since August 1983\. (Its operations are
outlined in para 3\.10)\. For highway maintenance, the DOH engaged consultants
under the provincial roads project, Loan 2035-TH\. The maintenance system to
be developed will take into consideration all levels of maintenance in the
paved and unpaved road network and will establish a systematic road condition
inventory; actual implementation will be sometime in the future\. As for the
computer, a Burroughs B1825 minicomputer was purchased and installed in the
DOH, under the sixth project\. Finally, communications equipment will be
procured under the Provincial Roads Project Ln\. 2035-TH\.
Technical Assistance to the Transportation Planning Unit
3\.35 To improve the planning and use of resources in the transport
sector, the Government had established a Transportation Planning Unit (TPU)
and had decided to institute a Transport Management information System (TMIS)\.
To make this Unit more effective, the Ministry of Communications decided that
assistance should be provided to the Unit for a period of about two years\.
This was referred to as Phase III of the Transportation Planning Unit Project,
and was a continuation of the consulting services provided by French
consultants under the earlier Phase I and II (in 1975-1977), as follows:
(a) Phase I of the services was aimed at making recommendations for an
efficient functioning of the Transportation Planning Unit and at
designing the TMIS\.
(b) Phase II was aimed at assisting the MOC in implementing the Phase I
recommendations and training the staff of the TPU\. Port development
policies were an important aspect of this phase of the services\.
(c) The Phase III services were initiated under a separate contract
between the Ministry of Communications and French consultants in
January 1980, more than two years after the end of Phase II\. These
- 16 -
services were aimed at assisting the TPU staff in doing specific
studies, the further development of the TMIS, and advising the MOC
as necessary\.
3\.36 The consulting services concentrated on two studies in which the
Ministry had vested the highest priority; these were: (a) a study of energy
policies applicable to the transportation sector; and (b) a study of road user
taxation\. Other subjects were covered by the Consultants to varying degrees,
such as highway traffic statistics, international comparisons of road vehicle
weights and dimensions, pricing and regulation of transportation services,
deep-sea port development policy, identification of new inland waterway
projects and the impact of crude oil discoveries at Larn Krabue and Sukhothai
on inland waterways development\. They also reviewed or prepared terms of
reference for a port development mission, for the survey of the trucking
industry, for a regional transportation plan for the Eastern Seaboard and for
Bangkok Second International Airport\. In addition, a large part of the
consultancy service was devoted to developing TMIS for the road subsector\.
3\.37 The consultancy services were to last for about two years, but due
to lengthy delays in data acquisition and processing, the contract was
extended to July 1982\. The technical assistance provided had a significant
impact on the TPU's institutional development\.
Overseas Training
3\.38 A total of 41 professional staff of the Department of Highways had
completed overseas training courses in various subjects by the end of 1978\.
This training was financed by the First, Third, and Fifth Highway Projects\.
With the improvement and expansion of Thai universities, all courses were
provided locally except for a limited range of specialized subjects\. The
Sixth Highway Project included specialized training for more DOH staff
members\. Four staff members were trained in transportation engineering, one
in photogrammetry, and two in transportation economics\. Most of the courses
were conducted at overseas institutions, but two staff members were trained at
the Asian Institute of Technology\.
3\.39 The Sixth Highway Project also provided fellowships for eight man-
years of overseas training in transportation planning and economics for the
staff of the Transportation Planning Unit\. Five staff members have completed
training courses and have returned to contribute to the unit's work program\.
IV\. PROJECT COST AND BANK LOAN
Project Costs
4\.01 The total cost of the project, including contingencies, was about
4,134\.6 million Baht, or a total of about US$194\.4 million equivalent\. The
foreign exchange component was about US$102\.6 million, or about 53% of the
total cost\. The total cost is about 6% less than the US$206\.7 million
estimated at appraisal\. The underrun of about US$12\.3 million was mostly due
to savings of about US$6\.2 million in road construction costs and also of
- 17 -
about US$3\.9 million in highway maintenance equipment\. The items which
exceeded the appraisal estimates were the construction supervision, by about
$0\.1 million, and the right of way acquisition, by about US$7\.9 million\.
Details of actual costs and appraisal estimates are given in Table 3\.
4\.02 The reasons for the civil work cost underrun were the excellent
control of physical and price contingencies\. No contract exceeded the 10%
physical contingencies built into the appraisal estimates because contractors
generally managed their works well and the DOH did strict supervision\. For
price contingencies, civil works contracts included a clause which stipulated
essentially that payments to cover them would only be triggered if prices had
escalated by 5% or more\. In most periods, prices increased by less than 5%
and hence were absorbed by the contractor\. Actual payments to cover price
contingencies were therefore negligible\. The other reasons for the underrun
in total project cost arose from changes in the rates of exchange and the use
of a basket of currencies during project implementation\. At the rate of
exchange prevailing during appraisal, the total cost of the project should
have been equivalent to US$202\.7 million\. However, the actual total cost was
US$194\.4 million, resulting in a cost reduction of US$8\.3 million\.
Loan Disbursements
4\.03 Cumulative disbursements (detailed in Table 7) compared to appraisal
estimates were as follows:
FY78 FY79 FY80 FY81 FY82 FY83 FY84
($--------- ( million -------------------
Appraisal 10\.0 37\.0 71\.0 92\.0 108\.0 110\.0 -
Actual 5\.1 25\.5 61\.4 78\.6 90\.9 99\.3 102\.6
It should be noted that even though there was some delay intially in disburse-
ments, due to late contract awards etc, the overall profile compares well with
appraisal estimates\. It was faster than the standard country profile would
suggest\.
Reallocation of Loan Funds
4\.04 At the Government's request, the Bank loan funds were reallocated on
June 10, 1982 to use the unallocated portion\. Subsequently, on July 12, 1983
US$7\.4 million of the loan was cancelled at the Government's request\. The
loan was closed on May 18, 1984 and the remaining undisbursed balance
(US$29,443\.90) was cancelled\. The following table shows the original and
actual allocation of loan proceeds\.
- 18 -
Category Loan Agreement Reallocation of Actual as of
June 10, 1982 May 18, 1984
--------------- (US$ million) -----------
1\. Civil Works 54,000 66,100 63,727
2\. Equipment, vehicles, survey
boat and spare parts 17,800 23,740 21,506
3\. Consultant' s services 15,600 17,100 17,160
4\. Fellowships 200 180 178
5\. Unallocated 22,400 2,880 0
Total 110,000 110,000 102,571 /a
/a The actual amount was US$102,570,556\.10\.
Fulfillment of the Main Loan Covenants
4\.05 Compliance with covenants (Table 8) was generally satisfactory\.
More could have been done on the maintenance program where budgetary provi-
sions generally lagged needs by about one year\. The Government has since
agreed to take appropriate steps under the second provincial road project,
Loan 2311-TH\. Similarly, administrative and bureaucratic delays adversely
affected the agreed implementation timing for other measures such as the
revolving fund, and construction of the link roads and bridges\. The
Government also adhered to agreements on toll policies and the extension of
the road traffic monitoring system\.
V\. INSTITUTIONAL DEVELOPMENT
5\.01 In addition to assisting the Government of Thailand in attaining its
road construction goals, the Sixth Highway Project contributed to the
development of all institutions involved in the road subsector and prepared
the basis for several follow-on projects (some of which were financed by other
aid agencies)\. The main beneficiary institutions were the Department of
Highways (DOH) and the Transportation Planning Unit (TPU) of the Ministry of
Communications and to a certain extent, the Ministry of the Interior\.
Ministry of Communications
5\.02 The DOH's road maintenance capability was considerably strengthened
and the issue of the perennially inadequate maintenance funds was also
addressed\. The maintenance program was particularly helped by the provision
of technical assistance to establish the revolving fund\. Further technical
assistance to the DOH is being provided under the Second Provincial Roads
project, Loan 2311-TH\.
5\.03 The TPU was considerably strengthened by the training program
especially because it provided staff training in fields, such as transporta-
tion economics and highway investment planning, which were not previously
- 19 -
emphasized in Thailand\. The TPU capability has improved significantly but for
certain assignments it continues to use consulting services\. These services
are usually aimed at assisting the TPU in doing specific technical studies and
in the further development of the transport management information system
(TMIS)\. Further technical assistance is being provided to the TPU under the
Provincial Roads project, Loan 2035-TH\.
Ministry of the Interior
5\.04 The "Organization and Maintenance" component of the rural roads
study addressed complex issues affecting the many agencies concerned with
rural roads\. These agencies included the Public Works Department and the
Office of Accelerated Rural Development in the MOI, as well as the Royal
Irrigation Department and the Community Development Department\. The proposals
to reform the rural roads agencies as designed under the study were not
implemented bcause of decisions made by the Cabinet\. However, the MOI has
benefited from the conduct of the study itself as it has helped to define the
issues more clearly\. Discussions on the future administration of rural roads
can now be more properly focused\. This will be increasingly helpful as
the Government turns its attention to the, so far lower priority, rural
(tertiary) roads\.
Road Subsector Policies
5\.05 The exchange of views between the Bank and Government has helped in
the evolution of road subsector policies\. Of these, the most important are
the greater priority now being given to maintenance of the road network,
adoption of the most cost-effective designs and the use of studies to analyze
the effect of tolls before allowing their introduction or a road section\.
VI\. SCONOMIC RE-EVALUATION
6\.01 The economic re-evaluation compared the benefits and the costs of
constructing the roads, for an assumed life of 15 years\. The economic costs
of the project include all outlays, net of taxes and duties\. Also included
are the cost differentials of routine maintenance and periodic resurfacing
required to maintain the standard of the road surface with and without the
road construction or improvements works\.
6\.02 Road user benefits were determined using the standard vehicle
operating costs and travel time costs, which were developed by the Post
Evaluation Section of the Planning Division in the Department of Highways as
part of feasibility studies for national highways and provincial roads in
Thailand\. Vehicle operating costs were calculated for the eight types of
vehicles using the road, i\.e\., motorcycle (MC), cars (PC), light bus (LB),
medium bus (MB), heavy bus (HB), light truck (LT), medium truck (MT) and heavy
truck (UT)\. There has been an increase in vehicle operating costs, largely
due to the escalation of fuel and other costs, since the project was appraised
in 1975\. Compared with the appraisal figures, the vehicle operating costs are
estimated to have increased by about 85-145% for motorcycles, car, light bus
and light truck; and about 150-240Z for medium and heavy buses, and medium and
heavy trucks\. The basic variable and fixed costs by vehicle type, road
surface and geometric condition, and operating speed were also calculated\. A
summary of the operating costs for various types of vehicles is presented in
- 20 -
Table 5\. In the calculation of time benefits, average running speeds, with
and without the improvement, and average occupancy of passenger vehicle were
taken into account\.
Traffic
6\.03 For this economic reevaluation, traffic counts were carried out at
various locations in 1984 to determine the actual traffic using the roads\. As
a basis for estimating the travel distance savings accruing to this traffic,
the Post Evaluation Section also did new origin-destination (0-D) surveys at
that time\. The O-D survey results were used to prepare trip matrices, showing
the number of trips between %ones by type of vehicle\. From these matrices it
was possible to assign traffic to road sections with and without the
project\. The comparisons of actual and forecast traffic in 1984 are shown in
Table 4\.
6\.04 Average annual daily traffic (AADT) in 1984 varied among the project
roads from about 130 vehicles per day (vpd) to 5,700 vpd\. Actual traffic
volumes on four roads, Nakhon Sawan-Phitsanulok, Ban Chai Badan-Dan Khun Thot,
Ban Bung-Klaeng, and Bo Phloi-Dan chang, were about equal to traffic projected
at appraisal\. Actual traffic on another four roads, Bang Bua Thong-
Suphanburi, Sam Khok-Sena, Ban Sali-Ayutthaya, and Bo Phloi-U Thong, were
somewhat less than projections\. However, actual traffic on the remaining
roads, Ban Bung-Ban Khai, Hat Yai-Chana and Hat Yai-Samyaek Khuha, exceeded
projections\. The actual traffic growth rates were between 3\.11 and 9\.1Z p\.a\.,
while the growth rates for traffic projected at appraisal ranged between 32
and 122 p\.a\.
Re-estimated Rates of Return
6\.05 The analysis showed that the project roads, both taken individually
and as a whole, are fully justified economically\. The re-estimated economic
rates of return (ERR) are summarized below:
Road Section Length (km) ERR (2)
Nakhon Sawan-Phitsanulok 126 19
Ban Chai Badan-Dan Khun Thot 84 18
Ban Bung-Klaeng 88 35
Ban Bung-Ban Khai 74 20
Bang Bua Thong-Suphanburi 74 20
Ban Sali-Ayutthaya 37 19
Sam Khok-Sena 30 21
Bo Phloi-U Thong 38 18
Bo Phloi-Dan Chang 78 27
Hat Yai-Semyaek Khuha 23 20
Hat Yai-Chana 36 14
The comparisons of ex-post and original estimates of economic rates of return
are shown in Table 6\. The overall ERR for the 11 roads was approximately
202\. In all except one case, Ban Bung-Ban Khai, the re-estimated economic
- 21 -
rates of return were less than the appraisal estimates\. This is partly
because the actual traffi\. volumes are less than the volimes projected at
appraisal and also partly due to increased operating costs\.
VII\. THE ROLE OF THE BANK
7\.01 The project continued and expanded the dialogue between the
Government and the Bank started under the previous five projects\. This has
led to the further evolution and implementation of policies and programs in
the road transport subsector\. Moreover, the studies provided the Government
with a planning framework and led directly to Bank involvement with the
secondary and tertiary road network as well as with inland waterways and
coastal ports\.
7\.02 In terms of policy development, the continued dialogue on
maintenance funding and reviews of road transport regulations led to further
development of road transport policy\. There is now a stronger emphasis on
transport investment planning and the design of least-cost alternatives\. Bank
involvement contributed to improving the quality of the projects which are now
both better technically designed and implemented\. This appears to be
generally true both for construction works and for maintenance organization
and operation\. In addition, the efficiency of the road transport industry,
highway maintenance and planning capabilities have all improved\.
7\.03 During supervision missions, the Bank staff assisted in solving
various problems associated with project implementation\. The extensive use of
local consultants and the Bank's support in this venture has led to the
development of a competent local industry\. Now, selected foreign consultants
can be used in a mostly Thai team to do feasibility studies and detailed
engineering\.
VII\. CONCLUSIONS
8\.01 The project was satisfactorily implemented and accomplished its
major objectives\. Despite initial delays, the civil works component was well
executed and all roads had adequate re-estimated rates of return\. The
emphasis on maintenance was timely and led to more adequate arrangements for
protecting the road networks\. All of the various studies led to follow-on
projects, and the technical assistance and training helped significantly to
develop road subsector organizations in Thailand\. Finally, the project helped
to focus the Government's attention on the previously very t\.ow priority rural
(tertiary) road network\.
I &
I,\
TIUILAUW
SX11 RICEWAY PROJECT (LOAm 1519-TN)
PROJECT CO02PLETION REPORT
Actual and Expected Project Implemantation
Contractor/consultant Btd receipt Contract awrd BDgtng of work Cmpletion of vork Z of works completed by
Project component and nationality Actual Ezpected Actual Expecpected Actual Expected expected completion date
Construction atd Improent of
Nhtional and Provinclal Roan
Group At Consultant Vallentine, Laurie & Davies
Nakhon Savan - Phiteanulok Garson & Sons Ltd\. (That) 09/20/77 09/02/77 05/09/78 02/28/78 05/17/78 03/01/78 06/22/82 12/31/81 82
Ban hait Badan - Dan Ohun Thot Liu Ca roen Onotruction, Ltd\. (Thai) 09/06/77 09/02/77 05/04/78 02/28/78 05/17/78 03/01/78 07/20/81 03/01/81 92
Ban Bung - EleenS Vich bhan, Ltd\. (Thai) 08/23/77 09/02/77 05/04/78 02/28/78 03/01/78 10/02/81 10/02/81 03/01/81 84
Ban lung - Dan Xhai A\.S\. Associated Dagineetrig, Ltd\. (Thai) 08/23/77 09/02/77 06/15/76 02/28/78 07/03/78 03/01/78 02/12/82 12/31/80 79 1
Group St Onsultant Snowy Mountainas Egineering Corporation
Bang Bus Thong - Suphanburi mopawong C mcial Ltd\./(Thai) 11/01/78 04/30/78 04/12/79 06/15/78 05/01/79 06t31/78 11/30/83 06/01/82 55
Ban ali - Ayuthaya Si Soeng tothakarn Ltd\./Thai Wato WMorn 11/04/76 04/30/78 04/12/79 06/15/78 05/01/79 06/31/78 11/07/82 12/31/81 69
VWat Udorn Thanl Ltd/
Sahaaak Ltd\. Joint Venture (Thai)
Sam Ehok - Sans Si Saeang Yothakarn Ltd\./That Watn Udorn 11/04/76 04/30/78 04/12V79 06/15/78 05/01/79 06/31/78 11/07/82 12/31/81 71
Vatn Udorn Thanti Ltd/
Sahsak, Ltd\. Joint Venture (Thai)
Do Phloi - U tbong Namprasert cholburi, Ltd\. (Thai) 12/09/77 09/02/77 06/26/78 02/28/78 07/03/78 03/01/78 05/07/80 12/31/80 100
Do Phlol - Dan (ffan Prayoon Viava Engineering Co\. Ltd\. 08/26/77 09/02/77 06/26/78 OV28/78 07/03/78 03/01/78 05/07/80 12/31/80 100
(Tbai)
Rat tai - Samyaek Ehuha Nopawng Coaercial, Ltd\. (Thal) 08/26/77 09/02/77 05/08/78 02/28/78 02/26/78 03/01/78 11/15/80 12/31/80 100
fat ati - (laxna Sabakol Engineers Ltd\. (Thai) 08/26/77 09/02/77 05/08/78 02/28/78 02/26/78 03/01/78 11/15/SO 12/31/80 100
i~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~'h
Contractor/conaultaut 8i4 receipt Contract award Deal ing of work Completion of work N of works comploted by
Project componnt and nottovality Mtu I EXPOeted Aceuil ihpectd Actual Erpected Actl Rpected expected completion date
Supervision of Road Contruction Vallentine, Laurie 6 Davies (Australia) - - 04/19/78 02/28/78 06/01/78 03/01/78 01/31/83 12/31/81
Snowy mountain Enginsering (Australia) - - 04/19/78 06/15178 06/01178 07/3L/78 01131/84 12131/81
HigRtay Iiatenance kquipmat 08101/78 06/15178 01/31/79 09/30/76 - - 06128/82 09/30/79
survey Boat N/A 1VA OU28/80 N/A - - 07122/80 N/A
Studies and BMineeria
National and Provincial goads
Study of National and Louis lerer Tnt\./Asian gtinee8ring N/A 03/31/78 04/23179 08/31178 0/17/79 09/30178 02129/80 03/31/79
Provincial Road Network (US/Thai)
in Thailan (Stage I)
Detailed engineering Group I Thai Consulting firs D08 - - 03/06/80 10131180 03/06/80 11/30/80 10/10/80 11130181
Detailed engineering Group rI DOR - - - 10/31/80 N/A 11/30/80 N/A 11/30/SI
Detailed engineering Group III Thai Consulting Firm 6 DO - - 09/25/60 10/31/80 09/25/60 11/30/80 06/30/81 11/30/81
Detailed engineering Group IV Thi Coulting Firms & D08 - - 08/17/81 N/A 03/17/81 N/A 02/01/84 N/A
Design Supervision Louis Berger Int\./Asian Engineeriag - - 04/30/80 10/31/80 06/01/80 11/30/80 N/A 11/30/81
(US/That)
Highway Naintensace and VallAntines Laurie h Davies N/A 11/30/77 08/21/78 02/28/78 09/01/78 02/28/78 N/A 03/31/80
Equipant Revolving Fund (Australia)
Study of Riral roads 8C0CELSII/AEC/URCC (trance/US/ 08/01/78 07/31/78 09/16/80 12V15/78 10/12/80 03/01/79 10120181 03/01/80
Thail/Tai)
Inland Waterways Study BCECt (France) 03/17/78 03/31/78 02/19/79 06/30/78 12/01/78 08/01/78 12/01/78 071/31/79
Costal Ports Study aunsell and Partners (U/Autra"a) 04/27/78 03/31/78 01/02/79 06/30/78 12/01/78 08/01/78 04/01/80 09/30/79
Techac\.l\. Assistance and Trainai
DOs/Nquip_ent Revolvins Fu Valleatine, Laurie 6 Davies (Australia) N/A 11/30/77 08/21/78 02/28/78 16/A 02/28/78 I/A 03/31180
TPU/road user charges BOCRO (France) N6A 12/31/78 N/A 03/131/79 01/06/80 06/01/79 07/20/82 11/30/80
Training - DOl - - 10/02/78 09/30/78 12/28/82 06130/82
Training - TPU - _ _ - O927/78 09/30/78 12/27/82 03/31/81
\.~~~~~~~~~~~~~~~~~~~~@
\.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~j
TUAILMND
SIXTH HIG1IAY PROJECT (LOAN 119-TH)
PROJECT COMPLETION REPORT
Construction Contract$
(Aunts In BEht illion)
Work completed Estimated add'l cost Estimated total cost
Contract Contract amount to complete contract to copltion
period (at bid prices) At bid At current At §9 Acrent Pcurret Progress (2) to
Provincial roads Length (km) Contractor /a (months) OrtgtnaI l prices prices prices prices prices prices 02 /01/84
Consultants:
V_llenttne, Laurie 6 Davies
Nakhon Sawvn-Phitsanulok 126 terson & Sons Ltd\. 42 377\.1 414\.8 414\.8 468\.9 - - 414\.8 468\.9 100
(+ 14 km access road) (05/17/78-11/17/81) (completed 11/7/82)
Ban Chai Badan-Dan Khus Thot 84 1Am Charoan Construction\. 38 224\.5 234\.4 234\.4 277\.9 - - 234\.4 277\.9 100
Ltd\. (05/17/78-07/27/81) (completed 07/21/81)
Ban Bung-lKlaeng 88 Vichitbhsn, Ltd\. 37 291\.3 301\.7 301\.7 382\.8 - - 301\.7 382\.8 100
(+ 3 Ic access raod) (05/17/78-o7/O2/Al) (completed 08/12/81)
Ban Bung-Ban Ihai 74 A\.S\. Associated Engineering 32 154\.3 169\.3 158\.6 200\.2 - - 158\.6 200\.2 100
(+ 6 km access road) Ltd (07/03/78-03/17/81) (completed 02/12(82)
Consultants: Snowy Mountains
inginvering Corporation
Bang Bua Thong-Suphenburi 74 Nopavong Cozmercial Ltd\. 48 419\.5 421\.6
(+ 2 I= access road) (05/01/79-04/30/83)
Ban Sali-Ayutthaya 37 Si Saeng Yothakarn, Ltd\./ 42 241\.3 243\.2 243\.2 323\.6 - - 243\.2 323\.6 100
(+ 2 Im Thai Watn Udorn (05/01/79-10/31/82) (completed 02U08/83)
access road) Than, Ltd\./Sehasak,
Ltd\. Joint Venture
San Rhok-Sena 30 St Soeng Yothakarn, Ltd\./ 42 206\.1 210\.8 210\.8 277\.5 - - 210\.8 277\.5 100
(+ 10 km That Watn Odorn (0501/79-10/31/82) (completed 11/07/82)
access road) Thani, Ltd\./Sahasak,
Ltd\. Joint Venture
So Phloi-U Thong 39 Noaprasert Cholburi, Ltd\. 30 66\.4 66\.8 58\.8 68\.8 - - 58\.8 68\.8 100
(07/03/78-01/02/81) (completed 05/07/80)
Bo Phlot-Dan Chang 78 Prayoon Visava 30 111\.7 111\.5 99\.7 108\.4 - - 99\.7 108\.4 100
(05/17/78-11/16/80) (completed 02t11/80)
Hat Yai-Samyak Khuba 23 Novawong Commerclal, Ltd\. 30 96\.9 96\.5 89\.4 102\.5 - - 89\.4 102\.5 100
(+ 8 k access road" (05/17/78-11/16/80) (completed 11/15/80)
Hot Ytal-Chana 36 Sahakol Engineers, Ltd\. 30 126\.5 127\.3 120\.6 140\.9 - - 120\.6 140\.9 100
(05/17/78-11/16/80) (completed 12/05/80)
Totals 688 2,322\.7 2,415\.3 2,354\.1 2,998\.1 2\.354\.1 2,998\.1
(+ 45 kmc\. access road)
THAILAND
SIXTH HIGHWAY (PROVINCIAL ROADS) PROJECT (LOAN 1519-TH)
Equipment Contracts
(Amounts in Baht million)
Number of Contract Contract amount Estimated total Progress
units period (at bid prices) cost to completion (X) to
Original Revised Contractor (days) Original Revised At bid At current (06/28/82)
prices prices
Group I
Inspection vehicles 3-1/2
tons flatbed truck 108 141 Tri Petch Isuzu Sales Co\., Lt\. 210 21\.457 28\.013 28\.013 28\.013 100
6 Ton flatbed truck with spare parts 89 10S Thai Hino Sales Co\., Lt\. 300 36\.279 42\.610 42\.610 42\.610 100
4 C\.M\. damp truck with spare parts 226 272 Tri Petch Isuzu Sales Co\., Lt\. 210 64\.665 77\.470 77\.470 77\.470 100
Water tank truck 47 55 Tri Petch Isuzu Sales Co\., Lt\. 270 13\.426 15\.711 15\.711 15\.711 100
Lubrication truck 12 12 Thai Hino Sales Co\., Lt\. 300 6\.230 6\.230 6\.230 6\.230 100
Group II
Truck tractor (Mack) with spare parts 12 12 East Asiatic Thailand Co\., Lt\. 300 15\.609 15\.609 15\.609 15\.609 100
Low boy trailer with spare parts 12 12 Pan Supplies Co\., Lt\. 180 2\.606 2\.760 2\.760 2\.760 100
Plant trailer 8-1/2 tons 47 55 World Engineering Supply 270 5\.640 6\.600 6\.600 6\.600 100
Co\., Lt\.
Group III
Motor grader (catterpillar) 95 95 Metro Machinery Co\., Lt\. 300 89\.254 89\.254 89\.254 89\.254 100
120 G\. with spare parts 16 16 Metro Machinery Co\., Lt\. 300 20\.670 20\.670 20\.670 20\.670 100
Group IV
Maintenance Roller with spare parts 103 118 Nippitar Partnership 420 48\.282 30\.093 30\.093 30\.093 100
Group V
Industrial tractor loader backhoe 6 6 Lauis T\. Leonovens Co\., Lt\. 300 2\.728 2\.728 2\.728 2\.728 100
Industrial tractor fitted with
hydraulic Arm mower (John Deer) 36 52 East Asiatic Thailand Co\., Lt\. 250 14\.926 21\.560 21\.560 21\.560 100
Croup VI
Grass mower (pedestrian) 101 125 United Motor Work Co\. 150 0\.399 0\.494 0\.494 0\.494 100
Mud pup 3 with spare parts 62 62 World Engineering Supply 300 2\.485 2\.485 2\.485 2\.485 100
Co\., Lt\.
Tandem Vibrating Rollers (Bomag 136 136 International Engineering 210 37\.441 37\.441 37\.441 37\.441 100
Model EM, 90A) with components Co\., Lt\.
and spare parts
Virating plate tampus with component 110 114 United Machinery Co\., Lt\. 210 1\.280 1\.322 1\.322 1\.322 100
Bailey type bridge with ramps and 24 24 R\. Schalle Ltd\. 240 38\.619 38\.449 38\.449 38\.449 100
spare parts
Total 421\.969 439\.472 439\.472 439\.472
THAILAND
SIXTH HIGHWAY PROJECT (LOAN 1519-TH)
PROJECT COMPLETION REPORT
Consultants Contracts Costs
(amounts in B '000)
Contract amount Actual total cost
Man- (at bid prices) at completion
Project Item/Consultant months Original Revised Original Revised
Supervision of Road Construction
Vallentine, Laurie& Davies 2,810 95\.5 - 106\.2 -
Snowy Mountains Engineering 2,720 111\.0 - 119\.1 -
Studies and Engineering
National and Provincial Roads
Study of national and provincial road 443 28\.0 - 28\.0 -
Network in 7hailand (LBIl/AEC)
Detailed Engineering Group I
(7 Thai consultants and DOH) N/A 9\.8 - 9\.4 -
Detailed Engineering Group II (DOH) N/A - - - -
Detailed 1!rineering Group III
(7 Thai consultants and DOH) N/A 6\.6 - 6\.3 -
Detailed Engineering Group IV (POBS) N/A 13\.0 - 12\.0 -
Design Supervision (LBII/AEC) 147 7\.6 - 7\.8 -
Highway maintenance and equipment 169 21\.5 - 22\.1 -
Revolving Fund (VLD)
Rural Roads
BCEOM/LBII\.AEC/UECC 594 37\.4 - 37\.2 -
Inland Waterways
BCEOM 60 12\.7 - 12\.7 -
Coastal Ports
Maunsell and Partners N/A 7\.1 - 7\.1 -
Technical Assistance and Training
DOl/Equipment Revolving Fund /a /a -
TPU/road User Charges 48 9\.0 - 8\.5 -
Training - DOH - 2\.4 - 2\.4
Training - TPU - 1\.5 - 1\.5 _
la Included in Techiacal Assistance Services for Highway Maintenance and Equipment Revolving Fund\.
N/A - Not available
- 28 -
Table 3
THAILAND
SIXTH HIGHWAY PROJECT (LOAN 1519-TH)
PROJECT CONPLETION REPORT
Artual and Forecast Estimates of Project Costs
Actual cost as
Initial Forecast estimate of Cost Actual cost irton of
contract Baht 4illlon) Baht (million) aotrecast UYntraet
Project Component amount rcal Foreign Total Loea Foreign Tota estimate amount
A\. Construction and Improvement of
Provincial Roads
1\. Nakhon Sawan - phiteanuloK 371\.2 268\.4 216\.3 484\.6 292\.9 240\.8 533\.7 110 141
2\. Ban Chai Badan-Dan Xhun Thot 224\.5 160\.7 128\.5 289\.2 157\.1 132\.9 290\.0 lOO 129
3\. Ban Bung-Klaeng 298\.3 212\.5 170\.5 383\.0 207\.2 175\.6 382\.8 100 128
4\. Ban Bung-Ban Khai 154\.3 110\.2 87\.8 198\.0 111\.6 92\.2 203\.8 103 132
5\. Bang Bua Thong-Suphan Burt 419\.5 337\.0 271\.0 608\.0 317\.5 248\.6 566\.1 93 135
6\. Ban Sali-Ayutthaya 241\.3 190\.5 152\.7 343\.2 177\.0 146\.6 323\.6 94 134
7\. Sam Rhok-Sena 206\.1 168\.5 136\.2 304\.7 154\.3 123\.2 277\.5 91 135
8\. Bo Phloi-U Thong 66\.4 49\.2 40\.7 89\.9 37\.8 30\.9 68\.7 76 103
9\. Bo Phloi-Dan Chang 111\.7 80\.3 63\.6 143\.9 59\.7 48\.8 108\.5 75 97
10\. Hat Yai-Sam Yak Khuha 96\.9 68\.7 56\.0 124\.7 56\.4 46\.1 102\.5 82 106
11\. Hat Yai-Chana 126\.5 90\.7 72\.6 163\.3 77\.5 63\.4 140\.9 86 111
Subtotal A 2,322\.7 1,736\.6 1,395\.9 3,132\.5 1,649\.0 1,349\.1 2,988\.1 96 129
B\. Supervision of A 196\.4 123\.1 99\.3 222\.4 143\.6 81\.7 225\.3 101 115
C\. Maintenance Equipment 420\.0 116\.7 456\.8 573\.5 50\.9 439\.5 490\.4 86 117
D\. Survey Boat 4\.7 - - - - 4\.7 4\.7 - 100
E\. Studies and Engineering
1 *NatIon-al and Provincial Roads
Study of national and I
provincial road 28\.8 1 15\.6 12\.4 28\.0 J 100
Detailed Engineering I
Group I 9\.8 9\.4 - 9\.4 96
Detailed Engineering
Group II - ) 72\.6 58\.5 131\.1 - - - 65 -
Detailed EnRgineering }
Group III 6\.6 1 6\.3 - 6\.3 } 95
Detailed Engineering )
Group IV (POBS) 13\.0 1 12\.0 - 12\.0 92
Design supervision 7\.6 } 3\.6 4\.2 7\.8 103
Highway maintenance and }
equipment revolving fund 21\.5 5\.9 16\.2 22\.1 ) 103
2\. Study of Rural Roads 37\.4 2\.6 8\.9 11\.5 21\.0 16\.2 37\.2 323 99
3\. Inland Waterways Study 12\.7 3\.9 17\.8 21\.7 - 12\.7 12\.7 59 lCO
4\. Coastal Ports Study 7\.1 1\.3 6\.4 7\.7 - 7\.1 7\.1 92 100
Subtotal E 144\.5 80\.4 91\.6 172\.0 73\.8 68\.8 142\.6 83 99
F\. Technical Assistance and Training
1\. Department of Highways 2\.4 2\.6 10\.2 12\.8 - 2\.4 2\.4 19 100
2\. Ministry of Communications 10\.5 2\.6 10\.2 12\.8 1\.7 8\.3 10\.0 78 95
Subtotal F 12\.9 5\.2 20\.4 25\.6 1\.7 10\.7 12\.4 48 96
Total Cost of Works 3,102\.2 2,062\.0 2,064\.0 4,126\.0 1,919\.0 1J954\.5 3,863\.S 94 124
C\. Right-of-Way - 90 - 90 261\.1 - 261\.1 290
Total cost of Project 2,152\.0 2,064\.0 4,216\.0 2,180\.1 1,954\.5 4,124\.6 98
The Project costs of technical assistance are included in Item E (1) Highway Maintenance and Equipment revolving
Fund\. The movement of economic indicators are as follows:
1978 1979 1980 1981 1982 1983 1984
Rate of exchar3e 20\.38 20\.46 20\.53 21\.87 23\.05 23-\.S 23\.05
Consumer price irdex 70\.50 76\.00 83\.60 100\.00 112\.70 118\.60 123\.00
Percentage (X) 7\.00 10¢00 19\.00 12\.70 5\.00 3\.00
29\.- Table 4
Page - of2
---- --- --- --- --- - - - - ---_---_________j\.-
* 1n-1~~' 1 1
I t~~~~~~~-
j~~~~~~~~~-- - - - i i -- "_ 1 'v$ \.
I~~~ ~~ 'i Ei I
i, Rla - i -\. t4% 4% -
ai~~i
1 V "b*= sX£4t-X
_'J '\. anl~ wsnssls R
S Z a~~~~~~~~~~~~~~~~~~a
I \.V1 I E{ aaSfi g-£d
i~~=a \.3jmz-2;_ ,sisgsg
t-1''X'- -4% ;;Ss as$::l s:2;
-i- - i 41 - --------------- ----------
i Wt3 a:z ** §:*2 ^E^ss
3 EE j I : I: 4 'S 4-s 43!; 4C3 4S j
\. \. a iXBXX zXX|s
| j~I E -- --5 fjj ;g ~§|§§
- _ _ _ _ _ 4\. _____~___________
still RsUSmi IWICI 18\.34 859-1
PUJECT CWLETIU REPOt
ads\.k An P00CM)T aiMF , 113
-I ------------- ------ ---- --- - -\.--\.----- --------\. --\.- - - - - -- -\.----- \.- ----- -
IECtI8I ACTIA FRCASI ACTUL NUOEMI ACTUAL FUEMI ACTUA F91M? ACTUAL FORCAT KCIMA F05M? KC IM FORCST KMUA FYI=AS ACIS\. P95CM I
---- -- --- ---- -I---- - ----- --------------------------\.*-* --\.----------
DALKI - J\.INfE 3111 (KM() 454 fl 334 t,548 23 39" 173 49 520 7I" 133 214 411 4US 2,035 ,9
I J\.mm E3III I 1) - U?U IU A 209 32 235 1,31 53 31 121 44 S2u 543 133 144 22 441 1,31463W ,
- ------ ----
1 M KHOK - A SAt 219 547 2,195 49 - 123 130 034 774 IN 363 "I94 WI 2,147 4,W5
I 3 SAUIA- GMI 211 - 3162,195 33 34 - t 21334 Su INS 124 Am40 "I 8,90, 4,045V j
go MlO) -Uu TM224 174 52 5so 44 174 23 2 404 297 If 4a so 8In 531 I'M12kw
I I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
I sNio It-Nu FMU 46 34 1 95 3 103 43 - 52 384 79 125 13 - 120 190 8,242 32191
8 NM MOihi-UIUIon 302 412 3 14 82 87 It1 - I is 47 i3s 3 84 fit lo01I
8 NM am NO uOACMAS 302 1,371 3 It 12 43 18 - 9 243 13 It 13 - 3 141 129 US0111
I I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
I I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
ml AI A- cmiI 559 412 494 417 23 SU - 19 113 414 1,44 231 - 13 842 I,9m 1,0541
18341 TAt - 93311K MmS 24 8,741 45 445 219 1ie - ITT to0 95 359 443 - 3 640 2,13 2,002 1
hIts I 1 ThM Ioracal\. traffic Is fram the \.as8bility stsdy rapwt\.
21 Pw ldats Sown - PhilsmWIs road, th forecast traffic as lathe Ia\. - 3\.1Uts 1047 mcli\. lIsn swrap traffit am ListA I sad Usk 2,
3 od thera horgcn KIsag tica th foacat* t1 ffc\. a Bn - 1\.9tsHS KIO g0\.SWA 338setites tisa a 3rg trafsic eOfList IA andLIbii,11 epr\.0 a\.1
adf n q-Dogrl the forecast tralfce 19\. 01- \.t a8 he tI I\. - n 11avutg, Ia Scicm IsA 3 awnd rSf ti sof tiheI fad ih kIll mtd aer\.0\.
the forecat traffic a em isl 338 - King Ai\. Wan Chau mtcli Is an sapeag tralfig es Li I SW tad L 3, ad the forecat t,aif Ic\.
em till Ashos lan C\.e - OlN"gKcatI\. eSs s WIg trf fic ea List I amd 8\.1t 4\.ofth\. fuscibility clad roeort\.
41 Fer Sao Dung - he tha road, the foreast traffic as J\.Wet 3191 - 1as NaW sectim is a mawip trafic ea LISA 4 sad tisA 5 P1
of the feasIbIlIty study repot\.
THAILAtlD
SIXTH HIGHWAY PROJECT (LOAN 1519-TH)
PROJECT COMPLETION REPORT
Comparisons of Vehicle Operating Costs (Baht/lm\.)
Paved Surface Laterite Surface Earth Surface
Vehicle Type and Cost Items
New New Orginal Infwormation
Information Original Information On nformation Original
Motorcycle (MC)
Cost Items
Fuel 0\.1796 0\.0701 0\.1702 0\.0746 0\.1972 0\.0957
Oil 0\.0025 0\.0010 0\.0035 0\.0014 0\.0056 0\.0022
Tyres 0\.0101 0\.0109 0\.0156 0\.0137 0\.0325 0\.0155
Maintenance 0\.0699 0\.0357 0\.0785 0\.0397 0\.1120 0\.0565
Depreciation 0\.2516 0\.1472 0\.2870 0\.1663 0\.2870 0\.2131
Total 0\.5137 0\.2649 0\.5548 0\.2957 0\.6343 0\.3830
Passenger Car (PC)
Cost Items
Fuel 0\.5166 0\.1884 0\.5442 0\.2008 0\.7735 0\.2574
Oil 0\.0143 0\.0090 0\.0186 0\.0123 0\.0300 0\.0170
Tyres 0\.0526 0\.0325 0\.0700 0\.0410 0\.1236 0\.0463
Maintenance , 0\.1694 0\.1448 0\.2138 0\.1607 0\.2816 0\.2287
Depreciation 1\.0852 0\.7384 1\.3927 0\.8344 2\.2565 1\.0688
Total 1\.8381 1\.1131 2\.2393 1\.2492 3\.4652 1\.6182
Light Bus (LB)
Cost Items
Fuel 0\.6947 0\.2051 0\.7013 0\.2093 1\.0776 0\.2485
Oil '0\.0190 0\.0111 0\.0271 0\.0147 0\.0390 0\.0246
Tyres 0\.1010 0\.0428 0\.1267 0\.0587 0\.2215 0\.0608
Maintenance 0\.1693 0\.1880 0\.2502 0\.2412 0\.3691 0\.3001
Depreciation 0\.4766 0\.3093 0\.6265 0\.4119 0\.9248 0\.9030 1 P
Salaries 0\.4896 - O\.5341 - 0\.7344 -
Overh&ads 0\.0479 - 0\.0523 - 0\.0719 -
Total 1\.9981 0\.7563 2\.3182 0\.9358 3\.4373 1\.5370 O\.
THAILAND
SIXTH HIGIIWAY PROJECt (LOAN 1519-TH)
PROJECT COMPLETION REPORT
Comparisons of Vehicle operating Costs (Baht/Kau\.)
Paved Surface Laterite Surface Earth Surface
Vehicle Type and\.Cost Items
New Original New Original Inew Original
Information information Information
Medium Bus lME3}
Cost Items
Fuel 0\.8491 0\.3981 0\.8063 0\.4512 1\.0728 0\.6748
Oil 0\.0278 0\.0195 0\.0387 0\.02S3 0\.0556 0\.0524
Tyres 0\.2944 0\.0885 0\.3559 0\.1113 0\.6591 0\.1154
Maintenance 0\.9170 0\.3247 1\.3207 0\.4062 2\.0652 0\.5054
Depreciation 0\.8934 0\.4042 1\.1736 0\.5985 1\.9308 1\.3567
Salaries 0\.7276 - 0\.8255 - 1\.1350 -
Overheads 0\.1538 0\.0457 0\.1745 0\.0575 0\.2400 0\.1159
Total 3\.8631 1\.2807 4\.6952 1\.6530 7\.1585 2\.8206
Heavy Bus (Hs) 4
Cost Items
Fuel 1\.6298 0\.4775 1\.5433 0\.5076 2\.0319 0\.7592
Oil 0\.0363 0\.0188 0\.0508 0\.0283 0\.0822 0\.0524
Tyres 0\.4437 0\.2182 0\.5127 0\.2513 0\.9983 0\.2608
Maintenance 1\.5663 0\.4417 2\.0630 0\.5394 3\.2242 0\.6710
Depreciation 1\.0404 0\.4353 1\.3198 0\.6893 1\.8920 1\.5625
Salaries 1\.1720 - 1\.3523 - 1\.7580 -
Overheads 0\.4400 0\.0776 0\.5077 0\.1043 0\.6600 0\.2102
Total 6\.3285 1\.6691 7\.3496 2\.1202 10\.6466 3\.5161
Light Truck (LT)
Cost Items
Fuel 0\.7692 0\.2171 0\.7131 0\.2093 1\.0958 0\.2485
Oil 0\.0195 0\.0108 0\.0279 0\.0147 0\.0390 0\.0246
Tyres 0\.1121 0\.0467 0\.1267 0\.0587 0\.2215 0\.0608
Maintenance 0\.1735 0\.1843 0\.2446 0\.2307 0\.3608 0\.2870 * cr
0
Depreciation 0\.5911 0\.3123 0\.8259 0\.4362 1\.3002 0\.9563 LA
0
Total 1\.6654 0\.7712 1\.9382 0\.9496\. 3\.0173 I\.S772
L I _ _ _ _ _ _ _ _ _ _ _ _ I__ _ I__ _ A
TiHAILAND
SIXTH HIGHWAY PROJNCT (LOAN 1519-TH)
PROJECT COMPLETION REPOR-T
Comparisons of Vehicle Operating Costs (Baht/Km:)
Paved SurCace Laterite Surface Earth Surface
Vehicle Type and Cost items - -
New New o New
Information Original Information OriIinal Information Original
Medium Truck (MT)
Cost Items
Fuel 1\.0846 0\.4159 1\.1663 0\.5008 1\.S566 0\.7491
Oil 0\.0290 0\.0192 0\.0387 0\.0266 0\.0556 0\.0494
Tyres 0\.2922 0\.1785 0\.4306 0\.2444 0\.8788 0\.2537
Maintenance 0\.8102 0\.3657 1\.2880 0\.4692 2\.0141 0\.5837
Depreciation 0\.9739 0\.6599 1\.1886 0\.9129 1\.8470 2\.0694
Salaries 1\.2889 - 1\.3876 - 1\.8125 -
Overheads 0\.1556 0\.0661 0\.1675 0\.0774 0\.2188 0\.1560
Total 4\.6344 1\.7053 5\.6673 2\.2313 8\.3834 3\.8613
Heavy Truck (UTt
Cost Items
Fuel 1\.6698 0\.S199 1\.6628 0\.6161 2\.2102 0\.9364
Oil 0\.0387 0\.0192 0\.0496 0\.0280 0\.0822 0\.0494
Tyres 0\.5996 0\.2782 0\.8574 0\.3504 1\.6669 0\.3954
Maintenance 1\.4192 0\.5168 2\.1907 0\.6440 3\.5283 0\.8249
Depreciation 1\.4313 0\.6308 1\.8930 0\.9347 3\.0628 1\.9781
Salaries 1\.2238 - 1\.4032 - 1\.8421 -
Overheads 0\.5507 0\.0772 0\.6314 0\.0985 0\.8289 0\.1824
Total 6\.9332 2\.0421 8\.6882 2\.6717 23\.2214 4\.3666
Note: The new information and original vehicle operating costs are constant 1984 and 1974 prices\. However, these
costs are economic costs, and on the level tangent road at average operating speed\.
- 34 -
Table 6
THAILAND
SIXTH HIGHWAY PROJECT (LOAN 1519-TH)
PROJECT COMPLETION REPORT
zx-post and Original Estimates of Economic Rates of Return
Proportion Rate of Return (%)
of Total Oignal Estimate
Project Investment Ex-post -Feasibniy Project
(Construction Estimate Study Appraisal
_____________________________ _Contracts) _ Report Report
1\. Nakhon Sawan-Phitsanulok 17\.8 19 32 33
2\. Ban Chai Badan-Dan Xhun 9\.6 18 35 32
Thot
3\. Ban Bung-Klaeng 12\.8 35 63 56
4\. Ban Bung-Ban Rhai 6\.8 20 16 16
5\. Bang Bua Thong-Suphanburi 18\.9 20 34 30
6\. Ban Sali-Ayuthaya 10\.8 19 20 23
7\. Sam Khok-Sena 9\.3 21 29 27
8\. Bo Phloi-U Thong 2\.3 18 61 47
9\. Bo Phloi-Dan Chang 3\.6 27 28 29
10\. Hat Yai-Samyaek Rhuha 3\.4 20 31 26
11\. Hat Yai-Chana 4\.7 14 16 20
- 35 -
Table 7
THAILAND
SIXTH HIGHWAY PROJECT (LOAN 1519-TH)
PROJECT COMPLETION REPORT
Accumulated Disbursements
(US$ million)
Actual disbursements
IBRD FY Appraisal Actual total as a percentate of
& quarter estimate disbursements appraisal estimaates
1977/78
3~rd 1\.0 -
4th 5\.0 -
1978/79
lst 10\.0 5\.1 51
2nd 15\.0 7\.5 50
3rd 21\.0 10\.8 51
4th 27\.0 16\.2 60
1979/80
1st 37\.0 25\.5 69
2ad 48\.0 37\.6 78
3rd 58\.0 48\.7 84
4th 64\.0 55\.2 86
1980/81
lst 71\.0 61\.4 86
2nd 78\.0 63\.9 82
3rd 84\.0 70\.0 83
4th 88\.0 75\.0 85
1981/82
1st 92\.0 78\.6 85
2nd 96\.0 81\.3 85
3rd i00\.0 84\.0 84
4th 104\.0 85\.7 82
1982/83
1st- 108\.0 90\.9 84
2nd 110\.0 93\.3 85
3rd 95\.5 87
4th 96\.9 88
1983/84
Ist 99\.3 90
2nd 100\.8 92
3rd 102\.4 93
4th 102 6 93
Closingdate 12/31/82 03/31/84
- 36 -
Table 8
Page 1
THAILAND
SIXTH HIGHWAY PROJECT (LOAN 1519-TH)
PROJECT COMPLETION REPORT
Compliance with Major Loan Conditions
Action required Action taken
Sections 3\.02 and 4\.04 (and
Supplemental Letter on the
Maintenance Program):
(a) Borrower to make Budgetary appropriation for the first year
necessary funds available, (FY79) of the Maintenance Program was only
through annual budgetary about 70% of the estimated need, as set out
appropriation in amounts in the Supplemental Letter, anu for FY80
satisfactory to the Borrower only 60%, after adjustment for price in-
and the Bank, for the proper creases\. However for FY81 about 66% and in
carrying out of such FY82 about 78% of the adjusted estimate was
maintenance; and provided and for FY83-85 the allocations
were close to the adjusted estimate\. The
Government provided updated estimates for
road maintenance for the years 1984-88 which
are set forth in a Supplemental Letter to
the Agreement for the Second Provincial Road
Project\.
(b) not later than Octo- There were some delays in the preparations
ber 1, 1979, cause DOH to es- for introducing the new "revolving fund" (a
tablish and maintain a sepa- system of management, with internal "hire"
rate fund, on terms and condi- financing, for the road maintenance equip-
tions satisfactory to the Bor- ment)\. Final approval (by Ministry of
rower and the Bank, to be used Finance) of the detailed regulations for
for the sole purpose of making operating the fund was given July 10,
payments for the maintenance, 1981\. Later on, its operation was blocked
repair, renewal and replace- by Parliamentary action affecting budgetary
ment of the Borrower's road provisions for road maintenance\. MOF in a
maintenance and workshop telex of November 24, 1981, stated cabinet
equipment and for the pro- was being requested to authorize realloca-
curement of spare parts tion to permit operation, Cabinet authori-
therefor\. zation was given March 30, 1982, conditional
on a change in the constitution of the Board
of Management; this was arranged through the
Ministries of Communications and Finance and
the Fund became partially operational in
August 1983\.
- 37 -
Table 8
Page 2
Action required Action taken
Section 3\.07
The Borrowers shall levy The Government has not indicated any inten-
tolls on any sections of the tion of introducing tolls on any of the
roads to be constructed or project roads\.
improved under Part A of the
Project only (a) after an eco-
nomic and financial evaluation
satisfactory to the Bank shall
have been carried out by the
Borrower with respect to the
imposition of tolls on said
road sections and (b) by
agreement between the Borrower
and the Bank\.
Section 3\.08
The Borrower undertakes to
complete or cause to be com-
pleted:
(a) not later than Octo- After some initial delay in preparation and
ber 31, 1978, or such later bidding, the Government awarded two con-
date as the Bank may agree, tracts for construction of the link road and
all arrangements necessary to work was started on first section Thon Buri
ensure that the construction (Bangkok Noi) - Taling chan March 23, 1979,
of a road to link the Bank Bua and on the second section Taling Chan - Bang
Thong areas with the main Thon Bua Thong april 17, 1979\.
Buri/Bangkok City area road
network shall be carried out
in accordance with such plains,
specifications and design
standards as shall be accept-
able to the Borrower and the
Bank; and
(b) not later than Decem- The construction was substantially delayed
ber 31, 1981, or such later because of delays in completing the bridge
date as the Bank may agree, at Taling chan\. Work is now completed and
the construction of the afore- the entire link was opened to traffic in
mentioned road to link the early 1985\.
Bang Bua Thong area with the
main Thon Buri/Bangkok city
area network\.
- 38 -
Table 8
Page 3
Action required Action taken
Section 3\.09
The Borrower undertakes to The paving was completed on schedule\.
complete or cause to be com-
pleted, not later than Decem-
ber 31, 1978, or such later
date as the Bank may agree,
the paving of the Chana-Thepa-
Patthani road in accordance
with appropriate practices\.
Section 4\.03
The Borrower shall in res- The DOH, assisted by consultants financed
pect of its national highway under Loans 870 and 1519-TH compiled, and
system, continue to implement, now maintains adequate inventories of
and shall, in respect of its national and provincial roads\. DOH also
provincial roads system, collects and process traffic data on all
promptly extend the implemen- national roads and most of the provincial
tation of its program of col- roads\. Traffic counting is being gradually
lecting and recording in ac- extended to the remaining provincial
cordance with appropriate roads\. The location of traffic counting
statistical methods and pro- stations needs continuing review and revi-
cedures, including regular and sion and, as suggested by the Bank, this is
systematic traffic counts, being undertaken by the Government\. How-
such technical, economic and ever, information on the road system under
financial information as shall the DOH for planning of road maintenance, is
be reasonably required for being improved with the assistance of con-
proper planning of mainte- sultants under the second Provincial Roads
nance, improvements and exten- Project, Loan 2311-TH\.
sions of its national highway
and provincial roads systems\.
URA \.|fVIET NAM
K
T\.-N
LAO PEOPLE'S DEMOCRATIC REPUBLIC rEII bA
SIN)OKSOA
iE tS~t
O t , R M A
DEMOCRATIC KUMPUCHEA
PRASIlS,; DRffe -f f ff\.
=,\. % f { * _ , KVo ff ff¢DEMOCRATIC KUMPUCHEA
x~ ~ ~ ~ ~~\. \.NI \. 4ufuEhir-fw a
, ~~~~~~~~~~THA If'LAND
\.0-\. TI NATIO HIGHWAY AND
) - NO PROVIICIAL ROAD NORKS
ffP \.zf } _ ~~~~~~~~~~~~~~~~~~~~EXIISTlNGNATI\.NALI-ICHffAYS 0
f f LffffffffE ~ ~ ~ ~ ~ ~ ~ ~ - - - NATIONALHIGHffAYSUND[RaONSR\.CT\.O OfffROfOSE
i |~~~~~~~~~~~~ EXW-ISTIN 9NCIAL ROAOS
\. > i fROfECT~~~~~~~~~~~~DROAOSI fft IoR 3TH
\.4- ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 4
ff >tthe El f-~~~~~~~~~~~~~~ONSTRUCfTON AND IMPROVEfffET Sffd Prol- 5EsTH
gIfSLfRdrff; e, \.- ~~~~~~~~STUDfYAND ENGINEERING f<DPoe 26r
_ fff tf, T a~~~~~~~~~~~~~ONSTRUCTIONAN IN -PROVEffEN SI- Pxl*ro
/E N
rRALLWA A
p f, g f afft t ffff f<ffSi Th--AlfEt RIVERS
nOJ s A i ;>fsfsb RN AIRfORTS
N ITIRNATIONALSOUNH ARIG S
PROV APISCIALE ROA BD N1iWORKS
FEBRU TLN TIONAL1\.C T HIGHWAMS
w , s f fJo ~~~~~~~~BEIEN CHANGEf3
ffiOt@f / ROD ORFROPOE9
0 ~ ~ ~ ~~~~~~~~SSt
8 azD' l M A L YS I AA Y S lIVID
ftf~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~10 N IDNOIG FUSP*121 | APPROVAL |
P008513 | Document of
The World Bank
Report No\. 14701-KG
STAFF APPRAISAL REPOiT
KYRGYZ REPUBLIC
SHEEP DEVKLWPENT PROJECT
APRIL 23, 1996
Agriculture, Industry and Finance Division
Country Department III
Europe and Central Asia Region
CURRENCY EQUIVALENTS
(after May 10, 1993)
Currency Unit = Som
I Som = 100 tiying
US$1 = 10\.6 Som
MARKET EXCHANGE RATES
Som per US$1
Period Average End of Period
December 1993 6\.0 8\.3
December 1994 11\.0 10\.6
December 1995 10\.8 11\.2
March 1996 10\.8 10\.8
WEIGHTS AND MEASURES
Metric System
KYRGYZ REPUBLIC - FISCAL YEAR
January I - December 31
ABBREVIATIONS AND ACRONYMS
APEAC Agricultural Privatization and Enterprise Adjustment Credit
ASSP Agricultural Support Services Project
ATAS Agricultural Training and Advisory Services
CG Consultative Group
CPR Country Procurement Report
DLMD Department of Livestock Management and Development
DLSS Development of Livestock Support Services
DVS Department of Veterinary Services
EU (TACIS) European Community Technical Assistance to the Commonwealth of Independent States
FAO Food and Agricultural Organization
FSU Former Soviet Union
GDP Gross Domestic Product
ICB International Competitive Bidding
IDA International Development Association
IDF Institution Development Facility
IFAD International Fund for Agricultural Development
IRR Internal Rate of Return
KSBA Kyrgyz Sheep Breeders' Association
LCB Local Competitive Bidding
LRS Livestock Regulatory Services
MAF Ministry of Agriculture and Food
MOET Multiple Ovulation and Embryo Transfer
MS Master of Science
NBF Non-Bank Financed
NBK National Bank of Kyrgyzstan
NGO Non-Government Organization
PESAC Privatization and Enterprise Structural Adjustment Credit
PhD Doctor of Philosophy
PIU Project Implementation Unit
PRFS Pilot Revolving Fund Scheme
PSC Project Steering Committee
RSBA Regional Sheep Breeders' Association
SAR Staff Appraisal Report
SBRS Sheep Breeding and Research Support
SCNP State Committee of Nature Protection
SDP Sheep Development Project
SIE Scientific Industrial Enterprise
SPED Sheep Private Enterprise Development
SPGA Sheep Breeders' Group/Association
SOE Statement of Expenses
SSCLU State Scientific Center for Land Resources and Use
TA Technical Assistance
US United States
WMC Wool Marketing Center
STAFF APPRAISAL REPORT
KYRGYZ REPUBLIC
SHEEP DEVELOPMDENT PROJECT
Contents
Page No\.
CREDI AND PROJECT SUMMARY \.
I\. TbE AGRICULTuRAL SECTOR \.1
Agriculture in the Kyrgyz Economy\. I
Status of Agricultural Reforms\. 2
Reforms in the State Procurement System\. 2
Land Reform and Farm Restructuring\. 3
The Role of Government\. 3
The Sheep Industry\. 4
Structural Trends in the Sheep Industry\. 4
Potential of the Industry\. 7
Pasture Resources\. 8
Sheep and Wool Processing and Marketing\. 9
Support Services \. \. 10
W\. BANK LENDING EXPEREENCE AND SECTOR STRATEGY \. 11
Bank's Lending Strategy for Agriculture \. 11
Bank's Experience and Lessons \. 12
Project Design Options \. \. 13
III\. THE PROJECT \. 14
Objectives and Brief Description \. \. 14
Project Objectives \. \. 14
Brief Project Description \. \. 14
Detailed Project Features \. \. 14
Sheep Private Enterprise Development \. 14
Sheep Producers' Groups/Associations \. 14
Regional Sheep Breeders' Associations \. 16
Kyrgyz Sheep Breeders' Association \. 17
Wool and Lamb Marketing System \. 17
Development of Livestock Support Services \. 20
This report is based on the findings of an appraisal mission (May/June 1995) led by Barnabas K\. Zegge (Task Manager)\. Others who
parficipated in the IDA mission and/or contributed to this report include ljaart W\. Schillhorn-Van Veen (AGRTN), Robert Simsolo,
Hudson Glimp, Roben Stoban, Jane Kwak and P\.K\. Subramanian (Consultants)\. Gallus Mukami (SA2AG) and Dirk van der Sluijs
(MN2NE) were peer reviewers\. Claude Blanchi (ECAVP), Marc Blanc, Mohammad Ashraf and Pervaiz Rashid (EC3DR) provided
operational guidance\. Michael A\. Gould and Yukon Huang are the managing Division Chief and Department Director, respectively, for
this operation\. Sabrina Sally provided secretial support\.
Project Implementation Unit \. 20
Agricultural Training and Advisory Services \. 21
Animal Health Services \. 23
Sheep Breeding Research Support \. 24
Pasture and Fodder Research \. 26
IV\. PROJECT COSTS AND FINANCING \. 28
Project Costs \. 28
Financing Plan \. \. 28
Procurement \. 30
Disbursements \. \. 33
Accounting and Auditing \. \. 34
Reporting and Monitoring \. \. 35
V\. PROJECT ORGANIZATION, MANAGEMENT, AND IMPLEMENTATION \. \. 36
Implementation Strategy \. \. 36
Project Management \. \. 36
Project Implementation Plan \. 37
Beneficiary and NGO Participation \. 37
Annual Work Plans and Budgets \. \. 38
Project Supervision \. \. \. 38
Implementation Completion Report \. 39
VI\. PRoJEcT BENEFITS AND RISKS \. 40
Project Benefits \. 40
Farmers' Financial Returns \. 41
KSBA Financial Projections \. 42
Economic Benefits and Costs \. 42
Impact on Women \. \. 43
Impact on Poverty \. \. 44
Sustainability \. 44
Fiscal Impact and Cost Recovery \. 44
Impact on Private Sector Development \. \. 44
Sensitivity and Risk Analysis \. 45
Environmental Aspects \. 46
VII\. AGREEMENTS AND RECOMMENDAION \. 47
ECONOMIC AND FINANCiAL ANALYSIS SUPPORTING TABLES \. \.49
TABLES
4\.1 Summary of Project Costs (including contingencies) \. \. \. 29
4\.2 Summary of Project Costs per Categories (including contingencies) \. \. 30
4\.3 Summary of Proposed Procurement Arrangements \. \. \. 32
6:1 Internal Rate of Return (IRR) Computation \. 50
6: la Sheep Enterprise Gross Margin Models: Improved Kyrgyz Fine Wool (with project) \. 52
6\. lb Sheep Enterprise Gross Margin Models: Kyrgyz Fine Wool (without project) \. \. 53
6\. Ic Sheep Enterprise Gross Margin Models: Kyrgyz Dual Purpose Sheep Breed (with project) 54
6\. Id Sheep Enterprise Gross Margin Models: Alai Strong Wool and Fat-tailed Meat Sheep
(without project) \. 55
6\.2 Kyrgyz Wool Marketing, Testing and Information Center - Profit and Loss Account \. 56
6\.3 Kyrgyz Wool Marketing, Testing and Information Center - Balance Sheet \. 57
6\.4 Kyrgyz Wool Marketing, Testing and Information Center - Funds Flow Statement \. \. 58
6\.5 Kyrgyz Sheep Breeders' Association - Profit and Loss Account \. 59
6\.6 Kyrgyz Sheep Breeders' Association - Balance Sheet \. 60
6\.7 Kyrgyz Sheep Breeders' Association - Funds Flow Statement \. 61
ANNEXES
Annex A Detailed Cost Tables \. \. 62
Annex B Environmental Mitigation Statement \. 75
Annex C Implementation Plan \. \. 77
Annex D Project Objectives and Monitorable Indicators \. \. 86
Annex E Schedule of Project Supervision \. 87
Annex F Terms of Reference for Consultants \. 88
Annex G Estimated Disbursement Schedule \. 102
Annex H Procurement Plan \. 105
MLAP IBRD No\. 26822
TECHNICAL ANNEXES IN PROJECT IMPLEMENTATION FILE
Annex 1 Project Implementation Unit
Annex 2 Agricultural Training and Advisory Services
Annex 3 Animal Health Services
Annex 4 Sheep Breeding Research
Annex 5 Pasture and Land Resources
Annex 6 Kyrgyz Sheep Breeders' Associations
Annex 7 Wool Marketing System
Annex 8 Detailed Procurement Plan
Annex 9 Project Operational Manual
KYRGYZ REPUBLIC
SHEEP DEVELOPMENT PROJECT (SDP)
CREDIT AND PROJECT SUMMARY
Borrower: The Kyrgyz Republic\.
Implementing Agency: Ministry of Agriculture and Food (MAF)\.
Beneficiaries: Ministry of Agriculture and Food and participating private farmers and sheep
breeders\.
Poverty: Measures to increase sheep and wool productivity, the proposed removal of
export taxes and improvement in wool and lamb marketing system would have
considerable impact on raising the income of sheep producers who constitute
the poorest segment of the rural population\.
Amount: SDR 7\.8 million (US$11\.6 million equivalent)\.
Terns: Standard IDA terms, with 35 years maturity, including 10 years of grace\.
Commitment Fee: 0\.5 percent on undisbursed loan balances, beginning 60 days after signing,
less any waiver\.
Onlending Terms: The proceeds of the Bank loan would be passed on to participating Sheep
Breeders' Associations as grants for technical assistance, training and
operating expenditures in initial year of operation and on a full cost recovery
basis in subsequent years\. After the first year, loans to producers'
associations would bear an interest rate determined on the basis of the
rediscount rate of the National Bank of Kyrgyzstan and be repayable in no
more than five years including a grace period of no more than two years\.
Project Financing: Total project costs are estimated at US$16\.8 million equivalent\. IDA would
finance US$11\.6 million, or 69 percent of project costs, and 91 percent of
foreign exchange costs (approximately US$12\.7 million)\. Government would
contribute US$1\.7 million, or about 10 percent of project costs, mainly
through salaries for incremental local staff\. IFAD would contribute
approximately US$3\.5 million\. IFAD financing would be earmarked for
supporting the promotion of farmers' organizations, and ATAS (Agricultural
Training and Advisory Services)\. On the basis of annual work plans and
budgets, the PIU would disburse project funds to meet incremental recurrent
expenses of DLMD and DVS for project activities\. In line with its policy to
promote the development of the private sector, Government is agreeable, in
principle, to disburse project funds to the KSBA and its affiliates, on a grant
basis\.
- 11 -
Financing Plan:
Financing Source Local Foreign Total Component
as Percent
(US$ million equivalent) of Total
IDA 2\.10 9\.48 11\.58 69
IFAD 0\.25 3\.25 3\.50 21
Government of Kyrgyz Republic 1\.70 - 1\.70 10
Total 4\.05 12\.73 16\.78 100
Percent of Total 24\.10 75\.90 100\.00
Economic Rate of Return: 57 percent
Staff Appraisal Report: 14701-KG
Map: IBRD 26822
Project ID Number: KG-PA-8513
STAFF APPRAISAL REPORT
KYRGYZ REPUBLIC
SHEEP DEVELOPMENT PROJECT
1\. THE AGRICULTURAL SECTOR
Agriculture in the Kyrgyz Economy
1\.1 Agriculture is an important sector of the Kyrgyz economy as it accounts for roughly 30 percent
of GDP and approximately one-third of employment\. An additional 10 percent of the labor force is
employed in industries processing fiber, food, and agricultural by-products\. Farm input and service
enterprises add to the overall impact of agriculture to account for more than 50 percent of GDP\.
Livestock products contribute significantly to the gross value of agricultural output\. In 1994, the
livestock share was estinated at 60 percent of the gross value of agricultural output at 1983 constant
prices\. The importance of livestock production is also reflected in current land use patterns, accounting
for over 85 percent of agricultural land\.
1\.2 About half of the total value of Kyrgyz exports come from the agricultural sector\. The mnain
agricultural export products are wool, tobacco, cotton, and hides and skins which accounted for 90
percent of agricultural exports\. In terms of value, wool is the most important export\. There is good
potential for increasing exports of live lamb and mutton\.
1\.3 Irrigation is critical to agricultural production in the country, covering over 80 percent of arable
land\. The main crops grown are wheat, barley, maize, cotton, tobacco, sugar beet, sunflower, potato,
vegetables, fruits and fodder crops\. Winter wheat is the dominant cereal crop, accounting for over 40
percent of the 624,000 hectares under grain in 1993\. Spring barley is the next most important grain crop
and accounts for about a third of the grain area\. The remainder of the grain area is planted with winter
barley, spring wheat, and maize\.
1\.4 Following the breakdown of the Soviet system in 1990, agricultural output has declined
consistently\. Gross agricultural output fell by 10 percent in 1991, 6 percent in 1992, and 8 percent in
1993\. This trend is expected to be continued in 1996 with a 12 percent decline\. Many farmers have
resorted to subsistence production since marketing systems for both commercial inputs and products have
virtually collapsed\. Trade is increasingly done on a barter basis\. The decline in agricultural production
has affected rural cash incomes which in 1994 fell to less than one-third of their value in 1990\. The
virtual collapse of the marketing system has resulted in extremely low product prices for sheep and wool,
and low farm profitability\. The negative trend in agricultural output and rural cash incomes are due to:
(a) the virtual collapse of the marketing system following the abolition of the state orders system and the
inability to quickly develop alternative mnarketing channels; (b) the inability of traditional state marketing
enterprises to raise operating capital to procure crops as a result of the general credit squeeze in the
economy; (c) the fragmentation and break-up of traditional trade relations; (d) rapid establishment of
private property rights and lags in the provision of contractual support services (land, pastures, water and
tradable goods) and farmn restructuring; (e) the absence of effective support services, including research
and extension, for the emerging private farming sector; and (f) the current crisis in the agricuitural
financial system resulting in a severe credit squeeze\. More generally, the recent macro-econornic success
of containing inflation and stabilizing the som have so far failed to stimulate immnediate agricultural
growth because of these factors\.
1\.5 During the Soviet period, agriculture was based on collective farmns, state farms, and household
plots\. There were 195 collective farms and 275 state farms in 1991\. In addition to arable land, both
state and collective farms had grazing rights on identified tracts of pasture to which the animals were
moved for summer grazing\. Prior to 1990, the household sector owned about one-third of the cattle, one-
fifth of sheep and goats, one-quarter of horses\. Recent changes in agricultural policy and structure are
briefly discussed below\.
Status of Agricultural Reforms
1\.6 A number of fundamental reforms have been initiated to change the policy environment for
agriculture and its structure\. These have included: (a) changes in the state procurement system to
liberalize both the pricing and marketing systems, though many former state farms remain closely
attached to processing enterprises; (b) privatization of state-owned enterprises involved in agricultural
marketing and processing; and (c) land reform and farm restructuring to forn the basis for private sector
farming\. The Government is committed, in principle, to the implementation of these reforms\. At the
same time, efforts to restructure Government institutions, especially the Ministry of Agriculture and
Food, to provide support services to private farmers and to facilitate the sector's transition to a market
economy are yet to be implemented\.
1\.7 Refonns in the State Procurement System\. The traditional marketing system, based on state
orders at fixed prices administered by state enterprises, is in the process of being replaced by market-
based exchange\. State orders have been replaced by domestic supply agreements under which producers
contract to deliver fixed quantities to agents of the state at negotiated prices\. After fulfillment of such
agreements, producers are free to sell the balance on terms and conditions dictated by a free market\.
Whilst this remains an important step towards liberalization, it still falls short of a competitive market
because of the prevalence of monopsonistic state buying agencies\. Privatization of these agencies is
critical to the development of competitive markets in the future\. Horticultural products, potatoes, and
livestock are free of any obligatory deliveries\. Domestic supply agreements are, however, covering a
declining share of commodity trade because state agents lack operating capital to purchase the
commodities from producers\. Export taxes, trade margin ceilings, and licenses have been abolished for
all commodities\.
1\.8 Prices of inputs, like imported fertilizers and agro-chemicals, have been liberalized and are now
based on world market prices, though bilateral aid has produced subsidies for certain inputs\. Given that
domestic output prices are still depressed compared to world market prices, especially for wool, input-
output price ratios have risen substantially\. This, in combination with the complete absence of
agricultural credit, has negatively affected input use\. This, in turn, is contributing to the stagnation or
even decline of the yields of the most important commodities observed over the last couple of years\.
1\.9 The Government has initiated programs to de-monopolize and privatize state-owned enterprises
involved in agricultural marketing and processing\. Nevertheless, the majority of these still retain
significant shareholdings (and informal links) by Government with little corporate autonomy, and
alternative marketing channels are developing very slowly\. The generally small size of the Kyrgyz
economy remains an obstacle to the development of competitive marketing channels\. Kyrgyz Gemish,
-3 -
involved in the processing of fruits and vegetables, and Kyrgyz Agro-Chemistry, involved in handling
agricultural inputs, are examples of recently created joint stock companies\. The Bread Products
Enterprise and Kyrgyz Tamak-Ash, involved in food processing have been demonopolized and are in the
process of being privatized\. Besides these traditional mnarketing agencies, a few new companies like
Kyrgyzagropromimpex, Kyrgyz Agro-Invest, and the Commercial Information Agency Kyrgyzstan are
currently trying to establish themselves as intermediaries in the marketing of agricultural products\.
1\.10 Land Reform and Farm Restructuring\. Up to date privatization of state and collective farms
has taken a variety of forms which include the emergence of: (a) private peasant farms (21084); (b)
agricultural production cooperatives (191); (c) associations of peasant farms (123); (d) joint stock
companies (9); and (e) small enterprises (120)\. Land reform and farm restructuring was initiated in 1991
and explicitly provided opportunities for privatization of state and collective farms on the basis of the
share system commonly used in other FSU countries\. However, the initial program was not very
successful\. Too much emphasis was placed on the rapid transfer of herds to the household sector without
commensurate transfer, or privatization, of land; too little emphasis was placed on the experience of
potential lessees in agriculture, and on the effect of devolution on the operational efficiency of specialized
units, such as breeding farms\. The lack of a transparent farm restructuring policy, including ways of how
to address the increasing amounts of debt owed by state and collective farms, are other impediments
which are still acting against the spirit of the government's policy of privatization\. More importantly,
no institutional measures have been introduced to provide private farmers with technical assistance,
extension, and other support services\. A Presidential Decree in February 1994, followed by a
Government Directive in March, have rekindled the process of establishing family land holdings and
private farming\. These provide for privatization and restructuring of state and collective farms\.
Individual landholders would be issued with a 49 year lease, renewable at expiration, while grazing
resources would be leased to individuals or groups for a definite period\. Government has also drafted
a Land Code to codify these rights into law\. The responsibility to actually implement these decrees has
been shifted from the State Property Fund to the Ministry of Agriculture and Food in collaboration with
the local state administrations and rural committees for land and agrarian reform\. In recent months,
privatization of state and collective farms has accelerated, giving rise to the establishunent of numerous
private small farms and livestock herds/flocks\. By the end of 1995, it is estimated that private farms
accounted for nearly 50 percent of all arable land held by agricultural enterprises\. The remainder was
still in the hands of state and collective farms\.
1\.11 In regard to livestock the Government has announced its intention to privatize all State sheep
breeding farms over the next twelve months, with the government retaining a 25 percent share holding\.
At the same time, it is also Government's intention to privatize most of the grazing resources through
leasing arrangements with individual or cooperative farms\. In response, sheep farmers are now
evaluating the choice between preserving sheep flock structures in either a co-operative or joint stock
entity or divesting the flocks into smaller sized units\.
1\.12 The Role of Government\. The sector's transition towards a market-economy also requires a
change in the functions and role of the Ministry of Agriculture and Food and its affiliated (research)
institutes\. These continue to be directed at agricultural production, marketing and processing via state
enterprises and collective farms\. The diminished role of government in a market economy and the
current fiscal constraints argue in favor of a smaller, service oriented Ministry focusing exclusively on
the legitimate tasks of the public sector\. These would include sector policy analysis and formulation;
design and implementation of land reform and farm restructuring programs; support for agricultural
research, extension and training; and market infrastructure development\. Current production, processing,
- 4 -
marketing, and input supply functions of the Ministry should be privatized\. The oblast and district level
agricultural departments should be redefined as units offering professional advisory services, and
marketing information and should be explicitly excluded from administrative interference in production
or marketing by farmers\.
The Sheep Industry
1\.13 Structural Trends in the Sheep Industry\. This section reviews the structure of the sheep and
wool industry in recent years, focusing on: sheep inventory, breeds, types of sheep holdings, ownership
categories, management systems, feed resource, animal health, sheep and wool productivity, sheep and
mutton output, marketing, and support services\. In this review, emphasis is placed on identifying
problems that are constraining or are likely to constrain the performance of the sub-sector\.
1\.14 Sheep Flock Size and Composition\. Total livestock units expressed in sheep equivalents (sheep,
cattle, horses) in the Kyrgyz Republic increased from 7\.5 million in 1940 to 12\.4 million in 1960 and
19\.7 million in 1990\. The total number of sheep increased from 2\.3 million in 1940 (30 percent share
of total livestock units) to 6\.3 million in 1960 (51 percent share) and 10\.5 million (53 percent share) in
1990 before reducing to 8\.8 million in 1993 and an estimated 7 million by January 1995 (goats account
for about 2\.5 percent of these numbers)\. It is anticipated that the national sheep flock will decline to
between 5 and 6 million by the end of 1995\. Relatively high death rates (+ 10 percent/year), low
lambing rates (86 percent), and high off-take rates propelled by high consumption of sheep meat will
jointly lead to further decline in the flock\. This will continue until prices of mutton and wool rise
sufficiently to create the incentives for flock rebuilding\. The development of a new and efficient lamb
and wool marketing system will be a prerequisite for this\. The proposed project would support the
development of such a marketing system\.
1\.15 Sheep Breeds\. All three sheep breeds in the country are classified as wool breeds\. These
consist of the Kyrgyz Fine Wool breed (91 percent of the flock), the Tian Shan breed (7 percent), and
the Alai semi-coarse wool breed (2 percent)\. These breeds have adapted well to the agro-ecological
environment for which they were bred\. The fine wool breed were based almost exclusively on state and
collective farms where rigid breeding and selection procedures were maintained\. This is, however,
rapidly breaking down with the privatization of state and collective farms, accompanied by distribution
of sheep to private owners who hold them in smaller flocks\. The breeds were developed at state sheep
breeding plants some years ago by using the local sheep as a base and initially crossing with imported
breeds\. This crossbreeding was followed by continued selection to improve specific performance traits
and finally a classification or registration scheme was evolved to identify elite and less superior sheep\.
Semen from superior rams, through artificial insemination (Al), has been the predominant method of
mating\. However, private sheep owners are now relying more on natural mating methods because of the
high fee charged for AI service relative to the low profitability of sheep and wool production\. This shift
away from Al by most private producers has the risk of spreading some diseases by unhealthy rams\. In
addition, breeding is unregulated both in respect of strain and breed and this is likely to lead to decreasing
wool quality and yield\. With the decline of the AI service, the control of indiscriminate breeding of
sheep is necessary\. This could be done through the introduction of certification and registration of rams
(flock book registration) via producers' associations by the Ministry of Agriculture and Food (MAF)\.
Owing to the virtual collapse of the wool marketing system in the country, contrasted by a relatively
strong local demand for mutton, many private sheep breeders are reported to prefer using rams of a meat
breed, particularly the Altai\. This puts the wool breeding work of several years at risk, though this is
likely to be a transitional phenomenon\. Nevertheless, it poses a strategic dilemma in the future
- 5 -
development of the industry: should investment in the industry be geared toward the production of lamb
production or maintenance and expansion of the wool genotypes? Ultimately, the choice between these
two options will be made by the farmer\. Meanwhile, it is important that Government control breeding
through licensing of rams and providing appropriate breeding stock to farmers for both purposes\.
Consequently, the elite flocks and superior genotypes that have been developed over the years for both
purposes should be maintained\. The proposed project would support the above measures and restore the
relative profitability of wool production, particularly for export\.
1\.16 Types of Sheep Holdings\. Prior to 1991, sheep breeding and production was mainly organized
around state and collective farms, including state sheep breeding plants and farms\. The former have been
critical in developing superior sheep stocks for distribution to state and collective farms\. With the
privatization of these state plants and farms, new types of livestock farming enterprises have emerged\.
The situation is, however, not entirely clear since many state enterprises have been nominally privatized
without undergoing real changes in essence or structure\. Moreover, the process of privatization and farm
restructuring is still going on\. In addition to the well known state and collective farns that are within
the public sector, there are currently four types of sheep farming within the private sector\. Following
the Soviet legacy, most of these farms are mixed (i\.e\., they produce both livestock and crops)\. They
consist of: (a) Family Farm, averaging 10 hectares with rights to natural grazing, is rented and operated
by one family\. The head of the family makes most of the management decisions in consultation with the
family\. Typically, the lease on the farm is registered and arises from the dissolution of a state or
collective farm\. The independence of this type of farm is often limited by collective management of farm
machinery, irrigation water, and natural grazing resource; (b) Peasant Livestock Owner is often a
member of a state or collective farm that has decided to restructure by privatizing the ownership of
livestock (especially sheep), without distributing arable land\. He receives livestock which he maintains
on common natural pastures (formerly belonging to the state or collective farm), on his household plot,
and purchased feed\. Subject to the same management decision constraints faced by the family farm
holder, he makes management decisions in respect of his livestock\. On the other hand, he continues to
be a mere laborer as far as crop production is concemed; (c) Production Cooperative Farm arises when
a small number (up to 10) of workers of a dissolving state or collective farm pool their land and livestock
shares to form a single farm unit under joint management, usually led by one dominant individual\. The
unit may operate as a joint stock company farm\. The sheep are managed jointly and share the same
management decision constraints as other types of famis; and (d) Independent Cooperative Farm derives
from a dissolution of a state or collective farm, where the majority of workers decide to continue
operating the farm enterprise together under, quite often, the same management\. The farm may operate
as a joint stock farm enterprise\. This fann differs from its predecessor in that it is no longer subject to
state or oblast administration orders or directives in its management decision making and has discretion
in the use of its operating surplus\. Sheep continue to be managed jointly on the farm's leased natural
pasture, fodder, and purchased feed\. At the end of 1994, it was estimated that the national sheep flock
was distributed as follows among the various types of farms: public sector farms (46 percent),
independent cooperative farms (11 percent), and small-scale private farms (43 percent)\. Small-scale
private farms consist of family farm, peasant livestock owners, and production cooperative farms\. The
share of small-scale private farms is highest in the major sheep producing regions (ranging between 54
percent in Issyk-Kul and 44 percent in Osh), except in Naryn (37 percent)\. The share of small-scale
private farms in the national sheep flock is increasing rapidly under the ongoing land reform and farm
restructuring program of the Govermment\. The primary target group of the proposed project would be
all sheep farms and producers in the private sector\. State and collective farms that are legacies of the
Soviet system would not be eligible for participation in the proposed project, except those designated for
sheep breeding and research activities under the project\.
1\.17 Private Farmers' Associations\. The transition of the sheep industry would greatly benefit from
the development of a strong network of farmers' associations or groups\. These associations are being
established under the EU (TACIS) Livestock Project, mainly in Talas and Naryn regions, as multi-
purpose service cooperatives\. They differ from the production cooperatives in that they provide services
to private farms emerging from the dissolution of state or collective farms\. Usually, the ex-workers of
a state or collective farm retain the former management to run the service association for them, while
they run their private farms independently\. The services provided include: input supply (especially fuel
and oil), marketing of produce (mainly through barter of produce for inputs), machinery services, credit,
water regulation, and common pasture management regulation\. Most of these associations are affiliated
to Dyikanardo, a national apex farmers' association, through which the Government channeled
concessional credit to farmers in 1994\. Dyikanardo has, however, transformed itself into a political
movement and participated in the 1995 general elections\. Nevertheless, there is need to strengthen the
grassroots associations, through technical and financial assistance, to enable them to provide support
services to members, which, in addition to the above activities, should include herd/flock book
registration and extension service\. The proposed project would support the establishment of sheep
farmers' associations which may eventually become multi-purpose to cover activities related to other
livestock and crops\.
1\.18 Sheep Management System\. The annual cycle of sheep management is similar throughout the
year, with seasonal variations dictated by altitude and the severity of winter\. Lambs are born during
February-March, coinciding with the shearing period\. During this period, winter feeding is predominant
until it is succeeded by spring grazing in low lands or foothills as snow disappears in May\. As spring
progresses into summer, the flocks are moved progressively to graze on high altitude pastures (up to 3500
m)\. The shepherds and their families accompany them\. With the approach of winter, the flocks descend
to lower fall pastures in September and October\. They also graze the stubble and forage crops at this
time, which flushes the ewes in preparation for service\. During winter (November-February), sheep are
housed in "kashara" (sheds)\. Winter feed comprises hay, straw, and ground barley\.
1\.19 Animal Health\. During the Soviet regime, the control of diseases was relatively easy\. Since
flocks are now in private hands and they graze freely over extensive areas, some disease outbreaks are
imminent, particularly brucellosis\. The incidence of brucellosis in sheep increased from 1 percent in
1992 to 1\.8 percent in 1993\. A brucellosis eradication program has been started, but it suffers from lack
of resources and staff\. In addition, it was designed for prior privatization situation, during which the
majority of sheep were concentrated in state and collective farms\. Today, some private sheep owners
are not cooperating in diagnostic services provided by the state\. In the absence of compensation for sheep
slaughtered or disposed of after testing positive, farmers have little incentive to cooperate\. Disease
control should be made more effective by adopting a strategy of improved diagnosis, vaccine
development, and testing for brucellosis in coordination with other countries in the region\. In addition
the participation of private veterinary practitioners should be encouraged and supported\. Private farmers
should be required, through their farmers' organizations, to participate in public campaigns of disease
control\. Internal and external parasites are also a major source of loss\.
1\.20 Sheep and Wool Productivity and Production\. Average productivity in sheep and wool has
consistently declined since 1990\. The average body weight of sheep has dropped from 36 to 31 kg over
the period\. The average greasy fleece yield per sheep declined from 3\.8 to 3\.7 kg over the same period\.
Wool yields have declined more in the state and collective farms, dropping from an average of 3\.2 to 2\.9
kg per sheep over the same period\. The decline in wool yield is continuing and both wool yield and
quality are being adversely affected by inadequate winter feeding\. The dilution of the fine wool
- 7 -
genotype, resulting from the decline in sheep breeding control, is expected to progressively reduce the
yields and quality of wool\. In addition, private farmers have a preference for breeding for bigger
carcasses, resulting in lower wool yield\. Total production of mutton has increased from 77,000 tons
(dressed weight) in 1990 to 82,000 tons in 1993, reflecting an increasing off-take rate via increased
slaughter\. This is continuing and is likely to reduce the size of the flock further\. On the contrary, the
production of wool has fallen from 39,000 tons (greasy weight) in 1990 to 25,000 tons in 1993\.
Declining wool yields suggest that total wool production will continue to fall\.
1\.21 Despite the fall in production, wool remains an important product for the Kyrgyz economy, with
exports of wool and wool products constituting the largest source of foreign earnings\. In 1994 wool
production was equivalent to about 20,700 ton (greasy weight), valued domestically at 134 million som
(US$12\.7 million)\. At world prices, and in a competitive marketing environment, the value of Kyrgyz
wool production could be doubled\. The Kyrgyz Republic accounts for about 10 percent of wool
production and trade in the Former Soviet Union and 1 percent of global wool production\. The sub-
sector is in the fore-front of privatization efforts affecting the agricultural sector\.
1\.22 Livestock Institutions\. The principal institutions servicing the livestock sub-sector are the
Ministry of Agriculture and Food (MAF) and its affiliated institutes\. MAF has two departments serving
the sub-sector: the Department of Livestock Management and Development (DLMD) and Department of
Veterinary Services (DVS)\. The former is responsible for overseeing sound animnal breeding, husbandry
and nutrition practices in state and collective farms, including research institutes\. DLMD has 17
professional staff in three sections each dealing with cattle and dairy breeding, sheep breeding, and
pedigree inspection\. The latter two sections would be involved in the implementation of the proposed
project\. The Livestock Institute (LI) has two departments each for animal breeding and research\. The
LI has been recently reorganized into two corporate entities: "Asyl-Mal" and "Kerneej"\. The "Asyl-
Mal", operated as a public joint stock company, maintains 16 livestock breeding farms which are
responsible for progeny recording and selection of sires for artificial insemination (AT)\. It has 7 sheep
breeding farms, of which 5 farms are for fine wool breeds, and 2 farms for Tian Shan and Alai breed\.
These farms are responsible for storage and distribution of semen and for the supply of improved
breeding stocks\. The "Kerneej" carries out livestock research and is wholly state-owned\. It is engaged
in several research programs, including breeding improvement and selection, biotechnology, genetics,
forage utilization, and mechanization of livestock production\. The Scientific Industrial Enterprise (SIE)
formally known as the Pasture Institute is responsible for research in both natural pastures and cultivated
forage production\. All breeding and research institutes are operating on shoe-string budgets and have
substantially curtailed their programn activities\. Staff attrition has been considerable with the recent
exodus of non-Kyrgyz ethnic residents\. Neither MAF nor its institutes are currently organized to or
capable of providing support services to the emerging private fanning sector\. All of them are still
organized to issue directives, control the supply of inputs, and direct marketing and processing\. MAF
and its institutes are being reorganized to become capable of providing support services to private farms
and implementing the land and agrarian reforms\. The proposed project would initiate the reorganization
of MAF's departments and institutes dealing with livestock development\. This would be done in
compliance with the proposed reorganization of MAF that will be implemented under the proposed
Agricultural Support Services Project (ASSP)\.
1\.23 Potential of the Industry\. Despite the recent decline in sheep and wool productivity and the
depressed price of Kyrgyz wool compared to world market levels, there exists significant potential to
increase farm profitability in the sub-sector\. Given the country's grazing resource, harsh climatic
environmnent, and long distance from potential international markets, this potential lies in wool and lamb
production rather than mutton production\. There are significant opportunities to increase wool
- 8 -
productivity and improve its quality to fetch price premiums on the international market\. Potential wool
productivity gains (by increasing greasy wool yields from the 3\.5 kg/sheep average over the last 5 years)
are estimated at 30 percent, while price increases of Kyrgyz wool could exceed 100 percent\. Further
sources of increased productivity exist in the form of higher lambing percentages, lower death rates and
increased clean wool yields\. The Kyrgyz wool industry has important natural advantages in its close
proximity to major markets in Russia and China, with potential clients in Eastern Europe\. However,
much of this advantage is dissipated by inefficient production, handling, grading, and lack of marketing
regulations of international standard\. It also has the capacity to produce high quality wool and, most
importantly, it has low labor costs\. The wool processing industry is considered to have significant
potential in increasing both capacity utilization rates and capacity\. In this connection, the country has
the potential to rival China which is emerging as a major finishing center for wool products for Japanese
and Korean textile firms because of its low labor costs\. The country has also good potential to produce
lamb for the export to the Arabian Gulf States and to compete with the traditional lamb suppliers
(Australia, New Zealand, South Africa, and Argentina) to the market\. This potential has been neglected
in the past because the sheep industry's policy focus during the Soviet regime was to produce wool\. The
proposed project would seek to make maximum use of this potential and to make the entire sheep industry
export-oriented\. However, to realize this potential, specific problems faced by the sheep and wool sub-
sector, including insufficient pasture resource management, poor sheep husbandry practices, and
inefficient wool marketing and quality control system have to be resolved\. The proposed project has been
designed to address these problems\. In order to respond to these problems through market solutions, the
pivotal role of the private sector in managing the subsector's transition has been underscored in the
proposed project\. However, the development of the private sector in the subsector would require: (a)
the establishment of adequate support services, including extension and credit; (b) establishment of wool
marketing regulations, based on international standards, to enhance wool quality control and
marketability; and (c) promotion of formation of grassroots farmers organizations, operating on self-help
and self-accountability, by the state to spearhead the subsector's response to continually changing market
requirements\.
1\.24 Pasture Resources\. The pasture area of approximately 8\.8 million hectares is supplemented by
forage areas of some 600,000 hectares (of which 400,000 hectares is irrigated alfalfa and other legumes)\.
In this respect, the Kyrgyz Republic appears to have a considerable grazing resource, suggesting
comparative advantage in extensive livestock production\. However, the past policy that focused solely
at increasing livestock numbers has resulted in considerable degradation of the resource\. Years of
overgrazing have reduced the productivity of summer, spring/fall, and winter pastures over the past 30
years, from 639 to 414 kg/ha, 465 to 301 kg/ha, and 297 to 93 kg/ha respectively\. As a result of
degradation of winter pastures and a continued reliance on wool production from weathers (male
castrates) kept over winter, the Kyrgyz Republic has become reliant on relatively high-cost supplemental
feeding for four to five months of the year\. In 1987, at the peak of the livestock herd and of feed
consumption, the amount of grain used for feed was approximately twice that used for food\. This was
unsustainable and feed imports have virtually disappeared, forcing producers to reduce considerably their
flock sizes\.
1\.25 Sheep graze natural pastures during March-October\. Winter pastures supplement winter rations
based on straw, lucerne/saifoin hay, silage, and barley\. These winter feeds are, however, rarely
sufficient and availability of winter grazing is determined by climate, weather, and pasture condition
(which is generally overgrazed and poor)\.
- 9 -
1\.26 To reduce the problem of overgrazing a number of actions have been done or are required in
future\. Already the sheep flock size has been reduced substantially to the current estimate of 7 million\.
To allow for a sustainable utilization of current pasture resources, sheep flock numbers should be
maintained at the current level\. This requires a change in the grazing management and stocking rate by
stopping to equate 100 percent utilization of feed on offer with maximum efficiency and profitability\.
Experience elsewhere in the world (e\.g\., Australia) suggests that maximum profit and maximum
sustainability of pastures almost always occur when less than 50 percent of the total pasture on offer is
utilized\. The reduction in sheep flock size is being accompanied by a change in the flock structure\.
First, the ongoing privatization of state and collective farms has considerably reduced the flock sizes\.
Second, reduced numbers of weathers during winter would save scarce winter pastures and reduce the
demand for imported feed\. There should be increased emphasis on younger sheep production from more
abundant summer pastures\. The average yield of both hay meadows and irrigated alfalfa is very low\.
This could be increased by the introduction of appropriate high altitude-adapted legumes in hay meadows
and by the improvement of management and introduction of new varieties in irrigated alfalfa fields\.
These practices need to be complemented by more efficient use of concentrate feeds in winter\.
1\.27 Despite these shifts towards a sustainable level of sheep production, the current uncertainties
surrounding property rights of agricultural land and grazing resources have created a situation in which
producers may seek security in livestock numbers rather than land\. Clearly defined and accepted property
and grazing rights, supported by an effective pasture monitoring system taking into consideration land
use capabilities, would facilitate stabilization of the flock size at optimal levels\. Similarly, increases in
the use of yield-enhancing inputs are necessary to improve the productivity of fodder crops\. But this,
in turn, depends on reforms to improve the incentive structure, particularly corrections to the distorted
input-output price ratios\. ,
1\.28 Sheep and Wool Processing and Marketing\. The Kyrgyz Republic accounts for about 10
percent of wool production in the Former Soviet Union and 1 percent of world wool production\. Over
75 percent of wool produced in the Kyrgyz Republic is classified as "fine wool" with a fine fiber diameter
of less than 25 micron\. The main source of this fine wool is the Kyrgyzstaia Fine-wool breed, a
derivative of the Australian Merino\. In general, however, the wool classified as "fine wool" in the
Kyrgyz Republic would be classified as medium to strong in Australia\.
1\.29 In the past, over 95 percent of greasy wool has been processed further into scoured wool in the
Kyrgyz Republic and over 50 percent of scoured wool processed further into yarn, cloth and garments,
most of which is exported to other members of the FSU\. The main importers of scoured wool are
Russia, Ukraine, Belarus, Kazakstan, Azerbaijan and Lithuania\. More recently, however, an increased
amount of greasy wool is being consigned directly to China, Russia and Turkey\. The major deficiencies
in the overall production, marketing and processing chain are: (a) lack of effective greasy wool marketing
infrastructure, to carry out wool testing, wool selling, and information and communication tasks; (b)
historical and continuing bias against research into wool marketing and processing problems and
opportunities; (c) poor control of quality in classing, preparation of wool for sale, handling and storage;
(d) inefficient local processing industry; and (e) poor understanding of the main profit variables at the
farm level\. The underlying causes for these deficiencies include: (a) government's ownership of
production and processing facilities which reduced the need for marketing facilities and support services
at the greasy wool level; (b) the centralized concentration of wool research in Russia; and (c) extreme
dependence of Kyrgyz wool processors on traditional markets in the FSU where absence of price
premiums for high quality wool failed to provide the incentives to fully exploit the economic benefits
associated with high quality wool production\.
- 10 -
1\.30 As a result of these imperfections, greasy wool prices are on average at least US$1\.00 per kg
(clean basis) lower than world market prices\. Given current production levels this translates to a gross
loss in farm income of about US$10\.8 million\. The discounts tend to be higher for better quality wool
(in excess of US$2 per kg) and lower for poor quality wool\. At the local level there is little knowledge
of world market prices for different types of wool\. The inefficiencies in the local processing industry
contribute further to the low price of Kyrgyz wool as their capacity to pay world market prices for greasy
wool has been eroded through high processing costs\.
1\.31 Slaughter and veterinary controls are poor and limit the acceptability of mutton and live animal
exports in international markets\. Nevertheless, during 1993-94, exports of chilled mutton carcasses were
made to the Middle East\. There are no formal live animal markets in the country\. However, sheep are
offered fo\. sale in markets in the southern parts of the country\. Prospects for lamb exports to the Middle
East appear quite favorable, provided production and market efficiency in the Kyrgyz sheep industry can
be initiated and sustained\. These would be introduced under the proposed project\. Lamb production
efficiency would be considerably improved (tables 6\.1a - 6\.1d) and a new lamb marketing system for
exports to the Middle East would be established under the proposed project\. Accordingly, lamb
production for export would become the mainstay of the country's sheep industry in terms of foreign
exchange earnings (table 6\.1)\. Existing lamb prices in the Middle East market are considerably higher
than those assumed for the calculation of the project's economic rate of return (table 6\.1)\. For example,
live weight p\.ices fcr lamb averaged US$1\.50 per kilo in Saudi Arabia and the Gulf States during 1995\.
This would imply a marketing margin of $0\.70 per kilo as the current domestic farmgate price is $0\.80
per kilo\.
1\.32 To fully exploit the potential of the wool industry, the development of an internationally
competitive wool marketing infrastructure, controlled and owned by the private producers, is of
paramount importance\. This development would include: (a) enhancement of wool quality control with
the aim of achieving more differentiated wool types for high price premium segments of the market; (b)
establishment of a greasy wool testing system, initially contracted to foreign laboratories, a greasy wool
marketing center and an associated information system; and (c) improvement of the classification and
grading of greasy wool at village and regional wool stores\. The Kyrgyz wool processing sector is also
an important source of demand for greasy wool produced in the country\. Unless the efficiency of the
local scouring industry is significantly improved, this will remain an important constraint on greasy wool
prices and international buyers will continue shipping greasy wool to lower cost scouring locations\. This
project is not addressing the problems of the wool processing sector, which is currently undergoing
privatization and restructuring under the Government program for economic reform, supported by other
Bank operations\.
1\.33 Support Services\. In addition to the development of marketing infrastructure, the success of
privatization in mobilizing private resources depends critically, on the concomitant development of
suitable support services to the private sector\. The latter includes both extension services and a veterinary
regulatory framework (vector control, veterinary surveillance, quarantine etc\.)\. At present, there is little
evidence for dissemination of technical/managerial information from government to all types of sheep-
owners\. There is a need for sheep producers, many of whom are new managers/sole operators, to
possess all available information that will assist in improving productivity, and introducing new
technologies\. In this process, there is a need to move away from the current production-driven focus of
the state towards increased provision of support services to private farmers\.
- 11 -
II\. BANK LENDING EXPERENCE AND SECTOR STRATEGY
Bank's Lending Strategy for Agriculture
2\.1 The Bank, through an Agricultural Sector Review (1994), is helping the Government in its design
of structural and sectoral reforms and the identification of investment opportunities to facilitate the
transition to a market economy in the agricultural sector\. The review identified five areas for policy
reform: demonopolization and privatization of state agribusiness enterprises; transfer of agricultural land
and farm assets to provide ownership; adoption of appropriate pricing and marketing structure; a
diminished and supporting role for the state in agriculture; and development of an appropriate rural
financial system to serve private farming and rural enterprises\. These recommendations were endorsed
by a Bank/Government sponsored Agricultural Conference held in November 1994\. Within the context
of structural reforms, agriculture is considered vital for contributing to the Governmnent's broad
objectives, which include sustainable economic growth, poverty reduction, and employment creation\.
2\.2 The proposed project is consistent with the Country Assistance Strategy as discussed by the Board
of Directors during the presentation of the Agricultural Privatization and Enterprise Adjustment Credit
(APEAC) on June 28, 1995\. To achieve the CAS objectives, Bank Group financial and technical
assistance will be selectively focused on four areas: continued adjustment-lending; agricultural/natural
resource management; energy; and social sectors\. Growth recovery in the agricultural sector is a critical
element of IDA's assistance program for growth and poverty reduction\. Within the CAS framework,
the Bank's assistance strategy for the sector consists of policy-based lending operations in support of
structural reforms and investment lending operations in support of sectoral investments\. Operations in
support of structural reforms, which are currently under implementation or preparation, and have
relevance for the agricultural sector include: (a) the TA component of the Rehabilitation Credit, which
supports the development and implementation of policy change and privatization of agro-enterprises; (b)
the recently approved Privatization and Enterprise Sector Adjustment Credit (PESAC), which seeks to
liberalize trade policies and the price system; and to improve the regulatory framnework for private sector
development; (c) the Agricultural Privatization and Enterprise Adjustment Credit (APEAC) aims at
deepening the market and pricing liberalization in agriculture and the development of competitive markets
through privatization and private sector development; and (d) the availability of an Institutional
Development Fund (IDF) grant to facilitate the implementation of Government's Land Reform and Farm
Restructuring efforts\. Building on the policy framework established under these operations, the proposed
project would contribute to the emergence of an internationally comnpetitive sheep industry, increase
incomes of sheep producers, generate increased foreign exchange earnings, and foster sustainable
management of the country's pasture resources\.
2\.3 The Bank's sector work has identified a number of investment priorities for the agricultural
sector\. These include: (a) the provision of support services to private and restructured farms consisting
of technical advisory services, market information, land registration and titling services; (b) agricultural
research to produce new technologies (mainly through adaptation) in well prioritized areas; (c) animal
production and health to strengthen public support services to private livestock producers; (d) irrigation
rehabilitation to provide for the management and maintenance of water within private farms and to
finance maintenance and operations of the existing irrigation system; (e) rural roads rehabilitation to
provide for the management and maintenance of the existing network of rural roads; and (f) restructuring
and improvement of the rural financial system\.
- 12 -
2\.4 Besides dealing with agricultural policies under the APEAC, the Bank has decided to initially
focus on three investment operations which include the Agricultural Support Services Project (ASSP), a
Rural Finance Project and the Sheep Development Project (SDP)\. The ASSP aims at the establishment
of support services for the emerging private sector, which are considered crucial for the success of
privatization efforts in the sector\. In this process it will restructure the Ministry of Agriculture and Food
to reflect its proper role and functions in a market economy context\. The Rural Finance Project will
support the development and implementation of a durable system of financing farm and other rural
activities\. The SDP focuses on the sheep sub-sector because of its current importance, its high potential
for future growth in terms of both productivity and profitability, its impact on poverty alleviation, and
the relatively high proportion of private sector production\. The Bank's involvement in donor coordination
efforts is expected to generate interest from other donor agencies to include some of the above mentioned
investment priorities in their support programs\.
2\.5 The proposed Sheep Development Project is the first investment lending operation in support of
reforms in an important agricultural sub-sector, with substantial potential and a leading role in the
implementation of privatization efforts\. The sheep sector is important because of the large sheep herd
and the potential in the sector for increasing production and exports of meat and wool and raising the
income of low income farmers\. Based on findings of the Agricultural Sector Review, which was
completed in July 1994, it was concluded that the sub-sector faces serious problems of declining sheep
and wool productivity and low prices of Kyrgyz wool compared to world market levels which are
attributed to a wide range of factors including inadequate sheep husbandry practices and disease control,
insufficient pasture resource management, existing constraints in wool marketing, and the absence of
effective support services to the emerging private farming sector\. The project will help create the
research and extension institutions and private farmers' organizations necessary for the development of
an efficient, competitive and financially self-sustainable sheep industry\. More specifically, these
institutional reforms and critical investments include: (a) the formation of grassroots farmers'
organizations; (b) creation of lamb and wool marketing infrastructure; (c) establishment of support
services for sheep and wool farmers; and (d) strengthening of sheep research and development\.
Grassroots organization would be critical in enabling farmers to respond appropriately to the rapidly
changing market signals as the process of economic reforms and liberalization takes root\.
Bank's Experience and Lessons
2\.6 The Bank Group has no previous involvement in the agricultural sector in the Kyrgyz Republic\.
However, limited experience with the ongoing Economic Rehabilitation Credit indicates that inadequate
implementation capacity is a very serious issue\. Recent evaluations of livestock projects financed by the
Bank show an improving success rate against a deteriorating success rate for agriculture in general\.
Critical ingredients having a positive effect on project success include: (a) absence of internal price
controls; (b) clear definition of the role of the public and private sector, with, wherever possible,
increased involvement of the private sector; (c) increased attention towards livestock-environment
interactions; (d) acknowledgement of the positive role of national livestock research on livestock
productivity; and (e) focus on private family farm development instead of support to public and semi-
public livestock production and processing\. These factors have been incorporated in the design of the
SDP in various ways\. Nevertheless, weak implementation capacity in the public sector will be critical
to the success of the proposed project\. The situation in the Kyrgyz Republic is made worse by the fact
that the development of private farming depends, at least initially, on Government support\. However,
the Government itself needs help, in the form of technical assistance, to be able to assist the development
of private farming\. The proposed project recognizes this unpleasant reality\.
- 13 -
2\.7 Given the limited local project implementation capacity and experience in the FSU and Eastem
European countries, effective project implementation requires reliance on extensive technical assistance\.
Early Bank projects, such as the Economic Rehabilitation Project, which was essentially a Technical
Assistance operation, have succeeded in using TA in implementation, recruitment of consultants,
establishment of termis of reference, and other procedures which increase the sense of local ownership
of the project\. These lessons have been incorporated in the proposed project through: (a) the provision
to set-up a Project Implementation Unit in the Ministry of Agriculture and Food, which will have a broad
mandate conceming project implementation issues; and (b) the implementation of several project
components shall be sub-contracted by the PIU to various public and private sector agencies, including
NGOs\.
Project Design Options
2\.8 Several project design options were initially considered\. These included: (a) leaving the
marketing system for lamb and wool in Govermment hands; (b) establishing a sophisticated wool testing
facility as part of the producer-managed marketing system; (c) a sheep industry that is managed and
controlled by producers with a credit component; and (d) a sheep industry that is managed and controlled
by private producers with some support services being initially provided by the Government, but which
would eventually be assumed by the industry\. These options were individually evaluated and the last
option was finally selected as the most cost-effective and appropriate strategy for achieving the project
objectives\.
- 14 -
III\. TIE PROJECT
Objectives and Brief Description
3\.1 Project Objectives\. The objectives of the proposed Project are to: (a) increase the profitability
and efficiency of sheep and wool farming; (b) privatize the provision of several services to farmers,
including wool marketing and veterinary services; and (c) improve the management and conservation of
natural grazing resources by farmers\. To achieve these objectives, the project would focus on: (i)
organizing sheep and wool farmers into farmers' associations or groups through which essential services
can be channeled; (ii) developing a competitive marketing structure with incentives for production of
quality lambs and wool for premium prices; (iii) increasing sheep and wool productivity through
establishing training and advisory services for private farmers and supporting selected breeding activities;
and (iv) developing and disseminating sustainable pasture management techniques among sheep producers\.
These objectives have been translated into monitorable performance indicators (Annex D)\. These are
market-based strategies that would require intensive transfer of "technical know how" and market-oriented
management skills to the Kyrgyz technical experts and sheep producers\. In this sense, the project is
extremely technology transfer intensive\.
3\.2 Brief Project Description\. The proposed project consists of three main components\. These are:
(a) Sheep Private Enterprise Development (SPED); (b) Development of Livestock Support Services
(DLSS); and (c) Sheep Breeding Research Support (SBRS)\.
Detailed Project Features
3\.3 Sheep Private Enterprise Development (SPED)\. The specific objectives of SPED are: (a) to
establish several sheep producers' groups or associations (SPGAs) at village level which would eventually
affiliate themselves to regional sheep breeders associations (RSBAs) and a national Kyrgyz Sheep
Breeders Association (KSBA); and (b) to establish a new marketing system for lamb and greasy wool with
incentives for production of quality products\. The development of SPGAs, new marketing system, and
agricultural training and advisory services are closely interlinked and critical to the development of a
market-based sheep industry in the country\.
3\.4 Sheep Producers' Groups/Associations (SPGAs)\. The transition from a command system
towards a market economy requires the transfer of responsibilities from the state to individual groups of
the society\. The state can no longer provide secure employment in rural areas where state farms and
rural enterprises are collapsing one after another\. The transfer of responsibility cannot be done by
decree, but by supporting interested groups to prepare them to shoulder this responsibility\. After
independence several local NGOs emerged from former state organizations to pursue social and ecological
objectives, but most of them have not completely succeeded to free themselves from the legacy of state
influence\. Two new national farmers' associations with economic objectives have been established, but
they have tended to confuse economic with political pursuits\. Grassroots farmers' associations or groups
would play an important role by taking over part of the those tasks the state can no longer fulfill\. Such
associations or groups, based on self-help and self-accountability principles, would constitute a departure
from the "top down" and centralized decision-making approaches of the command system\. With regard
to sheep producers, the project would support the promotion of SPGAs to initially address four critical
issues in sheep production and marketing: (i) to arrest the drift toward unregulated sheep breeding among
small private producers through the introduction of certification and registration of rams (flock book
- 15 -
registration); (ii) to provide small private producers with technical and managerial know how (to be
provided in close cooperation with ATAS and other extension service programs); (iii) to facilitate the
marketing of sheep products, including lamb, wool, and skins, by small private producers; and (iv) to
manage common pastures on a sustainable basis\.
3\.5 The SPGAs would be village-based and, in accordance with Kyrgyz traditions, organized around
a clan or extended family\. Their members would be independent farmers or groups of independent
farmers registered with the local State Statistics Office\. The SPGAs, once established, would be
registered with the State Statistics Office as societies with limited liability\. They would have "open
membership" with free entry and exit rights\. SPGAs would be managed and operated by members on
cooperative principles\. Project support to groups would be demand-driven, namely only producers who
are willing and able to participate in the designated group activities would benefit from the support
provided under this sub-component\. The project would provide technical, organizational, managerial and
financial support to the groups or associations to enable them to overcome the constraints they are facing\.
About 150-200 groups/associations, averaging 30-50 members (50-100 households) and raising 1\.5-2\.0
million sheep, are expected to be established during the life of the project\. These groups or associations
would be the focus for improvements in regulating sheep breeding, animal husbandry, wool shearing,
sorting and marketing, and sustainable management of common pastures\. These tasks would be
implemented by the SPGAs with technical support provided by staff ATAS, KSBA/RSBA, and the
Veterinary Department\.
3\.6 The privatization of sheep ownership has disrupted the breeding and selection program which was
exclusively based on the state and collective farm system and artificial insemination\. Private sheep
owners are now relying more on natural mating methods (using rams)\. This has the risk of spreading
some diseases by unhealthy rams\. In addition breeding by private farmers is increasingly becoming
unregulated both in respect of strain and breed, affecting the quality and yield of wool\. SPGAs would
be instrumental in regulating sheep breeding at the farm level\. This would be done through the
introduction of licensing and registration of rams held by individual farmers by each SPGA with the
assistance of the Ministry of Agriculture and Food\. For this purpose, each SPGA would maintain a
pedigree or breed book in which each licensed ram of each member would be registered\. All such rams
would be periodically checked and certified by the Department of Veterinary Services and those found
unfit would be eliminated or castrated\. Similarly, the introduction of new genetic material (semen) under
the project would be done under the auspices of the SPGAs\. The appropriate semen would be procured,
on the basis of members' requirements and ATAS advice, by the SPGA for distribution or sale to its
individual members\. The decision whether to distribute free of charge or sell the semen would be made
by the SPGAs, depending on their financial situation\. Some SPGAs may choose to provide Al services
to their members\.
3\.7 The SPGAs would also function as grazing associations responsible for managing the utilization
of common pastures\. Sustainable management of common natural pastures would be complex and would
require the SPGAs to limit individual flock sizes and stocking rates, promote increased production and
use of fodder by individual farmers, foster change in individual flock structure (by reducing the number
of weathers during winter to save scarce winter pastures and emphasizing younger sheep production from
more abundant summer pastures by individual farmers)\. These practices would be enforced by the
SPGAs\. This would only be practical if leaseholds or grazing rights for pastures are issued to the SPGAs
rather than to individual members or farmers\. Granting grazing rights to the SPGAs or grazing
associations would be consistent with both Kyrgyz traditions and the practice under the state farm system\.
It would also create a situation in which members of an SPGA or grazing association would jointly seek
- 16 -
security in the grazing resource (land) rather than in sheep numbers\. During negotiations, it was agreed
that the Borrower shall take all necessary measures to ensure that sheep producers 'associations shall be
granted, on a leasing basis, grazing rights without prejudice to other users of pastures, whether
individually or collectively organized\.
3\.8 Implementation of the producers' groups/associations sub-component would be contracted out by
the PIU to an international NGO or consulting firm with the requisite experience and capability\. It was
agreed during negotiations that the Borrower shall cause the PIU Manager to manage the Project
execution activities in accordance with the PIU Management Agreement, satisfactory to the Association,
which shall include, inter gjjg, provisions in respect of staffing of the PIU with qualified individuals in
sufficient number, and the management responsibilities to be carried out in accordance with a project
operational manual; such manual to be attached to the PIU Management Agreement and to constitute an
integral part thereof\. The NGO/consultant would develop a rolling program with annual work plans
phased in to cover all districts with significant sheep and wool production over the implementation period\.
These plans would include: (i) implementation details and expenditures for activities during the current
year; (ii) implementation plan and budget for activities in the following year; and (iii) a training program
for members of the group\.
3\.9 Regional Sheep Breeders Associations (RSBA)\. These associations would be established by the
local independent producers' groups/associations to facilitate, initially, the marketing of lamb and wool\.
SPGAs domicile in any RSBA's catchment area would not be obligated to affiliate\. About four or five
RSBAs, each with average membership of 40-50 groups/associations be established during the project life\.
The RSBA would be instrumental in the operation of the proposed regional wool stores where much of
the classifying, baling, and wool sampling for testing would take place\. They would also assist in
organizing regional markets or auctions for lambs where exporters and domestic buyers would participate\.
The project would initially support the formation of these associations through technical assistance to be
provided by selected NGO/consultant\. The NGO/consultant would provide advice to the associations in
respect of organization, management, legal, registration and marketing\. RSBAs would be supported by
the project on demand and commercial viability basis\. Like the SPGAs, they would be registered as
societies with limited liability\. The project would also equip the selected regional wool stores with the
requisite wool baling and sampling equipment\.
3\.10 The implementing NGO/consultant, together with the ATAS and RSBAs, would identify and
select the location of wool stores and lamb auctions in the major wool producing regions and, using local
engineering consultants, assess the cost of the physical improvements needed in each store or auction\.
Most of the stores belong to either oblast administrations or the State Procurement Agency\. Some oblast
administrations have expressed their willingness to donate such facilities to local producers associations\.
Before rehabilitation of the stores begins, they would be turned over or leased to the newly established
RSBAs with responsibility for maintenance\. The project would provide for the rehabilitation of public
wool stores through local competitive bidding\. Rehabilitated public wool stores would be leased to
associations at rental fees that reflect full cost recovery of the cost of rehabilitation within five years\.
Rehabilitation of private wool stores would not be provided under the project\. The cost of rehabilitating
wool stores donated to associations by oblast administration would be fully met by the associations
themselves\.
3\.11 The project would also provide for employment of regional wool store managers, wool graders,
sorters and support staff on a grant basis in the first year of operation and full cost recovery basis in
subsequent years\. Short-term consultants to train local staff and sheep producers in shearing, grading,
- 17 -
and sorting through demonstrations at the local wool store and farm level would be provided on a grant
basis\.
3\.12 Kyrgyz Sheep Breeders Association (KSBA)\. This association would be founded by the local
SPGAs and RSBAs at a national level\. SPGAs that are not affiliated to any RSBA would be permitted
to acquire direct membership in KSBA\. All RSBAs are expected to be affiliated to the KSBA\. KSBA,
like its affiliates, would have "open membership"\. It would be incorporated as a society with limited
liability\. KSBA would, initially, have three principal tasks\. First, it would gradually establish the
necessary and sufficient range of technical services which would be complementary to ATAS\. Second,
it would, in conjunction with the NGO/consultant, promote the establishment of SPGAs and RSBAs as
the channels for the delivery of project goods and services\. Third, it would gradually establish the
essential commercial capabilities for complementing the commercial activities of its members, especially
in marketing\. While membership of KSBA would be open to all sections of the industry, the voting
structure would ensure that both ownership and control, through a majority at general meetings and in
committee composition, would be in the hands of sheep producers through their SPGAs and RSBAs\.
3\.13 The need for essential SPGA and RSBA services would, however, precede KSBA's formal
establishment\. KSBA would be formally established a year or two after a sufficient number of SPGAs
and RSBAs have been formed to become its constituent members\. In the interim period, the
NGO/consultant, employed to organize the SPGAs and RSBAs, would also develop the required
corporate, constitutional and commercial structure for KSBA operations as an apex body\. Inter alia, the
NGO/consultant would: (a) act as the management committee of the Association; (b) establish a Group
Development Division to promote the formation of the primary associations or groups which would
constitute the main body of the Association's membership; (c) institute and develop the required producer
services, including the establishment of a new wool and lamb marketing system; and (d) provide key
technical assistance staff, including a Group Supervisor and Financial Specialist, and a Group
Development Specialist\. The NGO would be charged with specific responsibility to establish KSBA with
by-laws acceptable to IDA/IFAD\. Following the incorporation of KSBA, the NGO/consultant would
hand over the management of its affairs to KSBA's elected committee\. An appropriate contingent of local
staff would be recruited by the NGO/consultant and their salaries would be financed by the project for
the first three years\. The cost of the NGO/consultant contracts would be funded by the project for three
years\. Project funds, in the form of grants, would be given to KSBA for these purpose by Government\.
The project would also finance KSBA's acquisition of computers, equipment, and vehicles\. Project funds
for these purposes would be given on full cost recovery basis, with a two year grace period\.
3\.14 Wool and Lamb Marketing System\. The project would assist the sheep industry to set up a new
marketing system for Iamb and wool, where possible using existing facilities\. This new marketing system
would be built around the following principles: (a) grading at the farmn and local (village) wool collection
center is of crucial importance to ascertain homogeneity and quality of the wool; (b) local wool stores
and lamb auction facilities would be owned and operated by producer groups, operating as marketing
cooperatives; and (c) the new marketing system would incorporate incentives for: (i) improved lamb and
wool production and harvesting practices by producers; (ii) verification of wool quality by independent
testing; (iii) wool marketing in lot sizes accepted by international buyers; and (iv) promoting sellers'
confidence in lamb and wool quality control and adherence to contracts\.
3\.15 The privatization in the sheep industry has resulted in small individual flock sizes to the point that
individual producers do not produce quantities of lamb and wool necessary for efficient marketing\. In
order to obtain acceptable lot sizes and improve the efficiency of production, storage, testing and
- 18 -
marketing, individual producers would have to cooperate\. This project component would closely
collaborate with the component that would be developing producers' associations and ATAS\. Where
possible, it should follow, and at least be in tune with the initial set-up of small producers' groups and
ATAS, as these would constitute the prime basis of the new wool and lamb marketing structure\.
3\.16 The primary focus for improvement of wool quality would be the farm, local and regional wool
stores\. At the farm level, emphasis (through SPGA and ATAS) would be placed on proper flock
management procedures, including appropriate timing for lambing, prevention of excessive vegetable
matter contamination in wool, proper shearing techniques, preliminary skirting of the fleece during
shearing, removal of any colored fibers, and separate shearing of any colored sheep\. Primary wool
grading, classing, and sorting would initially be done at the local wool store largely by ATAS staff\. This
quality control would be reinforced and refined at the regional wool store by NGO/KSBA specialists who
would check the grading and sorting done at the local store\. The regional wool stores would be
responsible for putting together lots of wool sizes (weights) that would be appropriate for offer on the
international market\. These lots, with similar characteristics, would be baled in packs of appropriate size
in accordance with international market requirements\. These lots would then be cored and grab samples
removed for testing at both local and international laboratories in accordance with the requirements of
either International Wool Technical Organization (IWTO) or ASTM (US Standards), depending on the
market\. The regional wool stores would be equipped with the requisite equipment for wool baling and
sampling for testing\.
3\.17 Lamb marketing would follow the introduction and adoption of a dual purpose sheep breed that
would optimize the production of both lamb and wool\. Like wool, lamb marketing would be organized
under the auspices of the SPGAs and RSBAs which would organize local markets or auctions at which
local traders and agents of exporters would participate\. A quality incentive system would be introduced
through a grade-based pricing structure to permit producers of quality lambs to fetch premium prices for
their products and to discourage the production of inferior animals\. The bulk of lamb production would
be destined for export markets in the Middle East and Turkey to fetch better prices than domestic prices
(para 1 \.31)\.
3\.18 Wool Marketing Center (WMC)\. Although the regional wool stores would be free to export
wool directly to foreign buyers, the bulk of raw wool selling in international markets would be
coordinated through a marketing center in Bishkek\. The center, owned and operated by KSBA, would
consist of offices and a wool display facility to present wool in an attractive setting to buyers\. The
display facility would be used mainly for display of samples drawn from regional wool stores and
presented to buyers\. The marketing center would, among other things, collect and dispatch samples of
core and grab wool for testing abroad; facilitate wool sales, including holding auctions during June-
August; and establish wool selling regulations that generate confidence and meet standards of international
buyers\.
3\.19 WMC would also serve as an information center, adequately equipped to collect and disseminate
international market information to local wool producers and buyers, including wool prices, standards,
sale procedures and conditions\. It is expected that WMC's throughput would be about 16,000 tons of
wool, enough to justify at least three auctions of each 5,000 tons of greasy wool\. Each of this amount
would be large enough to attract international buyers from China, Russia, India, Eastern Europe and
maybe Western Europe\. WMC would generate its revenue by charging storage and brokerage fees\.
- 19 -
3\.20 Since WMC would be operated as a KSBA activity, its establishment would, therefore, be
contracted out by the PIU to the same international consultants responsible for the establishment of the
KSBA\. An international Wool Marketing Specialist would be directly responsible for the establishment
and operations of the WMC during the initial three years\. Upon the formal establishment of KSBA, the
WMC would become formally owned by the former\. The project would finance WMC's physical
infrastructure (stores, offices, auction floors), and equipment on full cost recovery basis, operating
expenditures on a grant basis in the first year of operation and on full cost recovery basis in subsequent
years\. Technical assistance would be provided on a grant basis\. Project funds for these purposes would
be transferred to KSBA or before it is established, to the NGO/Consultant managing its affairs by the
Government\.
3\.21 WMC would establish regulations governing the sale of greasy wool in the country\. Such
regulations would underpin the transparency and integrity of the new wool marketing and trade system
and would cover: (i) inspection in local and regional wool stores by designated inspectors; (ii)
establishment of standard weights and grades for wool; (iii) wool display procedures; (iv) wool baling
and sampling procedures; (v) payment procedures and terms; (vi) terms and conditions of domestic and
international sales; and (vii) procedures for settlement of claims, disputes or arbitration\.
3\.22 Wool Testing\. This is an integral and important part of wool marketing because it facilitates
the use of product differentiation as an important instrument of pricing policy\. Pricing wool on grade
basis would stimulate quality improvement among wool producers, provided the gradewise price
differentials are significant\. Testing of Kyrgyz greasy wool, on the basis of internationally accepted
standards, is a sine non quo for its entry and acceptance on the international wool markets at reasonable
prices\. International buyers' confidence in Kyrgyz wool would, initially, be greatly enhanced through
client-specific or general testing by an independent foreign wool testing laboratory\. At the Tokmok
scouring plant there is a wool testing facility which was previously used to test all wool produced in the
Kyrgyz Republic\. About 25,000 samples of wool per year were processed here\. The samples processed
were of original size, instead of core samples\. Consequently the facility is relatively large with a variety
of physical facilities and equipment, most of which would not be required for a modern testing facility\.
A modern, small-scale testing laboratory would be set up in one room of this facility with provision for
future expansion under the project\. Government would, however, need to transfer the ownership and
operation of the facility to the Livestock Institute who would run it as both a commercial testing
laboratory and a research laboratory\. Combining these aspects of wool testing into one facility would
be logical and economic\. The project would support the refurbishing of this facility by replacing some
of the obsolete equipment with modern ones, constructing an environmentally controlled room for storing
wool samples prior to measuring fiber diameter, and installing an auxiliary water heating device to bring
water temperature at desired levels\. The laboratory would charge a testing fee\. During negotiations,
agreement was reached that the ownership and management of the wool testing facility would be formally
transferred to the Livestock Institute by December 31, 1996\. It was agreed that, should the Borrower
decide to locate the proposed wool testing laboratory at a location and facility other than the Tolanok
Scouring Plant, the Borrower' would submit a feasibility study therefore for review and approval by the
Association and the Fund\. The said study should fully specify the economic and financial implications
of the Borrower's decision\. It was further agreed that, if the Borrower decides to relocate the laboratory,
(a) any additional costs of establishing and operating said laboratory would be fully met by the Borrower;
and (b) the Borrower and the Association would agree on an amendment to the Credit Development
Agreements to the effect that the depositing of funds for such additional costs would be a condition for
the Association 's disbursement against any expenditures for the laboratory\. Export marketing orientation
of the wool industry in the country would certainly require effective marketing promotion, including wool
- 20 -
testing\. In order to eliminate some of the existing trade barriers for the sheep industry, agreement was
obtained to eliminate the existing export taxes and licensing for wool, hides and skins before negotiations\.
3\.23 The project would also support wool testing by foreign laboratories that would be competitively
contracted to one or two wool testing laboratories with international reputation for independence and
reliability\. As the number of testing laboratories is rather small and highly concentrated (dominated by
the SGS Group), such contracting would be done by limited international competitive bidding\.
3\.24 Duplicate samples each of about one kilogram of wool would be obtained from bales stored in
regional or central store by WMC and mailed to the local testing laboratory and contracted testing
laboratories by commercial couriers\. Such couriers as well as testing would be competitively contracted
out by WMC\. Foreign wool testing would stop once the local testing laboratory has been registered with
the IWTO\. Since world market international prices are based primarily on fiber diameter, the basic
wool characteristics to be tested would be yield and diameter\. Testing of other wool characteristics would
be done on demand basis by customers\. WMC would charge an appropriate testing fee\. The project
would provide for the financing of both the foreign testing and courier contracts, including any incidental
expenses (e\.g\., inspection and clearance of samples in the recipient country), all of which would be fully
recovered through appropriate charges on wool\.
3\.25 Development of Livestock Support Services (DLSS)\. The transformation of MAF's role from
production and marketing functions to a provider of essential support services to private fanners would
be addressed through a Bank-supported Agricultural Support Services Project (ASSP) and an IFAD-
supported Agricultural Development Project\. The need for the provision of support services to private
sheep producers would, however, precede MAF's functional transformation under the proposed projects\.
The proposed DLSS component would, therefore, initiate this transformation with respect to support
services essential to private sheep producers\. Following the implementation of these proposed projects
and the TACIS extension program, the provision of support services under SDP would be merged with
the activities of these initiatives\. These projects would be designed to ensure this merger\. In areas where
the existing TACIS extension program would have proved effective and sustainable, every effort would
be made to blend this project's activities with those being provided under the TACIS extension program\.
The specific objective of this component is to strengthen MAF's capability to implement the proposed
project and to provide essential support services to sheep producers\. DLSS would comprise (i) the
establishment of a Project Implementation Unit (PIU) which would be contracted by MAF to execute the
project; (ii) Agricultural Training Advisory Services (ATAS), at oblast and rayon level, to advise and
train private livestock producers; and (iii) the upgrading of Animal Health Services to monitor, diagnose
and control animal diseases, especially brucellosis, and to enforce animal health regulations and
quarantines\. Agreement on the creation of ATAS was obtained before negotiations\.
3\.26 Project Implementation Unit, managed by international consultants, would be contracted by
MAF to manage the execution of the project\. The PIU would have operational andfinancial autonomy,
including the authority to select and sub-contract specific project activities or components to local and
international consultants or agencies\. Agreement to that effect was obtained before negotiations\. It was
agreed that the PIU would operate on the basis of terms of reference which, together with those of other
consultants under the project, were agreed at negotiations\. The PIU would: (a) recruit its own local
qualified staff and pay competitive salaries; (b) program and coordinate the implementation of the Project;
(c) open and operate accounts in local and foreign currencies; (d) select and supervise consultants to
implement project activities; (e) sub-contract to various agencies, local or foreign, the implementation
of some of the project's components, under contracts to be approved by IDA/IFAD; and (f) supervise
- 21 -
compliance to the Project Operational Manual by all implementing agencies\. The PIU would be fully
accountable to MAF for satisfactory execution of the entire project\. The Head of the PIU would have
overall responsibility to oversee the implementation of the project\. He would be assisted by: (i) a
Financial Manager, internationally recruited, who would handle budgeting, accounting, and
disbursements; and implement financial control of the entire project, and (ii) a locally recruited Finance
Manager Designate to work with the expatriate Finance Manager; (iii) two local counterpart staff would
be recruited to understudy and assist the Head of the PIU in project management and technical matters
respectively; and (iv) a Procurement Specialist, locally recruited, to assist the Head of PIU in managing
procurement and sub-contracting arrangements\. All PIU experts would be recruited competitively by the
Borrower through an international firm of consultants and approved by IDA\. Six local support staff
would also be competitively recruited by the consultants\. The Project would fund, for the duration of
the Project, the PIU contract with an international management firm through which the two expatriate
consultants and the local consultants and staff would be recruited and employed\. The project would
finance the PIU consultant's contract during the project period\. The Government has met the requirement
for the tendering of the management contract, which was a condition of Board Presentation\. The signing
of this contract would be a condition of effectiveness\.
3\.27 Agricultural Training and Advisory Services specific to livestock producers would be
established in areas where sheep production is predominant\. This would be done to complement the EU
TACIS extension program and as a precursor to a broad-based ATAS under the proposed Bank and IFAD
operations\. The ultimate aim under these operations would be to establish ATAS covering both livestock
and cropping enterprises within the context of a farming system approach\. The project would start
building ATAS in those areas where livestock production is predominant\. The project would also aim
to complement other pilot regional extension programs being initiated by the EU TACIS group and some
NGOs (Winrock and Swiss Helvetas)\. In particular, it would seek to be fully integrated with these
programs in areas where they have proved successful and sustainable\. Integration mechanisms with these
programs would be determined on the basis of prevailing local conditions during the planning and
preparation of individual project annual work plans at rayon or oblast level\.
3\.28 ATAS would be critical to growth and profitability recovery in the country's sheep industry\. The
emerging private farmers do not understand market-based decision making processes and, due to their
historical roles on state or collective farms, have very limited understanding of the complexity and
interrelationships of the many management and production decisions required to succeed in a market
economy environment\. The private farmers recognize this need, and almost unreservedly place a very
high priority on the need for technical assistance\. During the preparation of this project, the common
refrain from farmers was "show us what and how to do it"\. This, in itself, explains why the proposed
project is "technical know how or technology transfer" intensive, in terms of the relatively high share
of technical assistance and training in the total project costs\. Neither MAF nor the Oblast administrations
have the resources or knowledge and experience of appropriate extension programming to implement
ATAS\. Technical assistance, consisting of foreign technical advisors and consultants, as well as training
of local staff and farmers would be critical to successful achievement of the overall project objectives\.
ATAS would therefore provide support to livestock farmers in critical areas of sheep production, sheep
husbandry practices, sheep nutrition and health, wool shearing and preparation and quality control,
grazing and farm management\. The focus of ATAS would be to deliver extension and training services
which, for the time being, are not being provided by other donor-supported extension\. ATAS district
offices would be established in response to specific requests by active groups of sheep farmers\. In this
context the district presence of ATAS would be demand-driven by the ultimate target group, that is, sheep
producers\. The groups would be established under the auspices of the KSBA group development program
- 22 -
(para\. 52)\. The establishment of ATAS offices would start in Naryn and Talas oblasts, adding one oblast
in each subsequent year\. Each district office would have a training coordinator, supported by two
technical staff\. An ATAS manager in DLMD would manage the planning and execution of program\.
He would be assisted by an expatriate Extension Advisor, based in DLMD\. To ensure that women
participate actively in the implementation of project activities, a position for a women's advisor, to be
occupied by a female, would be created at oblast level within ATAS\. The advisor would ensure that the
project provides women with appropriate training in awareness of their role and benefits and technical
skills\. Assurances were obtained at negotiations that this position would be established at the beginning
of implementing ATAS in each oblast\.
3\.29 ATAS Basic Principles\. The programming and implementation of ATAS would be market
driven\. This implies that: (a) program priorities, in terms of technical packages or messages, would be
determined by the farmers' continual responses to market signals; (b) farmers, through their village or
rayon associations, would determine their local ATAS needs and would communicate these to ATAS staff
at rayon level; (c) the rayon producers' associations would collectively determine their priorities and
communicate these to their oblast representatives (RSBA) and ATAS staff; and (d) the process would be
repeated at the oblast and national levels, during which both ATAS and breeding research staff would
be involved\. To further emphasize the empowerment of private producers in ATAS program decision
making, representatives of RSBAs would participate in the selection of ATAS agents (staff) assigned to
their oblasts and in their annual performance evaluation, and in the approval of the project's annual work
plans and budgets at oblast level\. This would permit the sheep breeders associations, ATAS, and
breeding researchers, to work in concert to optimize productivity, meet market demands, and maximize
profitability for the individual producers\.
3\.30 ATAS Program Methods\. ATAS would use the SPGAs as the principle vehicle of reaching out
to farmers\. Within each SPGA, one or two "progressive farmers" would be identified and recruited to
volunteer to become "contact farmers" or leaders to spearhead the adoption of new technical packages
or recommendations\. These farmers would usually be highly respected, closely watched by other
farmers, and have great pride in their position and ability to "make things happen"\. Rayon ATAS agents
would identify these private sheep producers and use their farms as demonstration farms to educate other
farmers on the basis of the identified priority program needs in the area\. These progressive farmers must
therefore be willing to use their farms and sheep flocks for field days and "result demonstration" or on-
farm research trials\. Typical training programs on such demonstration farms would include, for example:
(a) management practices necessary for the production of a quality wool clip; (b) proper shearing shed,
equipment, and shearing techniques; (c) methods of skirting, classing and packaging wool at the shearing
shed; (d) appropriate management of fodder and range pastures; (e) proper lambing timetable; and (f)
appropriate stocking rates and flock structure during winter\.
3\.31 In addition to field demonstrations, other communication methods would be used to reach out
to the producers, including the publication of simple fact sheets, newsletters, radio/television programs\.
The messages to be communicated would be locally determined by the needs of producers in response
to market requirements\. In general, producers' information needs would include: (a) wool and lamb
market information (prices, auction timetable); (b) pasture management practices, with emphasis on
grazing systems that optimize pasture and animal productivity; (c) winter pasture and feed
supplementation practices; (d) sheep breeding-breeds, selection practices, rams; (e) shearing, wool
handling and market practices or regulations; (f) flock health management planning and disease control:
and (g) routine sheep management practices such as lambing, castrating, docking, internal and external
parasite control methods, weaning, finishing lambs for market\.
- 23 -
3\.32 ATAS Staffing\. The number of professional staff employed by the ATAS would be
approximately 80, including 20 subject matter specialists and 60 extension agents\. Senior staff in DLMD
(4 persons) and ATAS regional staff (6 positions) would be responsible for providing technical and
professional guidance in key subject matters and training ATAS rayon staff (60 persons by year 5 of the
project)\. The staff training program would have to emphasize four basic principle underlaying the
planning and implementation of the ATAS program: (a) the primary role of ATAS is to empower
producers and enable them to respond appropriately to market changes; (b) understanding of the dynamics
and techniques of demonstration farms and on-farm research by ATAS staff; (c) good training in sheep
husbandry and farm management with special emphasis on identification of operational problems of which
farmers might not be aware; and (d) ATAS staff training must be a continuous process\. The project
would support four basic levels of training: (a) training and extension for private farmers and member
groups of the KSBA (the prime target); (b) training of trainers at the oblast level and later, at the rayon
level, as the extension service develops; (c) training of head office personnel; and (d) training of
Agricultural Institute young lecturers through a series of study tours in other countries with well
developed extension services\. This would aim to enhance the Institutes' capacity to provide specific
training programs for special groups of trainers\.
3\.33 The project includes provision for adequate operating costs, which were lacking in the past, and
allowances for field trips\. With proficient management, and regular training, there are enough incentives
to deliver professional and up-to-date advice to the farmers\. It is expected that in the future some farmer
associations, organized under KSBA or RSBAs, would take over the assistance to small farmers,
including extension services, and that the Government provision of such services would be slowly phased-
out\. Such transfer would result in cost recovery for the services provided\. It is envisaged that some
ATAS staff would be drawn from the existing pool of livestock experts currently laid-off at state and
collective farms or whose services shall become redundant after privatization\. In addition, existing
private farmers with professional qualifications and appropriate experience could be candidates for district
advisory positions\.
3\.34 The Project would provide for technical assistance, training and study tours, equipment,
transportation and, where necessary, incremental recurrent costs on a declining basis\. All funds would
be channeled to DLMD by PIU on the basis of agreed yearly work programs and budgets\.
Implementation of ATAS would be done by the DLMD under the overall supervision of the PIU\.
3\.35 Animal Health Services\. Animal health services that the Department of Veterinary Services
(DVS) would provide include meat inspection, monitoring, diagnosing and controlling diseases of national
or public health importance, and enforcing animal health regulations and quarantine\. The project would
support three closely related major activities: (a) privatization of veterinary services; (b) brucellosis
control in selected oblasts; (c) strengthening of the Government (oblast and rayon) ability to monitor the
prevalence of animnal diseases and disease control; and (d) local production of some veterinary vaccines,
including vaccines against brucellosis\.
3\.36 Privatization of Veterinary Services, involving private veterinary practitioners in disease
monitoring and control activities, would be promoted under the project through contractual arrangements
with the Department of Veterinary Services\. The project would support the government effort to
privatize clinical veterinary services through training and financing the participation of private
veterinarians in the brucellosis control program\. Producers" groups would be encouraged to have
retainer contracts with private veterinarians who would provide clinical veterinary services and control
of diseases\.
- 24 -
3\.37 Brucellosis Control would initially be limited to Naryn and Issyk-Kul oblasts where quarantine
is easier to implement than in the others\. Project funds would be used to contract private veterinary
practitioners to execute the vaccination program and to perform clinical services\. Government would
contract with the private veterinarians to carry out the necessary disease control activities, including
vaccination and limited testing\. About 150 private veterinarians would be required in each of the two
oblasts supported by the project\.
3\.38 The project would provide for the planning of the brucellosis program by local consultants (from
the Veterinary Research Institute) with the help of an international Animal Disease Control Specialist,
the procurement of vaccines and equipment, supporting activities such as training, monitoring,
dissemination of information on diseases\. The vaccines would be provided free of charge to participating
veterinarians and eventually to farmers, except the equipment which would be provided at cost\.
Vaccination procedures would be conducted in compliance with FAO guidelines\.
3\.39 Strengthening Government Capability\. The project would support the strengthening of the DVS
diagnostic and quarantine capabilities through upgrading of the diagnostic laboratories (in the project
oblasts) and a network of regional epidemiology units with the assistance of an expatriate Epidemiologist\.
Testing of new vaccines at the Veterinary Research Institute would also be supported\. Finally, the project
would provide for graduate training (MS and PhD level) for a number of young animal health specialists
in relevant subjects, study tours, vehicles, and equipment (including computers)\.
3\.40 Local Veterinary Vaccines Production\. The project would support the purchase of equipment
and materials to produce veterinary vaccines, including vaccines against brucellosis, locally\. A lumpsum
of US$0\.5 million has been allocated for the purpose, but disbursement of thesefunds must be subject to
the Borrower carrying out a feasibility study satisfactory to IDA\.
3\.41 Sheep Breeding Research Support (SBRS)\. Sheep breeding research is conceived in the context
of holistic production systems, consisting of production of appropriate sheep breeds and the ecosystem
(land and pastures)\. The sheep production and land management systems of the last 40 years were not
sustainable\. Due to overstocking and pasture degradation, sheep were housed in sheds during November-
March and fed roughage and concentrates at levels that were economically unviable\. The Kyrgyz Fine
Wool sheep were selected for staple length of greasy wool, with little attention to the economically
important traits of reproductive efficiency, body size and lamb growth rate, and the most economically
important wool traits of fiber diameter and clean wool yield\. In addition to overstocking and concurrent
needs for high cost feed supplements, ewes were lambed during January-February, which resulted in peak
nutrient demand during the high cost feeding period\. Furthermore, to maximize wool production, all
lambs were retained to one year of age for shearing before sale for slaughter\. This further aggravated
the excessive stocking rates and high supplemental feed costs\. The proposed project would support: (a)
the development of a production system that would reduce feed and labor costs and thereby improve
production efficiency; (b) improvement in breeding and selection technology; and (c) improvements in
pasture and fodder management\.
3\.42 Reducing Production Costs\. In order to reduce production costs, private sheep producers would
be encouraged to match the sheep production cycle with the natural resource base production cycle\.
Lambing should be done in late April and May, during which the peak nutrient demands for the late
gestation and lactation of ewes would coincide with spring forage growth\. This would minimize or
eliminate the need for high cost supplemental feeding\. With appropriate stocking rate, availability of
winter pasture, supplemental forage crops and crop aftermath grazing in lowlands would increase,
- 25 -
eliminating the need for housing the sheep in winter\. The ewes should be shorn just prior to lambing,
and the lambs should be sold after weaning in the fall\. A review of the projected sheep production
budget models (Tables 6\. la-6\. ld), shows that a combination of adopting the above production cycle and
the development of an improved dual purpose Kyrgyz Fine Wool breed of sheep (para\. 3\.42) could
substantially reduce unit production costs and enhance the profitability of the sheep industry in the Kyrgyz
Republic\. These two major shifts in sheep production would be market driven\. The improvement in
wool quality would meet changing world market demands for finer wools\. The increased lamb
production would meet major demands for imported lamb into the Middle East countries during the fall
and winter months following the shift in the Muslim holy season in 1997\.
3\.43 Improving Sheep Breeding\. The existing sheep in the state breeding farms are highly selected
Kyrgyz Fine Wools\. They are relatively small, with mature ewes averaging about 50-55 kg and mature
rams at 90-100 kg\. To optimize lamb and wool production, the project would support the development
of a dual purpose fine wool breed with improved reproductive efficiency, lamb growth rate, and wool
quality\. For this purpose, semen would be imported from two lines of sheep, consisting of the American
Rambouillet and the Rafter 7 Improved Merino\. This would result in increasing the average weight of
a 150-day lamb by 50 percent over the Kyrgyz Fine Wool breed and produce the same amount and
quality of wool\. The rams selected for semen importation should be the best of these two breeds, and
should have genetic potential to have above average performance of the selected traits\. 5,000 straws of
semen, containing at least 70 million live sperm per straw, from each of the two breeds would be
imported each year of the first four years of the project\. New rams would be collected each year to
maximize the genetic variation of the breed sample\. 2,500 straws from each of the two breeds would
be used to mate selected ewes at Lushikhin (Talas) and Orgochor (Issyk-kul) State Breeding Farms\.
Approximately, 1,750 ewes should lamb to each breed at each of the two breeding farms\. The first two
years would produce first generation offspring which would be mated AI in the third and fourth year to
produce second generation offspring\. A comparable number of Kyrgyz Fine Wool ewes should be mated
to the best available Kyrgyz Fine Wool rams each for comparisons at each of the two breeding farms\.
All ewe lambs would be retained for comparison of reproduction and wool performance traits\. The top
30-50 percent of the ram lambs produced each year would be distributed to AI private breeders and sheep
producers at cost\.
3\.44 Sheep breeding activities under the project would be done at three breeding research farms,
operated by Asyl Mal, at Orgochor, Lushikhin, and Soukulok Al Center\. The project would support
upgrading of the physical infrastructure at these farms, particularly at the Soukulok Al Center\. At the
Center, the following upgrading would be supported: purchase of a liquid nitrogen generator, semen
straw packaging equipment, medium-size semen storage tanks, small semen tanks for transporting semen
in-country\. The AI Center would be used as the control point for imported semen, and would be the site
for all AI training programs\. During negotiations, assurances were obtained from the Borrower that the
breeding stock at and the ownership of the Asyl Malfarms participating in the project's breeding program
would not be substantially changed without approval of IDA and IFAD\.
3\.45 As private breeding farms have not yet been established, the bulk of breeding activities would be
done on these Asyl-Mal farms\. DLMD is, however, expected to assist newly emerging private breeding
farms in participating in the upgrading program through advice, distribution and dissemination of
improved genetic material\. This would assure rapid commercialization and privatization of breeding
services through the emerging private breeding farms\. With the decreasing number of publicly owned
sheep, the proposed breeding program would require close cooperation, especially in selection, with
private producers\.
- 26 -
3\.46 The project would support the employment of expatriate consultants (in Genetics and
Reproduction), to work with the staff of the Asyl-Mal in upgrading the sheep breeding program of Asyl-
Mal and to train its livestock breeding staff\.
3\.47 Staff of DLMD, Asyl-Mal, Agricultural University and selected private breeding farms would
be trained locally and externally using project funds\. The Breeding Specialist and Reproductive Specialist
would provide a series of short technical training courses at various sites in the country, primarily for
those directly involved in the breeding program and extension personnel as well as staff of the selected
private breeding farms\. The project would also provide for short and long term courses in sheep
breeding for staff of the implementing agencies, including MS/PhD training in foreign countries\.
3\.48 Pasture and Fodder Research\. The project would increase fodder quality and availability and
assure a more efficient and sustainable use of natural pastures\. To achieve these objectives the project
would support: (i) improved pasture monitoring, evaluation and protection; (ii) pasture and forage
research; and (iii) improvement of fodder harvesting and conservation\.
3\.49 Pasture Monitoring, Evaluation and Protection\. Every year, the Geobotanic Expedition as
part of the State Scientific Center of Land Resources and Use (SSCLRU) surveys the pasture conditions
of a restricted number of rayons\. The location of the pasture enforces the use of horses as means of
transport\. It usually took about 20 years to cover the whole country, but nowadays with a decreased staff
number, it is going to take much longer\. This approach gives reason to question the reliability of the
existing data on the overall decrease in pasture productivity\. To develop a fast country-wide monitoring
and evaluation method, the project would support a one-time intensive pasture monitoring and evaluation
program which should lead to the identification of a limited number of pasture status parameters or
indicators\. These pasture status parameters would then be used for rapid pasture monitoring and
evaluation in future years\. Pasture characteristics to be considered are vegetation cover, species
composition, dry matter production, dry matter percentage of palatable and unpalatable species, perennial
and annual grasses, legumes and other dicotyledons\. Based on pasture status, the (SSCLRU), in
collaboration with the Oblast Committees of the State Committee of Nature Protection (SCNP), would
identify areas which should be totally protected against any exploitation\. The actual protection, would
be agreed with and implemented by each concerned rayon administration\.
3\.50 Pasture and Forage Research\. Animal research and monitoring capabilities within the Livestock
Institute are inadequate\. The laboratories are poorly equipped to meet national research and monitoring
needs relating to pasture and forage\. Since the thrust of this project is to reduce the role of concentrates,
information on the nutritional values of various pastures and fodder would be an important input in ATAS
messages to farmers\. The project would therefore support upgrading the Livestock Institute's capacity
to analyze and monitor the nutritional value of pastures and fodder in various locations of the country\.
This would include laboratory upgrades, additional equipment, and acquisition of foreign research
materials\.
3\.51 Improved Harvesting and Preservation of Winter Fodder\. The project would support the
increase of winter feed availability by encouraging farmers, through ATAS, to adopt proper methods of
forage harvesting and storage\. For example, following proper harvesting management for lucerne could
penmit a third, instead of two, harvests or leave significant amounts of forage for aftermath grazing\.
Advice on establishment of fodder production (legumes) on marginal lands, currently unprofitably
cropped with wheat and barley, would enhance availability of winter grazing resources\. Advice on
proper management of pastures would also arrest the deterioration of spring and fall pasture composition
- 27 -
into poor quality grasses, thistles and other noxious weeds, some of which are detrimental to sheep
performance and wool quality\.
3\.52 SSCLRU and ATAS would be contracted by the PIU to implement these activities\. The PIU
would also employ consultants to assist the two organizations in implementing their respective activities,
including a Pasture Management Specialist, a Fodder Haying/Storing Specialist on short term basis\. The
implications on pasture and agricultural fodder management resulting from the above activities would be
disseminated through annual seminars involving ATAS staff and farmers groups\. These seminars would
be organized by DLMD\.
3\.53 Policies and regulations governing the use and management of pastures are still evolving within
the context of the ongoing land reform process in the country\. W ithout prejudice to this process,
assurances were obtained during negotiations that the Borrower would ensure that: (i) the grazing rights
leased by the Borrower to sheep producers' associations and other users shall be for land management
units large enough to support sustainable grazing systems in respect of the respective size of the sheep
management unit; and (ii) the lease contracts and administrative acts relating to the granting of grazing
rights shall include adequate provisions stipulating grazing regulations andpractices designed to establish
good pasture management practices, and shall be duly implemented\.
- 28 -
IV\. PRoJECT Cosms AND FINANCING
Project Costs and Financing
4\.1 Project Costs\. Total costs over the five year period of the project are estimated at US$16\.8
mnillion (Table 4\.1), including physical and price contingencies\. The foreign exchange part of these costs
is estimated at US$12\.7 million, or 76 percent of total costs\. Physical contingencies of 10 percent have
been calculated on the costs of equipment and civil works, and price contingencies of 2\.6 percent per
year, reflecting the Bank's estimate of the average annual price increase for 1996-2003, have been
included\. Detailed cost tables are in Annex A\.
4\.2 Table 4\.2 snumarizes the project costs by categories\. Investment costs (including technical
assistance) make up US$13\.5 million, or 80 percent of total project costs\. Technical assistance costs
would be USS4\.1 rnillion, or 25 percent of total costs\. This reflects the severity of lack of local
implementation capacity and the need for implementation support and institution-building\. The latter is
also reflected by the relatively high cost of training (US$1\.6 million, or 10 percent of total costs)\. The
transformation of the Kyrgyz sheep industry into a market-responsive system is initially extremely
technical "know-how" intensive, given the dearth of market-based management skills and technical
knowledge in the industry today\.
4\.3 Financing Plan\. The proposed IDA Credit of US$11\.6 million equivalent would finance 69
percent of total project costs, and 91 percent of foreign exchange costs\. The International Fund for
Agricultural Development (IFAD) would provide US$3\.5 million, or 21 percent of total project costs\.
The Government would contribute US$1\.7 million, or about 10 percent of total project costs\. This
contribution would cover approximately 52 percent of the total incremental operating costs of the project\.
As a condition of effectiveness, Government would produce evidence that all conditions precedent of IFAD
financing, except the effectiveness of the IDA financing, have been fulfilled\.
4\.4 On-lending Terms and Conditions\. IDA Credit funds channeled to Government agencies,
contracted to implement specific project components or activities, would be channeled as grants through
the regular budget process\. It was agreed, during negotiations, that funds to producers 'associations and
affiliates for technical assistance, training and operating expenditures would be on grant basis in the
initial year of operation, and on full cost recovery basis in subsequent years\. It was further agreed that,
after the first year, loans to producers ' associations and their affiliates for goods and civil works would
bear an interest rate determined on the basis of the prevailing discount rate charged by the National Bank
of Kyrgyzstan to be denominated in Som, repayable over and up to five years including a grace period
of no more than two years and the foreign exchange risk to be borne by the Borrower\.
- 29 -
Table 4\.1: Summary of Project Costs (including contingencies)
(US$ mnillion)
Millions of Foreign as
US$ % of Total
Local Foreign Total
A\. Private Sector Development
(a) KSB Associations \. 0\.49 1\.18 1\.67 71
(b) Wool Testing 0\.09 0\.84 0\.93 91
(c) Wool Marketing 0\.58 1\.83 2\.41 76
Sub-total 1\.16 3\.85 5\.01 77
B\. Dev\. of Livestock Support Services
(a) Project Impl\. Unit 0\.48 0\.57 1\.05 55
(b) ATAS 0\.82 1\.65 2\.47 67
(c) Animal Health 0\.30 2\.67 2\.97 90
Sub-total 1\.60 4\.89 6\.49 75
C\. Research Support
(a) Sheep Breeding Research 0\.74 2\.44 3\.18 77
(b) Pastures Land Resources 0\.30 0\.51 0\.81 63
Sub-total 1\.04 2\.95 3\.99 74
Total Base Costs 3\.80 11\.69 15\.49 75
Physical Contingencies 0\.0 0\.54 0\.54 100
Price Contingencies 0\.25 0\.50 0\.75 66
TOTAL PROJECT COSTS 4\.05 12\.73 16\.78 76
- 30 -
Table 4\.2: Summarv of Project Costs per Categories (including contingencies)
(in US$'000)
Civil Goods Training Technical Operating Total
Works Assistance Costs
IDA & Kyrgyz Govt\.
(i) Project Implementation 92 24 897 92 1106
Unit
(ii) Animal Health 56 2436 157 328 248 3224
(iii) Sheep Breeding Research 56 2317 50 216 886 3525
(iv) Pastures & Land Research - 300 152 160 249 861
(v) Wool Marketing System 618 691 503 537 298 2647
(vi) Wool Testing Information - 557 - 129 324 1010
Services
Sub-total 730 6393 886 2267 2097 12373
IFAD & Kyrgyz Govt\.
(i) Ag\. Training & Adv\. 493 508 927 715 2643
Services
(ii) Kyrgyz Sheep Breeders' 98 218 936 510 1762
Associations
Sub-total 0 591 726 1863 1225 4405
TOTAL 730 6984 1612 4130 3322 16778
% of Total 4\.4 41\.6 9\.6 24\.6 19\.8 100\.0
Procurement
4\.5 Procurement Responsbilities\. The PIU would be responsible for carrying out all procurement
and disbursements under the project\. The PIU would include a procurement specialist, with
responsibilities that will include, inter A ia: (i) training PIU staff on Bank procurement and disbursement
procedures; (ii) developing monitoring procedures for procurement and disbursement; (iii) ensuring
proper notification of bidding opportunities; (iv) preparing specific bid documents based on the current
Bank Standard Bidding Documents for goods and works; (v) preparing letters of invitation and terms of
reference for consultants; (vi) assisting the PIU in the evaluation of bids and proposals and the preparation
of bid evaluation reports; and (vii) assisting the PIU in contract administration\. In addition, IDA will
monitor procurement activities, contract administration and project record keeping during periodic
supervision missions\.
4\.6 Procurement Procedures\. The General Procurement Notice for the project was issued
immediately following negotiations\. Goods and works would be procured under the "Guidelines:
Procurement under IBRD Loans and IDA Credits" of January 1995, and consultants' services would be
procured in accordance with the "Guidelines: Use of Consultants by World Bank Borrowers and by the
- 31 -
World Bank as Executing Agency" of August 1981\. A summary of procurement arrangements is given
in Table 4\.3\. A Procurement Workshop will be conducted in Bishkek tentatively in July 1996\.
4\.7 Procurement Arrangements\. The items summarized in Table 4\.3 would be procured as follows:
Because of their scattered nature in temporal and locational termns, Civil Works for the
construction/renovation of regional or central wool stores estimated to cost less than US$75,000 per
contract and up to a maximum aggregate amount of US$750,000 would be procured under lump sum,
fixed price contracts awarded on the basis of quotations from three qualified contractors in response to
written invitation\. However, any work estimated to cost above US$100,000 and below US$500,000 will
be procured under National Competitive Bidding (NCB) using Europe and Centra Asia (ECA) Region's
Standard Bidding Document for NCB (Small Works)\. Goods, including equipment, agricultural
machinery, wool baling machines, computers and other office equipment, collated in different packages,
and estimated to cost more than US$200,000 up to an aggregate of US$5\.7 million, would be procured
under International Competitive Bidding (ICB)\. The number of ICB packages would not exceed seven\.
For ICB contracts, local manufacturers, eligible for domestic preference in accordance with Bank
Procurement Guidelines, would be granted a domestic preference in bid evaluation equivalent to 15
percent of the CIF price, or the amnount of customs duties and other import taxes, whichever is lower\.
Contracts for the supply of goods and equipment, estimated to cost less than US$200,000 up to an
aggregate of US$700,000 would be procured through International Shopping (IS) on the basis of
quotations to be obtained from a minimum of three suppliers from at least two eligible countries\.
Contracts for the procurement of items or groups of items costing less than US$30,000 for an aggregate
amount not exceeding US$200,000 would be awarded through national shopping (NS), on the basis of
three quotations obtained from three different eligible suppliers, depending on the availability of such
items in the Kyrgyz Republic\. Consulting Services, amounting to seven packages for a total value of
US$2\.3 million for various components detailed in the Procurement Plan, would be procured on the basis
of proposals submitted by short listed firms in accordance with the World Bank Guidelines\. A number
of contracts not exceeding US$50,000 per contract and $0\.3 million in total will be entered into with
individual consultants selected from shortlisted candidates acceptable to the Bank to carry out specific
tasks such as studies, produce training materials, case studies, legal support, translation services and so
on\. Local staff shall be recruited through competitive process\. Training, estimated at US$0\.9 million,
would consist of assistance from foreign and national institutions, visits or study tours abroad, local
courses provided by local and foreign trainers\. The training programs and the criteria for selection of
trainers would be agreed with IDA\. Incremental Operating Costs, consisting of incremental local staff
salaries and allowances, utilities, communication, vehicle and equipment operating and maintenance
expenditures, would be procured in accordance with the directives and instructions contained in the
Project Operational Manual, approved by IDA and IFAD\.
4\.8 Prior Review of Procurement Decisions by IDA\. Prior review of bidding documents, bid
evaluation and contract awards by IDA would be confined to ICB contracts for goods and the first two
contracts for works\. For technical assistance and training, contracts valued at US$100,000 and above
for firms, and US$50,000 and above for individuals will be subject to IDA's prior review\. All terms of
reference would also be subject to IDA's prior review\.
- 32 -
Table 4\.3: Summary of Proposed Procurement Arrangements
(US$ million equivalent)
Procurement
Project Element Method Total
ICB N\.C\.B N\.B\.F\. Other Cost
1\. Civil Works 0\.7 0\.7
(0\.7) (0\.7)
2\. Goods
2\.1 Equipment 1\.7 0\.3 o d 2\.7
(2\.4)
2\.2 Vehicles 0\.4 0\.2 0\.6
(0\.4)
2\.3 Animals 2\.0 0\.1 2\.1
(2\.0)
2\.4 Vaccines 1\.6 1\.6
(1\.6)
3\. Consultancies and Training
3\.1 Implementation Support 1\.8 2\.3' 4\. lb
(2\.3)
3\.2 Capacity Building 0\.7 0\.9' 1\.6c
(0\.9)
4\. Incremental Operating Costs 2\.0 1\.3 3\.3'
(1\.3)
Total 5\.7 0\.7 5\.1 5\.2 16\.7
(11\.6)
Note: Figures in parenthesis are the respective amounts financed by the IDA credit\. N\.B\.F\. = Not Bank-financed
a\. Services to be procured in accordance with World Bank, Guidelines: Use of consultants by World Bank borrowers and by the
World Bank as Executing Agency (August 1981)
b\. Co-financed by IDA (US$2\.3 million) and IFAD (US$1\.8 million)
c\. Co-financed by IDA (US$0\.9 million) and IFAD (US$0\.7 million)
d\. Intemational Shopping (IS) and National Shopping (NS)
e\. The total US$3\.3 million for operating costs would be financed jointly by IFAD (USS0\.3 million), IDA (USS1\.3 million) and
the Kyrgyz Government (US$1\.7 million)
- 33 -
Disbursements
4\.9 The proceeds of the proposed IDA Credit, and IFAD Loan, would be disbursed over an eight-
year period, expected to start at the beginning of 1997\. The Credit's estimated disbursement schedule,
based on average disbursement profile of similar projects, is presented in Annex G\. Funds would be
disbursed as follows: either directly offshore to suppliers or consulting firms, on the basis of procurement
and/or contracts approved by IDA/IFAD or to cover operating expenditures and local procurement
through two Special Accounts, one for IDA funds and the other for IFAD\. (These would be opened in
a bank, acceptable to IDA and IFAD terms and conditions\.) The requirements for depository bank
holding special accounts would be: (i) execute foreign exchange and local currency transactions; (ii) open
letters of credit; (iii) handle a large number of transactions promptly; and (iv) issue prompt and detailed
monthly bank statements\. The selection of a local commercial bank would be decided in consultation
with NBK and MAF in accordance with above requirements\. The authorized amounts for the IDA
Special Account and the IFAD would be US$1\.0 million and US$400,000 respectively\. IDA and IFAD
would make initial deposits estimated at US$200,000 and US$100,000 respectively from their proposed
financing, immediately upon effectiveness, reflecting the estimated costs of operating costs, local training,
local procurement, and foreign expenditures for three months\. Applications for the replenishment of
these special accounts would be monthly\. Disbursement would be fully documented except that Statement
of Expenses (SOE) would be for: (i) all incremental operating costs and local training; (ii) contracts of
goods and civil works valued at less than US$200,000; (iii) contracts of consultant firms valued at less
than US$100,000; and (iv) contracts of individual consultants valued at less than US$50,000\. The
documentation for justification of withdrawals made under SOE's will be retained by the PIU, will be
reviewed by IDA/lFAD missions, and will be audited annually\.
4\.10 Immediately after effectiveness, PIU would open and operate a Project Account in a Kyrgyz bank\.
The Borrower would deposit into this account, an amount representing one-tenth of project financing
required semi-annually, and Government would agree and commit itself to pay in the saxpe amount every
six months\. This first deposit by Government into the Project Account would be a condition of Credit
effectiveness\. The persons authorized to sign for this Project Account would be the Head of the PIU,
,ointlY with a senior official of MAF specifically designated to that effect by the Deputy Minister of
Agriculture and Food responsible for livestock\. These funds would be used exclusively for the local
operating costs of all the project's components\.
4\.11 Disbursements would be made by IDA for the total costs of the following components (the figures
are from Table 4\.2): (i) the PIU, US$1\.1 million, Animal Health, US$2\.7 million, Sheep Breeding
Research, US$4\.1 million, Pastures, US$0\.9 million, and the Wool Marketing components, US$3\.7
million, making a total of US$12\.4 million\. IDA would provide US$11\.6 million, and part of the
incremental operating costs of these components (US$0\.8 million) would be drawn from the
Government's contribution to project costs of US$1\.7 million, leaving a balance of US$0\.9 million\.
4\.12 Disbursements under the IDA Credit of US$11\.6 million, which would be fully disbursed within
8 years, would cover approximately 90 percent of the costs as follows:
(a) 100 percent of the costs of Consulting Services for the PIU (US$0\.9 million), Animal
health (US$0\.3 million), Sheep Breeding Research (US$0\.2 million), Pastures and Land
Resources (US$0\.2 million), and the Wool Quality Testing and Marketing (US$0\.7
million, making a total of US$2\.3 million);
(b) 100 percent of costs of training for the above five components, with a total of US$0\.9
million;
- 34 -
(c) 100 percent of foreign expenditure, or ex-factory costs of goods, for equipment for the
above five components, with a total of US$2\.4 million, vehicles for a total of US$0\.4
million, vaccines for the brucellosis campaign, US$1\.6 million, genetic material (rams
or semen) for US$2\.0 million, a total of US$6\.4 million\. In case of local procurement,
IDA's share of the costs would be reduced to 90 percent, with the Government providing
the balance;
(d) 90 percent of the cost of civil works mainly for the rehabilitation of the rural wool stores
(US$0\.7 million), with the Government providing the difference; and
(e) expenditures for operating costs (including vehicle and equipment maintenance and
operating costs, office supplies, utilities and salaries, wages and allowances) of the five
components indicated above: PIU (US$0\.1 million), Animal Health (US$0\.2 million),
Sheep Breeding Research (US$0\.9 million), Pastures (US$0\.2 million), and Wool
Marketing & Testing (US$0\.6 million), a total of US$2\.0 million\. It is estimated that
IDA would disburse US$1\.3 million of the operating costs (the Government will provide
the balance of US$0\.8 million from its contribution to project costs\.) As a result, IDA
disbursements for operating costs of those components would be 80 percent in year 1 and
50 percent from year 2 onwards\.
4\.13 IFAD would disburse for the total costs of the ATAS, US$2\.6 million (equipment US$0\.5
million, Consulting services US$0\.9 million, Training US$0\.5 million, and operating costs US$0\.7
million); KSBA, US$1\.8 million (equipment US$0\.1 million, Training US$0\.2 million, Consulting
Services US$0\.9 million and operating costs US$0\.5 million) making a total of US$4\.4 million\. IFAD
would provide US$3\.5 million and use the balance of Government's contribution of US$0\.9 million\.
Percentage of disbursement for all cost would be the same as for IDA, except that IFAD's share of
operating costs of US$0\.3 million (costs US$1\.2 million less government's participation of US$0\.9
million) would be disbursed at the following rates: in year 1, 80 percent of all operating costs of IFAD's
components, 60 percent in year 2, and 10 percent from year 3 onwards\.
Accounting and Auditing
4\.14 Accounting\. The PIU would introduce and supervise the use of an accounting and control system
capable of reliably recording and reporting all financial transactions by the various implementation
agencies\. This system must be operational when project expenditure begins\. For the use of Statement
of Expenditures, the PIU would process and maintain SOE documentation to IDA's and IFAD's
satisfaction\. For the Special Account mechanism, the PIU and the depository commercial bank would
agree on procedures for proper accounting of receipts, payments and submission of documentation to IDA
for the replenishment of the account\.
4\.15 Auditing\. Annual accounts for the project, including Statement of Expenses (SOEs) and the
Special Account (SA), would be audited in accordance with generally accepted auditing standards by an
independent auditor, acceptable to IDA\. The various implementing agencies, under contract to the PIU,
would also provide annual financial statements for the component under their management, which would
be audited in accordance with generally accepted auditing standards by an independent auditor acceptable
to IDA\.
4\.16 The auditors would be appointed by the borrower (PIU) and the implementing agencies close to
the beginning of the fiscal year, so that the auditors may commence review sufficiently early in the
financial year to complete the audit on a timely basis\. Terms of Reference for the auditors would follow
- 35 -
the Guidelines for Financial Reporting and Auditing Projects Financed by the World Bank\. of March
1982\. The financial statements and the auditor's opinion and reports should be submitted to the World
Bank no later than six months after completion of the fiscal year\. The cost of retaining the auditors
would be financed from the proceeds of the IDA Credit and IFAD Loan and included as part of project
costs\.
Reporting and Monitoring
4\.17 Monitoring and Evaluation\. Annexes C and D show the details of the implementation plan and
of monitoring targets for each component respectively\. The annual work plans would include a section
detailing the targets and the results that are expected to be achieved at the end of each year\. PIU would
establish, on the basis of this information, a monitoring and evaluation system, and follow-up regularly
the progress achieved under the annual plan\. The following year's work plan must explain any
discrepancy between the goals assigned and the results obtained\.
4\.18 Annual Reports\. The PIU shall establish annual reporting on the progress achieved during the
year on all aspects of the project, problems encountered and changes introduced\. Substantial changes
would have previously obtained IDA's comments and/or approval\. The financial aspects of the
implementation of the project, flow of funds and a summary balance sheet would be added to this
information; the PIU must complete this annual report with all other relevant information, and send it to
IDA and IFAD not later than March 31 of each year\.
4\.19 Mid-Term Review\. An independent consultant together with an IDA/IFAD supervision mission
would carry out a Mid-Term Review of the project at the end of third year of implementation\. The
review would focus on progress made, take stock of the experience gained in implementing individual
components of the project, and evaluate problems associated with beneficiary participation in planning
and implementing project activities\.
- 36 -
V\. PROJECT ORGANIZATION, MANAGEMENT, AND IMEmENTATION
Implementation Strategy
5\.1 In view of the rapid changes in the structure of the sheep industry, the challenges sheep producers
will continue to face during the transition, and the dearth of implementation capacity and experience,
flexibility in implementing the proposed project would be crucial\. For this purpose, the project's
implementation strategy would consist of the following approaches\. First, in order to avoid overloading
the inexperienced implementation capacity, most of the project's activities would be implemented on an
oblast-based phasing\. Under this approach, implementation in the first year would be concentrated in
Naryn and Talas oblasts, to be followed by one or two more oblasts each subsequent year until all oblasts
have been covered\. Second, the project's annual work plans and budgets would be reviewed and
adjusted, on the basis of the previous year's implementation performance and experience, at a meeting
involving MAF, implementing agencies, the Bank and IFAD three months before the beginning of the
ensuing project year\. It was agreed at negotiations that the Borrower would ensure that the review and
adjustment would take place every year during project implementation as stipulated\. Third, the
implementation of the sheep breeders' association and wool and lamb marketing components would be
done by the same contractor to ensure appropriate sequencing between these closely related components\.
Fourth, the project would focus on promoting the production of both lamb and wool to introduce more
flexibility in enterprise combination (product mix) at farm level than at present\. Fifth, to ensure
beneficiary participation, the project's technical packages and priorities, to be generated by the training
and advisory services in conjunction with the sheep breeding research, would be determined by the
responses to market signals by the final beneficiaries (sheep producers) rather than by extension and
research officials\. Lastly, in order to increase participation in project implementation by final
beneficiaries, a Project Implementation Council with significant beneficiary representatives has been
established to approve project annual plan and budgets\.
Project Management
5\.2 Given the variety of activities to be implemented, the wide range of institutions and agencies
involved in the Project, the limited experience of the Ministry of Agriculture and Food in the
implementation of externally funded projects, and the need to provide on-the-job training to Kyrgyz
experts, an independent Project Implementation Unit (PIU) would be contracted by MAF to execute the
project\. The PIU would have sufficient autonomy to: (a) recruit highly qualified staff and pay
competitive salaries; (b) coordinate the implementation of the Project; (c) open and operate accounts in
local and foreign currencies; and (d) select and supervise consultants to implement project activities\. The
PIU would sub-contract various agencies, local or foreign, in Kyrgyz andlor overseas, with the
implementation of some of the project's components, under contracts approved by IDA\.
5\.3 The two PIU expatriate staff would be assisted by four national counterparts, recruited in open
competition (para\. 3\.26)\. Government officials who would like to compete for these positions would have
to resign from Government service\. All Kyrgyz staff would be recruited locally and paid locally
competitive salaries\. Agreement on the establishment of the PIU and on the hiring of a management
consulting firm was obtained before negotianons\.
- 37 -
Project Implementation Plan
5\.4 The project implementation plan is fully described in Annex C and the staffing of the
implementing agencies is described in the detailed project description\. The following project
implementation plan summarizes the contractual relationship between the PIU and the individual
implementing agencies of the various project components or activities\. The PIU would review and
approve all annual workplans and budgets prepared by the sub-contractors\. Such workplans and budgets
would constitute informal contracts between the PIU and the individual sub-contractors (implementing
agencies)\.
(a) Sheep Private Sector Development would be sub-contracted by the PIU to an
international NGO/consultant to implement the SPGAs, KSBA, and wool marketing
activities\. The contractor would employ its own international and local specialists;
(b) Technical and Management Advisory Services would be sub-contracted by the PIU to
DLMD for implementation\. DLMD would be assisted by an expatriate Director of
Extension, employed by the PIU, in managing ATAS\. DLMD would implement ATAS
on the basis of annual work plans and budgets approved by PIU;
(c) Animal Health Services would be sub-contracted by the PIU to the Directorate of
Veterinary Services(DVS), who would enlist the cooperation of the oblast administrations
in which brucellosis eradication would be initiated\. The PIU would employ a Senior
Livestock Advisor to assist the Director of DVS in implementing the activities under this
sub-component;
(d) Sheep Breeding Research would be sub-contracted by the PIU to Asyl-Mal and a few
selected private sheep breeding farms\. The PIU would employ an Animal Breeder, a
Reproduction Specialist, and an Animal Nutritionist to assist Asyl-Mal and the
participating private farms\. The procurement of genetic material (rams or semen) would
be done by the PIU through ICB and would be distributed to the participating breeding
farms; and
(e) Pastures and Fodder Improvement would be sub-contracted by the PIU to the State
Scientific Center of Land Resources and Use (SSCLRU) and the Scientific Industrial
Enterprise (SIE)\. SSCLRU would implement the pasture monitoring and evaluation
activity and SIE would implement the research on controlled grazing and pasture
rehabilitation and research on improved fodder harvesting and conservation\. Consultants
associated with these activities would be recruited by the PIU\.
Beneficiary and NGO Participation
5\.5 At the grassroots level, participation of beneficiaries, particularly those of members of SPGAs,
would be promoted by the NGOs employed to implement the SPED component\. In addition, the project
would aim, to the extent possible, at transferring the management of wool marketing and control activities
to the SPGAs and RSBAs\. Direct involvement of Government agencies in undertaking activities suited
for the private sector would be avoided\. For this purpose, the bulk of brucellosis testing would be
carried out by private veterinarians who would be contracted through local competitive bidding\.
Furthermore, beneficiaries will have representation in the Project Implementation council\.
- 38 -
5\.6 Acting through their associations, sheep producers would participate in the annual reviews and
adjustments of the annual work plans and budgets at rayon, oblast and national level\. In this way, sheep
producers would participate in determining the priorities of the key project components, particularly those
relating to ATAS and sheep breeding research\. These two critical components would therefore reflect
the producers' responses to market signals\. In this sense, their design and implementation would be
market driven\.
5\.7 To ensure beneficiaries participate fully in the selection, location, design and implementation of
project activities, NGOs contracted to implement specific project activities would work through local
beneficiary groups, especially SPGAs after they have been established\. Because these SPGAs are non-
existent, NGOs would be engaged to establish them, and evolve methods for their effective participation\.
The NGOs would also provide support to SPGAs in organizing input supply, wool marketing, credit, and
develop training for members\. NGOs are expected to hold meetings with interested beneficiary groups
to ascertain their needs and desire to establish SPGAs in their localities\.
Annual Work Plans and Budgets
5\.8 The project is designed as a rolling program with annual work plans and budgets phased in to
cover all activities over the implementation period\. Achieving implementation efficiency, high quality
works, cost-effectiveness, and beneficiary participation are some of the project's major themes\. The
Annual Work Plan would include: (a) implementation details and expenditures for project activities during
the year; (b) implementation plan and budget for project activities for the following years; (c) designs,
drawings, specifications and bidding documents for regional wool stores and the WMC physical
infrastructure; (d) SPGAs, RSBAs and farmers' training programs; and (e) Memoranda of Agreements
between implementing NGOs and SPGAs and RSBAs in the selection, location, and design of local and
regional stores\.
5\.9 The project annual work plan, procurement plan and civil works plan, besides the project legal
documents, would serve as the main framework for project implementation\. Confirmation of preparation
of a work plan and budget for 1997 to include project activities to be implemented in the first year of the
project, satisfactory to IDA/IFAD, was a condition of Board Presentation and has been met by the
Government\.
Project Supervision
5\.10 Project supervision would be closely linked to the project objectives and the annual
implementation plans\. It would involve monitoring a number of key indicators (Annex D) and assessing
both quality and quantity aspects of project implementation and impact\. Heads of implementing agencies
would supervise component or activity implementation and provide guidance\. In addition, PIU would
oversee supervision of project activities to assess field implementation progress and problems,
involvement of beneficiaries and impact\. IDA and IFAD would normally field at least three supervision
missions every year to focus primarily on key implementation issues, sort out problems, assess benefits
and draw lessons, and provide advice to implementing agencies\. The first IDA/IFAD mission would
include a project launch workshop to provide orientation and training for key staff in implementing
agencies on the project cycle, procurement and disbursement procedures, accounting and auditing
requirements\. Nevertheless, full responsibility for project supervision would rest with implementing
agencies and PIU\. Proposed experts on supervision missions are presented in Annex E\.
- 39 -
Implementation Completion Report
5\.11 An implementation completion report would be prepared by the PIU on the basis of Bank's
guidelines no later than six months after the Closing Date of the credit\. The report would highlight
problems and successes experienced during implementation, both physical and financial and assess the
impact of the project to determine whether the project objectives were achieved\.
- 40 -
VI\. PROJECT BENEFITS AND RISKS
Project Benefits
6\.1 The Project would generate substantial economic and financial benefits\. Benefits include
increased wool and lamb production, increased wool and lamb prices\. In addition, the Project would
contribute to sustainable management of the country's pasture resources and would reduce the incidence
of brucellosis among humans\. More importantly, the Project would contribute to the emergence of a
more efficient sheep farming sector which will contribute to reduction in rural poverty in the long run\.
This will be done through the provision of critical support services and financial support for the
establishment of farmers' grassroots organizations\. The project's training and technical assistance would
have favorable capacity-building effects that would be critical to the management of the sector's transition
in the medium and long-term\.
6\.2 The provision of Livestock Support Services, through ATAS, would be critical in: (i) realizing
the genetic potential of the existing fine-wool merino sheep and the new improved dual purpose sheep
breeds (production effect); and (ii) improving the quality of wool and lamb (price effect)\. The production
effect would consist of increased lamb and wool production\. The price effect would consist of
incremental value of wool and lamb as a result of entry on the international markets, increase in quality
of wool and lamb, and product differentiation\. Both effects are detailed in Tables 6\.1 a-d and are
summarized in Table 6\. 1\. As indicated in Table 6\.1 by the "with" and "without" scenarios, the project
is assumed to have no major impact on the overall size of the national flock\. It would, however,
substantially alter the flock structure and composition and improve the flock's productivity and quality
in terms of both lamb offtake rate and wool production\. The bulk of lamb production would be for
export (para\. 3\.17)\.
6\.3 The provision of Animal Health Services would be associated with benefits accruing from the
control or eradication of brucellosis in both animals and humans\. These include decrease in human illness
and decreased reproduction losses in sheep\. The former benefits are difficult to estimate\. Reduced
reproduction losses would result in improved lambing and a corresponding increase in lamb offtake as
detailed in tables 6\.1 a-d\. Since it is not possible to isolate the impact of animal health services from that
of livestock support services, the parameters underlying the production effects (Table 6\.1) assume
effective control of brucellosis and other diseases\.
6\.4 Sheep breeding and research support would enhance the genetic potential of the existing fine-wool
merino sheep through the introduction of new genetic material for developing a breed capable of
optimizing wool and lamb production in the country\. It is estimated that an increase of about a kilo of
greasy fleece per head would become a permanent feature of sheep production after ten years\. In
addition, the average weight of lambs would increase by almost 50 percent\. Pasture monitoring,
complemented by ATAS advisory services, would enable sheep producers and rangeland supervisors to
avoid localized overstocking and pasture degradation\. Improved pasture management and fodder
production would reduce the pressure on natural pastures\. More importantly, it would enable sheep
producers to replace high cost concentrates with long-term low cost pastures and thereby substantially
improve the profitability of sheep farrning ( Table 6\.1 a-d)\. However, the short-term costs of improved
management of natural pastures would be higher than the cost of concentrates, but these are expected to
substantially decline after the initial investment have been made\. This decline has not been reflected in
the economic justification of the project because it is not possible to reflect such changes within the
framework of the gross margin models upon which the calculation of the project's rate of return is based\.
- 41 -
6\.5 The development of sheep and wool private enterprises, consisting of the establishment of the
SPGAs, RSBAs, KSBA, and the WMC, would enable sheep and wool producers to respond appropriately
to international market signals\. This would improve the efficiency of the domestic marketing system for
lamb and wool\. Wool testing would enable KSBA to use product differentiation as a major pricing policy
instrument to obtain premium prices on the greasy wool international market\. Certification of Kyrgyz
wool would enhance international buyers' confidence and minimize market risks and transaction costs,
leading to increased producer prices and exports\.
Farmers' Financial Returns
6\.6 The beneficiaries of the Project would be private participating farm enterprises\. Eventually, the
project would benefit all sheep producers in one way or another\. At full development, the Project would
benefit approximately 14,000 households grouped into about 3600 farm units, which would employ
approximately 37,367 persons who provide for a further 112,000 family members\. These persons would
receive an estimated additional net income of US$25\.0 million per year under the project\. By co-
incidence this group is among the less well off and are located generally in remote regions and
mountainous areas that are not well suited to other activities\. The project would therefore contribute
significantly to rural poverty alleviation\.
6\.7 Gross margins per livestock unit, as proxy indicators of farm enterprise profitability, have been
estimated for three types of farm models, based on sheep breed (Tables 6\.1 a-d)\. These consist of the
three breeds currently found in the country: (i) Alai/Fat-tailed Sheep for meat production; (ii) Kyrgyz
Fine-Wool Sheep for fine wool production; and (iii) a new Kyrgyz Dual Purpose sheep to optimize lamb
and wool production\.
6\.8 The following major assumptions underlie the calculation of the annual gross margins: (a) 2000
head units per farm; (b) an exchange rate of Som 10\.5 per US dollar; (c) value of skins is not included
in calculation; (d) Kyrgyz wool price = 70 percent of Australia wool price (clean) in 1995 for "with
project" case; 50 percent of world wool market prices for "without project" case; and (e) meat prices
are projected at 40 percent of current Middle East and European market prices and assumed held constant
over the project period\.
6\.9 Based on the above assumptions, the following annual gross margin per livestock unit were
estimated (Tables 6\. la-6\. Id):
Farm Model With Project (USS) Without Proiect (US$)
Alai/Fat-tailed Sheep n\.a\. 1\.78
Kyrgyz Fine-Wool Sheep 5\.98 3\.20
Dual Purpose Sheep 5\.59 n\.a\.
6\.10 It is evident from the "without project" case that sheep production under the current marketing
conditions in the country is only marginally profitable\. With the project, sheep production in general
would be extremely profitable\. The project would have impact on lamb and fine wool production by
promoting the adoption of an improved Kyrgyz Fine Wool breed and an improved dual purpose sheep
breed\. These two breeds would eventually outperform the Alai breed\. Essentially, all sheep enterprises
would benefit from the improved marketing and prices, improved lamb offtake and productivity associated
with the Project\. Cash outlays for the adoption of the new technical packages at the farm enterprise level
would range between 53 and 74 soms per animal and might not require external financing or credit
(Tables 6\.1 a-d)\. They constitute about 30 percent of total variable costs, a higher percentage of which
is accounted by non-cash inputs, such as family labor and natural pastures\.
- 42 -
KSBA Financial Projections
6\.11 KSBA, once established, would operate the wool marketing center, testing, and information
center\. Each of these activities would be operated as a profit center, maintaining separate books of
accounts in accordance with the generally accepted accounting principles and following the accrual system
of accounting\. The major sources of revenue associated with these operations would be warehouse fees,
lot building fees, broker's fees, promotion charges, and wool testing markups\. Warehousing fees would
be paid by wool sellers for holding wool in the central store for obtaining core and grab samples and for
storing the wool up to two weeks after selling or auctioning\. Buyers would be charged a storage fee on
wool held in store beyond the standard two weeks after sale\. A lot building fee would be levied on small
lots that require to be amalgamated to form a standard lot of one ton for sample testing and sale\. Brokers
would be charged a fee of I percent of gross sale proceeds to be paid by producers\. Producers would
also be charged a promotion fee of 1 percent on gross sale proceeds to cover promotion and wool
marketing center expenses\. A 33 percent markup would be imposed by KSBA on wool testing (local and
foreign)\.
6\.12 No revenue other than testing fees is expected in the first year \.of operation\. KSBA's financial
projections relating to marketing, testing, and information operations are presented in Tables 6\.7 to 6\.9\.
The projections show that these operations would be highly profitable, except in the first year of
operation\. The operations would also generate sufficient internal funds for expansion after the third year
of operation\. KSBA, as a profit center by itself, would rely on membership fees and member annual
contributions, both of which would be set at reasonably low levels\. It would make losses in the first three
years of operation and thereafter make modest profits\. Such losses would, however, be compensated by
profits from the other commercial operations under KSBA beginning with the second year of operation\.
KSBA's consolidated financial projections indicate a healthy financial situation for the organization\.
Nevertheless, the importance of competent management to KSBA's future financial situation cannot be
over emphasized\.
Economic Benefits and Costs
6\.13 The project's private benefits and costs have been derived from the annual gross margin models
(Tables 6\. la-d)\. Using a standard conversion factor of one (reflecting the current equilibrium exchange
rate of the som), the models' financial private costs and sales values were converted into border economic
values\. Fixed project costs consist of public expenditures by the Government and producers' associations
for implementing the project\. Direct economic benefits of the project, over a 20 year period, would
consist of the value of incremental wool and meat production and increase in lamb and wool prices,
resulting from the provision of support services, animal health services, sheep breeding research, and
establishment of a new marketing system for lamb and wool\. The new marketing system would facilitate
entry onto the international markets for Kyrgyz lamb and wool and permit these products to fetch prices
obtaining in these markets\.
6\.14 Project costs are into two categories: public and private costs\. The former consist of all
incremental expenditures related to project implementation by the Government or producers' associations\.
Private costs are those project-related incremental expenditures made at the farm level, including costs
of production, marketing, and transportation\. The opportunity cost of producers' participation in
associations would be negligible and difficult to quantify\. Although some project expenditures, for
example, most of the costs for the establishment of SPGAs, RSBAs, KSBA and ATAS, have long-term
institution-building effects and, hence, have economy-wide externalities, they have been treated as direct
project costs\. This, of course, leads to understating the project's rate of return\.
- 43 -
6\.15 The "without" project scenario underlying the economic analysis postulates that the existing
Kyrgyz fine-wool breed, supplemented by the Alai breed, would continue to dominate the national flock\.
However, both breeds would not reach their genetic potential in terms of productivity and production
quality because of relatively poor husbandry at the farm level\. The sheep industry's access to world
markets would continue to be constrained by inadequate marketing infrastructure and poor quality of
products\. Product prices would therefore increase very slowly and might never be at parity with world
market prices\. Wool exports would continue to be the major source of foreign exchange earnings for the
industry\. The "with" project scenario, on the other hand, would consist of the following changes: (a)
the improved Kyrgyz fine-wool breed, supplemented by the introduction of a dual purpose breed, would
dominate the national flock and largely replace the other existing breeds after eight years of project
implementation; (b) the structural change in the national flock would gradually lead to lamb exports being
the major source of foreign exchange earnings, leaving wool exports to play a secondary role in the
sheep industry; (c) the sheep industry's access to world market for lamb and wool would substantially
improve as a result of improved marketing infrastructure and product quality, leading to increased product
prices which might be at parity with world market prices; (d) animal productivity and quality would
considerably increase as a result of improved animal husbandry and nutrition at the farm level and in
response to incentives embedded in the new marketing system for both lamb and wool; and (e) despite
the increased lamb and wool production for export under the project, the Kyrgyz Republic would remain
a small producer and price taker in the context of the world markets for both products\.
6\.16 In view of the above scenarios, the key assumptions used to estimate the project's economic rate
of return include (a) adoption of the new sheep technology would be completed in 8 years of project
implementation; (b) lamb prices are conservatively projected at 55 percent of current Middle East and
European market prices and held constant in real terms; (c) fine wool prices are conservatively projected
at 50 percent of current world market prices and which are expected to rise to 70 percent over the next
five years; and (d) the establishment of 150 producers' associations over the life of the project\.
6\.17 Under these assumptions, the project's economic rate of return was estimated at 57 percent\. This
high return reflects, to a large extent, the high opportunity cost of the existing market distortions which
have depressed both prices and quality production in the industry\. At the same time, it underscores the
need for structural reforms and price incentives to stimulate the adoption of productivity-enhancing
technology in the industry through the project\.
Impact on Women
6\.18 Women in the Kyrgyz Republic play a major role in agriculture, including sheep and wool
production\. They appear eager to participate in new income-generating activities, but they lack resources
and technical knowledge\. Most of the existing local NGOs' activities are largely directed toward welfare\.
The proposed project would reverse this trend by actively involving women in project activities, including
extension service and credit\.
6\.19 Women's daily work routine depends largely on the structure of the household's flock\. Since ex-
state/collective farm sheep flocks are distributed on per capita basis within a household or family, all
women own sheep, although they usually regard this as a joint household asset\. They normally reserve
the poor quality wool for felt and rug making\. Overall improvement in wool quality would therefore lead
to upgrading of the quality of these products\. To ensure that women participate actively in the
implementation of project activities, a position for a women's advisor would be created at oblast level
within the ATAS\. This advisor would ensure that the project provides women with appropriate training
in awareness of their role and benefits, organization and management and technical skills\.
- 44 -
Impact on Poverty
6\.20 The majority of private sheep producers are found in remote mountainous areas of Naryn, Talas,
and Issyk-Kul\. They have virtually no alternative economic activities\. They constitute the poorest of the
rural poor in the country\. Until recently their incomes were further depressed by Government export
taxes on wool, hides and skins and by the virtual collapse of the traditional domestic marketing system
for wool\. The recent removal of export taxes and improvements in the domestic wool marketing system
will have considerable impact on raising the incomes of these farmers\. Sheep and wool productivity gains
under the project would also result in improving their incomes\. At full project development, about
14,000 households, owning a total of 7\.2 million sheep, would benefit from an incremental income under
the project of about 155 percent\.
Sustainability
6\.21 Once completed, project activities would be sustained\. Incremental staffing and associated
recurrent costs would gradually be transferred to the beneficiaries through the farmers' associations that
would be promoted and established under the project\. The improved policy environment, especially for
production and marketing, and the productivity gains, would provide financial incentives for farmers'
organizations to consolidate and expand their newly acquired assets or activities\. Sheep and pasture
research and disease control activities would be the only project activities that would continue to be
financed by the government budget after project completion\. These would be kept within manageable
limits and could be partially financed by the sheep industry through a levy\.
Fiscal Impact and Cost Recovery
6\.22 The impact of incremental recurrent expenditures on the government budget for agriculture would
be small\. The total incremental recurrent expenditures per year would average US$622,000 per year over
the implementation period, with ATAS, sheep breeding research, KSBA, and wool testing component
accounting for the largest share\. It is estimated that the Government would disburse US$1\.7 million of
the operating costs\. IDA and IFAD will provide the balance of US$ 1\.6 million out of total US$3\.3
million\. About 55 percent of the total incremental recurrent expenditures would be transferred to the
sheep producers associations by the fifth year of project implementation\. Recurrent expenditures for
sheep and pasture research, disease control activities and overall project management would be the only
ones that would continue to be financed by the government budget after project completion\. Most of the
KSBA's commercial activities (e\.g\. marketing and wool testing) would become self-financing in the third
year of implementation\.
6\.23 The project would also institute full cost recovery for Credit funds on-lent for training, technical
assistance, operating expenses, goods and civil works to sheep producers' associations through charging
an interest rate that fully reflects the market cost of such funds\. It is envisaged that the producers'
associations would become financially independent by generating adequate operating revenues from
membership dues, wool storage, and marketing fees which would be set at levels to allow full cost
recovery\. The gradual transfer of extension services and wool and lamb marketing activities to
producers' associations are envisaged as an effective strategy for cost recovery under the project\.
Impact on Private Sector Development
6\.24 The major thrust of the proposed project is to transform the sheep industry from a centrally
planned and government-controlled industry into an export-oriented and efficient production system
largely managed and controlled by producers\. This empowerment of private producers would take place
- 45 -
through the formation of village-based producers' associations and establishment of private enterprises\.
This would entrust the critical elements of project implementation in the hands of profit seeking
enterprises\. The associations would play an important role by taking over most of those tasks the state
can no longer effectively perform\. The proposed project would support the establishment of sheep
producers' associations to initially address four critical issues in sheep production and marketing,
including the development of an efficient export-marketing infrastructure for lamb and wool; provision
of advisory services (know how) to individual private sheep producers; management of common pastures
on a sustainable basis; and control of unregulated sheep breeding and adoption of improved technologies
among small private producers\. These tasks would be implemented by the associations with technical
support provided by government agencies and technical assistance\. Within the framework of these
grassroots associations, producers would continually respond appropriately to market signals in terms of
product mix and quality\. The project would also support the privatization of certain services which
traditionally have been the domain of the state, including veterinary services by encouraging private
practice by veterinarians, and sheep breeding by encouraging private sheep breeders to participate in the
sheep breeding program under the project\.
Sensitivity and Risk Analysis
6\.25 A risk for the project is that the international and domestic prices of lamb and wool do not turn
out to be as high as projected\. In the event of this happening, the incentives for adoption of new
technology, increased productivity and improved lamb offtake would not materialize\. If the assumed
prices for Kyrgyz wool declined by 15 percent (i\.e\., were only 55 percent of the assumed world market
prices), the project's rate of return would be reduced to 49 percent\. If, on the other hand, prices for
lamb declined by 10 percent, the project's rate of return would fall to 36 percent\. A 15 percent overall
reduction in project benefits would reduce the rate of return to 34 percent\. A slower rate of adoption of
new technology and full conversion after nine years would reduce the rate of return to 36 percent\. The
project's viability is therefore extremely sensitive to product prices (especially lamb prices) and adoption
rate and, hence, to the quality of lamb and wool which would determine the level of prices to be obtained
in the international markets\. A 10 percent cost overrun would reduce the rate to 44 percent, implying
the project might be sensitive to increase in the incremental operating costs at the farm level\.
6\.26 The success of the project is also dependent on the ability to export meat to foreign markets\.
There is a large and accessible Middle Eastern market and the expectation is that live animals will be
transported by air or truck and that major investments in transport will not be necessary\. The project
conservatively assumes that domestic lamb prices will remain only 55 percent of Middle Eastern and
European prices; this margin should be sufficient to allow for the export of Kyrgyz meat\.
6\.27 Due to the transition, the project has high risks\. The project could be adversely affected by an
array of factors, including: (i) macroeconomic instability; (ii) delays in implementation of reforms
pertaining to land, market liberalization, and enterprise privatization; (iii) institutional uncertainty and
weakness surrounding the establishment of new farmers' organizations and a new farmer's advisory
service; and (iv) delays in implementation of the Project\. The prospects for macroeconomic stability
appear good, given Government's commitment to both the stabilization and structural reform programs
(paras\. 1\.6-1\.11)\. Implementation of land reform and market liberalization and enterprise privatization
would be key to the success of the project\. Government's commitment to reforms in agriculture is
strong, but remains to be translated into actions\. The price and land reforms are now well advanced and
would be difficult to reverse at this point\. The project's risks associated with delays in establishing the
new farmers' organization and advisory service would be minimized by requiring up front appointments
of the PIU consultants and agreements on their establishment, staffing, and funding of ATAS\.
- 46 -
6\.28 Another factor is the local capacity to cope with the demands of a range of new functions in the
marketing, distribution, testing, and research of wool\. Many of these functions are foreign to the existing
personnel\. A strong technical component has been incorporated in the project design to overcome this
weakness\. Regular supervision would also be required for several years\. While there is a clear
leadership role for Government to initially promote the formation of these new organizations, it is
envisaged that they would ultimately be controlled by farmers\. Specific risks exist in terms of sharp
deterioration in greasy wool production and quality, themselves a consequence of the deficiencies the
project seeks to correct\. In the short term, however, these risks might result in unused capacity of the
new facilities\. But contingency plans can be devised to cope with this situation\. For instance, the wool
storage, handling, and selling complex could be used for skins and hides when it is not fully used by
wool\. The wool testing facility could be used for research when not fully utilized for commercial testing\.
The envisaged annual reviews and adjustments in project workplans and budgets to take into consideration
previous year's implementation experience would minimize risks associated with project implementation
and permit continual flexibility in implementation\. Intensive supervision would also be required in the
initial years\.
Enviromnental Aspects
6\.29 The Project is expected to increase enviromnental protection through research and extension
activities focusing on improved management of the country's natural pastures\. The establishment of a
pasture inventory and monitoring system would guide farmers' and rangeland supervisors' decisions
regarding the use of pastures in the short to medium-term\. This, complemented by ATAS advisory
services, would result in avoiding localized overstocking and pasture degradation\. The proposed
improvement in pasture management and fodder production would reduce the pressure on natural
resources\. It would be required, under the project, that grazing rights be granted for land management
units large enough to support sustainable grazing systems (para\. 3\.52)\. The producers' associations, to
whom most of the grazing rights would be granted, would be required to adhere and enforce regulations
and practices for improved pasture management among their members (para\. 3\.52)\. Finally, the project's
emphasis on the production of quality animals (rather than quantity) in response to market requirements,
would provide adequate incentives for improved management of pastures and fodder by sheep producers\.
The project would discourage the present practice of using chemical for sheep dipping and, instead, rely
on spot-spraying on animals\. The Project has a "B" environmental assessment category\. An
environmental mitigation statement is contained in Annex B\.
- 47 -
VII\. AGREEMENTS AND RECOMMENDATION
The following agreements were reached during negotiations
7\.1 During negotiations, it was agreed that the Government would:
(a) ensure that sheep producers' associations shall be granted, on a leasing basis, grazing
rights without prejudice to other users of pastures, whether individually or collectively
organized (para\. 3\.7);
(b) include, inter alia, provisions in respect of staffing of the PIU with qualified individuals
in sufficient number, and the management responsibilities to be carried out in accordance
with a project operational manual: such manual to be attached to the PIU Management
Agreement and to constitute an integral part thereof (para\. 3\.8);
(c) transfer formally the ownership and management of the wool testing facility to the
Livestock Institute by December 31, 1996 (para 3\.22);
(d) establish the position of a female Women's Advisor at the beginning of implementing
ATAS each oblast (para\. 3\.28);
(e) ensure that the breeding stock at and ownership of the Asyl Mal farms participating in
the project's breeding program would not be substantially changed without consulting
IDA and IFAD (para\. 3\.44);
(f) ensure that grazing rights leased by the Borrower to sheep producers' associations and
other users shall be for land management units large enough to support sustainable
grazing system in respect of the respective size of the sheep management units; and the
lease contracts and administrative acts relating to the granting of grazing rights shall
include adequate provisions stipulating grazing regulations and practices designed to
establish good pasture management practices, and shall be duly implemented (para\. 3\.53);
(g) on-lend Credit funds for goods and civil works to producers' associations and their
affiliates as a loan at the full cost recovery basis to be denominated in Som (para 4\.4);
and
(h) ensure that the review and adjustment of the project would take place every year during
project implementation (para\. 5\.1)\.
Conditions of effectiveness
7\.2 It was agreed that the following will be the conditions of effectiveness for the IDA Credit and
IFAD Loan in addition to those in the respective general conditions:
(a) the execution of the PIU Management Agreement with an international consulting firm,
satisfactory to the Association (para 3\.26);
- 48 -
(b) that fulfillment of all conditions precedent to the IFAD Loan and the IDA Credit (para\.
4\.3); and
(c) the Borrower will deposit the Som equivalent of US$25,000 into the Project Account\.
It was agreed that the Borrower will ensure provision of adequate funds for the project
in its Budget for 1996, including the above mentioned amount\.
Condition of disbursement
7\.3 Borrower shall provide the Association with a satisfactory feasibility study relating to the local
production of veterinary vaccines (para 3\.40)\.
Recommendation
7\.4\. I am satisfied that the proposed Credit would comply with the Articles of Agreement of the
Association and reconmmend that the Executive Directors approve it\.
- 49 -
ECONOMIC AND FINANCIL ANALYSis SUPPORTING TABLES
Table 6\.1: Internal Rate of Return (IRR) Computation
Table 6\. la: Sheep Enterprise Gross Margin Models: Improved Kyrgyz Fine Wool (with project)
Table 6\. lb: Sheep Enterprise Gross Margin Models: Kyrgyz Fine Wool (without project)
Table 6\. lc: Sheep Enterprise Gross Margin Models: Kyrgyz Dual Purpose Sheep Breed (with project)
Table 6\. Id: Sheep Enterprise Gross Margin Models: Alai Strong Wool and Fat-tailed Meat Sheep
(without project)
Table 6\.2: Kyrgyz Wool Marketing, Testing and Information Center - Profit and Loss Account
Table 6\.3: Kyrgyz Wool Marketing, Testing and Information Center - Balance Sheet
Table 6\.4: Kyrgyz Wool Marketing, Testing and Information Center - Funds Flow Statement
Table 6\.5: Kyrgyz Sheep Breeders' Association - Profit and Loss Account
Table 6\.6: Kyrgyz Sheep Breeders' Association - Balance Sheet
Table 6\.7: Kyrgyz Sheep Breeders' Association - Funds Flow Statement
- 50 -
Tble 6\.1: Initemal Rae of Return (IRR) Compurtston
W7h Prq\.ot _ _ ___
1 2 3 4 5 6 7 8 9 10 11-20
Fleck Size (000) __
KFW 5500 5000 3506 2479 1945 1454 1015 633 O 0 O
IKFW ___0 __0 500 1000 1500 2000 2500 3000 3516 3516 35191
DPS 0 0 500 1000 1500 2000 2500 3000 3510 3516 36161
AMi 200 158 158 159 159 158 159 159 158 159 159
Total 5700 5158 4464 4837 5103 5612 8173 8791 7190 7190 7190
Farm units
KFW 2750 2500 1753 1240 973 727 508 317 0 0 0
IKFW 0 0 250 500 750 1000 1250 1500 1758 1758 1758
OPS_ 0 0 250 500 750 1000 1250 1500 1758 1 758 1758
Abli 100 791 79 _ 79 79 79 79 79 79 79 79
Total 2850 2579 2332 2319 2552 2906 3087 3396 3595 3505 3595
No\. of Shnm SU fer mn (1000)1 _
KFW 1917 1743 1222 I84 678 507 354 221 0 a 0
IKFW 0 0 330 675 1013 1350 1689 2025 2373 2373 2373
DPS 0 0 367 734 1101 1408 1835 2202 2581 2581 2581
Alai 121 96 96 96 86 96 9 969 6 96 96
Total 2039 1939 2022 23691 2987 3421 39721 4844 5050 5050 5050
Pirc of Motkg 11 I
KFW 0\.8 0\.9 0\.9 0\.8 0\.8 0\.9 0\.8 0\.8 0\.9 0\.8 0\.8
IKFW 0\.8 0\.9 0\.9 0\.8 0\.8 0\.8 0\.8 0\.8 0\.9 0\.81 0\.8
OPS 0\.8 0\.8 0\.8 0\.8 0\.8 0\.9 0\.8 0\.8 0\.9 0\.8 0\.8
Alai 0\.96 0\.80 0\.96 0\.96 0\.86 0\.96 0\.86 0\.86 0\.96 0\.se1 0\.88
Volve of Mast 21 (US mginl I I I
KFW 35\.08 31\.99 22\.36 15\.81 12\.41 9\.27 6\.47 4\.04 O\.DO0\.00 0°\.00
IKFW 0\.00 0\.00 9\.79 17\.57 20\.36 35\.14 43\.93 52\.71 61\.78 81!L 1\.78
DPS 0\.00 0\.00 9\.81 19\.211 2\.82 343 48\.03 57\.84 67\.55 67\.55 87\.5
Ala 3\.25 2\.571 2\.5 2\.57 2\.57 2\.57 2\.57 2\.57 2\.57 2\.57 2\.S7
Totalvaluofmost 38\.33 34\.48 43\.32 55\.16 70\.15 85\.41 101\.00 116\.96 131\.90 131\.90 131\.90
Wool (too)
KFW 10560 9600 6732 470 3734 27921 1948 1215 0 1 0 0_
IKFW 0 - 0 1189 2379 3589 47571 5948\. 7138 8363 8363 8363
|PS a_ 0 795 1591 2389 3191 3976 4772 5592 5592 5592
Akl 314 248 248 2481 248 248 248 248 248 24 248
Total 10874 9848 664 9977 9836 10978 12120 13371 14203 14203 14203
Wool PriciA 31 ___ __I
KFW 1\.40 1\.40 1\.70 1\.90 2\.40 280 3\.00 3\.00 3\.00 3\.00 3\.00
IKFW 1\.40 1\.40 1\.0 1\.90 2\.40 2\.80 3\.00 3\.00 3\. 3\.00 3\.00
OPS 1\.40 1\.40 1\.70 1\.90 2\.40 2\.80 3\.00 3\.00 3\.00 3\.00 3\.00
Al|i 0\.80 0\.70 0\.80 0\.90 1\.00 1\.00 1\.00 1\.00 1\.00 1\.00 1\.00
Value of WOl (U moIIen) !I
KFW 14\.78 13\.44 11\.44 9\.041 8\.96 7\.92 5\.85 3\.85 0\.00 0\.00 0\.00
IKFW O0 0\.001 2\.02 4\.521 8\.56 13\.32 17\.84 21\.41 25\.09 25\.09 25\.09
DPSI 0\.00 0\.00 1\.35 3\.02 5\.73 9\.91 11\.93 14\.31 16\.79 16\.78 16\.78
Alil 0\.19 0\.17 0\.20 0\.22 0\.25 0\.25 0\.25 0\.25 0\.25 0\.25 0\.25
Total valu of wool 14\.97 13\.61 15\.02 16\.91 23\.50 30\.291 35\.86 39\.62 42\.11 42\.11 42\.11
--M --am 4§81463j3\.8j2\. Mr\.71 17\.091 12\.32l -7\.86 - \.0m 0\.0Ol 0\.00
IFW 0 10Q1 22\.00 34\.92 U\.4I e1\.0 6671a\.86 S8\.861 86\.86
oPSi 0\.0 Q\.00 10\.0 22\.24 j 34\.5S 47\.33 s9\.98 7t1\.i 84\.33 94\.331 84\.33
I Xil 3\.44 2\. 2\.7 371 2\.7sl 2\. 11 2\.82 2\.82 si2 2\.82 2\.82
r\.wsin-e* 53\.30 48\.07 59\.34 71\.97 93\.65 115\.70 136\.86 158\.57 174\.01 174\.01 174\.01
(meat * wool _ _ __I I_I I_
VA* cost (US$ mibal _____ __
KFW 49\.05 44\.5aj 31\.26 22\.111 17\.34 12\.97 9\.051 5\.64 0\.00 0\.00 0\.00
IKFW 0\.00 0\.00 9\.40 18\.90 29\.20 37\.60 48\.991 58\.39 66\.091 69\.09 o s \.os
DPS 0\.00 0\.00 9\.10 19\.20 27\.30 36\.40 48\.50 54\.60 63\.99 63\.99 63\.99
Alai 3\.21 z2\.541 2\.54 2\.54 2\.54 2\.54 2\.54 2\.54 2\.54 2\.54
Flix Pre Coat 5\.6 3\.9 3\.5 2\.2 1\.7 0 0 0o 0 0 0
TrealeCet 57\.66 50S2J 55\.90 63\.84 77\.07 89\.48 104\.08 119\.17 132\.61 132\.61 132\.61
_tA_ w__ 4\.55 25 2\.54 8\.13 16\.57 26\.21 32\.79 37\.40 41\.40 41\.40 41\.40
F E r1 - F I 1 9 - l
11 Lamb pnc are about % of Middle Eato and Euep\.n rmnaket pnrcu fer amb\.
21 Totael e fom tab e tat mh e mod thi number of farm unhL 7s
3IFito wool pd ei pfices about 60% of eurramt wotid maiket prines which are oxpacted to rue through ths nai five ears\.
- 51 -
Table 6\.1: Internal Rate of Return (IRR) Computation
Without Project |
1 2 3 4 5 6 7 8 9 10 11-20
Rock Size
KFW 5500 5000 4506 4479 4945 5454 6015 6633 7032 7032 7032
Alai 200 158 158 158 158 158 158 158 158 158 158
Total 5700 5158 4664 4637 5103 5612 6173 6791 7190 7190 7190
Farm Units
KFW 2750 2500 2253 2240 2473 2727 3008 3317 3516 3516 3516
Alai 100 79 79 79 79 79 79 79 79 79 79
Total 2850 2579 2332 2319 2552 2806 3087 3396 3595 3595 3595
No\. of sheep sold
KFW 1917 1743 1570 1561, 1723 1901 2096 2312 2451 2451 2451
Alai 121 96 96 96 96 96 96 96 96 96 96
Total 2038 1838 1666 1657 1819 1997 2192 2408 2547 2547 2547
Price of Meatikg
KFW 0\.84 0\.64 0\.64 0\.64 0\.64 0\.64 0\.64 0\.64 0\.64 0\.64 0\.64
Alai 0\.69 0\.69 0\.69 0\.69 0\.69 0\.69 0\.69 0\.69 0\.69 0\.69 0\.89
Value of Meat (USt million)
KFW 35\.081 31\.89 28\.74 28\.57 31\.54 34\.79 38\.36 42\.31 44\.85 44\.85 44\.85
Alai 3\.25 2\.57 2\.57 2\.57 2\.57 2\.57 2\.57 2\.57 2\.57 2\.57 2\.57
Total value of meat 38\.33 34A6 31\.31 31\.14 34\.11 37\.35 40\.93 44\.87 47\.42 47\.42 47\.42
Wool Iton) I
KFW 10560 9600 8652 8600 9494 10472 11549 12735 13501 13501 13501
Alai 318 251 251 251 251 251 251 251 251 251 251
Total 10878 9851 8903 8851 9746 10723 11800 12987 13753 13753 13753
Wool Pricelkg 11 | _
KFW 1\.40 1\.40 1\.70 1\.90_ 1\.95 2\.10 2\.50 2\.50 2\.50 2\.50 2\.50
Alai 0\.60 0\.70 0\.80 0\.90 1\.00 1\.00 1\.00 1\.00 1\.00 1\.00 1\.00
Value of Wool us Mallion) I_ r
KFW 14\.781 13\.44 14\.71 16\.34 18\.51 21\.99 28\.87 31\.84 33\.75 33\.75 33\.75
Alai 0\.19 0\.18 0\.20 0\.23 0\.25 0\.25 0\.25 0\.25 0\.25 0\.25 0\.25
Total value of wool 14\.97 13\.62 14\.91 1857 18\.77 22\.24 29\.12 32\.09 34\.00 34\.00 34\.00
Total Revenue 53\.30 48\.07 46\.22 47\.70 52\.87 59\.60 70\.06 76\.96 81\.42 81\.42 81\.42
(meat plus wool)
Variable Cost (lSt million)
KFW 49\.05 44\.59 40\.18 39\.94 44\.10 48\.64 53\.64 59\.15 62\.71 62\.71 62\.71
Alai 3\.21 2\.54 2\.54 2\.54 2\.54 2\.54 2\.54 2\.54 2\.54 2\.54 2\.54
Total 52\.28 47\.12 42\.72 42\.48 46\.63 51\.17 56\.17 61\.68 65\.24 65\.24 65\.24
Alf tlReven 1\.05 0\.95 3\.50 5\.22 624 8\.42 13\.88 15\.28 16\.18 16\.18 16\.18
Incrumntal Benefit 0\.00 0\.00 12\.12 24\.27 40\.78 56\.10 65\.81 79\.61 92\.59 92\.59 92\.59
Incrmental Cost 5\.60 3\.80 13\.08 21\.36 30\.44 38\.32 47\.90 57\.48 67\.37 67\.37 67\.37
Net Benefit \.5\.60 \.3\.80 \.0\.96 2\.91 10\.33 17\.78 18\.91 22\.13 25\.22 25\.22 25\.22
Internal Rate of Return 20 yrs 57%
11 Asuumes, in absence of project, that domestic prhce of fine wool rises to 70% of world price over eight years
21 Lamb (meat prices are 80% pof 'with project projected prices\. _______
- 52 -
Table 1\.1\.: SHEEP ENTERPRISE GROSS MARGIE MODELS 4IKFW With Project
(2000 head unite)
Improved Kyrgya Fine Wool- 22 micrem fiber diameter
Stuck Schedule No\. Va1\. Sales Birthd Dh Shmin
No\. No\. Kg
Culled Ewes 1500 25 300 1500 75 1500 6750
On yrEwes 500 26 100 25 475 1900
Ewe Lambs 750 225 25
Wether Linbs 750 725 25
Totel Flock 3500 1350 1500 150 1975 8650
Returns
950 Lambs @3Sg\. live wt\. x *0\.801kg\. ie ($281h 2800 21
300 CULL EWEs S4Okg\.livewigbht x$0\.42Jkg ($ 1 6\.81hd) 5040 [31
100 om yea EWEs @ $35 each 3500 [41
Wool Sales 4757 kg\. cbLanB $31kg 14176 [51
TOTAL SALES 49316
Costs VARIABLE COSTS
Shaing 1975 at $0\.31head 583
*Vaccinn, Drench, Insecticides 3500 @ $2\.01hnd 7000
Advisory ssrvius @O0\.2ihnad 700
*Artificial Insmination 2000 at $2\.0lhead 4000 [61
*Fuol 2 litroulhead at $0\.331Lsr for 2000 1320
Fed Roughag 1\.5kgsId14O daysl*0\.051kg fr 2000 000 171
Pasture Lene, Imrvemenh, Mnagment Costs 14848 [01
Wool seing costs Std Testing ($0\.02141kg gay) 185
Clssing, Skirting (*0\.0214)kg 185
Waehoue, Belig ($0\.08751kg 757
Prm\. & Broking (2% ef Gross) 284
'Sheep traport services 3% of rvene 1479
TOTAL VARIABLE COSTS 37349
Morning GROSS MARGIN 11967
GROSS MARGINISHEEP 5\.98 [9]
Cash OutlylSheop 7
Noetse o di Grs Magin Estknates\.
1\. Locnl Cate in *US, st 10\.5 sorl*I[Doc'941
2 Lambs bor in Api May, sod Sept\. Nov\. a live lambs, international market
3\. Sold an local mutton carcus markt a cdle after weaning\.
4\. Om-yew repiacement breeding EWEs sel around world at 1\.1 to 1\.3 tims
Maket Me prices
5\. Assunes Kyrgyz wool 570% of world mrket price of US$4\.25\.
S\. Asmns fth smen; *1\.00 for ram, 1\.00 for imominator, supplies, equipment\.
7\. Emerpncy slppns of ucerne or clever hay
8\. Recoge majer nree for inproed putures and pature _magement\.
9\. Gros marginsheep is baed on 2000 herd unit
10\. Anes rape lot size of 1,000 kg\.
11\. Wool parption at shring shed\.
12\. Fnl p and beling for extemnal market at rayon or oblast wool store\.
* Entbl Cah Outlays
- 53 -
Table 1\.11: SHEEP ENTERPRSE ROSRS MARGIN MODELS- KFW WItlet Pr est
12000 had udiu)
Kyrgyz Re Wed 22 micr fier disamter
Stock Schehb No\. VX Sale, i Death S bas
Ne\. Na\. Kg
Cuid Ewas 1000 200 216 860 60 1000 4000
On yr Ews 404 100 121 0 25 4U0 1840
0 yr Wetber 404 100 361 0 25 480 1840
Ewe Lunb 426 21
Wither Liamb 425 21
Totl Rock 2650 687 850 152 1920 7880
482 Lamb\. at 30Kg he wt0\.71 kg (US*21I 10122 [21
215 Cubd Ew e 35k be wtJO 3SAg (US*10A6h4 2834 131
3840kcbm weeIat 311 11520 [41
TOTAL SALES 24276
Ce h
VARIABLE COSTS
Shoing 1920 it 001\.l4red 289
Ciching 2000 at $0\.06 hrad 100
oChmniialr Viccuin
DOnch
Iniecticl 2658 at $08leO d 2126 151
Advinary sefvrcn 10
*Artificial dm\.nnitn 1404 t 00\.9 Ihrod 133
hFl 2hldtu dst $\.3311f r1020 1287 (61
Feid Suppbmnt
* Cnc\. 300 gmid x 140 dyil*\.081k fa r2000 S804 [71
Rwghup 1\.3kpld x 140 dpi*0\.019li fw 2000 6918 I81
(Rg fem 32 to 5 peranlrnteorvi)
Wed InA cse: T"th 0
Warhmhg Idt b\.I_ 0
PrimL & Brii 0
Trfnipst smime 1\.0% if ide rvt 243
TOTAL VARIABLE COSTS 17669
GROSS MARGIN 6407
GROSS MARGiN ISHEEP 3\.20 1
Coh Ouepy shhep 5
Not\. tithe km s Mw Estmte\.
1\. Licl casb b US\. at 10\.5 saudllDsc'S41
2 OlMer sli\.p ktmeid m\.wkt
3\. YeApr iheep - ltaII malut
4\. Assuav\. Knpz wel -60% of wid pice c
5\. mIebl vwecsm & \.e\.ticWla
S\. Esthete fr\. flbW ti
7 & 8 Neede fwr l sem bird (2000) r ber h- mi ed I W f Mhm witd
9\. Grin awgim bad2000 hardu t
S Entel cub oudhp
- 54 -
Tabll 8\.1c SHEEP EUTERPNSE GROSS MARGIN MODELS - DPI With Prejet
12000 head malta)
Kyruyz Deal Purpse\. Sheep Breed - 20 21 nlere fihr
Stock Modeldle _N V Sab Bkt D S
Ne\. No\. Kg
Cuid Ewae 1500 20 300 1650 76\.0 150 4860
On yrEwas 500 30 100 25\.0 475 1425
Evw Lam_\. 825 284 41\.3
Wither Lami\. 825 784 41\.3
3860 1487 1650 182\.0 1975 0275
Returns
1068 Lambs 03g ve wL x U0\.lkg In ($2891 29887 [21
300 Cd EWEs 040g lin wt x 10\.421kg (1US116\.81hl 5040 [31
100 myer EWEs W t35 ewh 3500 141
WedSas 3181k\. at *3Ik*cbm 9413 [51
TOTAL SALES 47940
Cab VARIABLE COSTS
Shearig 1975 at 00\.31head 593
Vaccms, Dmeah, huwtticti SZOOIhead x3650 7300
Advisry rvicau 90\.2fhiaw x 2WO head 400
'Antificial haemat 2000 at $ZOlhead 4000 11
*Fel 2 trsfn ad\. at \.331l r 20W 1435
Feed @i\.Gk rughag1dryx8Oiyx$\.05kR fwr 2000 300 [l
Patinr Loew, klpyrev rmts, Manameat cut 11500 181
Wl ng cutb
Teting S $0\.02148c Pury 134 [91
Classin\. S*dt I *0\.02141kg psy 134 1101
W hbsme, Baeg S $0\.08751g 548 [111]
Prm\. & Selu Cost 12% of ge) 1in
*Shep trmpet servcs 3% of nvuev 1435
TOTAL VARIAUBE COSTS 3869
Marinb GROSS MARGIN 11171
GROSS MARGINISHEEP 5\.59 [121
Cah Outbylheep 6
Nets\. to to Gros\. M6 IN Estia\.
1\. Vae w tUS, at 10\.5 sml0kIDec'41
Z Lamn bse h Api May, sold SepL - NNe\. s in _mbs, hite oAd mu&t
3\. SdId on bcal mutton ewcm mbt as is adfr d aaws
4\. O-yea rmpicmet hrsag EWEs ul - d wwWd at 1\.1 to 1\.3 tims
mowat lmb pie"
5\. Assumn Kyrgyz wed @50% of wedd mekat strong wal pice af USt4\.25\.
6\. Assme huh senr *1\.00 fwr rm 1\.00 fa hisemintr, supple, equimnt
7\. Emrncy supple of lknr or clver hay
8\. Recepem m*r seeds far ipred pstues am psture maaennt\.
9\. Assames mar let sh of 1,000k\.
10\. Woel peraae a sheal ehd\.
11\. Fhld gadig xsd h l5 far extnl maet at dra r aMst wea stoes\.
12\. Brms mwgIhep ib ae 2000 herd unit
* Enticaheouderi
- 55 -
Table B\.1d: HEEP ENTERPRISE OROSS MARGIN MODELS\. Abla Wftbout Project
(2000 head witb)
Alai Strong Wool and Fat-taid Most Sheep
Stock Schedule No\. Vlu Sals Bithe Deaths Shsanw
No\. No\. Kg
Cud Ewes 1500 14\.6 340 1400 90 1500 5490
On yrEwes 500 14\.5 25 475 1062
Ewe Lanbs 712 25 187 36
Wither Lambs 713 25 677 30
3426 1214 1400 186 1975 7142
Ratumns
874 Lambs at US$32\.51hd 28418 [21
340 Evwes at 14kg 0 088kg (USS 1 Z041hd) 4094 [3]
3142kg at *1kgclean 3142 [4]
TOTAL SALES 35652
Costs VARIABLE COSTS
Shoanng 1975 at S0\.141head 277
Cnatching 2000 at S0\.051hlad 100
*Chemials Vaccinen
Drnch
Insecticides 3425 at $0\.81head 2740 [5]
Adviory servicue 10
IAitifichl Inneinaion 2000 at $0\.0951oS ad 190
*Fu 2\.5 Z6ltnslhoad at S0\.3311 for 2000 1650 [61
Food Supplemant
*Conc\. 325 InulD 1500YSt0\.O081Kg for 3239 12789 [71
Roughap 1\.5kp1dll60dys*0\.0l9k1g for 3239 13848 [0]
Laour
(Ranp from 32 to frio perons)
Wool soing costs Testing 0
Waehomhig & lot huilding 0
ProL & Brokdng 0
Shop trnsport nervicn 1\.5% o enua 488
TOTAL VARIABLE COSTS 32089
Maruns GROSS MARGIN 3683
GROSS MARGINISHEEP 1\.79 191
Cub OudayiShohp 6
Notos to the Gross Margin Estmdas\.
1\. Vaus aeo US, at 10\.5 s6*mJ1[Dac 94]
2\. Younpr sheep - local narket
3\. Oldbr shep - local meksat
4\. Assum Kyrgyz cben strong wool -50% of world market prike of US$2
5\. Includes vaccims & insecticids
8\. Estimts fnm fi Id trips
7\. & 8 Al sold in winttrlarly spring\. concentrebs & roughap needd for whoel herd
9\. Gross magin per sheop bhued on 2000 herd unit
* Entail Cuh outlays
T abe 6\.2: KYRBTZ WOOL MARKETIEG, TESTING AID INFORMATION CENTER * PROFIT AMD LOSS ACCOUNT
(Amounts in US dollars)
Yer I YTr 2 Y"r 3 Ywr 4 Yer 6 Y5r I Yar 7 YVr 8 YSr I
Wool Production (tonnes grsy)1l 13,953 13,746 12,128 12,736 14,278 17,534 19,772 24,343 26,080
Wool Production (tonnes ceInJIl 6,977 6,873 6,064 6,368 7,139 8,767 9,886 12,172 13,040
Market Sher (%)12 20 25 30 35 40 45 50 55 60
Price (US $IKg\.U3 1\.40 2 \.60 2\.86 3\.00 3\.00 3\.00 3\.00 3\.00
Warehousing (Ssllsr\.6\.25cuntsIKg gpyjI4 174,413 214,781 227,400 278,578 356,950 493,144 617,875 836,791 978,000
Warehousing (Buyer-1\.35contuKg( gsy\.)14 37,673 46,393 49,116 60,173 77,101 106,519 133,481 180,747 211,248
Lot Building (Sedler\.2\.5cntsdKg gsy\.)14 69,765 85,913 90,960 111,431 142,780 197,258 247,150 334,716 391,200
Brokr's Fm (Seller-1 % of gross vauelu5 19,534 34,365 47,299 63,739 85,668 118,355 148,290 200,830 234,720
Promotion Chere (SelIer-1% of gross volue)/5 98 137 158 182 214 283 297 365 391
Te ting FmS 1\.33 time teting fhal6 54,969 56,178 28,707 81,300 102,545 139,921 173,559 233,109 249,742
Total Reven 350,451 437,707 443,542 595,403 765,258 1,055,459 1,320,131 1,786,557 2,065,301
Reursent Exuoned7
Salaiu and Allowances 33,477 49,314 46,082 52,390 92,500 94,500 97,500 100,000 101,500
Testing Fsee7(a) 41,330 42,239 21,684 61,128 77,101 105,204 130,495 175,270 187,776
Utilities 2,067 2,112 2,158 2,206 2,400 2,600 2,800 3,000 3,200
Communications 2,067 2,112 2,158 2,206 2,400 2,600 2,800 3,000 3,200
Supplies & Mailing 21,078 22,070 7,554 10,000 12,000 14,000 16,000 18,000 20,000
Space Rental 2,067 2,112 2,200 2,300 2,400 2,500 2,600 2,700 2,800
Visit to local wool stores 5,166 5,279 5,400 5,500 5,600 5,700 5,800 5,900 6,000 vl
Fuel & Insurance 3,100 3,168 3,238 3,309 3,415 3,500 3,600 3,700 3,800 O
Totol 1kviiont EApen 11,351 125,408 90,375 13\.9,039' i97,516 230,604 261,595 311i,570 328,278
Amortization Costsl8 0 0 190,1,918 919,099 8 190,918 190,9168 1 190,918
Deprecibtionl9 0 0 0 164,194 184,194 184,194 184,194 184,194 184,194
InterestlI0 0 0 0 0 31,570 29,455 27,682 25,828 24,097
Income Tax Q 50% 123,050 154,681 81,175 40,626 80,380 210,144 328,121 537,024 668,908
Total Expenm 233,401 283,018 302,487 554,777 684,878 845,315 992,510 1,249,533 1,395,393
Prefiftfleeli 123,050 154,681 81,175 40,526 80,380 210,144 323,121 537,024 008,908
NOTES:
(1)\. Wool production numbers are from table 5 (a)\.
(2)\. Market share is assumed to be 20% for the first year rising to 60% by Year 9
(3)\. Wool price is taken at the existing price of US$1 \.40 per Kg\. increasing to S3\.0 (70% of the world price of $4\.25) by Year 8
(4)\. Warehousing fee is projected @ 6\.25 cents and 1\.35 cents per Kg from the seller and buyer respectively and lot building revenue @ 2\.5 cents per Kg\. from seller, all based
(5)\. Broker's fees and promotion charge are based on gross sales value; ie\. 1% of (Clean wool production * Price per Kg\.)
(6)\. Testing fees revenue is projected at 33% mark up on the testing fees\.
(7)\. Recurrent expenses are shown at the figures inthe project costs as per table 108 and 109 whereever available\. For later years, the figures are estimates\.
7 (a)\. Testing expenses are per cost table 108 from Year I to Year 4\. From Year 5, they are projected @ S 12/ton\. It is assumed that 40% of the greasy wool would be tested in Y
(8)\. Deferred costs are amortized over ten years from year Year 3
(9)\. Depreciation is computed @ 2\.5% on buildings & fixtures and @ 10% on stores & office equipments from Year 4\.
(10)\. Interest on loan is @ 1% per annum amortized over 15 years (with a holiday of initial four years)\. Interest accrues from the fiflth year\.
Tabe 6\.3: KYRGYZ WOOL MARKETING, TESTING AND INFORMATION CENTER - BALANCE SHEET
-Amour m US -o n-
ASSETS Yar I Yer 2 Yar 3 Yr m4 Year 6 Year Yar 7 Year8 Yar 9
Csh mi hend nd at Budc 29,254 48,615 81,092 90,091 51,926 55,765 79,832 113,480 23,323
Invesrnentrll 80,000 400,000 700,000 1,100,000 1,650,000 2,200,000 3,000,000 4,200,000 6,800,000
Fixed AIbtu2
Budkip & Fituns 200,574 406,383 617,502 617,502 617,502 817,502 617,502 617,502 617,502
Stun & Office mi Other Eqmmnu 1,081\.482 1,132,365 1,360,923 1,431,929 1,604\.782 1,504,782 1,504,782 1\.504,782 1\.504,782
Total Groa Fixd Asset 1,262,056 1,538,728 1,978,426 2,049,431 2,122,284 2,122,284 2,122,284 2,122,284 2,122,284
Le Depreciation 0 0 0 158\.630 324,50 480,482 656,378 822,293 988,209
Tetf Net RIWodAss et 1\.282,058 1, 38,728 1,978,426 1,890,801 1,797,738 1,631,822 1,485,908 1,299,991 1,134,075
Tr_iN & Advisoy Servcesco hferrdJ3 392,639 8391 !3\.9 \. ; j\.0 1 201\.275 i,251,6i5 1,2 1,2,i;576 1,i29,56i 1,29,i576i 1 \.2915 i 8
Less mortiad 0 0 120127 245,244 374,402 503\.559 632,717 781,874 891,032
~~~~~~~~~~~~\. _\._\.f\. \. \. \. \. \. \. _ \. \.
Not coal of Aitry SmWcen & Truer 392,8 3 30 j3 1,091, 147 1,005,921 917,175 788,017 658,859 529,702 400,544
TOTAL ASSETS 1,743,949 2,826,481 3,840,555 4,092,913 4,416,837 4,575,604 5,204,597 6,143,172 7,357,942
UABIUTIES
incon Tax P\.yabb4 123,050 277,730 358,905 399,531 479,911 690,055 1,018,176 1,555,200 2,224,108
Long Tnrm Lonalh 1,397,848 2,121,020 2,922,854 3,043,751 3,157,015 2,945,494 2,768,245 2,582,772 2,409,726
Equty16 100,000 150,000 200,000 250,000 300,000 360,000 400,000 450,000 500,000
Retaimd Emimg 123,060 277,730 358,905 399,531 479\.911 690,055 1018,176 15 200 2224,108
Eg*t& ReW EwI 3,052 427,730 5501,418176 ,505,200 2,724,109
TOTAL IUABIUlIES & EQUS Y 1,743,949 2,826,481 3,840,565 4,092,813 4,419,837 4,876,604 5,204,597 6,143,172 7,357,942
NOTES:
11) I suwned that a exce hfurds w4 he ntad *udtiy\.
(2) Vakes of fixd asets we bed on propt cot tlsb 107 and 108\.
(3) Cost of advisoy uiess d tr_ai incurred diring prct knpinwntatin has been deferred id anortind over 10 yeas from Year 2\.
(4) honax taxs accmuted as payab" nd is cnaid each yewr\.
(5) Long erm m b_ repaid frn mYer 5 ovr a pedod of I yean with cmst l 1% per wnm\.
(61 It is iaid that KWMTIC w be abl to rie an eqity of t 100,000 at rncption Wd add on t50,000 every year thereafter\.
Tak 6\.4: KYRGYZ WOOL MARKEING, TESTING AMD INFORMATION CENTER - FUNDS FLOW STATEMENT
lAmounts in US dolbrs)
SOURCES Yar 1 Yer 2 Yer 3 Yuar 4 Year 5 Yer 6 Yer 7 Yer 8 Yar 9
Net profit 123,050 154,681 81,175 40,626 80,380 210,144 328,121 537,024 68,908
Dspreciation 0 0 0 184,194 184,194 184,194 184,194 184,194 184,194
Arortization 0 0 190,918 190,918 190,918 190,918 190,918 190,918 190,918
Interest 0 0 0 0 31,570 29,455 27,682 25,828 24,097
\.~~~~~~~~~~~~~~\. " \. ,\. \. \. \. \.
Intenal Cash Guration 123,050 154681 272,093 415,738 407,062 6147711 730,915 937,964 1,064717
Equity 50,000 50,000 550,000 0,000 50,000 50,000 50,000 50,000 50,000
Other Labilities 123,050 154,681 81,175 40,626 80,380 210,144 328,121 537,024 568,908
Loans 1,397,849 723,171 801,834 120,897 0 0 0 0 0
Totl Souree 1,693,9 1\.082,532 1,205,102 627,261 117,442 874,856 1,109,036 1,524,988 1,787,025
APPLICATIONS
Capital Investment 1,262,056 276,672 439,698 71,006 72,852 0 0 0 0
Other Investment 30,000 340,000 300,000 400,000 200,000 300,000 600,000 1,000,000 1,300,000
Debt Service
Interest 0 0 0 0 31,570 29,455 27,682 25,828 24,097
Principal 0 -0 0 0 113,264 211,521 177,249 185,473 173,048 1
Totsl ft Sebvie 0 0 0 0 144034 240,975 204931 211,301 197,143 0
ChaW in Working Capial 9,254 19,351 103,258 105,5 54,922 92,904 99,173 128 97
Doefrred Charges 392,639 446,50 362,136 49,890 40,411 0 0 0 0
Total Afficatioone 1,893,9 1,082,532 1,205,102 627,261 617,442 874,855 1,108,036 1,524,888 1,787,025
Tabe L\.: KYRGYZ SHEEP INEEDER'S ASSOCIATON - PROFRT AND LOSS ACCOUNT
UAmeato in US du_ __
Yor I Yor 2 Yar 3 Ye r4 Y ow Y6l Yew 7 Ye rI Yaw 9
Toet nbr of mmubml 900 1,500 2,000 2,600 3,250 3,600 4,000 4,500 5,000
Aw shoohap per nmbr2__ 350 450 500 600 660 550\. 600 600 600
Meubw Joig Fe" S*p\.m per r 900 600 500 BOO 650 350 400 500 500
A_I DO U l56canat par dhop emwd 47,250 101,250 150,000 195,000 268,125 297,000 360,000 405,000 450,000
Tota lwavsa 48,150 101,850 150\.500 196,00 218,77M 297,350 360,400 405,500 460\.600
Opwaorog Cst14
Sbrui & Alowuie 14,891 20,683 34,017 40,809 51,973 63,117 54,285 55,480 56,700
Vas" Oparaios 9,117 12,472 22,394 22,976 23,573 24,092 24,622 25,164 26,717
GawWd Sarvie\. 33,226 U,892 62,270 63,896 65,5560 6,998 08,472 69,978 71,618
Total Opwatig Cta 57,235 77,846 118,886 127,680 141,102 144,207 147,379 150\.622 153,836
k\. Profit (B,085 24,004 31,814 07,920 127,673 153,143 213,021 264,878 296,656
Amnultin Coet4 0 0 0 0 115,403 116,403 115,403 115,403 115,403
0 8pr\.chtianll 0 13,323 14,185 14,185 14,185 5,289 5,289 5,289 5,289
_tbmat oule17 0 0 O 0 17,597 16,503 15,399 14,284 13,168
hieamaTa x 50% 14,5421 5,340 8,814 26,807 (9,7561 7,974 38,465 59,961 81,358 o
Not Profit af Aa\.iasa (4,6421 6,340 8,814 26,867 (0,7561 7,974 38,406 68,951 81,358
MProMef Iw f,wKNTEC/9 123,050 154,1 51,175 40,a28 00300 210,144 324121 537,024 55a5
TOTAL MET PROFTI(LO1S3 118,601 110,021 8J\.988 07\.404 70,24 218,118 3661516 596\.175 750,2
IOTES:
1\. It is stimst wi b900 nwmh byd tad ofYr1 YId tIt dthpnbawWiwifech 6000 by rYe 8
2\. Awop Wip pw _ \.ais as essumptins\.
3\. RFau ismanly frunn a m thn\. a-,e afeof $1 per d nn an annual 6 dm cdponfoof I5eants per Wap ownd byaoeh member\.
4\. Opawot costs for t\. fIfot 6year how I\. bad on Ute prq catc i Tobb 106 ad frn Yar 6, they hawe ben proecbd to wmr by 2\.2 % \.voy yew\.
5\. Dafwad ct a weqully mrtitod ovr tan year tr t th ya\.
6\. e n is priW d at20% an v ibu s t 10% on squ*a an stwig tmb \.
7\. aon bmn is proW atano rnaoef 1% per _ bd on a 15 ywortfn n chedule with o c piod of fin yam\.
8\. Nat profitflLosa) afor tan of KWMTIC is conId wh the figms of KSBA\.
Table 6\.5: KYRGYZ SHEEP BREEDER'S ASSOCIATON - BALANCE SHEET
(Amotb si US dolh_
ASSETS YurI Yar2 Yer 3 Year 4 Yar 5 Yer B Yar 7 Yewr Yar 9
Cash i hnd and at Ban 48,150 50,000 50,688 48,189 47,367 85,145 51,870 38,997 75,870
Inest\.entull 100,000 250,000 450,000 700,000 1,000,000 1,050,000 1,200,000 1,400,000 1,000,000
Fixed As12
Equpinmnts 41,229 44,087 52,885 52,885 52,885 52,885 52,885 52,886 52,885
Ve\.obs 44,572 44,572 44,484 44,484 44,484 44,484 44,484 44,484 44,484
Totl Gros Fixed Assts 85,801 88,059 97,309 97,369 97,369 97,369 97,369 97,309 97,309
Las Deprecation 0 13,323 27,508 41,094 55,879 01,167 60,456 71,744 77,033
Tof Not taedAssets 8501 75,336 6\. 75,436,202 30,913 25,65 20,336
Tfming & Advisory Services costs dhferredl3 313,118 663,107 1,031,381 1,089,149 1,154,032 1,154,032 1,154,032 1,154,032 1,154,032
Lass aniortied 0 0 0 0 115,403 230,806 348,210 401,613 577,010
L~~~~~~~~~~~~~~~~~~\. ii i \.d \. \. \. \. \. \. \. \.°\. O°\. \.°\.154\. \.80 \.
Not cot of AdiSarySuvces &T 313,15i 663,167 131\. 1,038,628 83,2 o 0418 577,0918
rOTAL ASSETS (ISIA) 547,M9 1,93J,103 1901,530 1,N1,913 2127,4J5 2974572 2059\.50 21f 7,041 2273222
Asob of KWMTIC 1,743,948 2,920,481 3,840,065 4,092,013 4,416,837 4,575,004 5,204,597 0,143,172 7,357,942
CONSOUDATED ASSETS 2,291,018 3,964,985 5,442,495 5,993,826 6,544,323 6,750,176 7\.295,203 8,300,213 9,131,104
UABIUTIES
Income Tax Payablel4 14,542) 798 9,012 30,480 20,724 34,698 73,162 133,114 214,471 8
Long Tomi LoanslS 456,154 880,908 1,382,605 1,568,053 1,774,038 1,055,177 1,544,280 1,440,813 1,344,279
Equity16 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000
Retaird dE * \. \. \. \.{\.(4,542) 798 9,012 38,480 20,724 34,698 73,162 133,114 214,471
Totd 4vdly & R EinodEa7iks 85,458 150,798 208,612 286,480 326,724 384,688 473,162 583,114 714,471
TOTAL 1lA M TILiES & EaUfTr[(SBAJ 5 S47,050 1,035,503 19001,530 1,581,913 2127,485 2,974,S72 2,990,905 2157,041 2273,222
Liabilities Equity of KWMTIC 1,743,948 2,820,481 3,840,665 4,092,813 4,416,837 4,675,004 5,204,597 0,143\.172 7,357,942
CONSOUDATED EaUITY & LIABILITIES 2,291,018 3,804,985 5,442,495 5,983,820 6,544,322 0,750,176 7,295,203 8,300,213 9,631,163
MOTES:
(1) It is assuned tht al excess funds wi be invested suitably\.
(2) Vds of fixed asts are based on propct cost tab 106\.
(3) Cost of advisory services and trairig incurred durig propct implmentation has been deferred and anortizd over 10 years from Year3
(4) Income tax is accounted as pay"bb and is accrued each year\.
(5) Long tenno as bebing repaid from year Year B over a period of 15 years with interest e 1% per annun\.
(6) It is assunsd that KSBA wi be able to rain an equity of t 100,000 at inception and add on t50,000 every year thereafter\.
(7) The asts and lblties of KWMTIC are being consolidated in the financial statements of KSBA\.
Table 6\.7: KYRGYZ SHEEP BREEDER'S ASSOCIATION - FUNDS FLOW STATEMENT
(Ainoain US dola) _
SwrourYcr I Yer 2 Yew 3 Yfr 4 Yar 6 Y Year Ym 7 Yer 8 Yar 9
Not at (4,542) 5,340 8,814 28,867 19,76B) 7,974 38,465 59,951 81,368
DO rcim 0 13,323 14,186 14,185 14,186 5,289 509 6,289 5,289
Ahni 0 0 0 0 115,403 115,403 115,403 115,403 115,403
hitue 0 0 0 0 17,597 16,503 15,399 14,284 13,158
\.~~~~~~~~~~~~~~~~~ _5 137 \. \.___ \. \. \. \. \. \. \. \. \. \.__ \. \.__
itanW Cuh Go\.watin _4,5 lO1 B B3 23,000 41,053 137,429 45168 174,555 194,927 215,207
Eqity 60,000 50,00 60,,0000 50,000 50 ,000 50000 50,000
Odi\. Lkities 4,642) 6,340 8,814 28,867 (8,756) 7,974 38,465 59061 81,368
LOW _ 466,154 430,754 495,698 185,448 0 0 0 0 0
s*Taed i184A \. Se \. 457,95 5*77 577,512 )34369 1t7,573 291143 28192a1 3657 344
KWMTICe' Searm 1,193,139 1\.082C532 1,20C,102 127,201 617,442 87,815 1\.109,036 1,524,988 1,787,02C
TOTAL SOURCES 2,191,018 1,87\.290 1,782,B13 930,829 795,114 1,077,98 1,372,0C7 1,B29,8BB 2,133,590
APPlCATIONS
C*itd bnhununt 86,801 2,868 8,710 0 0 0 0 0 0
Odth\. I_Mnt 100,000 160,000 200,000 250,000 0 100,000 150,000 160,000 200,000
DebtSi-im
hitant 0 0 0 0 17,597 18,6503 16,390 14,284 13,158 oh
Prbc,d_ 0 0 0 0 118\.861 110,887 103,47 96,535 90,636
rToDtsk \.r 0 0 0 0 138457 127,400 11496 \. 110,919 109,63
Chaw in Woai Cqpta (1,850) 1\.850 588 4,400 (23,667) (24,258) f5,8461 44,069 36,872
DehfenedChla 313,118 350,040 368,214 57,768 64,882 1 a 0 0
Sob redf 1 am W7,W 594757 577,512 30JV 177,073 334143 20J1 miui 3446O
KWMTne\. Applaiemn 1,193,949 1,082,532 1\.205\.102 827,261 617\.442 874,355 1,109,036 1,624,93 1,717,021
TOTAL APPUCATIOS 2C,191,013 1,587,290 1,732,13 930,629 795,114 1,077,998 1\.372Z067 1,829\.861 2,133,590
Ezpanibuu AicuuwM by Co nId- Ilass Coms
Al DO_d Tdbl_ CJS$)
n vdp\. mg o Uvemlock hinpord
- III IDEpL of
Lvwdock _- u and Shee ON Wool Pri I
D0na- Sho R&D Supot D b_pmi
Ag_cAWA Pee111AM Nd Wad Wool Teting
Plated Trlms and _a Land Ky Se_ M Oa and Phyl
- Advhay Ani" bemu R umes b and Gd r hhtdon C_uilrmncks
Unr t SON Hs H _ R RmeAh RID Assocedin Contdrol Sevi Total % AmUM
L we Cod\.
A\. MMl Works
Cndruclo n 50,00\.0 s000\.0 - - 540,000\.0 - 640,000\.0 10\.0 64,000\.0
L Goods
hWpds wd Mdwk - 81,000\.0 1,OD -\.0 1\.736,5000\.0 8 30,000\.0 180,000\.0 11,800\.0 3,512\.300\.0 5\.7 201,230\.0
Cuesu En Cnmurn dlmis 32,000\.0 40,000\.0 70,0W0\.0 16,000\.0 30,000\.0 23\.000\.0 - 211,000\.0 10\.0 21,100\.0
Equad and = hdlhary 11,00\.0 114,150\.0 528,00\.0 254,700\.0 158,000\.0 41,000\.0 338,200\.0 486,S50\.0 1,933,400\.0 10\.0 193,340\.0 V
T1nl 40,000\.0 189,000\.0 120,0W\.0 40,000\.0 w,m\.o 20,\.0 $0,08000 589,000\.0 10\.0 58,900\. 0
Subtotl Goods 83,000\.0 424,1500 2,218,500\. 2,047,200\.0 268,S00\.0 87,000\. 598,200\.0 498,750\.0 6,225,700\.0 7\.6 472,570\.0 ; j
C\. TrdMn\.Wl - 225,000\.0 52,200\.0 50,000\.0 50,000\.0 131,800\.0 240,000\.0 - 741,W0\.0 - -
D\. TraInIg-Locel 24,000\.0 258,000\.0 100,000\.0 - 100,000\. 70,000\.0 240,000\.0 - 792,000\.0 M
L Technca Aaalgance
I anIIonel Conaukeds 434,0W\.0 900,000\.0 312,000\.0 210,00\.0 156,000\.0 900,00\.0 378,000\.0 126,000\.0 3,416,000\.0 -
Lood Caiuawds 420,D00\.0 - 0 - * - 135,000\.0 51,500\.0 -
Subtotal Techncal Asstance 854,WO\.0 _ 90,\.0 318,500\.0 2156,WO 900,O\.0 513,00\.0 128,000\.0 3,977,500\.0 -
Total Invedmad cosa 961,000\.0 1,807,150\.0 2,739,200\.0 2,357,200\.0 574,90\.0 1\.188,800\.0 2,131,20\.0 624,750\.0 12,384,200\.0 4\.3 536,570\.0 n #4
\. Recurredn coats
A\. Saml\.e 3,500\.0 483,300\.0 16,300\.0 119,80\.0 114,9000 150,100\.0 243,120\.0 46,500\.0 1,329,220\.0 - -
B\. Minwimc - 167,500\.0 - - - - - 167,500\.0 -
C\. OthwrOpwrhg Coms 88,500\.0 13,500\.0 64,800\.0 710,000\.0 120,240\.0 324,W\.0 34,500\.0 262,5009 1,815,040\.0 *
TotalR tCos 9,000\.02 664,300\.0233,1000\.0 2351400 474,1\.0 277,620\.0 30s,ww\.0 3,111,760\.0
Total ASUSECOSTS 1,050,0W\.0 2,971, Z\.0 2,300\.0 3,186\.700\.0 810,040\.0 1,662\.900\.0 2\.408,820\.0 933,750\.0 15,495,060\.0 3\.5 536,570\.0 S
Pho cdC ucI 8s,300\.0 42,415\.0 76,860\.0 20s,720\.0 26,090\.0 8,700\.0 113,820\.0 49,875\.0 536,570\.0 - -M
Price Cmodnenc 47,712\.7 129A09\.0 175,1072 128,891\.8 23,452\.1 90,65e\.4 123,6625 26,361\.8 745,253\.6 2\.3 17,458\.0
Totdal PROJECT COSTS 1,108,012\.7 2,643,274\.0 3,224,2572 3\.525,311\.8 860,382\.1 1\.762,256A 2,646,302\.5 1,009,986\.8 16,M7\.73\.6 3\.3 564,028\.0
Tomn\. - - -\. \. \.
Foreign Efhag 601,2532 1,758,634\.8 2,904,472\.3 2,733,4022 547,345\.2 1,237,506\.8 2,026,392\.2 917,116\.6 12,726,1232 4\.4 554,028\.0
Expendure Accounts by Copoets - Tobtas induding Cotingenc
All Dibld Tabls (US$)
Developrmet of Uveatock Support
Services
Strnghtang Dept of
Livestock Managmt an Shep and Wool Privat Entepris
Developrimt Shep R&D Support Devdopmwnt
Agricultural Pasturesd Wool Wool Tesing
Proect Training wnd Shep Land Kyrgyz Shep Marketing and
hnetatlon Advisy Anil Breedng Resourcs Breedws and Qulity Inbmion
Urit Sevices Health Resrch R&D Associaon Control Sutvice Total
L nvestbnen Costs
A\. ClI Works
Consructon - - 55,715\.0 55,715\.0 - - 617,502\.4 - 728,932\.4
B\. Goods
InpeA endWMials - 94,272\.5 1,617,576\.8 1,967,471\.5 - 3,342\.9 211,278\.6 13,148\.7 3,907\.091\.0
CornpAes and Cemmuniafions 35,657\.6 45,576\.8 79,644\.5 17,828\.8 33,429\.0 25,834\.0 - - 237,970\.7
Equxmert and Machiney 12,257\.3 132,854\.4 603,002\.3 286,037\.4 177,065\.2 45,993\.9 388,516\.3 543,500\.4 2,189,227\.2
Tmran 44,572\.0 219,969\.2 135,454\.3 45,745\.9 89,144\.0 22,286\.0 91,491\.9 - 648,6\.3
Subtotad Goods 92,486\.9 492,672\.9 2,435,677\.9 2,317,083\.7 299,638\.2 97,456\.8 691,286\.7 556,649\.2 6,982,952\.2
C\. Trainng4in - 233,902\.4 54,265\.4 50,650\.0 50,650\.0 142,221\.8 251,145\.4 - 782,834\.9
D\. Tranng - Local 24,312\.0 273,950\.8 102,616\.9 - 101,300\.0 76,200\.4 251,415\.5 829,795\.6 ON
E\. Techncal Assistanee
lntemationuCornsubrts 448,917\.8 927,169\.4 320,897\.7 216,058\.2 159,940\.8 935,609\.6 392,956\.0 129,112\.9 3,530,662\.4
Local Consulants 448,166\.7 - 6,701\.9 - - - 144,053\.6 - 598,922\.1
Subtotal Technical Assistance 897,084\.5 927,169\.4 327,599\.6 216,058\.2 159,940\.8 935,609:6 537,009\.6 129,112\.9 4,129,584\.6
Total InvesbTme Costs 1,013,883\.4 1,927,695\.5 2,975,874\.8 2,639,506\.9 611,528\.9 1,251,488\.6 2,348,359\.6 685,762\.1 13,454,099\.7
II\. Recurren Codst
A\. Salaries 3,598\.5 521,002\.5 180,381\.5 127,378\.9 121,920\.8 162,373\.5 261,129\.3 49,123\.5 1,426,908\.6
B\. Maitenance \. - 180,170\.6 - \. - - - - 180,170\.6
C\. Olher Operatng Coats 88,530\.8 14,405\.4 68lODo9 758,426\.0 126,932\.4 348,394\.3 36,813\.7 275,101\.2 1,716,B04\.6
Total RcurrndtCosts 92,129\.3 715,578\.5 248,382\.4 885,804\.9 248,853\.2 510,767\.8 297,943\.0 324,2247 3,323,B83\.9
Total PROJECT COSTS 1,106,012\.7 2,643,274\.0 3,224,257\.2 3,525,311\.8 860,382\.1 1,762,256\.4 2,646,302\.5 1,009,986\.8 16,777,783\.6
TaM - - -
Fonegn Exchange 601,253\.2 1,758,634\.8 2,904,472\.3 2,733,402\.2 547,345\.2 1,237,506\.8 2,026,392\.2 917,116\.6 12,726,123\.2
Projet Components by Year - InvestmentURecurrent Costs
All Detailed Tables (USS)
Totals Including Contingencies
1996 1997 1998 1999 2000 Total
A\. Develpmnent of Livestock Support Services
1\. Projet Implementation Unit
Investent Costs 372,074\.9 276,463\.9 179,148\.6 91,903\.2 94,292\.7 1,013,883\.4
Recurent Costs 59,868\.3 8,418\.6 8,104\.3 7,768\.0 7,970\.0 92,129\.3
Subtotal Project Iplemethation Unit 431,943\.2 284,882\.5 187,253\.0 99,671\.2 102,262\.7 1,106,012\.7
2\. Strenghtening Dept of Livestock Management and Deveopmnent
Agricultural Trainig and Advisory Services
Investment Cosb 728,200\.1 626,229\.7 306,608\.1 134,055\.6 132,601\.9 1,927,695\.5
Recurrent Costs 83,775\.1 115,730\.3 139,373\.4 171,388\.6 205,311\.2 715,578\.5
Subtotal Agricutural Training and Advisory Services 811,975\.2 741,960\.0 445,981\.4 305,444\.2 337,913\.1 2,643,274\.0
Animal Health
Investment Costs 603,292\.2 1,043,703\.2 481,728\.5 426,201\.3 420,949\.7 2,975,874\.8
Recurrent Costs 40,418\.7 59,034\.4 55,237\.5 49,015\.1 44,676\.8 248,382\.4
Subtotal Animal Heith 643,710\.9 1,102,737\.6 536,966\.0 475,216\.3 465,626\.4 3,224,257\.2
Subtotal Strenghtenhng Dept\. of Uvestock Management and Development 1,455,68\.1 1,844,697\.6 982,947\.4 780,660\.6 803,539\.6 5,867,531\.2
Subtotal Development of Uvestock Support Services 1\.887,629\.3 2,129,580\.2 1,170,200\.3 880,331\.8 905,802\.3 6,973,543\.9
B\. Sheep R&D Support
1\. Sheep Breeding Research
Investnt Costs 1,797,639\.4 350,974\.0 259,147\.0 224,090\.7 7,655\.7 2,639,506\.9
Recurrent Costs 157,926\.7 175,024\.5 179,575\.2 184,244\.1 189,034\.5 885,804\.9
Subtotal Sheep Breeding Research 1\.955,566\.1 525,998\.6 438,722\.2 408,334\.8 196,690\.1 3,525,311\.8
2\. Pastures and Land Resources R&D
Investment Costs 560,877\.8 25,058\.4 25,592\.7 - - 611,528\.9
Recurrent Costs 74,820\.2 38,663\.4 62,318\.1 24,288\.7 48,762\.8 248,853\.2
Subtotal Pastures and Land Resources R&D 635,698\.0 63,721\.8 87,910\.8 24,288\.7 48,762\.8 860,382\.1
Subtotal Sheep R&D Support 2,591,264\.1 589,720\.4 526,632\.9 432,623\.6 245,452\.9 4,385,693\.9
C\. Sheep and Wool Private Enterprise Development
1\. Kyrgyz Sheep Breeders Association
Investment Costs 398,919\.4 352,907\.2 377,011\.9 57,767\.7 64,882\.4 1,251,488\.6
Recurrent Costs 55,411\.1 75,767\.7 116,126\.7 125,054\.0 138,408\.2 510,767\.8
Subtotal Kyrgyz Sheep Breeders Association 454,330\.5 428,675\.0 493,138\.5 182,821\.8 203,290\.6 1,762,256\.4
2\. Wool Marketing and Quality Control
Investment Costs 741,399\.5 581,925\.3 784,878\.9 140,699\.5 99,456\.4 2,348,359\.6
Recurrent Costs 41,877\.4 49,825\.9 63,533\.8 70,437\.3 72,268\.6 297,943\.0
Subtotal Wool Marketing and Quality Control 783,276\.9 631,751\.2 848,412\.6 211,136\.7 171,725\.0 2,646,302\.5
3\. Wool Testing and Information Service
Investment Costs 613,295\.5 61,632\.7 3,519\.0 3,610\.5 3,704\.4 685,762\.1
Recurrent Costs 74,860\.7 105,077\.1 97,678\.6 37,964\.8 8,643\.5 324,224\.7
Subtotal Wool Testing and Information Service 688,156\.2 166,709\.8 101,197\.6 41,575\.3 12,347\.9 1,009,986\.8
Subtotal Sheep and Wool Private Enterprise Development 1,925,783\.7 1,227,136\.0 1,442,748\.8 435,533\.8 387,363\.5 5,418,545\.8
Total PROJECT COSTS 6\.404,657\.0 3,946,436\.5 3,139,582\.1 1,748,489\.2 1,538,618\.7 16,777,783\.6
Total Investment Costs 5,815,698\.8 3,318,894\.7 2,417,634\.5 1,078,328\.6 823,543\.1 13,454,099\.7
TotlRecurrent Costs 588,958\.2 627,541\.9 721,947\.6 670,160\.6 715,075\.6 3,323,683\.9
Components Projct Cost Summary
All Dabded Tabls
% % Total
(SOn) (US$) Foreign Base
Local ForS\.n Total Local Foreign Total Exchange Costs
A\. Devekomn_t of Livestock Support Sevices
1\. Prect hpeeton Unit 5,050,921\.2 6,079,078\.8 11,130,000\.0 476,502\.0 573,498\.0 1,050,000\.0 55 7
2\. Slreaghtenng Dept of Lvestox Manag_ ent and Devopnwnt
Agur Tralning and Advboy Svic 8,740,083\.7 17,457,286\.3 26,197,370\.0 824,536\.2 1,646,913\.8 2,471,450\.0 67 16
nimal HeM 3,218,185\.4 28,288,194\.6 31,50S,380\.0 303,6D2\.4 2,o8,897\.6 2,972,300\.0 90 19
Subto Stenqteng DepL of Livesack Managemnt and DevWopment 11\.958,289\.2 45,745,4808 57,703,750\.0 1,128,138\.8 4,315,611\.4 5,443,750\.0 79 35
SubtaloDeveopment of Livesock Support Services 17,u09,190\.4 51,824,559\.6 68,833,750\.0 1\.604,640\.6 4,889,109\.4 6,493,750\.0 75 42
B\. Sheep R&D Support
1\. Sheep Brdhg Re"ech 7,860,673\.8 25,918,346\.2 33,779,020\.0 741,573\.0 2,445,127\.0 3,186,700\.0 77 21
2\. Pasr aNd Land Roeeoce R&D 3,175,920\.7 5,410,503\.3 8,588,424\.0 299,6152 510424\.8 810,u40\.0 83 5
Subtl Shep R&D SWport 11,036,594\.5 31,328,849\.5 42,365,444\.0 1,041,188\.2 2,955,551\.8 3,996,740\.0 74 28
C\. Sheep and Wool Privat Entepr O oprnt
1\. KyrgWz Shee Sweden Associaon 5,156,109\.2 12,470,630\.8 17,6740\.0 486,425\.4 1,176,474\.6 1\.662,900\.0 71 11
2\.WoolMfignd widQueRyContrIl 6,184,488\.2 19,349,003\.8 25,533492\.0 583,442\.3 1,825,377\.7 2,408\.820\.0 76 16
3\. Wool Testg and hibonfon Sevice 938\.163\.6 8,959,586\.4 9,897,750\.0 88,50o\.0 845,244\.0 933,750\.0 91 6
Subol Shpand Wool Priva Entarprie Develpment - 12,278,71\.0 40,779,221\.0 53,057,982\.0 1\.158,373\.7 3,647,096\.3 5,005,470\.0 77 32
Todi BASELNE COSTS 40,324,545\.9 123,932,630\.1 164,257,176\.0 3,804,202\.4 11,691,757\.6 15,495,960\.0 75 100
F- Crhgen_s - 5,887,642\.0 5,887,842\.0 - 536,570\.0 536,570\.0 100 3
Prc Co n 2,623,053\.7 5276,634\.2 7,899,687\.8 247,457\.9 497,795\.7 745,253\.6 67 5
Toti PROJECT COSTS 42,947,599\.5 134,869,0S\.3 177,844,505\.8 4,051,660\.3 12,726,1232 16,777,783\.6 76 108
z
zr
Expendiure Accounts by Yers - Base Costs
All Debied Tables (USS)
Bas cost Foreign Exchange
1N 1107 lowS 1N 2000 Total Anount
L hwesbvmU Code
A\. ClV Works
Consruction 230,000\.0 180,000\.0 180,000\.0 - - 640,000\.0 100\.0 640,000\.0
B Goods
Inpis and Maerials 1,390,500\.0 481,700\.0 606,700\.0 606,700\.0 426,700\.0 3,512,300\.0 100\.0 3,512,300\.0
CompuArsand Commuricabon 163,000\.0 6,000\.0 36,000\.0 5,000\.0 1,000\.0 211,000\.0 100\.0 211,000\.0
Equipmen and Machinery 1,124,150\.0 568,825\.0 148,375\.0 46,025\.0 46,025\.0 1,933,400\.0 100\.0 1,933,400\.0
Tranwport 323,000\.0 91,500\.0 91,500\.0 31,500\.0 31,500\.0 569,000\.0 100\.0 569,000\.0
Subtotal Goods 3,000,650\.0 1,148,025\.0 882,575\.0 689,225\.0 505,225\.0 6,225,700\.0 100\.0 6,225,700\.0
C\. Training-Int'l \. 279,000\.0 179,200\.0 185,200\.0 72,800\.0 32,800\.0 749,000\.0 100\.0 749,000\.0
D\. Trainkg - Local 290,100\.0 190,600\.0 173,100\.0 66,600\.0 71,600\.0 792,000\.0 10\.6 83,952\.0
E\. Technical Assistance
International Consulbnts 1,461,000\.0 1,275,000\.0 666,000\.0 14,000\.0 - 3,416,000\.0 100\.0 3,416,000\.0
Local Consulnts 114,750\.0 112,650\.0 111 550\.0 111,550\.0 1 1 1,000\.0 561,500\.0 10\.6 59,519\.0
Subtotal Technial Assistance 1,575,750\.0 1,387 6500 77,550\.0 125,550\.0 111,000\.0 3,977,500\.0 87\.4 3,475,519\.0
Total Invesbnnt Costs * 5,425,500\.0 3,085,475\.0 2,198,425\.0 954,175\.0 720,625\.0 12,384,200\.0 90\.2 11,174,171\.0
II\. Recurrent Costs
A\. Salaries 208,140\.0 223,640\.0 278,880\.0 285,280\.0 333,280\.0 1,329,220\.0 10\.6 140,897\.3 0"
B\. MaIntenance 23,000\.0 28,250\.0 33,500\.0 38,750\.0 44,000\.0 167,500\.0 10\.6 17,755\.0
C\. Ow Operatfng Costs 350,260\.0 351,900\.0 364,640\.0 288,500\.0 259,740\.0 1,615,040\.0 22\.2 358,934\.2
Todal Recurent Costs 581,400\.0 603,790\.0 677,020\.0 612,530\.0 637,020\.0 3,111760\.0 16\.6 517,586\.6
Total BASEUNE COSTS 6,006,900\.0 3,689,265\.0 2,875,445\.0 1,566,705\.0 1,357,645\.0 15,495,960\.0 75\.5 11,691,757\.6
Physical ConVgnies 315,565\.0 107,802\.5 68,757\.5 31,422\.5 13,022\.5 536,570\.0 100\.0 536,570\.0
Price Contin 82,192\.0 149,369\.0 195,379\.6 150,361\.7 167,951\.2 745,253\.6 66\.8 497,795\.7
Total PROJECT COSTS 6,404,657\.0 3,946,436\.5 3,139,582\.1 1,748,489\.2 1,538,618\.7 16,777,783\.6 75\.9 12,726,123\.2
TOM_s
Foreign Echange 5,554,051\.6 3,170,544\.0 2,281,902\.8 1,001,523\.8 718,101\.1 12,726,123\.2
Tabke 101\. Projea Im nttion Unit
Debied Cots
AU Detaied Tables (USS)
Quane Tota Includhg Conomnie
UnK low 19S7 1096 1900 2000 Total Unit Cost 1*9 1917 10 1m 2000 Total
L lieveatnus Cofta
A\. Adviemy 6\.1*ss
P\.ed m ru month 6 12 6 - - 24 14,O0D 85,092\.0 174,808\.8 89,574\.3 - 349,2751
Acoo_mtiProcwmnt month 6 1 - 7 14,000 85,092\.0 14,550\.7 8- - 99,42\.7
Subh Adetmy Owvle 170,184\.0 189,fS9\.5 89,574\.3 - - 448917\.8
S\. Locet ttpub
Proect Mrnw per 2 2 2 2 2 10 21,000 42,548\.0 43,852\.2 44,787\.2 45\.951\.6 47\.146\.4 224,083\.3
Fmwxclewlew PemorVyr 1 1 1 1 1 5 21,000 21,273\.0 21,826\.1 22\.393\.6 22,975\.8 23,573\.2 112,041\.7
PrOcznin Speck" petaVyr 1 1 1 1 1 5 21,000 21,273\.0 21,828\.1 22,393\.6 22,975\.8 23,5732 112,041\.7
Sukbbta Local Expqb 85,092\.0 87,304\.4 89574\.33 91903\.2 9429-27448166\.7
C\. CUe Eqorpult
Con computr 10 * - - \. 10 2,000 22,286\.0 - - 22,286\.0
Pril prhu 5 - - - 5 2,000 11,143\.0 - - - 11,143\.0
Fo fax 2 - - - 2 1\.000 2\.228\.8 - - - 2,22&8
Phdotocopls-4\.g each 1 - - - - 1 10\.00 11\.143\.0 - - - - 11,143\.0
\.mm each 1 - - - -I1 1\.000 1,114\.3 - - \.- - 1,114\.3
4Awdt Drive cw 2 - - - - 2 20,000 44,572\.0 7\. - 2\.0
_aU OI6\.e -mM 92,486\.9 - \. 92\.486\.9
D\. Trelng
Coaueput i dudy taw wnotx 3 - - - 3 8,000 24,312\.0 - \. - 24,312\.0
Toh Cost 372,0 74\.9 278,463\.9 179,148\.6 91,903\.2 94,292 1,013,883\.4
IL ftemw,ui Costs
A\. CPua ll blpue\.
Lel CO _Mancjs uoat 2\.026\.0 1,039\.3 533\.2 - - 3,598\.5
PIU Sqppw taff persmnw 8 8 6 8 8 30 600 3\.646\.8 3,741 8 3,838\.9 3,93\.7 4\.041\.1 19\.207\.1
Vee Opuron sech 2 2 2 2 2 10 1,750 3,545\.5 3,637 7 3,732\.3 3,829\.3 3,928\.9 18,873\.8
SaUMY un3ut 5,065\.0 - 5,065\.0
mlee nosm 45,5f5\.0 -- - 45,585\.0
Totdl RecuutCota so 3 8\. 1043 77680 7970\.0 92129\.3
TOW0 431,943\.2 284,882\.5 1871253\.0 102996271\.2 1\.7 10,012\.7
T*b0I AW_Tnag NW A& S hut
D*_kd TwmN
UlS1 eeT1 1wmn T_ o 1 nT1 m Tdum CTdow
E_"wDOh_r 0\.5- 2\.5 sBA U 18o2,160\.0 IG?' e\.e e5sM2\.6 4e5\.3s3\.3
_ S_m* _ ds 1V* 2 1 o,p0p 182\.340\.0 187,e\.e -\. 3e9,42p\.e
fte6d_e Spdl WAF 3 \. a e 1Ap 45s5 s\.o1 40,770\.2--- t5\.
_I L_ ATA Vlpso 410\.2115\.0 420,231\.9 95\.972\.5 0 27\.10A
C _~~~~~~~~~~~~~~~~~~md 3 I a 2,000 e,e \.e 2,2ee\.5 2,34e\.0 2,407\.0 13s,725\.3
F_ Pw 3 1 0 2,000 e, s1\.e101 2,2ee\.5 2\.34e\.e 2,407\.0 \. 3,725\.3
_ S~~~~~~~~~~~~~~~~~~e 2 * - \. \.2 2 Poo 4\.45f7\.2 --\.- 4,457\.2
Fox_l 2 1 e1,o e\.e,143\.3 1\.173\.0 1,203\.5 1,234\.0 Cm@\.1
Fall X1 2 1 1 j I t 1,000 2,27e\.e 1,sa\.X 1,17s,0 1,20s\.5 1,234\.l e,se3\.r~~~01\.00 222841 1,13\.3 1,73\. 1,03\. 1234$ sW\.
C_ TA $ q _tm' 29,971\.9 G,Bs"\. 7,03e\.0 7\.221\.0 2,4es\.e s2\.500\.0
1\._*mpa o
$411 2 1 6 I e \.ooo 2,22e\.e 1143\.3 1,173\.0 i,203\.5 1,234\.0 G\.903A
SmF_h Tom o 2 1 a l,ooo 2\.221\.0 1,143\.3 1,173\.0 1,203\.5 1,234\.0 6,9e8\.i
M"SFhv Pkwdw 2 1 1 1 4,500 10,02e\.7 5\.l44\.7 5,27B\.5 5,415\.7 s,sse\.s 31 ,424\.2
_PO9 2 1 1 1 I e 2,000 4,457\.2 2,29e\.s 2\.34e\.0 2X407\.0 2\.44es\.e 13,see\.3
wow pe Od 2 1 1 1 I a 25 55\.7 20\.e 29\.3 30\.1 30\.0 174\.e
C&AMNPf pro 2 1 1 1 1 e e,0op 13,371\. e,eso\.e 7,03e\.0 7,221\.0 7,40B\.7 41,8011\.9
_ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~Sd 2 1 1 1 I e l,oo 2,22e\.A 1,143\.3 1,173\.0 1\.2113\.5 1,234\.e e,se\.i
Tl_ih Id 2 1 1 1 I e 2,500 5\.571\.5 2\.ese\.2 2\.N22 5 3,ooe\.7 1,pe7\.0 17,457\.9
_Olw 1Oc 40,170\.5 20,eo7\.5 21\.143\.3 21\.e93\.0 22,257\.0 125\.e71\.3
C_ S~~~~~~~~~~~~~~~~~O 2 1 1 1 I a 4\.500 10,028\.7 5,144\.7 5,278\.5 5,415\.7 s,sse\.s 31,424\.2
Sm d stcst 2 1 1 I I e 4\.500 10,0211\.7 5\.144\.7 5,278\.5 5\.415\.7 5,s55\.5 31\.424\.2
Id 2 1 1 1 I e 4,500 10\.02e\.7 5,144\.7 5\.278\.5 5\.405\.7 5,55e\.s 31,424\.2
a F _Lad " 300ee\.i i5\.434\.2 i5se35\.5 16247\.2 16eee9\.e s42n2\.5
D\. V d Evs 70\.258\.0 30,04i\.0 3e\.978\.7 37\.s40\.2 30es2e\.0 220,14\.8 0
Mb4WD I Ie I a 1500 1 3wo ,429\.0 17,140\.1 17,595\.0 1D,052\.4 10,521JS 104,747\.2 X0
_ew~~~~~~~~~~~~~~~~~~~ 2 1 1 1 I e 12\.00P 20,7a3\.2 13,719\.3 i4,07e\.0 14\.441\.9 14,B17\.4 $3,797\.8
mowreyde ~~~~ca 10 5 5 5 5 30 900 10,02e\.7 5,144\.7 5,27e\.5 5,415\.7 5,558\.s 31,424\.2
L T,kf 70\.200\.9 3e,013\.1 3e,s4s\.4 37\.910\.1 3e,es\.1r1\. 219,9s\.2
h*t Ps 10 Io o \. - 30 7,500 75\.075\.0 77\.95P4 79,077\.1 -- 233,902\.4
Su$ Tnsbbg per" t a e O e 30 eso 3,e4e\.8 3,741\.e XR3,9Ms 3,s3e1\.7 4,041\.1 19,W7\.1
Et\. Sdtirf T h9 p 30 30 30 30 30 ISO eop 1e,234\.0 1s,n\.70\. 1s,104\.5 Is,S3\.M 20\.20\.0 se,o35\.7
Fmnm_T g* morth 500 250 2s0 250 250 1,500 IW0 soeso\.o 25\.M\.5 2eess1\.0 27,352\.2 2soe3\.3 150,707\.9
Totd - Cg1 148e50se 12efe93\.5 12se0s\.5 sose4M\.4 52uO1\.0 507ss63\.2
L Twrwtcd* 728\.200\.1 eU22,n\.7 3M\.W6a\.1 134,056\.e M\.26411\.0 i,927,05s
sus "WY * 9 12 Is le eo 1,e00 10\.940\.4 1e,a37\.3 23,033\.4 20,540\.3 30\.370\.1 116,721\.4
E_wNsall "WY 27 42 57 as *1 27e 1,200 32,821\.2 52\.3e2\.e 72,11M\.1 90,590\.3 10W\.110\.2 357,U43\.4
ass sStr U-1 2 2 3 4 s le eop I1,215\.e 1,247\.2 1,919\.4 2\.e25\.8 3,3e7\.0 10,375\.7
Drhmm ~ ~ ~ ~ ~ ~ S Wb' 3 4 s e 21 Soo I,11ZIA 1\.e70\.0 2,5511\.3 3,282\.3 4\.04i\.1 1357e\.0
mh emd mrh a \.s l \.5 - 365 e oo MUGA0 I1 i24\.9 M9B\.9 22,4tS\.2
_ * dwiAm 57,74a\.0 a s5s2\.e 100,771 \.r 23\. se\. 20\.
4WD p\.m\. 2 3 4 5 e20 1,750 3,545\.5 5\.4se\.5 7,4e4\.5 s,573\.3 ar,jes\. 37\.92e\.4
se" ~~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~P\.O\. 2 3 4 5 e 20 1,750 3,545\.5 5,45t\.5 7,4a4\.5 9573\.3 11,781\.0 37\.e2e\.4
c\.r Pa 2 3 4 s e 2D 1,750 3\.545\.5 5,45t\.5 7,4e4\.5 \.sn71\.3 11\.ne\.t 37,4126\.4
CdGnal 9Vk p IDAM3\.5 1e,38s\.0 22,30N\.6 2s,719\.8 3s\.3ss\.e 113\.470\.2
0m ski le 12 1 2 1 2 12 2 eo 75 911\.7 IM3\.4 950\.7 9U4\.7 1\.010\.s 4,901\.9
P&T wUm 12 1 2 1 2 12 t o IO 1508,23\.4 1,070\.8 1\.019\.A 1,9N0\.4 2,020\.0 s,eo3\.s
E_~~~~~~~~~~~~~~~~~wm I _ I I I I 5 12,500 12\.Me\.5 12\.991\.7 13,329\.5 13,e7e\. 14,031\.7 88,691\.5
To Rm css s\.,397\.e 1s\.7s7\.s 10,2DB\.7 It,AWA\. 17\.062\.5 811\.008\.
ToS a7751 IISnoo 445g3eng4 305'44482 23°3759t31 2\.ta\.27 0~~~~~~~~~~~~~~~~~~~0107\.2 74\.1100 4506 A 30,44\. 37\.131 \.63,4\.
i E_usnbe b S |g \.s_beg dh d5 \. rolcu T ueo b d s Sp,ora p wn , hio ppo h o fl
Tl 103\. Fb HaM
Detailed C\.b
Al Da0a Tea (US$)
Quanrtlil\. Totals ibelLudina Conti l9flh
Unit 1 17 1000 100 2000 Total Unit Cot Is" 17 1 10n0 20 TOt
&k Equip-n
CmtA* Canv 6 - 4 \. \. 10 2\.000 13,371\.6 9,384\.0 * - 22,766\.6
POW0~ p\.ie 6 4 - - 10 2,000 13,371\.6 \. 9384\.0 * 22,755\.6
Sd S 6 - 6 - 12 2\.000 13,371\.6 14\.076\.0 - - 27447\.6
Fox to ea - - 6 1\.000 6,665\. - - * 6,66s\.s
Lob ELAr idph 2 - - - - 2 10\.O0 2,226\.6 - - 2220\.6
LoalES n Ss 2 - * - 210\.000 2z 60 2Z26\.0
o0 ~aUIac 84 -42****2 1so 2s\. - * 2s\.
-q ii12 - - 2 10\.00032,8439 - 126\.446\.1
bc ~ Ca" Bpi m d nmi 2 1 - - 3 14,000 20,364\.0 14,650\.7 \. - - 42,914\.7
otwc spad o 1 1 - - 2 14\.000 14\.1820 14,550\.7 - - 20\.732\.7
E qdwiitg8 magih 3 2 1 1 - 7 14\.000 42,46\.0 20,101\.5 14,929\.1 15,317\.2 \. 101,893\.7
Pfac\.nwug-Vm udayoda omit 3 2 - - - 5 14\.000 42,46\.0 29,101\.5 - - - 71,647\.5
R\.g,"y Sp*Ma nmxh - - I - 1 14\.000 - - 14929\.1 - - 14129\.1
F\. Y S1 Var k wood Wo,760\.0 - - - * 60780\.0
h_pr\.~ day 150 6s 22 22 260 25 3 796\. 18714\.9 56\.5 W017 - 67019
StMctalAdvlaotyauva 19221\.e 69,019\.3 30,444\.6 15,919\.0 -32t9\.
C\. Tiulln
hITdg pa 2 2 2 - a 6 8\.700 17\.262 18,064\.5 16,564\.7 - * 54,26\.4
Loed v" ohV 50 W 0 - - 100 1\.000 so,e so\.0 sts66S * - - 1o
Subo Tra 6s,272 70,051\.4 18,554\.7 * \. 1s56\.z3
D\. T _utopon
4VW*U e - 3 - - - 3 20\.000 - 68,596\.3 - - - e\.s596\.3
ca cv 3 - 3 20\.000 66,s86\.0 \. - - 66
Ubtota T _npmtion 66,858\.0 66\.596\.3 - - * 135,484\.3
E C aW U \.l t1w,0 * -- - 1\.000 60 55,715\.0 - - - - 55,715\.0 C
F\. 191__ %
Vacdra pwchmn 50o 1\.000 1,500 1\.500 1,500 6,000 250 126\.25\.0 256,834\.5 399,885\.3 410\.2023 420\.949\.7 1,61576\.8
Pwcl O_as o \.qgnanlOvawt It - 556201\.7 - - - 55S,201\.7
Subtotal Uoao 4102823 4209497 217377\.5
T~ tov w Coot\. 603,292\.2 1,043\.7032 481,728\.5 426,201\.3 4209497 297 \.574\.6
L Recuren Co0
A uina Remouroga
1\. _obf
vtowVW 3 5 5 5 5 23 2100 6,381\.9 10,913\.0 11,196\.8 11,487\.9 11,766\.6 51,7612
&poprt dS 2 4 4 4 4 18 a o 1823\.4 3741 6 3638\.9 3s7 4041\.1 17383\.7
SubtEt Epdmo 206\.3 14,654\.7 'U05\. 1Lm268 1 69,160\.
L Dl@Useis
Vg00t o 2 5 5 5 5 22 2,O1 4,254\.6 10,913\.0 11,196\.8 11,U 47\.9 11,785\.6 49\.638s
TadII YEAR 4 6 6 6 6 20 1,20 4,8824 7,483\.2 7,677\.8 7\.877\.4 8\.062\.2 3563\.1
Tr" V 2 3 3 3 3 14 900 1\.8234 28062 s8792 2,964\.0 3,030\.8 13,493\.7
aIoUs_ mm 2 5 5 5 5 22 100 2Oe6 519\.7 533\.2 547\.0 5613
Subowl DagnoSs l1,143\.0 21,7M2 22,61 22,800\.4 23,4601 10 1 \.479,
3\.CuLtTM" y- 6 2 2 - - 10 1,000 6\.078,0 2,078\.7 21327 - , 10,29\.4
4\. Ada SOW 4 4 4 4 4 20 1,200 4\.st4 4,968a 5 118\.5 5,251\.6 s\.31t2 26809\.5
Sublotal Huan _mou 302r8\.7 43U 4\.443 4544\. ue6 447t\.s8- 5\.U\.3
S\. AWd R_asch As 5\.085\.0 5196\.7 5,331\.8 5\.470\.4 \. 21\.0631
C\. PF npg sn 10 393 4 5533160 B - 20\.7902
TOWItalRce CoUt 418\.7 C9,0344 552\. U,4015T1 678
Tetal U43\.710\.9\. 1\.19,737\.6 536ss6\.0 45,2163 465\.8264 ' 3,724,257\.2
* w tiebjot puno0Uulein1dpi
70 - ANNEX A
\.-- so j* n;4t,en -yy att I\.o *qr iv"e na\. 03t
X~ ~~~~~* z1 z ss \.e 351-I-
\. \.R I In\. \. o\. o \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. I
\. * @ | S S o o \. e \. \. \. \. \. \. \. \. \.
\. \. \. \. -R R -Z t z t w - i ! i
\. \. \. \. r\. \. - - - --T-
"~~~~~~~~~~~~ ~ II z1 I' t ttt 4 n^_ eyQ-, g o- - II \.8 o ,
\. \. \. \. \. \. \. J~~Ii
X I\. I R °°°I hi~ " - e --"--- '\.Ss -°1 -F-e 1AI
I: - \. \. \. \. \.
-H _ i \. \. \. \. \. \. \. \. \. \. \.
1-u ------- - --- ------- ---
f\. d d i d d
IflUIIR I RM~~~~ *I~~I~~ II
TO\. 105 Pac a Lw4 0t\.C A-\. h
it Cab
Al Dods Ta\. (LES)
f lnan San cow TOWd hCit\. Ci -hatig
URN ion ori iiOn 1 ir 7 as Ain 20 rc is tiOr Ig M I st 21t Ta*
L SWegmaNCee
A\. Pulls, 0yfw
comomad
C-\.W" --*N 3 5 2,0o 6\.0005 - ,000\.0 0,01\. \.0,MA
Cod 3 -3 1\.000 3,*--0 3,0000 34\.2 - * - 3,342*
atm\. T t 3,000\.0 * 3\.000\.0 3,3420 33- 42A
Et6 r _ t 7 \. \. \. - 7 100 700T- 700\.0 7000 * - - 71t0
iAt- _lif,t 1-,700* 11,7000 20,6374 - - 20R637A
2 4WD 2 \. - 2 20,000 40,000\.0 40,000\.0 44\.72\.0 - - \.44,72
be ' Como us 5 - - 5 1 003m 0 9, - \.------ s \.0 \. \.O D\.0 O,i t 5 * - -_ 0\.0
-Ai-oreek" MflTOO 1o70 - - - 100,700\.0 116\.0104 - * * 110,0614
IL C_ontd au mic_tt
c _ ,E__ - \. \. - 3 tODO gas - -,0009 0,51 \.M i it'
3 * - - - 3 toOw i,000\.0 - *\.o 0 \. i 0009
Om - 3 - - - - 2 ia to00ws - - 3 ,000\.0 342 - - \. \. 2,342\.1
FWA Tn d '°°° 110,000\.0 17\.I450 *t7Al40D
i tel l_ __Itomm T\.sk XODO9 * - \. \. 000o0 3\.342D \. - \. 33423
Pbo*md _ 100oo 1009o \. \. 20m\.0 1I4 114wi - - Z?5J
boAf*sIwa Id 2 - - \. - 2 I\.Om X aosO - ------- - too \., m\.t - - 2i
it t_S m 170,1009\. 100\.0 - \.- 70 1i0\.,424 1143 \. - 10\.51t
2\.-l_te
_ mC _ 1b 10to - I - 10 10,000 loomos - IW,OOO\. 101,005 - - - - 101300\.0
3\.4t t0 2 - - - 2 29,0O 40\.0D9\. \. - 40,09 44,ii72D \. - \. 472D
Ct* WC _flS Amor\.MUt dw SlO,I9 100\.0 - 3 310\.200\.0 330,4144 1143 - 3 3\. ,5211
C\. T __iefl
iLAk_r
aga Satk mib 9 2 2 - 13 OO i D\.O 24\.009\.0 24,000\.0 - \. 166,009 1l0t,4s4D 24,it4t\.1 25,592\.7 *150\.40J
Told w4m"SCa 4iUOw 24,100\.0 A0OD - 5T4900\.0 Sit,9T 21,5\.4 2050,7 \. \. 91,52it
BPS,\.e Noafloe
_essoldw Pa\.aI5 \. I I I '- * 15 \.o0gu \.0o0s0 - On\.0 27,000\.0 %117\.0 * 0,0571 - 10\.102\.1 2g\.giO
T __m pa\.I u 12 - 9 - * 24 Imp 14\.4005 - 7\.200AD 7\.2co\.0 ma\. 0 147 \.2 t977\.5 C ON=2 303471
acos* - 2 2 10 ow ,4000 - I,itO90 * I\.it\. 1000\.0 SA4702\. 1,919A Z020A 0,4102
_ _ _ I,umoowgs 2XitO9\.0 - itw\.0 * gas "\.ao 0 20,174A * t9i43 20*6m\.6 11,741
2 V* Opadac- T_d M_ I1O\.O0 IS,OO IS,OOO\.0 - 44000\.0 IgS6S\.0 IS,Si\.I 16,9964 \. \. 4,7001
3 In\. Rea4d yW £2 \. 9 - O 30 340 4,320 0 - 3,2400 - ,240\.0 wo,ows0 4,3761 - 5,4559 \. 3\.037A 11\.4I62
4 C a-k ,009Dm 1,Ot7\.0 1,000 1,00\.0 I,OOOD 5,DO\.0 COSA 1,039 *,OA 1,Ot7A,1 1to22 5,s3\.3
VANNp a 49,12s\.0 1w,0009 37,3409 1,0000\. 22\.24090 12t6,ao 4,7S6J 19,i2AA 39,7113 1\.04A I 24,il0\.1 13Z,6A0
IL C _t
I Vod t 100,os0m009 IOODOO s,\.0 ID,OOD\.O IO,ODO\.O SO,OOO 10,1309 10,343A 10,\.6020 10,40i 11\.225J 3,33632
L H| MeoWftt
Ib _a\.dww 1 8P- 2 2 2 2 2 10 w2a I\.SO t0o0 3o0000 3a0nu\. 2,00s\.0 3,0o0\.s IwS\.OO a3\.0390 twig\.0 3,190\.1 3,2323 331\. 10,000\.0
T\.d\." pa 4 4 4 4 4 20 1,200 4,O9 4\.i00\.0 4A00o0 4*000 4*,O\.0 24,000\.0 4,002A 4,9il J ,1195 5\.251\.S 50301 2510005
&" SW1 _--'w 2 2 2 2 2 10 oO 1,900\.0 1iO\.O 1,9000 100\.0 1,S00\.0 0 000\.0 A,OA 1,070\.0 1\.9194 IA0004 2,0J 0,431
50 d Tp It 2 2 2 2 2 10 300 o000o iOO\.O 9AS iO\.0 K9\.0 3,00as 0071 i2A 029\.8 $ilS 0731 3,2012
VW 2 \. 2 720 14400 \. \. \. 1440\.0 1,460\.7 __ -7
-atgSm - 11o II,it409 10\.20090 10,200\.0 l0,20D0 10\.2000 SZ440\.0 11,7013 10,8012 10\.076J 11,16\.7 11,440\.6 56,0790
3\. Cawamfofau l \.OD O\.o l, DOD\. O I\.OD OO *,OD O S\.OOO\.O 1,013\.0 1,0093 ,0 #4 1 ,1223 5,32 5J
3510 coS 2ovi04 ZO05 21\.2000 1200\.0 2\.)20\.0 21\.200\.0 107\.4400 z22342 2ZO4\.0 220\.J 23\.154\.0 22,797\.7 11t407A
C\. T S ttdow\.
I _ _\.i\.2 2 io 1,200\.0 \. 1\.20D0 121\. 1\.215\.6
2 0 WA&i 1i is so 9W\.o \. wo\.o 9117 5 - * 011\.7
_ TS ,t,tt 2100\.0 * - 210DO Z127\.3 \. X t
T ib_C_ 72-60\.0 27200 S4,4400 22200\.0 43200\. "S\. _40\.O 74,2J X6AA Z,310 I 24\.205\.7 46\.7Q92 24i0i3J
T000O,00 41,300\.0 ilZ4400 222000 43\.4400 510,040\.0 630,\.0 03\.721\.6 67,0101 24\.2W67 4g732J o\.3a2\.1
zE
Z:
Tal 108\. Kyrgyz Shap Breadms Aaochicn
DOtied CoAt
AN DeWed Table (US)
OuiNlee Tdte Including Caflngseia
Unit in 16\.7 i 1n 2in TOs Uni Cost 1n 1\.7 in In 2000 TOtS
L h e Cae
A\. Group Adelptf dloass- bwvrn
Av yew I I 1 - 3 150,000 151,950\.0 156,900\.7 159,954\.1 - 467,604\.8
Gm Suepvbmn mnd d sem yeWr 1 1 1 -I 3 150,000 151,950\.0 155,900\.7 150,964\.1 - - 47,4\.8
SubKe Group - Adebleoy Uen 303,900\.0 31 1,801\.4 319,906\.2 * - 9356,\.6
Computer Copuer 4 - \. - - 4 2,00o 8,914\.4 - - - - 8,914\.4
PW prlts 4 - \. \. - 4 2,000 8,914\.4 - - - - 8,914\.4
Sd_we Ot 2 - \. - - 2 2\.000 4,457\.2 - - - - 4,457\.2
Phocopier Pm 2 \. , 2 1,000 2,228\.6 - - - - Z228\.6
Otto Furnji set 6 1 3 - - 10 1,500 10,028\.7 1,714\.9 5,278\.5 * - 17,022\.1
Fo am 3 1 3 - - 7 1,000 3\.342\.9 1,143\.3 3,519\.0 - - 8,005\.2
Sharey Pedgo peckge 3,342\.9 - - 3,342\.9
_EIs - 41,229\.1 2,868\.2 8,797\.5 - - 52\.884\.8
C\. VehIcle
Car car I - 1 20,000 2Z286\.0 - - - 22,286\.0
4 WD car 1 - \. - - 1 20,000 22,286\.0 - - - - 22,286\.0
Sublot Vehicled 44572\.0 - - - - 44\.5720
D\. Trolng
Study Ptr peson , 2 2 2 2 8 8\.000 - 16,629\.4 17,061\.8 17,505\.4 17,960\.5 69,157\.1
AueAount nwk 24 12 12 12 12 72 150 3,646\.8 1,870\.8 1,919\.4 1,969\.4 2,020\.6 11,427\.0
Fid aW peron 5 15 25 25 25 95 600 3,039\.0 9\.354\.0 15,995\.4 16,411\.3 16,838\.0 61,637\.7
PFdwalFwmem Aaockllcon PFA 50 200 250 400 500 1,400 50 2,532\.5 10,393\.4 13,329\.5 21,8817 28,063\.3 76,200\.4
Sublota Trdlngn 9,218\.3 _38247\.6 48306\.1 57,767\.7 64\.8824 218422\.2
TotS R neatnt Coeta 398,919\.4 352,907\.2 377,011\.9 57,767\.7 64,682\.4 1,251,488\.8
IL Recurrnt Cod
A So lce and Al b'c
Oawlapmoatofter oily 1 1 1 1 1 5 2,400 2,431\.2 2,494\.4 2,559\.3 2,625\.8 2,694\.1 12,804\.8
AslontDalopmntOtow Moly 2 3 6 6 6 23 1,800 3\.648\.8 5,612\.4 11\.5167 11,816\.1 12,123\.4 44,715\.4
Audi nmage MIy I A 1 1 1 5 2,400 2,431\.2 2,494\.4 2,569\.3 2,625\.8 2,694\.1 12,804\.8
AeabtrtAuditMnar oiy - - 1 2 5 8 1,800 - - 1,919\.4 3,938\.7 10,102\.8 15,961\.0
Accounat M/y 1 1 1 1 1 5 1,800 1,823\.4 1,870 8 1,919\.4 1,969\.4 2,020\.6 9,03\.6
Fldw o/y 2 5 8 12 18 43 so 1,823\.4 4,677\.0 7,677\.8 11,816\.1 16,184\.5 42,158\.8
atca CII o/y 3 4 7 7 7 28 700 2\.127\.3 2,910\.1 5,225\.2 5,361\.0 5\.500\.4 21,124\.0
DOku MIy 1 1 1 I 1 5 600 607\.8 623\.6 639\.8 656\.5 673\.5 3 201\.2
Subtalel Sw e and Alowanrc 14,891\.1 20,682\.8 34,016\.9 40,80\.4 51,973\.3 162,373\.5
L\. Veic opherpor
car pa\. 1 1 1 1 1 5 3,000 3,039\.0 3,118\.0 3,199\.1 3,282\.3 3,387\.6 18,006\.0
4WD p\.a\. 2 3 6 6 6 23 3,000 6,078\.0 9,354\.0 19,194\.5 19,693\.6 20,2D5\.6 74,525\.7
ubO Vehice peen 9,117\.0 12,4721 22,393\.6 22,975\.8 23,573\.2 90,531\.6
attca S_plfl p\. - 1 1 1 1 4 7,000 - 7,275\.4 7,464\.5 7,668\.6 7867\.7 30\.258\.2
Post atgrph p\.a\. 7,091\.0 7,275\.4 7,464\.5 7,658\.6 7,857\.7 37,347\.2
Pubkaln p\.a\. 1 1 1 1 1 5 2,000 2,026\.0 2,078\.7 2,132\.7 2,188\.2 2,245\.1 10,670\.6
Ratabl adto 4 5 10 10 1o 39 3,000 12,156\.0 15,590\.1 31,990\.8 32,822\.6 33,676\.0 126,235\.5
Audi p\.a\. 1 I 1 1 1 5 10,000 10,130\.0 10,393\.4 10,2S 3\.e 10,940\.9 11,225\.3 53,353\.2
5ub_t Gee ServIe 31,403\.0 482818s ss 71e\.2 61,20a\.e 62,1 s 257,82\.7
Totd Recurren coab
Tou tewn 55 41i\. i 75,7e7\.7 11e 126\.7 i25,054\.0 1u ,408\.2 510,7e7\.8
Tots 454,330\.5 428,676\.0 493,1U\.5 182,821 8 203\.2906e 1,762256 4
z
z
Table 107\. VWoMdm n9 r*d Oually CAnN
DOWled Cof
All Debbld Tabi" (UST)
Q,_,Zb Tom*b Ineuding ConUngmach
URN is" 1U7 1 lo" 2000 Te1a1 Unlt Cost 1# 1n7 Iw_ 1@ 20Doe Tobl
L h_*obm Com
A\. Tecncl A1_lee
wow4 Mul Cow w mhn S 9 9 - 27 n 1,0C 1n ,SM o i3O,966\.6 114\.361\.5 - - 392,sse\.0
I_rdw of l b mnth 9 9 9 9 9 45 3,00D0 27,3510 28,02\.1 Zt,7917 29,540\.3 30\.308\.4 144,053\.6
SulW _ T _ sdtw 15u,ss\.O 09,018\.7 1b3,153\.2 2s,uo\.3 30,30t\.4 s37,00s\.6
L CtIl Ww
R_nm m t 4,00 0 2 to 0 4\.eo o - - 10,800 45 200,574\.0 14U,052\.2 211,13S\.4 - - W,6\.M\.7
RohaNin I t C qn - 1,Z00 -- 1,200 45 - 6i1736\.7 --- 611 736\.7
SubW CNN Wo 200,574\.0 205,788\.9 211,139\.4 - 17\.50z 4
C\. E*d_ml
1\. 6le " "
Fo1 " 2 2 *- 4 35,000 7t,0010 - U,10St -8 180,11068
wow Pma (Aft)9 4 2 2 2 2 12 10,0 0 4U,67Z0 2zz,es4 23,45s\.9 24,069\.9 24,es\.7 130,663\.0
WK4 ram 5,000 5,000 5\.eoo) 5,0C0 5,ODD 25,000 7 39000DD5 40,014\.5 41,054\.9 42\.1223 43,217\.5 205,409\.7
we dbP * w \.20\. 20 20 2a 20 100 sO 1,114\.3 1,143\.3 i173\.0 1,Z03\.5 1,234\.8 5,6S6\.6
M\. o " 2 *2 -- 4 7,0oD 15,e00\.2 - 16\.422\.0 - 3;o2022
Spam _W Zs- 2 2 4 xooo 4\.457\.2 - 4,6SZ\.0 -- 9,149\.2
Pur'M a 2 -2 --4 20\.001) 44\.572\.0 4esr\.91- - 91,491\.9
"-hs wb eqo-Am 2 4 4 --1o 750 1\.671\.5 3\.420\.8 3,5`19 0 - ,6M\.3
C'" _he d W*O 10 --- 10 X500 27,85S7\.5 - -Z-- 7,857\.s
_w Walu olal_m 250,84e\.2 67,453\.0 219\.350\.4 67\.395\.7 6s,148\.0 680,193\.3
2\.Om 0 _m
Dow 41 2 -2 --4 150 334\.3 - 351\.9 - - 686\.2
ahf OR e - s0 *0 - s n\.s 293\.2 571U
SW_ 2 *2 --4 seo 1\.114\.3 1,173\. Z 2s7\.3
Fie t 4 -4 a 250 11,114\.3 - 1\.173\.0 Z 287\.3 -4
T *_ Mt 2 -2 --4 150 334\.3 - 351\.9 -- 686\.2 W
Fu 2 -2 --4 I,o= 2,2211\.5 2,346\.0 -* 4,574\.0
w a4"l_ \.w0sun 5,404\.4 - 5,688\.0 -1-1,093\.4
sum" EVoa 2OZ250\.5 s7\.4530 o zs,03s\.4 67,305\.7 0s,1411\. o e1,28s\.7
CL Tdllks
ho Trq flo 4 3 3 2 -12 20,0C0 t1,o40\.0 6Z300\.3 U3,981\.6 43,7e3\.4 - 251\.W4\.4
G on 50 10o 150 - 300 600 J0,390\.0 SZ300\.3 95,97zs * \. 188\.72ns
SW"i 20 40 40 --10o eom 12,i56\.0 24,19U\.1 25,5927 \. \. \. \.L sZOs
sub _ Tw 113ste\.0 149U64\.7 1sss546\.8 4 u7e3 4 - oZsfo\.e
TOW kve_1wf COWb 741,380\.5 5U1925\.3 784,t7t 9 140,60 J5 09,456\.4 Z345\.350\.5
fIL RWM Comb
_ ~~~~~~~~~~~~~~~~Yw 2 2 2 2 2 10 1,SDo 3,039\.0 3,118\.0 3,1SS\.I 3\.2C7 3 3\.397\.6 11e,006\.0
Go _ (w Un) _xw so so 120 12D 12D 500 90 5,470\.2 7,4U3\.2 ii,518\.7 11,816\.1 12,123\.4 48\.409\.0
Gravleogao "W 2 4 4 6 6 22 11,20 Z431\.2 4,988\.8 5,11t11\.5 7\.87n\.4 8,082 2 26,499\.2
_ _midm Yew 2 2 4 4 4 Is 1,2DD Z431\.2 Z494\.4 5,11tS5 5,251\.0 s,3u11\.2 20,su3e
SOONy Yew 2 2 4 4 4 16 eoo 1,U23\.4 1 ttO t 3,838\.9 3,9U1 17 4\.0u1\.11 isBssZO
_opa monh is 18 la is is 90 too 10,940\.4 11,224\.9 11,S1t \.7 11,31&\.1 12,123\.4 57,021\.4
Temp\.lw monh 120 IGO X0 240 240 950 W 7,2M6 O\.O77\.6 1 Z,7S6\.3 15,7S4\.8 1\.164\.5 51,986
DrW Yew 2 2 4 4 4 le 720 1,4U8\.7 1,4ee\.e 3,07i\. 1 3,151\.0 3,23zs Z,1X1Q,3
Su_e LeBr _W" J4,87\.7 42\.654\.4 56,175\.9 ozuw1 64,5M\.2 281,129\.3
IL Op_or CeFb
I RN' mnourit 2,025\.0 Z~~~~~~~~~~~~~~~~~~~~Xto 078\.7 Z,132\.7 Z118\.2 Z245\.1 IO,M7\.f
C _ _ 2C2fl0 Z0787 2,132\.7 2,1U\.2 2,2451 10,670\.s~~~~~~~~~~~~~~~~~~~~~~~~~~~~~zo\.0 Z0S\. Z32 IS\. Z24\. t's\.
FuMwla 2,431\.2 Z4s4\.4 2,559\.3 x 625\.3 xe94\. 12 *xto4-8
_ 4 808\.5 519\.7 a33\.2 s47\.0 581\.3 2,667\.7 <~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~e\. 60\. M2 4\.066\.3 ZM\.
34f" Mo _ CA 6,M8\.7 7,111\.4 7,357 9 7,4\. 7,45\.5 3U,613\.7
TOW llow _ CON 41,87"\. 4s,s2s\.e 43,108 70YY\.3 22U\.:6 2s7\.e4,3\.0
Towl Q7u,n\.s 31\.751\.2 86U,41Z86 211,138\.7 17i,725\.0 ZW46302 5
I\.~~~~~~~~~~~I
8 8 \. \. \. \.8\.1
-\.s\. 8~\.m\.-\. \. \.*\.3\. \.2 \. \. \. \. \. \.,\. \. \.
IL
Vt~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~5
\. \. \. \. \. \. \. \. \. \. \. \. \.4\. 4
v XgNNV tL -3~~I§~ ~ ft
- 75 - ANNEX B
KYRGYZ REPUBLIC
SHEEP DEVELOPMENT PROJECT
ANNEX B
ENV1RONMENTAL MITGATION STATEMENT
1\. The Kyrgyz Republic, with the assistance of the Bank, is in the process of finalizing the
preparation of a National Environmental Action Plan (NEAP) that outlines high priority environmental
issues in various sectors of the economy\. In agriculture and the rural sector in general, the draft NEAP
highlights the following issues as high priority:
(a) Water management and water supply issues that have emerged with the failure to
maintain water infrastructure in urban and rural areas have important health and
agricultural production implications\. Immediate investment in rehabilitation and essential
maintenance of water infrastructure, and reforms in water pricing policy (including water
charges for irrigation water) have been identified as priority strategies for mitigating the
problems of water supply contamination and falling agricultural productivity and incomes;
and
(b) Poverty and some traditional practices in rural areas (e\.g\., grazing resource and forestry
management) have contributed to serious degradation of soils and grazing resources and
are reducing the income potential of local farmers\. The draft NEAP recommends general
strategies for better management and reducing the pressure on these fragile natural
resources\. The proposed project's interventions would help to implement, in targeted
fashion, some of these strategies\.
2\. Land Use\. The project will provide for a system for continual inventory and monitoring of
natural grazing resources\. The analyses and output of this system would be used to protect
environmentally sensitive areas, giving particular priority to reducing overgrazing in natural pasture areas
where this is already a problem\. The monitoring system would also provide data and information that
would be used by Agricultural Training and Advisory Services (ATAS) staff to guide farmers' decisions
regarding the use of local pastures in the short-run\. The project would also support research and
development of pasture production improvement with emphasis on the spring-autumn production in two
agro-ecological regions in which pasture availability is a constraint to sheep production\. Resulting
improved yields would reduce the existing pressure on natural pastures\.
3\. Animal Husbandry Practices\. Through the establishment of an agricultural advisory service
(ATAS) and sheep breeding research, the project would promote the following environment-friendly
practices among sheep and wool producers:
(a) Sheep Husbandry\. Private and cooperative sheep farmers would be provided with
advisory services covering all aspects of breeding plans, stocking and culling rates\.
ATAS staff would focus their advice to farmers on strategic feeding of conserved fodder,
management practices to improve animal nutrition and reduce prevalence of diseases,
optimal stocking rates for sustainable grazing, and improved pasture establishment
techniques and management\. Improved management of shedding during winter and the
- 76 - ANNEX B
heavy grazing intensity near the sheds in few weeks prior to and after winter shedding
would be improved to reduce pasture and soil degradation;
(b) Veterinary Practices and Sheep Disease Control\. ATAS staff would focus on
enhancing farmers' skills to identify and control diseases and the integration of animal
disease control with husbandry and nutritional aspects\. The use of chemicals for sheep
dipping would be discouraged\. Instead, farmers would be encouraged to use spot
spraying methods on animals;
(c) Animal Disease Control\. The project would also provide for a nation-wide eradication
of Brucellosis in sheep and, consequently, in humans\. An international quarantine
protocol with neighboring countries to prevent the spread of the disease in the region is
envisaged\. In controlling animal diseases, the Livestock Institute would develop
reconmmendations for ATAS staff for safe use by farmers;
(d) Fertilizer Use\. No extensive use of fertilizers is envisaged under the project, except in
the production of fodder\. Since alfalfa would be the major fodder produced, its demand
for chemical fertilizers would be minimal, reducing the incidence of water pollution\.
ATAS staff would encourage farmers to use organic fertilizers which are becoming
popular with the increase of prices for inorganic fertilizers;
(e) Irrigation\. No new irrigation schemes are planned under the project\. Fodder production
under the project would be done in the existing schemes\. ATAS staff would focus on
enhancing farmers' skills to use irrigation water more efficiently than hitherto; and
(f) Wool and Meat Processing\. The project would have indirect effects on the existing
practice of wool scouring and operation of slaughter houses\. Since much of the scouring
would be done by the private sector, it is important that Government set specific
environmental standards which must be met by all scouring plants, particularly with
regard to affluent water treatmnent\. Much of the project's lamb output would be marketed
live and internationally and would have no environmental impact\.
4\. Conclusion\. The project would have a mitigating impact on some of the major environmental
issues that have been identified in the draft NEAP as high priority\. The project has a "B" environmental
assessment category\.
- 77 - ANNEX C
KYRGYZ REPUBLIC
SHEEP DEVELOPMENT PROJECT
ANNEX C
ILPLEMENTATION PLAN
1\. The Ministry of Agriculture and Food (MAF) would contract the execution of the project to a
Project Implementation Unit (PIU)\.
2\. Establishment of the Project Implementation Unit (PIU)\. With funding provided under the
Japanese Grant, prior to credit effectiveness, a procurement consultant would be dispatched to Bishkek
to assist the Ministry of Agriculture and Food (MAF) in the selection of the management firm that would
staff and supervise the PIU (terms of reference for the firm and each one of the three expatriate
consultants are attached as Annex F), as well as the initiation for the recruitment of the Extension
Director who would be in charge of establishing the Agricultural Training and Advisory Services
(ATAS)\. The PIU shall be financed by IDA\.
3\. Agricultural Training and Advisory Services (ATAS)\. This component is to be implemented by
the Department of Livestock Management and Development (DLMD), under a contract awarded by the
PIU\. ATAS would be set up by the head and staff of DLMD, reinforced by an expatriate Extension
Director (see 1 above); PIU would award a contract to this DLMD, and would supervise the development
of ATAS, on the basis of approved yearly budgets\. ATAS shall be financed by IFAD\.
4\. Animal Health\. This component is to be implemented by the Directorate of Veterinary Services
(DVS) of MAF, under a contract awarded by the PIU, which would supervise the implementation of this
component\. DVS would enlist the assistance of the Oblasts in which the eradication of Brucellosis is to
be started\. PIU would issue a contract for the Brucellosis Expert, under the terms of reference appearing
in Annex F, who will act as Senior Adviser to the Director of DVS\.
5\. Sheep Breeding Research\. This component is to be implemented by the Livestock Research
Institute (LRI)\. The PIU would negotiate a contract with LRI for the delivery of sheep breeding services,
and the PIU would award the contracts* for the Animal Breeder, Reproduction Specialist and Animal
Nutrition expert\. New breeding material (semen) would be procured through ICB, under the supervision
of PIU\.
6\. Pastures and Fodder Resources\. This component shall be carried out jointly by the State
Scientific Center of Land Resources and Use (for monitoring, evaluation, and grazing areas protection)
and the Scientific Industrial Enterprise (the ex-Pastures and Fodder Research Institute, for pasture
research support)\. During the first year, the activities will be supported by a pasture management
specialist (TA), while during the second and the third year, a Pasture Management Specialist will only
evaluate the activities by a visit of 2 months\. A fodder haying/storing Specialist (TA) will be provided
during the first year for two months to review fodder haying and conservation strategies and advise on
improvements\. Annual budgets would be established and approved and supervised by the PIU\. PIU
would award the contracts for the Pasture Management Specialist, and the short-term Fodder Specialist\.
- 78 - ANNEX C
7\. KSBA/Group Development Services\. PIU would issue an invitation for bids from
NGOs/Consulting firms who are willing to organize the development of farmers and sheep breeders
groups, associations and/or cooperatives, according to the specifications of Annex F, and award a
contract to the selected firm\. Under the terns of the Contract, in addition to group development, the
implementing NGO/Consultant would fulfill all the duties, legal or otherwise, of the future apex
institution, KSBA, until such time that the KSBA is formed, and its board of Directors legally elected\.
PIU would supervise the implementation of the Contract on the basis of approved yearly budgets, and
also award the contracts* for the two expatriates who would fill the positions of Group Development
Advisor, and Group Supervisor and Financial Specialist\. This component is to be financed by IFAD\.
8\. Wool and Lamb Marketing System\. This component will essentially be implemented by the
farmers/producers themselves, which are to be organized in groups by the NGO/Consultants\. The
implementation of this component would be supervised and facilitated by this NGO/Consultant under
separate annual budgets to be approved by the PIU\. These budgets will include all expenditure for
equipment, salaries and recurrent costs for the satisfactory implementation of the component, which is
to be financed by IDA\.
9\. Details of the Implementation Plan are shown in the following diagrams\.
\. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \.
Ii II~~~~~~~~~~~~i
I\.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~3
ko (
I ''I-I-----~~~~~~~~1
10
00
a
3 XTNN-V 6L~~~~~~~~~~~~~~~~
Mu ~~~~ MM M ~~~~~ MUM ~~~~~b
\. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \.W\. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \.
II '''''Ii iii~~~~~~~~~~~~~~~~~~~~~~~~~~~1
Ij~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1
liii~~~~~~~~~~~~~~~~~~~~~~~~~~1
08 ~ ~ ~ ~ ~ ~
I f'IIiufj\. I1i111i
10
\. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \.
3\.
a\.1
I~~~~~~~~~~~~~~~~~~~~~I
0'at
DYmv isT -
Sheep and Wool Private Enterprise Develoment (SPED)
11996 1 1997 1 1998 1999 2000 2001
ID Task Name _Qtr I Qtr 2|Qtr 3|Qtr4 1Qtr tr Qtrt ZQtrt 3Qtr4 1Qtr tr Qtr2 QtrSQtr 4|Qtr I |Qtr 2|Qtr 3|Qtr 4|Qtr 1 lQtr 210tr 3Qtr 4t Qtr 2Qtr3Qtr4
I L Kyrgyz Sheep Breeders Associafon
2 Prepare ICB procurement package to contract NGO consuftants
S Complete ICB Procurement
4 Bank Review bid documente
6 Bids issued
6 Contractor setected/awarded by PIU
7 Contract organize SPGA & RABA _
a Provide key technical assistance
9 Training __ ___
10 Study Tour _
11 Auditaccounts
12 Field Staff _ _
13 Private Farmers Association _
14 Affiliate SPGA & RSBA into KSBA _ _
15 Incorporate KSBA
16 Contractor hand over the mgt\.of KSBA to the selected committee
17 Supervision of KSBA ____ _
18 II\. Wool Marketlng and Information Service
19 PIU subcontract the implementation of WMS
20 Contractor recruit wool marketing specialist
21 Develop Wool Marketing system
22 Build wool marketing and dispilay facility in Bishkek
23 Faciliate wool sales I
24 Disseminate ln'tl market info, to local producers & buyers
25 Establish Regional Wool Stores by RSBAs _ _
I It II *3 F M Ii I I I U S M
I I I I ~I I
~~~Ii 11 E
1 ''~~~~~~~~~~~~~~1
cr
cir
q rni
10
ci
0
ci
10
Ci
0
D XVN - £8-
i rn m m p r m * m ~\. -l 0 & -am rl-
a U 4 *
cn ~ ~ ~ ~ ~ ~ u u ~ ~ - -
0~~~~~~~~~~~
W~~~~~~~~~~
3 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
-010
4
40ar
Ca)
\. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \. \.
C\.)
0r
Z) XaNRV~~~~~~~~~~~~~~~~~~~
- 8S - ANNEX C
ab \.
\.aaXj
a 4aaxN
PRoJECT OBjEnvEs AND MONITORABLE INDICATORS
Project Objectives Activities or Strategies Monitorable Indicators
1\. Increase profitability and Promote sheep breeder associations\. Increase in production and productivity of lamb (5
efficiency of sheep and wool Provide training and advisory services to sheep million sheep) and wool (14,200 tons) at full
farming\. producers\. development\.
Develop competitive markets for lamb and wool\. Increase in gross farm incomes by 115 percent at
full development\.
Adoption rates of new technologies by sheep
producers averaging 12 percent per annum\.
Reduction in use of concentrates in winter to
zero by project year 9\.
2\. Create viable producers' Organize sheep breeders' and grazing associations\. Growth in membership of associations by 20 0
associations\. Registration of sheep breeders' associations\. associations each year\.
Training of sheep producers\. Financial viability of sheep breeders'
associations (70 percent viable)\. I
Number of associations established (150 associations
at full development)\.
Business throughput of associations (80 percent of o
lamb and wool value at full development)\. o,
Incidence of brucellosis in sheep (less than 0\.05
percent at full development)\. t
Availability of and quality of advisory services
to producers (full coverage at full development)\.
3\. Develop competitive markets for TA and training for market and information Increase in share of good quality lamb and wool (65-
lamb and wool to obtain development\. 70 percent top quality)\.
premium prices\. Development of wool stores and lamb auction Increase in average product export prices (up to 70
facilities\. percent of world market prices at full
Development of wool testing facility\. development)\.
Train farmers in proper wool shearing and Trend in trade margins and marketing costs (not
handling\. exceeding 30 percent at full development)\.
Percentage of high grade wool per district/
oblast (averaging 80 percent top quality)\.
4\. Improve management and Assume adequate grazing rights\. Quality and quantity of winter and fall pastures (85
sustainability of range pastures Enforce improved pasture and fodder management percent at full development)\.
and fodder\. practices\. Trend in sheep stocking rate and average I
Assess and monitor status of pastures\. management units (double original number at full x
development)\.
Number of violations against proper pasture
management (not exceeding 10 percent of
licensees)\.
- 87 - ANNEX E
KYRGYZ REPUBLIC
SHEEP DEVELOPMENT PROJECT
ANNEX E
SCHEDULE OF PROJECT SUPERVISION
Semester Expected Staff Reguirements Staff Input
(staff weeks)
FY97 I
Accountant/Procurement 4
Disbursement
Economist
FY97 II Livestock Specialist 6
Extension Specialist
Animal Breeding Specialist
FY98 I Livestock Specialist 4
Cooperative Specialist
Wool Marketing Specialist
FY98 II Animal Breeding Specialist 4
Range Management Specialist
Procurement Specialist
(Mid-Term Review)
FY99 I Economist 12
Range Management Specialist
Wool Marketing Specialist
Cooperative Specialist
Livestock Specialist
FY99 II Economist 4
Financial Analyst
FYOO I Livestock Specialist 4
Range Management Specialist
Wool Marketing Specialist
FYOO II Economist/Financial Analyst 6
Livestock Specialist
Cooperative Specialist
Range Management Specialist
- 88 - ANNEX F
KYRGYZ REPUBLIC
SHEEP DEVELOpmNT PRojECr
ANNEX F
A\. TORS FOR PROJECr IMLEAMTION UNITU
Head of the PIU
(1) Responsibilities: The PIU will be contracted by the Minister of Agriculture and Food to manage
the execution of the project\. The PIU will have operational and financial autonomy, including
the authority to select and sub-contract specific project activities or components to local and
international consultants or government agencies\. The PIU will be managed by a Head who will
be internationally recruited\. The PIU Head will be fully accountable to the Minister for
satisfactory execution of the entire project\. His specific responsibilities will include:
(a) Overall management of the project, including providing guidance and direction in the
transformation of the Kyrgyz sheep industry into an internationally competitive and
export oriented production system;
(b) Personnel management and training;
(c) Management of procurement of goods and services under IDA/IFAD guidelines and
oversight of sub-contracts with project implementation agencies;
(d) Proper management of funds through introduction of a new project accounting and
financial control system consistent with IDA/IFAD requirements, and budget planning
and control;
(e) Establishment of a system for project monitoring and reporting;
(f) Preparation of a Project Operational Manual; and
(g) Arrangement for timely audit of all project accounts\.
(2) Oualifications and Experience:
(a) Proven extensive international experience and technical ability to manage large livestock
projects of the scale of the SDP and good knowledge of sheep products markets at
international level;
(b) Fluent in English; knowledge of Russian will be an advantage;
(c) Proven skills in commercial negotiations at the highest level, and in dealing with senior
government officials and business executives;
- 89 - ANNEX F
(d) Sound knowledge of World BanklIFAD project implementation procedures, including
procurement, disbursements, and reporting and monitoring;
(e) Ability to lead, manage and motivate a team of international and local consultants to
achieve results; and
(f) Advanced University Degree\.
(3) Duration: Assignment will initially be for two years, extendable to a period to be mutually
agreed at renewal\.
2\. Finance Manager
(1) ResRonsibilities: The Financial Manager (FM) will be internationally recruited to assist and be
responsible to the PIU Head in carrying out all project responsibilities related to financial matters,
including preparation of work plans, budget planning and control, introduction of a new project
accounting and financial control system, management of the Project Account and special accounts, project
reporting and monitoring, and arrange timely audits of all project accounts, and preparation of a Project
Operational Manual\. He will particularly ensure that project funds flow on a timely basis to
implementing agencies and special accounts are replenished on a timely basis\. He will also train local
counterpart staff\.
(2) Oualifications and Experience:
(a) Proven international experience and technical ability in setting up a project management
and accounting information system in accordance with internationally accepted accounting
standards;
(b) MBA, or similar accounting/finance professional qualification;
(c) Fluent in English, knowledge of Russian will be an advantage;
(d) Familiarity with IDA/IFAD procurement and disbursement procedures; and
(e) Proven experience in training local counterpart staff\.
(3) Duration: Assigmnent is initially for two years, renewable on basis of mutual agreement\.
3\. Procurement Specialist
(1) Responsibilities: The Procurement Specialist will be locally recruited to assist and be responsible
to the Head of the PIU for implementing project responsibilities in respect of management of international
and local procurement of goods and services in accordance with IDA/IFAD guidelines, preparation and
supervision of sub-contracts of specific project activities or components with local and international
consultants and government agencies, preparation of a Project Operations Manual, review of performance
of sub-contractors, and training of local staff and sub-contractors in procurement matters\.
- 90 - ANNEX F
(2) Oualifications:
(a) Proven experience and technical ability to manage international procurement of goods and
services in accordance with IDA/IFAD guidelines;
(b) Working knowledge of English, fluent in Russian;
(c) Proven experience and skills in procurement negotiations and in dealing with senior
business executives and government officials;
(d) University Degree in Management; and
(e) Technical ability to train local staff and subcontractors in procurement management\.
(3) Duration: Assignment is initially for three years, renewable for additional two years upon
satisfactory performance during mid-term review of the project\.
4\. Senior Livestock Technical Adviser
(1) Responsibilities: The Senior Livestock Technical Adviser would advise and assist the Head of
the PIU in the technical coordination and program management of the project\.
(2) Duties:
(a) Advise the Head of the PIU on project-related technical matters;
(b) Review the programs and activities of the different services involved in project
implementation and evaluate their technical and operational efficacy--and on this basis,
prepare the Annual Work Program;
(c) Prepare and issue the bids for the different sub-contracts to be awarded under the project;
participate in the negotiations and supervise their implementation;
(d) Prepare and submit to the Head of the PIU semi-annual and annual progress reports on
the implementation of the Work Program; the annual report should include an evaluation
of the progress achieved, and comments on shortfalls, problems encountered and
measures introduced to overcome these difficulties;
(e) Train counterpart personnel in the PIU, coordinate program planning exercises, and
internal program evaluation;
(f) Assist the Head of the PIU in representing the project to other local or international
organizations, and in seeking international funding sources to meet the project's financial
needs; and
(g) Ensure smooth working relationship among the staff of the various services implementing
the project components, and of the consultants and technical assistance personnel; and
- 91- ANNEX F
(h) Involve his local counterpart in all these duties, and train and supervise him accordingly\.
(3) Oualifications and Experience:
(a) Fluent knowledge of English; knowledge of Russian would be an advantage;
(b) Post-graduate degree in animal science, or a related field, with at least five years of
experience in implementing or assisting in the implementation of livestock projects
preferably in developing countries;
(c) Demonstrated skills in interpersonal relations and administration, and shown ability of
a team leader; and
(d) Special consideration will be given to candidates being familiar with sheep breeding and
wool marketing, mountainous farming, peasant farming systems, farmer organization, and
having worked in Central Asia previously\.
(4) Duration: The assignment would initially be for three years, extendable to five years if deemed
necessary after the mid-term review of the project\.
B\. TORs FOR AGRICULTURAL TRANING AND ADVISORY SERVICES (ATAS)
1\. Extension Advisor
(1) Responsibilities: The Consultant would be required to assist in the creation of ATAS in the
Ministry of Agriculture and Food (MAF), in Bishkek\. In a first phase, ATAS would be involved in
livestock extension and training\. The Consultant will work with the Director of the Department of
Livestock Management and Development (DLMD) to develop an advisory service for private livestock
producers and put in place an institutional framework, in consultation with existing donor funded
extension activities\. Specifically, he shall have the responsibility of producing all extension and technical
services literature, organize training seminars for newly hired extension staff (who may have no practice
of extension and/or working with private farmers), and as a second step, conduct the same seminars with
farmers and/or farmer groups\. For these activities, the project has provided funds to hire an Extension
Specialist to assist the Director during 12 months in each Year 1 and 2 of project implementation\.
(2) Duties: The Extension Advisor's first task is to produce a fact-finding report on the livestock
husbandry, production and feeding practices and wool handling system needed in the country\. This will
be accomplished through the Breeders Associations, ATAS Specialists and Agents, and Technical
Specialists in other project components\. He and this team will then:
(a) Determine appropriate training programs for staff of ATAS and sheep breeders;
(b) Review the training facilities available and their standard;
(c) Identify potential sources of livestock advisors/agents and their training needs;
(d) Prepare a detailed three-year training program, and liaise with the Agricultural Institute
for teaching/training agricultural staff in livestock practices\. If positive, arrange, in
- 92 - ANNEX F
consultation and agreement with the PIU, for a contract with the Institute to train the
livestock extension staff needed at ATAS; and
(e) Supervise the implementation of the contract with the Agricultural Institute\.
(3) Oualification and Experience: MSc or PhD in agricultural communication or extension, with at
least 5 years experience in planning and implementing agricultural and livestock extension programs for
smallholder farmers in developing countries\.
(4) The specific topics of extension messages and the training would be market driven, but are
expected to include, inter alia: sheep lambing, husbandry and health, shearing techniques and wool
handling, wool classing, wool pressing and packaging, general shed management and machinery
maintenance, fodder production and conservation, and pasture management\. The Consultant will liaise
with the Wool Marketing Expert who will be hired to coordinate the Wool Marketing System component,
and who will assist in those matters that are specific to him, such as wool classing and packaging\.
(5) With the first group of extension staff trained at the Institute, the Consultant will hold
demonstration and seminars among private farmers consecutively in each of the six Oblasts of the Kyrgyz
Republic\. Extension staff trained to serve in the field, and those stationed in each one of the Oblasts,
would take a central part in this aspect of training\.
(6) The Consultant's local counterparts would be the Director of the Department of Livestock
Management and Development (DLMD)\. Both will liaise closely with the NGO/Consultants carrying out
the Group Development activities which would lead to the creation of the Kyrgyz Sheep Breeders
Association; this liaison shall take place at every level, village, rayon and oblast\. The Consultant would
keep close relationship with the Senior Livestock Advisor in the PIU\.
C\. TORs FOR KYRGYZ SHEEP BREEDERS ASSOCIATION (KSBA)
1\. Group Development Advisor
(1) ResDonsibilities: The Group Development Advisor will have responsibility for the establishment
within KSBA of the promotional and technical services for the primary village associations which will
be the shareholders and eventual owners of the KSBA and regional associations\. The assignment will
be for a period of three years and the selected candidate will work as a member of the KSBA
management team\.
(2) Duties: On the basis of project documents, namely the Loan Agreements and the Staff Appraisal
Reports, the Group Development Advisor will:
(a) Establish the organizational structure of the KSBA Group Development Division to (i)
carry out its development and promotional duties; and (ii) to provide the necessary and
sufficient company secretarial, audit, supervision and inspection services for the orderly
expansion of member groups' activities;
(b) Draw up and recruit the initial staff establishment;
(c) Prepare the Annual Work Program and Budget for the first year of KSBA operations;
- 93 - ANNEX F
(d) Review and revise the draft by-laws of the Association to ensure they meet the provisions
of Kyrgyz law and cater to the requirements of member groups;
(e) Review and revise the draft by-laws for member groups;
(f) Draw up a manual of operating procedures for divisional promotional activities and for
the audit, supervision and inspection procedures required by the terms of KSBA and
groups' by-laws;
(g) In cooperation with the Group Training Advisor, prepare model book-keeping and
accounting procedures for member groups; prepare the financial reporting and routines
to satisfy the requirements of the model by-laws; prepare a simple but comprehensive
manual for the maintenance of member groups' finances;
(h) In cooperation with the Group Training Advisor, prepare a simple but comprehensive
manual for the conduct of group affairs, which shall include, inter alia, meetings (General
and Committee), voting rights and procedures, the rights and duties of members, the
election, duties and responsibilities of the officers of the group;
(i) Prepare and put in place the financial and progress reporting procedures for group
development affairs as required by PIU; and
(j) Have general responsibility for the orderly implementation of the component and
management of the Division during the period of the consultancy\.
(3) Oualifications
Essential qualifications for the position are:
(a) A degree or professional qualification in economics or finance;
(b) A minimum of 15 years of senior management experience in cooperative development
(eg\. as a Registrar of cooperative societies), or in a commercial organization in the
private, cooperative or public sector;
(c) Good knowledge of computer applications and demonstrable command of financial
administration;
(d) Experience in the management of projects funded by IBRD, IFAD, EEC or other bi- and
multi-lateral donors;
(e) Field experience in FSU or other Eastern European countries; and
(f) Fluency in written and spoken English\.
It is unlikely that candidates under the age of 45 will have the requisite field experience\. The
position calls for a high degree of self-reliance; the ability to live and work in an unstructured
situation with minimal facilities; and the capacity to motivate inexperienced staff\. In particular,
- 94 - ANNEX F
experience in the coordination of the activities of a number of agencies to achieve the goals of
the commercial and rural development will be of value\.
(4) Duration\. The period of the appointment will be 36 months and the appointee with be based in
Bishkek\.
2\. Business Manager
(1) Responsibilities: The Business Manager, as the Chief Executive Officer of KSBA, will have
responsibility for the conduct of its affairs until the formal handover of the organization and its finances
to a properly constituted Board of Directors of the Association in accordance with the provisions of its
by-laws\.
(2) Duties: On the basis of project documentation, namely the Loan Agreements and the Staff
Appraisal Reports, the Business Manager will:
(a) Prepare the Annual Work Program and Budget (AWP/B) for the first year of KSBA
operations;
(b) Review and revise the draft by-laws of the Association to ensure they meet in full the
requirements of Kyrgyz law;
(c) Define and put in place the administrative organization of the Association;
(d) Draw up a manual of operating procedures for KSBA administration;
(e) Draw up and recruit the initial staff establishment;
(f) In conjunction with the consultant accountant, open the books of account; prepare the
initial capital structure of the Association; set out the basic accounting and book-keeping
procedures; and prepare the financial reporting routine; prepare a detailed manual for the
administration of the Association's finances;
(g) In conjunction with the Head of the PIU, draw up a schedule of investment for the KSBA
subsidiaries;
(h) Draw up the Articles of Association (or By-laws as appropriate) for the registration of
KSBA subsidiaries;
(i) In conjunction with PIU and consultant staff, prepare the AWP/B for each subsidiary;
* (j) Establish and the operational financial and administrative routines for each subsidiary to
ensure conformity with KSBA procedures;
(k) Prepare and put in place the financial and progress reporting procedures for KSBA and
its subsidiaries as required by PIU;
- 95 - ANNEX F
(1) Together with the Group Development Specialist, draw up and put in place the
organization and administration of the Group Development Division; establish its
promotion, audit, inspection and field supervision routines; prepare the group, member
and staff training programs;
(m) In co-operation with the Head, PIU, establish the operational duties and working
procedures for the Commercial and Services Divisions of the Association;
(n) Establish the on the-job and formal training programs and routines for the staff of KSBA
and its subsidiaries; and
(o) Have general responsibility for the orderly implementation of the component\.
(3) Oualifications: Preference will be given to those candidates with:
(a) Experience in the management of projects funded by IBRD, IFAD, EEC or other bi- and
multi-lateral donors;
(b) Field experience in FSU or other Eastern European countries;
(c) A good knowledge of computer applications;
(d) Commercial or public sector experience of financial planning, and in particular of
detailed budget preparation and processing;
(e) A degree or professional qualification in economics or finance;
(f) A minimum of 15 years of senior management experience in a commercial organization
in the private, co-operative or public sector; and
(g) Fluency in written and spoken English\.
It is unlikely that candidates under the age of 45 will have the requisite field experience\. The
position calls for a high degree of self reliance, the ability to live and work in an unstructured
situation with minimal facilities; and the capacity to motivate inexperienced staff\. In particular,
experience in the co-ordination of the activities of a number of agencies to achieve the goals of
the commercial and rural development will be of value\.
(4) Duration: The period of the appointment will be 36 months and the appointee will be based at
Bishkek\.
D\. TORs FOR WOOL MARKETING CENTER (WMC)
1 \. Wool Marketing Coordinator
(1) Responsibilities: The Wool Marketing Coordinator will work in close cooperation with the
Consultants entrusted with the promotion of sheep producers' groups or associations\. The new system
being based on farmers and producers and/or groups of the same, the Coordinator would keep permanent
- 96 - ANNEX F
contact with the NGO/Consultants who would set-up these primary groups and, eventually, advise on the
creation of the apex institution, the Kyrgyz Sheep Breeders Association (KSBA)\. The Wool Marketing
Center would become part and property of KSBA\. The Wool Marketing Coordinator, identified and
contracted by the Project Implementation Unit (PIU), will keep the PIU fully informed of his activities
and copy all his progress, and other, reports to the Unit\.
(2) Duties:
(a) One of the objectives of the project would be to assist the sheep industry to set up a new
wool marketing system built around the following structure, and designed to maximize
the returns to the farmers;
(b) Grading at the local (county) wool collection center, which is of crucial importance to
ascertain homogeneity and quality of the wool;
(c) Local wool stores to be owned and operated by producer groups, operating as marketing
cooperatives;
(d) The new marketing system would incorporate incentives for improved wool production
and harvesting practices by producers, through verification of wool quality by
independent testing, marketing in lot sizes accepted by international buyers; and
(e) The Wool Marketing Coordinator would establish the WMC and facilitate its adoption
and implementation of the following actions (the list is not exhaustive, and the Consultant
could suggest and add other actions):
(i) make arrangements for the efficient storage of greasy wool and facilitate the
sampling of greasy wool for testing and display purposes;
(ii) develop and implement a wool store inspection service to enhance the quality of
greasy wool clip preparation and sale lot presentation standards;
(iii) continuously introduce improvements and implement programs to improve the
quality of Kyrgyz wool including a register of qualified woolclassers, and a
mechanism by which wool classed by any registered woolclasser may be
identified and made secure;
(iv) develop and operate efficient and effective wool selling facilities, which may
include auctions, tenders and/or continuous bid-offer facilities;
(v) develop and implement an internationally acceptable set of wool selling
regulations for the purpose of facilitating security and confidence by all parties
involved in greasy wool sale transactions;
(vi) implement an effective wool clearing house system to enhance efficient delivery
of wool to buyer's transhipment and final destination points; and
(vii) contract the testing of wool samples by local and foreign laboratories\.
-97- ANNEX F
The final target is to promote buyers' confidence in wool quality control and adherence to
contracts\. This would be facilitated by the creation of a Wool Marketing Center (WMC) which
would have as objectives to improve the quality of Kyrgyz wool, advertise and promote wool and
sheep products both within and outside the Kyrgyz Republic by increasing the level of
competition among buyers of Kyrgyz wool\.
(3) Oualifications: The Wool Marketing Coordinator must have had a long career in the wool
processing and trading, of which at least 10 years in a position of responsibility in the technical and
marketing aspects of the industry, with full knowledge about international transactions\. The specialist
would have a proven track record in demonstrating ability to interact fruitfully with producers and farmer
organizations\. Understanding of, and experience in quality control and marketing of hides, skins and
leather, is desirable\. Fluent knowledge of English is required; knowledge of Russian would be an asset\.
(4) Duration: His stay in Kyrgyz is estimated to last the first three years of project implementation\.
He will have the assistance of an International Expert on Testing/Quality for three months in the first
year, and another three-month follow-up visit the following year\. Other short-term consultants that would
be made available would be in shearing, grading and sorting, for periods of six consecutive months each
in the first year, with the possibility of bringing them back when and if necessary\.
2\. Testing/Quality Controller
(1) Responsibilities: He/she will visit Bishkek for 3 months per year, during the two first years of
implementation, at the time considered most appropriate, to assist in the development of quality control,
and the adoption of work practices and procedures that meet international standards\. These standards are
to be reached in the Wool Marketing Center, and all regional stores\.
(2) Duties: He/she should submit reports to the PIU with recommendations will be produced at the
end of each visit\. Specific tasks to be addressed include:
(a) Training of employees in testing and quality control of all work practices;
(b) Assistance in setting up documentation systems, including pre and post sale documents
and sale execution records;
(c) Training of auctioneers; establishment of efficient storage and handling methods; control,
classification and valuation of wool types to be permitted in the sale arena; and
(d) Core and grab sampling techniques; and coordination of storage, selling and handling
with testing and recording of information\.
(3) Oualifications: The Testing/Quality Controller must possess a long experience in wool testing,,
processing and quality control, in positions of responsibility\. He should be experienced in training,
motivating and communicating with people, having successfully carried-out training programs of the kind
described above\. Knowledge of Russian would be an asset\.
(4) Duration: The two first years of implementation\.
- 98 - ANNEX F
E\. TORs FOR ANIMAL HEALTH SERvIcEs (AHS)
1\. Sheep Veterinary Specialist
(1) Responsibilities: The Consultant would serve as Senior Advisor to the Director of Veterinary
Services (DVS) in the Ministry of Agriculture and Food, in Bishkek, with whom he will work closely
and associate him in every aspect of his activities\. He would have special responsibility to plan, organize
and follow-up on all aspects of Sheep Health and disease control programs\. To that effect, he will review
previous Brucellosis Control campaigns, identifying strengths and weaknesses\. In particular, he would
review plans and progress of the 1995-2000 campaign, and recommend additional steps and/or
improvements necessary to add effectiveness to that campaign\.
(2) Duties: The Sheep Veterinary Specialist, in concert with the epidemiologist and production
specialists will:
(a) Determine what animal health problems will require veterinary services and supplies or
medication, and develop training and management programs for their control\. Examples
are: internal and external parasites, foot rot, pizzle rot in rams, nutritional deficiencies
or toxicities; and
(b) Organize a seminar on his conclusions and findings, in coordination with the Senior
Livestock Advisor in the PIU; prepare and leave a report on the visit with the Director
of DVS and the PIU, in which he would recommend the timing of his next visit\.
(3) Oualifications and Experience: Degree at least at the Doctorate level in Veterinary Medicine,
with extensive experience in the planning, organization and implementation of livestock disease control
programs, especially brucellosis control under conditions comparable to those in the Kyrgyz Republic\.
(4) Duration: His first visit will be for 2 months at the start of the implementation of the component,
and a follow-up second visit of one month in the following year\.
2\. Epidemiologist
(1) Responsibilities: This consultant shall review records and all available information on sheep
diseases in the Kyrgyz Republic, and on the range and incidence of these diseases in recent years\. He
shall determine if epidemiology factors characterize the spread of any one of these diseases\. He shall
also review and assess the methods used in the diagnosis of these diseases, and, if necessary, recommend
improvements in diagnosis, data collection, and reporting\.
(2) Duties: He/she shall:
(a) Establish, in cooperation with the local epidemiology specialists and the epidemiology
units, a detailed survey system for the recording of disease, with emphasis on
determining epidemiology factors;
(b) Train staff in these tasks, including advice on laboratory testing/confirmation\. He will
assist as necessary in the selection of equipment being provided for this component;
- 99 - ANNEX F
(c) Keep the Sheep Veterinary Specialist, the Director of the Veterinary Services, and the
Senior Livestock advisor in the PIU fully informed of his activities\.
At the end of his stay, he shall:
(d) Present a seminar on his conclusions, and leave behind a book of instructions on the
follow-up involved; and
(e) Prepare and leave a report on his visit, and recommend on the timing of his next visit\.
(3) Qualifications and Experience: Epidemiologist with extensive experience in Veterinary R&D,
particularly related to disease survey\.
(4) Duration: 6 months in Year 1, followed by a one-month follow-up visit in the second year\.
F\. TORs FOR SHEEP BREEDING RESEARCH (SBR)
1\. Animal Breeding Specialist
(1) Responsibilities: The Animal Breeding Specialist will work with the Livestock Research Institute
to develop a sheep breeding improvement program\. As a first priority, he will assess the preferences of
the producers, in order to:
(a) Evaluate the sustainability of the genetic base available in the country, its quality and
uniformity;
(b) Determine the future directions in breed development (e\.g, in the case of sheep, the
need for meat and/or wool or other production goals); and
(c) Review the structure of breeding research, and its linkage with private farmers\.
The Animal Breeding Specialist will be assisted in the above tasks by two short-term consultants,
a Reproduction Specialist (two month each during the first two years), and a Nutrition/Feed
Analysis specialist (two month each during the first two years)\. The Sheep Breeding Specialist
will prepare the terms of reference of these two consultants, and time their visits on the basis of
his work plan\.
(2) Duties: On the basis of the above, and considering potential markets for sheep products, the
Consultant will develop a dynamic genetic base to optimize both wool and meat production for maximum
profitability\.
To achieve the above objectives, the Consultant will:
(a) Evaluate existing breeding activities at Sheep and Livestock Breeding Farms, assist in the
design of future breeding plans, the selection of stations and farms to be supported, and
methods of upgrading sheep breeding;
- 100 - ANNEX F
(b) Determine the type of genetic material required for the upgrading program, and if this
material should be imported in the form of semen or rams;
(c) Provide technical training as necessary to local experts, including computer techniques
required for statistical analysis of breeding data;
(d) Assist as necessary in the selection of equipment being provided to the sub component;
(e) Organize seminars on research findings and recommnendations in coordination with the
Livestock Institute and the Senior Livestock Advisor in the PIU; and
(f) Prepare and leave a report on the visit to the above two officials, and recommend on the
timing of his next visit\.
(3) Oualifications: The Animal Breeding Specialist will have a degree in animal science, or a related
field, at the Doctorate level, with a broad background in animal breeding, and specialized knowledge
about sheep/wool production\. He must also possess extensive experience in planning and implementing
breeding programs using the most modern procedures and technology\. He would have worked for a
significant part of his career in an area with comparable geographic conditions as the Kyrgyz Republic\.
(4) Duration: The Consultancy would be initially for 6 months, followed by another 6-month in Year
2 of the project implementation, and finally one month visit in each of the subsequent years\.
G\. TORS FOR PASTURES AND FODDER RESOURCES (PFR)
1\. Range and Pasture Management Specialist
(1) Responsibilities: The Range and Pasture Management Specialist will advise the State Scientific
Center for Land Resource and Use (SSCLRU) in all matters pertaining to pasture monitoring, production
and management\. He will start his assignment by reviewing all the available information on current land
resource and pasture availability, and such matters as privatization procedures and policies, and "public"
land management\.
(2) Duties:
(a) Review the state of monitoring activities and recommend improvements as necessary\.
To that end, he will visit as many agro-ecological zones in the Republic to become
familiar with diversity of pasture types, and various monitoring systems;
(b) Develop the establishment of analytical techniques of examining data, and train, as
necessary, local staff in collating and analyzing results\. He will initiate consideration of
options for alternative more cost efficient systems of monitoring from Year 3 of the
project;
(c) Develop at strategic locations optimum management systems, and recommended pasture
forage mixes, as a part of ATAS demonstration farmers\. Specific attention should also
be given to restoring marginal wheat/barley lands to produce pastures;
-101- ANNEX F
(d) Organize a seminar on his findings to the senior staff of SSCLRU, and prepared a
handbook on conservation and monitoring of pastures in the Kyrgyz Republic; and
(e) Keep the Senior Livestock Advisor in the PIU regularly informed of his work, and copy
to him the reports he issues\. He shall prepare, before his departure, a report on his visit\.
(3) Oualifications\. Range and Pasture Management Specialist with extensive experience in assessing
pasture availability and composition and ecological factors, as these are related to management, utilization
and monitoring of these pastures\.
(4) Duration: One full year starting with the project implementation, and return visits of 2 months
each in Year 2 and Year 3\.
(5) The Range and Pasture Management Specialist will be assisted by a Fodder
harvesting/conservation specialist, for a duration of 2 months\. The duties of the Fodder
harvesting/conservation specialist would be to evaluate the efficiency of present fodder harvesting and
conservation practices, and make recommendations on the potentials of fodder harvesting and preservation
improvement\. He shall prepare and issue a report for use by ATAS on the training of extension agents
in these topics\.
- 102 - ANNEX G
KYRGYZ REPUBLIC
SHEEP DEVELOPMENT PROJECT
ANNEX G
ESTIMATED DISBURSEMENT SCHEDULE
(US$ million)
Bank Fiscal Year Disbursements Cumulative Disbursements
and Quarter by Quarter by end of Quarter
1997
1st Quarter 0\.3 0\.3
2nd Quarter 0\.2 0\.5
3rd Quarter 0\.3 0\.8
4th Quarter 0\.2 1\.0
1998
1st Quarter 0\.7 1\.7
2nd Quarter 0\.7 2\.4
3rd Quarter 0\.7 3\.1
4th Quarter 0\.7 3\.8
1999
Ist Quarter 0\.6 4\.4
2nd Quarter 0\.6 5\.0
3rd Quarter 0\.6 5\.6
4th Quarter 0\.6 6\.2
2000
1st Quarter 0\.4 6\.6
2nd Quarter 0\.4 7\.0
3rd Quarter 0\.4 7\.4
4th Quarter 0\.4 7\.8
2001
1st Quarter 0\.4 8\.2
2nd Quarter 0\.4 8\.6
3rd Quarter 0\.3 8\.9
4th Quarter 0\.3 9\.2
2002
1st Quarter 0\.3 9\.5
2nd Quarter 0\.3 9\.8
3rd Quarter 0\.3 10\.1
4th Quarter 0\.3 10\.4
2003
1st Quarter 0\.2 10\.6
2nd Quarter 0\.2 10\.8
3rd Quarter 0\.2 11\.0
4th Quarter 0\.2 11\.2
2004
1st Quarter 0\.2 11\.4
2nd Quarter 0\.2 11\.6
- 103 - ANNEX G
Attachment 1
KYRGYZ REPUBLIC
SHEEP DEVELOPMENT PROJECT
Estimated Disbursement Profile
Disbursements Profile
IDA Fiscal By Quarter Cumulative Agriculture
years and quarters IUS* million) (US$ million) Project All Regions
1997 1 0\.3 0\.3 2\.6% 0\.0%
2 0\.2 0\.5 4\.3% 0\.0%
3 0\.3 0\.8 6\.9% 1\.5%
4 0\.2 1\.0 8\.6% 3\.0%
1998 1 0\.7 1\.7 14\.7% 4\.5%
2 0\.7 2\.4 20\.7% 6\.0%
3 0\.7 3\.1 28\.7% 10\.0%
4 0\.7 3\.8 32\.8% 14\.0%
1999 1 0\.6 4\.4 37\.9% 16\.0%
2 0\.6 5\.0 43\.1% 18\.0%
3 0\.6 5\.6 48\.3% 22\.0%
4 0\.6 6\.2 53A% 26\.0%
2000 1 0\.4 6\.6 56\.9% 30\.0%
2 0\.4 7\.0 60\.3% 34\.0%
3 0\.4 7\.4 63\.8% 40\.0%
4 0\.4 7\.8 67\.2% 46\.0%
2001 1 0\.4 8\.2 70\.7% 50\.0%
2 0\.4 8\.6 74\.1% 54\.0%
3 0\.3 8\.9 76\.7% 58\.0%
4 0\.3 9\.2 79\.3% 62\.0%
2002 1 0\.3 9\.5 81\.9% 66\.0%
2 0\.3 9\.8 84\.5% 70\.0%
3 0\.3 10\.1 87\.1% 76\.0%
4 0\.3 10\.4 89\.7% 82\.0%
2003 1 0\.2 10\.6 91\.4% 84\.0%
2 0\.2 10\.8 93\.1% 86\.0%
3 0\.2 11\.0 94\.8% 90\.0%
4 0\.2 11\.2 96\.6% 94\.0%
2004 1 0\.2 11\.4 98\.3% 96\.0%
2 0\.2 11\.6 100\.0% 98\.0%
3 0 11\.6 100\.0% 99\.0%
4 0 11\.6 100\.0% 100\.0%
'Country profile data is not available yet as of 03/31196
KYRGYZ REPUBUC: SHEEP DEVELOPMENT PROJECT
Euteibd Diswment Proes
0\.9
0\.8
0\.7
0\.6 - Estimated Project Profile
0\.5 - Agriculture: All regions
0\.4
0\.3
0\.2
0\.1
r-\. - % '
0 0 0 0 ° ° O 0
z
IDA FReal Year z
9 C)
tTJ
PROCUREMENT PLAN
Component/Item Contr\.ct Estimated Procurement No\. of Responsible Bid lmpimnt\.
Type cost Method Contracts Agency Documents period
_____________ _ _(US$000) Available
Eguipment
I\. Software Goods 54 IS I PIU N\. A\. 08/96-06/98
2\. Office Equipment Goods 203 IS 2 PIU N\.A\. 08/96-06/98
3\. Office Furniture Goods 8 LS 3 PIU N\. A\. 08/96
4\. Video Equipment Goods 23 LS I PIU N\.A\. 08/96-06/97
5\. Laboratory Equipment Goods 174 IS I PIU N\. A\. 08/96-08/98
6\. Grassland Tools Goods 7 LS I PIU N\.A\. 08/96
7\. Wool Testing Equipment Goods 541 ICB I PIU 06/96 08/96-08/97
0
8\. Wool Handling Equipment Goods 589 ICB I PIU 06/96 09/96-08/97 3
9\. Generator & batteries Goods 26 IS/LS I PIU N\.A\. 09/96-08/97 G N -
10\. Fencing material Goods 168 IS I PIU N\.A\. 09/96-08/97 o
11\. Vaccine Mfg\. Equipment Goods 556 ICB I PIU 10/97 12/97-06/00
Vehicle
12\. Vehicles Goods 406 ICB I PIU 06/96 08/96-08/97
Animal
13\. Merino Sheep Goods I,114 ICB I PIU 06/96 08/96-06/99
14\. Breeding Material Goods 834 ICB I PIU 06/96 08/96-06/99
Vaccine
15\. Vaccine Goods 1,618 ICB I PIU 10/96 12/96-06/00
Civil Works
16\. Rehabilitation works Works 730 NCB 4 PIU 10/96 10/96-10/98
Books 1\.9
17\. Professional Journal Goods 19 is I PIU N\.A\. 08/96-07/98
Component/Item Contract Estimated Procurement No\. of Responsible Bid Impimnt\.
Type cost Method Contracts Agency Documents period
(US$000) Available
Consultancy
18\. Project Manager Cons\. 350 Short list I PIU N\.A\. 08/96-06/98
19\. Accountant/procurement Cons\. 100 Short list I PIU N\.A\. 08/96-01/97
20\. Brucellosis control specialist Cons\. 43 Short list I PIU N\.A\. 10/96-02/97
21\. Diagnostic specialist Cons\. 29 Short list I PIU N\.A\. 10/96-02/97
22\. Epidemiologist Cons\. 102 Short list I PIU N\.A\. 10/96-06/99
23\. Practice Mgt\. Specialist Cons\. 72 Short list I PIU N\.A\. 10/96-02/97
24\. Regulatory Specialist Cons\. 15 Short list I PIU N\.A\. 08/98
25\. Feasibility study for vaccine Cons\. 61 Short list I PIU N\.A\. 07/96-02/97
mfg\. I o
26\. Animal breeder Cons\. 187 Short list I PIU N\.A\. 10/96-06/98
27\. Reproduction specialist Cons\. 29 Short list I PIU N\.A\. 10/96-02/97
29\. Rangeland ecologist Cons\. 160 Short list I PIU N\.A\. 08/96-08/98
30\. Wool marketing coordinator Cons\. 393 Short list I PIU N\.A\. 08/96-08/98
31\. Int'l expert on testing/quality Cons\. 72 Short list I PIU N\.A\. 10/96-06/97
32\. Marketing/auction specialist Cons\. 57 Short list I PIU N\.A\. 10/96-06/97
33\. Local consultants Cons 592 Short list 4 PIU N\.A\. 08/96-06/00
Sub-total for consultancy 2,262
z
MAP SECTION
iUD 2\.822
- U\.) L
KAZAKHSTAN
2\. v X t _ A X f ,~~~~~~~~~~\. \.0 - 6i
K- ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~~~~~~U
TAJIKISTANS Mf
-0-~~~~~7
// \{ -< o~~~~~~ S H
| i-_- \._\.x,\._ ___45=X_ > *t--_ ~~~~~~~~~KYRGYZ REPUBLIC
110' T\. 'V~~~~~~~~~~~~~~~~~~~~~b ~~- MAIN ROADS
* - OT~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~0HER ROADS
~~~ ') ' ~~~~~~~~~~~AZAKHSTAN * NATIONAL CA~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~NAIOA CPIA
T A J, I ORAS T CAPN \-r :ffiT4 _ +07-BO AT S
- 4- - 0 SELRCTED CMES
t -i t < (- - r\._ INWERNAnONAL ROUNDARIES
I \ ,A\., \.JSK\.I- b-I\. 0\. ,\. \.J ,\.d ,,M Ro& Co0\.
IEPUTUC CHINA l u y , pd \. - A\. I\. ,, 5 100
AtY 19
IMAGING
Report No: 14701 KG
Type: SAR | APPROVAL |
P010053 | RESTRICTED
Report No\. P-673
FILE CWY
This report was prepared for use within the Bank and its affiliated organizations\.
They do not accept responsibility for its accuracy or completeness\. The report may
not be published nor may it be quoted as representing their views\.
INTERNATIONAL DEVELOPMENT ASSOCIATION
REPORT AND RECOMMENDATION
OF THE
PRESIDENT
TO THE
EXECUTIVE DIRECTORS
ON A
PROPOSED DEVELOPMENT CREDIT
TO
THE ISLAMIC REPUBLIC OF PAKISTAN
FOR A
TELECOMMUNICATIONS PROJECT
February 14, 1969
INTERNATIONAL DEV3LOPMENT ASSOCIATION
REPORT AND RECOMMENDATION OF THE PRESIDENT
TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT TO THE
ISLAIKEC REPUBLIC OF PAKISTAN FOR A TELECOMMUNICATIONS PROJECT
1\. I submit the following report and recommendation on a proposed
credit in an amount in various currencies equivalent to US $16 million to
the Islamic Republic of Pakistan to assist in financing the foreign exchange
expenditure of the expansion program of the Telegraph and Telephone Department
of Pakistan (T&T) during the fiscal years 1969 - 1972\.
PART I - HISTORICAL
2\. The proposed credit would be the first lending by the Bank Group
for telecommunications in Pakistan\. The Government had at various times re-
quested such financing, but in the absence of a study of long-term develop-
ment needs, no basis for lending could be agreed upon\. In 1965, however,
consultants, financed by a UNDP grant, were appointed, and they have now
completed their report\. Information enabling the Association to appraise
the project (described in more detail in para\. 9 - 16) became available in
June 1968\.
3\. Negotiations took place in Washington from January 6 - 13, 1969\.
The Borrower was represented by Mr\. A\.R\. Bashir, Economic Minister to the
Embassy in Washington, Mr\. M\.M\. Hussain, Director General of T&T, and
Mr\. G\.M\. Sheikh, Assistant Chief Engineer (Coordination)\.
4\. The Bank has made 26 loans to Pakistan totalling $517 million of
which 17 are fully disbursed\. The Association has made 25 credits totalling
$332 million of which 6 are fully disbursed\. The following is a summary
statement of Bank loans and IDA credits to Pakistan presently under dis-
bursement, as of January 31, 1969\.
-2-
Loan/
Credit Year Borrower Purpose Amount ( US $ million )
No\. Bank IDA Undisbursed
266 1960 Islamic Republic
of Pakistan Indus Basin
(Pakistan) (Multipurpose) 90\.0 28\.4
22 1962 Pakistan Khairpur Ground Water
and Salinity Control 18\.0 6\.3
39 1963 Pakistan Brahmaputra Flood
Embankment 5\.0 0\.3
40 1963 Pakistan Chandpur Irrigation 5\.2 o\.6
41 1963 Pakistan Dacca Water Supply
and Sewerage 13\.2 11\.6
42 1963 Pakistan Chittagong Water
Supply and Sewerage 7\.0 5\.2
376 196h Trustees of
the Port of Port Development 17\.0 1C\.1
Karachi
382 1964 PICIC Industrial
Development 30\.0 0\.3
49 1964 Pakistan East Pakistan
Education 4\.5 1\.5
50 1964 Pakistan West Pakistan
Education 8\.5 5\.3
53 1964 Pakistan East Pakistan Highway 22\.5 2C\.5
54 1964 Pakistan West Pakistan Highway 17\.0 8\.5
56 1964 Pakistan Pakistan Eastern
Railway 10\.0 1\.3
57 1964 Pakistan Pakistan Western
Railway 24\.4 0\.1
65 1964 Pakistan Inland Water Transport 5\.2 0\.2
76 1965 Pakistan Agricultural Develop-
ment Bank 27\.0 0\.8
421 1965 PICIC Industrial
Development 30\.0 5\.7
83 1966 Pakistan Foodgrain Storage 19\.2 13\.1
87 1966 Pakistan Second East Pakistan
Education 13\.0 12\.3
S-1 1966 Pakistan Project Preparation
Credit (Highway
Engineering) 1\.0 0\.3
488 1967 KESC Karachi Electric
Supply 21\.5 10\.8
106 1967 Pakistan Lahore Water Supply,
Sewerage and
Drainage 1\.8 1\.4
496 1967 Pakistan Pakistan Western
Railway 13\.5 9\.7
509 1967 PICIC Industrial
Development 35\.0 26\.7
548 1968 Pakistan Tarbela
(Multipurpose) 25\.0 25\.0
-3-
Loan/
Credit Year Borrower Purpose Amount (US $ million)
No\. Bank IDA Undisbursed
117 1968 Pakistan Second Agricultural
Development Bank 10\.0 8\.o
5%9 1968 Dawood Fertilizer Project
Hercules 32\.0 32\.0
578 1968 Pakistan Second West Pakistan
Highway Project * 35\.0 35\.0
136 1969 Pakistan General Consultants
for EPWAPDA * 2\.C 2\.0
Loans/Credits fully disbursed 21h\.l 118\.0
Total (less cancellations) 551\.9 332\.5
of which has been repaid to
Bank and others 116\.5
Total now outstanding 435\.4
Amount sold 21\.9
of which has
been repaid 16\.8 5,1
Total now held by
Bank and IDA 430\.3 332\.5
Total Undisbursed 183\.7 99\.3 283\.0
* not yet effective
5\. Difficulties in the implementation of a number of projects,
particularly in East Pakistan, have made necessary several revisions
and postponements, but in general, satisfactory progress is now being
made\. Approximately $30 million of the undisbursed amount of
$289\.1 million is committed\. Of the balance approximately $53 million
rermain in the Indus Basin (266-PAK) and the Tarbela (5h8-PAK) Loans\.
6\. In the current fiscal year the Second Agricultural Development
Bank Credit amounting to $10 million (117-PAK), General Consultants
Credit amounting to $2 million (136-PAK), and a Fertilizer Project Loan
(5h9-PAK) amounting to $32 million were made\. Disbursement of funds in
the early months of these three projects was not contemplated\. The Bank
also expects to make an eighth loan to PICIC of $40 million\. The second
fertilizer project in the Lahore area, for which a $28 million loan had
been negotiated, will not be proceeded with because the sponsors,
Adamjee/Cyanamid have decided not to go ahead with their project as the
Government has approved the erection of another plant by other sponsors
in a different location in West Pakistan\. The second Sui Northern Gas
Pipeline Project for which a loan of $12 million had been negotiated
is consequently being reduced in size to serve one rather than two
fertilizer plants but to provide also for low pressure distribution
in urban areas\. A proposed loan of $8 million is expected to be
presented for Executive Directors: consideration in April\. The appraisal
of a West Pakistan Railway Project has been completed, and a proposed
loan of $14\.5 million is expected to be referred to the Executive
Directors in May\. A development credit of about $20 million for a third
Agricultural Development credit is being appraised\. A Low Lift Pump
(East Pakistan) Project, about $10 million, is also being appraised
for presentation whenever additional IDA funds become available\.
7\. IFC has made eleven commitments in Pakistan totalling $28
million\. The outstanding commitment net of repayments, cancellation
and sales of loans is about $23\.4 million\. IFC is presently considering
investment applications in the field of engineering and chemical
industries\. The IFC operations in Pakistan are proceeding satisfactorily\.
- 5 -
PART II - DESCRIPTION OF THE PROPOSED CREDIT
8\. Borrower: Islamic Republic of Pakistan\.
Beneficiary: Telegraph and Telephone Department
of Pakistan (T&T)\.
Amount: Various currencies equivalent to
us $16 million\.
Purpose: To assist in financing the foreign
exchange expenditure required for T&T's
expansion program 1969/1972\.
Amortization: In 50 years with 10 years of grace,
through semi-annual installments
commencing June 15, 1979 and ending
December 15, 2C18, each installment to
and including the installment payable
on December 15, 1988 to be 1/2 of 1%
and each installment thereafter to be
1-1/2%\.
Service Charge: 3/4 per cent\.
Relending Terms: The Government of Pakistan will relend
the proceeds of the Credit to T&T for a
term of 24 years including h years of
grace at 6% interest\.
PART III - THE PROJECT
9\. A report entitled "Appraisal of the Expansion Program of the
Telegraph and Telephone Department of Pakistan", No\. TO-695a on the proposed
project is attached\. At the time of partition, Pakistan's telephone network
was rudimentary with a telephone density of only 0\.02 per 100 persons\.
Since the Government introduced its series of Five-year plans in 1955, the
number of telephones in service has increased at an average rate of 12\.25%
per annum\. Even so, the present telephone density at \.143 per 100 is still
one of the lowest in the world\. The overall average telephone density in
the world is six per 100\. There is a considerable unfilled demand mainly
concentrated in the industrial and business sectors and amounting to some
70,0CO requests for service\. As a result of the very low telephone density
the telephone calling rates are extremely high and on the average some eight
local calls are made per day from each telephone which is about three times
the level experienced in the more developed countries\.
10\. The program of telephone and telecommunication expansion which is
at present being carried out and of which the project forms part, is con-
tained in the Pakistan Government's Third Five-year Plan covering fiscal
years 1966-70 with a carry forward into the first two years of the Fourth
Five-year Plan period\. The Third Five-year Plan provides for the connection
of an additional 160,000 telephones, but due to certain external factors
and the shortage of foreign exchange only 41,000 telephones were installed
during the first three years of the plan\. It is now expected that it will
be possible to step up the rate of provision of service and during the
fiscal years 1969-72 add no less than 175,000 telephones to the existing
system, which consisted of 172,000 telephones at the end of fiscal year
1968\. Also included in the program are the provision of two satellite
ground stations for communication by satellite between East and Webst Pakistan,
expansion of the trunk network facilities by means of microwave and
auxiliary facilities, extension of the openwire long-distance network, pro-
vision of subscribers' long-distance dialing facilities to the main exchanges,
improvement of high-frequency radio facilities, extension and improvement
of the telegraph and telex networks, an expansion of training facilities and
the reorganization of the Department\.
11\. The part of the expansion program, which it is proposed to under-
take with IDA financing, consists of the provision of cables for the
subscribers' distribution network, extension of the openwire long-distance
network, the installation of microwave and coa-xial cable systems, the
improvement of high-frequency radio facilities and the employment of con-
sultants in connection with the reorganization of the Department\. The above
specific works are estimated to cost US $41\.8 million\. The proposed loan of
US $16 million would cover the foreign exchange costs of these works\. The
balance of funds required for the program would be proiided from T&T's
own funds generated from its operations supplemented by Uo 5 $)5 million
equivalent of bilateral loans and suppliers' credits\. A substantial part of
the supplementary external financing has been arranged\. The Credit Aigreement
obligates the Borrower to use its best efforts to obtain the balance\.
12\. The Government had originally also applied for funds to finance
the purchase of imported materials for the Telephone Industries of Pakistan,
a Government owned telephone manufacturing company separate from, but
closely associated with,T&T\. Consideration of this request has been de-
ferred because the transactions between T&T and the Telephone Industries
of Pakistan were not on a commercial basis and it could not be determined
whether the Telephone Industries' operations were reasonably efficient
and competitive\. The Government has indicated its intent to proceed with
a clearer separation of the two entities and to apply for a further credit
to provide, among other things, for the purchase of materials for manufactur-
ing, once this has been completed,
13\. The facilities to be provided in the project are expected to be
brought into operation in successive stages during fiscal years 1970-71-72\.
All contracts proposed for Bank financing, other than the employment of
consultants, are to be \.awarded on the basis of international competitive
bidding\.
14\. The T&T Department is qualified to carry out the expansion and
operate the new facilities effectively\. The senior staff have extensive
experience in telecommunication operations, and the existing training
facilities are to be extended\. Such organizational weaknesses
as do exist have in the main resulted from the development of
- 7 -
the department within the civil service structure, a sharing of responsi-
bilities, (particularly in financial matters) with other departments, and a
failure to introduce a modern accounting system\. The reorganization pro-
posed as part of the project is intended to overcome and eliminate these
weaknesses and to provide the organizational basis for an efficient and
businesslike public utility operation\.
15\. Compliance with major covenants - the payment by T&T of debts and
contributions to the Government, the rate of return and the debt limitation
coverage - is contingent on a reorganization of T&T's financial relationship
with the Government and specifically on the operation of a modern accrual
accounting system which will be established with the help of consultants\.
Pending the introduction of that system the Association and the Borrower
agreed to leave the present arrangements in force\. There would be
little purpose in attempting partial and temporary improvements which would
only complicate the transition\. Furthermore, financial results of T&T's
operations in recent years have been satisfactory and are expected to con-
tinue so in the foreseeable future\. No change in tariffs is required at this
time\.
16\. A detailed examination of the economic aspects of the project
has been undertaken, and a special effort has been made to define the
concepts, criteria and methodology needed to establish an economic rate of
return on a project of this kind\. The supplement to the Appraisal report
contains this study, and a digest is given in Annex 18 of the Appraisal
Report\. The conclusion is that the rate of return of the proposed invest-
ment would be well over 5O%\.
PART IV - LEGAL INSTRUMENTS AND AUTHORITY
17\. The draft Development Credit Agreement between the Islamic
Republic of Pakistan and the Association, the Report of the Committee
provided for under Article V, Section 1 (d) of the Articles of Agreement
of the Association and a draft resolution are being distributed to the
Executive Directors separately\.
18\. The following features of the draft Development Credit Agreement
are of particular interest:
(a) Section 2\.02(b) provides that withdrawals and commitments
from the Credit Account may only exceed four million dollars if the
consultants required to be retained by Section 4\.02(b) are so retained\.
(b) Section 4\.Ol(b) provides that the proceeds of the Credit
will be relent to T&T by the Borrower for a period of twenty-four years,
including four years' grace, to bear interest at 6% per annum\.
(c) Section 4\.07 requires the Borrower to pay its bills to T&T
on a current basis\.
(d) Section 6\.03 limits the duration of provisions dealing with
the operation and management of the project and with the obligations of
T&T to a period of twenty-four years, which is the period of repayment
of the relending provided in Section 4\.Ol(b)\.
- 8 -
PART V - THE ECONOMY
19\. A Report on the Current Economic Position and Prospects of
Pakistan (AS-136a) was distributed to the Executive Directors cn April 22,
1968\. A review of more recent developments is included in the President's
Report for a Second West Pakistan Highway Project (P_651) of November 13,
1968\. An economic Mission has just returned from Pakistan\. Its report is
expected to be distributed in April\.
PART VI - COMPLIANCE WITH ARTICLES OF AGREEMENT
20\. I am satisfied that the proposed development credit would comply
with the Articles of Agreement of the Association\.
PART VII - RECOMMENDATION
21\. I recommend that the Executive Directors approve the proposed
Development Credit\.
Robert S\. McNamara
President
Attachment
February Th, 1969 | APPROVAL |
P081776 |  ICRR 14568
Report Number : ICRR14568
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 02/09/2015
Country : China
Project ID : P081776 Appraisal Actual
Project Name : Cn-second US$M ):
Project Costs (US$M): 187\.90 147\.13
Guangdong Pearl
River Delta Urban
Environment Project
L/C Number : L4856 Loan/ US$M ):
Loan /Credit (US$M): 96\.00 70\.92
Sector Board : Water US$M):
Cofinancing (US$M ):
Cofinanciers : Board Approval Date : 03/21/2007
Closing Date : 12/31/2012 12/31/2013
Sector (s): Sewerage (39%); Flood protection (31%); Sub-national government administration (20%);
Sanitation (10%)
Theme (s): Pollution management and environmental health (33% - P); Urban services and housing for
the poor (33% - P); Environmental policies and institutions (17% - S); Water resource
management (17% - S)
Prepared by : Reviewed by : ICR Review Group :
Coordinator :
Nestor Ntungwanayo John R\. Eriksson Christopher David IEGPS1
Nelson
2\. Project Objectives and Components:
a\. Objectives:
"The objective of the Project is to assist the Borrower in reducing water pollution in the Pearl River system originating
from Foshan and Jiangmen Municipalities [Grant Agreement (GA), page 5]\." The statement of the Project objective
in the PAD is identical, but adds three sub -objectives as follows: (1) wastewater treatment and sludge disposal; (2)
water quality monitoring and sediment removal from waterways; and (3) flood protection and river embankment
improvements (Project Appraisal Document -PAD p\. 4)\. This assessment will be based on the objective stated in the
Grant Agreement, using as sub-objectives those mentioned in the PAD \.
b\.Were the project objectives/key associated outcome targets revised during implementation?
Yes
If yes, did the Board approve the revised objectives /key associated outcome targets?
No
c\. Components:
The project components planned in the two localities of the Pearl River Delta are developed hereunder :
1\. Original components :
(i) Foshan Components :
Wastewater Management : (T 31 \.70 million, actual cost of US$15
( Total appraisal cost of US$ 31\. 15 \.93 million ): Activities
US$ 15\.
under this component included (i) the expansion of Zhenâan wastewater treatment plant (Phase III) by 50,000m3/day;
(ii) the construction of interceptors, secondary sewers, and pumping stations; and consultant services for
development of GIS-based wastewater network map, and (iii) the enhancement of wastewater management
capacities\.
Sludge Treatment and Disposal : (Total appraisal cost of $ 19\.19 \.00 million, actual cost of US$ 9\.10 million ): Intended
activities were (i) the construction of a 400 tons/day capacity centralized sludge treatment and disposal facility at
Nanzhuang to treat sludge from five wastewater treatment plants in Foshan; (ii) consultant services for design review
of facilities, and equipment and other goods for the operation of the facility \.
63 \.70 million, actual costs of
Flood Protection and Embankment Rehabilitation : (Total appraisal cost of US$ 63\.
39 \.51 million )\. The project intended to make improvements to Fengjiang River north embankment and adjacent
39\.
US$39
US$
areas\.
Total appraisal cost of $ 29\.
River Water Quality Improvement : (Total 22 \.31 million ):
29 \.70 million, actual cost of US$ 22\.
Activities included (i) the Foshan Waterway and Foshan Creek sediment dredging, treatment and disposal; and
construction supervision services; (ii) construction of four automatic water quality monitoring stations; and (iii)
consultant services for development of a water environment management information system and improvement of
the Foshan urban management information database \.
Institutional Strengthening and Training : (Total appraisal cost of US$ 4\.64 million, actual cost of US$ 4\.81 million )\.
This component aimed to provide technical assistance for (i) project management services including contract
management, utility management and tariff setting, and monitoring safeguards implementation; (ii) study of
environmental costs for GDP growth and âgreenâ? economic planning; and (iii) training and study tours\.
ii) Jiangmen Components :
(ii)
( Total appraisal cost of US$ 38\.
Wastew ater Management : (Total 54 \.64 million )\. This
38 \.35 million, actual total cost of US$ 54\.
component aimed to expand the Wen Cheng Sha wastewater treatment plant by 150,000 m3/day; construction of
interceptors, secondary sewers, pumping stations; and improvements in the water quality monitoring system \.
( Total appraisal cost of US$ 0\.80 million, actual total cost of US$ 0\.84
Institutional Strengthening and Training : (Total
million \. This component was to provide technical assistance to enhance operational and business management
capacities of the new Jiangmen Biyuan Wastewater Company \.
2\. Revised components :
In October 2012, the project went through a level two restructurin g, triggered by the Remimbi (RMB) re-evaluation
and increases in labor and material costs, and led to the following changes :
The construction of a centralized sludge treatment and disposal facility of a capacity of 400 tons/day to treat
sludge from five WWTPs was replaced by the construction of four decentralized sludge treatment facilities with a
total capacity of 220 tons/day for four WWTPs\.
The loan proceeds were reallocated among the disbursement categories and the financing percentages for
selected categories of expenditure were increased to complete the project activities and achieve the PDO \. After
restructuring, while the project total envelope didn't change, there were spikes in budgeted costs for goods in
activities in Foshan and Jiangmen, which were offset by a decrease in costs for civil works in Foshan, and costs
of consultant services and training across the board \.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Costs : The project total costs amounted to US$ 147\.13 million or 78 percent of costs at appraisal \. Out of the total
costs, the IBRD loan contributed in the amount of US$ 70\.92 million, or 48\.2 percent of approved amount, the other
part of the costs was covered by the Borrower's contribution \.
Financin g: The project was an IBRD Specific Investment Loan in the amount of US$ 96\.0 million\. Funds were on lent
to participating sub-national governments (provinces)\.
Borrower Contribution : At appraisal, the Borrower intended to contribute US$ 91\.90 million, but at project closure,
disbursed resources amounted to US$ 76\.21 million or 83 percent of the amount identified at appraisal \.
Dates : This was an IBRD special investment loan approved on March 21, 2007 and became effective on June 27,
2007\. In October 2012, the project went through a level two restructuring aimed at (a) a reallocation of funds; (b) an
increase in the disbursement percentages for selected categories; (c) a one year extension of the Loan Closing date
until December 31, 2013 to allow extra time to implement the redesigned sludge treatment facilities and to complete
sewer networks; and (d) amendments to the Subsidiary Loan Agreements to reflect certain administrative changes
that occurred during implementation \. The project was closed on new closing term, 12 months after initial closing date\.
A non-disbursed amount of US$25\.0 million was cancelled on May 12, 2014\.
3\. Relevance of Objectives & Design:
a\. Relevance of Objectives:
High
The project aimed to support the Government âs 11th Five Year Plan, articulated around a âpeople-centeredâ? strategy,
aiming to achieve a âharmonious societyâ? that balanced economic growth with distributional and ecological concerns
(PAD)\. In the Pearl River Delta (PRD) cities of Foshan and Jiangmen, the priority was to rapidly expand the
wastewater treatment capacity, and Bank dialogue with the country authorities concluded that this project could bring
value added through best practices in the design and implementation of relatively innovative sludge management,
dredging and safe disposal of sediments from the rivers, and the establishment of an environmental monitoring
system\.
At appraisal, the project supported two prominent themes in the Country Partnership Strategy (CPS) for 2006-2010:
(a) managing resource scarcity and environmental challenges especially related to water pollution reduction and
conservation; and (b) promoting balanced urbanization and improving the quality of urban life \. When the project
closed in 2014, the project was still consistent with the Country Partnership Strategy (CPS) for 2013-16, especially
through the first pillar aimed at supporting greener growth, by helping China shift to a more sustainable energy path;
enhancing urban environmental services; piloting sustainable natural resource management approaches; and
demonstrating pollution management\.
The project supported priority areas for the country, and was at the core of the two Bank's country partnership
strategies that overlapped with the project \. Relevance of objectives is rated as high \.
b\. Relevance of Design:
Modest
The statement of the overall objective in the Loan Agreement was concise and precise, and was identical to the one
in the PAD\. However, the latter was more comprehensive as it added three project sub -objectives\. Activities detailed
in the project components aligned logically with the project sub -objectives and the overarching objective \. Initial
resource allocation was adequate, but in hindsight, substantial savings during implementation were not utilized
toward achieving the project objective
The quality of the results framework in Annex 2 of the PAD was mixed, as there was an imbalance in the composition
of the outcome indicators\. Most indicators were related to the financial sustainability of the infrastructure, and less to
the efficacy of the project \. While the indicators included in the results framework reflected the impact of most of the
project activities in the PDO and included target values derived from different studies conducted during project
preparation, additional indicators were necessary to better reflect the impact of all activities funded by the project,
and all indicators should have had baseline and annual targets instead of just mid -term review and end-of-project
targets\. Some of the outcome targets were revised during the level 2 restructuring in October 2012, but as shown in
Section 10 below, several of them were at the output rather than outcome level \.
In summary, while the project was adequately designed, the initial and revised results frameworks had weaknesses,
and saved resources were neither efficiently allocated nor used \.
4\. Achievement of Objectives (Efficacy):
The development objective was to reduce water pollution in the Pearl River system originating from Foshan and
Jiangmen municipalities\. (Grant Agreement-GA, page 5)\. Achievements toward the overall objective included
progress made in (i) wastewater treatment and sludge disposal, (ii) water quality monitoring, and sediment removal
from waterways, and (iii) flood protection and river embankment improvements \.
(i) Wastewater treatment and sludge disposal : Modest
Outputs :
Expansion of the capacity of the Zhen âan Wasterwater Treatment Plant (WWTP) in Foshan from 200,000
m3/day to 250,000 m3/day, and construction of 7\.6 km of associated sewer collection networks \. Expanded
WWTP became operational in 2010 at the high hydraulic capacity of 95%\. These interventions have contributed
to increase the amount of wastewater collection and treatment in Foshan from 50% at appraisal to 88% at
closing (8 % more than expected),
Following the expansion of the Wen Chang Sha WWTP in Jiangmen, wastewater collection and treatment
increased from 22% in 2006 to 80% at project closure, 10 % more than the target\. Sludge was dewatered to
20% solid content using centrifugal filter press, and then shipped by a licensed operator for composting \.
Decentralized and downsized sludge treatment works (220 tons/day total) at four WWTPs were built using plate
and frame filter press for dewatering sludge to 40% solid content\.
Outcome
At project closing, wastewater treatment plants in Jiangmen and in Chancheng district in Foshan were serving
about 500,000 people and 600,000 people respectively;
The target of improvement of wastewater volume treated per employee (â000 m3/day/person) was achieved for
Foshan (2\.32 achieved against target of 1\.27) and Jiangmen (2\.12 against 1\.905);
Sludge was properly treated and safely disposed of, preventing the contamination of groundwater and adjacent
waterways around the disposal site as before the project;
The volume target (mass) of biologic oxygen demand (BOD) pollution loads removed by the treatment plant
supported under the project (tons/year) was achieved\. Achievements were 846t/y against a target of 476t/y for
Foshan, and 3,528t/y against a target of 1,954t/y for Jiangmen\.
The target on improvement of consumption of electricity per unit (kWh/m3) for Foshan and Jiangmen was
achieved\. Levels achieved were 0\.15 kWh/m3 for Foshan, and 0\.23 kWh/m3 for Jiangmen\.
The target for improvement of the unit cash operating cost (RMB/m3) for Foshan and Jiangmen was not
achieved as the plants are not yet fully loaded (81% in Jiangmen and 95% in Foshan);
Reductions in pollution discharges entering the PRD river network from Jiangmen and Foshan (COD, NH4-N),
were only partially achieved, due to an overestimation of the pollution loads in the WWTPs influents \.
Achievements for Foshan were 1,825t/y for chemical oxygen demand (COD), and 276t/y for NH4-N, against
targets of 2,500 t/y for COD and 150t/y for NH4-N\. Achieved levels for Jiangmen were 6,050t/y for COD, and
917t/y for NH4-N, against targets of 14,235 t/y for COD and 1,095t/y for NH4-N\.
Improvement of the cost recovery ratio and debt service ratio for Foshan (cost recovery achievement of 1\.6%
against a target of 2\.33%, and debt service achievement of 1\.5% against a target of 0\.4%) was not achieved\.
The above ratios for Jiangmen were not applicable because the Jiangmen Biyuan Wastewater Company was
still not autonomous (Cost recovery of 1\.3% against a target of 0\.7%, and a debt service ratio of 1\.5% against a
target of 0\.4%)\.
Overall, efficacy toward outcome was substantial, because capacity for wastewater treatment, sludge disposal, and
reduction in pollution discharges improved, although sustainability and operating targets were either missed or
partially achieved\.
ii) Water quality monitoring, and sediment removal from waterways : Substantial
(ii)
Outputs :
28 km of river dredged compared to 35 km estimated at appraisal;
699,600 m3 of wet sediments were dredged and dewatered, resulting in 362,600 m3 (with less than 60%
water content) which in turn was disposed of in a specially designed and developed landfill within an abandoned
quarry 28 km away\. The landfill was then closed at the year end of 2011\.
Outcome
The target of compliance rates for key indicators (COD, BOD, N, P) with river quality standards at measurement
stations in Foshan and Jiangmen was achieved \. Actual levels for Foshan were (i) 21\.6 mg/l against a target of
40mg/l for COD, (ii) 3\.2mg/l against a target of 10mg/l for BOD, (iii) 1\.42 mg/l against a target of 2\.0 for NH4-N,
and (iv) 0\.1 mg/l against a target of 0\.4mg/l for TP\. Actual levels for Jiangmen were (i) 12\.4 mg/l against a target
of 30\.0mg/l for COD, (ii) 2 mg/l against a target of 6\.0mg/l for BOD, (iii) 0\.55mg/l against 1\.5 mg/l for NH4-N, and
(iv) 0\.2mg/l against a target of 0\.30 mg/l for TP\.
The removal of polluted sediments arguably helped improve water quality and increased the river âs discharge
capacity although no directly linked indicators are available;
Improved water quality monitoring system helped to better understand the capacity of the river to assimilate
pollution loads and plan more effective pollution control measures \.
Under this sub-objective, outcome is rated as substantial, because the project helped to improve the standards of
water quality, partially through removal of polluted sediments \.
iii) Flood protection and river embankment improvements : Modest
(iii)
Outputs
6\.7 km of embankments along the Fenjiang river were improved by intercepting wastewater and redirecting it to
the WWTP and elevating the river banks to a sufficient height to protect against a 1 over 50 years flood event\.
Outcome
There was no outcome indicator at appraisal and at restructuring \.
IEG rates the achievement of this sub -objective as Modest even though there was no Outcome indicator, but the
output achievement was important for flood protection
5\. Efficiency:
Modest
Financial analysis : The ICR carried out a project financial sustainability analysis of the wastewater companies in
Foshan and Jiangmen managing the WWTPs, by reviewing the level of cost recovery in the sector and the impact of
government contribution on their fiscal expenditures, using the financial indicators of (i) full cost recovery rate and (ii)
debt service coverage ratio \.
In Foshan , the financial analysis found that the current concessional rate is sufficient for the WWTP company to
comply with the indicator of debt service coverage ratio established in the financial covenant (1\.6 vs\. the target of
1\.3), but failed to meet the requirements of full cost recovery in 2012 and 2013 (a ratio of 0\.9 achieved vs the target
of 1 in the financial covenants)\. An additional analysis shows that controlling the level of debt for capital investment
could help the wastewater company to comply with the requirement of full cost recovery \. The financial analysis of the
entire wastewater sector found also that the current wastewater tariff paid by customers is not sufficient to cover full
costs (investment and operations) of the wastewater sector in Chancheng District (collection and treatment)\.
In Jiangmen , the financial analysis prepared during the ICR exercise found that the wastewater treatment company
can cover operation and maintenance costs through the concessional rate paid by the municipal government \.
Calculation of the full cost recovery and debt service ratios for the company is not possible because the municipal
government is responsible for capital investments and debt service payments \. Assuming a fictitious payment from
the municipal government to the company equivalent to the value of depreciation of assets, the company would
comply with the financial covenant of debt service coverage ratio and full cost recovery in 2013\. The level of cost
recovery in the whole wastewater sector was also analyzed and it was found that revenues from the wastewater tariff
can cover the operation and maintenance costs of wastewater treatment and collection, although not the full costs
including debt service and depreciation \. To meet the requirements of full cost recovery, the wastewater tariff in
Jiangmen should be increased annually \.
Economic analysis :: Since project benefits were difficult to quantify, the economic analysis was based on a
least-cost analysis of estimated total project costs at appraisal \. Following this approach, total project costs were
estimated ex ante at US$187\.9 million\. At project closure, the ICR reported that all activities were completed, except
for two activities (which were under implementation at closure, but now completed ) and final project costs incurred
amounted to US$147\.1 million\. The differences with the estimated cost at appraisal are mainly due to savings on
procurements and favorable exchange rates \. Average incremental costs (AIC) of selected alternatives of the WWTPs
are almost the same (Foshan) or lower (Jiangmen) than expected at appraisal \. The decentralized option for treating
sludge, which was implemented as indicated under Section 4, was more economical than the centralized one
considered at appraisal\. The river rehabilitation component was also cheaper than expected, unlike the river
dredging which was US$20 million more expensive than expected \.
Administrative and Institutional Efficiency : Weaknesses were observed in four areas : (i) the lengthy project review
cycle made project adjustments difficult, resulting in sub -project cancellation, and more simplified review procedures
were warranted, (ii) regulation changes and technology development on wastewater treatment sludge management
and disposal requirements caused delays on bidding evaluations and resettlement works, and (iii) borrower's
implementing agencies had difficulties with preparing bidding documents, and needed more examples during the
preparation of tendering documents, and (iv) improper allocation of the savings accumulated during project
implementation (US$25\.0 million), which could have been used for an expansion of the project activities in order to
strengthen the outcomes identified in the project \.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re -estimated value at evaluation :
re-
Rate Available? Point Value Coverage/Scope*
Appraisal No
ICR estimate No
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
Moderately Satisfactory
Relevance of objectives was high, whilst relevance of design was modest \. Efficacy was substantial for the first and
second sub-objectives, and modest for the third sub -objective\. Achievements under the first sub -objective were
mixed; most outcome indicators assessing efficacy were achieved, although those measuring sustainability were
partially missed\. Under the second sub-objective, efficacy was strong as illustrated by achieved outputs and
outcome indicators\. There were substantive achievements under the third sub -objective, but the rating was modest
because of the absence of performance benchmarks at project design and restructuring \.
Overall efficiency was modest, because ex -post financial and economic analysis found that the current wastewater
tariff paid by customers is not sufficient to cover full costs of the WWTP in Foshan and in Jiangmen, and savings on
procurements and favorable exchange rates were not used efficiently \.
a\. Outcome Rating : Moderately Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
The ICR identified two areas of strength, and two areas of weakness regarding the risk to development outcome \.
Factors supporting the sustainability of achieved outcome are the following : (i) both the municipal and provincial
governments showed great commitment in keeping up with the environmental management agenda in the region,
and (ii) unfinished project activities when the project closed have been completed, including (a) the environmental
management system and (b) the infrastructure in the flood protection component and the sludge treatment plants of
Nanzhuang and Chengbei, as well as adequate sludge and landfill management \.
There are two areas in need of close follow up by the Borrower to sustain achieved outcome : (i) while the wastewater
treatment plants are working well, it is important to regularly make tariffs adjustments in order to strengthen the
financial autonomy of the wastewater sector, including the needed investments and operation of the sewer network,
under the responsibility of the municipal governments, and (ii) the city of Guangzhou in the Pearl River Delta is
considered by a recent study as the most vulnerable coastal city in the world to climate change, and the cities of
Foshan and Jiangmen belong to the PRD metropolitan area \. The conclusions of that study apply to these two cities
as well\. Additional measures to mitigate flood risks will be indispensable in the near future \.
a\. Risk to Development Outcome Rating : Moderate
8\. Assessment of Bank Performance:
a\. Quality at entry:
Bank management utilized the country team's high technical level, its strong partnership with the two
municipalities, and its experience in the country \. The option for a successor project was adequate, as building on
achieved outcome by the completed project could increase impact \. The project interventions focused on
wastewater treatment and on activities where sound knowledge and best international practices could be applied \.
Investment selection was based on economic rationality and lower costs rather than guided by political criteria \.
The project design relied heavily on considerable economic and sector work funded by donors' and Bank's
budgets\.
While implementing arrangements were strong, the provision for M&E was tentative \. While critical risks related to
the achievement of project outcomes were identified, risks related to potential overestimation of pollution loads to
be removed by the WWTPs should have been identified, given that this was a well -known and common problem
in the region\. Project design was deeply affected by shortcomings in the design of the results framework and the
unrealistic financial covenants pertaining to full cost recovery in the wastewater sector \. The team failed during
appraisal and restructuring phases to set up realistic indicators with well -defined baseline and targets \.
Performance in this area was below expectations, given the quality of the Bank team members, and the large
experience they had of the country and the sector \.
at -Entry Rating :
Quality -at- Moderately Unsatisfactory
b\. Quality of supervision:
The Bank showed proactivity in restructuring the project in 2012 to re-design the sludge management
component, extend the project period for one year and improve the results framework by adding more
quantifiable indicators to measure utility efficiency and by dropping the indicator on increased land use rights \.
The Bank provided expertise to resolve the issues causing delays such as procurement irregularities and
financial management weaknesses \. During supervision missions, the Bank reviewed the remedial actions being
taken by the PMOs and provided on -the-job training of financial management practices \.
However, the above Bank's support to PMOs was insufficient, as the latter continued to witness weaknesses,
including delays on bidding evaluations and resettlement works, and in preparing bidding documents \. The Bank
should have worked unilaterally or in conjunction with the Borrower to support more effectively implementing
agencies, notably through enhanced technical and train ing\.
Quality of Supervision Rating : Moderately Satisfactory
Overall Bank Performance Rating : Moderately Satisfactory
9\. Assessment of Borrower Performance:
a\. Government Performance:
Provincial and local authorities showed strong leadership by taking the option of a decentralized approach to
manage the project, by making the necessary institutional reforms, and by providing counterpart funding
estimated at US$91\.9 million to support or complement project activities \. The decentralized arrangement favored
a more fluent implementation as it avoided extra clearance processes \. The provincial and municipal governments
also played a key role in the selection of project activities, and including those activities that were more
technically complex\.
There are two key weaknesses that the Government should have handled differently in the pursuit of project
outcome: (i) the two municipal governments could have made stronger efforts to further adjust tariffs to improve
the financial autonomy of the wastewater sector, (ii) by proper allocation of the savings accumulated during
project implementation, the Government could have planned an expansion of the project activities in order to
strengthen the outcomes identified in the project \.
Government Performance Rating Moderately Satisfactory
b\. Implementing Agency Performance:
Implementing agencies (decentralized sector agencies in Foshan and Jiangmen ) were effective in project design
and implementation, they maintained strong commitment toward achieving the PDO, and they were proactive in
dealing with the startup delays and slow procurement approvals and in achieving effective results \. However,
there were some delays, notably in the execution of environmental and social safeguards measures \.
While the quality of monitoring and reporting on the project outcomes and output indicators was good, the
Implementing Agencies fell short in designing and monitoring the indicator # 1 (reductions in pollution discharges
entering the PRD river network from Jiangmen and Foshan ), and this could not help in setting more realistic
targets at an earlier point during project implementation \.
Implementing Agency Performance Rating : Moderately Satisfactory
Overall Borrower Performance Rating : Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization:
a\. M&E Design:
The project had a comprehensive and detailed results framework and monitoring arrangements presented in the
annex 3 of the PAD, which included target values derived from different studies conducted during project preparation,
such as the Environmental Assessment or the Financial Analysis \. However, there were difficulties in setting
performance indicators: (i) the targets set up for indicator # 1 overestimated the amount of pollution to be removed by
the plants, (ii) the indicator #2 in the PAD should have included quantifiable indicators related to utility benchmarks,
and (iii) the indicator #4 was not directly attributable to the project and should not have been used as a PDO
indicator\. Finally, to meet the standards, all indicators should have had annual targets instead of just mid -term review
and end-of-project targets\.
DPO The development objective is to reduce water pollution in the Pearl River
system originating from Foshan and Jiangmen municipalities through a
package of key initiatives, including wastewater treatment and sludge
disposal, water quality monitoring, sediment removal from waterways, and
flood protection and river embankment improvements \.
Results 2007 -October 2012
March 2007- 2012 -December 2013
October 2012- Comme
indicators nts
1 Evidence of reductions in Reductions in pollution discharges Minor
domestic source pollution entering the PRD river network adjustm
entering the PRD river from Foshan ents
network from Foshan
municipality (via technical
and social audits)\.
2 Evidence of reductions in Reductions in pollution discharges Minor
domestic source pollution entering the PRD river network adjustm
entering the PRD river from Jiangmen ents
network from Jiangmen
municipality (via technical
and social audits)\.
3 Evidence of improvement in Evidence of improvement in Revised
the effectiveness in effectiveness in operations,
operations, management management and finances of
and finances of wastewater wastewater utility services under
utility services assisted the project, (i) Unit Cash Operating
under the project\. Cost (ii) Wastewater Volume
treated per Employee, (iii)
Consumption of Electricity per
Unit, (iv) Cost Recovery Ratio, (v)
Debt Service Ratio
4 Evidence of improved river Compliance rate for key indicators Minor
water quality at (COD, BOD, N and P) with river adjustm
measurement stations in quality standards at measurement ents
Foshan municipality\. stations in Foshan
5 Evidence of improved river Compliance rate for key indicators Minor
water quality at (COD, BOD, N and P) with river adjustm
measurement stations in quality standards at measurement ents
Jiangmen municipality\. stations in Jiangmen
6 Increases in land use rights Dropped Droppe
for residential commercial d
and industrial properties
adjacent to project areas\.
7 Volume (mass) of BOD pollution New
loads removed by the treatment
plant supported under the project
(tons/year)
b\. M&E Implementation:
As reported by the ICR, data on water quality was collected at wastewater treatment plants, and in representative
stations along the waterways, and financial data from the two wastewater utilities was also periodically gathered in
order to monitor their performance\. The implementation progress was monitored and information related to these
indicators was collected and reported in progress reports \. The Bank kept track of progress of physical, financial,
environmental and resettlement and land acquisition aspects, which were reported in the semi -annual progress
reports\.
To improve the results framework, the restructuring in November 2012 revised one PDO Indicator (#2), while another
one was dropped (#4)\. A Core Sector Indicator was introduced (Indicator #5) to comply with a new corporate
mandate and to correct the overestimation of the targets in indicator # 1\. Target values and baselines were also
revised\.
c\. M&E Utilization:
The information provided by the ICR under the M&E utilization heading is correct, but does not provide substantive
content, which appropriate to this heading \. However, the data and information provided under the M&E
implementation heading above was used to monitor the project progress \. That is why the components were slightly
revised, and the results matrix revamped, although these changes were ineffective, because the achieved budget
savings were not reallocated efficiently, and that part of the results matrix remained inappropriate until the project
closure\.
M&E Quality Rating : Modest
11\. Other Issues
a\. Safeguards:
Social Safeguards \. The Project triggered OP 4\.12 on resettlement\. A Resettlement Action Plan for the Foshan
component was prepared and disclosed on April 27, 2006\. Implementation of the Plan started in 2006 and was
completed by loan closing\. In February 2014, the Foshan PMO submitted a summary report of resettlement
implementation prepared by the external monitoring institution of the Project and compliance with OP 4\.12 was found
satisfactory\. A total of 15 households were re-located, compared to 10 originally planned, and the number of affected
people was significantly lower than planned due to attentive design \. The Jiangmen component did not include
resettlement\.
Environmental Safeguards : The ICR reported extensively on how environmental safeguards were dealt with
throughout the project life: (i) before project approval, the Environmental Impact Assessment (EIA) and the
Environment Management Plan (EMP) were reviewed, found satisfactory and disclosed \. Environmental impacts and
mitigation measures were fully considered at every project phase \. The Bankâs OP 4\.01 on Environmental
Assessment was also triggered, (ii) a supplemental EMP was prepared and disclosed when the sludge treatment
component was redesigned, (iii) Training was carried out on key environmental safeguard compliance requirements,
and environmental management measures were included in the bidding and contract documents, (iv) public
consultation and information disclosure were continuous processes during the entire project cycle, and (v) the
monitoring results showed that the effluent, ambient air quality, odor and noise, and sludge complied with the
relevant environmental standards during the operation of WWTPs \.
b\. Fiduciary Compliance:
Financial Management : The ICR reported that financial management largely followed Bank procedures and all
project audit opinions were unqualified \. However, some small issues related to weak financial management practices
were disclosed by the external auditors, and project accounting practices and project management coordination
mechanisms and communication caused delays in disbursements \.
Procurement : Procurement was generally carried out in accordance with the procedures stipulated in the legal
agreements, Bank guidelines, and the agreed procurement plan \. Procurement for four transactions had to be re -bid
or re-evaluated and caused delays up to 12 months\. Availability of more experienced staff and consultants and more
coordination between the different project implementation units could have avoided procurement processing
disruptions\.
c\. Unintended Impacts (positive or negative):
d\. Other:
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Moderately Moderately
Satisfactory Satisfactory
Risk to Development Moderate Moderate
Outcome :
Bank Performance : Moderately Moderately
Satisfactory Satisfactory
Borrower Performance : Moderately Moderately
Satisfactory Satisfactory
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank
for IEG to arrive at a clear rating, IEG will downgrade
the relevant ratings as warranted beginning July 1,
2006\.
- The "Reason for Disagreement/Comments" column
could cross-reference other sections of the ICR
Review, as appropriate\.
13\. Lessons:
IEG supports three lessons developed in the ICR, which are reformulated below :
(i) The Results Framework deserves close attention during the entire project cycle : Without
a solid and clear results framework, it is difficult to measure the success of a project \. Formulating relevant,
measurable outcome indicators is critical for project design and implementation, and the achievement of project
objectives\. On the contrary, if outcome indicators are flawed during project life, performance measurement
becomes an issue, and this is an impediment to objective achievement \.
(ii) Financial and institutional sustainability of complex operations like Wastewater Treatment Plants and
centralized vs decentralized sludge treatment are complex themes that need more research and analysis \.
Projects supporting the urban environment sector address a multifaceted problem, ranging from institutional
sustainability and financial viability of the companies set up to manage wastewater treatment, to sludge disposal \.
Before deeper research and experimentation is concluded, the Bank's projects in this domain should pursue less
ambitious goals\.
(iii) There is need for deeper analytical work to address the problem of water and sewerage influent
characteristics at the design stage : Incorrect measurement of the influent characteristics has led to a flawed
results matrix, and this seems to be an issue at the regional level \. As this matter seems to be a systemic issue,
resources should be sought to address it definitively, not only for China, but for other countries and similar
projects\.
14\. Assessment Recommended? Yes No
Why?
A PPAR reviewing the two projects (PRD1 and PRD2) of the urban environment program in China would provide an
opportunity to assess the technical issues raised in the ICRR, especially those related to the institutional and
financial sustainability of WWTPs, and the problem of influent characteristics \.
15\. Comments on Quality of ICR:
This ICR was candid and comprehensive in reporting facts pertaining to project design and implementation \. There
was clear and complete reporting of the outputs generated, and special attention to the financial and economic
analysis of the project outcome \. However, the ICR was weak in analyzing the overall achievements of the project,
and in isolating the outputs and outcomes attributable to this project \. Finally the project performance rating for
efficiency was mislabeled as âModerate,â? when it should have been termed âModest\.â?
a\.Quality of ICR Rating : Satisfactory | APPROVAL |
P005428 |  Power Distribution
Report No: ; Type: Report/Evaluation Memorandum ; Country: Morocco; Region: Middle East And North Africa; Sector: Distribution & Transmission;
Major Sector: Electric Power & Other Energy; ProjectID: P005428
The Implementation Completion Report for the Morocco: Power Distribution Project (Loan 2910-
MOR, approved in FY 88) was prepared by the Middle East and North Africa Regional Office\. The loan
in the amount of US$90 million was closed on June 30, 1996, one year after the original closing date,
when an undisbursed balance of US$12\.79 million was cancelled\. The ICR is based on contributions from
the beneficiary power utilities and includes comments from some of them\.
The objectives of the project were to: (i) help the power sub-sector satisfy the growing demand
for electricity at least cost; and (ii) achieve financial and managerial autonomy for the Office National de
lâElectricité (ONE) and the municipal distribution utilities (Régies)\. The first objective was su pported by
the project through the financing of (i) investment components to expand and rehabilitate the
transmission and distribution substation capacity, and the distribution network, of ONE and five Régies,
spare parts and equipment for thermal plants, and teleprotection and telecommunications equipment; and
(ii) institutional strengthening components including the establishment of a high voltage hot line
maintenance program, a training program, and tariff and planning studies\. The second objective was
addressed through the implementation of policy actions derived from studies carried out under the Public
Enterprise Rationalization Loan (Loan 2820-MOR), approved in FY87\.
The project largely achieved its physical objectives, but accomplished very little in improving the
financial and managerial autonomy of ONE and the Régies\. Overall, 85 percent of the physical
components were completed, the efficiency of ONEâs thermal plans was improved, most of the planned
teleprotection and telecommunications equipment was installed, and the hot line maintenance program
became operational\. On the other hand, the planned training program was superceded by similar training
offered by other donors, and the tariff and planning studies were completed but had little impact\. The
financial and managerial autonomy for ONE was pursued through the implementation of performance
contracts, but their effectiveness was limited, since the Government has been slow in meeting its
commitments\. The finances of ONE and the Régies have only partially improved, with some key financial
performance indicators (mainly bulk tariffs to the Régies and arrears due to ONE and the Régies by
Government entities) remaining below targets established at appraisal, and coordination among the sector
entities continuing to be weak\. The rate of return of the project was estimated at 12\.4 percent at appraisal
and reestimated at 9\.8 percent at completion, mainly because of lower sales and tariffs\.
The Operations Evaluation Department (OED) rates the outcome of the project as marginally
unsatisfactory, the sustainability as uncertain, and the institutional development impact as modest\. The
Bankâs performance is rated as unsatisfactory\. These ratings are consistent with those in the ICR with the
exception of outcome, which the ICR rates as unsatisfactory\. Given that the project largely achieved its
physical objectives and the financial and managerial autonomy of the enterprises in the sector is
improving, a marginally satisfactory rating is more appropriate\.
As discussed in the ICR, the achievement of the objectives of the project was hampered by weak
ownership by the Government\. This was evidenced from the beginning of implementation by delays in
meeting conditions for loan effectiveness, excessive slowness in raising tariffs and taking measures to
reduce arrears, and the inability of the enterprises in the sector to excercise the financial and managerial
autonomy that had been agreed in the performance contracts\. The experience with this project reinforces
the important lesson that the Bank should strictly enforce Bank guidelines for project processing (e\.g\.,
delays in loan effectiveness), and critical covenants (e\.g\., tariffs and accounts receivables) to avoid later
problems during implementation and an eventually unsatisfactory outcome\. Another lesson is that the
implementation of a performance contract will not necessarily solve the problems of the power sector
unless it is supported by a broad reform of the policies and regulatory framework\.
The ICR is satisfactory\. It provides a well-organized discussion of the implementation experience
of the project, including prospects for future project operation\. It could have been improved through the
provision of more complete statistics on key enterprise and sectoral performance indicators, to better
document the extent to which the projectâs objectives for the sector have been achieved\.
OED has no plans to audit this project\. | APPROVAL |
P161814 | PROJECT INFORMATION DOCUMENT (PID)
IDENTIFICATION/CONCEPT STAGE
Report No\.: PIDC90831
Public Disclosure Copy
Project Name Sierra Leone Audit Service Capacity Building Support Project
Region AFRICA
Country Sierra Leone
Lending Instrument IPF
Project ID P161814
Borrower Name Ministry of Finance
Implementing Agency Audit Service Sierra Leone
Environment Category C - Not Required
Date PID Prepared 04-Oct-2016
Estimated Date of Approval 31-Jan-2017
Initiation Note Review The review did authorize the preparation to continue
Decision
I\. Introduction and Context
Country Context
Since the end of the civil war in January 2002, Sierra Leone has made strong progress in building
peace, re-establishing democratic institutions, strengthening core systems, and bringing decisions
and resources closer to its citizens through decentralization\. Additionally, until the outbreak of the
Ebola epidemic in 2014 through 2015, the country was achieving macro-economic stability\. The
Public Disclosure Copy
GDP growth rates had averaged an impressive 7%, and inflation had dropped to single digits
reflecting a continued tight monetary policy stance, a stable exchange rate, and some moderation of
prices\. The countryâ¢â¨ s external current account deficit had reduced, and had recorded increased
financial reserves at the end of 2013\. Strong average growth rate of the economy has coincided with
a reduction in poverty as poverty rate had declined from 66\.4% in 2003 to 52\.9 per cent in 2011\.
Despite this period of growth, the country remains a low income country and one of the poorest,
with a GDP per capita of US$513 in 2013\.
The outbreak of the Ebola in 2014 through 2015 has had a devastating socio-economic impact on
the country reversing the prior modest economic gains it has enjoyed\. The epidemic was recorded
to have caused about 3,953 deaths by early 2016 when it was declared over by the WHO\.
Additionally, about 8,345 children were orphaned and more than 1,100 households left with single
parents\. Economically, the outbreak derailed the government economic program as there was
persistent pressure to divert government expenditure to deal with the outbreak\. Furthermore, since
the outbreak, revenue mobilization, overly dependent on exceptional collection from the mining
sector (iron ore) and oil exploration licenses, has been affected by fall in commodity prices leading
to a significant revenue decrease\. Due to the Ebola outbreak, for example, real GDP contracted over
the second half of 2014 by an annualized rate of -1\.3 percent compared with an impressive
annualized growth rate of 11\.3% percent of 2014 and 20\.7 percent in 2013\. While the Government
has developed the Ebola Recovery Strategy to address immediate short term effects, there is need to
Page 1 of 6
strengthen post-Ebola growth prospects by supporting key sectors of the country\.
The country remains a Fragile State with a Country Policy and Institutional Assessment (CPIA) of
Public Disclosure Copy
3\.26 in Fiscal Year (FY) 2015\. Despite the remarkable progress achieved since the end of the civil
war, Sierra Leoneâ¢â¨ s state institutions remain weak and marred by limited human capacity and
elite capture, and are subject to political interests leading to poor transparency and accountability\.
Improving transparency and accountability in the public sector is crucial in building broader
consensus around development strategies\. While efforts have been made in the country to promote
budget openness and public financial management, overall the country, still, has significant
weaknesses in the area of spending oversight both at the central and local government levels, as
well as the State Owned Enterprises\. Building capacity in the countryâ¢â¨ s oversight institutions so
as to improve transparency and accountability is, therefore, deemed essential\. Accordingly,
strengthening the Audit Service Sierra Leone (ASSL), which is the countryâ¢â¨ s Supreme Audit
Institution, to provide a strong oversight is key in the Governmentâ¢â¨ s Governance and Public
Sector Reforms under the Agenda for Prosperity\.
Sectoral and Institutional Context
Sector:
Overall, the countryâ¢â¨ s PFM remains weak\. Although efforts by donor-partners, through
implementation of several reform initiatives, over the years, have yielded some improvements,
significant capacity constraints and other concerns still exist in government institutions\. The weak
PFM environment has resulted to lack of sustained fiscal discipline and inadequate personal
accountability in the country\. PEFA assessments conducted in the country since 2008 have all
emphasized weak budget credibility and predictability, fiscal management challenges, poor
expenditure control (particularly development expenditure), and poor transparency as major
national concerns requiring immediate attention\. Budget execution also faces significant challenges
Public Disclosure Copy
due to limited resources in the midst of expenditure pressures often setting the stage for a tight
fiscal envelope in recent years\.
Despite the gains made in the audit reform arena in Sierra Leone, quite a number of problems still
remain\. These include corruption in contract management, problems in auditing the justice sector
institutions in totality given the core function they provide and general leakages of resources
through embezzlement\. Further, inconsistencies in records, wrong postings, missing supporting
documentation as we all as salary payment irregularities are key issues that the ASSL faces year in
year out\. More broadly, there continues to be lapses in the financial management system in Sierra
Leone which has ultimately resulted into the loss of funds and reduction in the quality of service
delivery in key ministries\. For instance, serious procurement malpractices exist despite existence of
Procurement Law supported by procedural manual and a directorate in MOFED\. These
procurement lapses in public institutions dominate concerns expressed in qualified audits by the
ASSL with common problems being lack of supporting documentations and poor transparency\. A
strong and capacitated audit outfit would unearth these anomalies to ensure appropriate reform and
resultant actions taken to address them\.
Internal audit and internal controls are weak at MDAs and other government institutions\. For
instance, only few MDAs have internal auditors but these internal auditors lack capacity to provide
any meaningful internal audit services consistent with international standards\. Their work are
Page 2 of 6
mainly confined to pre-audits of transactions, and lack the capacity to undertake audits in the IFMIS
environment which is much needed\. Due to limited scope and poor quality of work, the Audit
Service does not place reliance on their work\. Additionally, whilst Audit Committees have been
Public Disclosure Copy
formed in the MDAs, only few are actually functioning\.
Institutional Context:
The Audit Services Sierra Leone, the Supreme Audit Institution of the country, is mandated by law
to be the auditor of Government as espoused in Section 119(2) of the 1991 constitution\. This
section also empowers the Auditor General to audit all government ministries, departments,
agencies, educational institutions and any other statutory body and report on matters deemed fit to
Parliament\. The Act further provides for establishment of Office of the Auditor-General, and an
Audit Service Board (ASB)\. The ASB is an Advisory Board empowered to appoint persons other
than the Auditor-General, to hold or act in offices as members of the Audit Service\. The Board also
exercises disciplinary control over officers of the Audit service\. The ASSL thus was created as an
independent body with administrative and functional autonomy\.
Although, the ASSL is responsible for auditing the central and local governments and SOEs, in
practice some of these audits are contracted out to privately owned audit firms\. In such cases,
however, ASSL retains responsibility for such audits and submits reports on them to the Parliament
as part of its annual report\. The Government Budgeting and Accountability Act 2005 (GBAA)
spells out the Auditor-Generalâ¢â¨ s responsibilities to include conducting financial, compliance,
and performance audits\.
Under the countryâ¢â¨ s Agenda for Prosperity (2013-2018), the work of the ASSL is included under
Pillar 7-entitled Governance and Public Sector Reform\. Under the countryâ¢â¨ s overarching
Agenda for Prosperity, specific objectives highlighted for the ASSL include to; i) build capacity to
cover at least 90% government expenditure by 2015 (this could not be achieved); ii) build capacity
to enable ASSL move into specialized audits such as IT, forensic, and environmental audits whilst
Public Disclosure Copy
being grounded into performance audits (target is to publish 20 performance audits by 2017; iii)
work with other stakeholders to spread awareness of the ASSL roles and responsibilities; and iv)
conduct annual surveys to gauge public perception on the relevance and quality of published audit
reports\.
Despite the important roles expected to be played in the Governmentâ¢â¨ s PFM Reform Strategy,
the ASSL is significantly constrained\. The ASSL audit reports reveal significant capacity
constraints including lack of up-to-date audit standards, and inadequate human and financial
resources\. The audit scope is limited, and coverage is exclusively focused on review of budget
execution reports and compliance issues\. Although it has established quality assurance unit, it is not
yet operational and its working papers are not consistent with INTOSAI and International
standards\. The National Anti-Corruption Strategy 2014-2018, for example, emphasizes some of the
constraints of the ASSL to include perceived lack of capacity to conduct systems, performance, and
forensic audits; persistent allegations about auditor corruption; and lack of due attention given to
ASSLâ¢â¨ s reports by the Public Accounts Committee\.
Lack of public awareness of the existence of the ASSL and its expected oversight roles and
responsibilities is also a concern\. There is limited civil society engagement by ASSL leading to
inadequate knowledge of its roles and what it exists to contribute to the country\. This often results
Page 3 of 6
to lack of cooperation from stakeholders and non-appreciation of services rendered\. The complexity
of its reports also discourages the public from reading and understanding these important reports\.
Public Disclosure Copy
Successful implementation of PFM reforms in the country, however, demands a stronger and better
equipped ASSL that can efficiently fulfill its mandate, and be appreciated by all stakeholders\. For
example, the need for more enhanced capacity for ASSL is heightened as the Government of Sierra
Leone, through MOFED, has incorporated sectoral sustainable development goal considerations
into its budgetary processes, necessitating ASSL to include, in its audit plans, verification of the
implementation of these strategies\.
Although ASSL over the years has enjoyed support from several development partners in building
appropriate structures and processes to promote transparency and accountability and mitigate the
fiduciary risk of utilizing public funds, much support are still needed to achieve desired competency
of the Audit Service\. Strengthening the capacityof the Audit Service Sierra Leone through this
financing being sought will focus on developing core professional staff capacities since other areas
are already funded\. Such efforts will go towards buttressing development and strengthening audit
methods, development of audit manuals, improving the planning and management of professional
work as well as strengthening development of quality assurance methodologies which are being
funded by the PFMICP\.
Once in place, the professional capacity would help deal with organizational capacity where
corporate strategic planning, strengthening leadership and management as well as developing skills
to better manage resources-financial and human will be improved\. Resultantly, the ASSL capacity
will be in a stronger position to deal with external environment by having an engaging interaction
with Parliament and legislature for oversight purposes, the executive, audited bodies, donors,
regional audit bodies, the media as well as professional associations and private sector\.
Public Disclosure Copy
The SAI PFM assessment conducted in 2012 confirmed the weak governance and public financial
environment that ASSL operates in the country as mentioned above\. The report acknowledged that
ASSL over the years has received sustained donor support and has benefited from the availability of
INTOSAI regional capacity development progress, but strongly pointed out that the institutionâ¢â¨ s
quality of audit work is very low due thus confirming the need for continuous efforts in capacity
building of the ASSL\.
Relationship to CAS/CPS/CPF
The Countryâ¢â¨ s Partnership Framework (CPF) identifies transparency and accountability in the
public sector as a cross-cutting area crucial to building broader consensus around development
strategies\. During the period of the CPF, transparency agenda supported by the Bank focuses on
regularity, government effectiveness, and accountability\. As the proposed project intends to
strengthen ASSLâ¢â¨ s capacity to ensure transparency and accountability in public expenditure, it is
fully aligned with CPFâ¢â¨ s focus on transparency and accountability\.
II\. Project Development Objective(s)
Proposed Development Objective(s)
To improve the quality and efficiency of public sector audit, thereby strengthening external
oversight over the management of public resources in Sierra Leone
Page 4 of 6
Key Results
Key Outputs
Public Disclosure Copy
Key outputs are:
â¢â¨Â¢ Component 1: i) a core team of ASSL auditors trained in Revenue Audits
â¢â¨Â¢ Component 2: i) ASSL trained producing simplified versions of ASSLs reports for the
public yearly during project life\.
Key Results/Outcomes
Project outcomes include:
â¢â¨Â¢ ASSLâ¢â¨ s capacity strengthened to conduct and deliver timely and quality revenue audits\.
â¢â¨Â¢ ASSL uses its strengthened capacity to undertake at least three revenue audits during the
project life\.
â¢â¨Â¢ ASSL capacity strengthened to produce simplified version of audit reports including
developing pictorial and vocal depictions\.
â¢â¨Â¢ Enhanced understanding of audit reports issued by the ASSL by the public
III\. Preliminary Description
Concept Description
The project will consist of the following components:
Component 1- Strengthening Professional Capacity
The objective of this component is to create professional capacity to support strengthening of the
financial oversight roles of the ASSL, and submission of timely quality audits to the Public
Accounts Committee to ensure transparency and accountability on the use of public funds\.
Activities that shall be financed under this component include: i) engagement of a consultant to
Public Disclosure Copy
provide â¢â¨ hands-onâ¢â¨ training and development for ASSL in revenue audits\. Currently,
maximization of revenue collection has become a priority area for Government and donors\. As such,
the audit of government revenue has become a priority audit focus\. As ASSL is limited in capacity
in conducting this type of audit, the SAI is seeking support to engage a Consultant to provide hands-
on training in this revenue audit to equip skills necessary to undertake this specialized audit on their
own in the future; and ii) relevant logistical support\.
Component 2: Enhanced understanding of ASSL audit reports issued\.
The objective of this component is to make it easier for the public to read and appreciate reports
issued by the institution\.
Activities that shall be financed under this component include; i) engagement of consultants to train
and develop ASSL staff to produce simplified versions of ASSL audit reports including developing
pictorial and vocal depictions for the benefit of the public to promote understanding of the audit
findings
Component 3: Project management, M&E, and Audit
This component would finance; i) Project Coordinator within the ASSL who would support and
facilitate the interaction among different units within ASSL, and interaction with the PMU and
overall project monitoring\.
Page 5 of 6
IV\. Safeguard Policies that Might Apply
Safeguard Policies Triggered by the Project Yes No TBD
Public Disclosure Copy
Environmental Assessment OP/BP 4\.01 â
Natural Habitats OP/BP 4\.04 â
Forests OP/BP 4\.36 â
Pest Management OP 4\.09 â
Physical Cultural Resources OP/BP 4\.11 â
Indigenous Peoples OP/BP 4\.10 â
Involuntary Resettlement OP/BP 4\.12 â
Safety of Dams OP/BP 4\.37 â
Projects on International Waterways OP/BP 7\.50 â
Projects in Disputed Areas OP/BP 7\.60 â
V\. Financing (in USD Million)
Total Project Cost: 0\.27 Total Bank Financing: 0
Financing Gap: 0
Financing Source Amount
Supreme Audit Institutions Capacity Development Fund 0\.27
VI\. Contact point
World Bank
Contact: Victor Boakye-Bonsu
Title: Sr Financial Management Specia
Tel: 5342+3317
Email: vboakyebonsu@worldbank\.org
Public Disclosure Copy
Borrower/Client/Recipient
Name: Ministry of Finance
Contact: Guillermo Galvan
Title: Director, Territorial Development
Tel: 50325601500
Email: ggalvan@presidencia\.gob\.sv
Implementing Agencies
Name: Audit Service Sierra Leone
Contact: Guillermo Galvan
Title: Director, Territorial Development
Tel: 50325601500
Email: ggalvan@presidencia\.gob\.sv
VII\. For more information contact:
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 473-1000
Web: http://www\.worldbank\.org/projects
Page 6 of 6 | APPROVAL |
P126506 | INTEGRATED SAFEGUARDS DATA SHEET
CONCEPT STAGE
Report No\.: AC6294
Date ISDS Prepared/Updated: 06/02/2011
I\. BASIC INFORMATION
A\. Basic Project Data
Country: Middle East and North Africa Project ID: P126506
Project Name: Arab World Initiative for Financing Food Security
Task Team Leader: Julian A\. Lampietti
Estimated Appraisal Date: October 17, Estimated Board Date: May 15, 2012
2011
Managing Unit: MNSSD Lending Instrument: Adaptable Program
Loan
Sector: General agriculture, fishing and forestry sector (34%);Ports, waterways and
shipping (33%);Agricultural marketing and trade (33%)
Theme: Global food crisis response (100%)
IBRD Amount (US$m\.): 0\.00
IDA Amount (US$m\.): 0\.00
GEF Amount (US$m\.): 0\.00
PCF Amount (US$m\.): 0\.00
Other financing amounts by source:
Borrower 0\.00
0\.00
B\. Project Objectives [from section 2 of PCN]
The higher-level objective of the AWIFS is to minimize the impact of high food prices on the
livelihoods of poor urban and rural residents in Arab countries\. In order to achieve this higher-
level objective, the objectives of the regional program are to: (1) support governments in the
design of effective social safety nets that mitigate the adverse impacts of high and more volatile
food prices on poverty; (2) increase agricultural productivity growth and market participation to
support rural incomes; and (3) improve food import logistics to facilitate the pass-through of
international prices into the domestic economy at a lower cost\. The project development
objectives at the project-level will be tailored to the specific needs of each project\.
C\. Project Description [from section 3 of PCN]
Component 1: Strengthening social safety nets\. This component would support countries in: (i)
building effective social safety net systems for crisis preparedness; (ii) consolidating existing
fragmented safety net programs for more effectiveness and results, including reducing overlaps
and bridging coverage gaps; (iii) linking social safety nets to interventions that build human
capital and improve peopleâs productivity; and (iv) building community interventions to improve
access to services for the poor, generate short-term employment, and contribute to community
assets\. Examples of potential policy and investment activities include: developing targeted and
conditional cash transfer systems; implementing public workfare programs; supporting the
subsidy value of food stamps; and financing school feeding costs\.
Component 2: Strengthening agricultural production and marketing systems\. Arab countries can
take steps to increase food production at home, even with the constraints imposed by the limited
availability of water and land\. In this context, an export-oriented agricultural development
strategy centered on high value crop production is generally the most effective way to valorizing
scarce arable land and water resources and ensuring food security through improved incomes\. To
these ends, the AWIFS would support production-linked reforms and investments in research,
extension and water management coupled with improved efficiency of domestic markets\. The
initiativeâs strategic focus on promoting high value crop production for domestic and export
markets would not exclude productivity-enhancing investments related to staple crops where a
clear economic case can be made\. Eligibility criteria would be designed such that public support
is geared towards investments generating the highest returns regardless of the nature of the
underlying production system\. Examples of potential policy and investment activities include:
national and regional competitive financing for research grants programs; building the capacity
of national and regional research centers; developing a pluralistic approach to delivering
extension and advisory services; increasing incentives for irrigation water conservation among
farmers; improving the performance of irrigation services; and improving the efficiency of
domestic markets\.
Component 3: Reducing exposure to food import price volatility\. Modern procurement methods
and efficient import logistics infrastructure could generate substantial savings in food import
costs\. Import supply chains are important because they are a critical element of costs and price
formation that affect both producers and consumers\. One cost effective way to generate savings
is to improve management of national and/or regional physical grain reserves and facilities
through better procurement procedures and practices\. There are also many potential investments
- in transportation, logistics, and storage - that can reduce the time and cost of importing food\.
Improved monitoring of world and regional cereal supply and demand would help Arab
countries foresee price shocks and allow them to adjust imports accordingly\. Arab countries
could further manage price risks by making better use of financial risk-hedging instruments\.
Financial instruments could be used to create virtual reserves, ensuring cereals at a certain price
without many of the costs associated with physical stockpiles\. Financial instruments could also
improve budget planning by allowing importing countries to lock in prices ahead of time\. The
two primary financial instruments used to establish virtual stockpiles are futures contracts and
options\. Examples of potential policy and investment activities include: improving national and
regional grain stock management; developing national and regional early warning and weather
risk management systems for food crop production; and improving price risk management\.
D\. Project location (if known)
Member states of the League of Arab States (LAS)\.
E\. Borrowerâs Institutional Capacity for Safeguard Policies [from PCN]
Each project under the facility would be implemented by an implementing entity at the national
level designated by the government\. A project implementation unit will be set up at the project
level that will be expected to include the required capacity to undertake successful
implementation of the Bankâs safeguard policies\. A capacity assessment of the implementing
entity will be undertaken during project preparation and training will be provided, as necessary\.
At the initiative level, along with eligibility criteria and details for accessing the funds, the
Framework Document will include guidance to be followed at the project level which will ensure
compliance with Bank safeguard policies\.
F\. Environmental and Social Safeguards Specialists
Ms Banu Setlur (MNSEN)
Mr Colin S\. Scott (MNSSO)
II\. SAFEGUARD POLICIES THAT MIGHT APPLY
Safeguard Policies Triggered Yes No TBD
Environmental Assessment (OP/BP 4\.01) X
A Framework Document will be prepared for the initiative as a whole which will include
details for accessing the funds\. Additionally, this document will include a Safeguards Guidance
Annex that will outline steps required to be followed at the project level by each participating
country to be in compliance with the Environmental Assessment and other environmental
policies, as applicable\.
Natural Habitats (OP/BP 4\.04) X
Forests (OP/BP 4\.36) X
Pest Management (OP 4\.09) X
Physical Cultural Resources (OP/BP 4\.11) X
Indigenous Peoples (OP/BP 4\.10) X
Involuntary Resettlement (OP/BP 4\.12) X
A Framework Document will be prepared for the initiative as a whole which will include
details for accessing the funds\. Additionally, this document will include a Safeguards Guidance
Annex that will outline steps required to be followed at the project level by each participating
country to be in compliance with the Involuntary Resettlement policy\.
Safety of Dams (OP/BP 4\.37) X
Projects on International Waterways (OP/BP 7\.50) X
Projects in Disputed Areas (OP/BP 7\.60) X
Environmental Category: A - Full Assessment
III\. SAFEGUARD PREPARATION PLAN
A\. Target date for the Quality Enhancement Review (QER), at which time the PAD-stage ISDS
would be prepared: 09/01/2011
B\. For projects that will not require a QER, the target date for preparing the PAD-stage ISDS:
N/A
C\. Time frame for launching and completing the safeguard-related studies that may be needed\.
The specific studies and their timing1 should be specified in the PAD-stage ISDS\.
N/A
IV\. APPROVALS
Signed and submitted by:
Task Team Leader: Mr Julian A\. Lampietti 05/25/2011
Approved by:
Regional Safeguards Coordinator: Mr Hocine Chalal 05/31/2011
Comments:
Sector Manager: Ms Hoonae Kim 05/26/2011
Comments:
1 Reminder: The Bankâs Disclosure Policy requires that safeguard-related documents be disclosed before appraisal (i) at the
InfoShop and (ii) in-country, at publicly accessible locations and in a form and language that are accessible to potentially affected
persons\. | APPROVAL |
P174329 |  The World Bank
Malawi Education Reform Program (MERP) (P174329)
Project Information Document (PID)
Concept Stage | Date Prepared/Updated: 24-Sep-2020 | Report No: PIDC29717
Jun 09, 2020 Page 1 of 14
The World Bank
Malawi Education Reform Program (MERP) (P174329)
BASIC INFORMATION
A\. Basic Project Data OPS TABLE
Country Project ID Parent Project ID (if any) Project Name
Malawi P174329 Malawi Education
Reform Program
(MERP) (P174329)
Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead)
AFRICA EAST Dec 10, 2020 May 26, 2021 Education
Financing Instrument Borrower(s) Implementing Agency
Investment Project Financing Republic of Malawi Ministry of Education,
Science and Technology
Proposed Development Objective(s)
to strengthen learning environments in lower primary
PROJECT FINANCING DATA (US$, Millions)
SUMMARY-NewFin1
Total Project Cost 48\.70
Total Financing 48\.70
of which IBRD/IDA 0\.00
Financing Gap 0\.00
DETAILS -NewFinEnh1
Non-World Bank Group Financing
Trust Funds 48\.70
EFA-FTI Education Program Development Fund 48\.70
Environmental and Social Risk Classification Concept Review Decision
Moderate Track II-The review did authorize the preparation to
continue
Jun 09, 2020 Page 2 of 14
The World Bank
Malawi Education Reform Program (MERP) (P174329)
Other Decision (as needed)
B\. Introduction and Context
Country Context
1\. The Republic of Malawi is a densely populated, landlocked county which is one of the poorest countries in the
world\. Malawi is home to about 18 million people where 70 percent of the population lives below the poverty line of
$1\.90 per day per capita\. Incomes are substantially unequally distributed, with the poorest quintile of households
accounting for only seven percent of income and the wealthiest quintile, fifty percent\.1 Nearly 85 percent of population
lives in rural areas2, with most locked in low productivity subsistence farming\.
2\. The global COVID-19 pandemic has interrupted Malawiâs trajectory for a third straight year of faster growth\.
Real gross domestic product (GDP) per capita grew at an average of 1\.5 percent per year in 1995â2018, while non-
resource-rich Sub-Saharan African (SSA) economies grew at an average of close to 3 percent per year over the same period\.
Growth improved to an estimated 4\.4 percent in 2019, up from 3\.5 percent in 2018, reflecting improved agricultural
production and resulting stronger performance in the industrial and service sectors\. The economy was on a trajectory for
its third consecutive year of faster growth in 2020 before the onset of the COVID-19 pandemic\. Although the overall
duration and severity of the economic shock associated with the pandemic is uncertain at this time, it is likely to be
significantly larger than anything seen since the financial crisis of 2008/09\. The pandemic is also likely to exacerbate
chronic high levels of poverty and inequality\.
3\. Human capital outcomes are low\. Malawi ranks 172 out of 189 countries on the 2018 Human Development Index
and 125 out of 157 countries on the Human Capital Index (HCI)\. According to the latest HCI, a child born in Malawi today
will be 41 percent as productive when s/he grows up as s/he could be if s/he enjoyed complete education and full health\.
In terms of education, low rates of learning (see Sectoral and Institutional Context) mean that, while children in Malawi
can expect to complete 9\.4 years of pre- primary, primary and secondary school by age 18, when adjusted for quality of
learning, this is only equivalent to 5\.4 years\.3 In terms of health, only 94 out of 100 children born in Malawi survive to age
5, and 37 out of 100 children are stunted, increasing their risk of cognitive and physical limitations that can last a lifetime\.
High rates of stunting persist as a result of high rates of poverty and a high incidence of early marriage (see next
paragraph)\.
4\. Gender inequities are substantial\. Issues related to girlsâ and womenâs empowerment affect Malawiâs human
capital development with high fertility rates, particularly among rural women and those in the lowest-income quintile of
households (6\.1 persons per household, versus 4\.5 in the least poor quintile)\.4 Early marriage is common, with 46 percent
of women aged 18-22 reporting having been married before their 18th birthday, and nearly one-third of women aged 15-
19 having already begun childbearing\.5 The Malawian population is very young and growing fast, posing significant
1 Integrated Household Survey (IHS) 2016/17\.
2 World Bank estimate based on United Nations Population Divisionâs World Urbanization Prospects\. 2018\. Available at:
https://data\.worldbank\.org/indicator/SP\.RUR\.TOTL\.ZS?locations=MW\. Accessed: 9th June 2020\.
3 World Bank\. 2018\. âMalawiâ?\. Available at: https://databank\.worldbank\.org/data/download/hci/HCI_2pager_MWI\.pdf\. Accessed: 10th June 2020\.
4 IHS 2016/17
5 Multiple Indicator Cluster (MICS) 2017 survey\.
Jun 09, 2020 Page 3 of 14
The World Bank
Malawi Education Reform Program (MERP) (P174329)
pressures on education service delivery, with the expansion in schooling system unable to catch up with the demand\. The
mean age is 17 years, with 75 percent of Malawians under the age of 35 years\. The large, fast growing young population,
with 1\.3 million children entering the school system every year, places tremendous pressure on limited resources available
for education service delivery\. The number of school-age population at primary level is expected to increase from 4\.8
million to 6\.5 million by 20306\.
Sectoral and Institutional Context
5\. Education is a key national priority area for Malawi\. Education and Skills Development are among the nine Key
Priority Areas (KPAs) within the Malawi Growth and Development Strategy III, 2017-2022\. The Governmentâs National
Education Sector Plan (NESP), 2008-2017, and related Education Sector Implementation Plan II (ESIP-II) 2013-2018, is
supported by the current Education Sector Plan Implementation Grant (ESPIG) of US$ 44\.9 million from the Global
Partnership for Education (GPE) and the resulting project, the Malawi Education Sector Improvement Project (MESIP,
P158145)\. Following a two-year transition period between sector plans, the Ministry of Science, Education and Technology
(MoEST) is finalizing the National Education Sector Investment Plan (NESIP) 2020-2030; this will translate into a five-year
costed implementation plan, the Education Sector Implementation Plan (ESIP) III (2020-2025), currently under
development\. The proposed project will support NESIP and ESIP-III, in particular the strategic objectives for primary
education: improved equitable, inclusive access and participation; improved quality and relevance of teaching and
learning; and efficient governance, management and accountability of service delivery\.
6\. MESIP has put the primary education sub-sector on the right footing\. Provision of additional grants going directly
to schools supported the construction of more than 1000 low cost learning shelters and classrooms, constructed by
communities, and appointment of more than 500 auxiliary teachers\. Headteachers and deputy headteachers from 800
schools across Malawi have received School Leadership Program training to better manage schools in resource-
constrained environments, maintain school records, create inclusive school cultures, and improve teacher performance\.
MoEST has prepared a new primary Teacher Management Strategy updating and clarifying policies relating to teacher
management and made substantial improvements in the targeting of newly allocated teachers to schools\.
7\. However, these achievements have not significantly improved national outcomes owing to a narrow focus on
a subset of schools\. Each MESIP intervention is targeted to around 15 percent of public primary schools\. In most cases,
the targeted schools are all within eight disadvantaged districts\.7 The MESIP interventions have achieved improvements
in learning environments and practices at these schools, and it is anticipated that forthcoming impact evaluations will
confirm long-term impacts on education outcomes\. However, the national picture in terms of key performance indicators
has not significantly improved\. Chronic high rates of repetition and dropout, and low levels of learning, have persisted, as
have large inequities in conditions and learning between schools\. Moving the needle on national outcomes necessitates
a transition from a project to a programmatic approach\.
8\. Malawiâs primary education system has achieved remarkable progress in increasing access to school but faces
continued pressure on the system to provide quality learning in the face of growing intake of students\. Only 61 percent
of students entering Standard 1 survive to Standard 5, and this rate has declined in the last five years\.8 Malawiâs primary
schools are an extreme case of âtraffic-jamâ problem, with extremely large class sizes and low learning in Standards 1 and
2\. High fertility rates have driven a rapid rate of enrollment expansion in recent years\. Without adequate supply of
6 6-13 year olds\. We use population projections from the United Nations Department of Economic and Social Affairs, adjusted to reflect school-age
share of population as reported in the UNICEF Multiple Indicator Cluster Survey\.
7 An additional 10 percent of schools, and an additional four districts, are targeted by the MESIP-Extended program supported by Royal Norwegian
Embassy\.
8 MoEST\. 2019\. Malawi Education Statistics 2017/18\.
Jun 09, 2020 Page 4 of 14
The World Bank
Malawi Education Reform Program (MERP) (P174329)
classrooms and teachers, this results in extremely large class sizes, typically above 100 students in Standards 1-2\. In these
poor conditions, rates of learning are low, leading to high rates of repetition and subsequently even larger class sizes\. As
a result, students finish lower primary with minimal learning: only one-third of Standard 4 students can add simple two-
and three-digit numbers\. These large class sizes are a result of severe shortages in classrooms and teachers in lower
grades\. The typical school has 326 students in Standards 1-2 and only two classrooms available for classes in these
standards\.9 More than a quarter of schools employ at least one open-air classroom, and these are predominantly used in
lower primary\.
9\. These overall challenges are exacerbated by large inequities between schools\. Pupil-teacher ratios and learning
environments vary widely, with disadvantaged schools â mostly in remote areas â facing severe shortages of teachers and
infrastructure in poor condition while other schools have excess staff and relatively good conditions\. These inequities are
predictive of disparities in learning outcomes\. To raise overall levels of learning, there is an urgent need to âraise the floorâ
by targeting resources to close the gap between the most disadvantaged schools and the rest\.
10\. These poor outcomes persist as a result of longstanding bottlenecks in education system management capacity\.
Weaknesses in the teacher management system prevent district officials from allocating and enforcing allocation of
teachers to remote schools; weaknesses in school management, and sub-district school supervision lead to persistent
inequitable allocations of teachers to lower grades; and weakness in central level procurement of construction lead to
high-cost and low-speed construction of classrooms\.
11\. The MESIP interventions have presented effective approaches to address these issues, but on a limited scale\.
Provision of additional grants to schools (âMESIP SIGâ), paid directly to schools in a timely manner as a top-up to regular
PSIG, supported the construction of more than 1000 low cost learning shelters and classrooms, procured and constructed
by communities at an average cost of $2,500, less than 1/7 the cost of conventional central procurement\. These schools
have additionally appointed more than 500 âauxiliaryâ teachers, paid for from the MESIP SIG, predominantly teachers who
have completed teacher training but are waiting for their full deployment to schools\. The School Leadership Program;
guidance and supervision from Primary Education Advisers (PEAs) on use of MESIP SIG; and disbursement-linked indicator
(DLI) providing incentives to MoEST to achieve reductions in PTRs in lower primary in eight disadvantaged districts; have
collectively supported improvements in the allocation of teachers to lower grades\. However, these gains are limited to
the schools supported by MESIP SIG and participating in the School Leadership Program, and to the eight districts subject
to the DLI\.
12\. MESIP SIG may have been more effective with a more needs-based approach\. Analysis by the World Bank Task
Team of the pilot implementation under MESIP, which employed a similar needs-based component as PSIP, suggests that
only around one in ten participating schools were able to construct adequate shelters or appoint sufficient auxiliary
teachers to reduce pupil-classroom ratios (PCRs) and pupil-teacher ratios (PTRs) in grades 1-2 to reasonable levels\. Around
80 percent of schools were only partially able to meet their needs for shelters and teachers with the funds available, while
12 percent of schools already had reasonable conditions in these grades and invested their grant finance in other areas\.
A more targeted approach, with a larger needs-based component, would have enabled a greater share of schools to
reduce PTR and PCR in these grades to reasonable levels\.
13\. Girls achieve lower learning outcomes than boys and are less likely to complete primary school\. Malawi has
largely achieved gender parity in primary school intake: the gross intake ratio for girls is slightly higher than that for boys,
124 percent versus 122 percent in 2017/18, according to the Education Management Information System (EMIS), and girls
repeat and drop out at similar rates to boys\. However, girls achieve lower learning outcomes at all stages of primary
9
Malawi Longitudinal Schools Survey (MLSS), midline data (2018/19)
Jun 09, 2020 Page 5 of 14
The World Bank
Malawi Education Reform Program (MERP) (P174329)
school\. In the MLSS learning assessments, conducted with Standard 4 students, girls achieve average scores twenty points
below boys on standardized knowledge scale, equivalent to several monthsâ less learning\.10 These disparities persist in
upper primary: by Standard 6, girls achieve scores ten percentage points lower in SACMEQ Maths and seven percentage
points lower in reading11, and by Standard 8, only 72 percent girls pass the PSLCE versus 82 percent of boys\. The result of
these diverging learning trajectories is that the primary completion rate for girls is significantly lower than for boys\.
14\. Concerted efforts to support girls in upper primary have successfully reduced the gap in completion rates in
recent years, but further progress requires attention to divergent learning in lower primary\. MESIP, and other projects
such as the Strengthening Malawiâs Education System project supported by DFID, have provided support to retention and
attendance of girls in upper primary through methods including appointment of girlsâ counselors and mentors; provision
of menstrual health management (MHM) materials; and monitoring and support to vulnerable girls and those at risk of
dropout\. These interventions have succeeded in reducing the gap in primary completion over the last five years (Figure
7), although the gap has also reduced as a result of declining completion by boys\. However, the persistence of significant
learning disparities in Standard 4 suggests that the seeds of differential primary completion are sown in lower primary\.
Attention to girlsâ learning in lower primary, to close the learning gap with boys, is likely to be necessary to fully eliminate
the gap in primary completion\.
Other contextual factors of relevance to the proposed project include:
15\. Context of decentralization\. The framework for education management in Malawi has shifted since the onset of
MESIP as a result of the ongoing agenda of decentralization in Malawi\. Management of teacher payrolls, which was
previously conducted at central level by the Department of Human Resource Management and Development (DHRMD),
has been decentralized to district level since 2016/17\. The Local Government Accountability and Performance (LGAP)
project, implemented by USAID and DfID, provides support to districts to conduct a range of activities including school
leadership training and inspection\. The World Bankâs Governance for Effective Service Delivery (GESD) programme, which
was approved by the World Bank Board on April 30 2020, will support performance-based financing for districts, including
for education, which will increase district-level resources while strengthening fiscal and service delivery management at
local level, laying the groundwork for deeper decentralization of education finance to districts and schools over time\.
16\. Other WB support to sector\. The proposed project is aligned with and complementary to World Bank support to
other levels of the education, most notably Equity with Quality and Learning at Secondary (EQUALS, P164223) and Skills
for a Vibrant Economy (SAVE, P172627)\. In particular, the support to teacher management in the proposed project is well
aligned with EQUALS, which supports improvements in supply and allocation of teachers at secondary level, with an
emphasis on female teachers\. In addition, the proposed project builds upon activities supported by the Investing in Early
Years for Productivity Project (IEYPP, P164771), notably the provision of distance learning materials via community radio;
and the aforementioned GESD\.
17\. Coordination with DPs working on education\. The proposed project builds upon and is complementary to the
various ongoing DP-supported projects and activities in the sector\. In particular, the project builds upon the work of the
National Reading Programme, supported by USAID and DfID, which strengthens literacy education in lower primary and
is currently being expanded to upper primary; and Strengthening Malawiâs Education System (SMES), supported by DfID,
which aims to achieve gender equality in education via provision of financial and material support to female students,
strengthening of communities, and mentoring\. The proposed project also complements ongoing support to strengthening
of EMIS by UNICEF and USAID, among others; The MLSS, which is financed by RNE and DFID, provides evidence to inform
10
MLSS baseline, 2016\. Initial analysis suggests continued gender disparities at midline (2018/19)
11
SACMEQ IV, 2013\. http://www\.sacmeq\.org/?q=sacmeq-members/malawi/sacmeq-indicators
Jun 09, 2020 Page 6 of 14
The World Bank
Malawi Education Reform Program (MERP) (P174329)
the project design and has laid the groundwork for a joint framework between DPs and Government to address issues of
data quality and evidence-based policymaking\.
Relationship to CPF
18\. The proposed operation is aligned to the most recent Country Assistance Strategy (CAS) (FY 2013-17)\. The
proposed operation is directly aligned to Theme 2 âenhancing human capital and reducing vulnerabilitiesâ\. The specific
results areas to which the project will directly contribute are: Results area 2\.1, âimproved delivery of public servicesâ;
Outcome 2\.1: (Improved access to quality education)\. Arising from the socio-economic benefits of secondary education
highlighted above, the project has a linkage to results area 2\.2: âlowering vulnerability and enhancing resilienceâ; as well
as Theme 1: âpromoting sustainable, diversified and inclusive growthâ, results area 1\.3 âstrengthening productivity in a
diversified economyâ\. Although the new Country Partnership Framework (CPF) is in draft, the project is well aligned with
the third focus area for the new CPF, âbuilding human capital and resilienceâ\.
19\. The proposed project is also aligned to the 3rd Malawi Growth and Development Strategy (MGDS III, 2017-22)
which will provide anchorage for the next CPF\. Education and skills development is one of the five key priority areas in
the 3rd Malawi Growth and Development Strategy (MGDS III) with an overall goal to âimprove quality and relevant
education and skills for allâ\. The specific outcomes of the MGDS to which the proposed project is aligned are: (a) increased
quality and relevance of primary education; (b) improved access and equity in basic education; and (c) improved
governance and management of basic education\. Further, the project will also contribute to Malawiâs progress towards
the Sustainable Development Goals (SDGs) on education over the upcoming CPF cycles\. This is specific reference to Goal
4: âensure inclusive and equitable quality education and promote lifelong learning opportunities for allâ\.
20\. The proposed project will contribute to the World Bankâs twin goals of ending extreme poverty and promoting
shared prosperity, and is consistent with the World Bank Groupâs Human Capital Project and Africa Human Capital Plan\.
Global evidence shows that countries that experience high and sustainable economic growth have large supply of post-
primary education personnel\. Investments in secondary education would enable Malawi to harness its population
dividend through the high returns that accrue to secondary education; as well as contribute to the demographic
transformation arising from the social returns to secondary education\. The proposed project is thus in line with the World
Bank Group's Human Capital project, which is an accelerated effort to encourage investment in people; and the Africa
Human Capital Plan, which has as one of its objectives ensuring that all girls and boys attain real learning in the classroom\.
In addition, the projectâs focus on improving learning environments in lower primary is well aligned with the World Bankâs
target to reduce learning poverty at age 10 by at least half by 2030\.
C\. Proposed Development Objective(s)
21\. The proposed Project Development Objective is to strengthen learning environments in lower primary\.
Key Results (From PCN)
PDO Level Results Indicators
1\. Pupil-classroom ratios (PCRs) in lower primary [Number], by grade, average and interquartile range12
12
Interquartile range is measured to capture improvements in equity between schools\.
Jun 09, 2020 Page 7 of 14
The World Bank
Malawi Education Reform Program (MERP) (P174329)
2\. Pupil-qualified teacher ratios (PQTRs) in lower primary [Number], by grade, average and interquartile range
3\. Student dropout rate in lower primary [Percent], disaggregated by grade and gender
22\. PBCs are tentatively as follows:
1\. Recipient has met the annual target for the share of schools receiving Primary School Improvement Grants by
October 31 in accordance with the PSIG formula [Percent]
2\. Recipient has met the annual target for the share of schools with pupil-teacher ratios in Standards 1-2 in the
acceptable range [Percent]
3\. Local Government Authorities have met the annual target for the completion of activities to improve
distribution of female teachers [Percent]
23\. All PBCs will be Intermediate Results Indicators\. Additional Intermediate Results Indicators will be identified during
project preparation\.
24\. Project beneficiaries\. The project is expected to invest in all public primary schools in Malawi, with benefits for
around five million students13\. In particular, the project is expected to benefit female students (2\.6 million)14\.
D\. Concept Description
25\. The project supports a combination of targeted investments at Standard 1 and 2 levels, and provides incentives
to districts and direct support to schools to address the constraints which prevent schools from providing quality
education\. Key elements include:
⢠Improved learning environments in lower primary: supporting expansion and reform of the PSIG program to
provide more support to districts, zones and schools, particularly those facing severe disadvantages in staffing
and learning conditions in lower grades;
⢠Supporting girlsâ learning: providing training to headteachers, deputy headteachers, selected female
teachers, zone-level PEAs, and inspectors to (1) create a positive and inclusive culture towards vulnerable
children including girls and over-age students; (2) support female teacher retention and overall performance
of teachers in schools; (3) Improve the efficiency and equity of school resource utilization and (4) maintain
and utilize academic records to support low-performing students, and capacitation of communities to support
female students;
⢠Policy reform for improved efficiency, equity and learning (Variable part), to provide incentives for system-
level reform of policy and resource allocation, with performance-based conditions (PBCs) as described under
Key Results\.
26\. There are four components: two fixed components supporting project activities; a variable part; and a component
for project coordination\.
Component 1\. Improved learning environments in lower primary (US$15 million [indicative])
13
5,063,917 public primary students as of 2017/18 (MoEST Education Statistics 2017/18)\.
14
2,559,560 female public primary students as of 2017/18 (MoEST Education Statistics 2017/18)\.
Jun 09, 2020 Page 8 of 14
The World Bank
Malawi Education Reform Program (MERP) (P174329)
27\. PSIG are the primary source of discretionary finance to schools, and of vital importance for the long-term capacity
of schools to ensure safe and effective learning environments\. This component will support the expansion and reform of
PSIG to provide additional and more needs-based discretionary finance to schools to support investment in reduced class
sizes and improved learning environments\. Following the successful implementation of MESIP SIG, MoEST is currently
updating the PSIG guidelines to incorporate the strategies piloted under MESIP for improvement of retention and
promotion and reduction in girlsâ dropout, including construction of low-cost learning shelters; hiring of auxiliary teachers;
and provision of MHM materials and gender-specific infrastructure, notably girlsâ changing rooms; awards for most rapidly
improved students; inviting female role models to schools; and monitoring and counselling girls at risk of dropout\.
28\. However, the current PSIG per-school allocations are insufficient to enable schools to fully implement these
strategies\. In addition, the current formula is inadequately linked to needs and school size\. Projections by the Task Team
suggest that an approach where grants (a) are scaled according to enrollment, not on a per-school basis; and (b) contain
a substantial adjustable needs-based component, could substantially reduce disparities between schools over the lifetime
of the project (Table 1)\. This component will provide additional finance to expand the standard per-school allocation of
SIG; expand the enrollment-related component to provide more equitable per-student funding; and provide additional
targeted support to districts, zones and schools facing severe challenges of infrastructure and staffing\.
29\. The component supports Strategic Objective 2 of NESIP, to Improve quality and relevance of teaching and
learning in primary education\. Specifically, the PBC supports Priority Action vi under this objective, to increase the
direct funding to schools and make it needs-based\.
Component 2\. Supporting girlsâ learning (US$9\.1 million [indicative])
30\. This component will support the national delivery of an updated and revised School Leadership Program (SLP)
supporting headteachers and deputy headteachers to (1) create a positive and inclusive culture towards over-age children
and girls; (2) Improve teacherâs motivation and morale and reward performance; and (3) Improve the efficiency and equity
of school resource utilization and (4) maintain and utilize academic records to support low-performing students\. The
Program will adapt and update the School Leadership Program supported by MESIP, with a greater emphasis on building
school cultures which meet the needs of girls, overage students, and low-performing students\.
31\. Only around 12 percent of Malawiâs headteachers are female15\. The lack of female teachers in senior leadership
positions poses a threat to efforts to build inclusive school cultures, to improve the distribution of female teachers, and
to provide role models for female learners\. The project will explore innovative approaches to build the management skills
of female teachers and develop a cohort of potential future school leaders\. As part of this, it is likely that the revised SLP
will include female teacher in junior leadership positions, such as section heads, with a particular emphasis on schools
where neither the headteacher nor deputy headteacher is female\.
32\. Supervision by meso-level officials has positive impacts on the quality of school leadership and resulting learning
outcomes\.16 The original SLP under MESIP included PEAs in the training to enable them to monitor and support
headteachers in the implementation of the strategies and behaviors inculcated by the program\. Following feedback from
follow-up visits in participating schools, and noting the expansion of the school inspection program supported by LGAP, it
15
MLSS midline, 2018/19
16
Ehren, M\., Eddy-Spicer, D\., Bangpan, M\. & Reid, A\. 2017\. âSchool inspections in low- and middle-income countries: Explaining
impact and mechanisms of impact\.â? Compare: A Journal of Comparative and International Education 47:4, 468-482
Jun 09, 2020 Page 9 of 14
The World Bank
Malawi Education Reform Program (MERP) (P174329)
is anticipated that the expanded training will also include school inspectors to ensure alignment between officials
providing subdistrict supervision\. These officials will then provide follow-up supervision support to schools\.
33\. Project preparation will explore the potential for this component to additionally support capacity building of
communities to support girlsâ learning, through monitoring of girlsâ attendance, MHM support, psychosocial support, and
support to caregivers of female students\.
34\. The component supports Strategic Objective 2 of NESIP for Inclusive Education and Gender, Improved quality of
service provision in IE, Gender and other crosscutting issues; and Strategic Objective 3 under the same area, Improved
governance and management of Inclusive Education, Gender and other cross cutting issues\.
Component 3\. Policy reform for improved efficiency, equity and learning (Variable part/performance-based conditions)
(US$21\.6 million [indicative])
35\. This component will support PBCs in three areas, providing incentives and resources to support medium-term
reforms to ensure the long-term functioning of the education system\.
PBC 1\. Recipient has met the annual target for the share of schools receiving modified School Improvement Grants by
October 31 in accordance with the new formula (Percent; US$ 7\.2 million [indicative])
36\. PSIG is subject to delays and discrepancies in delivery which pose severe limitations in its usefulness for schools\.
Under MESIP, payment of MESIP SIG direct to schools from central Government enabled timely and correct payments, a
key driver of the successful utilization of the funds by schools\. To complement the support provided to the mainstreaming
of MESIP SIG into PSIG and reformed formula, this PBC will support reforms to the funds flow of PSIG and incentivize
timely payments to schools in accordance with the new formula\.
The PBC supports Strategic Objective 2 of NESIP, to Improve quality and relevance of teaching and learning in primary
education\. Specifically, the PBC supports Priority Action vi under this objective, to increase the direct funding to
schools and make it needs-based\.
PBC 2\. Recipient has met the annual target for the share of schools with pupil-qualified teacher ratios in Standards 1-2 in
the acceptable range (Percent; US$ 7\.2 million [indicative])
37\. Misallocations of teachers â between schools and, within schools, between grades â represent the single largest
misallocation of resources in the Malawi education sector\. Teacher salaries account for around 70 percent of public
primary expenditure, but an estimated 7 percent per year is used inefficiently to finance comparatively excessive staffing
in certain schools with PTRs well below 60, predominantly in towns and trading centers\. Headteachers in these schools
report that excess teachers reduce overall levels of discipline and school functioning, while headteachers in chronically
understaffed schools in the same zone face severe constraints\.17 Recent reforms supported by MESIP have improved the
allocation of newly deployed teachers to schools, as described above; however, a large share of schools still face PTRs
17
Asim, S\., Chimombo, J\., Chugunov, D\. and Gera, R\. 2020\. âMoving teachers to Malawiâs remote communities: A data-driven approach
to teacher deployment\.â?
Jun 09, 2020 Page 10 of 14
The World Bank
Malawi Education Reform Program (MERP) (P174329)
above 100\. Improved allocations, while necessary, may be insufficient to address the disparities in PTRs in the medium
term and bring PTRs at overstaffed to a reasonable level\.
38\. In addition, even with action to improve allocations of teachers to schools, there is a need to address poor
allocations of teachers within schools to grades\. PTRs in lower primary are exacerbated by under-allocation of teachers to
these grades\. In order to achieve reduction in class sizes, and complementary to the support provided to addressal of
classroom shortages in these grades by Component 1, it is necessary to increase the equity of school-level teacher
allocations\. Therefore, this PBC provides incentives for increases in the share of schools with PTRs in Standards 1-2 within
the acceptable range, rewarding improvement in both inter- and intra-school allocations\.
39\. The PBC supports Strategic Objective 3 of NESIP for primary education, Efficient governance, management and
accountability of primary education service delivery\. Specifically, the PBC supports Priority Action iii under this
objective, to Rationalize teacher deployment to achieve minimum pupil teacher ratio at every school\. As teacher
misallocations represent one of the largest misallocations of resources in the Malawian school system, the PBC is expected
to increase system efficiency through reduced misallocation\. However, this is additionally expected to have benefits for
equity by reducing the disparities in staffing between schools, and within schools, between grades\. Furthermore, as
evidence suggests that reduction in class sizes is a prerequisite for improving learning in lower primary, the PBC is also
expected to have impacts on quality\.
PBC 3\. Local Government Authorities have met the annual target for the completion of activities to improve distribution of
female teachers (Percent; US$ 7\.2 million [indicative])
40\. Female teachers are particularly poorly distributed between schools as described above\. A number of obstacles
present challenges in ensuring adequate numbers of female teachers in remote areas: availability of housing; concerns of
safety during transportation to schools; and access to healthcare and childcare\. District councils and DEOs have a mandate
to address these challenges through a number of means, including construction of housing for female teachers at schools
in remote areas; support to transport for female teachers to schools in remote areas\. These activities are among the
district mandated activities supported through results-based financing from GESD, but without a specific results-based
focus on gender in an education context\. This PBC provides direct incentives to districts to districts to conduct activities
to improve the distribution of female teachers\.
41\. The PBC supports Strategic Objective 3 of NESIP for primary education, Efficient governance, management and
accountability of primary education service delivery\. Specifically, the PBC supports Priority Action iii under this
objective, to Rationalize teacher deployment to achieve minimum pupil teacher ratio at every school\. By focusing on the
distribution of female teachers in particular, the PBC is expected to improve the equity of the primary school system by
providing adequate access to female teachers for female students, particularly in remote areas\. This supports Strategic
Objective 2 of NESIP for Inclusive Education and Gender, Improved quality of service provision in IE, Gender and other
crosscutting issues\.
Component 4\. Project Management, and Sector Program Support and Coordination (US$3 million)\.
42\. This component will finance the management of the project, including reporting\. The component will support the
establishment of a small Program Facilitation Team (PFT), consisting of a coordinator and specialists in financial
Jun 09, 2020 Page 11 of 14
The World Bank
Malawi Education Reform Program (MERP) (P174329)
management, procurement, M&E, and gender\. Specialists for environmental and social safeguards will be appointed if
deemed required as part of safeguards capacity assessments\.
Legal Operational Policies Triggered?
Projects on International Waterways OP 7\.50 No
Projects in Disputed Areas OP 7\.60 No
Summary of Screening of Environmental and Social Risks and Impacts
\.
Detailed project location(s) and salient physical characteristics relevant to the E&S Assessment (geographic,
environmental, social)
43\. The project will support national implementation of a focused, coordinated sector-wide approach providing a
minimum package of support for all schools, with smart, data-driven targeting, top-up resources for needy schools
commensurate with the specific challenges faced\. The main environmental and social risks within the proposed project
are associated with financing the construction of low cost learning shelters within Component 1\. Enhanced School Finance
for Improved Retention and Learning in Lower Primary\. While resources are not tied directly to construction of shelters,
schools can choose to use the School improvement Grants (SIG) for construction of learning shelters\. It can therefore be
assumed that that project will fund a subset of shelters that the school might choose to construct using the School
improvement Grants\. In that regard, all constructions that will be built by schools funded in this operation will conform to
the World Bank ESF\. These low cost learning shelters will help overcome Malawiâs chronic shortage of school classrooms
and attendant overcrowding by increasing the long-term capacity of schools to ensure safe and effective learning
environments\. The civil works are expected to be of small scale educational infrastructure new constructions and/or
rehabilitation/improvement of existing structures\. Works are expected to consist of learning shelters with single or twin
learning rooms with potentially one or more blocks to be constructed or rehabilitated within a school\. Also included in the
component is the construction of gender-specific infrastructure within the schools, notably girls? changing rooms which
are expected to be similarly small-scale and infrastructure will be designed to ensure universal access taking into account
of accessibility for people and learners with disabilities, whose prevalence stands at 3% among children, according to the
2018 census\. Component 4 Reform for Effective Schooling and Equitable Learning (Variable part/performance-based
conditions); Performance-Based Condition (PBC 3 Local Government Authorities have met the annual target for the
completion of activities to improve distribution of female teachers - also includes provision for the construction of housing
for female teachers at schools in remote areas\. All of the civil works are expected to be within or adjacent to existing
educational campuses/facilities and be of a scale where risks and impacts are not anticipated to be significant, long term,
complex or diverse\. The construction/rehabilitation will entail construction works that may result in the creation of solid
waste, noise/air pollution and minor congestion due to the use of vehicles and machinery\. Additionally occupational health
and safety risks and community safety impacts including GBV/SEA/SH that may result from learners interaction with
external workers and school personnel are to be expected\. The civil works are therefore not anticipated to result in the
loss of or impact on high conservation value habitats\. Where school campuses are too small to accommodate additional
learning shelters it would be necessary to acquire adjacent land\. Being in existing urban settings these areas are not
expected to pose any additional environmental risk\. However should existing school campuses be too small to
accommodate additional structures it would be necessary for land to be acquired\. Potential environmental and social risks
or impacts of conducting the TA under component 2 and 4 are expected to be negligible and will not result in significant
Jun 09, 2020 Page 12 of 14
The World Bank
Malawi Education Reform Program (MERP) (P174329)
potential adverse risks\. As the exact locations of project investments are not yet determined, an ESMF will be prepared to
ensure that a process of identifying, assessing, and mitigating environmental and social impacts is integrated in the
development of the specific subprojects\. As the requirements for additional land outside of existing school campuses
becomes clear, the requirement to prepare RPF will be determined\.
Borrower's Institutional Capacity
44\. The Ministry of Education, Science and Technology (MoEST) will be the main implementing agency on behalf of
the Government of Malawi; under the overall leadership and coordination of the Directorate of Planning and Directorate
of Basic Education\. Line agencies and institutions that will be involved include the Malawi Institute of Education (MIE), the
Teaching Service Commission (TSC) and Malawi College of Distance Education (MCDE)\. In addition, the 34 Education
Districts will play a key role in day-to-day implementation and achievement of results\. The Government and the Ministry
in particular already has considerable experience and developed PIUs which have managed similar school-construction
related risks and impacts within Malawi Education Sector Improvement Project (MESIP, P158145), Equity with Quality and
Learning at Secondary (EQUALS, P164223) and Investing in Early Years for Productivity Project (IEYP P164771)\. These
projects have built increasingly competent capacity for preparing and implementing safeguards instruments and
monitoring safeguards compliance of construction contractors\. The PIUs have not implemented any project that applies
the ESF\. However, the safeguards specialists have been trained on the ESF and further capacity building will be outlined
in the ESCP\.
\.
CONTACT POINT
World Bank
Salman Asim
Senior Economist
Borrower/Client/Recipient
Republic of Malawi
Clifford Chiunda
Secretary to the Treasury
finance@finance\.gov\.mw
Implementing Agencies
Jun 09, 2020 Page 13 of 14
The World Bank
Malawi Education Reform Program (MERP) (P174329)
Ministry of Education, Science and Technology
Rodwell Mzonde
Director of Education Planning
rsmzonde@gmail\.com
FOR MORE INFORMATION CONTACT
The World Bank
1818 H Street, NW
Washington, D\.C\. 20433
Telephone: (202) 473-1000
Web: http://www\.worldbank\.org/projects
APPROVAL
Task Team Leader(s): Salman Asim
Approved By
APPROVALTBL
Country Director: Hugh Riddell 29-Sep-2020
Jun 09, 2020 Page 14 of 14 | APPROVAL |
P078813 | Page 1
INTEGRATED SAFEGUARDS DATA SHEET
CONCEPT STAGE
Report No\.: AC726
Date ISDS Prepared/Updated: March 29, 2004
I\. BASIC INFORMATION
A\. Basic Project Data
Country: Peru
Project ID: P078813
Project Name: Regional Transport Infrastructure
Decentralization
Task Team Leaders: Aurelio Menéndez, Nicolas
Peltier
Estimated Appraisal Date: November 16, 2004
Estimated Board Date: May 24, 2005
Managing Unit: LCSFT
Lending Instrument: Specific Investment Loan
Sector: Roads and highways (50%);General public
administration sector (30%);General transportation
sector (20%)
Theme: Decentralization (P);Rural services and
infrastructure (S);Other trade and integration (S)
Safeguard Policies Specialists in the task team:
Elizabeth Dasso, Sr\. Social Development and Civil Society Specialist (LCCPE)
Alonso Zarzar, Sr\. Social Scientist (LCSEO)
Marco Zambrano, Consultant Environmental Specialist (LCSFT)
Isabella Micali, Sr\. Councel (LEGLA)
Keisgner Alfaro\. Sr\. Procurement Specialist (LCOPR)
Patricia McKenzie, Sr\. Financial Management Specialist (LOCA)
Loan/Credit amount ($m\.):
IBRD: 50
Other financing amounts by source:
($m)
INTER-AMERICAN DEVELOPMENT BANK
50
B\. Project Objectives [from section 3 of PCN]
The project development objective is to improvethrough decentralization at the regional levelthe prioritization,
efficiency and effectiveness of regional transport interventions and, hence, their contribution to local development
and poverty reduction in Peru\. These features refer to:
\01\02
prioritization: better aligning transport investments to local needs as identified by participatory regional
development plans and appropriate planning and evaluation tools;
\01\02
efficiency: strengthening the institutional framework in order to achieve the appropriate management of
transport interventions at the regional level, with due consideration to environmental and social issues,
including issues related to the Indigenous Peoples of Peru; and
\01\02
effectiveness: upgrading the quality of regional transport infrastructures and developing sustainable
maintenance mechanisms\.
The projects design would take place in the context of the decentralization agenda in Peru\. In this respect, one of
the key policy reforms to be pursued is the establishment of institutional frameworks in the participating regions to
make a clearer link between investment and maintenance interventions and the related resource needs, encouraging
incentives through the contributions from the central level (including those from the project) towards better resource
mobilization and appropriate road asset management practices\.
C\. Project Description [from section 4 of PCN]
Page 2
The project will include the following four components, each moving at different levels depending on the
participating region:
Component 1 : Through participatory planning, the identification of regional road segments which are critical to
regional development (estimated cost US$5 million of which US$2 million would be financed by the Bank Loan
)\.
This component would finance the preparation of participatory regional road plansaligned with the existing
regional development plansand elaborate a diagnosis of the sector in a particular region, analyze the supply and
demand for transport services and infrastructure, and prioritize and evaluate road investment options, towards
identifying the sub-project priorities that could be funded under the project\. A prioritizing methodology, including a
combination of both economic potential and poverty level criteria, would be elaborated as part of project
preparation, with due attention paid to environmental issues\. This methodology will build on other current
experiences in the country (e\.g\., Peru Rural Roads or Pronasar) and proven modeling instruments (such as HDM-4
and RED)\.
Component 2 : Improving mobility through the rehabilitation of about 3,000 km of regional
roads (estimated cost US$160 million of which US$40 million would be financed by the Bank
Loan)\.
Regional governments would contract private enterprises to perform the rehabilitation
works and engineering consultants to carry out the relevant supervision, with the technical
support and oversight of the PVD\. None of the works to be undertaken under this component
will require resettlement or imply major impacts to the natural environment\. Share of World
Bank financing in this component (25%) could have been higher if the total loan amount were
not constrained by current debt ceilings in the transport sector\.
Component 3 : Improving the efficiency and effectiveness of road maintenance through scaling-up the micro-
enterprise maintenance mechanism (estimated cost US$15 million of which US$3 million would be financed by
the Bank Loan)\.
This component would finance the maintenance of the 3,000 km of roads rehabilitated under
component 1, plus 2,500 km of regional roads transferred from the Rural Roads Program\. Building on the successful
experience of the Rural Roads projects I and II, maintenance would be performed by mechanisms similar to the
micro-enterprise model\. Particular attention will be paid to ensuring the sustainability of the model (i\.e\., that
sufficient funding is dedicated by regional governments to maintenance and that micro-enterprises are contracted to
perform such maintenance)\. This activities will follow environmentally sensitive approaches, following current
practices in Peru and other Latin American countries\.
Component 4 : Strengthening the decentralization process and ensuring the sustainability of the project through
institutional capacity building (estimated cost US$20 million of which US$5 million would be financed by the
Bank Loan)\.
One of the projects major challenge is to put in place a robust and agile institutional framework
allowing regional governments to plan, manage and implement transport interventions in an efficient and sustainable
manner\. This componentto be managed centrally by PVDis aiming at providing the technical assistance needed
to upgrade regional governments institutional capacity and will be built upon a comprehensive institutional
assessment to be performed during project preparation\. Critical issues include: (a) the merging between the RDDs
(formerly with the Ministry of Transportation and Communication) and the RIMUs, newly-created as part of the
organizational structure of the regional governments; (b) managing a transition from direct administration of road
maintenance/rehabilitation to contracting it to the private sector; (c) clarification and assignment of responsibilities
over the regulation of transport services and road safety; and (d) timetable of actions for the restructuring of the
PVD\. This component will also strengthen the management capacity of regional governments in dealing with
environmental and social issues\. Finally, this component will finance the projects administration and
implementation monitoring and evaluation system\. Indicators to be used will focus on outputs (roads rehabilitated
and properly maintained, contracting to the private sector), outcomes (mobility and regional institutional capacity),
and impacts (local development and poverty reduction)\.
Given the particular focus of the project on strengthening the decentralization process in Peru, the importance of
institutional reforms is emphasized in all components\. Institutional issues are particularly critical in component 1
(participatory planning), component 3 (transition from in-house maintenance to contracting micro-enterprises) and
component 4 (capacity building, particularly on environmental and social management)\.
Page 3
D\. Project location (if known)
The project will focus on several or all regions of Peru\. Regional coverage is still under discussion\. Alternatives that
are considered include (1) focusing on all regions (with a risk of diluting the impact) ; or (2) focusing on only a few
regions selected according to criteria to be determined\.
E\. Borrowers Institutional Capacity for Safeguard Policies [from PCN]
The project takes place within a decentralization context at the regional level\. The institutional framework is still
new (regional governments were created in 2002) and a critical aspect of the project is to ensure a timely transfer of
responsibilities to regional governments together with the transfer of the required financial resources and of
sufficient technical expertise\. Thus, a large part of the proposed program focuses on building an appropriate
institutional capacity (including that for the management of safeguards)\.
Important concrete examples of the capacity building process with implications for safeguards include:
\01\02
The elaboration of the prioritizing methodology used to prepare the participatory regional road plans (see
component 1)\. This methodology will combine economic potential and poverty level criteria but will also
take into account environmental aspects\.
\01\02
Institutional capacity building activities for regional governments with respect to the procurement of road
maintenance contracts (performed under component 3) and regarding social and environmental issues
(performed under component 4)\.
\01\02
The preparation of a strategic environmental evaluation (during preparation phase) allowing to implement a
proper framework for environmental management since the earliest stages of the project cycle (i\.e\., since
the beginning of the planning process), in coordination with the national environmental entities (the
CONAM and the socio-environmental unit of the Ministry of Transport)\. This is considered an efficient
option to addressing environmental issues for each road segment rehabilitated under the project\.
\01\02
The preparation of comprehensive institutional assessments of regional governments (during preparation
phase with support from a PHRD grant)\. These assessments will particularly investigate regional
governments planning capacity with due attention to social and environmental issues, their situation and
strategy for human resource management (including training), and the contracting and procurement
capacity\.
\01\02
The preparation of the operational manual (during preparation phase with support from a PHRD grant)\. The
manual will describe how the project will be administered at both central and regional levels\. Elements of
the manual which are relevant for safeguards include (1) institutional requirements for regional
governments to qualify under the project (including regarding capacity to implement safeguard policies) ;
(2) participatory methodology to be applied at regional level to identify roads to be rehabilitated ; (3)
technical standards for road rehabilitation and maintenance; and (4) contracting procedures with the private
sector (including micro-enterprises)\.
II\. SAFEGUARD POLICIES THAT MIGHT APPLY
Applicable?
Safeguard Policy
If Applicable, How Might It Apply?
[X]
Environmental Assessment
(
OP
/
BP
4\.01)
The Program does not foreseen significant environmental impacts that could jeopardize the
natural environment of its influential area\. Therefore has anticipate temporal and directs
impact that will be prevent, mitigate and compensate the environmental impacts, to ensure
the environmental sustainability of the Program\. In this sense will be necessary to include
the Environmental Assessment Policy to define the environmental studies to be required in
this preparation phase\.
Page 4
[ ]
Natural Habitats
(
OP
/
BP
4\.04)
[ ]
Pest Management
(
OP 4\.09
)
[ ]
Involuntary Resettlement
(
OP
/
BP
4\.12)
[X]
Indigenous Peoples
(
OD 4\.20
)
Because this a national project subject to the demand of the regions, we do not know where
the project will be implemented and therefore cannot anticipate if Indigenous Peoples will be
affected by project activities\. An Indigenous Peoples Development Framework will be
prepared during project preparation to address potential impacts on Indigenous Peoples\.
[ ]
Forests
(
OP
/
BP
4\.36)
[ ]
Safety of Dams
(
OP
/
BP
4\.37)
[X ]
Cultural Property
(draft OP 4\.11 -
OPN 11\.03
)
Chance Find Procedures will be included in the EMP\.
[ ]
Projects in Disputed Areas
(
OP
/
BP
/
GP
7\.60)
*
[ ]
Projects on International Waterways
(
OP
/
BP
/
GP
7\.50)
Environmental Assessment Category:
[ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined)
If TBD, explain determinants of classification and give steps that will be taken to determine that EA category
(mandatory):
III\. SAFEGUARD PREPARATION PLAN
A\.
Target date for the Quality Enhancement Review (QER), at which time the PAD-stage ISDS would be prepared\.
January 2005
B\.
For simple projects that will not require a QER, the target date for preparing the PAD-stage ISDS
C\.
Time frame for launching and completing the safeguard-related studies that may be needed\. The specific
studies and their timing
1
should be specified in the PAD-stage ISDS\.
Launching: July 2004\. Completion: January 2005\.
IV\. APPROVALS
Signed and submitted by:
Task Team Leaders:
Aurelio Menendez, Nicolas Peltier
Date
Approved by:
*
By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the
disputed areas
1
Reminder: The Bank's Disclosure Policy requires that safeguard-related documents be disclosed before appraisal (i) at the
InfoShop and (ii) in-country, at publicly accessible locations and in a form and language that are accessible to potentially af
fected
persons\.
Page 5
Regional Safeguards Coordinator:
Juan D\. Quintero
Date
Comments
Sector Manager:
Jose Luis Irigoyen
Date
Comments | APPROVAL |
P002387 | RESTRICTED
Report No\. TO-423a
This report was prepared for use within the Bank and its affiliated organizations\.
They do not accept responsibility for its accuracy or completeness\. The report may
not be published nor may it be quoted as representing their views\.
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
INTERNATIONAL DEVELOPMENT ASSOCIATION
SIERRA LEONE ELECTRICITY CORPORATION
APPRAISAL OF KING TOM POWER STATION
AND DISTRIBUTION PROGRAM
SIERRA LEONE
July 15, 1964
Department of Technical Operations
CURRENCY EQUIVALENT
EWA 1 = U\.S\. $2\.80
SIERRA LIONE ELECTRICITY COHPORATION
APPRAISAL OF KING TOH POU,ER STATION
AlD
DISTRIBUTION PROGRAii
SIERRA LEONE
TABLE OF CONTENTS
Page No\.
SUNA,RY i
I INTRODUCTION 1
II BACKGROUND 1
III THE ELECTRICITY DIVTSION 2
IV TlE SIERURA LEONE ELECTRICITY CORPORATION 3
V THE POWER MARKET 4
VI THE PROJECT 6
Estimated Cost 6
Status of Engineering 7
VII JUSTIF-'ICATION 8
VIII THE FITURE FX?ANSTON PROGRAH 8
IX FINANCIAL ASPECTS 9
Formation & Financial Structure of
Electricity Corporation 10
Tariffs 12
Future Operating Results 12
Financial Plan 13
Future Financing Position 14
Accounting and Audit 15
X CONCLUSIONS 15
TADIE OF CONTENTS - 2 -
ANNEXES
1\. Generating Station Statistics - Freetown & the Provinces
2\. Peak Load, Capability & Installation Schedule
3\. Annual Energy Production
4\. Description of Project
5\. Cost Estimate
6\. Estimated Cost of Power
7\. Guma Valley Hydroelectric Project
8\. Income State-nents
9\. Source & Application of Funds
10\. Balance Sheets
Map
SIERRA LEONE ELJECTRICITY CORPORAT1ON
APPRAISAL OF KING TOM POWER STATION
AND DISTRTBUTION EPOGRAMi
SUI111RY
io This report covers the appraisal of a project of the Sierra Leone
Electricity Corporation, comprising the construction of the King Tom diesel
generating station in Freetown and expansion of the associated distribution
facilities\. A Bank loan of US $,3*8 million has been requested to cover the
bulk of the foreign exchange cost of the project\. Total cost of the project
is estimated to be US $5 million, including interest during constructiono
ii\. The Borrower would be the Sierra Leone Electricity Corporation which
will be an autonomous Government corporation and which has been organized to
replace the Electricity Division of the Public Works Department\. It would be
the first loan made in Sierra Leone by the Banko
iii\. The King Tom station would comprise two 6\.6 IMW units and wculd be
built to accommodate the ultimate installation of a third generator0 The dis-
tribution phase of the proJect comprises the conversion of some of the distr{-
bution circuits from 3,300 volts to 11,000 volts and the addition of new dis-
tribution substations,
iv\. The project is technically sound and is necessary to meet the in-
creas½ng demand for electricity in Freetown, The installations proposed would
be the most economical means of meeting the demand\.
v\. The major problem has been that of setting up a sound organization
to operate the electric system in Sierra Leone and to provide adequate manage-
ment for this purpose\. The steps taken in this connection are satisfactory\.
Suitable legislation, establishing the corporatior, has been enacted, appoint-
menits of senior staff have been made and improved systems and procedures are
in the course of introduction\.
vi\. The prouosed capital structure of the Electricity Corporation will te
satisfactory\. It has been agreed that a rate increase will be implemented to
provide a rate of return of not less than 8% on the net fixed assets\. The
Government will implement the increase on August 4, 1964, the date on which
operations of the new Electricity Corporation are to coxiinerice\.
vii\. The project is suitable for a Bank loan of US $3e8 million equivalent,
for a period of 20 years including 2' years graceo
SIERRA LEDNE ELECTRICITY CORPORATION
APPRAISAL OF KING TOM POWER STATION
AND DISTRIBUTION PROGRAM
I\. INTRODUCTION
lo The Government of Sierra Leone has asked the Bank for a loan to
finance the foreign exchange cost of a power expansion program in the capital
city of Freetown\. The project would comprise the construction of a diesel
station of two 6\.6 I!W units and the expansion of distribution facilities\. The
total cost is estimated at £1,800,000 including interest during construction\.
The bulk of the foreign exchan&e component would be provided by the proposed
Bank loan of US $3,800,000 (£1,357,000)\. This would be the first loan made in
Sierra Leone by the Bank\.
2, The loan would be made to the Sierra Leone Electricity Corporation\.
3\. This report covers the appraisal of the project\. It is based on
information supplied by the Government of Sierra Leone and its consultants,
and on a field a'opraisal made by the Bank mission which visited Sierra Leone
and conferred with the consultants in London, during January and Februxary 1964,
IIo BACKGROUND
4\. Sierra Leone obtained its independence in 1961 preserving the British
form of political structure and remaining a member of the British Coamnonwealth\.
It has an area of 28,000 square miles and an estimated population of 2\.2 mil-
lion of which 250,000 l-ve in Freetown, the capital city, and its environs\.
Per capita income is estimated to be about US lOO The main sources of
income are agriculture, fishing, mining of diamonds and iron ore\. Practically
all manufactured goods are imported\. Government is the largest single employer\.
Agriculture aside, regular employment is limited to a comparatively srmall per-
certage of the population, divided mainly between commercial and Government
activity in Freetown, and mining in the provinces\.
5\. The supply of electricity in Sierra Leone has been the responsibility
since 1953 of the Electricity Division of the Public Works Department of the
Ministry of Works\. The Division has two plants, one steam and one diesel, in
Freetown with a total capacity of 9,800 kw and sixteen diesel stations in the
provinces aggregating 4,100 kw\. The stations in the provinces are not inter-
connected\.
6\. Wheni Sierra Leone obtained its independence in 1961 it indicated to
the Bank, of which it later became a member, that it would have need for assist-
ance and one specific field would be electric power\. The Covernment engaged
Messrs\. Preece, Cardew & Rider to study the power situation in Freetown\. The
recommendations made were substantially those on which the project now proposed
is based\. It was evident that imnediate implementation was required\. The Bank
advised that it could not consider financing the project until the Flectricity
Division was reorganized as a separate entity with an appropriate financial and
corporate structure\. The Government decided, in view of the need for power, to
proceed with the project mainly using suppliers' credits but with provision to
enable these to be paid off should the Bank subsequently make a loan\. Through
its consultants it followed standard Bank procedures, conferring with the Bank
about technical details, and calling for tenders on a competitive international
basis\. It was agreed in principle that should the Bank make a loan it would
reimburse for expenditures made on the project after January 1, 1963\.
7\. The Government decided to establish an Electricity Corporation res-
ponsible to the Govemment through a Minister to be appointed, to take over the
activities and assets of the existing Electricity Division\. The Corgmmonwealth
Development Finance Company of London, a Crown corporation, agreed to prepare
an Electricity Ordinance and to assist the Government in organizing the
Electricity Corporation\. Messrs\. Preece, Cardew & Rider were given the assign-
ments of establishing the value of the fixed assets, studying the electricity
market and estimating expenses and capital expenditures\. Cooper Brothers were
retained to review commercial and accounting practices and institute any new
systems and procedures which might be required to put the prospective
Electricity Corporation on a com\.mercial footing\. In addition Cooper Brothers
were instructed to prepare an opening balance sheet as the basis for
transferring assets to the Electricity Corporation to forecast the financial
position of the Corporation, ard to make recomniendations concerning the finan-
cial structure and organization\.
8\. Legislation establishing the Electricity Corporation was enacted in
May'1964\. The Corporation is to begin operations, replacing the Electricity
Division, on August 4, 1964, which is referred to as Vestirng Day\.
III\. THE LECTrUC CITY DI3E SION
9\. The present Electricity Division is headed by an Engineer-in-Chief,
responsible to the Minister of Works, and has a permanent staff of about 700
employees\. It has seven engineers functioning mainly in administrative capa-
cities\. It does not have an engineering department in the accepted sensec
System planning has been somewhat casual as there is no staff trained for this
purpose; major projects have been planned and designed by consultants\. Gen-
erating plants are well kept and satisfactorily operated; however, the main-
tenance of major equipment has suffered from lack of sufficiently experienced
craftsmen\. Responsibility is divided:- the administration of staff is in
accordance with Government general orders; the control of stores is governed
by Government regulations, and the financial control, including audits, col-
lections and accourting systems, is largely the responsibility of the Account-
ant General of the Government\.
10\. From a commercial standpoinit the Electricity Division has functioned
badly, Meter reading has not been well organized\. The control of accounts has
been poor and a great many are in arrears The system of rnachine accounting is
8' 3 -
now only in partial use\. Records have not been properly kept\. In addition the
staff has not been well trained and generally has not a clear concept of its
functions\. Difficulties are increased by the extensive area of onerations and
the lack of systematic control of provincial operations\. Energy lost in the
distribution system amounts to 25% of which probably 7-8% is the result of con-
nections which are illegal, and metered connections not included in the billing
system, etc\. It is assumed that with improved controls losses will diminish
slowly to about 21% by 1970\.
11\. For the supply of Freetown the Electricity Division has two generating
stations; Blackhall Road with a total capacity of 5,000 kw, comprises four
steam turbines ranging in size from 375 kw to 2,000 kw and in age from 1914 to
1960; the units burn residual fuel\. Falconbridge, with a capacity of 4,,800 kw
contains six medium speed diesel units ranging in size from 400 kw to 1OOO kw
installed between 1955 and 1961; the units burn distilled oil\. Power is dis-
tributed over a network of 11 kv and 3\.3 kv distribution circuits\. In the
sixteen provincial stations there are 49 diesel generators sized from less than
10 kw up to 250 kw, burning distillate oil\. Distribution is generally at 40C
volts or 11 kv\. Details of the Freetown and provincial generating stations are
given in Annex L The locations of the stations are shown on the map\.
IV\. THE SIERiRA LEONE ELECTRICITY CORPORATION
12\. The organization of the Electricity Corporation is adequate, The
Corporation is sufficiently autonomous to manage and conduct its affairs on
a commercial basis\. It has powers to raise money\. The policy of the
Corporation is set by a Board composed of not lss than seven or more than
eight membersp headed by a Chairman, with fixed tenure of office\. The members
of the Board are appointed by the Minister of Works\.
13\. The Chief Executive Officer of the Corporation is the General
MTanager, anpointed by the Board, who is an "ex-officio" member of it\. The
Government has hired a Financial Controller and Secretary, and a Commercial
Engineer is being sought\. Assurance has been obtained that the qualifications
and experience of the General Manager will be acceptable to the Bank and that
the Bank will be consulted prior to changes or appointments to the positions
of Financial Controller and Commercial Engineer\.
14\. The existing administrative and supervisory staff from the Deputy
Engineer-in-Chief down, which will continue to fill the posts now occupied, has
varying capabilities\. Some, particularly those in charge of stations have ade-
quate experience; others are deficient in background and lack experience\. To
improve efficiency Cooper Brothers are training staff to use machine accounting
and centralized billing and to employ improved meter reading and collection
practices\. However, it seems likely that it will take considerable time to
bring performance up to a satisfactory level\. It has been agreed that con-
sultants will be retainled on a continuing basis to assist with system planning
and the preparation of the annual capital budget, in view of the lack of ex-
perienced engineering personnel for this purpose\.
15\. The Electricity Corporation will comprise two main areas of operation,
Freetown and the provinces\. It is expected that the former will be commercially
viable\. The latter will likely operate at a loss for the foreseeable futture
since it is a high cost widespread operation with low load density; many of the
installations were built to provide essential services for Govermment centers,
and the Government uses a substantial portion of the power generated\. The
intention is that the Corporation should operate on a sound financial basis\.
The same rates are to be maintained in both Freetowsn and the provinces\. To
obtain additional revenue which will be required, rates are to be increased and,
to compensate for the loss which it is expected will be sustained in the
provinces, the Government will make an annual contribution of up to £35,000
which would substantially offset them\. The capital structure of the Corporation
is based on this outlook as explained in paragraph 42 and further reference is
made to the Government's contribution in paragraph 48\. The provincial under-
taking at Bo, one of the larger towns in the country, is at the stage vhere it
may begin to show a profit and for this reason the Government does not intend
to make a contribution on its behalf\.
V\. THE POWjE i4ABKET
16\. There is limited use of eiectriQity throughout the country\. Exclu-
ding privately owned gene;ating plants, the consumption per person in 1963 was
about 13 kwh per anrnumo In Freetown it was about 160 kwh per anmum\. A uniform
set of tariffs applies throughout the country; for domestic power the first
100 kw cost an average of US 6¢ per kwh, but most households take less than
20 kwh, payving about US 11¢ per kwh for this small amount\. The commercial rate
is approximately US 100 per hwh while the industrial rate is sonewhat more
moderate\. Since the bulk of the domestic users purchase so little power, the
amount they pay is hardly sufficient to cover the cost of connection to them\.
While the cost of electricity is comparatively high, it seems likely that it is
the low average incomes which keep domestic usage at this minimum level,
17, The present electricity tariffs are not properly structured and one
class of customer is penalized at the expense of another* A rate expert has
studied the situation and made recommendations\. The planned improvement to the
rate structure will have some beneficial effects, but it is unlikely to have
any marked effect on load growth in the near future\.
18\. In the Freetown area it is estimated that about 25% of the dwellings
take electricity\. A considerable number of those which do not use it are, how-
ever, not suited to being wired\. For this reason and because of the low in-
comes, possibly not more than half the dwellings are potential electric cus-
tomers within the near future\. In the past, however, growth of electric power
in Freetown has been rapid\. Additional capacity has generally been provided to
keep pace with demands\. Wrnile a large segrernt of the population wiill likely
continue without electric power for the tire being, the prospect is that with
improved income, new housing construction, the growth of new office buildings,
widespread use of air conditioning and the establishment of new commercial and
light industrial customers, there will continue to be pronounced growth in the
electricity demand\. During the 5-year period prior to 1963 the load growith in
the Freetown area averaged 16% annually\. An annual growth of 20% in 1963 and
1964, 15% in 1965 and 1966 and 13% thereafter has been assumed on the basis of a
review of the estimates made by Messrs\. Preece, Cardew & R\.ider\. It is expected
that the domestic load will continue to represent about 60% of the tobal demand,
The large growth assumed in 1964 and 1965 is based on the extensive conimercial
and office building program now under way in Freetomr, which is associated with
the country's recently gained independence\.
19\. The demand recently experienced, with estimates of future demand, for
the Freetown area is given below (see also Annexes 2 and 3)\.
Peak Demand Energy
inc\. Losses Prcduction En g old
kw (millions kwh) (millions kwh)
1963 O7,30 37\.0 2608
1966 12\.,600 64\.7 L800
1971 92,600 117,0 88,5
The estimated l\.oad growth in Freetown is reasonable considering the past trend
prospects for use of additional power and experience with the growth of electrire
power demand in other developing countries\.
20, Electricity service in the provinces, i\.e\., outside the Freetowni area,
is limited and it is unlikely that the areas in which electric power is avail-
able will be expanded or increased in number quickly, The uidertaking at Bo
is being expanded at the present time by the installation of twu 1000 kw diesel
generators, but the growth experienced there is not typical of the provincial
underta\.kings generally\. Sizab'le provincial industrial activities which require
considerable amounts of electric power, such as the iron ore mining undertaking,
have provided their own electric generators\. The electric facilities in various
provincial centers were installed to supply Government services and for politi-
cal and other reasons\. While this development tock place mairly prior to the
country obtaining indeperdence it seems probable that this trend will be con-
tinued\. There is no evidence of prospective large growth in commercial indus-
trial or domestic demand in the nrovinces and extensive provision of electric
power to the bulk of the provincial population would not appear to be consist-
ent with its cost or immediate necessibye Rate of growth in the provinces
should not, therefore, be very large in the immediate future\.
1/ for fiscal year ending Mtarch 31, 1963
VI\. THE PROJECT
21\. The project comprises the construction of a new generating station
at King Tom Point in Freetown and the expansion of distribution facilities\.
The generating station will be equipped with two 6,600 kw slow speed diesel
engines coupled to generators to produce power at 11,000 volts\. and the associ-
ated switchgears storage tanks, and ancillary works\. The building and founda-
tion are built to provide for the installation of a third unito The distribu-
tion works comprise the conversion of certain areas from 3,300 volts to 11 kv
distribution and provision of new distribution substations0 Details of the
project are given in Annex 4h
Estimated Cost
22\. The estimated total cost of the project is given in the Table that
follows\. Full details are given in Annex 5o
Estimated Cost of Prolect
(in thousands of £ )
Foreign Local
Cost Cost Total
King Tom Station
Generator sets and accessories 930 261/ 956
Civil Works 92 327- 419
Consultants 88 / 88
Contingencies 50 74
Sub-total Paoer Station 1,160 377 1,537
Distribution
Distribution works 125 67 192
Consultants 10 - 10
Contingencies 10 10 20
Sub-total Distribution 145 77 222
Interest during construction 52 - 52
Grand Total £\. 1,357 £ 454 t £\. 1811
(in thousands US $) $ 39800 $ 1,270 $ 5,070
1/ Local cost of civil works includes £65,000 for cost of offshore expendi-
tures not financed by Bank loan (see paragraph 26)\.
" 7 -
The King Tom station has been under construction since early 1963\. The esti-
mate of cost is based on contracts awarded for the civil works, mechariical
equipment and electrical equipment, and an estimate of the cost of distribution
work\. The cost of engineering is well established and the £94L9000 provided for
contingencies is appropriate in view of the advanced state of the project\. The
estimated cost of the project is realistic\.
23\. The estimated cost of King Tom station (including interest during con-
struction) is £120 per kw or US $336 per kw, including space for the third
unit\. This is somewhat higher than the cost of similar projects built recentlyp
due to the poor soil conditions at the site resulting in above normal founda-
tion costs\. Ultimate cost, including the third unit, should be about £105 per
kw (US $295)\.
24\. The estimated cost of energy generated by King Tom station, including
all fixed charges and operating expenses, with two 6\.6 MW sets in operation, is
lo03 pence (US l121 cents) based on a fuel cost of £6\.10s per ton\. Negotiations
for the supply of fuel indicate abaseprice of this order, subject to the con
ventional adjustments which may occur as the result of change in well-head
price, shipping rates, insurance, etc\. This price corresponds to US $2\.60 per
barrel which is consistent with world market prices for residual oil and tran3-
portation\. The cost per kwh is reasonable\. Details of the cost of energy are
given in Annex 6\.
Status of Engineering
25, Planning and design of the King Tom station were carried out by
Messrs\. Preece, Cardew & Rider of London, who are also responsible for the
supervision of construction, The design and construction of distribution ex-
tensions will be carried out by the staff of the Electricity Division with as-
sistance from the consultants,
26, The award of contracts for the mechanical and electrical equipment
was made on the basis of tenders issued in accordance with international
bidding practices and was reviewed by the Bank, While the award of the civil
work's contract was made on the same basis it was subsequently stipulated that
certain materials should be purchased from one particular country\. it is under-
stood that this was done to obtain tied assistance funds for these goods\. In
view of the Bank's policy concerning international procurement the foreign ex-
change cost of this portion of the civil works is not included in the proposed
Bank loan\.
27\. Work on the King Tom power station is over 60% complete\. Major
equipment is being installed and it is expected that the first 6e6 MW unit will
be placed in operation about the end of 1964, followed by the second in February
1965\. The distribution system expansion will be carried out mainly in 1965, in
adequate time to supply the increase in demand\.
VII\. JUMJTIF ATION
28\. The maximum dem(and experienced in Freetown in 1962 and that forecast
for 1965, the total generator capacity and the firm generating capacity (making
allowance for outages) are as follows:
Total Firm
Demand Capacity Capacity
1962 7,300 kw 9,800olw 7,8001>w
1965 12,600 23,00021 16,40021
When King Tom begins operation in 1965 it will provide the additional capacity
which it is indicated will be required\. King Tom will be operated on base load
so that the higher cost capacity at the Ialconbridge Station, which burns the
more extensive distillate fuel, can be shut down,
29\. The choice of size and type of units for King Tom was based on sever-
al considerations\. The alternatives were medium speed diesel units burning ex-
pensive distillate oil available in capacities up to 3,500 kw, slow speed diesel
units burning the much cheaper residual oil available in sizes up to 6,600 kw,
and conventional steam generators burning residual fuel in the 5,000-105000 kw
range\. The choice lay between the latter two\. The slow speed diesel unit was
selected because it has a somewhat lower cost per kw in this range of size and
produces power at lower operating cost because of its higner efficiency\. While
the use of the slow speed diesel unit is corrparatively new in the e'ectric uti-
lity field they have been used for many years in rarine applications and recent
installations at utility plants have proved satisfactory\.
30, The increasing use of power in the Freetown area will require the ePx-
pansion of the existing distribution system, by conversion from 3,300 volt to
11,000 volt operation, and by the addition of new distribution substations\.
This is part of a long-term program, of which it is proposed to finance a
portion of the 1965-66 expenditures from the Bank loan\. The remainder will be
financed from internally generated funds\.
VIII\. THE FIUTRE EXPANSION PROGRAM
31\. Plans are in hand for the construction of a 2,400 kw hydroelectric
plant several miles from Freetown in the Guma Valley in association with a
reservoir which will supply water to Freetown and which is under construction\.
The design of the hydro plant has been completed and the plant is to be placed
in operation in 1967\. It will be financed by the Government of SierLrA_Leo
with money obtained from the British Government\./ Further details and backgrouid
are given in Annex 7,
1/ including King Tom
- 9 -
32\. As indicated on the load growth curve in Annex 2 the installation of
a third 6,600 kw unit at Xing Tom may be necessazy in 1968\. Subsequently, ad-
ditional capacity may be required in 1970\. In this respect long-term plans call
for the installation of a 10,000 kw steam geinerator at that time, situated on
the King Tom property\. The diesel generating station now under construction at
King Tom is laid out so that ultimazely a steam generating plant can be erected
immediately adjacent, making use of certain of the King Tom facilities\. Suf-
ficient propertyhas been acquired at the King Tom site for this purpose\.
33\. Messrs\. Preece, Cardew & Rider are preparing a plan for the develop-
ment of the distribution and transmission system in the Freetown area for the
period up to 1971\. This plan will take into account the estimated increase in
generating capacity and load demand, the provision of power to an increasing
portion of the population and the growth of the area to be supplied\. From this
plan the basis and timing of fiture distribution capital expenditures can be
established\.
34\. There are plans for a modest expansion of several of the provincial
undertakings\. There has also been some discussion of a much more substantial
expansion, including building of new centers, but there is nothirg concrete and
there has been no study or planning in this connection\. It is unlikely, there-
fore, that a large capital expenditure uill be made on the provincial undertak-
ings during the next several years, unless the Government should adopt a policy
aimed at expansion\. This possibility, if unlikely, does exist and it is reoog-
nized that the financial position of the Corporation should, therefore, be safe-
guarded in this respect\. Assurances have been obtained that the Government will
inform the Bank of any proposals to build new provincial centers or substan-
tially expand the existimng ones so that the Bank shall have reasonable
opportunity to comment\. The Government has agreed to meet the capital costs of
any soch undertakings and assurances should be obtained to this effect as wello
35e As noted in paragraph 20 the provincial undertaking at Bo is presentlJy
being expanded\. The only additional expansion foreseen for some years, other
than improvements to the distribution system, is the construction of a trans-
mission line connecting Bo with two other provincial undertakings, to improve
the economy of operations\. An amount of possibly £100,000 might be expended
for this purpose in 1966/67\.
IX, FINANCIAL ASPECTS
36\. The financial affairs of the Electricity Division of the Public WJorks
Department have been the responsibility of the Accountant General and the ac-
counting records have been kept by his office\. However, little control over
income and expenditure has been exercised by either the Accountant General or
the Electricity Division itself and collection of accounts has been most inef-
ficient resulting in a high proportion of bad or doubtful debts\. It has there-'
fore been difficult to ascertain at any time the Division's revenues, operating
expenses, receivables or payables\.
37\. The accounts of the Division have been kept according to GovemrLient
accounting rules under which accounts are kept on a purely cash basis\. No
distinction has been made between capital and revenue, no provision has been
V 10
made for depreciation and no charge has been made to the Division for services
and facilities provided free by the Govermment\. Thus the accounts do not show
the operating surpluses or deficits which would have arisen if the Division had
been operating as a corporation and many assumptions have had to be made in
estimating the results of its past operations\.,
38- In the course of their investigation into the financial affairs of
the Electricity Division, Cooper Brothers drew up financial statements for the
year ending March 31, 1963, in accordance with coimiercial accounting practices,
and on the same basis prepared estimates for the year ending March 31, 1964\.
These, together with the estimated results for the 8 months from April 1 to
August 3, 1964, are shown in Annex 8, page 1, A breakdown of the operating
statement showing separately Freetown and the Provincial Undertalings is given
in Annex 8, page 2\.
39\. For the reasons already given, these figures can at best be approxi-
mations but they indicate that the Division operated at a loss in the past0
According to the statements prepared by Cooper Brothers there would have been
a net deficit on total operations in the year to March 31, 1963 of £68,000,
comprising a deficit on Provincial Undertakings of £92,000 less a surplus in
Freetown of £34;000\. The expected results for the year to March 31, 1964 ara
better, but the overall surplus of £48,000 (Freetown surplus of £F118000 less
a Provincial deficit of £70,000) represents a return on net fixed assets, as
computed by Cooper Brothers, of less than 4%\.
Formation and Financial Structure of Electricity Corporation
40\. The assets of the Electricity Division will be taken over by the
Corporation on the day it commences operations, referred to as Vesting Day\.
This will coince with the introduction of a decimalized currency system on
AuguLst 4, 19640- The opening assets of the Corporation will comprise fixed
assets, work in progress, inventories, net receivables and cash\. The Govern-
ment will pay trade creditors outstanding on Vesting Daye
hi\. The fixed assets are to be valued on the basis of historical cost
less straight-line depreciation\. The preliminary valuation used in this report
is that prepared by Cooper Brothers, but it is subject to-physical verification
of the assets by Preece, Cardew & Rider\. No material alteration in value -ifs
anticipated\. The value of inventories will be ascertained by Cooper Brothers
on the eve of Vesting Day,
42\. The capital of the Corporation will comprise the net value of the
Freetown assets, the cost of new units which are not yet in service at Bo but
which will be paid for by the Government, and the value of inventories, The
capital will be in the form of irredeemable loan stock bearing inter'est at a
fixed rate of 4h% per annum\. However, there will be a moratorium on interest
1/ The new currency will consist of leones and cents\. One leon will equal
10 shillings, or $1\.40\.
- 11 -
payments until July 1, 1969 and it has been agreed that thereafter the
Corporation will pay interest only if such payment does not materially and
adversely affect the financial condition of the Borrower0 It has been assumed
that the remainder of the fixed assets, those in the Provincial Undertakings,
cannot be operated profitably within the foreseeable future and they are to be
represented by a capital reserve\.
43\. The Corporation will also take over the work-in-progress on King Tomn,
receivables net of bad debts and sufficient cash for working capital\. The
local costs and part of the foreign cost of civil works of i'ing Tom (see para
26) will have been financed by the Government and will, together with the open-
ing cash provided by the Government, be represented by a 20-year loan at 5\.0
This loan wif be increased by the subsequent expenditures on King Tom not
covered by the proposed Bank loan\.
44\. The foreign exchange cost of the mechanical and electrical work to
date on King Tom has been financed by suppliers' credits which would be fVulJy
paid off by the proposed Bank loan\. The credit for the mechanical equipment is
from Maschinenfabrik Augsburg-Nurnberg A\.G\. at a price of £851,000 and is re-
payable over 8 years at 7% interest\. The electrical equipment credit, totalling
£103,000 is from Hawker Siddeley Brush International Ltd\.$ at 15% over U\.K\.
bank rate and is repayable over four years\.
45\. The opening balance sheet of the Corporation as at August 4\., 1964 is
estimated to be:
In Thousands _of Z's
Fixed assets - Freetown 1,132
Less depreciation 423 709
_ Provinces 70'
Less depreciation 160 548
Work-in-progress - King Tom 530
_ Bo 156 686
Net current assets - inventories, receivables,
etc\. 185
cash 100 285
2,228
Representing:
Government fixed capital 1,000
Capital reserve 548
Total equity 1,548
Government loan 380
Suppliers' Credits and Govemrnment advances 300
2,228
-12 -
Tariffs
46\. The need for a revision in the tariff structure has been referred to
in paragraphs 15 and 17\. In addition the estimated past results of the
Electricity Division show that even if there were an improverient in collections
and financial control, the present tariff level would not yield sufficient
revenues to put the Corporation into a sound financial position\. The Bank was
requested to give its views on the matter and recommended that tariffs should
be increased so as to produce a 10% increment in revenues over what they would
otherwise be\.
47\. It has been agreed that a new schedule of tariffs will be introduced
on August 4, 1964 to produce the necessary increase in revenues\. This will be
a condition of effectiveness of the proposed Bank loan\. The level of tariffs
should be reviewed from time to time in the light of the Corporation's actual
operating results\.
Future Operating Results
48\. Annex 8 shows the estimated operating results of the Corporation
from its inception to M4arch 31, 1569\. The forecasts take into account the
following factors:
a) Revenues are based on the energy sales forecast described in
para\. 18\. Power rates have been increased to given an increase
of 10% in revenues from power sales (see para\. 46)\.
b) Operating expenses are as forecast by the Consultants with the
addition of 3% per annum cumulative to cover wage and price
increases, other than those on fuel\.
c) Fuel costs are as noted in para\. 24\.
d) Administrative expenses not now charged to the Electricity
Division are as estimated oy Cooper>-Brothers\.
e) No provision is made for taxes on income and duty on fuel,
since the Government has stated that the Corporation will be
exempt therefrom\.
f) It is assumed that in accordance with the Consultants' recommen-
dations the cost of consumers' service connections will be
covered by connection fees\.
g) Depreciation is calculated on a straight-line basis\. The rates
vary between 2\.5% on buildings, 5% on generating plant and the
distribution system and 25% on transport\. These rates are ade-
quate\.
- 13 -
h) As explained in paragraph 15, the Government has agreed to make
an annual contribution to offset substantially losses incurred
by the Provincial Undertakings\. The contribution is to be a
maximum of £35,000 on the existing Undertakings and this amount
has been included in the Corporation's revenues,
49\. The results show a return on average net fixed assets rising from
8\.8% in 1965/66 to 10\.9% in 1968/69, and an annual surplus increasing from
£193,000 in 1965/66 to £303,000 in 1968/69\. While these results would be
satisfactory, it must be emphasized that the lack of reliable cost and earnings
figures for the past, together with the broad assumptions with regard to
future expenses, makes forecasts less reliable than usual\. Assurances have been
obtained that the Corporation will maintain tariffs sufficient to provide a re-
tumn on average net fixed assets in operation of not less than 8%\.
Financial Plan
50\. As has been mentioned in paragraph 43, the Goverm ment will provide
the Corporation with adequate cash initially and has undertaken to provide
loan funds to cover the local costs and civil works cost of King Tom\. The
Corporation will meet all its remaining requirements in the first two years,
apart from those covered by the proposed Bank loan, out of revenues\.
51\. It is estirated that the Corporation will need to increase its
inventories, receivables and cash working capital by £50,000 in the first
8 months and by £60,000 annually thereafter\.
52\. The cost of the Guma Valley hydroelectric scheme estimated at
£400,000 will be borne by the Governmment out of fmids provided by U\.K\.
assistanceo The completed scheme will be handed over to the Corporation
in 1967 in exchange for a 25-year loan at 54% interest\.
53\. The proposed Bank loan of $3\.8 million has been taken at 5B%
interest and for a term of 20 years including a grace period on amortization
payments of 21 years\. Thus the first amortization payment would be due 13
months after the scheduled completion date of the project\. Although the life
of the diesel units to be financed by the loan may be somewhat less than 20
years, the proposed term would be justified by the life of the project as a
whole\.
54\. An additional fbreign loan on similar terms has been assumed to cover
foreign exchange costs of the third diesel unit and a future steam unit at King
Tom\.
55\. The following is a summary of the projected cash flow of the
Corporation over its first five years of operation\. The cash flow is given in
detail in Annex 9\.
14 -
4 Aug\. '64 1 April 1966
to to
31 Mar\.'66 31 M4arch '69
(in thousands of £)
Sources
Net receipts from operations 591 1,703
Less debt service 1)48 558
1^ 2
Borrowings:
Proposed IBPD loan 1,357
Government loans 190 400
Future foreign loan - _ 40
1,990 1,985
Applications
Construction Expenditures:
IBRD Project 1\.229
Other construction 205 1,606
1;434T 1,6-0
Repayment of suppliersl credits and
Government advances 300
Required increase in net current assets 110 180
l;844 1,786
Cash surplus 146 199
56\. It is estimated that the Corporation would meet 31% of its construc-
tion expenditure to March 31,1966 out ofhet internal cash generation\. In the
three subsequent years it would meet 71% and the average over the whole period
would be 52%\. If the Goveriment contribution of £35,000 per annum is ex:cluded
from receipts, the percentage would be 28% to 1966, 65% for the next three years
and 48% for the period as a whole\. Coverage of debt service by internal cash,
including the Government contribution, wou,d range from 2\.8 times in 1967/68 to
3\.6 times in 1966/67\. These ratios mould be satisfactory\.
Future Financial Position
57\. Summarized balance sheets of the Corporation as at March 31, 1965
through 1969 are given in Annex 10\. These show that the debt equity ratio
would vary between 50/50 and 54/46 and that by 1969 the Corporation would
accumulate a substantial amount of cash of which £345,000 is estimated to be
surplus to requirements, However, the actual cash position of the Corporation
will depend on its operating results, its capital commitments and the
" 15 -
availability of external financing, none of which can be forecast accurately at
the present time\. In order to safeguard its financial position the Corporation
has agreed to seek the Bank's approval before incurring any medium or long-term
debt during the period of the cornstruction of the Bank project\. Thereafter the
Corporation may not incur, except with prior approval of the Bank, any medium or
long-term indebtedness unless net recei\.pts from operations, including cash con-
tributions from the Government, in the 12 months prior to the incurrence of the
debt (adjusted for tariffs in effect at the time of the test) would be not less
than 1\.5 times the maxinum debt service requirements in any succeeding yearo
Accounting and Audit
58, The present accounting situation has been described in some detail
and paragraph 13 refers to the appointrnent of' the Financial Coaitroller\.
Assurances have been obtained that the Bank will be consulted before any changes
are made in appointment to this position,
59\. Cooper Brothers have been engaged to install a commercial accounting
system and their duties include the training of local staff to run the system,
Two members of Cooper Brothers' staff are now in Freetown and they will remain
there until the Corporation is satisfactorily established\.
60\. Assurances have been obtained that the Corporation will appoint an
independent firm of auditors acceptable to the Bank\.
Xe CONCflSIONS
61\. The project proposed for Bank financing is technically sound\. Its
construction is necessary to meet the increasing demaiid for electric power in
Freetown\.
62\. The steps tanken to establish a properly organized Electricity
Corporation, to provide suitable management for it and to improve existing
practices, should result in an organization capable of operating the electricity
system with reasonable efficiency\.
63\. The Corporation should be able to maintain a sound financial position
following implementation of a rate increase to produce a 10%o increase in sales
revenues*
6h\. The project forms a suitable basis for a Bank loan of US $3\.8 million
for a period of 20 years, including a grace period of 21 years,
July 15, L964
SIERRA LEONE ELECTRICITY CORPORATIO ANNEX 1
GENERATING STATION STATISTICS
FREETOWN AND THE PROVINCES
PRODUCTION AND OTHER OPERATING FIGUR3-S
ARE FOR FISCAL YEAR ENDING MARCH 31\. 1963
Generatina Plant Operating Statistice
Firm Maximum Kwh Kwh Kwh Number of
Rating Total Capacity Demand Generated Sold Losses Cuetomers
Location (Inatalled) No\. Tyoe (kWY (kWV (kW) (kY) (thnThA"dg) (thuuan,nda (thou )
Freetown
Steam
Blackhall Road (1944) 2 Turbine 750
(1953) 1 a 1,500
(1960) 1 ' 2,000 5,000
Falconbridge (1955) 1 Diesel 500
(1958) 1 a 1,000
(1962/63) 3 " 2,925
(1961) 1 * 400 4\.825
9,825 7,825 7,260 37,033 26,825 10,108 13,095
Northern Province
KabalaV A! 2 Diesel 50 100 50 50 115 104 11 No record
Keambia 3 a 35 105 70 42 133 125 8 141
Lungi 2 a 140 280 140 116 558 413 145 139
Maburaka 2 a 110
1 N 140 360 220 124 465 389 76 391
Makeni 2 * 140
1 n 250 530 280 172 518 487 31 492
Port Loko 2 a 50
1 a 140 240 100 78 226 213 13 216
Rokupr 3 * 22 66 44 63 173 152 21 108
Southern Province
Bo 3 Diesel 110
2 a 240 810 570 630 3,165 2,544 621 1,650
Bonthe 4 a 22 88 66 85 189 152 37 248
Moyamba 2 5 50
1 a 140 240 100 96 340 317 23 246
N'jala 2 * 20
1 * 50 90 40 32 123 109 14 115
Pujehan/ / 2 a 50 100 50 37 90 75 15 86
Eastern Province
Bulk to
Daru 4 Diesel 22 88 66 19 84 Military
KailehunA! 1 a 37
2 2 54 145 91 32 102 84 18 196
Xenema 3 a 140 420 280 294 1,177 1,003 174 718
Koidu 2 ' 100
1 Dieeel
(Mobile) 267 467 200 212 56 51 5 550
A! At 30th September, 1963
2 Inetalled March, 1962
/ Inetalled April, 1962
A! 12 hour supply
40 I I I I I I I 40
STEAM TURBINE (10 MW)
35 35
SIERRA LEONE ELECTRICITY CORPORATION - FREETOWN SYSTEM
PEAK LOAD, CAPABILITY AND INSTALLATION SCHEDULE
30 _ -\. 30
KING TOM (6 6 MW)
FALCONBRIDGE SHUT DOWN (4 8 MW)
25 GUMA VALLEY (2\.4 MW) 25
25 \. \._l /25 o
KING TOM (2 - 66 6MW) U
0~~~~~~~~~~~~~~~~~~~~~~~~~~
z
r 0 ~~~~~~~0
Lo 20 20 °
()
8 r---
z TOTAL GENERATING CAPACITY
0~~~~~~~~~~~~~~~~~~~~~~~~
I1 5 15 -1
_ ~~~MAXIMUM ANNUAL
, O L r ~~~~~~~~~~~~PEAK DEMAND
10 10
5 _ _ - \._ _ _ *_ _ _ _ _ _ _ _ _ _ _ _ _ _ __ - 5
FIRM GENERATING CAPA CITY
(ALLOWING FOR OUTAGES)
1 I I I I 0
1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 >
z
ACTUAL -0 -E ESTIMATED z
IBRD -2327
SIERRA LEONE ELECTRICITY CORPORATION - FREETOWN SYSTEM
ANNUAL ENERGY PRODUCTION
(MILLIONS OF KILOWATT HOURS)
140
120
100
80
60
40
1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970
ACTUAL ESTIMATED 3 z
IBRD 2328
ANLTEX 4
SIERa\.l L730NE aLECTRICITY CORPORATION
DESCRIPTTO, OF PROJ2CT
King Tom Generating Station
The generating plant Jill comprise twfo diesel generating units
with provision for installation of a\. third\. The generators will be slow-speed
type, designed to operate on residual fuel\. They will be coupled to con-
ventional generators with an output of 6,600 kw each at 11,000 volts, feeding
into a switchboard incorporating circuit breakers and thence to the exist-
ing 11,000 volts distribution system in Freetown\.
The generators will be enclosed in a steel frame building, which in-
corporates room for the third unit, and\. which wrll contain auxiliary and
other ecuipment\. Cooling water will be obtained from the mouth of the
Sierra Leone river, to which the plant is adjacent, from pumps installed
on dolphinrs located in the river, wuhich will be used as well for mooring
barges bringing fuel to the plant\. A piping system will convey the fuel
to two bulk storage tanks with a cap-acity of 1,850 tons each located on
the site\. Office accommodation icill be within the power station building;
an existing building on the site, well suited for the purpose, is to
be converted to use for workshop, repairs and storage\.
Transmission and Distribution
This will comprise additions and ir,tprovements in and around
Freetown\. The conversion of sevreral distribution areas to 12 kv operation,
from 3,300 volts, is the major item\. A substantial number of the new
substations, rnostly pole mounted, suitable for ultimate operation at
11 kv but in some cases operating at lower voltages initially, are to be
installed\. In addition, reconductoring of a number of miles of the
transmission/distribution circuits is planned\. This portion of the
proposed project represents part of the trensmission/distribution
program being undertaken in 1965-66 by the Corporation, the remainder
of which is being financed by other means\.
Consultlng
Incorporated into the cost of the project to be financed by the Bank
loan are certain consulting and management expenses, other than conventional
costs of this nature which are included as a matter of course\. These addi-
tional consulting expenses comprise:
(a) Cost of a distribution study of the distribution re-
quirements of the Freetown area until 1971, by Messrs\.
Preece, CardewT & Rider, estimated to be fl0\.000\.
(b) Expenses of Cooper Bros\. in their capacity as management
consultants in the organizing of the JSectricity
Corporation, estimated to be f13,000\.
ANNEX 5
SIERRA LEONE J-1ECTRITCITY CORPORATION
COST ESTIMATE
KING TOM STATION & DISTRI3JTION PROGRAM
-_ _ _ _ -_,____\._
(in Thoiusands of £,
Foreign Local
Exchange Currency Total
King Tom Station
Electrical equipment 84 11 95
Meckanical equipment 846 l1 S 861
Civil works 92 327' 419
Consultants 88 _ 88
Sub-total for Power Station 1,110 353 1,463
Contingencies 50 24 74
Total for Power Station 1,160 377 1i537
Distribution
Distribution conversion 87 42 129
New substations 38 25 63
Consultants 10 - 10
Sub-total for Distribution 135 67 202
Contingencies 10 10 20
Total for Distribution 145 77 222
Interest during conastruction 52 - 52
Grand Total £ 1357 £\. 454 £ is 8l1
(in Thousands US $) $ 3,800 $ 1,270 $ 5,070
j Local cost of civil works inc'udes £65,000 for cost of offshore
expenditures not financed by Bank loan (see paragraph 2h)e
ANNEX 6
SI23R1A LEONE PELCTRICITY COIRPOWTTON
KING TOMI PLANT
Estimated Cost of Forer
Kwhr generated ! 63\.8 million
Capital investment (includinc interest
during construction) f 125759C00
Depreciation (20 year life) 0\.30
Average annual interest (512%) 0,17
2/ 3/
Fuel cost- - 0\.39
Lubricating oil, water & stores 0\.03
Repairs and maintenance 0\.06
Salaries, wages & allowances 0\.08
Cost per kwhlx generated 1\.03 pence
(Cost per kw\.hr US$) (121 US cents)
1/ Generation on basis oi7b8\.6%7 ant factor operation\.
2/ Fuel cost estimated at £ 6-10-0 per long ton\.
3/ Fuel consumption estimated at 0\.53 lbs/kwvh\.
AllNEX 7
SIERYRA LINE EL7TCTRICTTY CORFOU01TION
GUNDA VALLEY HYDROEMECTRIC PROJECT
The Ginna Valley hydro generating station witlh a capacity of 2,400 kw
is to be constructed in the Guma Valley near Freetown\. It wvill be built
in conjunction with a large reservoir project now under construction which
will provide an adequate water supnly for the foreseeable future for the
city\. The capacity of the reservoir and the annual impoundment of water
will exceed appreciably the water requirements of the city for many years,
so that the surplus water will be available to Renerate hydroelectric
power\. (Due to friction losses and other physical considerations it would
not be possible to use the water from the reservoir to operate the hydro
plant and then feed it into the city water system\.)
The reservoir is located 850 Teet above sea level and the hydroelec-
tric plant is designed to operate at a head of 750 feet\. It is expected
to produce about 10 million kc,Th annually, co:^responding to 50% plant
factor, until 1990 and diminishing amoants of energy thereafter\. An
economic study by Messrs\. Preece, Cardew &c Rider indicates that the in-
stallation is econo-nically feasible cn the basis of savings resulting
from displacement of thermal energy and postronement of additional capa-
city\. The hydro plant will permit future therrn-l generating additions
to be delayed by about one year as its capacity of 2,!(000 kw will represent
more than one yearts growth in FreeLiown for some years to come\.
The Sierra Leone authorities favor the plant, as well, from the
standpoint of protecting the electric service\. It would provide rower
to operate essential facilities such as hospitals, in the event of inter-
ference with the importation of oil on which ?LinV Torn and the other gene-
rating stations will be completely dependent, or interruption of power
due to other causes\.
The cost of the plant is estimated at £400,000 which will be financed
by the Sierra Leone Government by money obtained from the British Government\.
The Sietra Leone Goverrnent will transfer ownership of the generating
plant when it is completed to the ElectricIty Corporation on the basis of
a 25 year loan bearing 5-1/4% interest\. Tl;e Electricity Corporation
will not contribute to the cost of the reservoir nor to the expense of operating
it, but will pay a water purchase chiarge\. The hydro plant is to be placed
in operation in early 1967\.
SIERRA LECNE ELECTRICITY CORPORATI(N
INCOME STATEMENTS - ALL UNDERTAKINGS
Adjusted
Actual Estimated Estimated
4 mos\. to o mos\. to
Fiscal year ending 31 March 1963 1964 3 Aug\.'64 31 Mar'65 1966 1967 1968 1969
Energy Sales
Sales in miUions of kwh 33\.0 40\.3 16\.6 33\.3 57\.9 66\.3 74\.9 84\.0
Average revenue per kwh in
pence per unit 4\.0 4\.3 4\.2 4\.6 1\.6 4e5 4\.4 4A\.
(Thousands of Pounds)
Revenue Account
Operating revenues 543 727 289 638 1,102 1J241 1,382 1,529
Service eQtnection fees 106 108 38 76 115 115 120 127
Government contribution for pro-
vincial undertakings - - - 24 35 35 35 35
Total Income 649 835 327 738 1,252 1,391 1s537 1s691
Operating expenses excluding fuel 338 364 156 312 524 595 642 680
Fuel 189 218 77 154 183 199 206 232
Service coanection expenses 106 108 38 76 115 115 120 127
Depreciation 84 97 55 109 168 192 225 232
Total Operating Expenses 717 787 326 651 990 1,101 1,193 1,271
Net Income from Operations (68) 48 1 87 262 290 344 420
Interest _ _ - 29 102 113 132 138
Less: interest capitalized - - 29 33 1 10 21
Net Interest - - - - 69 112 122 117
Surplus (Deficit) (68) 48 1 87 193 178 222 303 |
Return on average net fixed co
assets in ope-ration 8\.8% 8\.6% 9\.5% 10,9,%
July 10, 1964
ANNEX 8
SIERRA LE£N E ELECTRfCITY COIfORATION
INCOME STATEMENTS
Adjusted
Actual Estimated Estimated
4- mos\. to o mos\. to
Fiscal year ending 31 March 1963 1964 3 Aug\.'64 31 Mar'65 1966 1967 1968 1969
P R O V I N C I A L U N D E R T A K I N G S
Energy Sales
Sales in millions of kwh 6\.2 7\.6 2\.9 5\.8 9\.9 11\.0 11,9 12\.7
Average revenue per kfid in
pance Der unit 4\.7 5\.1 5\.0 5\.5 5\.4 5\.3 5\.2 5\.2
(Thousands of Pounds)
Revenue Account
Operating revenues 122 163 60 133 224 244 257 274
Government contribution for
Drovincial undertakings - - - 24 35 35 35 35
Total Income 122 163 60 157 259 279 292 309
Operating expenses excluding fuel 132 133 51 101 161, 178 162 169
Fuel 54 60 22 46 76 83 90 96
Depreciation 28 40 14 28 42 45 53 511
Total Operating Erpenses 214 233 87 175 282 306 305 319
Net Income from Operations (92) (70) (27) (18) (23) (27) (13) (10)
FREET OWN
Energy Sales
Sales in millions of kwh 26\.8 32\.7 13\.7 27,5 48,o 55,3 63\.0 71\.3
Average revenue per kwh in
pence per unit 3\.8 4\.1 4\.0 4\.4 4\.4 4\.3 4\.3 4\.2
(Thousands of Pounds)
Revenue Account
Operating revenues 421 564 229 505 878 997 1,125 1,255
Service connection fees 106 108 38 76 115 115 120 127
Total Income 527 672 267 581 993 1,112 1,2h5 1,382
Operating expenses excluding fuel 206 231 105 211 360 417 480o 511
Fuel 135 158 55 108 107 116 116 136
Service connection expenses 106 108 38 76 115 115 120 127
Depreciation 56 57 41 81 126 147 172 178
Total Operating Ezpenses 503 554 239 476 708 795 888 952
Net Income from Operations 24 118 28 105 285 317 357 430
Juliy 10, 1964
ANNEX 9
SIERRA LEONE ELECTHICITY CORPORATION
SOURCES AND APPLICATIONS OF FUNDS
(in Thousands of Pounds)
Fiscal year eading 31 March 1965 1966 1967 1968 1969 Total
SOURCES
Net operating income 87 262 290 344 420 1,403
Add depreciation 109 168 192 225 232 926
e/ 196 430 4t2 569 652
Less adjustment for Gov't contribution- 24 1 - - - 35
Net receipts from operations 172 1419 4b 2 569 652
Borrowings:
Government loan - King Tom 181 9 - - - 190
Government loan - Guma Valley _- _ 400 - - 400
Proposed IBRD loan 1,085 272 - - - 1,357
Fature foreign loan - - 34 292 114 440
Total borrowings 1,266 201 434 292 114, 2M"
TOTAL SOURCES OF FUNDS 1,438 700 916 861 766 4,681
APPLICATIONS
Construction EBxpend'itures y
ID project - Kig Tom' 895 112 - - - 1,007
- Distribution 26 196 - - - 222
Total IBRD project 921 306 - - - 1,229
King Tom - 3rd generating unit - - 46 336 48 430
- Steam unit - - - - 94 94
Guma Vally - - 400 - - 400
Other Construction 107 98 240 273 169 887
Total Construction 1,02t 406 686 609 3113140
Repayment of Suppliers' Credits and
Government advances 300 - - - 300
Debt Services
Amortization - Gov't loan - King Tom - 17 18 19 20 74
- Oov't loan - Guma Valley - - 4 8 9 21
- Proposed IBRD loan - - - 47 50 97
- Future foreign loan - - - - - _
Total amortization - 17 22 74 79 192
Interest - Govt loan - King Tom 10 28 27 26 25 116
-Govt loan - Guma Valley - - 10 21 20 51
* Proposed IBRD loan 19 74 75 75 72 315
- Future foreign loan - - 1 10 21 32
Total interest 29 102 113 132 133 514
Total Debt Service 29 119 135 206 217 706
Required increase in net current assets 50 60 60 60 60 290
TOTAL APPLICATIONS OF FUNDS 1,407 585 881 875 588 4,336
1~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Cash surplus (deficit) 31 115 35 (14) 178 345
Cumulative cash surplus (deficit) 31 146 181 167 345
Debt service coverage - 3\.5 3\.6 2\.8 3\.0
1/ Due to the contribution being receivable in arrears
/ Does not include £530 thousand inourred prior to vesting day
July 10, 1964
ANNEX 10
SIERRBA LEWNE ELECTRICITY CORPORATION
BALANCE SHEETS
(in Thousands of Pounds)
As at 4 Aug\. 1964 - - As at 31st March -
(Vesting Day) 1965 1966 1967 1968 1969
ASSETS
Fixed assets 1,840 3,533 3,962 4,663 4,946 5,566
Less Depreciation 583 692 860 1,052 1,277 1,509
Net fixed assets in operation 1,257 2,841 3,102 3,611 3,669 4,057
Work in progress 686 50 60 46 382 94
Net current assets:
Inventories, net receivables, etc\. 185 234 285 325 365 405
Cash 100 156 291 346 352 550
Total net current assets 285 390 576 671 717 955
TOTAL ASSETS 2,228 3,281 3,738 4,328 4,768 5,106
LIABILITIES
Oovernsant capital 1,000 1,000 1,000 1,000 1,000 1,000
Capital reserve 548 548 548 548 548 548
Surplus - 87 280 458 680 983
Total equity 1,548 1,635 1,828 2,006 2,228 2,531
Debtt
Governrmnt loan - King Tom, etc\. 380 561 553 535 516 496
\. Ouma Valley _ - 396 388 379
Proposed IBRD loan _ 1,085 1,357 1,357 1,310 1,260
Future forign loan - - - 34 326 440
Total debt 380 1,646 1,910 2,322 2,540 2,575
Suppliers' credits and Government advances
for King Tom 300 - - - - -
TOTAL LTTABTTTIZS 2,228 3,281 3,738 4,328 4,768 5,io6
Debt/Equity ratio - 50/50 51/49 54/46 53/47 50/50
July 10, 1964
SIERRA LEONE
MAY~ ~ ~ 964cl XER 2349
4S4 t t A~~~~~~~~~~~~~~~KENI r
PORT\LKO-<-~}<
F^L;X~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~FD
FRcriiEETOWN)tdcelgneongpan < f
A rvtl ondea elgnrtgpnt9 o5ol 0j
A Electricty D\.P\. rt-et &-\.1 g \.at-ng plantmMIE
MWAY 1964 IBRI) 1349 | APPROVAL |
P003087 | Dammuzz of
The World Bank
FOR OFFICIAL USE ONLY
Report No\. P-4229-ZR
REPORT AND RECOMMENDATION
OF THE
PRESIDENT OF THE
INTERNATIONAL DEVELOPMENT ASSOCIATION
TO THE
EXECUTIVE DIRECTORS
ON A
PROPOSED DEVELOPMENT CREDIT
IN AN AMOUNT OF SDR 43\.3 MILLION
(US$50\.0 MILLION EQUIVALENT)
TO THE
REPUBLIC OF ZAIRE
FOR AN
EIGHTIH DEVELOPMENT FINANCE COMPANY (SOFIDE) PROJECT
April 10, 1986
I This document has a restricted distribution and may be used by recipients only in the performance
of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EqUIVALENIS
Currency Unit - Zaire (Z)
On September 12, 1983, Zaire introduced a transitional dual exchange rate
regime, comprising an official rate and a free market rate\. The two rates
were unified on February 24, 1984; thereafter the rate has floated on a
weekly basis\.
December 1985
Zaire 1\.00 - US$0\.02
US$1\.00 - Z 55\.1
WEIGHTS AND MEASURES
1 meter (a) - 3\.28 feet
1 kilometer (km) - 0\.62 mile
i sq kilometer (km2) - 0\.386 square mlles
1 metric ton (ton) - 2,204 pounds (lbs)
ACRONYMS AND ABBREVIATIONS
ADB - African Development Bank
BDZ - Banque du ZaIre
CCA - Contribution Bar le Cbiffre dtAffaLres
CCCE - Caisse Centrale de Cooperation Economique (France)
CEPETEDE - Centre de Perfectionnement aux Techniques de Developpement
CIA - Canadian LIternational Development Agency
EDI - Economic Developmenc Institute
EEF - Extended Fund Facility
SIB - European Investment Bank
FAC - Fonds d'Aide et de Cooperation
IlNS - Institut National de la Statistique
KfW - Ireditanstalt fuir Wiederaufbau
HNEI - Ministare de l'Economie et de l'lndustrie
ONAIRA - Office National des Transports
OPEZ - Office de Promotion des Petites et Moyennes Entrepises
ZaIroises
oK - Office des Routes-
OZAC - Office Zarrois de Contr8le
PIP - Public Investment Program
REGIDESO - REgie de Dietribution d'Eaux
RVF - Regie de Vote Fluviale
RIA - R£gie de Voie Maritime
SNCZ - SociEte Nationale des Cbemins de Fer du Zaire
SHE - Small and Medium Enterprises
SOFIDE - SociEtE Financiere de Dfveloppement
FISCAL YEAR
January 1 - December 31
FOR OMCIAL USE ONLY
ZAIRE
EIGHTL SOFIDE PROJECT
Credit and Project Summary
Borrower: Republic of Zaire\.
Beneficiary: Societe Financiere de Developpement (SOFIDE) and
Centre de Perfectionnement aux Techniques de
Dgveloppement (CEPETEDE)\.
Amount: SDR 43\.3 million equivalent to about US$50\.0
million\.
Terms: Standard IDA terms\.
Relending terms: The Borrower would onlend SDR 42\.3 million,
equivalent to about US$48\.8 million, to SOFIDE, at
8\.5 percent per annum (IBRD interest rate in
effect at the time of submission of the project
documents to the Executive Directors), with a
flexible amortization schedule that would
substantially conform with the aggregate of the
amortization schedules of subloans made by SOFIDE
and financed under this project, subject to a
maximum of 15 years, including a grace period not
to exceed three years; SOFIDE would relend the
funds at a rate of 14 percent per annum to its
subborrowers, who will bear the foreign exchange
risk\. The Borrower would also onlend to SOFIDE
SDR 567\.000,equivalent to about US$700,000, for
technical assistance at 8\.5 percent per annum t-ith
a fixed amortization schedule of 15 years,
including a three-year grace period, and would
pass on SDR 433,000, equivalent to about'
US$500,000, for training assistance needed by
CEPETEDE, as a grant\. The foreign exchange risk
on the SOFIDE technical assistance component (SDR
567,000) would be borne by SOFIDE\.
Objectives and Project The project would represent a continuation of
Description: IDA's support to an effective financial
intermediary in its ongoing assistance to the
productive sectors in Zaire, particularly private
investments in manufacturing and agro-industries\.
It complements the proposed Industrial Sector
Adjustment Credit, which aims at assisting the
Government in reforming policies affecting the
development of the industrial sector\. The
investment component of the proposed credit would
| This document has a restricted distribution and may be ued by recipients only in the performance
of their official duties\. Its contents may not otherwise be disclose without World Bank authorization\.
- ii -
cover about 47 percent (USS48\.8 million) of the
capital investment requirements in foreign
exchange of priority subprojects approved by
SOFIDE\. The balance would be provided by other
sources, including Canada (CIDA), Federal Republic
of Germany (KfW), ADB and EIB\. The remaining
US$1\.2 million of the Credit would finance (a)
technical assistance to continue helping SOPIDE
cope with the increasing volume and diversity of
its operations and support its ongoing efforts to
deal with its portfolio problems (US$700,000); and
(b) equipment and other assistance needed by
CEFETEDE to Improve its effectiveness as Zaire's
principal development training institution
(US$500,000)\.
Beneflts and Risks: The main benefits of the project would be to
provide the term investment resources needed to
accelerate growth and increase employment in
Zaire\. It would help stimulate a supply response
from the economy and, thus, complement the policy
measures already taken or to be taken under the
proposed Industrial Sector Adjustment Credit\. The
project would also enable IDA to continue helping
SOFIDe to improve its portfolio quality and
increase its effectiveness in assisting the
recovery of the productive sectors in Zaire\.
There are two risks In this project\. The first
risk relates to the possible deterioration of
X Zaire's economic situation which would, inter
alia, accelerate the depreciation of the Zaire
currency and make SOFIDE's foreign exchane lons
unattractive to potential investors who have to
bear the foreign exchange risk\. Such a risk is,
however, limited in view of Zaire's continued
compliance with the IM stabilization program and
the actions envisaged by IDA and other donors to
increase the resource transfer and accelerate
economic growth In Zaire\. The second risk is the
possible deterioration of SOFIDETs arrears
position\. This risk is also limited because of
the strong action SOFIDE has already taken to
improve loan collection and tb" additional
measures proposed in the contest of this project
to contain any portfolio deterioration\. These
should insure that SOFIDE will remain an effective
term lending institution that promotes
economically justified investment projects\.
- iii -
Estimated Project Costs: January 1, 1986 - June 30, 1989
Local Foreign Tota l
-US-t f miTon)
Total Financing Required for
SOFIDE Operations 36\.1 103\.0 139\.1
Technical Assistance 0\.3 0\.9 1\.2
Total 36\.4 103\.9 140\.3
Financing Plan
Resources Available for
Commitment at SOFIDE 3\.5 46\.7 50\.2
Eighth SOFIDE Credit 0\.3 49\.7 50\.0
SOFIDE's Cash Generation 32\.6 - 32\.6
Other Donors - 7\.5 7\.5
Total 36\.4 103\.9 10\.3
Estimated Disbursements
(SDR million)
Fiscal Year 1987 1988 1989 1990 1991 1992 1993 1994
Annual 1\.0 5\.0 8\.2 8\.8 8\.1 6\.3 4\.2 1\.7
Cumulative 1\.0 6\.0 14\.2 23\.0 31\.1 37\.4 41\.6 43\.3
Appraisal Report: No\. 6140-ZR
Map IBRD No\. 3560R9
REPORT AND RECOMNENDATION OF THE PRESIDENT
TO THE EXECUTIVE DIRECTORS ON A PROPOSED
CREDIT TO THE REPUBLIC OF ZAIRE
FOR AN EIGHTH DEVELOPMENT FINANCE COMPANY (SOFIDE) PROJECT
1\. I submit the following report and recommendation on a proposed
development credit to the Republic of Zaire in the total amount of SDR 43\.3
million (about US050\.0 million equivalent) on standard IDA terms to finance
an eighth SOFIDE project\. The Republic of Zaire would onlend SDR 42\.3
million (about US$48\.8 million equivalent) to SOFIDE at 8\.5 percent per
annum (IBRD rate in effect at the time of submission of the project
documents to the Executive Directors), with a flexible amortization
schedule conforming to the aggregate amortization schedule of SOFIDE's
subloans, subject to a maximum of 15 years, including a grace period not
exceeding three years\. The Borrower would also onlend to SOFIDE SDR
567,000 (about US$700,000 equivalent) for technical assistance, at 8\.5
percent per annum with a fixed amortization schedule of 15 years, including
a three-year grace period, and would pass on SDR 433,000 (about $500,000
equivalent) to CEPETEDE as a grant, for training and technical assistance\.
Country data sheets are provided in Annex 1 of this report\.
PART I - THE ECONOMY
2\. The latest country economic memorandum entitled Zaire: Economic
Change and External Assistance" dated March 29, 1985 (Report No\. 5417-ZR)
was distributed to the Executive Directors in April 1985\. A Bank mission
to assess recent economic developments and to review the Public Investment
Program visited Zaire in March/April 1986 and its report is under
preparation\. The following section is updated to reflect the findings of
the mission\.
Background
3\. Zaire is the third largest country in Africa in terms of its area
and the fifth largest in terms of its population, but its GNP per capita
estimated at US$140 in 1984, ranks among the lowest in the continent\. With
a population of about 30 milion, Zaire has a low population density
estimated at 12 persons per square kilometer\. About a third of its
population lives in urban areas\. Although agriculture (commercialized and
subsistance) accounts for only 30 percent of GDP, it provides employment
and income for more than three-quarters of the population\. Mining and
mineral processing accounts for a third of GDP and about two-thirds of the
country's export earnings\. Mining has traditionally been a major source of
public sector revenues\.
4\. When Zaire gained independence in 1960, it was ill-prepared for
the change, both technically and institutionally\. The first six years
following independence were marked by a violent political strife and a
severe disruption of the economy\. After the restoration of political order
in 1967, however, the country enjoyed a period of relative stability and
economic growth which lasted until 1974\. During this period, GDP grew at a
rate of about seven percent a year in real terms\.
The Crisis Period
5\. The first signs of crisis began to emerge in 1975 as copper
prices started to weaken\. Between 1975 and 1983, the performance of the
Zairian economy was characterized by a series of crises and short-lived
recoveries, severe underutilization and deterioration of productive
capacity and infrastructure, the emergence of significant economic and
financial imbalances, high inflation, and a decline in per capita income\.
Several factors, some of them predating 1975, contributed to these
difficulties\. Among these are: the zairianization and nationalization
measures of 1973/74, which though rescinded since, destroyed the
distribution network and undermined private sector confidence; the heavy
external borrowing of the early 1970s, much of it at unfavorable terms and
for projects with questionable economic justification; and the deficiencies
in economic management\. The weakness and volatility or world copper prices
during most of this period contributed to the severity of the crisis\. By
1979, GDP contracted by about 10 percent below the pre-crisis (1972-74)
level; inflation soared to more than 100 percent with chronic shortage of
essential consumer goods, fuel and intermediate goods\. With the balance of
payments under strain, external payments arrears continued to accumulate\.
Although two stabilization programs supported by the IMF were adopted, and
three Paris Club reschedulings were concluded during the 1975-79 period,
these could not be implemented\.
6\. Systematic efforts to cope with the crisis did not start until
1979\. These included a new stabilization program supported by the IMF, new
debt rescheduling agreements with the Paris Club (December 1979) and with
the London Club (April 1980); the preparation of a public investment
program (PIP) for the 1979-81 period with the support of the Bank, the
installation of external advisors at the Central Bank and the Ministry of
Finance, the revamping of some institutions (the Customs Office, the
ministry of Agriculture, the Investment Commission) and the creation of
others (a Central Pay Directorate in the Ministry of Finance)\. Along with
a strong recovery of copper production, these measures resulted in a
considerable improvement of the economic situation in 1980\.
7\. Largely on the strength of this improved performance, in
mid-1981, Zaire adopted a three-year program of economic and financial
adjustment supported by an 'Extended Fund Facility\. Zaire also concluded
another rescheduling agreement with the Paris Club in July 1981\. Further
weakening of copper and cobalt markets, however, caused exports to fall by
US$540 million (about 25 percent in nominal terms)\. The immediate shortage
of foreign exchange resulted in a sudden decline in imports which in real
terms were half of the pre-crisis level\. With weakening financial
discipline, the budget deficit quadrupled in nominal terms, reaching seven
percent of GDP\. Zaire could not comply with either the criteria under the
EFF or the Paris Club agreement\. The EFF was formally cancelled\. The
failure of the EFF meant the collapse of the premises on which the hopes of
recovery had been built\. These comprised: (i) improved economic and
financial performance with the help of DMF supported programs; (ii) major
- 3 -
external debt rescheduling; (iii) systematic Institutional reform; (iv)
implementation of the public investment program; and (v) well focused
external aid in support of a realistic PIP\.
8\. In 1982, copper prices continued to decline\. GDP contracted
further, and the overall balance of payments deficit reached a record
high\. By end 1982, external payments arrears totalled US$940 million\. On
the domestic front, the budget deficit continued to remain high as a
percent of GDP\. Both external and domestic confidence were at a low ebb: a
grossly overvalued exchange rate, pervasive price controls, and high
inflation were the manifestations of widespread distortions in the
economy\. Faced with a severe economic and financial crisis, the Government
began efforts to reestablish conditions for recovery at the end of 1982\.
These efforts included implementation in the first half of 1983 of a
"shadow program", as a precondition for a formal stand-by arrangement with
the IMF\.
The Stabilization Period
9\. The turning point for the Zairian economy came in 1983 when the
Government finalized, within the context of a formal IMF program, a series
of far-reaching measures, begun under the 'shadow program"\. These measures
included: (i) immediate devaluation of the zaire by 78 percent vis-a-vis
the SDR; (ii) introduction of a transitional dual exchange rate regime,
with unification of the two rates in February 1984 and "floating"
thereafter; (iii) a substantial liberalization and simplification of the
exchange and trade system, including a revision of customs duties; (iv)
decontrol of most prices, including agricultural producers' prices and most
interest rates; (v) tight expenditure controls, including reduction of
public sector employment; and (vi) a series of actions to reduce the burden
of parastatals on the budget, including the sale of some assets\.
10\. The adoption of the policies outlined above was followed by a
substantive rescheduling agreement with the Paris Club creditors and a
meeting of the Consultative Group in December 1983\. At the Consultative
Group meeting, the participants took two important steps relevant to the
execution of the 1983-85 PIP\. Tney agreed on the appropriateness of
convening co-lender meetings on transport (highways) and Gecamines, and
they endorsed Zaire's decision to reactivate the External Resources
Coordinating Committee, which had not met for about two years\. The
co-lenders meeting on highways was held successfully in March 1985 and two
meetings on Gecamines in September 1985 and March 1986\.
II\. The Government's stabilization-cum-liberalization program was
also a manifestation of the growing recognition of the importance of
private initiative and of the need to reduce Government intervention in the
economy\. The measures taken since 1983 were successful in putting the
Zairian economy onto a stabilization path: the budget deficit (taking into
account rescheduling of interest payments on external debt), which was six
percent of GDP in 1982, turned into a budget surplus (about one percent of
GDP) in 1985; the balance of payments current account deficit (after
reschedulings) declined from 4\.8 percent of GDP in 1982 to 1\.8 percent in
1985; and the rate of inflation which soared to 76 percent in 1983 was
estimated at around 30 percent in 1985\. Some of these measures had an
- 4 -
immediate impact\. Many price distortions were eliminated so that
private sector activities could be redirected from rent-seeking activities
towards directly productive sectors\. The supply response in the foodcrop
sector was impressive, but the results were mixed in the manufacturing
sector\. While short-run supply-side constraints, with the exception of the
availability of credit, were by and large eased, capacity utilization rates
in the industrial sector remained low\. In addition, demand for
manufactured products was curtailed by the sharp reduction in purchasing
power in urban areas\. Following a real GDP decline of 2\.6 percent in 1982,
growth picked up in 1983 and reached 2\.8 percent in 1984\. According to the
preliminary estimates, GDP growth was around two percent in 1985\. This
slowdown was due largely to lower import growth as the foreign exchange
shortage worsened\.
12\. With the floating exchange rate and the liberalization of
exchange restrictions, both the volume of transactions and the premium on
the parallel foreign exchange market were substantially reduced\. In the
non-copper export sector, significant export volumes were restored to
official channels\. Nevertheless, developments in the external sector
during 1983-85 were characterized by weak export prices and net capital
outflows\. The primary source of strain on the balance of payments, has
been on the capital account\. First, disbursements on grants and medium-
and long-term loans have declined precipitously since 1980\. Second,
private capital flows, including new direct foreign investment, have
remained at negligible levels even after the 1983 reforms\. Third, the debt
service burden has continued to increase notwithstanding debt
reschedulings\. The rapid decline in disbursements on medium- and long-term
M<) loans to Zaire can be traced back to fluctuations in the commitments
before 1983 and their continuous decline thereafter\. Since 1983, the major
source of commitments and disbursements has been multilateral donors which
have increased their lending to Zaire both individually and as a group\.
Transfers from bilateral sources as a group have been negative since 1983\.
13\. Zaire successfully concluded another rescheduling agreement with
the Piris Club creditors in May 1985, and to date, has met all of its
external debt obligations under the Paris and London Club agreements\. In
spite of these reschedulings, the impact of debt service and of the rapid
depreciation of the zaire on fiscal management has been drastic\. The
combined effects of exchange rate depreciation and revenue measures taken
since 1983 have been significant: the ratio of fiscal revenues to GDP rose
from 10 percent in 1982 to 17 percent in 1985\. The tax base, however,
remains heavily dependent on export-based activities such as copper and oil
sectors\. Despite significant revenue increases, the budget has been under
immense pressure because of the increasing debt service burden since 1982\.
Soaring debt service payments in local currency terms, have necessitated
massive cuts in salaries, expenditures on goods and services, and
investment expenditures in real terms\. The share of debt service payments
(after reschedulings and including arrears and domestic debt service) rose
from 17 percent of total expenditures in 1982 to 73 percent (of which 55
percent was for external debt service payments) in 1985, thus considerably
reducing the Government's latitude in allocating budgetary resources\.
- 5 -
14\. The brunt of financial adjustment fell on the investment budget
which financed 10-15 percent of the public investment program\. As a share
of total budgetary expenditures, investment spending declined from 12
percent in 1982 to less than 3 percent in 1985\. This corresponded to 0\.4
percent of GDP\. Overall financial execution of the 1983-85 PIP was 65
percent, with a much lower physical execution rate\. Implementation of the
program varied significantly among the sectors\. Agencies which used
self-generated funds were able to implement a larger proportion of their
programs than those which depended on investment budget for domestic funds\.
Prospects
15\. Today, the Zairian economy is at a cross-roads\. Despite Zaire's
impressive stabilization effort in the last three years which helped
redress critical external and internal disequilibria and laid the
preconditions for the resumption of sustained growth, the success of a
medium-term recovery scenario will depend on the country's ability to
address four major constraints: (i) uncertain external financial prospects
which remain dominated by a heavy debt burden and attrition to bilateral
aid flows; (ii) a tight domestic financial situation which underlines the
considerable impact of debt service on reducing Government's latitutde to
allocate resources for development expenditures; (iii) a weak institutional
environment which requires the strengthening of public sector management to
enable it to conceive, implement and monitor appropriate policies and
action programs; and (iv) an inadequate physical infrastructure in need of
continued rehabilitation\. Zaire has recently adopted a Five Year
Development Plan (1986-90) which identifies these constraints, and offers
ways to begin addressing them\.
16\. Of Zaire's total external debt outstanding, estimated at US$5\.4
billion at end-1985, almost two-thirds have been rescheduled at near-market
terms\. Zaire's ratio of external debt service payments to exports of goods
and non-factor services (after rescheduling) was 27 percent in 1985\. While
the previous debt reschedulings provided short-term relief, they have
increased the country's medium-term debt burden\. Debt service payments
falling due during the 1986-90 period is about US$4 billion, excluding
Zaire's obligations to the IMF\. In order to ease the external and domestic
financial constraints, future debt reschedulings will have to be done with
more concessional terms and for larger amounts than what have been granted
in previous reschedulings\.
17\. The next three years represent a critical period in the
transition from stabilization to sustained growth\. While the vagaries in
world markets for copper play a significant role in Zaire's external
financing prospects, the success of the transition will depend on the
country's ability to address the key constraints mentioned above\. This,
however, would require a concerted joint effort by Zaire and the donor
community\. On the part of Zaire, it would require pursuing financial
discipline and focusing on policies to stimulate growth within the context
of a structural adjustment program\. The Government has demonstrated its
ability to implement a painful but comprehensive stabilization-cum-
adjustment program during the last three years and there are clear
indications that it is committed to undertake further policy measures
for structural adjustment\. The success of the transition will, however,
also rest on the response of the international donor community to the
Government's structural adjustment efforts\. In addition to the financial
assistance to support these efforts in the form of quick-disbursing
non-project grants and loans, the level of new commitments for projects
will have to be increased to cover at least a minimum public investment
program\. New projects, properly identified in the context of a
resource-constrained public investment program, are needed to continue the
rehabilitation of the country's physical infrastructure, to permit the
development of human Lesources, and to assist in the recovery of productive
sectors\.
PART II - BANK GROUP OPERATIONS IN ZAIRE
18\. From 1969 to date, the Association has approved one Special
African Facility Credit (US$30 million equivalent) and 40 credits totalling
about US$650 million for agriculture, transport, development finance
company operations, water supply, power, petroleum technical assistance and
education projects\. The Bank Group has also extended grants totalling
US$400,000 as contributions toward the cost of two planning assistance
projects in Zaire\. In 1975, the Bank made a loan of US$100 million for the
Gecamines Mining Expansion Project, which was cofinanced by the European
Investment Bank and by the Libyan Arab Foreign Bank\. and which provided for
special repayment arrangements\. A Technical Assistance Credit was approved
in 1983 to assist Gecamines with its efforts to restructure its
organization, improve its manpower and prepare a long-term rehabilitation
and expansion program\. The IFC, which has a US$1\.3 million equity
participation in the Societe Financiere de Developpement Economique
(SOFIDE), approved a US$4\.1 million loan in 1978 for an offshore oil
production project, and a US$230,000 loan in 1982 for studies related to
the development of an aluminium complex at Banana\. In 1985, IFC has
approved a US$6\.25 million loan to, and a US$528,000 equity participation
in a textile company (SOTEXKI); a US$15\.0 million loan to the "Grands
Hotels du Zaire"; and a US$100,000 equity participation in a cotton farming
operation\. Annex II contains a summary statement of Bank loans, IDA
credits and IFC investments as of September 30, 1985\. [Annex II will be
updated with March 30, 1986 figures, prior to submission to the Executive
Directors]\.
19\. A main objective of Bank Group operations in Zaire has been
institution building\. The development finance company (SOFIDE) was
established in 1970 with assistance from IFC and IDA (para\. 38)\. The major
transport agencies, ONATRA, Soci4t4 Nationale des Chemins de Fer Zairois
(SNCZ), Regie des Voies Fluviales (RVF), Regie des Voies Maritimes (RVM)
and Office des Routes (OR), have received technical and financial
assistance from the Association, which also helped establish the National
Livestock Development Authority (ONDE)\. In the case of Gecamines, the Bank
loan originated a dialogue, still ongoing and now supported by a technical
assistance credit, intended to define ways and means to strengthen the
management, financial position and planning of the company, which helped in
the preparation of the proposed operation\.
20\. Project implementation has been satisfactory in spite of
difficulties resulting from the country's inadequate manpower and
management capability and, in recent years, because of the economic
crisis\. In the last two or three years, release of the required budgetary
funds has been difficult periodically because of budgetary ccnstraints\.
Lack of foreign exchange to finance spare parts and fuel, and the
deterioration of the transport network and marketing system have resulted
in severe supply problems for most projects\. Recruiting and retaining
adequate staff has also been difficult\. In January 1980, the Bank
undertbok with Zairian officials an overall review of Bank Group projects
which, for the first time, provided an Integrated view of implementation
problems; this resulted in an acceleration and improvement in the
utilization of Bank Group assistance, particularly in the agricultural
sector\. A second overall review, focussing on macro-economic and sectoral
issues and on their impact on project implementation, took place in May
1983 and assisted the Government in formulating the important economic
measures of September 1983 (para\. 12)\.
21\. Sixteen credits and one loan have been totally disbursed\.
Completion reports have been issued for all projects\. Performance Audit
Reports have been issued for the first three SOFIDE and highway
projects,the River Transport Project, the Rail/River Project and the First
Education Project\. The conclusion of the audit and completion reports
was that the Bank GroupIs impact on institution building had been mixed\.
All project entities had encountered operating difficulties beyond their
control as the economy deteriorated, financial resources grew scarcer and
the problems besetting the investment environment were exacerbated by the
Government's zairianization/radicalization measures\. Nonetheless,
effective administrations had evolved in REGIDESO, SOFIDE and the Office
des Routes, the highway agency\. Performance of ONATRA, the port and river
transport agency, had not improved as a result of the first River Transport
Project but did improve under the Rail/River Project\. More attention to
institution building activities would have been beneficial in the education
sector; administrative weaknesses in the Department of Education were cited
as partly responsible for poor performance under the First Project and the
inability to implement investment components under the Second Education
Project which resulted in cancellation of US$18\.8 million in February
1983\. Bank Group support to all of the above mentioned entities is
continuing through follow-on projects designed to address the issues raised
by the completion and audit reports\.
22\. The rate of disbursement to Zaire (about 20 percent for fiscal
years 1983-1985) is average for the Eastern Africa Region\. While
disbursement performance in general is satisfactory, difficulties have
arisen in several projects\. In the case of early credits for transport,
education and livestock (Credits 255-ZR, 272-ZR and 398-ZR), the lack of a
strong project entity caused implementation delays\. Economic conditions
were also a factor in slowing project programs in instances where
government counterpart funds were not available (Third Highway, Credit
660-ZR; Second Education, Credit 624-ZR) and where the investment
environment experienced slow recovery from the aftermath of abrupt
nationalization (Fourth 3OFIDE, Credit 710-ZR)\. Future project
implementation should be less affected by the above influences given the
strengthening of institutions under subsequent projects and efforts by the
- 8 -
Government to improve budgetary support of IDA-financed projects\. As of
June 30, 1985, the Bank Group's share of Zaire's total debt disbursed and
outstanding was about 7 percent\.
23\. In the past three years, the Bank Group's main efforts have been
directed towards assisting in the rehabilitation and develzpment of the
agriculture, industry/mining and transport sectors, in part through the
design and implementation of appropriate new policies\. Initial efforts in
support of the energy sector include the Shaba Power System Rehabilitation
Project (Cr\. 1224-ZR) and the Ruzizi II Regional Hydroelectric Power
Project (Cr\. 1421-ZR)\. Our lending will continue to assist the development
of the agriculture sector, including policy reforms under the agricultural
component of a proposed Structural Adjustment Credit; to promote the
development of the industrial and mining sectors; and to support the
transport sector\. In addition, further support will be considered for the
energy sector to develolp power, and to minimize the cost of supplying
petroleum products to the country\. An Education Technical Assistance and
Training Project to improve the management of the education sector and
relevance of education programs was recently approved\. Preparation is
under way for a G&camines rehabilitation project, a navigation improvement
project, and a technical assistance project to improve investment planning,
budgetary procedures, and parastatal management\. In addition to investment
projects, two quick-disbursing policy operations are also under
preparation: a Structural Adjustment Credit to address cross-sectoral
issues and pave the way for medium term recovery and an Industrial Sector
Adjustment Credit which would assist the Government in rationalizing and
simplifying tariff structure and export procedures, the tax regime of
industrial enterprises, and finance imports of spare parts and essential
equipment\. The proposed SOFIDE VIII project described in this report would
complement these efforts by providing the investment sources in foreign
exchange needed to finance the recovery and diversification of the
industrial sector\.
PART III - THE INDUSTRIAL AND FINANCIAL SECTORS
A\. The Industrial Sector
Sector Background and Recent Performance
24\. Zaire's industrial sector contributed about US$200 million to GDP
in 1984, and employed an estimated 150,000 workers, or ten percent of total
employment in the modern sector\. The five percent share of industry in
Zaire's GDP is now among the lowest in Sub-Saharan Africa\. As late as ten
years ago, this share was more than twice as large and was comparable to
the GDP industry share of such countries as Kenya, Zambia and Ghana\.
25\. Between 1966 and 1974, industrial output grew at an annual
average rate of about six percent, slightly below the seven percent overall
GDP growth rate\. The faster GDP growth was spurred by high copper and
cof fee prices\. Most of the industrial growth occurred between 1970 and
-9-
1974, supported by expanding domestic demand due to rising incomes from
mining, a favorable investment climate, particularly for foreign
entrepreneurs, and protection of the domestic market\.
26\. Since the beginning of the economic crisis in 1975 (para\. 5)\.
however, industrial output decreased without interruption until 1983, when
it stood at 31 percent below its 1975 level, a decline three times greater
than that registered by GDP\. The decline in industrial output started with
the collapse of copper prices in the aftermath of the first round of oil
price increases\. The resulting shortage of foreign exchange, together with
the unfavorable investment climate due to domestic policy measures, caused
a sharp decrease in industrial capacity utilization and a deterioration of
equipment\. At the same time, the worsening situation in agriculture and
transport led to shortages of local inputs\.
27\. Following the adoption of stabilization policies in late 1983
(para\. 9), there was a relatively modest recovery in industrial output\. In
1984, industrial output grew by nearly two percent, compared to a GDP
growth of about three percent\. Preliminary estimates for 1985, however,
indicate that, while GDP grew by about two percent, industrial output
actually declined by just under one percent, mainly as a result of foreign
exchange shortages for the importation of raw materials and spare parts\.
Structure of Industry
28\. Over the last ten years, there has been no significant change in
the structure of the sector or the location of enterprises\.
Zaire's manufacturing industry is still closely linked to commerce, with
many enterprises having substantial commercial operations\. Kinshasa, the
capital city, rpmains the main center of industrial activity, with
Lubumbashi and Kisangani, important secondary centers\. Agro-industrial
enterprises account for about two-thirds of industrial value added in
Zaire\. The activities of these enterprises include palm oil production and
processing, sugar processing, cotton ginrning and textile production, coffee
drying, flour milling and rubber and wood processing\. Other subsectors
include beverages, tobacco, the assembly of transport equipment, chemicals
and petroleum refining\. Medium and large size firms (employing more than
100 workers) dominate most branches and account for about 90 percent of
total value added in the sector\. Consumer goods account for over 70
percent of industrial output and are sold mostly in the domestic market\.
Palm oil, wood, coffee and some cotton fibers are the only processed
products being exported\.
29\. Until 1973, almost all major industrial enterprises were owned by
foreign and locally-based expatriate interests\. The zairianization and
nationalization measures of 1973-74, which transferred to Zairian hands
ownership of about two-thirds of manufacturing firms, had damaging\. effects
on production\. In 1976, Government rescinded these measures and decided to
return 60 percent of the equity in zairianized and nationalized enterprises
to their former foreign owners\. At present, ownership of the sector is
largely back in private hands\.
- 10 -
30\. Since late 1983, with an improved macro-economic framework,
better incentives for exports, and returning confidence, there has been a
substantial increase in private investment as evidenced by the high volume
of projects approved under the regulations of the investment code (about
US5137 million in 1984 as compared to US$44 million in 1983)\. The increase
in private investment, which has not yet translated into increased output,
led to the rapid pace of commitment of the Seventh IDA credit to SOFIDE\.
While the majority of these investments were for rehabilitation and
modernization of existing concerns, agro-industrial projects for export
accounted for about a third of the total, indicating a change in the
investment pattern consistent with the improved environment for
export-oriented projects\.
Industrial Policies
31\. Except for the period of the zairianization measures and its
immediate aftermath, Government policy has been not to invest in
manufacturing but to limit its direct investment mainly to the provision of
basic infrastructure\. During the 1970s, the Government used a number of
policy insLruments to regulate and promote industrial development\. These
included (a) a cost-plus price control system; (b) an investment code under
which enterprises could benefit from tax exemptions and guarantees for
repatriation of capital investment, profit and interest; and (c) tariff
protection and import prohibitions granted mostly on a case by case basis
to shield selected subsectors or firms from foreign competition\. In view
of the deteriorating economic situation, the negative impact on industrial
efficiency of some of its past policies, and its determination to move
toward a freer, market-based economy, the Government initiated, in 1981, a
number of measures aimed at (i) increasing price incentives; and (ii)
encouraging rehabilitation/reconstruction of existing industrial plants as
the main priority in the short to medium-term\. Over the last five years,
the Government partly decontrolled prices, eliminated import controls and
established a realistic exchange rate regime (para\. 9)\. These policy
measures have improved the environment in which firms operate in Zaire\.
Other important policy reforms needed to increase the sector's efficiency
and productivity will be implemented with IDA assistance through an
Industrial Sector Adjustment Credit currently under preparation\. The major
policy reforms being discussed with the Zairian Government within the
context of the industrial sector operation are summarized below\.
32\. Trade Policies\. As a means of protecting local industry, tariffs
were of little relevance until the macro-economic reforms of late 1983\.
With a serious external imbalance persisting since 1975 and a highly
overvalued exchange rate, the major limitation to imports was the shortage
of foreign exchange and import licencing\. Despite high nominal tariffs,
the actual level of tariff protection was low because import taxes and
duties were calculated on the official exchange rate (i\.e\., at only a
fraction of their real cost)\. Following the September 1983 devaluation and
the removal of quantitative restrictions on imports, a new tariff code was
introduced which substantially increased the tariff protection offered to
local industry\. The system is characterized by low duties on industrial
inputs (three percent) and high rates on finished products (up to 150
percent), resul_ing in very high and uneven effective protection for local
manufactures\. This high level of protection is further reinforced by a
- II -
higher sales tax on imports of final goods (25 percent) than on locally
produced goods (10-20 percent)\. In the context of the Industrial Sector
Adjustment Credit, the Government would be asked to implement a program to
lower over time the level of protection offered to the industrial sector
and reduce the disparity in effective protection rates that currently
exists\. This would be done by (i) introducing a basic minimum duty of
about ten percent on most imports, including all industrial inputs and
equipment; (ii) reducing tariffs on finished goods progressively to a level
of about 30 percent; and (iii) equalizing the sales tax on domestic and
imported goods, so that they apply uniformly to all goods in the same
category whether of domestic or imported origin\. The EEC is providing
technical assistance for the improvement of the administration of customs\.
Finally, a tariff commission would be established to implement the tariff
reform measures outlined above\.
33\. Price Controls\. The system of ex-post price controls is not
consistent with the Government's policy of liberalizing the economy\. In
the context of the Industrial Sector Adjustment Credit, the Government
is therefore expected to discontinue the remaining controls on the pricing
of industrial goods\.
34\. Export Promotion\. Until recently, Government policies had
created an export environment characterized more by disincentives and
administrative obstacles than by encouragement\. All exports require a
license which can be obtained through a commercial bank and which needs to
be validated by the central bank\. Some goods require authorization from
MNEI to ensure that local demand is being met before export is allowed\.
The same Ministry has to give formal approval to all exports, generally a
formality which can nevertheless cause delays for exporters\. In addition,
all exports require authorization of OZAC (Office Zalrois de Controle), an
agency in charge of quality control\. This authorization is given in three
different stages starting from an analysis of samples of items to be
exported and ending with a certificate verifying that the export has
actually taken place\. Most exports are subject to an export duty (four
percent), in addition to the normal sales tax of 6\.75 percent\.
35\. The export climate has improved following the 1983 devaluation
and the adoption of a realistic market-determined exchange rate which have
already begun to provide a potent stimulus to export\. To further promote
exports and investments in export-oriented activities, the Government would
be asked to abolish all export duties and other taxes on manufactured
exports\. The impact of this action on Zaire's business environment would
be profound and the expected loss of fiscal revenues would be outweighed by
the revenue increases resulting from the tariff reform and the corporate
taxes on expanding export activities\. Furthermore, the Government would
eliminate all the administrative bottlenecks faced by exporters, retaining
only registration procedures for statistical purposes\.
36\. Tax Reform\. Rationalization of the tax treatment of industrial
enterpris_, would also be tackled under the Industrial Sector Adjustment
Credit to address excessive and unpredictable levels of taxation\. Besides
corporate income tax (50% of profit), industrial enterprises pay a sales
tax with an effective rate on local production varying between 10 and 20
percent (para\. 32)\. In addition, industrial enterprises are subject to
- 12 -
several parafiscal charges, the most important of which is the FCD (Fonds
des Conventions de Developpement) levy which varies from enterprise to
enterprise\. Two studies financed under the sixth anu seventh IDA credits
to SOFIDE (asset revaluation study and review of the FCD system) are
underway to assess the incidence of current taxation and depreciation
allowance practices on the competitiveness and investment behaviour of
industrial enterprises\. In addition, a joint Bank/Fund mission which
visited Zaire in January/February 1986 also looked at a number of tax
issues and is preparing recommendations for reforms\. The adoption of a tax
reform program satisfactory to the Bank would form part of the proposed
Industrial Sector Adjustment Credit\.
Bank Group Strategy in the Sector
37\. In an effort to promote the development of the private sector,
the Bank Group supported the creation of the Societe Financiare de
Developpement (SUFIDE) in 1970\. IFC was one of SOFIDE's original
shareholders and IDA provided, in 1970, the first of seven credits, which
total US$111 million\. In 1984, IFC made a further capital subscription in
SOFIDE of US$576,000 equivalent\. IFC has also been involved in an offshore
oil project, a textile company, a hotel project and a cotton farming
operation and has made a loan for studies related to the development of an
aluminium complex at Banana\.
38\. Since the mid-1970's, given the economic crisis and the
difficulties facing the industrial sector, IDA's main objectives in the
lending through SOFIDE have been to provide the financial resources needed
to help rehabilitate and maintain the productive capacity of the industrial
sector and to develop SOFIDE into a strong, independent development finance
institution\. Despite the difficult economic conditions, SOFIDE has emerged
as a respected and effective term lending institution with a good appraisal
and supervision capability\. IDA's continued support has been critical to
this achievement\.
39\. The September 1983 macro-economic reforms and the Zairian
Government's determination to liberalize the economy have opened the way
for specific policy reforms in the industrial sector\. To help support this
effort, the Bank Group lending strategy in the sector now consists of a
combination of policy-based operations to improve the sector's
institutional and sectoral policy framework, while providing the foreign
exchange required for the importation of inputs and spare parts, and of
continued assistance to SOFIDE to increase its effectiveness in providing
the term foreign exchange resources needed to support the investment plans
of the private sector\.
B\. The Financial System
40\. The financial sector in Zaire consists of the Central Bank (BDZ),
nine commercial banks and two development Banks, SOFIDE and the
Agricultural Credit Bank\. The non-bank financial sector includes insurance
companies, a postal savings institution and a social security fund\. The
Central Bank is responsible for regulating all the financial institutions
in the country and for establishing and administering national monetary and
credit policies as well as managing international reserves\. Of the nine
- 13 -
commercial banks, seven have 50 percent or more participation by a foreign
bank\. Three of the banks have minority state participation\. The
commercial banks are mainly active in the provision of short-term credits\.
The main source of long-term finance and the only non-government source of
term foreign exchange resources is SOFIDE, which is described in detail in
Part IV of this report\. This situation, however, is beginning to change\.
With a market-determined exchange rate and easier convertibility of the
Zaire, the demand for term credit in local currency is increasing and the
commercial banks are starting to provide medium-term credit (two to three
years), although they remain constrained by the credit ceilings imposed by
the Central Bank\.
Credit Controls antd Interest Rates
41\. Over the past few years, in an effort to reduce inflation, the
Central Bank has progressively tightened credit to both the private and
public sectors\. The most important instruments used by the Central Bank
are credit ceilings set on an annual basis in consultation with the IMF\.
Commercial bank credit as a ratio to GDP is now about half of what it was
in 1978\. In real terms, commercial bank credit to the private sector
declined by 50 percent in the six-year period ending December 1984\. In
1985, credit available to the private sector within the agreed ceilings
increased considerably at the expense of the public sector and a further
increase has been agreed for 1986\.
42\. During the 1970s, Zaire followed a policy of administered
interest rates\. While commercial banks were free to set their own
commissions, both deposit and lending rates were regulated by the Central
Bank\. Thus, during that period, bank-customer relationships played a more
important role than interest rates in allocating credit to the private
sector\. This situation has changed significantly as the Central Bank freed
virtually all deposit and lending rates (with the exception of those on
loans for non-coffee agriculture) in September 1983 and more recently
created a market for Treasury Bills\. Beginning April 1984, these Treasury
Bills were sold to non-Bank public at annual interest rates ranging from 40
to 45 percent\. With the slowdown of inflation, these rates decreased to
30-35 percent in September 1985\. In response to this competition,
commercial bank deposit rates rose sharply and have become positive in real
terms (about 30-35 percent for term deposits compared to the estimated
inflation rate of 30 percent) in sharp contrast to earlier years\.
43\. On the lending side, limited availability of credit has kept
interest rates for short-term lending (including commissions) at about 35
to 40 percent, despite a deceleration of inflation (down to about 30
percent in 1985 from about 34 percent in 1984)\. As noted in para\. 40,
commercial banks have recently started to lend for two to three years,
financing mainly equipment renewals\. Commercial bank medium-term lending
has to be approved by the Central Bank on a case by case basis\. Given the
limited availability of credit and higher risks, this type of credit has so
far been given only to the commercial banks' best customers at rates
ranging from 26 percent (non-coffee agriculture loans) to 35 percent,
including commissions\. This situation is expected to change, however, with
the increasing demand for term loans in Zaire, and as banks move towards
higher interest rates\.
- 14 -
PART IV - THE PROJECT
44\. The Staff Appraisal Report for this project, entitled 'Zaire,
Staff Appraisal Report of an Eighth IDA credit for Societe FinanciAre de
Developpement' No\. 6140-ZR, is being circulated separately to the Executive
Directors\. Negotiations took place in Washington from March 26 to 27, with
a delegation headed by Mr\. Selemani Mwana Yile, Secretary of State for
Finance, Ministry of Finance, Budget and Portfolio\.
Project Objectives and Rationale for IDA Involvement
45\. The proposed credit would represent a continuation of IDA's
support to an effective financial intermediary assisting the productive
sectors in Zaire, particularly the development of private sector
investment in manufacturing and agro-industries, which are needed to
achieve a higher growth performance\. It complements the Industrial Sector
Adjustment Credit under preparation, which would assist the Government in
reforming policies affecting the development of the industrial sector\.
Specifically, the objectives of this project are (i) to provide the term
credit and foreign exchange needed for rehabilitation of efficient existing
enterprises and for new priority investment promoted by private
entrepreneurs; (ii) to continue supporting SOFIDE in its efforts to deal
with its portfolio problems; and (iii) to strengthen SOFIDE's institutional
structure to cope with the increasing volume and diversity of operations\.
The project would also continue IDA's ongoing support to CEPETEDE, Zaire ls
principal development training institution\.
46\. The rationale for IDA involvement in the project is to assist the
Zairian Government in its efforts to stimulate economic growth, promote
exports, and increase employment\. The foreign exchange resources provided
under this credit would help support the investment plans of the private
sector and facilitate the supply response from the economy to the policy
reforms already taken and to be taken shortly\. As in the past, continued
IDA support would enhance SOFIDE's capabilities to mobilize additional
foreign exchange resources from other external donors and enable it to play
a more significant role in promoting private investment in Zaire\.
Background on the Institution
47\. Objectives and Role\. SOFIDE was established as a limited
liability company in 1970 with IFC subscribing 18\.75 percent of its initial
share capital\. SOFIDE's objectives at its inception were to foster the
development of a capital market and to finance investments in the
productive sectors\. Since then, it has successfully established itself as
the main term lending institution in Zaire and has been able to attract and
retain the confidence of foreign shareholders and lenders\. The World Bank
Group's close and constant support through both financial and technical
assistance was instrumental to this achievement\. Much of SOFIDE's
investments over the past ten years have been for rehabilitation and
modernization of existing industrial capacity and for agricultural and
transport projects\. More recently, SOFIDE started to increase its
- 15 -
financing of small and medium enterprises (para\. 67)\. Virtually all of
SOFIIDEs loans and equity participations have been to privately (or private
majority) owned companies\.
48\. Performance under Previous Bank Group Projects\. Two Project
Performance Audit Reports (PPAR) covering the first three credits to SOFIDE
were prepared by OED in 1976 and in 1982\. The first PPAX concluded that
SOFIDE had succeeded in rapidly building up a competent organization and in
maintaining its independence in a difficult environment, but pointed out
that there was scope for improved performance, particularly in appraisal
and economic analysis of projects\. The second PPAR covering the second and
third credits to SOFIDE (271-CK and 463-CK) commented positively on the
institution building achievement of both projects, but noted again the
negative effects of the environment, particularly of inflation, on SOFIDE's
profitability\. It also concurred with the views of IDA staff that SOFIDE
needed to further strengthen supervision efforts and improve its
organizational structure and accounting system to better cope with the
increasing volume and diversity of operations\. SOFIDE moved rapidly to
address these issues by increasing supervision and instituting better cost
controls, by reorganizing its structure and by raising interest rates\. In
connection with the seventh credit, SOFIDE made further efforts in
improving arrears collection and its supervision procedures\. Progress to
date has been satisfactory, but much remains to be done, particularly with
regard to the arrears situation which is still above historical trends as a
result of the adverse impact of the September 1983 policy reforms on the
financial situation of SOFIDErs clients\. The proposed credit aims at
assisting SOFIDE further in this area\.
49\. As of March 31, 1986 all funds available to SOFIDE for onlending
under the on-going IDA credits have been committed\. Investment subprojects
financed by these credits were distributed as follows: 33 percent in
manufacturing (including agro-industry), 32 percent in agriculture,
forestry and livestock, 26 percent in transport, eight percent in
construction and one percent in mining\. Twenty-one percent of those
investment projects were new operations, and the rest were
rehabilitation/expansion\. They all had economic and financial rates of
return at appraisal in excess of 30 percent\. SOFIDE plans to undertake a
retrospective evaluation of its projects in operation to draw lessons for
its future lending activities\. The proposed IDA credit would help SOFIDE
in this undertaking (para\. 84)\. Results of this evaluation would also be
an input into the next Project Completion Report (PCR) planned for FY87\.
Share Capital and Ownership
50\. As of December 31, 1985, SOFIDE 's authorized share capital, all
of which was paid in, stood at Z 260\.0 million (US$4\.7 million)\. It is
held as follows: public sector shareholders (Government and the Central
Bank) 40 percent; local private shareholders 29 percent; IFC 10 percent;
and other foreign shareholders 21 percent\. In addition to its share
capital, SOFIDE has substantial long-term, low interest subordinated loans
from Government which have quasi-equity characteristics\. As of December
31, 1985 these loans, together with accumulated reserves, amounted to Z
669 million (US$12\.1 million)\. Since its establishment in 1970, three
capital increases have taken place at SOFIDE\. The last increase, which
- 16 -
occurred in September 1984, increased its loan limit (set at 20Z of
SOFIDE's equity and quasi equity) to US$3\.4 million\. The debt to equity
ratio, which improved to 3:1 after the capital increase, stood at 8\.1:1 on
December 31, 1985, but the debt to equity and quasi-equity ratio was good
at 2\.5:1 at the same date\.
Management, Organization and Staffing
51\. SOFIDE's Board consists of eleven members and is chaired by
SUFIDE's Chairman and Managing Director\. The Board meets on a quarterly
basis to discuss major policy issues and to approve loans exceeding USS1\.5
million\. SOFIDE also has an Executive Committee, composed of the locally
based directors, which meets more frequently than the Board and approves
loans below Board limits\. Both the Board and Executive Committee act in a
sound and businesslike manner\. IFC's presence on the Board is important,
as it brings to it IFC's wide experience and helps provide guidance and
oversight\. SOFIDE's Chairman and Managing Director, a Zairian national,
joined the institution in 1973\. He is capable and well respected by the
Government and business community in Zaire\.
52\. In mid 1984, SOFIDE restructured its organization in order to
relieve top management of the day-to-day administration of the institution
so that it could concentrate on policy design and strategy planning, and to
improve SOFIDE's operational efficiency\. SOFIDE's new organizational
structure is relatively simple, consisting of three Divisions responsible
for seven operational departments\. SOFIDE also has four regional offices\.
The three Divisions and the Departments reporting directly to them are (i)
Operations with responsibility for the appraisal, supervision and studies
departments; (ii) Finance and Administration which supervises both the
financial management and accounting department and the personnel and
general administration department; and (iii) General Inspection which
coordinates and supervises the regional offices, and manages the internal
audit and organization department\. Overall this structure is satisfactory\.
Decisions are made faster, there is better control of operations and the
institution is functioning smoothly\.
53\. As of December 31, 1985, SeFIDE had a total professional staff of
73, excluding the Managing Director and his expatriate advisor\. All the
staff are based in Kinshasa, except ten who run the regional offices\.
Although SOFIDE's staff is, by and large, competent and hardworking, it
includes a number of relatively new professionals who require additional
training\.
54\. During 1985, SOFIDE transferred five experienced professionals
from the Appraisal to the Supervision Department to strengthen monitoring
of its clients, many of whom were facing difficulties\. An additional four
professionals are expected to be recruited and trained in 1986, mainly for
the Supervision Department and the field offices in Goma and Kananga\.
The proposed professional staff strength of 77 will enable SOFIDE to
enhance its project monitoring activities to improve its arrears situation\.
- 17 -
Staff Training
55\. Because of the high quality of its professional staff, SOFIDE has
in fact become a recruitment source of high-level Government
officials\. Over the last three years, SOFIDE has lost several of its
experienced and senior staff who were requested to join Government
services\. As a result, SOFIDE's professional staff, particularly those at
the middle management level, are now relatively new to the job and need
additional training that SOFIDE is providing on an ad hoc basis through
in-house seminars and courses at CEPETEDE (paras\. 56 and 57) or abroad\. At
the working level, training is particularly needed for the four
professional staff appraising agricultural projects as the more experienced
ones have been transferred to supervision (para\. 54)\. SOFIDE intends to
increase training and plan the development of its staff, taking into
account the requirements and work programs of the different departments\.
It has prepared a three-year training program and has submitted it to IDA
for review during negotiations\. The program is very comprehensive and aims
at upgrading the skills of both support and professional staff to enable
them to improve their efficiency and take advantage of opportunities that
are offered in the institution\. SOFIDE has also decided to establish a
separate Human Resources Unit within the Administration Department and has
appointed an experienced unit chief to manage the training and development
program\. SOFIDE's staff training program is well conceived and would be
supported under this project which includes funds for staff training (para
84)\.
Centre de Perfectionnement aux Techniques de Dgveloppement (CEPETEDE)
56\. CEPETEDE is a management training institute set up jointly by
SOFIDE, Government, and Banque du Zaire in 1981 to train professional staff
of the public and private sectors in banking, administration, and financial
and economic analysis of projects\. It is managed by a former Director of
SOFIDETs Studies Department who is assisted by an expatriate Director of
Studies and two other expatriates financed by FAC (Fonds d'Aide et de
Coopgration)\. CEPETEDE has also three full-time Zairian counterpart staff
and recruits on a part-time basis foreign experts and professional staff
from local institutions and enterprises to run seminars in their respective
field of expertise\.
57\. CEPETEDE has performed well and has enabled SOFIDE, Government
institutions, and private enterprises to offer their staff a more
comprehensive training program than they could provide with their own
facilities and resources\. EDI has approached CEPETEDE with a view to
associating it to its training seminars in Africa\. The seventh IDA credit
to SOFIDE included US$250,000 to enable CEPETEDE to recruit experts to run
high-level seminars in project appraisal, financial management, etc\., for
executions of the public and private sectors\. As of March 1986, about 80
percent of these funds have been used and it is expected that CEPETEDE will
exhaust the balance before September 1986\. The proposed project would
continue to support CEPETEDE (paras\. 86 and 87)\.
- 18 -
Operating Policies and Procedures
58\. SOFIDE's operating and financial policies are set by the Board
and documented in a formal policy statement which was approved by IDA and
which remains a sound basis for operations under the proposed project\.
SOFIDE's promotion, appraisal, project selection, procurement, disbursement
and loan administration are adequate\. Over the past three years, SOFIDE
has considerably strengthened and improved its supervision and loan
recovery efforts, and these are also now satisfactory\.
Terms and Conditions of Lending
59\. SOFIDE's loans have maturities typically ranging from four to
twelve years, depending on the type of project being financed\. The average
loan maturity is about eight years\. SUFIDE takes adequate security and
does not accept subordination to any other lender\. It also requires that
clients satisfactorily insure equipment financed under SOFIDE loans over
the life of the loan\. SOFIDEVs interest rates are not regulated by the
central bank but set by its Board, subject to the limitations imposed by
some foreign lenders on their credit lines\.
60\. Foreign Exchange Risk Coverage\. Prior to 1979, Government bore
the foreign exchange risk on all foreign loans to SOFIDE\. In 1979,
however, Government informed SOFIDE that in future it would no longer be
willing to carry the exchange risk on the latter's foreign debt, other than
on an exceptional basis\. Since then, SOFIDE has passed on the foreign
exchange risk to its borrowers and agreed with Government on a mechanism to
protect it against the residual foreign exchange risk where repayments by
sub-borrowers are earlier than SOFIDE's repayment schedule to outside
creditors\. This arrangement has worked well and adequately protects
SOFIDE\.
61\. Interest Rates\. About 88 percent of SOFIDE's present portfolio
is denominated in foreign currency and the rest is in Zaires\. On foreign
currency loans, SOFIDE charges an interest rate of 15\.5 percent per annum,
a commitment fee of 1\.5 percent on the undisbursed committed amount and an
appraisal fee of two percent, with the full foreign exchange risk being
passed on to the clients\. Since January 1985, SOFIDE's clients are also
subject to a 18 percent tax on the interest paid (CCA sur les prestations
de service)\. This tax effectively increases the interest charges to 18\.3
percent, a very high rate given that SOFIDE's clients bear the foreign
exchange risk under a floating exchange rate system\.
62\. During the late 1970's and early 1980's, the interest rates
charged by SOFIDE on foreign currency loans were periodically increased (up
to 20 percent in 1982), and the spreads between SOFIDE's borrowing and
lending rates were also high\. The high interest rates in real terms,
however, were not sufficient to compensate for the impact of domestic
inflation on SOFIDE's costs as the exchange rate was not fully adjusted to
correct for differential inflation\. As a result, SOFIDE's profitability
was poor (negative in real terms) in spite of its general efficiency\.
- 19 -
63\. The 1983 devaluation and the adoption of a floating exchange rate
system has significantly improved SOFIDE's income from foreign currency
loans as well as its profitability and has allowed it to operate with
lower interest rates and smaller financial spreads\. Over the last two
years, the increase in iLiterest income resulting from the depreciation of
the Zaire outpaced the rise in administrative expenses and other costs and
enabled SOFIDE to show a return on average equity of 17 percent in 1985\.
Projections made on realistic assumptions regarding the level of
operations, interest rates charged, and loan collections also show that
SOFIDE would remain highly profitable in real terms during the period
1986-89 (paras\. 76 and 77)\. This will allow SOFIDE to reduce
intermediation costs and operate profitably with a 5\.5 percent spread,
which is 1\.5 percentage points lower than the spread under the seventh IDA
credit\. Therefore, SOFIDE in principle to reduce its interest rate on
foreign currency loans to 14 percent (para\. 81), a rate which is in line
with international interest rates for term credit and still highly positive
in real terms, as world inflation is expected to be between 6\.8 and 7\.2
percent over the next few years\. Further reductions of SOFIDE's interest
rate are expected in the future as its efficiency increases and a smaller
spread can ensure its continued profitability\. To encourage investment,
the Government also agreed to waive the CCA tax for borrowers who bear the
foreign exchange risk\. Submission by the Government to Zaire's legislative
of measures aiming at the suppression of the CCA tax for borrowers who bear
the foreign exchange risk would be a condition of effectiveness of this
credit\.
64\. SOFIDE 's interest rate on local currency loans is 30 percent
p\.a\. with commissions and fees similar to those on foreign exchange loans\.
This rate is positive in real terms as Zaire's inflation is projected to be
in the range of 15-20 percent in 1986-89\. It is also comparable to rates
charged by commercial banks for term credit in Zaire (para\. 43)\. However,
given Zaire's continued tight credit policy and the increasing demand for
local currency loans generated by the convertibility of the Zaire into
foreign currency, these rates, which are freely set by commercial banks
since September 1983, are expected to increase substantially\. SOFIDE will
change its rate if conditions require and keep it in line with those
charged by commercial banks\.
65\. To eLisure that SOFIDE's lending terms continue to remain
adequate, the covenant under the previous credits requiring SOFIDE to
maintain real positive interest rates on its free resources (foreign
exchange and local currency), to exchange views regularly with IDA on the
suitability of its onlending rates and to adjust them if conditions
require, would be maintained\.
- 20 -
Operacions
bb\. As of December 31, 1985, SOFIDE had approved 815 loans and equity
investments totalling Z 4\.0 billion, equivalent to about US$315 million\.
Over the past ten years, the number of SOFIDE's operations has increased
steadily (from 58 in 1981 to 76 in 1985)\. This was partly due to SOFIDE's
more active lending to SMEs (para\. 67)\. In 1985, manufacturing and
agro-industrics accounted for 47 percent ot approvals, transport 23
percent, construction and public works 12 percent and mining ten percent\.
Agriculture, livestock and forestry made up the remaining eight percent\.
The average size of SOFIDE's loans is US$435,000, or about the same level
as in the recent past\. SOFIDE has also progressively increased the
regional diversitication of its investments\. With the exception of 1984
when three large urban transportation projects in Kinshasa were approved,
loans to companies in or around the capital only represented about 25
percent of SOFIDE's approvals by amount in the 1980s, as compared to more
than 40 percent in 1978-8U\. SUFIDE's loans cover the 10 regions of Zaire
with the most active being Shaba, Bas-Zaire, Kivu and Equateur\.
SOFIDE and Small and Medium Enterprises
67\. Over the last five years, SOFIDE has increased its assistance to
small and medium enterprises (SMEs), which are for a large part owned and
managed by Zairian nationals\. During 1982-85, loans to SMEs accounted for
80 to 84 percent of approvals by number and about 50-55 percent by value\.
SOFIDE's important lending to SMEs reflects both its own conviction that a
strong SME sector is essential to Zaire's economic development, and the
availability of resources provided by several foreign lenders to be used
exclusively for financing SHEs\. However, this type of lending is costly to
SOFIDE because of the high relative cost of preparing SME projects, the
transport costs involved in supervising them, inadequate spread on SHE
financing and the high arrears rates associated with such lending\. SMEs
have also found it more difficult than larger enterprises to adjust to the
post 1983 reform period\. To help them go through this difficult transition
period, in the future, SOFIDE intends to reserve local resources to finance
SMEs as they are more vulnerable to exchange rate depreciation\. It has
also obtained technical assistance from CIDA and KfW to help defray the
costs of SHE operations and strengthen its capabilities to appraise and
monitor such operations\. Finally, SOFIDE is considering renegotiating with
some of its lenders an increase in the financial spread allowed on their
lines of credit\.
Portfolio, Arrears and Provisions
68\. As of February 28, 1986, SOFIDE had a small equity portfolio of
Z 37 million (US$0\.7 million) in fifteen companies and an outstanding loan
portfolio of Z 3,584 million (US$65million) in 334 projects\. Until the
adoption of the comprehensive stabilization package by the Zairian
Government in late 1983, SOFIP'Ds portfolio was remarkably sound,
especially considering the difficult environment in which SOFIDE and its
clients operated\. For example, total arrears of more than three months at
- 21 -
Government in late 1983, SOFIDE's portfolio was remarkably sound,
especially considering the difficult environment in which SOFIDE and its
clients operated\. For example, total arrears of more than three months at
the end of 1983, represented four percent of the outstanding loan portfolio
and affected 79 projects, the total of which accounted for 17 percent of
the value of the loan portfolio\. Given the massive devaluation of
September 1983 and the ensuing shock waves throughout Zaire's economy, it
was expected that several of SOFIDE's clients who bore the foreign exchange
risk would have difficulties honoring their debt and that special actions
would have to be agreed between SOFIDE and its clients\. Thus, under the
seventh IDA Credit, SOFIDE prepared and agreed with IDA on an Action Plan
to tackle this situation\. The Plan was detailed and listed all the actions
to be taken for each project considered risky\. Essentially, it called for
loan rescheduling and additional security to be agreed with and/or obtained
from borrowers, reduction of project scope, legal proceedings against bad
debtors, foreclosure, and sale of security in a few cases\.
69\. SOFIDE moved fast to implement this Action Plan\. During 1984,
SOFIDE rescheduled 24 loans, obtained additional security from four
borrowers, reduced the scope of four projects, reorganized two enterprises
and sold security to recover arrears from two clients\. In spite of these
measures, however, arrears of over three months climbed to 17 percent of
the portfolio and affected projects representing 62 percent of total loan
portfolio by May 1985\. Since then, SOFIDE took the following additional
measures to improve the quality of its portfolio: (i) loan rescheduling for
13 borrowers with repayment periods extended from 12 months to four years;
(ii) establishment of a new schedule for payment of interest arrears for 15
clients by use of promissory notes (payable over three to nine months) with
instructions to banks to honor SOFIDE's notes in priority; (iii) reporting
of eight bad debtors to the central bank to prevent them from receiving
bank credit\. Two such clients have since made partial payments; (iv)
threat of legal action for 18 clients and legal action for six more; and
(v) foreclosure of eight projects, two of which have been suspended pending
fulfillment of their promises to pay\.
70\. These actions have already started to show their positive impact
on SOFIDE's portfolio as arrears of over three months fell, at the end of
February 1986, to 11 percent and affected 134 projects representing 33
percent of the loan portfolio\. As noted earlier, SOFIDE also transferred
five experienced professionals to the Supervision Department which now has
14 professionals working full time on the arrears problem\. Finally, SOFIDE
increased provisions to a level of 12 percent of portfolio at the end of
December 1985\. In absolute terms, these provisions amounted to Z 331
million (US$6\.0 million) and represented 84 percent of total arrears of
more than three months at the end of February 1986\. Under the previous IDA
credits, SOFIDE agreed not to distribute any dividends until the amount of
general and specific provisions for risk constituted at least four percent
of the total outstanding loan and equity portfolio\. This covenant will be
maintained under this project\.
71\. SOPIDE's efforts are commendable\. However further actions are
required as the level of arrears is still high by SOFIDE's standards and a
major objective of this project is to continue supporting SOFIDE in its
effort to improve its portfolio\. The techn'cal assistance to be provided
- 22 -
under this proj ect is designed to help SOFIDE recruit short-term local and
foreign experts to assist clients in improving the viability of their
operations and undertake special audits and management reviews of some of
its important existing and prospective borrowers (para\. 84)\. During
implementation of this operation, IDA will also closely monitor SOFIDE's
progress in improving the quality of its portfolio\. To this end, the
following actions and quantitative targets have been agreed with SOFIDE:
(a) SOFIDE will continue to implement the Action Plan prepared
with IDA to deal with its portfoliio problems\. This Plan
has been updated to include specific measures envisaged for
all loans with arrears exceeding Z 1\.0 million (US$18,000)
at the end of February 1986, and targets for quarterly
collection ratios (defined as all amounts collected during
the quarter, including collection of arrears, over new
billings during the same quarter, including collection of
arrears, over new billings during the same querter) for CY
1986 increas:ng gradually from an average of 71 percent in
1985 to 95 percent in the last quarter of 1986\.
Thereafter, quarterly collection ratios will be agreed with
IDA depending on the results achieved; and
(b) as part of its reporting requirements, every quarter SOFIDE
will submit to IDA a note showing (i) the collection ratio
targeted and the result obtained; (ii) the measures taken;
(iii) the arrears situation at the end of the quarter, and
(iv) the collection ratio target and measures proposed for
the next quarter\.
Financial Results and Condition
72\. SOFIDE's financial statements reflect the changes that the
economy underwent in late 1983\. After an exceptional performance in that
year, mainly due to a US$0\.9 million windfall foreign exchange gain arising
from the devaluation, SOFIDE's return on average assets and on average
equity declined in 1984 because of the major equity increase at the end of
year\. In 1985, SOFIDE made a net profit of US$0\.85 million up only
marginally from US$0\.7 million of 1984, because of very high provisions
(Z 215 million, or US$3\.9 million in 1985)\. On an accrual basis, profits
before provisions increased from US$3\.2 million in 1984 to US$4\.7 million
in 1985\. Total income went up from 17\.8 percent of average total assets in
1984 to 20\.1 in 1985, but record provisions (up from 6\.3 to 8\.2 percent of
average assets) combined with an increase in interest payments (from 4\.5
percent to 5\.8 percent) left net profit at about the same level as in 1984
(1\.8 percent of average total assets)\.
73\. On a cash basis, SOFIDEts performance was less satisfactory
because of its arrears position (paras\. 68 to 71)\. The collection ratio,
which had fallen to 62 percent in 1984, improved to 71 percent in 1985, but
was still short of the 100 percent needed to stabilize the absolute amount
of arrears in the portfolio\. Despite this, SOFIDE's liquidity position is
good because most of its debts are of much longer duration than its loans\.
- 23 -
Lending Resources
74\. As of the end of December 1985, SOFIDE had the equivalent of
US$50\.2 million available for commitments and US$31\.4 million for
approvals, of which US$28\.3 million in foreign exchange\. Seventy-six
percent, or US$21\.5 million, of SOFIDE's foreign resources available for
new approvals is accounted for by recent loans from the African Development
Fund (US$12\.1 million), Canada (CIDA, US$2\.0 million) and the EIB (US$7\.4
million) which are intended to finance fertilizers and trucks for farmers,
SME projects in the Kivu region, and the second phase of the Shaba Cement
factory, respectively\. Only US$6\.8 million of SOFIDETs foreign resources
were therefore available for untied loans\.
Prospects
75\. SOFIDE's operations forecast is based on a strong pipeline which,
as at September 30, 1985, includes requests totalling US$120 million to
finance 54 percent of the costs of 168 projects in manufaLturing,
agro-industry, agriculture (including forestry and livestock), transport,
and mining\. Seventy-five percent of these requests are for
rehabilitation/expansion and the rest are new operations\. Thirty nine
percent of the amount requested is from firms based in Kinshasa\. Small
enterprises account for 40 percent of the number and 15 percent of the
amount of loan requests\. Loan approvals for 1986-1989 are expected to grow
about five percent p\.a\. in real terms\. Commitments and disbursements for
1986-1989 are expected to follow the pace of project approval and win grow
from US$35\.5 million to US$47\.3 million and from US$34\.3 million to US$41\.9
million, respectively\. The projections and underlying assumptions are
realistic, given SOFIDE's past growth in operations, increasing demand for
investment credit in Zaire, and projected resource availability\.
Projected Financial Performance
76\. SOFIDE's financial projections for 1986-89 assume a decrease in
SOFIDE's lending rate for new foreign currency loans from 15\.5 to 14
percent per annum\. Despite this reduction, interest and commission income
is expected to outpace the growth in financial and administrative expenses
(due primarily to anticipated continued depreciation of the Zaire), so that
SOFIDE can maintain provisions at least at 12 percent of its loan
portfolio, the level reached in 1985, and still earn a satisfactory return
on its average equity\. Net income is projected to grow from about US$2\.6
million in 1986 to US$5\.9 million in 1989 when it is expected to represent
about 44 percent of average equity, as compared to 12-17 percent in
1981-85\.
77\. The projections show that SOFIDE's financial structure will
remain sound, with the debt to equity and quasi-equity ratio ranging from
3\.3 in 1986 to 4\.4 in 1989, thus remaining within the prudent 5:1 limit
agreed with IDA\. This limit will be maintained under this proposed
operation\. SOFIDE's asset/liability maturity structure is also expected to
- 24 -
retain its present characteristics (i\.e\. loan assets having a much shorter
maturity than debt liabilities), and would allow it to maintain a
satisfactory liquidity position while dealing with any problems in its
portfolio\.
Description of the Proposed IDA Credit
78\. The proposed IDA Credit of SDR 43\.3 million (about US$50\.0
million equivalent) would be made to the Republic of Zaire, which would
onlend SDR 42\.9 million about (US$49\.5 million equivalent) to SOFIDE under
a Subsidiary Loan Agreement satisfactory to IDA, the signing of which would
be a condition of credit effectiveness, and would pass on SDR 433,000
(about USS0\.5 million equivalent) to CEPETEDE as a grant\. The credit would
include the following components:
(a) Investment component (SDR 42\.3 million) to finance the foreign
exchange costs of SOFIDE's subprojects;
(b) Technical Assistance to SOFIDE (SDR 567,000) to finance the total
cost of local and foreign experts to strengthen SOFIDE's
appraisal and loan collectin capabilities, the training of SOFIDE
staff, and the purchase of about SDR 87,000 of data processing
equipment;
Cc) Technical Assistance to CEPETEDE (SDR 433,000) to finance the
total cost of local and foreign experts to run high-level courses
in project appraisal and related subjects, and the purchase of a
limited amount of equipment (SDR 87,000 maximum, mainly for data
processing)\.
The Proposed Investment Component
79\. This component would finance the foreign exchange costs of
capital investment, including initial working capital, in subprojects
approved by SOFIDE\. All projects that are within SOFIDE's scope of
operations would be eligible, provided they are selected by SOFIDE in
accordance with its investment strategy and justified on the basis of a
full economic analysis, including calculation of an economic rate of return
for all non-service sector projects\.
80\. Government Onlending Terms\. Consistent with the Bank Group
policy for IDF operations, IDA funds would be passed on by Government to
SOFIDE at 8\.5 percent (IBRD's interest rate prevailing at the time of
distribution of the credit documents to the Executive Directors), with a
flexible amortization schedule that would substantially conform to the
aggregate of the amortization schedules of subloans made by SOFIDE and
financed under this project (subject to a maximum term of 15 years,
including a grace period not exceeding three years)\. In addition, SOFIDE
would pay to Government a commitment fee of 0\.75 percent per annum on the
undisbursed amounts of sub-loans from the date of their commitment\.
25 -
81\. SOFIDE T' Lending Terms\. SOFIDE would lend to subborrowers at an
annual interest rate of 14 percent\. This rate would yield a spread for
SOFIDE of about 5\.5 percent, which would be adequate to cover administative
administrative costs, make adequate provisions and allow for satisfactory
profitability\. SOFIDE's interest rate would be reviewed with IDA at least
once a year and adjusted if necessary to ensure its adequacy and
competitiveness compared to alternative sources of finance\. The foreign
exchange risk would be borne by SOFIDE 'S subborrowers\.
82\. Free Limit\. The individual subproject free limit would be
US$500,000 equivalent as under the seventh IDA credit\. The aggregate free
limit would be US$17 million equivalent, or 35 percent of the total amount
of the line of credit\. With this free limit, it is estimated that about 20
subprojects would require IDA review prior to approval\. This is sufficient
for the purpose of effective subproject monitoring by IDA\.
83\. Commitment Period\. The funds would be available for commitment
by SOFIDE until June 30, 1989\.
Technical Assistance to SOFIDE
84\. The SDR 567,000 million provided under this component would be
made available to SOFIDE to finance (i) short-term local and foreign
experts (management consultants, engineers, agronomists, etc\.) to more
effectively assist clients in difficulty in improving the viability of
their operations; (ii) consultants to help appraise large and complex
projects and conduct a post evaluation of its on-going operations; (iii)
special audits and management reviews of some of its important existing and
prospective borrowers; (iv) the training of its staff in Zaire and abroad;
and (v) computer equipment to improve its information processing system
(about SDR 87,000)\.
85\. Terms and Conditions\. Funds under this component would be onlent
from Government to SOFIDE at the same rate as the investment component (8\.5
percent per annum) and would have a fixed amortization schedule of 15 years
including a grace period of three years\. The foreign exchange risk would
be borne by SOFIDE\. The funds would be available for commitment until June
30, 1989\. Each request for financing would be submitted to IDA for review
and approval along with a brief justification and cost estimates\.
Technical Assistance to CEPETEDE
86\. The SDR 433,000 provided under this component amount to about a
third ot CEPETEDE's budget during 1986-89 and wou'd enable it to (i)
finance local and foreign experts to run high-level courses in project
appraisal, financial and portfolio management, accounting and related
topics for officials and executives of the public and private sectors; and
(ii) purchase a limited amount of training materials and equipment (data
processing and related equipment and pedagogical material)\.
- 26 -
87\. Terms and Conditions\. Funds allocated for this component would
be passed on as grant from Government to CEPETEDE and would be available
for commitment until June 30, 1989\. Each request for financing would be
submitted to IDA for review and approval along with a brief description of
the course and the qualifications of the experts\. To facilitate
administration of the component, SOFIDE has agreed to manage it on behalf
of CEPETEDE and to submit disbursement requests to IDA\. SOFIDE would
receive, as an administrative fee, a commission of 3\.5 percent of the
amount available under the component\. Such fee would be paid in three
equal yearly tranches of SDR 5,000 out of the Special Account (para\. 93)\.
The first tranche would be paid on the effectiveness date of this Credit\.
Total Project Cost and Financing
88\. SOFIDE's subloan commitments during the period January 1986 to
June 1989 are estimated at US$139\.1 million, of which US$103\.0 million
would be in foreign exchange\. The investment component of the proposed
project (US$48\.8 million) would cover about 47 percent of the foreign
exchange needs and the remainder would be secured from other sources:
Canada (CIDA), Federal Republic of Germany (KfW), EIB and ADB\. Assuming
that SOFIDE would finance, as in the past, about 55 percent of the total
investment costs, the US$139\.1 million forecast commitments would result in
about US$253 million in total investments\.
89\. The financing plan of SOFIDE's operations and for the technical
assistance provided under this project would be as follows:
Financing Plan
January 1986-June 1989
(USs million equivalent)
Local Foreign Total
SOFIDE's Subloan Commitments 36\.1 103\.0 139\.1
Technical Assistance 0\.3 0\.9 1\.2
Total Financing Required 36\.4 103\.9 140\.3
Financing Plan
SOFIDE: Resources Available for
Commitment as of January 1986 3\.5 46\.7 50\.2
SOFIDE: Cash Generation 32\.6 - 32\.6
Proposed IDA Credit 0\.3 49\.7 50\.0
Other Possible Lenders (Kfw, EIB, ADB) - 7\.5 7\.5
Total 36\.4 103\.9 140\.3
- 27 -
Project Implementation
90\. Procurement and Disbursement\. Procurement for subprojects
financed under the investment component of the credit, as well as goods
financed under the SOFIDE and CEPETEDE technical assistance components,
would be on the basis of competitive quotations from at least three
different suppliers (including foreign), a procedure acceptable to IDA
which has worked well under previous IDA credits to SOFIDE\. Given the
relatively modest size of procurement packages, there is little scope for
international competitive bidding\. Selection of consultants would be made
in accordance with Bank Group Guidelines\.
91\. The proceeds of the proposed credit would be disbursed as
follows:
(a) on the SOFIDE and CEPETEDE technical assistance components: (i) 100
percent of the cost of consultants and training; and (ii) 100 percent
of the foreign exchange cost of equipment and supplies bought by
SOFIDE and CEPETEDE;
(b) on SOFIDE subloans: (i) 100 percent of the c\.i\.f\. cost of goods and
services; (ii) 80 percent of the cost of previously imported
equipment purchased in Zaire and of equipment produced in Zaire from
previously imported components and raw materials; and (iii) 55
percent of the cost of construction works included in subprojects and
carried out by locally-based contractors\.
92\. The projected disbursement schedule is based on the disbursement
profile for DFC projects in Eastern and Southern Africa\. Disbursements are
expected to be completed over eight years, by December 31, 1994\.
93\. Special Account\. As under the sixth and seventh IDA credits, to
expedite disbursement of funds, a Special Account would be set up at a
financial institution acceptable to IDA into which IDA would make an
initial deposit of US$2\.1 million equivalent from the proposed credit
immediately after credit effectiveness\. This amount represents an
estimated average disbursement of funds over a four-month period\. The
Special Account would be used to finance all subproject component
expenditures under $25,000\. Replenishment of the Special Account for these
items would be made on the basis of Statements of Expenditures (SOEs)\. The
documentation for withdrawals made under SOEs would be retained by SOFIDE
for ten years and would be reviewed by supervision missions\. The Special
Account could also be used to finance expenditures for the technical
assistance components and subproject component expenditures in excess of
$25,000\. Replenishment of the Special Account for these items would be
made on the basis of fully documented applications\. Applications for
replenishment of the Special Account for a minimum of $100,000 would be
submitted on a monthly basis or whenever funds are below $1 million\. The
Special Account would be audited annually by independent auditors and the
audit reports would be submitted to IDA within six months of the end of
each fiscal year\.
- 28 -
94\. Audits and Reporting\. Since its inception, the Brussels-based
firm of Berger, Block, Kirechen and Schellekens and Co\. has audited
SOFIDE's accounts\. The quality of the audits has been satisfactory and in
line with IDA's requirements\. As under previous IDA projects, SOFIDE would
continue to have its accounts and financial statements, as well as the
Special Account and SOEs (para\. 93), and the account of the CEPETEDE
component that it has agreed to manage, audited by independent audltors
acceptable to IDA and would furnish to IDA certified copies of its audited
financial statements and its annual reports within six months of the end of
each fiscal year\. SOFIDE would also submit to IDA quarterly reports, which
would include, inter alia, financial statements, resource position,
statement of arrears, loan collection targets and results obtained and
measures taken to improve the arrears situation\.
Project Benefits and Risks
95\. The proposed project would provide term resources to the
productive sectors in Zaire to rehabilitate industrial and agro-industrial
enterprises, develop manufactured exports, improve transport facilities and
increase agricultural production\. It would thus help accelerate growth and
increase employment in Zaire and would complement the positive impact of
the policy reforms already taken or to be taken with the support of the
Industrial Sector Adjustment Credit\. The investment component of US$48\.8
million is expected to support productive investments totalling about US$90
million and would help rehabilitate or improve production capacity of a
much higher value\. As in the past, subprojects financed are expected to
show high economic and financial rates of return (para\. 49)\. The project
would also enable IDA to continue helping SOFIDE, the main term lending
institution in Zaire, to increase its effectiveness and institu\.-ional
strength\. The action program for portfolio improvement and monitoring
would enable IDA to assist SOFIDE in improving its loan collection and
arrears situation\. As in the past, continued IDA support would enhance
SOFIDE's capability to mobilize additional foreign exchange resources from
other lenders and enable it to play a more significant role in assisting
the recovery of the Zaire's productive sectors\.
96\. There are two risks in this project\. The first risk relates to
the possible deterioration of Zaire's economic situation which would, inter
alia, accelerate the depreciation of the Zaire currency and make SOFIDE's
foreign exchange loans unattractive to potential investors who have to bear
the foreign exchange risk\. Such a risk is, however, limited in view of
Zaire's continued compliance with the IMF stabilization program and the
actions envisaged by IDA and other donors to increase the resource transfer
and accelerate economic growth in Zaire\. The second risk is the possible
deterioration of SOFIDE's arrears position\. This risk is also 14mi\.ted
because of the strong action SOFIDE has already taken to 4mnrnve loon
collection and the additional measures proposed in the context of this
project to improve the quality of the portfolio\. These should insure that
SOFIDE will remain an effective term lending institution that promotes
economically justified investment projects\.
- 29 -
PART V - RECOMMENDATION
97\. I am satisfied that the proposed credit would comply with the
Articles of Agreement of the Association and recommend that the Executive
Directors approve the proposed credit\.
A\.W\. Clausen
President
Attachments
April 10, 1986
Washington, D\.C\.
ANNEX I
-30 - Page I of 6
A 8 L a 34
lain!R - OcIAL tIUlCAIdhS DATA SOUR
EARa nEiPRHia Gwns (SIlmTED AWAASS 4±
9WNC (lUST UZWT 1ST MATC) lb
1wet iioL flU? 3\. n As an co latut
EMTUIATVL SOOTH or SAHARA AuRICA S\. uV SAHARA
AMA iToms m\. a)
TOTAL 2343\.4 2343\.4 2343\.4
0A1003\.155 14&\.4 151\.2 1334\.
cr C) \. \. 110\. 23\. 1063\.5
(MLffANS OP OIL ,OIIIVAL5) 63\.0 5D\.0 52\.0 62\.3 531\.3
anAT mIsD VwIM ATISTIS
eULATON\.m-uTIaR CThMSS 17756\.0 2143B\.0 297LO
gIUm OPLTIOUl (3 or TOTAL) 15\.7 21\.G 38\.0 20\.1 32\.0
PUUATlOI PWOECFIulHS
PwUflowl IN IR20w0 (lULL) 46\.9
STATIOSAI PPULATIWN (MILL) 145\.0
roWUIATION RmnM 1\.1
POPUIATION NIm
PR sq\. m\. 7\.6 9\.2 12\.7 33\.2 05\.1
E SQ\. U\. AGRI\. LAND 121\.3 143\.1 184\.2 112\.5 124\.6
POPUZATION AGE STEICTURr CE)
0-14 RS 44\.1 44\.2 45\.4 44\.0 43\.6
13-4 Tis 52\.8 32\.9 Sl\.2 50\.8 31\.3
6S Mo0 AROSE 2\.9 2\.8 3\.2 2\.9 2\.7
POPULATION GRO1 ATE (l)
TOTAL 2\.2 2\.0 2\.4 2\.8 2\.,
MtA \. 3\.2 1\.6 6\.4 5\.1
CRUE 51311 RtATE (PER TSOPS) 48\.1 47\.8 46\.0 47\.2 67\.0
CX UDEATH RATE (ME TSOUlS) 24\.3 20\.6 15\.5 17\.3 15\.0
GROS RCPRODTON NATE 2\.9 3\.0 3\.1 3\.3 3\.2
FAIILY PLANNING
ACCISO0S\. AIL (T1015) \. \. \.
US ( O AIED ON) \. \. 3\.0 3\.3 6\.4
INDE F or0F £300\. VER CAPITA
(1969-71-100) 101\.0 101\.0 33\.0 83\.3 U2\.9
P CAPITA SUPPLY OF
CALWISS CZ OF UPIRUINESES) 9\.O IOLO 102\.0 S7\.7 9b\.S
pbndIlS tAMS PE DAY) 34\.0 3S\.0 35\.0 51\.9 S5\.4
OF WICH MAIAL AND PULSE 13\.0 13\.0 10\.0 Ic 1L\.7 16\.3
OIIID CAfS 1-4) DEATH RATE 32\.8 27\.2 20\.0 23\.1 16\.6
SR,
LIF urter\. AT EITS1 (TEa) 42\.9 45\.3 50\.7 47\.s 52\.0
INFANT 11\. RATE (ICIm TallUs) 150\.0 132\.0 106\.0 119\.5 luS\.6
ACMSS TO SAFE WATER ZFlOP)
TOAL \. 11\.0 17\.9 27\.1 42\.4
URA \. 33\.0 40\.0 43\.5 *7\.3
lintL \. 4\.0 5\.0 19\.3 33\.8
ACCSS TO a2031A DISPOSAL
(I or POPULUTIOIl)
TOTJAL \. \.0 \. 26\.5 28\.9
CRAM \. 5\.0 \. 65\.4 57\.7
RIUAL 3\.0 20\.5 20\.7
POPMATION PER PhYSICIAN 79620\.0 30140\.0 13940\.0 Id 27901\.7 11791\.7
POP\. PER NURSING PERSON 3310\.0 2290\.0 3610\.0 T; 3305\.4 2439\.5
cro\. PER HOSPITAL mm
TOTAL 230\.0 320\.0 330\.0 Id 1273\.b 951\.I
URBAN 60\.0 100\.0 I30\.0 7; 428\.2 368\.8
RURAL 710\.0 1070\.0 2330\.0 r 3292\.3 4371\.9
Al*ISSIONS PE HOSPITAL n \. \. \. \. 27\.2
3050
AVERSE SULE OF HOUSUOD
TOTAL \. \.
naRBl \. 4\.3
RRL \. \.
AVERA NO\. OF PE3SONSI/RWI
ToTAL \. \.
URaLt \. \.
RURL \. \.
PERCENTS OF DUCLLINGS WITM CLECT\.
TOTAL \. \.
0U \. \.R
RURAL \. \.
ANNEX I
- 31- Page 2 of 6
, * L L 34
ZAIRI - SOCtAL INDICATORS DATA SNfET
ZAIRF\. REFERENCE COUPS (WEIGiITED AwERAIEb) I
POST (NDST StCfJT ESTN4AIL) lb
RECENT tL lNlCOPl AFRICA MIDDLE IsNCmE
19tnLo 1970L E5fDIATE,?\. SOUTH OF SARA AFRICA S\. 0f SAIARA
ADJIUS ENROLlMENT RATIOS
PRINAI TOTAL 60\.0 66\.0 90\.O/s 67\.8 vs\.7
tm U \.0 110\.0 104\.0 7 77\.6 1 o
FMLE 32\.0 66\.0 75s\.0 i 54\.9 u3\.2
SaCONDun TOTAL 3\.0 9\.n 23\.0 to 13\.5 17\.3
maLE 4\.0 13\.0 33\.0 o7 17\.9 235\.0
iDea! 3\.0 4\.0 13\.0 77 9\.1 14\.6
VUCATIONAL (2 or SEWNUMR) 26\.S 9\.6 10\.0 IC 13\.2 5\.9
PUPlL-TEAC31E RATIO
PRIMA" 40\.0 43\.0 3u\.U Id '4\.9 43\.1
SEcONR 2Zt0 200 21\.0 /d 27\.4 25\.w
PASSENCER CAISITHOU5ANU POP 2\.5 3\.0 3\.8 20\.8
RADIO RECIVERS/THOUSAND POP \. 29\.1 66\.8 55\.6 107\.b
TV RECEEVERS/TNoUSAD POP 0\.3 0\.4 /f 2\.6 20\.6
NEWSPAPER MDAILY GIEERAL
INTUEST") CIOILATION
PER mIOUSAeD POPIil&ATON 1\.2 9\.2 1\.S 5\.0 16\.4
CINCIA AMNUAL ATTENDANCE/CAPITA 0\.1 0\.1 0\. 0\.4
LAIKF POIIC
TOTAL LAWR FORCE (TViOS) 6216\.0 9465\.0 12616\.0
fEMALE (PERCElr) 46\.4 64\.5 42\.2 34\.2 36\.2
ACRICJLIURLE (PERCENT) 63\.0 79\.0 75\.0 If 77\.5 54\.3
INDUSTRY (PERCENT) 90 11\.0 13\.0 7f 9\.7 16\.3
PARTICIPATION RATE (PERCENT)
TOTAL 46\.3 43\.7 39\.9 39\.3 36\.6
KALE 31\.9 49\.6 47\.3 50\.9 47\.1
VEKAL! 41\.2 38\.0 33\.4 28\.1 27\.2
ECONMC DEPZENNCY RUTIO 1\.0 1\.1 1\.2 1\.3 1\.3
tDCIN DESZRTIU
PERCENT OF PRIVATE INw
RECEVED BT
HIGHEST 5 OF HOUSEHOLDS
RICHEST 202 OF HOF3SEOLDS \.
LOJEST 20Z201 NOUfSEIOLDS \.
LOWEST 202 OF HOUSENOLDS \.
LOvr T mar ms
ESTDIATED ABSOLUTE POVERTY INCOME
LEVEL (USS PER CAPlTA)
URBAN \. \. \. 165\.5 590\.7
RURAL \. \. \. 93\.0 275\.3
ESTIMATED RLATIVE POVERTY INCOME
LZVIL (OS$ PE CAPITA)
03BAN \. \. \. 113\.1 455\.6
RURAL \. \. 43\.0 1 67\.6 201\.1
ESTIlATED POP\. bELIN ABSOLUTE
POVERTY INCOM LVML ()
URBN \. \. \. 36\.6
RURAL \. \. \. 61\.6
rOT AVAILALE
lOT APPLICAILE
Pi o T F S
/a The group averages for each indicator are populatioa-walgted artltetiC Means\. CoVerAge of csoetries
anong the Indicators depends on availability of data and is not udifor\.
/b Unless othewise noted, "Data for 1960 refer to any year beteen 1953 and 1961; "'Dts for 1970\. bebdeen
1969 and 1971; and deta for "Moet Recent Estiute" betmen 1961 and 1983\.
Ic 1977; /d 1979; /I 1978; /f 19W0\.
JUNE, 1985
-32 ANNEX I
Papa ' nf fS
DnUanoNs OF SOCIAL NDCATORSM
m: Alho\.m tlie dsuro dOmna_ y pd the mtt aoluwe sa mable, a sd \. he e tha they ay te ntemtimily
campwlek bha \.o ot lat of s ddduitiooa mad _mm mO by dillaut mt,,\.an in amith th da The dat am, 0mue \. uf to
oiaebte mim of dmpie\. adm usa\.d acieum stan -n dilirsam bhen\. cmamm
The u mr gup aim (1) the sua eamy pum of tw subjct owutry a_d (2) a amintly pomp with somewhal awi & in tat the cownny
pdbp of the l messy (amp\. fetK mH Oil Ehpinrtapo wham ihddlIhNcoe thAfoi Mudnte M an ichosenra d arse of mro
_scocitl Smit\. lathe ise pr Sa the avxua g \.ai popuon sweighed dathmatic urns zfa d m and o ey whenmjoity
dtewcatm ma *pomp adata h idb h _or\. Siathe co cou _ ua te inditeimdend\.on the alahily odar ad snot miror
_mim mu be eacud wa imlatim - iditer le11toanothe\. sawn,f el ulo \. m ag the vaue dne mdu r at am am g
d catry and m m waup\.
AREA (thousnd sq\.km\.) Crud Bit Act (p\. thussndJ-Number oflive births in the ycar
Total-Total surface aru compri-sig sand - end inland waters; per thousand of nid-year population; 1960\. 1970\. and 1983 dats
1960\. 1970 and 1983 dats\. Cude Deao Rae (per thoueand)-Number of deths in the year
_uIea -Estimate or agriculturt t c- usd temporarily or per thousnd of nmd-year population; 1960\. 1970\. and 19K3 data\.
permanently for crops, pastures\. markact and kitchen prdens or to GrC Reptfehde Nra--Average number of daughters a wom n
lie falow, 1960\. 1970 and 1982 data will bear in her normal reproductiv period if she expenences
presen *age-specific fertility rates usually five-year averages ending
GNP PER CAPfTA (USS)-GNP per capta estimates at current in 1960\. 1970, and 1913
market pries, calculated by sane cceusion method as World Fondly PSeiq-AccQpUors, Aral fvhomzdfl-Annual n-
Rat Adsu (1981-83 basis); 1983 data ber ofacceptors of birth-control devices under auspices of national
ENERGY CONSUMPTION PER CAPITA-Annual apparent fanily plnning program\.
consumption of commercial primarn t energy (coal and lignit\. Fdly fhwnaiMrV (percent of arried nse-Thc pren-
petroleum, natural gas and bydro- c\.n1inr and geothermal lec- tae of married womn or child-bearing age who m praticing or
tncity) in kilograms of oil equivalent t er capita; 1960\. 1970\. and whose husbane are practicing any form of contraception\. Women
1982 data, of child-bearing age are generally women aged 15-49\. although for
some countries contraeptive usage is measured for other age
POPUlATION AND VITAL STAII5TIC5 groups\.
TsiftpwIaioa, Mid-19er (sta- -As of July 1; 1960,1970, FOOD AND NURMON
and 1913 data\.
WArn tp\.lueu (ercen f aeds--Ravioof uran t tota Indx of Feed Prodacnian Per Capita 1 7969-71 - 100)-Index of per
L4*m Populdifferent no o - of umnan as urbesn to total capita annual production of all food commodities\. Production
population, data emt detiountries; of u 1970a a 1983 data compar- xexdudes animIal feed and seed for agriculture Food comnmodities
ability of data among countries; 1960 - 1970\. and 1983 data\. include primary commodities (e\.g sugrcaone instead of sugar)
Peparea ?reeeiens which are edible and contain nutrients (e\.g\. coffee and tea are
Pbpulasmin pyear 2000-Tbe prnoj ac of population for 2000\. exduded): they comprise cereals, root crops\. pulses, oil seeds\.
made for each economy separately\. Sira-tng with information on vegetables, fruits, nuts\. sugarcane and sugar beets livestock, and
total population by age and sex\. fert rtes, mortality rates, and livestock products\. Aggrete production of each country is based
international miigrtion in the base var 1980\. these parameters on national average producer price weights; 1961-65 1970, and
were projted at fnie-year intervals o-o the basis of genralzed 1982 data\.
assumptions until tbe population h stationary\. Pr C\.;a Sspply of Calefs te eerce, efnqEjeaeta)-4Compuv-
Statonery popula&ion,-s one in wbnz age- and sx-specific mor- ed from calorie equivalent of net food supplies available in country
talty rates have not changed over a boEng period while age-speific per capita per day\. Available supplies comprise domestic produc-
fertility rates have simultaneousy reeued at rplacement levl tion\. imports less exports, and changes in stock\. Net supplies
(net rproduction rae- 1)\. In such a a-population, the birth rate is exclude animal feed, seeds for use in agricultur quantities used in
constant and equal to the death rs e, the agc structure is also food processing, and losses in distribution\. Requirements werc
constant, and the growth rate is zv a The stationary population estimated by FAO bused on physiological needs for normal activity
size was estimated on the basis of the trpojoetd characteristic of and bealth considering environmental temperature\. body weights
the population in the year 2000\. and ds rte of dedine of fertility age and se distribution of population, and allowing 10 percent for
rate to replaement level, waste at household levd; 1961\. 1970 and 1982 data\.
Pbp&nion Monemanu-ls the tkodtcr for populatior growth to Per CApta Spply of Pein (gram per day)-Protein content of
continue beyond the time that repiaciet-level fertility has been per capita net supply of food per day\. Net supply of food is defined
acheved; that is\. ev after the net mrcduction rate has reached as above\. Requirements for all countries established by USDA
unity\. The momentum of a populabt mm the year r is mnasured as provide for minimum allowances of 60 grams of total protein per
a ratio of tbe ultimate stationary popquiation to the population in day and 20 grams of animal and pulse protein, of wbich 10 grams
the year :\. given the assumption thax it ienility remains at replace- should be aninml protein\. These standards\.are lower than those of
ment klvel from year t onward\. 1985 caW 75 grams of total protein and 23 grams of animal protein as an
Ppgw\. DJr)y average for tde vworld proposed by FAO in the Third World Food
Per sqkm-Mid-ycar population per r square kilometer (100 bec- Supply; 1961\. 1970 and 1982 data\.
tarns) of total area; 1960\. 1970\. and 1-!9 Z-data\. Per Capita Protein Supply Frm AhislmdPudhse-iProtein supply
Per sq\.km\. agricsltural hnd-Comptuamnr as above for agricultural of food derived from animals and pulses in grams per day: 1961 -65\.
blnd only\. 1960 1970, and 1982 data 1970 and 1977 data\.
Ptp\.ldo Age Str e fperceatrj---Children (0-14 years)\. work- CAd (irs 14) Deth Rate (per thous\.ad)-Number of deaths of
ing age (I5-64 years)\. and retired (65 'tan ad over) as percentage children aged 1-4 years per thousand children in the same age
of mid-year population; 1960\. 1970\. ac 1983 data\. group in a given year For most deveoping countries data derived
Ptpmlwi\.n Growrh Rate (perceabtk-aaL-Annual growth rates of from life tables\. 1960\. 1970 and 1983 data\.
total nid-year population for 1950-6s\. -\. 1960-70\. ad 1970-83\. HEALTH
Popaion Growh Rate Annual growth rates Le Expectaacy Bir (yearts-Number of years a newborn
of urban population for 190-60\. 190-Z-70\. and 1970-83 data\. infant would live if prevailing patterns of mortality for all people
* 33 -ANNEX I
- ePgCe 4 of 6
ahe dom ofof di bith wi to say tbc tsame throut is fife; Aup-tacr JRlwo - pLu\. id mmader)-Total studen en-
I1& 1970 \.d 1983 data\. roled in pnnmry and mooday leves divided by numbm or
&AM AmeWpy Am (P\.r tiunof)-Nmber of infants who die teahers in the owresponding kvdel
before rueiugme year of e per thoam live irth in a given
yer, 1960 1970 and 1933 deat CONSGUMla ON
_ t 5 WW (pwe of 11196 w_11, Md Pneq\. Cmx fpr av P lo \. se cars corn-
mm&-Number or people (total wran\. and nrual) _esoa prie motor cms eng less 1tan ight persons; xcluds armbul\.
amm to ask wate sup ncludes utd uface was or ancs, bams ad miitary vehies\.
_ao u misotemntdae _ tbs ft,prucil t Xd
borehodlet tmingsaad \. tuydWas puhanus ot t erit pet DAA\. ReeIer (p\.r thoseudpopoWm_ -AlU types of receivers
poph \.osprigs Midrban mmiar a pub)c5fomtai5 ort dpost for adio broadcasts to general puilic per thousnd of population;
dye popolatiom\. In an tirbiti ble Or tUbbe flisitam ID exicludes un-liced rceivers in countries and in yeas when
heajad sot mom than 200 meters from a hous may be cegiiteatdon ofradio set was in deffct data for recent yet -may
ec biag within reasonable acces or that houe\. In ruralm areeasraL ic ms onrmaose lcnig
_msownet access would iompl that the housewife or m nmot countries aohed licensing\.
boueiho- do no have to *pnd a disproportionate pat of the day TVRecEIs (e Vd(t? t d )-TV receivets for broadcast
a ftcig th i w to geea public per thousnd population; excludes unlicensed TV
rcdven in countins and in yeas wben rgstrbon of TV se was
Awamsr Emwea mupesa (pnwct #fp&pmlsAw\.u-tavtal w6w\. inelc\.
ad rmmi-Number of people (totaL urba and rural) served by da
aac disposal a pe retags of dheir respective popuont\. Akw4vqw Gndssi (per sthassesipoIari)-Shows the aver-
Exert diposl may incude the colbction nd disposL ,wth or ag drwation or daiy cra intest newsper\. defined as a
wthout ttment, of human excrua and waste-water by watr- penodmW pu ition devoted pnanly to recording gerld news\.
bne syms or the use or pit privies and slr i al\. It is considered to be dazly' if it appea at eat four tmes a week\.
PipId mp\.ser Physi± _'b4"p-tion divided by number of prac,- Memo A4U5 Aneadmwe per Cupta per Yew-Based on the
sng physcians qualif firom a medialshool at univeity lhd\. number of tickes sold during the year\. including admissions to
ftp\.hrirper NHft Asn-4opulabon divided by number of drive-in cinemas and mobile units\.
pacicing male an femalesraduate nss, asUant naurme
practcl numn ad nursing auxiliaries\. O FORCE
P k\. f' N\.spbd SNP-mid m4 rn1 -ad r\.d-Pbpulation Ted L\.6w Frwr (tMoswaJ-Econouically acive persons\. in-
(totl and ua)) dividled by their rspectve nIber o chiding armed forces and unemployed but excluding housewives\.
hospital beds available in publc snd privte, geeral and spld sudents, et\., covring population of al ages Definitions in
hsitals and rhabiitation ceters Hoptas we establishments vario countries are not comparable; 1960\. 1970 and 1983 data\.
permanely staffed by at lea one physic Esabhments prov- FPidt (pnww)-Fmale- labor rome as pentage of total labor
aft primpaly c\.aentl u not i Rumol hospitak force\.
ho ievee,inclu& bcaltb and media omtces not permanently sar A rke (pwrs)-labor force in fanrng forety\. huning
by a physdn (but by a medical sint, nure midwif etc\.) and fishing as perentage of tol labor fomrc 1960\. 1970 and 1980
offer in-patient accomodatio and provide a limited ang dat
ormedica facl laesr (percarw)-Labor force in mining, consbuion\. mnanu-
AA _hsba pgr HNosp Bin-Total number of admissions to or facuring and eectricity\. water and gas as pcentage of toal labor
di s fronm hospitals divided by the number of beds\. fore\. 196C\. 1970 and 1980 data\.
iP \.ti\. Rar ask\. \.affn 4ulicipation
HOUSING or activity rates m computed as total, male, and fenale labor force
se Su of M ul (pf ,nsr jogr h\.eloMI-mia, wa as percentages of total\. male and fmiale population of al ages
andrs-A housdxod consists ofa group of individuls who sham repectigly\. 1960\. 1970, and 1983 data\. lese a based on ILO's
liing qunt and their main mcals\. A boarder or bldger may or pationrates reflecting ag-scx structure of the populato\. and
my not he included in the houehold for saistc purpos long time trend\. A few estimates ae from national sourcs\.
Alenge Abm&m\. of ?esau per RAow-twI mma, ai nral- Ec_aat Depeudency Ada-Ratio of population under IS\. and
Aweng number of perons per room in all urba and rual 65 and over\. to the working age population (thos aged 15-64)\.
oupied conventional dwellings\. respectively\. Dwellings exlude
non-permaet stuctue and unoccupied parts\. INCOME DISRIBUMTON
Pc-awe Df vfa sih Eeerdrcky-wat\. m-am, ud - Pecet of TJd Dpabl am, (both as cash A\.d kmd)-J
Conventional dwdeng with electricity in lv:ing quarwters as percen- Accruing to p ienilce groups of households ranked by total house-
upg of totl, urban, d rur dwilings rspecively\. hold income\.
EDUCAtlON POVERTY TARGET GROUPS
A4wtedE\.aulbw Ratios The following estimates me very approximate measures of poveny
Paiwy scool - total, male and fenal-Gros total male and k- and should be interpreted with considerable caution\.
fma enroUlment of all as at the primary lewl as percentages or Esraued Abslue iwe1ty laevw Leve (LUSS per capirer-hoa
r_qictre prniry chool-a popult Whik many countris ad w-Absolute poverty income lvd is that income kvd
consider punary school age to be 6-1l years\. otbers do not Tbe below whicb a minimal nutritionally adequate diet plus essential
differences in county practces in the ages and dumtion of shool non-food requirnments is not affordabk\.
sc reflected in the aios give For some countries with universal E ed Relaikve Poverty lun l (USS per ep_a)--arhba
educaion, gram enrollment may exced 10D pecnt since some nd rral-Rural relative poverty income level is one-third of
pupils ae below or above the counys standard pinmary-shool average per capita personal income of the country\. Urban level is
a derived frm the rural level with adjustment for highwr cost of
SecArdy sd,el - roW ak and fale-Computed as above; iving in urban areas\.
seodary educaion rcquires at least four years of approved pr- Esriaed Papultmi Below Abw&tePveM lurew Level (per1-
may isucton prvides general, vocanonaL or teher training ceae)-rb\. aod rual- Prent of population (urban and rural
istuction for pupils usually of 12 to 17 years of age; cotrespond- who are absolute poor\.-
e courses we geneally excluded\.
VecaunId Evollenti fper f srcAdvy--Vocational institu- Comparative Analysis and Data Division
ts inlde tehnil industiaL or other programs which opte Economic Analysis and Projections Deparment
indepndenty or as deparments of seondary instutions June 19t5
-34-
ANNEX I
Page 5 of 6
ZAIRE Economic Indicators
NATIONAL ACCOUNTS
Annual Growth Res (U)
US a Millions As percent of CDP at 1966 priets
1984 1964 1963 1964 10i6
CDP Market Prices 4982\.2 1\.111 0\.2 2\.8 2\.t
CDP Factor Cost 4872\.6 97\.8 1\.4 J\.1 2\.6
Agriculture 1509\.4 J2\.0 2\.0 5\.O J\.6
Industry 175S\.0 a6\.6 4\.1 2\.5 1\.6
Other 1667\.1 32\.0 -0\.9 5\.6 5\.1
Not Export of GNFS 8\.2 4\.1
Import of CNFS 2631\.6 36\.9 \. 6\.9 2\.6
Export of GNFS 2646\.0 41\.0 4\.7 -1\.5
Gross Fixed Investment 511\.6 16\.2 \. 6\.6 -5\.3
Consumption 4162\.4 77\.6 \. 5\.6 4\.8
Gross Domestic Savings 819\.6 22\.6 \. 1\.0 -0\.9
Cross Notional Savings 463\.5 12\.0 \. -27\.6 2\.7
PUBLIC FINANCE (Central Government)
Zaire Millions % of GOP
19B3 1984 198S 1993 1984 19B5
Current revenues 10998 26994 41350 11\.4 14\.4 17\.2
Current expenditures 11459 26193 37654 11\.9 14\.6 16\.7
Current deficit -461 -199 3696 -0\.6 -O 1 1\.6
Capitol expenditures 647 1619 968 -1\.1 -0\.7 1\.1
Overall deficit -11O -1218 2746 -1\.1 -0\.7 1\.1
MONEY, CREDIT AND PRICES 1980 19B1 1982 1983 1984 19BS
Money and Quasi-money 3367\.3 4644\.9 8057\.0 14602 18792 23926
Bank credit to public sector 2329\.4 3783\.6 7388\.0 16252 13396 14847
Bank credit to private sect\. 1651\.1 1435\.4 2646\.0 3897 5947 9687
Money A Quasi-money (S GDP) 11\.7 11\.7 15\.6 24\.5 10\.4 16\.9
Consumer Price Index 1975=106 1313\.3 1813\.1 2487\.9 4376\.3 664\.8 8661\.3
Annual percentage change
Consumer Price Index \. 38\.1 37\.2 76\.6 62\.1 30\.0
Bank credit to public sec\. \. 62\.4 168\.6 30\.0 36\.7 10\.3
Bank credit to private sec\. \. 36\.8 85\.7 46\.2 62\.6 62\.9
NOTE: All conversions to dollars in this table are at the average exchange rate
prevaling in the period covered\.
3 35 - ANNEX I
Page 6 of 6
ZAZRE: Economic Indlcator\.
BALANCE OF PAYMENTS
- UC Millions
19U 1931 1932 911133 1934 1983
Euports ot Coods & Services 2371\.4 1772\.3 1656\.2 1775\.6 2 68\.6 2636\.3
of which Msrchandime(FOS) 2143\.6 1499\.3 1476\.3 1597\.8 1395\.2 1319\.3
Imoprt\. of Goods * Services 24U5\.9 2273\.1 2635\.3 1941\.8 1177\.1 1836\.9
of which Marchandine(FOS) 1761\.0 1636\.7 1436\.3 1329\.8 1321\.2 1370\.4
Privat, transform (net) -79\.4 -3\.5 -3\.3 3\.2 -01\.2 -61\.1
Current Account Balance
(before rescheduling) -291\.5 -83\.7 -59D\.6 -849\.6 -849\.6 -831\.3
(after rescheduling) -291\.5 -468\.1 -547\.6 -131\.7 -180\.6 -212\.2
Official Grants (net) 268\.8 247\.8 160\.1 173\.2 174\.8 169\.2
Public Capital (net) -22\.1 -168\.6 -173\.6 -196\.7 -296\.2 -293\.3
Priv\.Capital(net),Err\.& Om\.sm\. 58\.6 31\.3 91\.6 -15\.0 132\.5 174\.2
SDR Allocation 2a\.8 11\.9 17\.7 6\.6 6\.6 e\.6
Increase (-)in Int\. Reserves -48\.2 111\.2 85\.3 -8\.6 3a\.8 -2\.0
Reduction (-) in Arrears -1847\.1 129\.7 836\.9 -613\.1 -75\.9 -61\.1
Oth-r Financing 1629\.5 471\.7 244\.0 1682\.9 584\.3 477\.6
of which Debt Rescheduling 1612\.6 371\.4 156\.1 971\.7 477\.7 411\.4
EXCHANGE RATE
- Zires/U55 AVG\. EXCH\. RATATE (Z/US5)
Aug\.24,1979-Feb\. 22,198 2\.1 196 2\.0
Feb\.22,1980-Jun- 19\.1981 3\.1 1981 4\.4
June\.29,1981-Septem\.12,1963 5\.6 1982 5\.B
September 12,1933 [1] 26\.9 1983 12\.9
February 24,1984 33\.6 1994 36\.1
1989 47\.6
EXTERNAL DEBT (Outstanding Dec\. 191,5Mill\.USU)
Medium Long Term : 538e\.
1980 1931 1932 1983 19B4 1935
Dmbt service ratio 22\.7 21\.9 13\.9 14\.3 26\.4 27\.7
MERCHANDISE EXPORT (Mill \.USS) 1980 1991 1982 1983 1984 1986
Co'pper 1332\.5 7158\. 796\.7 781\.2 675\.5 691\.6
Cobalt 377\.3 168\.3 182\.8 121\.4 225\.6 249\.3
Dimonds 113\.6 77\.2 76\.2 138\.9 220\.4 222\.e
other Metals 113\.1 115\.7 84\.2 127\.2 166\.6 76\.6
Coffee 163\.1 111\.3 156\.0 116\.5 212\.2 1u8\.6
Crude oil 226\.1 273\.5 274\.1 236\.6 322\.9 309\.3
Other 157\.8 112\.9 127\.2 116\.6 128\.2 148\.6
Marketing Cost & Adjustments -39\.9 -166\.2 -163\.6 -46\.6 2\.1 0\.0
Total exports FOB 2143\.6 1499\.8 1476\.8 1597\.3 1893\.2 1899\.0
(1] On September 12,1983 Zaire introduced a transitional dual exchange rate regime
consisting of an official rate and a free market rate ,shown in parenthoses above\.
The two rates were unified on February 24,1984; henceforth the rate is fluctuating
and its market price determined in the intorbank market wore Commercial Banks
can buy and sell foreign exchange and the Bank of Zaire can intervene to
regulate the market\.
36 Page 1 of 2
ST= OF BANK EF OPERAIM IN ZA2
A\. S04HN OF EMMC M AND IDA CPEDI (As of Seveber 30\. 1985)
loan or Awmhunt ln US$ HMifLin
Cedt Y (less cYaglations)
N?ber Sigrd Borrcmer Bwak M_ tukdsburae I
Prior
to Jine ngo & Transport 91\.58 2/
1960 Otraco Inf ras ucture
One Loan Fuly Disbursed 100\.00
Sixteen Credits Fully Disbwsed 2D0\.34
798 1978 ZAIRE Oil Pa3m 9\.00 5\.67
902 1979 ZAE Railways 20\.00 4\.87
998 198) ZAIRE Fifth Dev\. Firmn 18\.50 2\.81
1040 1980 ZAIRE Smallhoder Maize 11\.00 5\.81
1089 1981 ZAE \.iIlu Ngorgo Sugar 26\.40 2\.80
1152 1981 ZAIR 1a=W-dlu Teckitcal Assistanoe 2\.90 0\.67
1180 1982 ZAI QCWA ModernIzation 26\.00 14\.35\.
1224 1982 ZAIRE Shaba Powe Syst ehabilitatI 19\.00 8\.89
1241 1982 ZAIE Water Supply II 18\.00 6\.11
1244 1982 ZAIRE Agricultue TA\. 5\.00 2\.64
1264 1982 ZAIE Seownd Cotton 11\.30 10\.41
1273 1982 ZAIRE Sixth DEC 21\.50 7\.90
1290 1982 ZAIE HIgh1y V 43\.50 13\.77
1325 1983 \. ZAIRE Nrth Easr Rural Developmem 13\.00 10\.17
1335 3983 ZAIRE Ports Rebabilitatimn 25\.00 20\.62
1336 1983 ZAIE GBcamines T\.A\. 7\.00 4\.90
1409 - !M3 ZAI Petrolan Sector T\.A 4\.50 3\.60
1421 1984 ZAIRE Ruzizi II Hydroelectric 15\.00 11\.97
1475 1984 ZAIRE Railways II 26\.00 26\.00
1492 1984 ZAIRE Seventh DEC 36\.00 32\.14
1519 1985 ZAIRE Edcation Techical Assistac 9\.00 6\.89
1540 1985 ZAIRE Tllua Agricultural DevelopmeLzc 12\.50 12\.50
1609 3/ 1985 ZAIRE Seeds 14\.90 14\.90
Total (lss cawzllatons): 191\.58 594\.82 251\.23
- of wtdch bas bem repaid 140\.12 2\.85
Total ao outstaniling 51\.46 591\.97
Amrut scibt 54\.47
of hiich bas beem repaid 54\.47
Total no heLd by Bark ard M!k 51\.46 591\.97
Total tJdisbursed: 0 230\.39 230\.39
1/ US dollar amunts for credits 1089-Z and awards are computed at the rat of Credit
negtiation dates\.
Z' Qztneed by the Kirgdom of Belgium
3 Sied but t yt effective\.
nM%1:,\. 1\.1
Page 2 of 2
-37-
L\.SU r 5 p WpC I NDW M (As of September 30, 1985)
Fiscal Type Of Mmt In US$ Millons
Year c Business In Ity Total
1970 Socidt Fziade de DMC - 0\.8 0\.8
DvelOppent (90FIE)
1984 Socitg Finarike de DFC - 0\.5 0\.5
DSveloppsent (SDFME)
1985 Soditf Textile de Textile Oyupuy 6\.3 0\.6 6\.9
de Kisargai
1985 Geatds Hotels du Zae Hotel Coeqany 15\.0 - 15\.0
1985 (0\.pany in formation) Cbtton Farming - 0\.1 0\.1
Total goss coMudMents Z1\.3 2\.0 23\.3
lms: -repaymnets - - -
-ndflburswla 18\.3 0\.7 19\.0
Held by IFC 3\.0 1\.3 4\.3
- 38 -
Annex III
Supplementary Project Data Sheet Page 1 of 2
ZAIRE
EIGHTH DEVELOPMENT FINANCE COMPANY (SOFIDE) PROJECT
Section I: Timetable of Key Events
(a) Appraisal mission: November, 1985
(b) Negotiations: March 26-27, 1986
(c) Planned date for effectiveness: September, 1986
Section II: Special Project Implementation Actions
None
Section III: Special Conditions
A\. The Government would:
(a) onlend the investment and the technical assistance components
(SDR 42\.9) to SOFIDE at 8\.5 percent per annum (IBRD's interest
rate in effect at the time of distribution of the credit
documents to the Executive Directors) (para\. 80); and
(b) pass on the remaining SDR 433,000 to CEPETEDE as a grant
to help it strengthen its training capabilities (para\. 87)\.
B\. SOFIDE would:
Ca) exchange views annually with IDA on the adequacy of its interest
rates (paras\. 65 and 81);
(b) distribute dividends only when general and specific provisions
for risk constitute at least four percent of its loan and equity
portfolio (para\. 70);
(c) implement the Action Plan aimed at improving the quality of its
portfolio (para\. 71 (a);
(d) as a part of its quarterly reporting requirements, submit to IDA
a note showing the collection ratio targeted and the results
obtained, the measures taken to improve arrears collections, the
arrears situation at the end of the quarter, and the collection
ratio target and the measures proposed for the next quarter
(para\. 71 (b);
(e) maintain its debt/equity and quasi-equity below 5:1 (para\. 77);
- 39 -
Annex III
Page 2 of 2
(f) reduce its interest rate on foreign currency loans to 14\.0
percent p\.a\. and pass on the foreign exchange risk to its
sub-borrowers (paras\. 63 and 81); and
(g) bear the foreign exchange risk on the technical assistance
component of SDR 567,000 (para\. 85)\.
Special Conditions of Effectiveness:
(a) submission by Government to Zaire's legislature of measures
aiming at the suppression of the CCA tax for borrowers who
bear the foreign exchange risk (para\. 63);
(b) signing of the Subsidiary Loan Agreement (para\. 78)\.
IURD 3W0F7D
CENTRAL/'_ARIA REPUB\. y-[, v SU DA N
Z A ~~~~~~~~~~~~~~~~~~~~~IRE HA5- UEtE
-'ADMINISTRATIVE DIVISIONS A < ,v\s \.-
P\.O celoi capital * 5 en gul ) HAUT- UEtE
0D=rla sot M _ ONC, I A S OufaS
-\._L'I"11moltlIb UIRANW4 , _>_, ,
-Profnee btando,y / -- Lnob >~__ >rL ,
---;R12et\._ , _w o H A U T - "'A *'i R E \.
g f jF 1- _, \ O*n40nnb!',,- - Buni
* ) f~~~~~~~QUArEUR Yan'gomb!,nnl
0 r ( t >~~~~~~~~~~~~~~~~~~~~~~~~~~~~k rd - HArZAIRE O\.
t 2 ~NORD-\.
S ~~~~> j ', 7 , { z~~~~~~~~~IVU t UGANDA
GABON 'C sO tt r ' rHuP s4 Xo ['
\.? t C ! Mv A r ~~~~~~e t' o M B F / \ t | KmouO i ' Uhluw°< J tC"RW"' N D
oP t- ds@~~~~~nd\.nd 5 7 UD-KIVU %8URUNDJ
6 J 2 --_tos 1 ; ] ~~~~~~MANIEMA |
tZw l> r,- KWnLU ( c b>gKaeo/g
Atlonfr~~N 0 KWAs-j TANZAN
,~~~~~~~~~~~~~~~~~~~~~~~~~n NlEl oK'b-- _ fP'1
r CE>iT Ft qFwU81t o \ {' ;~~~~~~~~~~~O P
E Otlanti/c \ KWANGO Is A_ NGAN)KA(ZAMBIA
* ~~~~~~~~~~or UI HAU - L _,MFAM tis --o_
, S" H> A B|T" A t IAw
-=-'r _ T-C 20 jf SHBA ZAMBIA
GABON ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~AG9 Ko885, | APPROVAL |
P117384 | Document of
The World Bank
Report No: ICR00004207
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IBRD-78540)
ON A
LOAN
IN THE AMOUNT OF USD 9\.0
TO THE
REPUBLIC OF ARMENIA
FOR A
SECOND PUBLIC SECTOR MODERNIZATION PROJECT
July 28, 2017
Governance Global Practice
Europe and Central Asia Region
South Caucasus Country Department
i
CURRENCY EQUIVALENTS
(Exchange Rate Effective 25 July, 2017)
Currency Unit = Armenian Dram (AMD)
AMD 1\.00 = US$ 0\.004
US$ 1\.00 = AMD 478\.83
FISCAL YEAR
January 1 â December 31
ABBREVIATIONS AND ACRONYMS
EDMS Electronic Document Management System
ARMEPS Electronic Procurement System
BPR Business Process Reengineering
CPIA Country Policy and Institutional Assessment
CPS Country Partnership Strategy
CS Civil Service
CSR Civil Service Reform
DPL Development Policy Lending
DPO Development Policy Operations
ECHRO Commission on Ethics of High-ranking Officials
EKENG e-Government Infrastructure Implementation Office of Armenia
EU European Union
FFPMC Foreign Finance Project Management Center
FMIS Financial Management Information System
GCI Global Competitiveness Indicators
GDP Gross Domestic Product
GFMIS Government Financial Management Information System
GoA Government of Armenia
HR Human Resource
HRMIS Human Resource Management Information System
IAD Income and Asset Declaration
IBRD International Bank for Reconstruction and Development
ICR Implementation Completion and Results Report
ICT Information Communication Technology
ii
ID Identity Document
IEG Independent Evaluation Group
IHISA Integrated Health Information System in Armenia
IR Intermediate Results
ISR Implementation Supervision and Results Reports
M&E Monitoring and Evaluation
MGIS Municipal Government Information System
MIS Management Information System
MOF Ministry of Finance of Armenia
MoH Ministry of Health of Armenia
MTR Mid-Term Review
OST Operations Support Team
PAD Project Appraisal Document
PAR Public Administration Reform
PARS Public Administration Reform Strategy
PDO Project Development Objective
PFM Public Financial Management
PMG Project Management Group
PSMP Public Sector Modernization Projects
PSRC Public Sector Reform Commission
QER Quality Enhancement Review
RA Republic of Armenia
SDP Sustainable Development Program
SIL Specific Investment Loan
TTL Task Team Leader
WBG World Bank Group
Senior Global Practice Director: Deborah L\. Wetzel
Practice Manager: Adrian Fozzard
Project Team Leader: Davit Melikyan; Migara De Silva
ICR Team Leader: David Bernstein
ICR Primary Author: Zhanybek Ybraiym Uulu
iii
REPUBLIC OF ARMENIA
Second Public Sector Modernization Project (PSMP II)
Table of Contents
B\. Key Dates \. vi
C\. Ratings Summary \. vii
D\. Sector and Theme Codes \. viii
E\. Bank Staff \. viii
F\. Results Framework Analysis \. ix
G\. Ratings of Project Performance in ISRs \. xviii
H\. Restructuring (if any) \. xix
I\. Disbursement Profile \. xx
EXECUTIVE SUMMARY \. 1
1\. Project Context, Development Objectives and Design \. 4
1\.1 Context at Appraisal \. 4
1\.2 Original Project Development Objectives (PDO) and Key Indicators \. 5
1\.3 Revised PDO and Key Indicators, and reasons/justification \. 5
1\.4 Main Beneficiaries \. 7
1\.5 Original Components \. 7
1\.7 Other significant changes \. 9
2\. Key Factors Affecting Implementation and Outcomes \. 10
2\.1 Project Preparation, Design and Quality at Entry\. 10
2\.2 Implementation \. 11
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 12
2\.4 Safeguard and Fiduciary Compliance\. 13
2\.5 Post-completion Operation/Next Phase \. 13
3\. Assessment of Outcomes \. 14
3\.1 Relevance of Objectives, Design and Implementation \. 14
3\.2 Achievement of Project Development Objectives\. 14
iv
3\.3 Efficiency\. 17
3\.4 Justification of Overall Outcome Rating \. 19
3\.5 Overarching Themes, Other Outcomes and Impacts \. 19
3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops20
4\. Assessment of Risk to Development Outcome \. 20
5\. Assessment of Bank and Borrower Performance \. 20
5\.1 Bank Performance \. 20
5\.2 Borrower Performance \. 21
6\. Lessons Learned\. 23
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners\. 24
Annex 1\. Project Costs and Financing \. 25
Annex 2A\. Changes in PDO Indicators During Restructuring and Outputs\. 26
Annex 2B: Project Outputs \. 29
Annex 2C\. Relationship Among PSMP I, II and III \. 39
Annex 3: Economic and Financial Analysis \. 40
Annex 4\. Bank Lending and Implementation Support/Supervision Processes\. 41
Annex 5\. Beneficiary Survey Results \. 43
Annex 6\. Stakeholder Workshop Report and Results \. 44
Annex 7\. Summary of Borrower's ICR \. 45
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \. 49
Annex 9\. List of Supporting Documents \. 50
Annex 10\. Project timeline: Key events in the implementation \. 51
Annex11\. Map of Armenia \. 52
v
A\. Basic Information
Public Sector
Country: Armenia Project Name: Modernization
Project II
Project ID: P117384 L/C/TF Number(s): IBRD-78540
ICR Date: 04/30/2017 ICR Type: Core ICR
REPUBLIC OF
Lending Instrument: SIL Borrower:
ARMENIA
Original Total
USD 9\.00M Disbursed Amount: USD 9\.00M
Commitment:
Revised Amount: USD 9\.00M
Environmental Category: C
Implementing Agencies:
Foreign Financing Projects Management Center (FFPMC)
Cofinanciers and Other External Partners:
B\. Key Dates
Revised / Actual
Process Date Process Original Date
Date(s)
Concept
10/07/2009 Effectiveness: 09/24/2010 07/26/2010
Review:
08/11/2012
Appraisal: 01/26/2010 Restructuring(s): 09/19/2013
10/08/2014
vi
Mid-term
Approval: 03/16/2010 06/30/2013 05/30/2013
Review:
Closing: 07/31/2015 01/31/2017
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes: Moderately Satisfactory
Risk to Development Outcome: Low to Negligible
Bank Performance: Moderately Satisfactory
Borrower Performance: Moderately Satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Moderately Moderately
Quality at Entry: Government:
Satisfactory Satisfactory
Quality of Implementing
Satisfactory Satisfactory
Supervision: Agency/Agencies:
Overall Bank Moderately Overall Borrower Moderately
Performance: Satisfactory Performance: Satisfactory
C\.3 Quality at Entry and Implementation Performance Indicators
Implementation QAG Assessments
Indicators Rating
Performance (if any)
Potential Problem
Quality at Entry
Project at any time No None
(QEA):
(Yes/No):
Problem Project at any Quality of
No None
time (Yes/No): Supervision (QSA):
DO rating before Moderately
Closing/Inactive status: Satisfactory
vii
D\. Sector and Theme Codes
Original Actual
Major Sector/Sector
Public Administration
Central Government (Central Agencies) 57 57
Information and Communications Technologies
Public Administration - Information and
43 43
Communications Technologies
Major Theme/Theme/Sub Theme
Private Sector Development
Enterprise Development 7 7
MSME Development 7 7
Public Sector Management
Public Administration 67 67
Administrative and Civil Service Reform 67 67
Transparency, Accountability and Good
25 25
Governance
Public Finance Management 2 2
Public Expenditure Management 2 2
E\. Bank Staff
Positions At ICR At Approval
Vice President: Cyril E Muller Philippe Le Houerou
Country Director: Mercy Tembon Asad Alam
Practice Manager/Manager: Adrian Fozzard Ronald E\. Myers
viii
Davit Melikyan Kathy Lazarian
Project Team Leader:
Migara De Silva Davit Melikyan
ICR Team Leader: David Bernstein
ICR Primary Author: Zhanybek Ybraiym uulu
F\. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document)
To enhance the performance of public sector management for better service delivery by:
(i) strengthening institutional capacity in policy formulation; (ii) maximizing the
efficiency of human resources; and (iii) developing information systems for internal work
flow and external communication\.
Revised Project Development Objectives (as approved by original approving
authority)
The project development objectives (PDOs) were not revised\.
(a) PDO Indicator(s)
All three PDO indicators were changed and a new one was introduced at Mid-Term
Review (MTR)\. These changes were approved by the Bank Management in September
2013 as part of the second restructuring of the project\. PDO indicators were revised or
replaced to remove reliance on CPIA indicators and methodology\. Alternative and new
indicators were agreed with the Borrower which used data from the project and outside
assessments to measure progress towards the PDO outcomes\.
ix
Original Actual Value
Target Formally Achieved at
Indicator1 Baseline Value Values (from Revised Target Completion
approval Values or Target
documents) Years
Indicator I: Number of pilot ministries adopting policy formulation guidelines and
procedures
Generic BPR
led to
New internal
regulations for
directives and
policy
regulations for
formulation,
policy
work planning
formulation and
Decision making is and
NA monitoring
generally not performance
developed in four
Value transparent, and public management
pilot ministries
(quantitative dissemination of rolled out across
and implemented
or qualitative) government policies the civil service\.
by the
and outcomes is a low Proposed new
Government\.
priority\. strategic
Mechanisms for
planning
policy
framework is
coordination
being piloted in
generally function
6 ministries and
effectively\.
Government
Office\.
Date achieved 2009 2017
Partially achieved\. As pilot of the new strategic planning framework was
Comments
launched only in December 2016, it was not feasible to assess the
(incl\. %
effectiveness of the new policy formulation framework and consequent
achievement)
outcomes\.
Indicator II: Favoritism in decisions of government policymaking
Value
At least 10%
(quantitative 2\.9 NA 3\.2
increase
or qualitative)
Date achieved 2009 2016
Comments Achieved\. According to the GCI the rating on the âFavoritism in decisions
1
For ease of comparison, the table uses indicators as refined during implementation\.
x
Original Actual Value
Target Formally Achieved at
Indicator1 Baseline Value Values (from Revised Target Completion
approval Values or Target
documents) Years
(incl\. % of government policymakingâ has improved and reached 3\.2\.
achievement)
Indicator III: Deploying the civil servant performance appraisal system to improve
human resource management and staff motivation
TA on civil
servant training
and job
evaluations
enable better
HRM decisions linking the
on training and performance
Value No robust performance career planning appraisals with
(quantitative appraisal system is in NA are based on the HRM decisions
or qualitative) place results of on training and
performance career planning\.
appraisals Consistency of
Performance/
HRM decisions
was reinforced
by recent DPF-4
prior action\.
Date achieved 2009 2017
Achieved\. Performance appraisal system is built into EDMS, where civil
Comments
servants can develop their work plans\. Performance is evaluated against
(incl\. %
the plans and quality of performed activities, which are assessed in EDMS
achievement)
on a project-by-project basis\.
Indicator IV: Increase in electronic communication with citizens (%)
Value
At least 15%
(quantitative 20 NA 43\.25
increase
or qualitative)
Date achieved 2009 2017
Comments
Achieved\. According to the EDMS data the electronic communication
(incl\. %
with citizens has reached 43\.25% in 2016\.
achievement)
xi
xii
(b) Intermediate Outcome Indicator(s)
Out of ten original Intermediate Outcome indicators in the PAD, four were revised and
six remained the same, while three new intermediate indicators were added and one
additional indicator that was left out in the original PAD was also added\. These changes
were introduced through a formal restructuring approved by the Bank Management in
September 2013 following the Mid-Term Review\.
Original Target Values Formally
Actual Value Achieved at
Indicator Baseline Value (from approval Revised Target
Completion or Target Years
documents) Values
Indicator 1: New internal directives and regulations for policy formulation and monitoring developed and
applied by the Government\.
High level Policy and PSMP-II and World Bank TA
Government Performance envisage more specialized
lacks formats Unit/s after adoption of new
unit is established and
Value and processes framework and regulations\.
operational\. The
(quantitative or for policy The Center of Strategic
regulations outlining
qualitative) formulation and Initiatives, created in January
new policy formulation
instruments for 2017 through PPP, is in charge
compliance\. requirements are- of key high level strategies and
implemented reforms\.
Date achieved 2009 2017
Comments Partially Achieved\. As pilot of the new strategic planning framework was launched in
(incl\. % December 2016, it was not feasible to assess the effectiveness of the new policy formulation
achievement) and monitoring mechanisms and consequent outcomes\.
Indicator 2: Improved practice for delivery of selected pilot services demonstrates that: (i) clear
requirements for receiving the service (traffic police, passports, e-health, etc\.) are publicly accessible; and
Clear Description of services is
Pilot services
No clear requirements for available on selected
Value demonstrate clear
requirements are receiving the ministerial/ government
(quantitative or requirements for
publicly service are websites (except for e-Health
qualitative) receiving the service are
accessible\. publicly which until rollout is only
publicly accessible
accessible\. described on EKENG website)\.
Date achieved 2009 2017
Achieved\. Documentary films on improved functionality of e-Health and e-Visa were
Comments
developed\. The films are YouTube video hosting:
(incl\. %
https://www\.youtube\.com/watch?v=bejoLjisWxA
achievement)
https://www\.youtube\.com/watch?v=PfaGeqLo8_o
Indicator 3: Improved practice for delivery of selected pilot services demonstrates that: (ii) average time
required to register a vehicle is reduced\.
xiii
Original Target Values Formally
Actual Value Achieved at
Indicator Baseline Value (from approval Revised Target
Completion or Target Years
documents) Values
The registration time of
At least 50%
Value vehicles is decreased to below
reduction in time
(quantitative or Over 24 hours NA 30 minutes including obtaining
required to
qualitative) number plates and physical ID
register a vehicle\.
of the vehicle\.
Date achieved 2009 2017
Comments
Achieved\. A documentary film on the functionality of E-Police was developed\. The film is
(incl\. %
YouTube video hosting: https://www\.youtube\.com/watch?v=q3VQDkyRkiI
achievement)
Indicator 4: Improved planning and performance monitoring and evaluation processes in pilot ministries
No systems in
place to Capacity building
monitor and interventions on
evaluate application of
performance, new mechanisms
except for the and tools on
EDMS system planning, M&E
to check in pilot ministries Following earlier introduction
individual completed\. of M&E/performance
performance\. Annual management framework, the
Value Ministries / At least 25% reduction Government recent PSMP-II and World
(quantitative or agencies of ad-hoc tasks over the activity plan is Bank TA on strategic planning
qualitative) produce annual baseline developed in is expected to add more
budgets but transparent coherence to the process and
more for budget manner and the tools for planning and
line item planned monitoring programs\.
planning\. Weak output/outcomes
connections are aligned with
between the budget\. M&E
budgets and systems have
planning of been tested and
outputs/outcom applied\.
e\.
Date achieved 2009 2017
Comments Partially achieved\. Pilot of the new strategic planning framework was launched in
(incl\. % December 2016\. Government planning process was enhanced with additional tools to
achievement) permit citizen engagement and to more closely tie HRM and planning processes\.
Indicator 5: Functional rules established for staff benefit transfer between public service positions\.
Value The benefits are NA Harmonized Following the adoption of the
(quantitative or not transferred public service Civil Service Reform Strategy
xiv
Original Target Values Formally
Actual Value Achieved at
Indicator Baseline Value (from approval Revised Target
Completion or Target Years
documents) Values
qualitative) between enabling staff in 2015 the principles of
segments of mobility without mobility of public servants are
public service losing the introduced through changes in
benefits\. the Law on Civil Service\.
Date achieved 2009 2017
Achieved\. The principles of mobility will be further enhanced through broader package of
Comments legislative changes, inter alia, enlarging the scope of civil service, Government intends to
(incl\. % submit to National Assembly in 2017\.
achievement)
Indicator 6: Consistent use of work plans and performance appraisals in the public service\. Information
from performance appraisal used for performance planning\.
Work planning and
performance appraisals have
been rolled-out and used for
Acceptable Work plans and
annual planning of civil
approaches and performance appraisals
Value servants\. DPF-4 prior action
systems exist but are used in pilot
(quantitative or NA further enhanced the
they are not used institutions in terms of
qualitative) robustness of performance
government civil servants annual
information\.
wide\. performance planning\.
Date achieved 2009 2017
Achieved\. The performance appraisals results are becoming more useful for performance
Comments planning after recent completion of the TA on job evaluation and DPF-4 prior action further
(incl\. % enhanced the robustness of performance information\.
achievement)
Indicator 7: Capacity of ethics commission staff to provide advice and training to public servants and
enforcing ethics rules
There were
attempts to The capacity of ECHRO was
All civil servants
establish ethics enhanced\. An on-line training
have access to
commissions at module is developed on ethics
manuals or
Value the level of and integrity of civil servants\.
educational
(quantitative or ministries, but NA The module is available for all
materials\. All
qualitative) the commissions civil servants\. The core staff
mid-level and
lack credibility\. of the ministerial
senior managers
A centralized commissions received initial
trained\.
commission has training\.
not been
xv
Original Target Values Formally
Actual Value Achieved at
Indicator Baseline Value (from approval Revised Target
Completion or Target Years
documents) Values
established\.
Date achieved 2009 2017
Comments
Achieved\. The ongoing legislative changes equip the ECHRO with staff, more resources
(incl\. %
and responsibilities for coordinating the work of ministerial commissions\.
achievement)
Indicator 8: A new policy adopted for Civil Service (CS) training allowing the pilot of on-line modules\.
On-line training modules are
developed on key themes in-
line with the project
Capacity for CS
The CS training objectives\. Special
training is
is disconnected methodology is developed for
improved through
Value from actual assessing the civil servant
improved
(quantitative or needs and does NA training needs\. The concept of
planning and pilot
qualitative) not contribute to the needs-based training is
online modules
improved reflected in draft legislative
(if endorsed by
performance\. amendment\.
the Law)
Date achieved 2009 2017
Comments Achieved\. On-line training modules are developed on service delivery, policy analysis,
(incl\. % performance management, project management, HRM, regional development, ethics and
achievement) integrity\.
Indicator 9: Enhanced functionality and interoperability of the electronic document management system\.
EDMS is operational in
all government bodies
and demonstrate The EDMS is operational in all
interoperability of the government bodies with
EDMS is electronic document integrated performance
Value
running in ten management system appraisal module\. EDMS
(quantitative or NA
government including the archiving archive is introduced and
qualitative)
bodies\. of e-documents, operational (since 2014)\.
enhanced performance
appraisal system, as well
as project management
tools\.
Date achieved 2009 2017
Comments
Achieved\. The plan for equipping EDMS with extra project management tools was dropped
(incl\. %
through project restructuring in 2012\.
achievement)
xvi
Original Target Values Formally
Actual Value Achieved at
Indicator Baseline Value (from approval Revised Target
Completion or Target Years
documents) Values
Indicator 10: An effective system is established for income, assets and conflict of interest disclosure by
high level public officials
The declarations
are collected and
published on Electronic IAD system is
Ethics implemented, functional and
Value Commission's used by trained ECHRO team\.
Train the ethics body to
(quantitative or website NA The ECHRO has been working
use the launched system\.
qualitative) (www\.ethics\.am on development of risk
)\. The e- analyses and data verification
Disclosures mechanisms\.
system is under
preparation
Date achieved 2009 2017
Comments
Achieved\. A Government decree enabling data exchange between ECHRO and number of
(incl\. %
critical sources of third party information important for risk analyses was adopted in 2015\.
achievement)
Indicator 10i: Share of required declarations (i) collected electronically (%)
Value
(quantitative or NA 50\.00 98
0\.00
qualitative)
Date achieved 2009 2017
Comments Achieved\. A documentary film, referenced on ECHRO website, confirms the achievements
(incl\. % and publicizes the functionality and the coverage of the system\. The film is YouTube video
achievement) hosting: https://www\.youtube\.com/watch?v=7Djx8oZaI3A&feature=youtu\.be
Indicator 10ii: Share of required declarations (ii) published online (%)
Value
(quantitative or 0\.00 NA 100 100
qualitative)
Date achieved 2009 2017
Comments
Achieved\. The declarations are published online on the ECHRO website:
(incl\. %
http://www\.ethics\.am/en
achievement)
Indicator 11: The civil servants and IT staff are trained to use the developed systems\.
xvii
Original Target Values Formally
Actual Value Achieved at
Indicator Baseline Value (from approval Revised Target
Completion or Target Years
documents) Values
80% of civil servants in
Separate government agencies
systems in covered by the Ministries and other public
Value operation, such developed program, entities ensure training of
(quantitative or as EDMS, trained to use the NA incoming staff following the
qualitative) HRMIS, MGIS upgraded systems\. 100% full-fledged training of users at
and other of IT staff trained to the launch of the systems\.
systems\. maintain the upgraded
systems\.
Date achieved 2009 2017
Comments
(incl\. % Achieved\.
achievement)
Indicator 12: Public access to services available through internet\.
Some e-kiosks
exist, introduced
under the JRP2,
which also give Harmonization of
access to the existing ICT All available electronic
Value
systems offering services are currently
(quantitative or EDMS\. NA
electronic accessible via internet (listed
qualitative) Preliminary services through on e-Gov\.am website)\.
work is done to e-Gov website\.
start use of
government web
portals\.
Date achieved 2009 2017
Comments
(incl\. % Achieved\.
achievement)
G\. Ratings of Project Performance in ISRs
Actual
Date ISR
No\. DO IP Disbursements
Archived
(USD millions)
1 03/27/2011 Moderately Satisfactory Satisfactory 0\.20
xviii
2 11/30/2011 Satisfactory Satisfactory 1\.03
3 06/26/2012 Satisfactory Satisfactory 2\.36
4 01/27/2013 Satisfactory Satisfactory 3\.38
5 11/27/2013 Satisfactory Satisfactory 5\.44
6 06/28/2014 Satisfactory Satisfactory 5\.64
7 01/14/2015 Satisfactory Moderately Satisfactory 6\.50
8 06/24/2015 Moderately Satisfactory Moderately Satisfactory 6\.50
9 12/22/2015 Moderately Satisfactory Moderately Satisfactory 8\.00
10 06/04/2016 Moderately Satisfactory Moderately Satisfactory 8\.85
11 11/17/2016 Moderately Satisfactory Moderately Satisfactory 8\.98
12 01/27/2017 Moderately Satisfactory Moderately Satisfactory 9\.00
H\. Restructuring (if any)
ISR Ratings Amount
Board at Disbursed at
Restructuring Reason for Restructuring2
Approved Restructurin Restructurin
Date(s) g & Key Changes Made
PDO Change g in USD
DO IP millions
Inclusion of additional
activities on development of
a nationwide electronic
healthcare service delivery
08/11/2012 S S 2\.50
system (e-Health)\. Some
non-critical activities,
performed by the GoA itself,
were cancelled\.
The results framework (RF)
09/19/2013 S S 4\.82 was improved to make the
RF more robust, and align it
with the changes introduced
2
Detailed reasons are given in section 1\.7
xix
ISR Ratings Amount
Board at Disbursed at
Restructuring Reason for Restructuring2
Approved Restructurin Restructurin
Date(s) g & Key Changes Made
PDO Change g in USD
DO IP millions
in 2012\.
The extension was required
to complete activities related
10/08/2014 S S 6\.10
to civil service reform and e-
Health services\.
I\. Disbursement Profile
xx
EXECUTIVE SUMMARY
Armeniaâs Second Public Sector Management Project (PSMP II) was approved on March 16,
2010, as a USD 9 million Specific Investment Loan\. PSMP II was the middle operation of the
Bankâs programmatic support to public administration reform consisting of a prior loan of about
equal size (PSMP I) and an ongoing, larger operation, the Third Public Sector Management
Project (PSMP III) approved during the last year of PSMP II implementation\.
PSMP IIâs development objective was to improve public service delivery through better public
sector management by: strengthening institutional capacity for policy formulation; maximizing
the efficiency of human resources; and developing information systems for internal work flow
and external communications\. PDO outcomes were measured by four PDO indicators and 14
intermediate indicators\. PDO and intermediate indicators were revised during implementation\.
PSMP II consisted of five components: first, strengthening capacity for public policymaking
through business process reengineering, improved strategic planning managed by the
Government Office and more effective workplan development and performance evaluation;
second, improving human resource management by preparing a basis for performance-based pay,
strengthening public service ethics and providing training; third, development of interoperable
information and ICT systems to improve access and service delivery; fourth, just-in-time
technical assistance (reallocated among the substantive components through a restructuring); and
fifth, project management\. These components built on and expanded the foundation of policy,
structural and organization reforms supported under PSMP I and laid the groundwork for the e-
governance approach underway in PSMP III\.
The project was restructured three times during implementation\. In response to new Government
priorities, new activities were added to components one and three to develop an integrated
electronic health system (e-Health) in the first restructuring in August 2012\. This restructuring
took advantage of the built-in design flexibility of the just-in-time component along with the
cancellation of several planned activities some of which the Government implemented itself\.
The second restructuring approved in September 2013, following the Mid-Term Review, revised
the PDO indicators and the projectâs results framework\. The Borrower decided not to implement
the surveys planned to generate data for PDO indicators due to the cost considerations\. A new
PDO indicator was added and changes made to the intermediate outcome indicators\. A third and
final restructuring approved in October 2014 extended the project closing date by eighteen
months to allow time to complete the e-Health and civil service activities\.
The ICR concludes that the overall project outcome rating is moderately satisfactory\. PSMP II
achieved three out of four PDO indicator targets and 12 out of 14 intermediate outcome
indicators\. One PDO indicator and two intermediate outcome indicators related to the
implementation of a new strategic planning framework were partially achieved because the
framework was only piloted at the time of project closure on January 31, 2017\.
PSMP II was able to improve Armeniaâs policy planning and performance evaluation systems
through the development of an IT module linking work planning directly to civil service
performance appraisal\. Service delivery was strengthened through business process
reengineering and the development of such e-government solutions as e-police and the
development of e-Health system\. Efforts to develop a strategic planning methodology that could
1
be managed by a central unit in the Office of the Government were not fully realized at project
closing but have subsequently been implemented\.
PSMP II improved human resource management and staff motivation in the public sector by
establishing an automated performance evaluation system tied to annual workplans with real-
time assessments\. PSMP II financed the development of a series of online training modules for
civil servants focused on key PSMP II themes including: service delivery, performance
management, policy analysis, HRM, and ethics\. The modules were posted in the fall of 2016,
and over 1,000 civil servants had accessed them by April 2017\.
PSMP II supported training for leadership and staff of the Ethics Commission for High-Ranking
Officials (ECHRO) that enabled the Commission to develop a verification system for income
and asset declarations\. The electronic asset declaration system for high-level public officials has
helped reduce conflicts of interest in government decisions by proactively flagging possible
conflicts of interest in government decision-making\.
Lastly, PSMP II financed the purchase, development and installation of a number of IT
management and service delivery systems\. These included upgrades to the EDMS and HRMIS
developed under PSMP I and the creation of the electronic asset declaration, e-police, e-visa and
e-Health services\. Development of the e-Health system was included in PSMP II two years after
approval\. This is a centralized platform that ensures comprehensive and real-time exchange
of medical, administrative and financial/insurance information\. The system provides patients,
healthcare providers, the Government and insurance companies real-time access to medical
information\. At project closure, the system had been piloted in 480 medical institutions that
receive state insurance funding registered in the system\.
Bank and Borrower performance were both moderately satisfactory\. PSMP II supervision and
the implementing agency benefited from team continuity from the previous project and were
rated satisfactory\. The Bankâs quality at entry was moderately satisfactory owing to the poor
design of the result framework which had to be adjusted during implementation\. The
Government was committed to PSMP IIâs original objectives and was supportive during project
implementation, however, project implementation was hindered by the identification of new
priorities mid-stream, multiple changes in the projectâs primary counterpart and disagreements
between project stakeholders on the design of key reforms\.
PSMP II highlights a number of lessons for projects supporting public administration reform\.
First, overlap with follow up projects ensures continuity in a series of operations, particularly
where this allows continuity in project teams\. Second, public administration reforms are more
likely to succeed when supported by IPFs and DPOs: policy actions create demand for technical
assistance and capacity building while technical assistance can ensure that policy reforms are
implemented\. Third, teams should avoid using composite indicators that are not designed and
managed for project-level M&E purposes: PSMP IIâs efforts to use CPIA-based indicators
proved to be unworkable because the data could not capture project-level impacts and they were
subject to unanticipated adjustments to methodology\. Indicators based on project-generated data
proved to be better suited for M&E purposes\. Fourth, ICT investments should be subject to an e-
readiness assessment: the feasibility study for the e-Health initiative helped stakeholders identify
the scope of work and enabled them to develop a detailed plan to design and implement the
system\. Firth, built-in flexibility allows projects to respond to opportunities for public sector
reforms\. Inclusion of a Just-in-Time component allows project management easy access to un-
2
programmed resources so that they can respond to emerging priorities by financing feasibility
assessments and revised implementation plans\.
3
1\. Project Context, Development Objectives and Design
1\.1 Context at Appraisal
Country Background
1\. Armenia is a small, landlocked country with a relatively limited economy based on small-
scale agriculture and mining\. Ethnically, religiously and linguistically distinct from its neighbors,
Armenia has a history of tensions with bordering countries, which restricts its access to markets
and opportunities to benefit from regional trade\. After the economic recession that followed
independence from the Soviet Union, Armeniaâs strong commitment to market reforms enabled
six percent average annual growth in the second half of the 1990s\. Despite rapid growth, jobs
creation lingered and expansion of export sectors and increase foreign direct investment has been
slow\. Armeniaâs economy remains heavily dependent on remittances provided by a worldwide
diaspora of eight million people, nearly three times the three million resident nationals\.
2\. GDP contracted 14 percent during the global financial crisis\. Poverty rates increased by
4\.5 percent in rural areas and 5 percent in urban areas between 2008 and 2012, leaving more than
one third of Armenians living in poverty\. The Government responded to this crisis with public
administration reforms to improve public sector efficiency and performance while safeguarding
social programs, increasing public investment, short-term job creation and credit and guarantee
facilities for private enterprises\. This has helped Armenia restore slow but steady growth since
2010\.
Sector Background
3\. The Government Program and the Sustainable Development Program (SDP), both
adopted in 2008, identified public administration reforms among the top priority reforms,
including measures to support anti-corruption efforts, decentralization and capacity building at
the regional and local levels\. The most urgent public administration reforms were reconfirmed
through the approval of the Public Administration Reform Strategy (PARS) by Government
Decree on September 10, 2009, one month before the Bank began to prepare the Second Public
Sector Modernization Program (PSMP II)\. The SDP focused on the development of a culture of
strategic programming, clearer accountability, management of public officialsâ conflicts of
interest and expansion of e-government services\. The PARS synthesized external partnersâ
advice and diagnostics with the Governmentâs own priorities for reform\. The strategy focused on
two strategic directions: improvement of decision making processes across policy areas at the
center of government and across ministries; and improvements in operational efficiency and
service delivery to support implementation of those decisions\.
4\. The first Public Sector Modernization Program (PSMP I, effective in 2004 and closed in
2011) supported the Governmentâs early efforts in public administration and civil service reform,
setting the stage for PARS and PSMP II\. Technical assistance under PSMP I strengthened
human resource management practices, introduced internal and external audit in public financial
management, supported decentralization efforts and began to strengthen the Governmentâs
policymaking capacity\. PSMP I introduced e-Government systems through the development of
management information systems for documents (EDMS), a human resource management
information system (HRMIS) and the introduction of select e-services, including e-licenses, e-
signature and e-procurement\. PSMP II was designed using the diagnostics and assistance
4
provided by PSMP I and was targeted at those elements of the Governmentâs strategy considered
most important for progress following the financial crisis\.
5\. In addition to the series of investment projects, the Bank supported implementation of
PARS through a series of two Development Policy Operations (DPO)\. The 2009 DPO supported
the introduction of the Law on Public Service which included provisions on conflicts of interest
setting the stage for PSMP IIâs support for the income and asset disclosure system\. The 2010
DPL included benchmarks on building consensus on conflicts of interest provisions and
promoting performance-based pay based on the civil service performance evaluation system
introduced under PSMP I\. Both benchmarks supported policy reforms that were further
implemented under PSMP II\. A second series of DPO in 2014 and 2016 supported additional
policy reforms important for PSMP IIâs implementation\.
Rationale for Bankâs assistance
6\. The World Bank has been an important partner in public sector governance reform
through the PSMP and the DPL series of operations\. The Government requested PSMP II to
build the necessary public administration capacity to sustain and expand PSMP Iâs achievements
and to meet the challenges laid out in the SDP and PARS\.
7\. The FY09-12 Country Partnership Strategy (CPS) was aligned with Armeniaâs SDP
priorities to address development challenges through reforms in public administration\. PSMP II
contributed to the CPSâs strategic objective to âstrengthen governance with resulting rise in
public sector efficiencyâ by supporting improvements in cross-cutting systems for strategic
policy making, human resource management and management information systems\.
Complementing this horizontal approach, PSMP II supported selected sector specific
interventions\. The parallel DPL/DPO series supported actions and benchmarks related to
improvements in Government performance and accountability\.
1\.2 Original Project Development Objectives (PDO) and Key Indicators
8\. The PDO was to enhance the performance of public sector management for better service
delivery by: strengthening institutional capacity in policy formulation; maximizing the efficiency
of human resources; and developing information systems for internal work flow and external
communication\. Attainment of these objectives was to be measured by the following indicators:
improved policy coordination and responsiveness functions; improved service delivery and
operational efficiency; and improved access to public information\.
1\.3 Revised PDO and Key Indicators, and reasons/justification
9\. The PDO was not revised\. However, the original three PDO indicators were changed and
an additional indicator was introduced following the Mid-Term Review (MTR)\. These changes
were approved by the Bank Management in September 2013 as part of PMSP IIâs second
restructuring\. Table 1 summarizes changes in PDO indicators\. A more detailed analysis is
presented in Annex 2A\. The original PDO indicators used the Bankâs CPIA methodology to
assess progress in public administration reform and civil society and business surveys to assess
progress in the development of e-Government services\. The Mid-Term Review concluded that
two out of three original PDO indicators had been met based on the information presented in the
2011 CPIA assessments\. However, the authorities and the Bank team realized that changes in
the CPIA methodology and the cost and technical limitations in the surveys meant that the
original PDO indicators would not capture further progress towards the projectâs outcomes\. As
5
alternatives, the Bank and Borrower agreed to use a mixture of internal project data (use of new
policy guidelines, increased use of Electronic Document Management System and deployment of
civil service performance appraisal system) and external assessment (an indicator from the
World Economic Forumâs Global Competitiveness Index) to measure the PDO\.
Table 1: Changes in PDO Indicators
Original PDO Original
Revised/New PDO Revised
Indicator as Project
Indicator Project Outcome
per PAD Outcome
1\.Improved Number of pilot ministries at least 15% New internal directives and
policy adopting policy increase in regulations for policy formulation
coordination and formulation guidelines and CPIA score and monitoring developed in four
responsiveness procedures pilot ministries and implemented
(CPIA 15a) by the Government\. Mechanisms
for policy coordination generally
function effectively\.
2\. Improved Favoritism in decisions of at least 10% At least 10% increase in GCI score\.
service delivery government policymaking increase in
and operational (World Economic Forumâs CPIA score
efficiency Global Competitiveness
(CPIA 15b) Index indicator)
3\. Improved Increase in electronic at least 15% At least 15% increase\.
access of civil communication with increase over
society to citizens measured by the the baseline
information on share of electronic
public affairs correspondence out of
(CPIA 16b) total citizen
correspondence\.
4\. Deploying the civil HRM decisions on training and
servant performance career planning are based on the
appraisal system to results of performance appraisals
improve human resource
management and staff
motivation
10\. The original PAD did not include an indicator for capturing improvements in the
efficiency of human resource management\. The original project design assumed that human
resource management improvements would lead to improved service delivery which would be
measured by the second original PDO indicator\. However, the score for CPIA 15(b) on "service
delivery and operational efficiency" failed to capture the project impact on the efficiency of
human resource management and showed no improvement by the time of the MTR\. A new
qualitative indicator measuring progress in "Deploying the civil servant performance appraisal
system to improve human resource management and staff motivation" was introduced to capture
the projectâs impact on human resource management more directly\.
11\. The second restructuring also changed four of the original ten intermediate outcome
indicators and their end of project targets, three new intermediate indicators were added and one
additional indicator that was left out in the original PAD was also added\. These changes are
reviewed in Annex 2B\.
6
1\.4 Main Beneficiaries
12\. The PSMP II PAD does not explicitly identify project beneficiaries\. Government
officials and civil servants have benefitted from training, improved business and HR processes
and ICT equipment\. Armenian citizens have benefitted from the information systems developed
and improved by PSMP II including e-police (vehicle registration) and e-Health (integrated
health information management system)\. The following agencies have received technical
assistance support and/or equipment from PSMP II: Office of Government, National Assembly,
Ministry of Finance, Ministry of Health, Civil Service Council, Ministry of Territorial
Administration, Visa and Passport Directorate, Chamber of Control and Ethics Commission for
High Ranking Officials\.
1\.5 Original Components
13\. The project consisted of five components designed to support policy making, enhance
HR management, improve information systems and strengthen capacity building in specific
agencies:
ï Component 1: Strengthening Institutional Capacity in Policy Making and Service
Delivery (US$2\.675 million)\. The purpose of this component was to strengthen policy
development and performance management and review and re-engineer organizational
and business processes\.
ï Component 2: Maximizing the Efficiency of Human Resources in the Public Sector
(US$1\.145 million)\. The purpose of this component was to support reforms to enhance
human resources management in the public service including strengthening public service
ethics and accountability\.
ï Component 3: Development of Information Systems for Managing Internal Workflow
and External Communication (US$ 3\.895 million)\. The purpose of the component was
to improve transparency and efficiency of government operations through enhanced,
interoperable information systems and increased public access to government information\.
ï Component 4: Just-in-Time Technical Assistance (US$ 0\.400 million)\. The purpose of
this component was to address unforeseen needs of the government and take advantage of
opportunities for intervention when they arose\.
ï Component 5: Project Management and Implementation (US$ 0\.885 million)\. The
purpose of the component was to support the administration and coordination of the
project as well as the implementation and follow-up of the projectâs monitoring and
evaluation framework\.
1\.6 Revised Components
14\. PSMP II activities were revised to reallocate project funds between components through
the first project restructuring in August 2012 in order to support the Government`s revised
priority to develop a nationwide electronic healthcare service delivery system\. These activities
were in line with the PDO outcome of enhancing performance of public sector management for
better service delivery\.
15\. New activities were financed through the savings generated from cancellation of less
critical activities included in the original project design some of which were implemented by the
Government without PSMP II support\. The cancelled activities included: procurement of IT
7
equipment for the central public administration; upgrading the Electronic Document
Management System (EDMS); development of an electronic government portal (developed and
launched by the Government as www\.e-gov\.am) and information management system for public
relations departments; analyses and feasibility studies for public pay and e-government reforms
(undertaken using the Governmentâs resources); and establishment of Ethics Commission for
High Ranking Public Officials (created without project funding)\. Details on the revised activities
and components are in Table 2\.
Table 2: Original and Revised Components with Budgets/Expenditures
Original Components and Revised Components and Final Difference in Expenditure
Budgets Expenditures /Reason for Change
Component 1: Strengthening Component 1: Strengthening -$0\.571 million The change
Institutional Capacity in Policy Institutional Capacity in Policy was related to savings in
Making and Service Delivery Making and Service Delivery procurement and the
(US$2\.675 million) (US$2\.104 million) Governmentâs decision to
1\.1\. â Review and Re-Engineering 1\.1\. â Review and Re- reduce the planned business
Institutions and Business Engineering Institutions and process reengineering and
Processes (US$1\.250 million) Business Processes (US$1\.010 functional reviews\.
1\.2\. â Policy Analysis, million)
Formulation, and Monitoring 1\.2\. â Policy Analysis,
(US$ 0\.940 million) Formulation, and Monitoring
1\.3\. â Strengthening (US$ 0\.108 million)
Organizational Capacity for the 1\.3\. â Strengthening
Policy Driven Performance Organizational Capacity for the
Planning and Management Policy Driven Performance
processes (US$ 0\.485 million) Planning and Management
processes (US$ 0\.987 million)
Component 2: Maximizing the Component 2: Maximizing the -$0\.437 million The following
Efficiency of Human Resources Efficiency of Human technical assistance was
in the Public Sector (US$1\.145 Resources in the Public Sector cancelled: feasibility studies
million) (US$0\.708 million) on public pay (Government
2\.1\. â Harmonization of Public 2\.1\. â Harmonization of Public conducted itself); development
Service and Introducing Service and Introducing of Code of Conduct for public
Performance Pay (US$ 0\.290 Performance Pay (US$ 0\.036 servants; creation of the Ethics
million) million) Commission for High Ranking
2\.2\. - Public Service Ethics and 2\.2\. - Public Service Ethics and Officials (created without
Code of Conduct (US$ 0\.215 Code of Conduct (US$ 0\.348 PSMP II support); and IT
million) million) equipment distance learning\.
2\.3\. - Capacity Building/ Training 2\.3\. - Capacity Building/
(US$0\.640 million) Training (US$0\.323 million)
Component 3: Development of Component 3: Development of +$1\.306 million The increase
Information Systems for Information Systems for was associated with the
Managing Internal Workflow Managing Internal Workflow Governmentâs decision to
and External Communication and External Communication develop a nationwide
(US$ 3\.895 million) (US$ 5\.201 million) electronic healthcare service
3\.1\. - Improved Management 3\.1\. - Improved Management delivery system (e-Health)
Information Systems (MISs) Information Systems (MISs) within the project\. The
following less critical
8
Original Components and Revised Components and Final Difference in Expenditure
Budgets Expenditures /Reason for Change
(US$ 3\.025 million) (US$ 4\.215 million) equipment and goods were not
3\.2\. - Information systems 3\.2\. - Information systems purchased: disaster recovery
development to enhance public development to enhance public for IT systems; equipment for
access and information access and information the central public
(US$ 0\.620 million) (US$ 0\.570 million) administration; and
3\.3\. - Management of a 3\.3\. - Management of a management portal for e-
Government ICT System Government ICT System services/e-government portal
(US$ 0\.250 million) (US$ 0\.416 million) (Government created)\.
Component 4: Just-in-Time Component 4: Just-in-Time -$0\.375 million Funds were
Technical Assistance (US$ 0\.400 Technical Assistance reallocated to the component
million) (US$ 0\.025 million) 3\.
Component 5: Project Component 5: Project +$0\.054 million Extension of
Management and Management and the project closing date for
Implementation (US$ 0\.885 Implementation (US$ 0\.939 eighteen months led to
million) million) increase in project
5\.1\. - Project Management and 5\.1\. - Project Management and administration cost\.
Administration (US$ 0\.815 Administration (US$ 0\.908
million) million)
5\.2\. - Project Monitoring and 5\.2\. - Project Monitoring and
Evaluation (US$ 0\.070 million) Evaluation (US$ 0\.031 million)
1\.7 Other significant changes
16\. The project was restructured three times during implementation:
17\. First restructuring\. A Level 1 restructuring was approved in August 2012, primarily to
reallocate the project funds for the creation of an integrated health information system (e-Health)\.
In addition to reallocating funds from Component 4 âJust-in-Timeâ, new activities were financed
through procurement savings and cancellation of less critical activities included in the original
project design\.
18\. Second restructuring\. In September 2013, a Level 2 restructuring revised the project
result framework\. Due to changes in the CPIA methodology after the project became effective
and the cost and inaccuracies in the initial surveys, the original PDO indicators were not likely to
capture progress towards the projectâs outcomes\. The restructuring replaced the PDO indicators
with external assessments and data captured directly from project activities\. Intermediate results
indicators were also revised to reflect changes made during the first restructuring as well as to
better capture the outputs from project activities\. (See Table 1 and Annexes 2A and 2B\.)
19\. Third restructuring\. In October 2014, a Level 2 restructuring extended the project
closing date by eighteen months from July 31, 2015 to January 31, 2017\. The extension was
required to complete implementation of civil service reform activities (Component 2) and
development of e-Health services (Component 3)\. Preparation of training modules, e-testing for
recruitment and the training needs assessment were delayed because of the difficulty in reaching
a final agreement between the Civil Service Council and the Government Office on key policy
considerations, including decentralization of HR management, the cancelation of attestation and
9
the scope of proposed training modules\. Agreement on these matters was reached with the
support of the first and second Development Policy Operations in a new DPO series which
included a some of the civil service reforms as prior actions and benchmarks (DPO1-September
25, 2013 and DPO 2-October 14, 2014)\.
20\. Implementation of the e-Health system faced procurement and policy delays related to
the completion of a feasibility study and its translation into procurement activities\. The Bank
team added a health sector colleague with expertise in e-health solutions who worked with
consultants, the Ministry of Health and EKENG (Armeniaâs e-government agency) to resolve the
issues and advance the procurement process\. By the time of project closing Ministry of Health
had begun pilot testing the system with health providers and agreements had been reached on
system developments and their rollout\.
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Project Preparation, Design and Quality at Entry
21\. Project preparation\. Preparation of PSMP II from Concept Note (October 2009) to
Board approval (March 2010) took a little over six months, significantly less time than regional
and Bank-wide norms\. Prior to the Decision Meeting (January 2010) the project received a
Quality Enhancement Review (QER) and a risk assessment review by the ECA Operations
Support Team (OST)\.
22\. As a follow-on project PSMP II preparation benefited greatly from the outputs and results
of PSMP I, not least because of continuity of TTL and team members\. Issues relating to civil
service reform, e-government development and implementation and policy-making at the
Government Office identified during PSMP I implementation were the basis for the activities
developed as part of PSMP II\. Project preparation also benefitted from the Governmentâs
continued focus on public administration reform in the SDP, PARS and Government Program
which in turn based their analysis on PSMP Iâs results, and the policy actions and benchmarks on
civil service reform and e-government implementation in the first DPL series\.
23\. The PAD identified key lessons from PSMP I and the evaluations of other Bank and
donor projects focused on public sector management reform\. These included: use of stakeholder
participation to build strong ownership among counterparts at federal, provincial, and lower
levels of government; building political commitment to and ownership of reforms by linking the
project to the Governmentâs strategic priorities; linking technical assistance and investments in
capacity building to policy reforms through the ongoing Development Policy Lending and
Operation series; addressing changes in behavior and organizational culture alongside the
development of new technology; and ensuring project flexibility and being opportunistic in
preparing technical foundations for what might become feasible in the future are important
ingredients for success\. The IEG ICRR for PSMP I endorsed these lessons, stressing the
importance of enhanced preparation for ICT projects, where an e-readiness assessment should be
critical, along with consideration of business process changes that can take full advantage of new
ICT opportunities\. The Bank team and Borrower took this into account by conducting a
feasibility study as a first step in the development of the e-Health system\. (The relationships
among PSMP I, II and the new PSMP III are described in Annex 2C\.)
24\. Design features\. Additional funding, a repeater of the PSMP I, Specific Investment Loan
and Adaptable Program Loan were all considered during the preparation stage\. The project
10
design was kept straight forward, realistic and well structured, adopting the basic design
envisioned by PSMP I\. QER peer reviewers raised attribution problems in relation to the use of
CPIA indicators/methodology to measure progress against PDO outcomes\. However, the PDO
indicators were not revised until the MTR and the second restructuring in September 2013\.
25\. Assessment of risks\. The PAD notes that there were substantial risks associated with
systematic corruption and Armeniaâs macroeconomic situation following the financial crises and
the\. The Bank team assessed five other risk factors as low and five as moderate in the Risk
Identification Worksheet\. The overall risk was rated moderate\. Policy actions supported by the
first DPL series and continuous Bank engagement on macro issues were identified as mitigating
factors for the macroeconomic risk\. However, the PAD notes that the corruption risk would
remain substantial even after mitigation measures were considered\.
2\.2 Implementation
26\. Supervision and technical missions were conducted on a regular basis and there was
consistent coordination and follow-up with the Government\. Regular Aide Memoires and ISRs
were filed\. From effectiveness until January 2015, implementation progress was rated
Satisfactory\. A Mid-Term Review in May 2013 â slightly earlier than envisioned in the PAD â
advised adjustment to PDO indicators and many of the intermediate result indicators to more
accurately assess implementation progress\. From January 2015 to project closing,
implementation progress was rated to Moderately Satisfactory due to delays in civil service
reforms and e-Health activities\. The third restructuring extended the closing date by eighteen
months to allow completion of these activities (see subsection 1\.7)\.
27\. The Bank team was able to attract outside resources to help address implementation
issues with the policy and strategic planning activities\. The Bankâs regulatory governance team
assisted the Government with developing and beginning to implement a regulatory impact
assessment process with the project then providing funding for a âregulatory guillotine unitâ to
help implement this process\. The Bank team also attracted additional trust funds to complement
the project activities on strategic planning\. These trust funds helped to push forward the
development of a strategic planning methodology which was then piloted under Component 1 in
select ministries and agencies near the end of the project\. Support for the pilots was provided by
a joint team consisting of one PSMP II consultant and one consultant from the strategic planning
technical assistance project\.
28\. Activities supporting civil service reforms were delayed due to the Civil Service
Commissionâs late approval of the new civil service reform strategy\. The Bank team supported
the strategy process through the use of policy actions and benchmarks in the second series of
DPOs (starting in late 2013)\. The DPOsâ focus on the decentralization of HR management and
the cancellation of periodic attestation (testing) supported PSMP II activities on civil service
management and training\.
29\. While the Government created the Commission on Ethics of High-Ranking Officials
(ECHRO) outside of PSMP II, implementation of Component 2 supported the development of
the income and asset declaration system and capacity building for the Commission\. The Bank
team also drew on its country engagement budget to support capacity building for ministerial
ethics bodies\. This additional assistance generated reform proposals for the ethics bodies which
were promoted through PSMP IIâs support for revision of Armeniaâs Public Service Law\.
11
30\. The development of Information Systems focused on purchasing IT goods and services â
77 percent of PSMP II expenditures were for goods, 11 percent for consulting services, 3 percent
for training and 19 percent for operating expenses â to support the development and
implementation of systems and automation\. While many of the e-services implemented with
PSMP II support fall under Components 1 and 2 the backbone for those systems was procured
under Component 3\. In response to the Governmentâs new priorities, the second restructuring
expanded Component 3 to develop the e-Health system\. Following delays in completion of the
e-Health feasibility study the Bank team engaged a World Bank colleague with e-health
expertise to advise on mediation between the vendor and the beneficiary agencies\.
Implementation of e-government applications and ICT systems under PSMP II built on
achievements made under earlier World Bank operations, including PSMP I, the Second Judicial
Reform Project and e-Society projects\. Activities under this component also were supported by
prior actions and benchmarks for an e-government strategy and interoperability requirements in
the second series of DPOs\. High-level Government commitment and experienced PMG and
FFMPC management and procurement staff worked effectively to ensure successful
implementation of multiple information management and e-service systems\.
31\. Project Management\. The Project Management Group (PMG) and the Ministry of
Financeâs Foreign Finance Project Management Center (FFPMC) ensured smooth
implementation of the project\. The Project Manager, who served in the same position for PSMP I,
had strong relationships inside the Government Office and other ministries and maintained a
good working relationship with the FFPMC\. The Project Manager supervised all project
activities and coordinated a diverse group of beneficiaries, interceding in the implementation of
project activities to resolve issues quickly\. The combined technical experience of FFPMC with
World Bank procedures and management skills of the PMG facilitated effective decision
making, decisive action and contributed to the smooth implementation of project activities\.
32\. Government Leadership\. While the Government of Armenia generally supported PSMP
II, there were numerous changes in key government officials\. Presidential and parliamentary
elections, a Constitutional referendum and three changes in Prime Minister and Chief of Staff
occurred during implementation\. The elections and referendum adversely affected
implementation, particularly those activities that required senior government attention such as
strategic planning and policy reform (Component 1) and civil service reforms (Component 2)\.
With each new Chief of Staff â the most senior official overseeing PSMP II implementation â
the Bank team and PMG had to review and revise PSMP II activities to align with the
Government priorities\. This had a significant impact on the activities involved in rationalizing
and improving the Governmentâs strategic planning capacity (Component 1) which were delayed
and ultimately only partially achieved\.
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
33\. The M&E design in the PAD provided for PDO and intermediate outcome and results
indicators for each component to assess progress in meeting the project implementation targets
and objectives\. As noted above in sections 1\.6 and 1\.7, these indicators proved unsuitable for
measuring the PDO\. Adjustments in the CPIA methodology meant that it no longer served as a
valid basis for comparison\. Besides, as QER peer reviewers pointed out, the CPIA ratings were
simply not granular enough to capture institutional changes effected by the project\. While the
project originally envisioned the use of periodic user surveys to measure project progress and
12
build stakeholder support, the Mid-Term Review advised to drop the use of citizen and business
surveys to measure improvement in policy formulation and service delivery, given the high cost
and inaccuracies in the initial surveys\. These were replaced with indicators based on mixture of
internal project data (use of new policy guidelines, increased use of Electronic Document
Management System and deployment of civil service performance appraisal system) and external
assessment (an indicator from the World Economic Forumâs Global Competitiveness Index)\.
Despite extensive restructuring the results framework did not capture the scope of project
activities and outputs\. While the project spent significant funds to develop the e-Health system,
PSMP II did not have a specific intermediate outcome indicator on e-Health with which to track
the progress of these activities\. The only intermediate indicator which referenced the system was
a combined indicator on improved service delivery\.
34\. During implementation, the PMG ensured that data on project implementation was
collected and that information was reviewed, consolidated and reported in timely manner\.
Annual progress reports were submitted to the Public Sector Reform Commission (PSRC) for
approval and sent to the World Bank by March 1 of the following calendar year\. Progress reports
were organized around PSMP IIâs Results Framework\. PMG followed the same approach in its
Mid-Term Report provided in June 2013 and in its Implementation Completion Report provided
in March 2017\. M&E was rated Moderately Satisfactory or Satisfactory throughout the life of
the project\.
2\.4 Safeguard and Fiduciary Compliance
35\. PSMP II was assessed as a category C project and therefore no environmental assessment
was required\. PSMP II benefited from FFPMCâs expertise and experience with the World
Bankâs fiduciary policies and procedures\. Financial management was rated Highly Satisfactory
or Satisfactory throughout the life of the project\. Procurement was rated Satisfactory from
project inception until mid-2016 when the rating was decreased to Moderately Satisfactory\.
There were no fiduciary compliance issues during the implementation of PSMP II\.
2\.5 Post-completion Operation/Next Phase
36\. At the time of the ICR mission all the IT systems supported by PSMP II were operational
and in use as planned under the project\. The project supported improvements in core
government management information systems including EDMS (archive and work planning) and
HRMIS (performance evaluation and distance learning modules) as well as the income and asset
declaration system\. E-service systems such as e-police and e-Health were operational, though
the e-Health system is being rolled out in phases by the EKENG (e-Government Infrastructure
Implementation Office)\. The e-Health system is operated and maintained by EKENG while a
private firm is selected to serve as e-Health operator under a concession awarded in July 2017\.
As of early 2017, the MoH revised its regulations so that applications for state insurance funding
can only come through the e-Health platform\. 480 health providers were connected to the e-
Health platform in June 2017 and all health providers, public and private, will be connected to
the system before the end of 2017\. The system is expected to become the sole platform for health
insurance and health services across Armenia\. EKENG continues to play the lead role in setting
e-government and e-service standards and, with support from PSMP II, resolving interoperability
issues across Armeniaâs information systems\. ECHRO is expanding the number of external
databases and registries that it can access to verify declarations (with support from DPO policy
actions)\.
13
37\. The Third Public Sector Modernization Project became effective on May 6, 2016, and
will support and advance many of the outcomes achieved under PSMP II\. (See Annex 2C)\.
PSMP III supports upgrades and expansion of PSMP II systems such as EDMS, HRMIS and the
income and asset declaration system\. PSMP III will also promote policy-making reforms\. The
e-Health system, which is not included in PSMP III, will receive additional financial support for
its rollout from the EU\. The PSMP II PMG will remain intact and should facilitate smooth
implementation of the new operation and provide institutional memory for any follow up actions\.
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design and Implementation
Relevance of objectives\. Rating: High
38\. The objectives of the project remain highly relevant\. The objectives supported by PSMP
II have been endorsed by three successive Governments, including the most recent Government
appointed in September 2016\. PSMP IIâs original objective to improve public sector
management performance through better service delivery are reflected in the long-term, Armenia
Development Strategy 2025 (ADS)\. One of the ADSâs four pillars is modernizing the public
administration through increased state efficiency and improved quality and access to public
services\. This goal is also reflected in the Bankâs most recent Country Partnership Strategy
FY2014-FY2017 which includes âimproving governance and anti-corruption measures in public
servicesâ as a cross-cutting theme\. This theme is directly supported by the follow-on PSMP III
operation\. The continued relevance of PSMP IIâs objectives is evidenced by the Governmentâs
request for the follow-up PSMP III and its focus on improved service delivery for citizens
through enhanced e-government operations and enforcement of conflict of interest rules among
public officials\.
Relevance of design\. Rating: Modest
39\. PSMP II was designed to build on the policy and process reforms supported by PSMP I
and the first DPL series, with flexibility to respond to changing Government priorities\. The
relevance of PSMP IIâs design can be seen in the progression from PSMP I (focused on policy
and process reforms and initial e-government systems) to PSMP II (strengthening the strategic
policy process and expanding e-government and e-services, including income and asset
declarations) to PSMP III (supporting multiple e-services, including PFM, and promoting
enforcement of conflicts of interest rules)\. PSMP II was sufficiently flexible to incorporate the
e-Health activities after over a year and a half of implementation\. In the first restructuring the
Bank team was able to use funding from the just-in-time-component and cancellation of
activities that the Government had implemented on its own to revise the design in response to the
Borrowerâs changed priorities for improving service delivery for citizens\.
3\.2 Achievement of Project Development Objectives
Rating: Substantial\.
40\. PSMP II was generally successful in achieving its overall objective and efficacy is rated
as Substantial\. PMSP IIâs overall Project Development Objective âto enhance performance of
public sector management for better service deliveryâ included three outcomes: strengthening
institutional capacity in policy formulation; maximizing the efficiency of human resources; and
developing information systems for internal work flow and external communications\. The PAD
14
is silent on the relative weighting of each outcome and so the ICR considers them to be equal in
importance towards achieving the overall objective\. Three out of four revised PDO indicator
targets and twelve of fourteen revised/new intermediate outcome indicators were either achieved
or exceeded\. One PDO indicator and two intermediate outcome indicators were partially
achieved\. The partially achieved indicators are related to the development and implementation
of a new strategic planning framework (PDO outcome 1), piloting of which was launched at the
close of the project in December 2016\.
Table 3\. Summary of PDO Efficacy Ratings
Overall
PDO Outcomes PDO Indicators Rating
PDO rating
PDO 1\. Strengthen institutional Partially Achieved (one achieved,
Modest
capacity in policy formulation one partially achieved)
PDO 2\. Maximizing the efficiency
Achieved Substantial
of human resources Substantial
PDO 3\. Developing information
systems for internal work flow and Achieved High
external communication
41\. PDO 1\. Strengthening institutional capacity in policy formulation (Modest)\. PSMP
II focused on improving the development and implementation of strategies, policies and
workplans\. Through the successful implementation of business process reengineering and
functional reviews at the ministerial level, the project was able to reform management
procedures and, as a result, improve service delivery\. Through the electronic vehicle registration
system, the e-police system, for example, PSMP II was able to reengineer and automate a service
provided by Armeniaâs police so that it provided additional services (registration, numbered
plates and registration document) in significantly less time (delivery time was cut from over 24
hours to under 30 minutes)\.
42\. PSMP II sought to tackle conflicts of interest in Government decision-making through
the development of an e-government solution to enable on-line filing and publication of income
and asset declarations of high-level public officials\. The Ethics Commission for High-Ranking
Officials (ECHRO), established in January 2012, managed the system and used a risk-based
verification system to identify possible public officialsâ conflicts of interest\. From 2012-2015,
the Commission received and analyzed 5230 income and asset declarations of high-ranking
officials and their related persons, with 98 percent submitted through the online system\. Training
and professionalization of the Commission personnel supported by PSMP II has helped ECHRO
proactively flag possible conflicts of interest in government decision-making processes\. The
Commission also serves a coordinating role for agency level ethics commissions\. The Bank
team leveraged Bank budget-supported technical assistance to provide training for these lower
level commissions and to identify options for reform leading to legislative proposals PSMP II\.
43\. PSMP IIâs efforts to improve strategic planning in ministries and in the center of
government were not fully achieved by the time of project closing\. The Government established
National Centre for Legislative Regulation to implement a regulatory guillotine process and to
pilot regulatory impact assessments across the administration\. Trust fund-supported technical
15
assistance helped to develop the strategic planning methodology that PSMP II was piloting in six
ministries/agencies based on instructions issued by the Government Chief of Staff in December
2016 and January 2017\. The central strategy unit in the Government Office responsible for
strategic planning was created in July 2017\. However, rollout of the strategic planning
methodology, including implementing links between ministry strategies and budget planning,
will require additional time to implement\.
44\. PDO2\. Maximizing the efficiency of human resources (Substantial)\. PSMP II
improved human resource management and staff motivation in the public sector by establishing
an automated performance evaluation system tied to annual workplans with real-time
assessments\. Use of the system has facilitated preparation of bottom-up annual work plans
coupled with top-down oversight of execution of those work plans\. The system also allows for
real-time assessment of deliverables and created the basis for the introduction of a performance-
based pay feature for the award of bonuses\. Establishment of the system enabled public sector
managers to align civil servantsâ work plans with the Governmentâs Program, which will lead to
a more effective HR management\. The workplan-performance appraisal system was developed
as an upgrade module to the EDMS originally developed under PSMP I which allows for full
automation of work planning and performance appraisal\. PSMP II also supported the adoption
of the Civil Service Reform Strategy in 2015 and harmonization of the public service in Armenia,
enabling staff and benefits mobility\.
45\. PSMP II supported the development of online training modules for civil servants based
on a needs assessment conducted by the Civil Service Commission\. The modules covered key
PSMP II themes including: service delivery, performance management, policy analysis, HRM,
and ethics\. The modules were posted in the fall of 2016 (on an IT platform developed under the
Bank-supported Second Judicial Reform Project, thus saving PSMP II funds) and by April 2017
the CSC reported that approximately 1,100 civil and public servants had accessed the courses\.
Civil service training funds have been severely limited, so development of the online courses has
allowed the CSC to achieve significant cost savings related to reduce travel and use of materials\.
46\. PDO 3\. Developing information systems for internal work flow and external
communications (High)\. PSMP II supported the purchase, development and installation of IT
information and service delivery systems\. These include upgrades to the EDMS and HRMIS
developed under PSMP I and the development of the electronic asset declaration, e-police, e-visa
and e-Health services\. Government established its own web portal www\.e-gov\.am, the EDMS
upgrade provided an electronic communication system between the Government and citizens
organized through the portal\. EDMS allows citizens to send a query to the Government or file a
complaint, track the query status and see the name of the official to whom the query has been
assigned\. Additional PSMP II-supported upgrades helped to transform EDMS into a
management tool that has improved record management; can electronically archive documents;
and manage how staff handle their tasks in terms of timeliness\. EDMS also allows for the
bottom-up development of annual work plans coupled with top-down oversight of execution of
those work plans which strengthens internal workflow and allows for closer alignment of
operational and strategic planning, another PDO outcome\. The web-based upgrade of HRMIS
provided additional functionality including the automatic importing and recording of
performance appraisal results\. PSMP II supported an upgrade of the e-visa system to improve
functionality and establish a consular registration module designed to improve internal work
flow in awarding visas (and which will be a focus of further improvements under PSMP III)\. As
16
part of the broader e-Government agenda, PSMP II supported a cybersecurity workshop and
conducted an assessment which identified a need for increased attention to security\.
47\. PSMP II supported the development of the e-Health system as a centralized platform
which ensures comprehensive and real-time exchange of information in three main areas:
medical, administrative and financial/insurance\. The system will provide access to patients,
healthcare providers, the Government and insurance companies in order to provide high-
quality, safe, accessible and cost-effective medical services to the population\. By project closure,
the system was developed and piloted with 480 medical institutions that receive state insurance
funding registered in the system\. These institutions uploaded information about their available
resources, services and personnel\. As of May 2017, the database includes information on more
than 32,000 personnel, including 22,000 doctors and nurses\. The project also supported training
on the new system for over 600 operators from these institutions as well as a train the trainers
course for Ministry of Health staff\. The e-Health system will greatly reduce paperwork freeing
up doctors to spend more time with patients and provide more reliable healthcare statistics to
guide future reforms\. It will also improve policymaking in the health sector by limiting
opportunities for corruption in state healthcare funding and strengthening control of the
importation and distribution of pharmaceuticals\.
3\.3 Efficiency
Rating: Modest\.
48\. The PAD did not provide a cost-benefit analysis of the investments that were going to be
made under PSMP II because the benefits were difficult to quantify\. The nature of PSMP II
activities do not lend themselves to standard economic or financial analyses to determine value
for money\. As a result, the efficiency assessment of PSMP II is based on a combination of least
cost comparisons and estimates, qualitative assessments and a description of the projectâs
implementation efficiency\. Based on this analysis and the limited availability of data, PSMP IIâs
efficiency is rated Modest\.
49\. Resources were used in a cost-effective manner and expenditures under PSMP II were
reasonable in relation to the outcomes and results produced\. PSMP II was able to deliver the e-
Health system, the largest ICT system developed under the project, at a lower cost than similar
systems developed and delivered in Moldova and Kosovo\. Based on data provided by the World
Bank e-health expert working on PSMP II, the Armenian e-Health software system was procured
at a cost of USD 925,000 which is less than half the cost of a similar system developed for
Kosovo (over USD 2M) and only two-thirds the cost of the similar system in Moldova (USD
1\.4M)\. This translates into a unit cost per facility using the system of USD 1,927 for Armenia
versus USD 200,000 for Kosovo\. (See Annex 3 for comparative details\.) In addition to
drastically reducing the time needed to register a vehicle, the e-police system developed by the
project cost USD 56,055 to develop and registered over 54,600 vehicles the past year at a cost of
a little over USD 1\.00 per registration\.
50\. The project contributed in a cost effective way to improved operation of a number of
public administration functions including the internal document management, income and asset
disclosure, human resource management and the delivery of vehicle registrations\. Under
Component 1, PSMP II delivered functional reviews/business process reengineering for four
ministries, one agency and one municipality for the cost of USD 276,659\. These reviews
assessed over 160 administrative functions across these organizations and produced 58
17
recommendations and 35 proposals for reforms that were adopted\. A World Bank team
conducted a similar set of institutional assessments of five ministries for the Turkish Cypriot
Community at the cost of USD 300,000\.3 The development of EDMS modules for an archive
and the work planning and performance system, cost USD 132, 036 and are being used by almost
13,600 employees across 46 government organizations\. The income and asset disclosure
software developed under the project was designed following best design practice to include
multiple functionalities (online submission, database, publication and electronic verification)
within a single development contract\. In addition, for a consultancy contract of USD 174,750,
PSMP II was able to catalyze the development of an interoperability regulation issued by the
Government and impacting the development all Armeniaâs e-government solutions\.4
51\. Project implementation was generally conducted in an efficient manner\. Activities under
Component 2 were impacted by the Civil Service Commissionâs delay in adopting a new civil
service reform\. E-Health activities under Component 3 were delayed due to disagreements
between the vendor and beneficiary agencies\. While these delays led to an 18-month extension
of the project closing date, the activities under each component were completed (and the e-
Health system was rolled-out following the pilot)\. Overall implementation progress never fell
below a moderately satisfactory rating during the life of the project\. The procurement process,
managed by PMG and FFPMC, generated cost savings of more than USD 1\.08 million from
effective tendering and contract supervision and avoidance of cost overruns in implementation\.
These savings were used to fund additional activities (Box 1), primarily the purchase of
additional IT equipment, which were used to advance the projectâs objectives\.
Box 1\. Project Activities Funded Through Cost Savings
1\. Procurement of the equipment for GoA Staff internal communication
2\. Supply of additional IT equipment for the operation of MIS in the GoA, ministries and regions &
IT equipment for police (activity originally cancelled under the first restructuring)
3\. Procurement of air condition system for the RA National Assembly session hall
4\. Procurement of equipment for electronic management system for registration of acts of civil status
5\. Procurement of computer equipment for RA National Security Council
6\. Procurement of the IT and communication equipment for MoF
7\. Procurement of IT equipment for the full-scale operation of ARMEPS procurement system
(originally implemented under PSMP I)
8\. Procurement of additional equipment for territorial departments of Civil Acts Registration Office
9\. Procurement of Computer equipment for RA Government Staff
10\. Procurement of Notebooks for Center of Strategic Initiatives of Government Staff
52\. Project resources were used in a cost-effective manner and expenditures under PSMP II
were reasonable in relation to the outcomes and results produced\. The procurement process,
3 Improving Public Administration in the Turkish Cypriot Community, P155890\. E-mail exchange with TTL,
Raymond Muhula\.
4
Principles of Interoperability, Government Decree #1093, August 31, 2015
18
managed by PMG and FFPMC, generated cost savings of more than USD 1\.08 million from
effective tendering, contract supervision and avoidance of cost overruns in implementation\.
These savings were used to fund additional activities (Box 1), primarily the purchase of
additional IT equipment, which were used to advance the projectâs objectives\.
3\.4 Justification of Overall Outcome Rating
Rating: Modestly Satisfactory
Table 3\. Calculation of the Overall Project Outcome Rating
Overall
Relevance of Efficacy: PDO Outcomes Efficiency
Outcome
Objectives Design 1 2 3
Moderately
High Modest Modest Substantial High Modest
Satisfactory
Averaged to Substantial Averaged to Substantial Modest
3\.5 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
53\. PSMP II did not explicitly target poverty reduction\. However, it can be expected that the
project outcomes will contribute indirectly to poverty reduction by improving the performance,
delivery and access to key functions of the Government, notably through improvements in the
delivery of healthcare\. The e-Health system has the potential to transform Armeniaâs health
sector, improving service delivery by minimizing therapeutic errors, improving diagnostic
processes, saving users time and costs, improving communication between patients and health
providers, improving access in rural and remote areas by making telemedicine services available\.
(b) Institutional Change/Strengthening
54\. PSMP II contributed to institutional change in three ways\. First, through business process
reengineering and functional reviews conducted in half of the Governmentâs ministries and
through establishment or expansion of government management information systems\.
Reengineering and functional reviews contributed to restructuring of ministerial processes and
procedures to improve the delivery of public services\. Second, the successful implementation of
management information systems such as EDMS and HRMIS, and the establishment of
interoperability standards for these and existing IT systems creates the enabling environment for
broader implementation of e-government solutions for better service delivery and strengthens the
service delivery orientation of institutions (a key focus of PSMP III)\. Third, PSMP II supported
the development of core management systems that sought to change organizational culture and
the basis for decision making\. The human resource management systems supported a shift
towards results orientation in the public sector by establishing an automated performance
evaluation system tied to annual workplans with real-time assessments\. PSMP IIâs support for
the National Centre for Legislative Regulation, a regulatory guillotine process and the use of
regulatory impact assessments sought to strengthen evidence-based decision making across the
administration\. Similarly, development of the strategic planning methodology will support more
evidence-informed, results-oriented policy process which aligns resources with policy objectives\.
19
Finally, PSMP IIâs support for the Ethics Commission for High-Ranking Officials (ECHRO), the
development of income and asset system and risk-based verification contributed to a culture in
which public service, in the public interest is seen as the norm for public servants\.
(c) Other Unintended Outcomes and Impacts (positive or negative)
55\. The Project achieved several positive outcomes which were not intended at the time of
project design, notably development of the e-health systems, the e-police vehicle registration
system with is associated positive cost and time savings and the e-visa activities which improved
consular service delivery, were not originally envisioned in PSMP IIâs design\.
3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
56\. Not applicable
4\. Assessment of Risk to Development Outcome
Rating: Negligible to Low
57\. The risk to development outcomes is Negligible to Low\. The Government has
demonstrated its strong commitment to sustain the achievements of PSMP II, notably by
requesting and approving the follow-on Third Public Sector Modernization Project\. E-
governance reforms are identified as a priority in the Armenia Development Strategy for 2014â
2025\. In line with this Strategy, some of the e-governance reforms delivered under PSMP II will
be supported and expanded under PSMP III\. PSMP IIâs investments in ICT and resulting
improvements in EDMS, HRMIS, e-visa, e-police and e-Health serve as building blocks for
Armeniaâs ongoing e-governance reforms\. PSMP IIâs improvements in policymaking and
strategic planning when paired with civil service performance appraisal reforms and new online
training for civil servants are the foundation of a more efficient and effective public
administration\. Risks to these PSMP II outcomes could arise if budget limitations make it
difficult for the Government to maintain and/or upgrade the information and IT systems
developed under PSMP I and II\.
5\. Assessment of Bank and Borrower Performance
5\.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
Rating: Moderately Satisfactory
58\. The Bank team took into consideration the successes and lessons learned from PSMP I in
designing the components and implementation arrangements for PSMP II\. During preparation
and appraisal, the Bank team worked with experienced counterparts in the PMG and FFPMC to
considered the adequacy of project design and address all major relevant technical and
institutional issues including procurement and financial management arrangements\. However,
the Bank teamâs efforts to identify or develop innovative PDO indicators and the use of many
intermediate indicators left PSMP II with a results framework that was difficult to implement and
required significant revision mid-stream\.
59\. Project preparation was carried out with an adequate number of specialists who provided
the technical skill mix necessary to address sector and fiduciary concerns\. The Bank provided
adequate human and financial resources to ensure quality preparation and appraisal work (details
20
in Annex 4)\. The project was consistent with the CPS at the time of approval and with
Government priorities in the sector at the time as expressed in the SDP and PARS\. The Bank had
a close working relationship with the Borrower during preparation and appraisal\. Due to
shortcomings in the project results framework, Bank performance at entry is rated Moderately
Satisfactory\.
(b) Quality of Supervision
Rating: Satisfactory
60\. The Bankâs quality of supervision was satisfactory\. Sufficient budget and staff resources
were allocated (details in Annex 4), and the project was supervised and closely monitored\. The
task team prepared and delivered aide-memoires and ISRs on a regular schedule in line with
Bank procedures\. The ISRs rated the performance of the project realistically in terms of
achievement of development objectives and project implementation\. The MTR was conducted
as planned and was used to discuss and agree on project restructuring\. The Bank benefitted from
the experience and expertise of a series of co-TTLs who had either led or worked on PSMP I or
similar projects in other regions\. It also benefitted greatly from having a locally-based co-TTL
who could respond in real time to requests from the Borrower or to address implementation
issues\. The co-TTL arrangement functioned well\. There was no disruption in supervision when
one TTL took leave for a year\. The co-TTLs also drew on appropriate Bank expertise (an
electronic health expert) to supplement their team when it was necessary to address technical and
communication issues that arose between the vendor of the e-Health system and the Borrower\.
61\. The Bank team responded to Borrower requests and measurement issues faced by the
project by restructuring the project\. The Bank the Governmentâs request for the development the
e-Health system using funds from the just-in-time component and cost savings to take on a large
e-government activity\. The Bank worked with the PMG to identify problems with the PSMP IIâs
results framework and redesigned the indicators so that the projectâs implementation progress
could be accurately measured\. The Bank team made positive use of the restructuring procedure
to keep PSMP IIâs implementation on track\.
62\. The Bank mobilized additional funds to complement PSMP II activities\. The co-TTLs
leveraged bank budget to bring the Bankâs regulatory governance team to Armenia to
supplement work on regulatory impact assessments for Component 1\. This Component was also
supported by trust funds that the co-TTLs mobilized to develop a strategic planning methodology\.
In addition, under Component 2, the team leveraged Bank budget to bring the Bankâs recent
experiences from work in Italy to build capacity in the agency level ethics commissions, and
develop proposals to strengthen ECHROâs role in managing ethics rules across the
administration\. The Bank team was opportunistic in supporting PSMP II implementation
throughout the life of the project\.
(c) Justification of Rating for Overall Bank Performance
Rating: Moderately Satisfactory
63\. With a Moderately Satisfactory rating for quality at entry and Satisfactory rating for the
quality of supervision, overall Bank performance is rated as Moderately Satisfactory in
accordance with Impact Evaluation Group harmonized rating criteria\.
5\.2 Borrower Performance
21
(a) Government Performance
Rating: Moderately Satisfactory
64\. While the Government was committed to PSMP IIâs original objectives and was
supportive during project implementation, project implementation was hindered by the
identification of new priorities mid-stream, multiple changes in the projectâs primary counterpart
and disagreements between project stakeholders\. Each new counterpart renewed the
Governmentâs commitment to PSMP IIâs objectives\. Implementing ministries and agencies,
notably the ECHRO and EKENG, worked with the Bank to address implementation issues as
they arose\. However, the e-Health activities were introduced into the PSMP II in August 2012,
23 months after effectiveness, too late to be completed within the original project timeframe\.
EKENG and MoH, the main stakeholders for the e-Health system, had coordination and
communication difficulties with the e-health vendor which further contributed to delays\. Civil
service reforms on preparation of training modules, e-testing for recruitment and training needs
assessment were delayed due to disagreement between the CSC and Government on civil service
policy reforms, which also contributed to the need to extend the projectâs closing date\. Multiple
changes in Chief of Staff of Government position led to multiple adjustments to the institutional
and organizational arrangements for the new strategic planning framework\. The adoption of
Constitutional Amendments in 2015, which initiated a reorganization of the management of
Armeniaâs public sector also impacted the implementation of the policy formulation and
monitoring activities\. The result of these impacts is a Government performance rating of
Moderately Satisfactory\.
(b) Implementing Agency or Agencies Performance
Rating: Satisfactory
65\. PSMP II benefitted from the experience of two implementing agencies, PMG and
FFPMC, both of whom implemented PSMP I and actively contributed to PSMP IIâs
implementation and the full attainment of nearly all its PDO outcomes\. The PMG managed the
day-to-day operation of PSMP II activities\. Located in the Government Office and reporting to
the Governmentâs Chief of Staff, the Program Manager was able to leverage the authority of the
Government Office and his own political skills to coordinate and effectively mediate among
project beneficiaries to resolve conflicts such as those with the Civil Service Commission or
EKENG\. PMG staff worked closely with the Bank co-TTLs to identify and resolve
implementation issues and provide timely advice to project stakeholders\. The fact that the
Program Manager remained in place through three changes in Chiefs of Staff is testament to his
value to the Government and his ability to maintain consistent top Government ownership and
commitment to PSMP IIâs objectives and motivate project beneficiaries to implement PSMP II
activities fully\. Monitoring and evaluation arrangements were adequate, though there were
delays in providing some reports to the Bank\. PMG staff also maintained an excellent working
relationship with FFPMC on all procurement and fiduciary issues\. Project management was
correctly rated highly satisfactory or satisfactory from the start of PSMP II through to its closing\.
66\. FFPMC served as the primary fiduciary body for PSMP II\. FFPMCâs staff has extensive
expertise in World Bank procurement, financial management and safeguards policies and
procedures from its experience implementing numerous World Bank-funded operations\.
FFPMCâs staff managed all PSMP II tenders and selection committees\. FFPMC, PMG and staff
from project stakeholders reported no issues with procurement activities and all agreed that
22
PSMP IIâs procurement process proceeded smoothly\. PSMP II ISRs rated FFPMCâs financial
management process as highly satisfactory or satisfactory throughout project implementation,
while project procurement was rated satisfactory until the last year of implementation when the
rating was downgraded to moderately satisfactory due to observed deviations in the
implementation schedule\.
(c) Justification of Rating for Overall Borrower Performance
Rating: Moderately Satisfactory
67\. In view of the performance ratings of Moderately Satisfactory for the Government and
Satisfactory for the implementing agencies the overall Borrower Performance is rated as
Moderately Satisfactory in accordance with Impact Evaluation Group harmonized rating criteria\.
6\. Lessons Learned
68\. Overlap with follow up projects ensures continuity in a programmatic series of
operations\. PSMP II was prepared and became effective during implementation of PSMP I,
overlapping implementation for seven months\. PSMP III became effective and overlapped with
the implementation of PSMP II for nine months\. Each of the three projects were developed and
implemented by the same Bank and Government teams, leveraging their design and
implementation experience to ensure that the projects are focused on key constraints in
Armeniaâs public administration and service delivery\. This approach ensured that projects
learned from and benefited from the progress made by its predecessor\. It also allowed the client
to maintain reform momentum and retain the core PMG and FFPMC staff with institutional
memory and experience\.
69\. Public administration reforms are more likely to be successful where they are
supported by both IPF-financed activities and DPO-supported policy reforms\. Explicit
linkage between SIL activities and DPO policy actions can be mutually beneficial: policy actions
support technical assistance and capacity building while technical assistance can ensure that
policy reforms are implemented\. PSMP II was linked directly to two DPL/DPO series, which
promoted policy reforms in e-government interoperability, government ethics and civil service
reforms, which were key achieving PSMP IIâs PDO outcomes\.
70\. Teams should avoid using composite indicators that are not designed and managed
for project-level M&E purposes\. Clients are generally reluctant to utilize loan proceeds for
the gathering of data or the monitoring of indicators\. PSMP IIâs efforts to use innovative, CPIA-
based indicators in order to reduce M&E costs proved to be unworkable in practice because the
data was not sufficiently granular to capture project-level impacts and were subject to
unanticipated adjustments to methodology\. Indicators based on project-generated data and
produced on a regular basis may be best suited for public sector reform projects\. The results
framework intermediate indicators should be streamlined to reduce the administrative burden,
and facilitate the clientâs efforts to monitor and report on their progress\.
71\. ICT investments should be subject to an e-readiness assessment\. PSMP Iâs IEG report,
stressed importance of e-readiness assessment, along with consideration of business process
changes that could take full advantage of new ICT opportunities\. The feasibility study for the e-
Health initiative helped stakeholders identify the scope of work and enabled them to develop a
detailed plan to design and implement the system\.
23
72\. Built-in flexibility allows projects to respond to opportunities for public sector
reforms\. Opportunism and flexibility helped PSMP II support emerging government priorities,
notably the e-Health system\. Inclusion of a Just-in-Time component allows project management
easy access to un-programmed resources so that they can respond to emerging priorities by
financing feasibility assessments and revised implementation plans\.
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies
73\. The Borrower submitted its Implementation Completion Report on March 27, 2017, a
summary of which can be found in Annex 7\. The Borrowerâs ICR does not raise issues that
require a response here\.
24
Annex 1\. Project Costs and Financing
(a) Project Cost by Component (in USD Million equivalent)
Actual/Latest
Appraisal Estimate Percentage of
Components Estimate (USD
(USD millions) Appraisal
millions)
Strengthening Institutional Capacity
in Policy Making and Service 2\.675 2\.104 78\.7
Delivery
Maximizing the Efficiency of
Human Resources in the Public 1\.145 0\.708 61\.8
Sector
Development of Information
Systems for Managing Internal
3\.895 5\.201 133\.5
Workflow and External
Communication
Just-in-Time Technical Assistance 0\.4 0\.025 6\.3
Project Management and
0\.885 0\.939 106\.1
Implementation
Total Baseline Cost 9\.00 8\.977 99\.7
Physical Contingencies 0\.00
0\.00 0\.00
Price Contingencies 0\.00
0\.00 0\.00
Total Project Costs 9\.00 9\.000 100\.0
Front-end fee PPF 0\.00 0\.00 0\.0
Front-end fee IBRD 0\.0225 0\.0225 100\.0
Total Financing Required 9\.00 9\.000 100\.0
(b) Financing
Appraisal Actual/Latest
Type of Estimate Estimate Percentage of
Source of Funds
Cofinancing Appraisal
(USD millions) (USD millions)
Borrower 2\.54 2\.19 86
IBRD 9\.0 9\.0 100
Total 11\.54 11\.19 97
25
Annex 2A\. Changes in PDO Indicators During Restructuring and Outputs
The table below lists changes in the PDO indicators in the PSMP2 Results Framework as approved by the Country Director in
September 2013 and final outputs associated with each revised/new PDO Indicator:
Project D=Dropped End of Project Targets
Development C=Continue
Objectives N= New Original End
PDO Indicators R=Revised Baseline of Project Revised End of Project End of Project Output
Target Target (Per
(Per PAD, Restructuring 2013)
2009)
Strengthening PDO Indicator 1: CPIA 2009 results at least 15% -
institutional Improved policy were not available increase
capacity in coordination and D yet\.
policy responsiveness (CPIA
formulation 15a)
PDO Indicator 1: Decision making is - New internal directives Partially achieved\.
Number of pilot generally not and regulations for policy Generic BPR led to
ministries adopting transparent, and formulation and regulations for policy
policy formulation public monitoring developed in formulation, work
guidelines and dissemination of four pilot ministries and planning and
procedures government implemented by the performance
N policies and Government\. Mechanisms management rolled out
outcomes is a low for policy coordination across the civil service\.
priority\. generally function Proposed new strategic
effectively\. planning framework is
being piloted in 6
ministries and
Government Office\.
26
Project PDO Indicators D=Dropped Baseline End of Project Targets End of Project Output
Development C=Continue
PDO Indicator 2: CPIA 2011 results at least 10% -
Objectives N= New
Improved service are not available increase
R=Revised
delivery and operational D yet\.
efficiency (CPIA 15b)
PDO Indicator 2: 2\.9 - At least 10% increase Achieved\. According to
Favoritism in decisions Conflict of interest the GCI the rating on
of government in public sector the âFavoritism in
policymaking N limits the efficiency decisions of government
(measured by Global of government policymakingâ has
Competitiveness Index decision-making\. improved and reached
indicator) 3\.2\.
Maximizing the PDO Indicator 3: No robust - HRM decisions on Achieved\. TA on civil
efficiency of Deploying the civil performance training and career servant training and job
human servant performance appraisal system is planning are based on the evaluations (completed
resources appraisal system to in place results of performance in Oct 2015) enable
improve human appraisals better linking the
resource management performance appraisals
and staff motivation N with HRM decisions on
training and career
planning\. Consistency
of Performance/ HRM
decisions was
reinforced by recent
DPF-4 prior action\.
Developing PDO Indicator 4 CPIA 2011 results at least 15%
information Improved access of civil are not available increase over
D
systems for society to information yet\. the baseline
internal work on public affairs (CPIA)
27
Project PDO Indicators D=Dropped Baseline End of Project Targets End of Project Output
Development C=Continue
flow and PDO Indicator 4: 20% - At least 15% increase\. Achieved\. According to
Objectives N= New
external Increase in electronic the EDMS data the
R=Revised
communication communication with electronic
citizens measured by communication with
R
share of electronic citizens has reached
correspondence out of 43\.25% in 2016\.
total citizen
correspondence\.
28
Annex 2B: Project Outputs
The table below provides a description of the outputs from the project as measured by the Intermediate Results Indicators\. The Table
tracks changes in the IR Indicators that occurred as a result of the second formal restructuring of the Project\. The final column
provides a description of the outputs achieved as measured against the revised IR Indicators\.
D=Dropped End of Targets
C=Continue
Original End of Revised End of
Results Indicators* N= New Baseline Project Target Project Target End of Project Output
(Per
R=Revised (Per PAD, Restructuring
2009) 2013)
Component 1\. Strengthening Institutional Capacity in Policy Making and Service Delivery
IR Indicator #1: C Government lacks High level Policy At least 10% Partially achieved\. Policy function has been
New internal formats and and Performance increase divided between sector departments of the
directives and processes for unit is Government Office\. PSMP-2 and World Bank TA
regulations for policy policy formulation established and on strategic planning envisage more specialized
formulation and and instruments for operational\. The Unit/s after adoption and roll-out of new
monitoring developed compliance\. regulations framework and regulations\. The project
and applied by the outlining new recommended informal arrangement for few
Government\. policy responsible staff from sector departments of
formulation Government Office to work as a temporary
requirements are- team/unit during piloting phase\. The Center of
implemented\. Strategic Initiatives, created in January 2017
through public private partnership, is in charge of
key high level strategies and reforms\.
29
Results Indicators* D=Dropped Baseline End of Targets End of Project Output
IR Indicator #2: C=Continue The baseline will
R Pilot services -
Improved practice for N= New be established demonstrate (i)
delivery of selected based on the clear
pilot services R=Revised results of the requirements for
demonstrates that: (i) institutional receiving the
clear requirements for reviews service are
receiving the service conducted in Y1 publicly
(traffic police, under sub- accessible; and
passports, e-health, component 1\.1 (ii) at least 20%
etc\.) are publicly reduction in
accessible; and (ii) number of
citizen/firm complaints\.
complaints are
reduced
IR Indicator #2: R No clear Clear requirements Achieved\. Description of services is available on
Improved practice for requirements are for receiving the selected ministerial/ government websites (except
delivery of selected publicly accessible\. service are publicly for e-Health which until rollout is only described
pilot services accessible\. on EKENG website)\.
demonstrates that: (i)
Documentary films on improved functionality of e-
clear requirements for
Health and e-Visa were developed\. The films are
receiving the service
YouTube video hosting:
(traffic police, https://www\.youtube\.com/watch?v=bejoLjisWxA
passports, e-health,
etc\.) are publicly https://www\.youtube\.com/watch?v=PfaGeqLo8_o
accessible; and
30
Results Indicators* D=Dropped Baseline End of Targets End of Project Output
IR Indicator #3\. C=Continue
D at least 20%
Improved practice for N= New reduction in
delivery of selected number of
pilot services R=Revised complaints\.
demonstrates that:
citizen/firm
complaints are
reduced
IR Indicator #3\. N Over 24 hours - At least 50% Achieved\. The registration time of vehicles is
Improved practice for reduction in time decreased to below 30 minutes level including the
delivery of selected required to register provision of obtaining number plates and physical
pilot services a vehicle\. ID of the vehicle\. A documentary film on the
demonstrates that: (ii) functionality of E-Police was developed\. The film
average time required is YouTube video hosting:
to register a vehicle is https://www\.youtube\.com/watch?v=q3VQDkyRkiI
reduced\.
IR Indicator #4\. R Quantitative At least 25%
Improved planning baseline on ad-hoc reduction of ad-
and performance tasks to be obtained hoc tasks over
monitoring and from EDMS\. the baseline
evaluation processes
in pilot ministries,
measured as a
reduced number of
ad-hoc tasks assigned
to the staff through
EDMS
31
Results Indicators* D=Dropped Baseline End of Targets End of Project Output
IR Indicator #4\. C=Continue R No systems in - Capacity building Partially achieved\. Following earlier introduction
Improved planning N= New place to monitor interventions on of M&E/performance management framework, the
and performance and evaluate application of new recent PSMP-II and World Bank TA on strategic
monitoring and R=Revised performance, mechanisms and planning is expected to add more coherence to the
evaluation processes except for the tools on planning, process and tools for planning and monitoring
in pilot ministries EDMS system to M&E in pilot programs\.
ministries
check individual
completed\.
performance\.
Ministries/agencies Annual government
produce annual activity plan is
budgets but more developed in
for budget line transparent manner
item planning\. and the planned
Weak connections output/outcomes
between budgets are aligned with the
and planning of budget\. M&E
outputs/outcome\. systems have been
tested and applied\.
D=Dropped End of Targets
C=Continue Revised End of
Results Indicators* Baseline Original End of End of project output
N= New Project Target Project Target
(Per Restructuring
R=Revised (Per PAD, 2009) 2013)
Component 2\. Maximizing the Efficiency of Human Resources in the Public Sector
32
Results Indicators* D=Dropped Baseline End of Targets End of project output
IR Indicator #5\. C=Continue
N The benefits are - Harmonized public Achieved\. Following the adoption of the Civil
Functional rules N= New not transferred service enabling Service Reform Strategy in 2015 the
established for staff between segments staff mobility principles of mobility of public servants are
benefit transfer between R=Revised of public service without losing the introduced through changes in the Law on
public service positions\. benefits\. Civil Service and will be further enhanced
through broader package of legislative
changes, inter alia, enlarging the scope of civil
service, Government intends to submit to
National Assembly in 2017\.
IR Indicator #6\. C Acceptable Work plans and - Achieved\. Work planning and performance
Consistent use of work approaches and performance appraisals have been effectively rolled-out
plans and performance systems exist but appraisals are used within the government\. The performance
appraisals in the public they are not used in pilot institutions appraisals results are becoming more useful
service according to government wide\. in terms of civil for performance planning after recent
specifications\. servants annual completion of the TA on job evaluation and
Information generated performance DPF-4 prior action further enhancing the
from performance planning\. robustness of performance information\.
appraisal is used for
performance planning\.
IR Indicator #7\. C There were attempts Training of All civil servants Achieved\. The capacity of ECHRO (Ethics
Capacity of high level of the GoA to trainers for ethics have access to Commission) was enhanced through online
ethics commission staff establish high level body staff is manuals or IAD system\. The ongoing legislative changes
to provide advice and ethics commissions developed and educational equip the ECHRO with staff, more resources
at the level of launched\. Ethics materials\. All mid- and responsibilities for coordinating the
training to public
ministries, but the body is established level and senior work of ministerial commissions\. An on-line
servants and enforcing
commissions lack and operational\. training module is developed on ethics and
ethics rules\. managers trained\.
credibility\. A The staff of the integrity of civil servants\. The core staff of
centralized ethics body the ministerial commissions received initial
commission has not demonstrates training by World Bank and Italian
been established\. capacity to anticorruption experts\. World Bank TA also
33
Results Indicators* D=Dropped Baseline End of Targets End of project output
C=Continue provide advice and proposed further improvements in regulation
N= New enforce ethics to make the ministerial commissions more
rules\. All civil effective\.
R=Revised servants receive
copy and
educational
materials\. All mid-
level and senior
managers trained\.
IR Indicator #8\. At least R Such programs do 70% of civil
5 online training modules not exist servants take one
prepared and made of the modules
available for public developed relevant
service training to their job
responsibilities\.
IR Indicator #8\. A new R The CS training is - Capacity for CS Achieved\. On-line training modules are
policy adopted for Civil disconnected from training is developed on key themes in-line with the
Service training allowing actual needs and improved through project objectives (including service delivery,
the pilot of on-line does not contribute improved planning policy analysis, performance management,
modules\. to improved and pilot online project management, HRM, regional
performance\. modules (if development, ethics and integrity)\.
endorsed by the Special methodology is developed for
Law) assessing the civil servant training needs\. The
concept of the needs based training is
reflected in draft legislative amendment\.
Results D=Dropped Baseline End of Targets End of project output
34
Indicators* C=Continue Original End Revised End
of Project of Project
N= New Target Target (Per
R=Revised (Per PAD, Restructuring
2009) 2013)
Component 3\. Development of Information Systems for Managing Internal Workflow and External Communication
IR Indicator C EDMS is EDMS is - Achieved\. The EDMS is operational in all government bodies with
#9\. Enhanced running in ten operational in integrated performance appraisal module\. EDMS archive is
functionality government all introduced and operational (since 2014)\. The plans for equipping
and bodies\. EDMS with extra project management tools was dropped through
government
interoperability project restructuring in 2012\.
bodies and
of the electronic
document demonstrate
interoperability
management
of the
system
electronic
document
management
system
including the
archiving of e-
documents,
enhanced
performance
appraisal
system, as well
as project
management
tools\.
35
IR Indicator R Does not exist\. Train the ethics -
#10\. An body to use the
effective high system\.
level
declaration of
interest system
is established
for senior
public officials\.
IR Indicator R The system - Train the ethics Achieved\. Electronic IAD system is implemented and functional
#10\. An does not exist\. body to use the (used by trained ECHRO team)\. The ECHRO has been working on
effective system launched development of risk analyses and data verification mechanisms\. A
is established system\. Government decree enabling data exchange between ECHRO and
for income, number of critical sources of third party information important for
assets and risk analyses was adopted in 2015\.
conflict of
interest
disclosure by
high level
public officials
IR Indicator N 0 - 50 Achieved\. 98%
#10 (i)\. Share
of required A documentary film, referenced on ECHRO website, confirms the
declarations (i) achievements and publicizes the functionality and the coverage of the
collected system\. The film is YouTube video hosting:
electronically
https://www\.youtube\.com/watch?v=7Djx8oZaI3A&feature=youtu\.be
(%)
36
IR Indicator N 0 - 100 Achieved\. 100%
#10 (ii)\. Share
The declarations are published online on the ECHRO website:
of required
declarations (ii) http://www\.ethics\.am/en
published
online (%)
IR Indicator C Separate 80% of staff Achieved\. Ministries and other public entities ensure training of
#11\. The civil systems in in incoming staff following the full-fledged training of users at the
servants and IT operation, such government launch of the systems\.
staff are trained as EDMS, agencies
to use the HRMIS, MGIS covered by
developed and other the
systems\. systems\. The development
interoperability program,
is lacking\. trained to use
the upgraded
systems\.
100% of IT
staff trained
to maintain
the upgraded
systems\.
IR Indicator R Some e-kiosks At least 50%
#12\. Public exist, increase over
access to introduced the baseline\.
services under the JRP2,
available which also give
through internet access to the
and public EDMS\.
information Preliminary
kiosks\. work is done to
start use of
37
government
web portals\.
IR Indicator R Some e- - Harmonization Achieved\. All available electronic services are currently accessible
#12\. Public kiosks exist, of existing ICT via internet (listed on e-Gov\.am website)\.
access to introduced systems
services under the offering
available JRP2, which electronic
through also give services
internet\. access to the
through e-Gov
EDMS\.
website\.
Preliminary
work is done
to start use of
government
web portals\.
38
Annex 2C\. Relationship Among PSMP I, II and III
â¢e-government: Interactive Budget; e-Licenses; e-Signature; EDMS
establishment; policy making on standardization, methodology and
certification\.
â¢Civil Service: performance evaluation system; HRMIS establishment\.
PSMP I â¢PFM: e-procurement; internal and external audit\.
â¢Decentralization: MGIS establishment; capacity building on revenue collection;
$10\.29 mill\. introduction of Municipal Civil Service
â¢Anti-Corruption: IAD system establishment; capacity building on ethics\.
â¢e-government: interoperability of different government IS; improved
functionality of EDMS â archive and work planning and performance
evaluation; e-Health; e-Visa upgrade; automation of registration of vehicle
PSMP II and processing driverâs license; HRMIS upgrade\.
â¢Center of Government: functional reviews; change management;
$9 mill\. improvement on policy formation\.
â¢Civil Service: harmonization of public service, benefits and performance pay;
introduction of performance evaluation system; distance learning modules
â¢Anti-Corruption: IAD system upgrade; digital pre-trial case management\.
â¢e-government: e-government portal; citizen feedback and analytics platform;
e-transport; e-consular services; e-vehicle insurance; e-licensing;
interoperability platform; establishment of data centers; EDMS upgrade;
PSMP III HRMIS upgrade\.
â¢Center of Government: policy formulation; e-Legal act\.
$21 mill\. â¢Civil Service: capacity building; training needs assessment; establishment of
learning management platform\.
â¢PFM: FMIS establishment\.
39
Annex 3: Economic and Financial Analysis
Comparative Analyses of E-Health Systems
System Functionality IHISA Armenia PHC Moldova HIS Kosovo
Admission, Discharge, Transfer Y Y/N (no transfer) Y
Scheduling Y/N Y Y/N
Patient Relationship Y Y/N Y
Outpatient Care Y Y Y
Inpatient Care Y N Y
Emergency Care N N Y/N**
Order Management (insurance) Y Y Y
Laboratory Referrals Y Y Y
LIS - Laboratory IS N N N
RIS - Radiology IS N N N
PACS - Picture Archiving and Comm\. N N N
System
Central EHR Y Y Y
EMR Y Y Y
Patient Registry Y Y/N Y
Advanced Reporting Y Y Y
BI Reporting Y N Y/N
Licensing Unlimited Unlimited 750
No\. of facilities covered 480 ⦠10
Identity and Access Management Y N Y
Human resources management Y/N N Y
Contract price $925,000 * $1,400,000 > $2,000,000
* Price without taxes
** Has support, but is not real EHC system
40
Annex 4\. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Names Title Unit
Anita Correa Analyst GCPPF
CTRFC-
Hannah M\. Koilpillai Senior Finance Officer
His
Kathy Lalazarian Senior Public Sector Specialist GGOGI
Anarkan Lilly Counsel LEGDF
Davit Melikyan Senior Public Sector Specialist GGO15
Richard E\. Messick Consultant GGO23
Michael G\. Nelson Operations Officer OPSPQ
Clelia Kalliopi Helena
Senior Public Sector Specialist GGO18
Rontoyanni
Arman Vatyan Sr Financial Management Specialist GGO21
Migara De Silva Senior Economist GGO15
Zlatan Sabic Senior Operations Officer GHN03
Gayane Davtyan Program Assistant BPSEM
Maya Gusarova Senior Public Sector Specialist GGO15
Seda Pahlavooni e-Government Specialist GTI09
Garik Sergeyan Sr Financial Management Specialist GGO21
Arsen Karapetyan IT Consultant CITCS
Lusine Grigoryan Financial Management Specialist GGO21
Alexander Astvatsatryan Senior Procurement Specialist GGO03
Armine Aydinyan Procurement Specialist GGO03
Benedicta T\. Oliveros Procurement Officer GGO03
Hunt La Cascia Senior Procurement Specialist GGO03
41
(b) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle USD Thousands
No\. of staff weeks (including travel and
consultant costs)
Lending
FY10 37\.37 242,597\.98
Total: 37\.37 242,597\.98
Supervision/ICR
FY11 22\.54 111,293\.94
FY12 34\.51 97,538\.05
FY13 24\.68 93,980\.96
FY14 18\.87 90,584\.00
FY15 25\.86 94,640\.02
FY16 21\.60 83,376\.80
FY17 (as of June 21, 2017) 22\.34 77,892\.67
Total: 170\.4 649,306\.44
42
Annex 5\. Beneficiary Survey Results
Not Applicable
43
Annex 6\. Stakeholder Workshop Report and Results
Not Applicable
44
Annex 7\. Summary of Borrower's ICR
The Project Management Group provided the ICR team with the Borrowerâs ICR
entitled, Brief Monitoring and Evaluation Report â Public Sector Modernization
Project II\. This Report was shared with the ICR team on March 27, 2017, prior to the
ICR mission\. A summary of the Report follows:
Project Design
PSMP II was one of the main initiatives to support the government reform agenda in
public administration sector\. The project was consistent with Armeniaâs 2014-2015
Development Strategy and 2014-2017 RA Government Program which emphasized the
importance of civil service reforms, fight against corruption, exclusion of conflict of
interest in the state sector, simplification of regulations, improvement of the
effectiveness through the application of IT systems, and enhancement of human
resources management\.
During project planning, the PSMP I5 management structure was considered as well as
lessons learned during its implementation\. The structure was already tested and proved
its sustainability and effectiveness during implementation of PSMP I; therefore, a
decision was made to apply a similar approach to the PSMP II project\. The inter-
ministerial Public Sector Reform Commission (PSRC) acted as the projectâs Steering
Committee\. Together with other selected pilot ministries and agencies, it was the
agency responsible for implementation of project activities, while the Office of
Government was the Bankâs main counterpart on the PSMP II\.
Project results and indicators
During project planning, indicators for measuring accomplishments of the Project
Development Objectives were established, which were reconsidered during project
implementation by the PMG, as well as by the Bank\. The indicators were revised during
the project restructuring\. The revised indicators were clear, based on objective data,
realistic, measurable and manageable, which allowed the Government to effectively
monitor the project progress and in necessary cases apply corrective measures\.
Overall, the clientâs report stated that the project accomplished and in some cases over
fulfilled some of the project targets\. According to the report all PDO and intermediate
indicators of the project were achieved\.
Project Implementation
According to the selected implementation arrangements the PSRC acted as the
coordinating council for the Project, and the regular management of the project activities
were implemented by a Project Manager\. Cooperation between the Council and the
Project Manager was effective, and the Bank has provided timely and effective
implementation support to the project stakeholders in the course of project preparation
and implementation\. Fiduciary aspects of the Project were implemented by Foreign
5
A predecessor of the PSMP II
45
Financing Project Management Center of RA\. Cooperation between the stakeholders
during the project implementation and their effective efforts has contributed to the
accomplishment of the indicators\. Procurements made were implemented in line with the
Bank procedures and qualification of selected consultants were most relevant to project
assignments, which in its turn contributed to accomplishment of the targets\.
Assignments designed and implemented within the framework of PSMP II were fully
in line with the objectives and directions of the Government Program, as well as in
line with strategic agenda on public sector modernization reforms\. RA highlighted
high relevance of the project activities to the Government priorities\.
The process of implementation of assignments was overall very effective, the
assignments were implemented within timeframes set by respective Terms of
References, as well as within the scope of planned resources\. Some contracts were
extended, and objective justifications for extension were provided\. Government of RA
noted that implementation of project assignments was at highly satisfactory level\.
Impact of Results
PSMP II was designed to improve quality of public services first for citizens - the final
beneficiaries of the project outcomes, and secondly the public administration bodies\. The
project activities had direct impact on the stakeholders, whose behavior was changing
due to introduction of software, which enabled automation of some public services\. The
project activities had direct impact on public servants since their working conditions were
improved\. The project results had an indirect impact on the economy, since business
environment was improved as project activities boosted IT sector\. For example, expenses
of citizens and business entities on communication with state bodies became more cost-
efficient because new e-governance systems were introduced via the project support\. It
has also positive impact on productivity of state bodies\.
Introduction of technological innovations was greatly emphasized in the project, which
contributed into improvement of effectiveness, timeliness, transparency and
accountability of the public sector\. Introduction of new information technologies in the
public administration system also encouraged development and application of IT
solutions in the private sector, by ensuring creation of additional value in the mentioned
sectors and improving the effectiveness\.
Establishment of a unified information electronic healthcare system (e-Health),
developed within the scope of the project, ensured overall modernization of the
healthcare system by introduction of new ICT solutions and improvement of public
service delivery in the healthcare system\. It is expected that the new system will bring
improvements in state management of the health care system\.
Development of software for the RA Traffic Police, supported by the project, helped to
optimize process of vehicle registration\. It resulted in cutting a lengthy process of
vehicle registration from one day to 24 minutes\. It is also important to note that the
improvements will allow to minimize the corruption risks associated with the vehicle
registration\.
Certain electronic governance systems, developed within the project, directly promote
transparency and accountability in the public administration\. Particularly, introduction
46
of online income and asset declaration system for senior officials, which improves
accountability of senior officials\.
Sustainability of results
PSMP II established preconditions to ensure the long-term sustainability of the project
results\. Strategic documents on public administration reforms, developed within the
project, also emphasized the importance of reforms in the sector, which could be also
considered as one of the preconditions of sustainability\.
According to the Governmentâs assessment, to ensure the long-term sustainability of the
results, the following provisions should get relevant attention:
ï Ensure that all necessary human and financial resources are continuously
provided to use, maintain and retain the project results;
ï Ensure that newcomers to the system get relevant training for using the systems
and applying the methodologies;
ï Make sure that the methodologies, guidelines, regulations and other similar
documents developed by the support of the project are approved by
corresponding legal acts;
ï Through regular meetings with the project stakeholders, reveal the needs for
possible support, corrections of results and ensure the provision of those
corrections;
ï While developing new projects for public sector reform support, consider the
results of PSMP II and build the new projects on those results, which will
impact the long-term sustainability of results, as well as will ensure synergy of
reforms\.
Evaluation of Project Implementing Bodies
The Borrower and Bank were actively involved in preparation and implementation of the
project\. The Borrower was represented in the PSMP II management body and very
actively participated in all project activities, including timely strategic decision making,
approval of procurement results and project reports etc\. Moreover, the Borrower has
actively participated in the project development phase and has had close cooperation with
the Bank and other state administrative bodies\. The Borrower had been actively involved
in the project content amendments, had participated in thematic discussions and decision
making processes\. Representatives of the Borrower have been involved in the
Coordinating Council of the project, i\.e\. have been directly involved in the project
management processes\. Such mechanisms ensured close engagement of the Borrower in
the project activities, and the issues, emerged in the course of project implementation,
were addressed in a timely manner\. The World Bank has provided implementation
support during all the stages of the project life\. In close cooperation with the Borrower,
the Bank has led the project planning and preparation of all necessary documentation\.
The Borrower and other relevant bodies have supported the Bank during development of
those documents\. Moreover, the Bank had always been actively sharing knowledge,
experience of other countries\. Moreover, the Bank was able to attract grant funds to
compliment the project activities\.
47
The logic of PSMP II envisaged reforms in public administration system, which
eventually have its impact on improvement of public administration system in
Armenia\. The improvements will have positive impact on behavior of citizens and
organizations, which are currently using public services\. Hence almost every task
implemented within the framework of PSMP II and particularly advisory services, had
a great impact on the whole system of public administration\.
It is noteworthy that the sustainability of the results achieved by the project was quite
high, and the necessary conditions for ensuring the high level of sustainability have
been created\.
48
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders
Not Applicable
49
Annex 9\. List of Supporting Documents
World Bank Documents
1\. Project Appraisal ReportâSecond Public Sector Modernization Project, February
18, 2010
2\. Loan Agreementâ Second Public Sector Modernization Project
3\. Implementation Supervision and Results Reports 2010-2017
4\. Aide Memoires, and technical reports 2010-2017
5\. Restructuring Papers 2012-2015
6\. Country Partnership Strategy, May 12, 2009, Report Number: 48222-AM
7\. Country Partnership Strategy, October 9, 2013, Report Number: 81647-AM
8\. Implementation Completion and Results Report - Public Sector Modernization
Project, October 26, 2011
9\. ICR Review- Public Sector Modernization Project, December 3, 2012
10\. Davit Melikyan, Performance Appraisal Beyond the Point of No Return, How E-
Government Innovations Anchor Civil Service Reform in Armenia, unpublished
note\.
Government Documents
1\. Armenia Development Strategy for 2014â 2025, March 27, 2014
2\. Civil Service Reform Strategy, December 29, 2015
3\. Principles of Interoperability, Government Decree #1093, August 31, 2015
4\. State Data Base Requirements, Government Decree #192, February 16, 2017
5\. Second Public Sector Modernization Project, Borrower ICR (Brief Report), April,
2017
6\. Directives of Chief of Staff to pilot the SP methodology, December 29, 2016 and
January 25, 2017
7\. E-health roll out plan, May 2017, EKENG â e-Governance Infrastructure
Implementation Office
8\. Armenia: Strategic Planning and Budgeting, June 30, 2017
9\. Armenia: Strengthening the Strategic Focus within Government Office, June 30,
2017
10\. Methodology and Guidelines: Strategic Planning and Budgetary Programs in
Armenia, June 30, 2017
50
Annex 10\. Project timeline: Key events in the implementation
51
Annex11\. Map of Armenia
52 | APPROVAL |
P002573 | D0umcnt of
The World Bank
FOR OFFICLAL USE ONLY
RqewttNo\. 7836
PROJECT COMPLETION REPORT
SUDAN
LIVESTOCK MARKETING PROJECT
(CREDIT NO\. 782-SU)
JUNE 21, 1989
Africa Region
Eastern Africa
Agrieulture Operations Division
Tbb docmentohas a nsoicted dstibution and may be wed by redieDtsonly In the perfomume of
dkd *Mdlh dude& Its ootmte may nOt otbrwi* be dskned wiftot World Bank auhorization\.
PROJECT COMPLETION REPORT
SUDAN - LIVESTOCK MARKETING PROJECT
(CREDIT NO\. 782-SU)
ERR - Economic Rate of Return
FAO - Food and Agriculture Organization of the United Nationf
FAOICP - FLO and IBRD Cooperative Program
GDP - Gross Domestic Product
GOS - Government of Sudan
IDA - International Development Association
LMCM - Livestock and Heat Marketing Corporation
ODA - UK Overseas Development Administration
PCR - Project Completion Report
RMEA - Bank Resident Mission in Eastern Africa
SiAR - Staff Appraisal Report
SRC - Sudan Railways Corporation
Ka OFICIAL W ONLY
THf WORID SANK
WashNton\. O\.C\. 20433
U\.S\.A\.
O&O 0 OWcbV\.GSWaJ
June 21, 1989
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: \.Project Completion Report on Sudan Livestock
Marketing Prolect (Credit 782-SU)
Attached, for information, is a copy of a report entitled
"Project Completion Report on Sudan Livestock Marketirg Project
(Credit 782-SU)" prepared by tne Africa Regional Office\. No audit of
this project has been made by the Operations Evaluation Department at
this time\.
Yves Rovani
by Ram K\. Chopra
Attachment
This document has a restrcted distrbution and may be used by rapients onl in the performa
of thei ofcial duties\. Its contents may not otowis be disclosed without World ank authodzaion\.
FOR OFFICIAL USE ONLY
PROJECT COMPLETION REPORT
SUDAN - LIVESTOCK MARKETING PROJECT
(CREDIT NO\. 782-SU)
TABLE OF CONTENTS
PaRe No\.
Preface \. i
Basic Data Sheet \. ii
Evaluation Slnmary \. iv
I \. AGRICULTURAL SECTOR \. 1
Agriculture in Sudan \. 1
Livestock Sub-sector \. 2
Experience with Past Lending \. \. 4
TI\. PROJECT FORMULATION \.5\.
Origin, Preparation and Appraisal \. \. 5
objectives \. \. 5
General Description of Project \. 6
Project Components \. \. \. 6
Project Execution \. \. 8
III\. IMPLEMENTATION AND OPERATION PERFORMANCE \. \. 10
Overview \. 10
Livestock Marketing \. \. 11
Livestock Exports \. 12
Livestock Transport \. \. 12
Institution Development \. \. 13
Consultants and Training \. 14
Project Costs \. \. 15
Financing \. 15
Procurement \. 15
IV\. BENEFITS, FINANCIAL AND ECONOMIC ANALYSIS \. \. 16
Benefits \. 16
Financial Performance of LMKC \. \. 16
Economic Analysis \. \. 16
Impact on Livestock Policy \. 17
V\. ASSESSMENT OF BANK PERFGiMANCE AND LESSONS LEARNED\. 17
IDA Performance \. 17
Lessons Learned \. 18
This document has a restricted distribution and may be used by recipients only in the performance
of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
Tables 1 - Rey Indicators
2 - Project Cost Sunmry
3 - Allocation of Loan Proceeds
4 - Livestock Throuighput for all Markets
5 - Sheep and Cattle Exports
6 - Block Train Traffic
7 - LMKC Financial Perfonmance Summary
8 - Economic Rate of Return
PROJECT COMPLETION REPORT
SUDAN - LIVESTOCK MARXCETING PROJECT
(CREDIT NO\. 782-SU)
PREFACE
This is the Project Completion Report (PCR) of the Livestock
Marketing Project in Sudan, for which Credit 782-SU in the amount of US$25
million was approved on March 26, 1978\. The Credit was closed on December
31, 1986, two years behind schedule; an unused balance of US$1\.46 million
was cancelled\. The date of final disbursement was July 9, 1987\.
The PCR was prepared by the Africa Region Eastern Africa
Department in collaboration with the Sudan Livestock Marketing Corporation
after a mission to Sudan in September 1987, and is based on a review of the
Staff Appraisal Report (No\. 1726-SU dated February 24, 1978), the
President's Report (No\. P-2193a-SU dated March 2, 1978), the Credit
Agreement of Jrne 16, 1978, correspondence with the Borrower, internal Bank
memoranda on project issues as contained in relevant Bank files, as well as
interviews with officials both in the Bank and in Sudan who have been
associated with the project\.
This PCR was read by the Operations Evaluation Department (OED)\.
The draft PCR was sent to the Borrower and Cofinancier on March 13, 1989,
for comments by May 1, 1989, but none were received\.
PROJECT COMPLETION REPORT
SUDAN - LXVESTOCK MARKETINO PROJECT
(CREDIT NO\. 782-SU)
BASIC DATA SHEET
KEY PROJECT DATA
Actual as U
Apprelsal of Apprailal
Estimate Actual Eatiu\.tat
Total Project Cost (USS Million) 51\.8 87\.9 74
Credit Mwunt (US$ Million) 26\.0 26\.4 100
Disburod (US$ Million) 2650 23\.6 94
Cancelled (US$ Million) - 1\.6 -
Cofinancing (ODA) (USS illion) 8\.1
Date Board Approval - 08/26/78 -
Credit Agrement Date - 98/16/78 -
Date of Effectiveness 09/14/78 07/09/79 260 /a
Date Physical Components Completed 95/81/64 12/81/88 188 /A
Proportion Then Comploted () 100 86 8e Jl;
Closing Date 12/81/84 12/31J86 188 /i
Economic Rate of Return (X) 15 40 267
Institutional Performnce - Satisfactory
Technical Performance - Satisfactory
STAFF INPUT /c
FY74 FY76 FY76 FY77 FY78 FY79 FY86 FYS8 FY82 FY68 FY84 FY86 FY86 TOTAL
IdentifIcation/Preperation 8\.8 118\.5 7\.9 19\.9 149\.8
Appraisal 97\.8 56\.9 15S\.7
Neotiation 8\.1 6\.1
Supervilson 0\.2 1\.9 9\.7 16\.0 18\.6 11\.1 16\.0 17\.2 14\.8 9\.9 198\.6
Total 8\.8 118\.6 7\.9 117\.7 86\.9 9\.7 14\.0 18\.5 11\.1 15\.9 17\.2 14\.6 9\.0 421\.1
CUMJLATIVE DISBURSEMENTS
FY78 FY79 FY86 FY81 FY82 FY68 FY84 FY36 FY86 FY87 FY88
Appraisal Estimtes (US* 1) - 2\.4 6\.4 12\.5 16\.6 20\.9 22\.0 26\.0 - - -
Actual (US million) - 9\.5 1\.0 12\.8 12\.8 18\.9 15\.5 19\.2 22\.8 28\.5
Actual as of Estimate _ - 8 74 64 a8 62
Date of Final Disbr\.ennt July 9, 1987
MISSION1 DATA
Dote No\. of Specialization Performance
Mission (mo/yr) Persons Represented Rating Trend Problems
Identification/
Prep\./Appr\. 8/77 8 L,F,R,M,C,T,E /d /I /f
Supervision 1 6/79 2 L,F S -
Supervision 2 12/79 6 L,AE,A 2 2 L,T
Supervision B 6/80 1 L 2 2 M,T
Supervision 4 12/80 1 L - - M,T
Supervlilon 6 7/81 1 L 2 2 M,T
Supervision 6 12/81 2 L,F 2 1 M,T
Supervlslon 7 12/82 1 L 2 2 M,T
Supervision 8 1/88 5 L,F,E - - M,T
Supervision 9 8/83 1 L 2 2 1,T,0
Supervision 10 11/883 L,F,E - - U,0
Supervlslon 11 6/84 8 L,AE,F 2 1 U,O
Supervision 12 11/84 8 L,AE,F 1 - U,0
Supervision 18 8/86 8 L,AE,E - - 1,0
Supervision 14 12/86 8 L,AE,F - - 1,0
Supervislon 15 7/86 1 L 2 - O
OTHER PROJECT DATA/INFORMATION
9orrower: _ Government of Sudan
Eiecutin A eno : Livestock and Meat Markoting Corporation t\.
Frisco Tor OT tne Borrower: - Julv 1 to June 80
Name of Currency (Abbreviatlons): - Sudanese Pound (LSD)
Curr nEy Exchange Rte
AppraIiT l FYiFw rog\. - US1\.01 * LSD 0 \.40
Ioplamentation Year\. Average - USB1\.00 a LSD 1\.94
ComPletion Year Average - US$1\.00 a LSD 2\.5W
/a Claculated in tersr of months from Board approval\.
to In terms of financial expenditures In respect of civil works, vhieles and technical equipment\.
/3 Input of staff weeks\. Source: World Sank Planning and Budgeting Deprtment\.
/3 L - Livestock Specialist; F - Financial Analyst; R - Railways Specialist; M - Marketing Specialist; E - £eonomist; AE - Agelcultural
Economint\.
/c 1 a Problem fre or minor problems; 2 = Mbderat problemsl 8 * Major problems\.
IV 1 a Improving; 2 a Statlonary; 8 * Detertorating\.
F a Finoncial; 1 Managerll; T = Technlcal; P a Politieal; 0 a Other\.
- iv -
PROJECT COMPLETION REPORT
SUDAN - LIVESTOCK MARRTING PROJECT
(CREDIT NO\. 782-SU)
EVALUATION SUMNARY
Intzoduction
A 1972 Livestock Sector Review and Project Identification Study
identified inadequate market infrastructure and livestock transport
capacity as the major constraints limiting the potential of Sudan's
livestock industry\. On the basis of these findings subsequent preparation
missions formulated a project suitable for financing by the Intarnational
Development Association (IDA)\.
Obiectives
The project aimed at underpinning the Livestock and Meat Marketing
Corporation (LMMC), which had been established in October 1976, and the
creation of a railway transport unit by the Sudan Railways Corporation
(SRC) to move livestock from the producing areas in Darfur and Kordofan to
the urban centers in Central Province and for export\. The project
components included, in addition to railway rolling stock for livestock
transport, the improvement of market infrastructure, the construction of a
headquarters building for LMMC in Rhartoum, the establishment of a
communication network, and the provision of technical assistance and
training to build a strong management team in LMMC\.
Implementation Exo,erience
The project was implemented by the LMMC in cooperation with the
SRC\. The project has been successfully implemented, as indicated by the
increased numbers of livestock transported and exported as well as by the
profitability of the implementing agencies which exceeded appraisal
estimates\. The positive trend was temporarily interrupted in 1986 when
livestock exports were restricted because of the effect of the 1963-85
drought\. This had a negative impact on the LMMC's operations and revenies\.
Delays in reaching an adequate arrangement between the two executing
agencies (LMMC and SRC) with respect to operating costs and transport fees
were an early disquieting feature of implementation, but this did not
affect the provision of these services while agreements were being
negotiated\. The increase in throughput at Improved or newly established
livestock markets and the smooth transition from irovincial to LMMC
management of those markets provide convincing evidence that the project
concept was sound\.
-v -
Technical assistg\.ce, provided by ODA, was an important factor in
the successful establishment and operation of LMMC, but greater emphasis
on technical assistance would have been beneficial to SRC\. It would have
been particularly helpful in the selection and procurement of suitable
equipment and spare parts as well as in speeding up the construction of
railway yards\. It would also have contributed to a better understanding
and collaboration batween LMKC and SRC by ensuring a better dialogue on
objectives and issues\. Cooperation between LMMC and SRC after the project
is completed and technical assistance withdrawn is essential to the
continuing success of the project\.
The project was appraised before LMHC wes fully established and
this explains the focus on strengthening LMMC, which was correctly
perceived to be the lead institution\. Performance during the
implementation period indicates that this focus was justified, and, in
addition, indicates that the assumptions made during appraisal were
realistic and conservative\.
The actual project cost was US$37\.9 million or about 752 of the
cost estimated at appraisal\. The lower cost was due to the agreed non-
implementation or modification of some components -- the construction of
fewer secondary markets (9 out of 11), Livestock Marketing offices (2 out
of 12), railway yards (8 out of 10) and the omission of 30 primary markets
originally proposed (Table 1)\. Actual prices for locomotives and wagons
were also lower than ap'raisal estimates\. Lower costs were partly the
effect of frequent devaluations of the Sudanese currency associated with
the comparatively high rate of inflation in Sudan over the project period\.
Implementation problems were ma'nly related to procedural
difficulties which delayed credit effect\. - ness, and to managerial
weaknesses in LMMC and SRC, which led to pioeurement and construction
delays for railway yards and, to a lesser extent, for livestock markets\.
The main contract under the project for the construction of LMMC's
headquarters in Rhartoum was, however, executed in an efficient and timely
manner\. Although some technical staff, who were trained under the project,
were lost to the private sector, their enhanced stills were not lost to the
Sudanese economy\. Two major events outside the project's control had an
important impact on the project's performance\. The first and most serious
one was the 1983-85 drought which directly and indirectly disrupted the
number of livestock transported, marketed and exported\. The second was the
well established practice of smuggling export animals to avoid export taxes
and to circumvent currency regulations which prevailed at t1a outset of the
project\.
Results
The following points are particularly noteworthys
- appraisal estimates of 1,160,000 sheep and 200,000 cattle
throughput per year at full development in markets under the
project had been surpassed by 1984 although the project had
not reached full development\. Cattle throughput for
virtually all years was more than double appraisal
- vi -
expectations and sheep throughput exceeded appraisal
expectations (para\. 3\.06):
- appraisal estimates of sheep transported by rail were met,
until the export ban was imposed in 1986, if an allowance is
made for the one year delay in starting block train
operations\. However, cattle traffic fell short of estimaces
for 1983 and 1984 (para 3\.09);
- LMMC performance in establishing and administering livestock
transporting, marketing and exporting has been commendable
and its financial performance impressive (para\. 3\.12);
- the technical assistance and training component provided by
ODA made a vital contribution to strengthening LMMC and to
the project's institution building objectives (para\. 3\.17);
3 important livestock sub-sector policy decisions such as the
elimination of a 25Z export tax and the introduction of a
more realistic exchange rate for livestock exports can be
largely attributed to the project (paras\. 3\.05);
du\.Aing the drought, project rolling stock was the main
vehicle for transporting food to and evacuating livestock
from the severely affected areas and as a result the project
made an important contribution to alleviating the worst
effects of the drought (para 3\.13)\.
Sustainability
In the course of project implementation, LMNC developed the
capacity to plan and monitor operations and transport livestock in SRC
block trains\. A computerized information system, together with the radio
communication u'twork provided under the project, enabled LMMC to establish
a valuable inventory to monitor livestock movements through primary and
terminal markets as well as through the holding grounds\. As a result, the
demand for rail transport can be accurately predicted and timely
arrangements made to transport livestock by block trains to Khartoum for
the domestic market or to Port Sudan for export\.
A stock of block train spare parts to meet estimated requirements
for the next five years was provided under the project to ensure that
tranport operations can be maintained with minimal disruptious\. The cost
accounting system established by LMMC enables the full cost of its
services to be recovered from beneficiaries\. Livestock transport and
marketing will operate oi - self financing basis from now on and this is an
important step in ensuring their long term sustainability\.
The maior lessons from the project are that:
(a) it was a success because it filled a major need in Sudan's
livestock transport and marketing systems;
- vii -
(b) early planning and procurement of spare parts is essential to
avoid reductions and uisruptions in rail transport services
for livestock (para 3\.1);
tc) technical assistance could have been better balanced between
the executing agencies LHMC and SRC even though SRC had been
established for a longer perioc of time and was fully
operational at the outset of the project (paras 3\.18 and
5\.02); and
(d) the capability of agencies responsible for constructing
buildings and civil works should be carefully assessed at
appraisal and sufficient technical assistance provided to
ensure timely construction\.
The success of the project (estimated ERR 40X), notable as it is,
would have been further enhanced if the problems arising from SRC's
unfamiliarity w*th a livestock-related operation were foreseen and avoided\.
PROJECT COMPLETION REPORT
SUDAN - LIVESTOCK MARKETING PROJECT
(CREDIT 782-SU)
I\. THE AGRICULTURAL SECTOR
AKriculture in Sudan
1\.01 The Agricultural sector, composed of both crops and livestock,
accounts for about 40Z of Sudan's Gross Domestic Product (GDP)\. It is the
source of virtually all exports, employs over 702 of the labor force and
provides primary inputs for a large proportion of Sudan's industrial
activities\. Crop production can be divided into three categoriest (a)
about 1\.6 million hectares of capital-intensive irrigated cotton and food
crops including wheat, sorghum and groundnuts; (b) about 2\.2 million
hectares of rainfed commercial farms producing mainly sorghum; and (c)
about 4\.5 million hectares producing sorghum and oil seeds under
traditional subsistence farming\. The Livestock sub-sector accounts for
about 302 of the value of agricultural production and is characterized by
two features - nomadic cattle raising and livestock production by settled
farmers\.
1\.02 During the 19709 and the early part of 1980s, the performance of
the Agricultural sector declined due to low producer prices for export
crops, inadequate foreign exchange allocations for imported agricultural
inputs, poor repair and maintenance of machinery and equipment on
mechanized farms and inadequate recovery of water costs in irrigation
schemes, leading in turn to poor repair and maintenance of irrigation
machinery and the water distribution system\. The situation was exacerbated
by a deterioration in the balance of payments and a shortage of local
budgetary resources\. In addition, a series of sub-normal rainfall seasons
in the four-year period 1982 to 1985 contributed to the decline of
agricultural production in the rainfed sector\.
1\.03 As part of an economic recovery program which started in 1982, the
Government reordered investment priorities and concentrated on
rehabilitating the irrigation sector and completing ongoing projects\. As a
result, yields for irrigated rrops such as cotton, groundnuts and sorghum
increased, in all cases substantially, and in some cases by more than 502\.
New projects were limited to those whose returns could be achieved quickly
and this helped alleviate foreign exchange shortages\. These new projects
included the production of irrigated groundnuts and sesame\. Even though
the rainfed sector has a aood potential compared to many other African
countries, recent exceptionally dry years caused a continuous decline in
the production of crops such as sorghum, sesame, gum arabic and millet\.
The increasing population pressure in the South Western Savannah region
(Darfur and Kordofan) is giving rise to more intensive cultivation, which
in turn is causing a serious decline in soil fertility\. The problem is
exacerbated by migration from drought affected areas in the North,
instability in land tenure for small farmers and the allocation of large
tracts of land for uncontrolled mechanized farming\.
- 2 -
1\.04 The Government is fully aware of the declining soil fertility
problems and has formed task forced, with IDA support, to investigate land
tenure problems and find ways to stabilize farming systems in these rainfed
areas\. In response to the Government's concerns, IDA supported a follow-up
(Western Savannah Project II) to the Western Savannah Project (Credit
1181-SU) in the Darfur region with the objective of increasing the
availability and security of food and water supplies without at the same
time causing environmental degradation\. It is expected that encouragement
provided for sedentary farming in Settlement Schemes and the provision of
demarcated grazing areas for nomadic communities in managed rangelands will
help to prevent the decline in soil fertility and arrest environmental
degradation\. In addition, adaptive research to generate, screen and
demonstrate iun'roved crop production technology for the area is supported
under the Wesanr} Savannah II project\. A similar -vpe of project, the
South Kordofaa AP\. tcultural Development Project, \. been appraised by IDA\.
It's main o -\.ive is to improve farming productivity by arresting the
decline in s5i, iertility and preventing environmental degradation\.
The Livestock Sub-Sector
1\.05 The livestock industry is one of the main sources of food and
employment in Sudan as well as being an important source of foreign
exchange\. About half the country's herd and flocks are owned by
pastoralists who traverse some 60 million hectares of rangeland, with most
of the remainder being owned by small sedentary cultivators\. Efforts to
modernize and expand livestock production have largely concentrated on
livestock fattening and processing for export\. The expansion and
improvement of the livestock industry has been seriously hindered by the
lack of adequate marketing facilities and poor transport, which resulted in
substantial weight loss and value of the animals during trekking\.
1\.06 Statistical information on livestock numbers in Sudan is extremely
weak\. Official government estimates are based on extrapolated data from
the 1975176 census and since the coefficients used in the projections are
not based on reliable surveys, they must be interpreted with extreme
caution\. The 1975176 National Livestock Census recorded 15\.4 million
cattle, 16\.2 million sheep, 11\.3 million goats, 2\.4 million camels, and 1\.8
million donkeys, horses and mules\. The official estimate of livestock
numbers for 1986 shows 22 million cattle, 21 million sheep, 15 million
goats and 3 million camels\. The estimate in the SAR for the Stock Route
project is considered the most reliable one available\. It was made by the
appraisal mission and showed 16 million cattle, 21 million sheep and 13
million goats in 1983\.
1\.07 The Stock Route Appraisal Mission's estimate indicates that while
sheep numbers had increased by about 302 since 1975-76 and goats by about
10?, the increase in cattle numbers was only about 42\. Up to now the meat
supply has been more than adequate to meet domestic demand, and an export
surplus existed which allowed Sudan to export about half a million live
sheep and some beef\. Domestic livestock population in the main producing
rangelands of Western Sudan have built up in recent years and now exceed
carrying capacity\. Hence, future livestock population increases, if they
were to occur, would not lead to more meat production\. The foreseen
increase in the human population of Sudan is, therefore, not expected to be
- 3 -
matched by increases in livestock numbers or meat marketed\. The pressure
on the demand side is becoming increasingly evident 1 and the Government,
in an attempt to alleviate increases in meat prices in Khartoum, placed a
temporary ban on livestock exports in July 1986 which was not rescinded
until August 1987\. The rapid increase in poultry production lends further
support to the proposition that supply is not keeping pace with demand, and
it is expected that this trend will continue unless human population growth
declines or improved livestock husbandry produces better offtake rates or
heavier carcasses\. Even though the situation has recently been exacerbated
by drought, the trend is expected to reflect increased pressure on the
demand side\. Foreseeable increases in cattle, sheep and goat populations
are unlikely to meet the increased demand because of constraints isposed by
the harsh environment and the traditional production systems\.
1\.08 Commercial offtake is estimated to be about 102 for cattle and 182
for sheep and goats, producing about 250,000 metric tons of beef, 65,000
tons of mutton and 35,000 metric tons of goat meat\. About 3 million cows
calve each year and yield on average about 300 liters of milk per head in
excess of calf requirements\. Together with minor milk production from
goats, total annual milk production is estimated to be 1\.3 million tons\.
Production of meat and milk from the sub-sector is worth about LSd 1800
million at 1986 prices\.
1\.09 For many years Sudan has exported sheep to Saudi Arabia, where
rapid urbanization and population growth created a demand for imported meat
which is expected to increase during the next decade\. In 1986 Saudi Arabia
imported about 6 million sheep and goats of which 5 percent came from
Sudan, 41 from Australia, 27 from Turkey, 17 from Somalia and 5 percent
from New Zealand which entered the Saudi Arabian market for the first time
in that year\. Sudanese sheep exports reached 650,000 head in 1982183, the
highest official number ever recorded\. Sudan has also traditionally
expo:ted some live cattle and goats and more recently some chilled beef, to
Egypt and Yemen\. These exports have been much less in volume and value
than the sheep exports\. Total livestock exports from 1980 to 1983 were
valued at US$170 million\. It is important to note that the livestock
sector has much higher net foreign exchange earnings than the crop sector
because of the comparatively low levels of imports needed to support the
sector\.
1\.10 The increase in livestock exports during the project period was in
part caused by the removal of the 252 export tax as well as improvements in
the marketing and transportation of cattle and sheep under the project\.
Although the effect of removing the export tax on increasing exports was
significant, the improvements in livestock marketing and transportation
under the project is also judged to have made a major contribution\.
Additional IDA support for livestock marketing is being provided under the
Stock Route Project (Cr\.1525-SU) by constructing water points along the
traditional livestock routes from producing areas in the south west to
1/ Meat prices are estimated to have increased about 40X in real terms
between 1973 to 1976 when large numbers of livestock died because of the
drought\.
- 4 -
Khartoum\. Some of these livestock will be transported by block trains or
by trucks financed under the project to Port Sudan for export\.
1\.11 During 1984/85, livestock production declined due to severe
drought in the producing areas of western Sudan\. As a result, the
Government banned livestock exports in an effort to build up the national
herd\. The ban was lifted in August 1987 following two normal rainfall
seasons\.
Experience with Past IDA Lending
1\.12 More than half of the total Bank lending to Sudan is for the
agricultural sector\. In the last 10 years, eight irrigation projects,
three mechanized farming projects, six smallholder development projects, an
agricultural research project, two livestock infrastructure projects and
two Agricultural Rehabilitation Program credits made up IDA commitments
amounting to a total of about US$0\.5 billion\. More than 70Z of these funds
were invested in irrigation projects with the objective of restoring
Sudan's capacity to produce cotton which had fallen from 1\.4 million bales
in 1970/71 to less than 0\.6 million in the early 1980s\. Investments in
irrigation and institutional development, together with improvements in
producer incentives, increased cotton production in 1985/86 to 1970/71
recorded levels\. In addition, by 1985186 more than 70X of Sudants sorghum
and 40? of its sesame were produced on mechanized farms which required
credit support\. In these years, Sudan exported sorghum to middle eastern
countries\. The livestock marketing project under review helped to increase
sheep exports more than threefold over the last five years; making
livestock the second largest net foreign exchange earner after cotton\.
1\.13 In an effort to provide much needed information on production
constraints and environmental factors for Sudan's Savannah areas, the
Government re-directed investment priorities to provide increased support
for agricultural research during the early 1980s\. As a consequence, the
IDA-assisted Western Sudan Agricultural Research Project (WSARP) became
effective in 1980 and the Western Savannah Project - Phase I (WSPI) started
in 1981\. The WSARP addressed the n\.eed to develop agricultural production
technology and improve land conservation and farming systems in the Western
Savannah regions (Kordofan and Darfur)\. WSPI was in essence a pilot
project to rationalize land use by developing water points and allocating
land to smallholders in settlement schemes\. Improvements in technology
generated by the project, i\.e\. phosphate application on millet, were
extended with encouraging results to smallholders\. As well as increasing
yield, however, phosphate stimulated the growth of a parasitic weed
(striga), but it was impressively demonstrated by the project that striga
could be controlled by rotating millet and pulses\. WSPI also included
range and livestock management trials which aimed at rectifying overgrazing
by granting exclusive tenure for dry season grazing to small groups of
pastoralists, but which also allowed traditional transhumant livestock
movements during the remainder of the year\. These trials showed that
rangeland pasture composition improved\. Pasture productivity trials in
South Darfur during 1983 and 1984 showed increased livestock weight gains
and additional milk production\. Excess milk was processed into cheese
which found a ready market in the provincial township of Nyala\.
II\. PROJECT FORMULATION
Proiect Origin\. Preparation and Appraisal
2\.01 The need for the project was initially identified in November 1972
by a Livestock Sector Review and Project Identification Study which was
carried out by private consultants at the request of the Government and
interested donor agencies, including IDA\. The initial design aimed at
improving the under-utilized potential of the Sudanese cattle, sheep and
dairying sub-sectors and although the components changed during project
preparation, the basic objective remained\. Three preparation missions,
which included IDA and FAO/CP staff members and private consultants,
visited the country in January, July and October 1974, and in February and
May 1975\. Changes in project design responded to needs which were
identified by these missions and duplication of activities financed by
other donors was avoided\. In an October 15, 1976 Decision Memorandum, IDA
made a final decision to separate the Livestock Marketing and Railway
Transport components from other related activities and by December 1976, an
updated Project Brief presented the project in its final form\.
2\.02 The updated project focussed on activities to support the recently
established (October 17, 1976) Livestock and Meat Marketing Corporation
(ILMMC) and included a Railway Transport component originally identified in
the 1975 FAOICPIIBRD project identification report\. The redesigned project
included components to: (a) provide technical and administrative assistance
to LHMC; (b) improve the infrastructure of livestock markets, and (c)
provide a new headquarters building for LMHC\.
2\.03 The project was appraised in February-March 1977\. Changes
introduced during appraisal included the deletion of a river transport
component\. the exclusion of airport marshalling yards, and a reduction in
the number of secondary markets, block trains and railway holding yards\.
The main issues identified during appraisal were related to the risk of
poor cooperation between the LMMC and the Sudan Railways Corporation (SRC),
which would be responsible for operating livestock trains, and concern
about SRC's capability to maintain reliable services\. Some legal issues
relating to LMC's ofperations were also raised, as well as the issue' of
local cost financing\. These issues were resolved in subsequent discussions
and during Credit negotiations\. The appraisal mission recommended the use
of the IBRD Project Preparation Facility (PPF) to finance certain
expenditures to be incurred by LMMC after April 1977, in order to allow the
project to get underway\. The PPF was approved on June 21, 1977\. The
reformulated project, as proposed by the appraisal mission, was supported
by the Government of Sudan during an Appraisal Follow-up mission in October
1977\. Costing US$51\.3 million (Table 2), it was approved by IDA's Board of
Directors on March 23, 1978 and became effective on July 9, 1979\.
Proiect Objectives
2\.04 The project was a first step in the Government's strategy to
support the long term development of Sudan's meat industry and aimed at
supporting an organized livestock marketing system and encouraging
livestock producers in the six Western provinces of the country to increase
the number of cattle and sheep channelled through the newly established
- 6 -
markets\. The improved railway transportation facilities were intended to
reduce weight and value losses when animals are trekked, to increase
exports of live cattle, sheep and carcass meat, as well as ensuring regular
supplies of beef and mutton, at stable prices, to the Khartoum market\.
2\.05 Other expected benefits included an increase in producer prices;
an increase in the number of marketed immature animals for fattening units
which would in turn ensure regular supplies to export and domestic markets;
an improvement in the efficiency of animal disease control; and an
enhancement of LMWC's capability to develop long term national livestock
marketing policies and strategies\.
General Description of the Proiect
2\.06 The project was intended to support, over a six year period, the
development of an organized, national livestock marketing system through
the establishment of both market and transport infrastructure and the
provision of staff and supporting services for WMHC (Table 3)\.
Specifically, the project made provision for:
(a) livestock trensport, including the purchase of locomotives
and wagons for livestock block trains to transport cattle and
sheep from the Western producing areas to Khartoum and Port
Sudan, and working capital for LMMC;
(b) the establishment of railway holding, transit and terminal
yards at strategic locations along the railway line which
would facilitate the collection of livestock by LMKC in
advance of train departures, allow stock to be rested during
the long journey from the west, and furnish a means of
quarantining stock from the moment they enter the holding
yards;
(c) improvement and/or establishment of 11 secondary markets,
improvement of 30 primary markets, and construction of two
terminal markets near Khartoum;
(d) construction of a headquarters building and the provision of
staff salaries, vehicles, equipment and housing for W C; and
(e) technical assistance, training and studies\.
2\.07 The LNHC had overall responsibility for the organization and
implementation of the project\. It was assisted by the Department of Animal
Resources in providing veterinary services at the markets and at the
railway yards\. SRC was responsible for the technical operation of the
livestock block trains\.
Proiect Components
2\.08 Livestock Transport Component\. The project would support the
establishment by LMMC of a block train freight service between the
producing areas in the west and Khartoum, and between Khartoum and Port
Sudan, the main export outlet\. New rolling stock purchased under the
project would be owned by SRC and leased to LMMC who, in turn, would pay
SRC to operate the equipment\. In addition, SRC would lease the required
number of cattle wagons from its existing stock to LMC for varying periods
in line vith project needs\.
2\.09 The equipment to be procured would constitute four block trains,
three of which would be composed of 20 double-decker sheep wagons, seven
cattle wagons, a guard van and a brake van\. The fourth olock train would
consist of 27 cattle wagons and 2 vans and would be operated only during
the peak operation period\. A Transport Agreement was signed between LMMC
and SRC specifying lease terms, guarantees of equipment availability,
maintenance procedures, scheduling and operation of the block trains, and
other matters of mutual concern to the two corporations\.
2\.10 The equipment to be purchased under the Livestock Transport
component includeds
(a) 10 locomotives (including two spares to facilitate
maintenance and overhaul);
(b) 69 double-deck sheep wagons (including 3 extra for
maintenance purposes and 6 for traffic spares);
Cc) 9 vans (including 4 guard, 4 brake and 1 spare); and
(e) locomotive spare parts equal to lOX of the total cost of the
locomotive\.
2\.11 The resulting transport system was expected to transport, at full
capacity, some 4,000 sheep and 175 cattle in each of the mixed trains, with
the peak season train handling an additional 2,700 sheep or 675 head of
cattle\.
2\.12 Transport Infrastructure Comoonent\. To enable LNMC to operate the
scheduled livestock freight service at a higher level of operating
efficiency, the project was to establish 6 holding yards, 3 transit yards,
one terminal and necessary sidings along the railroad between Nyala and
Khartoum\. The holding and transit yards would allow the Journey to be
broken into stages, minimizing mortality and weight loss as well as
facilitating quarantine and disease control measures\. The holding yards
would, in addition, allow the building up of specific numbers of carloads
of stock in advance of train departures\. The railway terminal yard was to
be built at Soba, 10 km south of Khartoum, where animals failing to meet
export standards would be sent to the Soba market for local sale while all
other stock would be transferred to the yard's quarantine holding pens or
loaded and shipped to Port Sudan for export\. Investments at the terminal
yard included holding pens, loading ramps, offices and veterinary supplies\.
2\.13 Market Infrastructure Component\. The project was to establish or
improve 30 primary, 11 secondary and two terminal markets, mainly in the
major livestock producing areas, but with some investments in other
production and marketing centers\. Infrastructure was to be provided for
orimary markets, which, at the time of appraisal, had no facilities of any
kind; these included thorn fences, sales ring and entrance and exit races
with connccting gates\. Six mobile marketing teams were scheduled to
supervise the primary markets during predetermined market days and provide
for vaccination of all livestock entering the markets\. The eleven
secondary markets to be constructed or improved were to be administered by
a 15-man market team headed by a Harket Master\. As in the primary markets,
veterinary staff would provide vaccination and inspection of all stock
passing through the markets and would issue movement permits\. Whenever
possible, the secondary markets were to be constructed on the same site
where an earlier market existed, except when space or water requirements
made it necessary to move them to a new location\. Terminal markets were to
be built at two locations near Rhartoums one mainly to handle the western
stockroutes and replace the overcrowded existing market; the other to
handle stock arriving by train, as well as trade stock trekked in from the
inter-riverine area\. The first terminal market was expected to handle
about 480 cattle and 3,000 small stock per day while the second would have
a daily capacity of only 180 cattle and 1,300 small stock for the Soba
market\.
2\.14 LMHC Headquarters and Field Staff Component\. An important
institution-building component of the project was the support provided for
the newly established Livestock and Meat Marketing Corporation\. This
support included:
(i) construction of an office building and provision of staff,
vehicles and equipment;
(ii) provision of a radio communications network to connect
L-MC headquarters with terminal and secondary markets and
with all project transport facilities, and
(iii) provision of five tractor-trailer combinations (plus four
spare trailers) for transporting livestock\.
2\.15 In addition to the above, it was agreed that holding facilities
sufficient to accommodate livestock from one block train at Port Sudan
would be provided under the IDA-assisted Ports Project I (Credit 781-SU)\.
2\.16 Technical Assistance\. TraininR and Studies Component\. Provision
was made for 360 man-months of technical assistance to assist LMMC in
implementing the project and in developing long term national livestock
marketing and pricing policies\. The assistance provided comprised six
internationally-recruited specialists in the fields of livestock and meat
marketing, livestock and meat economics, finance and administration,
livestock transportation, and construction supervision\. Also included in
the project were 40 man-months of training for senior LMMC staff through
fellowships and study tours overseas and in East Africa\. A program for the
training of intermediate staff was to be established by the Regional
Livestock Marketing Advisors and other local staff would be given on-the-
job training as required\.
Proiect Execution
2\.17 The project was to be implemented over six years\. The
construction of railway yards, terminal markets and the LMHC headquarters
- 9 -
building was expected to be completed by the third year, secondary markets
by the fourth year and primary markets by the early part of the sixth year\.
The operation of railway transport was expected to begin in the first
quarter of the third year\.
2\.18 Organization\. Management and Implementation Agencies\.
Responsibility for project execution was shared by two agencies, namely
LMHC and SRC\. The LMMC (para 2\.19) was established by the Government
shortly before project appraisal\. It was the first attempt to entrust the
marketing of livestock and meat in Sudan with a single administrative unit\.
SRC (para 2\.22) was the existing administrative agency for railway
transport under the Ministry of Transport and it had resDonsibility for
establishing overall transportation policy\. The interr- -ion between
these two agencies represented a crucial issue in projc\. implementation
and much attention was devoted during preparation, appraisal and later on,
during supervision, to ensuring smooth coordination between the marketing
and transport components\.
2\.19 LMMC was set up in 1976 as the national institution responsible
for the development and regulation of the livestock and meat marketing
sectors in Sudan\. The most important activity assigned to LMMC during its
first six years of operation was the implementation of the IDA assisted
Livestock Marketing Project\. The agency is headed by a Director General,
responsible to a Board of Directors where the Ministries of Finance and
National Economy, Trade and supplies, Transport and Communications, and
Agriculture Food and Natural Resources are represented\. The Livestock
Breeders and the Butchers' unions are also represented, as well as the
Livestock and Meat Traders and Exporters Board\. At full development, LMMC
was expected to employ a staff of some 665 persons, more than two-thirds of
which would be stationed in the field, mainly in Western Sudan\.
2\.20 The Project was intended to assist the Corporation with the
initial phase of its development\. In effect it had two main objectives\.
The first was to assist the newly-formed LMMC to develop the facilities,
organization and structure necessary for it to operate effectively\. The
second was to improve marketing infrastructure\. These improvements were
intended to facilitate the movement of livestock from the production areas
in the west to Khartoum for local consumption or for export\. Charges for
these services were expected to be fixed at levels which would enable the
Corporation to operate and develop effectively without incurring losses\.
Infrastructural improvements were to be of two kinds, those associated with
the provision of new, specialized rail transport services for livestock and
those concerned with the development of better livestock market facilities\.
In addition to operating these services, the Corporation was to licence and
control exporters and exports and eventually develop other regulatory
functions in the livestock and meat sectors\. A program of technical
assistance and staff training to support the LMMC was a further important
component of the project\.
2\.21 LMMC was given responsibility for (a) assuming control of all
markets improved or constructed under the project and gradually taking over
control of all other markets; (b) formulating and coordinating domestic and
export market policies for meat and livestock; (c) setting and collecting
market fees; and (d) establishing a block train service to transport
- 10 -
livestock\. To achieve the latter purpose, LMMC would lease equipment
purchased under the project from SRC, as well as leasing some of SRC's
existing equipment\. In addition, LMNC would issue export permits for
livestock, collect registration fees and yard fees, as well as transport
fees established jointly with SRC for livestock transported in the block
trains\.
2\.22 SRC was the agency responsible for operating all railways in
Sudan\. It was entrusted with the procurement, operation and maintenance of
the livestock block trains which, however, were under the administration of
LMMC\. The monthly rental fee charged by SRC for use of the equipment
included a fixed charge based on an allowance for capital recovery and a
variable charge based on projected operating and maintenance costs\. The
resulting transport costs were anticipated to be substantially higher than
those charged by SRC at the time of appraisal and a gradual adjustment of
these rates was expected throughout project implementation so that SRC
rates would reach, no later than June 30, 1981, levels corresponding to
those charged by LHMC for livestock transport under the project\.
III\. IMPLEMENTATION AND OPERATION PERFORMANCE
Overview
3\.01 After a delayed start due mainly to procedural difficulties, the
Livestock Marketing and Transport activities finally got underway\.
Although the Project Completion Date was ultimately moved two years beyond
appraisal estimates, this delay did not seriously affect project
implementation\. It was largely caused by delays in project effectiveness
and slow procurement procedures\. Cumbersome procurement procedures were
responsible for a serious delay in the procurement of locomotive spare
parts and railway equipment towards the end of the project period\. The
project was declared effective in July 1979 after more than a year had
lapsed since the June 16, 1978 Credit signing date\.
3\.02 The main project objectives were achieved, particularly its
institution building ones\. In spite of the expected managerial and inter-
agency difficulties foreseen throughout project preparation and appraisal,
the LMMC (para 2\.19) and the SRC (para 2\.22), the main executing agencies,
have emerged stronger and more efficient, in no small measure because of
their involvement in the project\. The financial impact on both agencies,
particularly on LMMC, has been highly positive\. The impact on the number
of animals transported and exported is impressive and in addition, the
expected increase in value and avoidance of weight loss in export animals
was successfully achieved\.
3\.03 The construction of LMMC headquarters was carried out
satisfactorily in terms of quality and schedule and although delays were
experienced in the construction of livestock yards, which were mainly due
to management inexperience, procurement difficulties and inadequate
supervision, they were eventually constructed satisfactorily and
successfully complement the operation of the block trains\.
- 11 -
3\.04 One unforeseen constraint in achieving the levels of livestock
transported as estimated at appraisal was the drought of 1984185 which
affected the Western provinces during a considerable portion of the project
implementation period\. This had an impact on the numbers of animals
exported, but even under these conditions the trend towards increasing
cattle and sheep exports was maintained, although the number of sheep
exported was depressed by the drought and the temporary ban on exports in
1986\.
3\.05 Finally, one important impact of the project, with long-term
positive results, was the influence which LMMC was able to exert on
national livestock policies\. Examples include the elimination of a 25Z
export tax on livestock exported on the hoof and use of a higher, more
realistic, commercial exchange rate to convert export earnings to local
currency which benefitted livestock exporters\. At the same time, livestock
exporters were allowed to retain their export earning8 in foreign exchange\.
Livestock MarketinR
3\.06 The project has been successful in its marketing objectives as
indicated by livestock throughput (Table 4)\. In spite of delays
experienced in project implementation, including late project
effectiveness, managerial difficulties and delayed construction, the
appraisal estimates of 1,160,000 sheep and 200,000 cattle throughput by
1984 were surpassed although the project had not yet reached full
development\. Average cattle throughput for virtually all years was more
than double appraisal expectations and sheep throughput exceeded
expectations\.
3\.07 By July 1981 LMMC was operating 10 markets and no additional
markets were taken over\. Total throughput of sheep in LMMC-operated
markets rose from 746 thousand head in 1981 to 1\.85 million in 1985 and
fell back to 1\.32 million in 1986 (Table 4)\. Part of the increase which
occurred between 1981 and 1982 resulted from the takeover of two markets in
1981\. However, the increase in other years represent genuine improvements
in market throughputs\. Considerable distortions were caused by the
drought\. Initially, as feed became scarce and expensive, more sheep and
cattle were offered for sale and prices fell sharply\. This was especially
the case in the production areas of the west because of the difficulty in
moving livestock to the major consumption areas in the Nile Valley In
addition many animals died of hunger in the west\. Later, when tne drought
eased, offtakes of animals for sale in the production areas were reduced
because of the smaller populations and because livestock was being retained
in order to rebuild flocks and herds\. In fact, at one stage early in 1986
cattle prices were higher in some western markets than in Omdurman itself\.
However, bearing in mind the fact that the appraisa\. estimates also include
throughputs in 30 primary markets in the west while the LMKC data only
covers terminal and secondary markets, actual throughputs were well in
excess of appraisal estimates\. Throughput (sales) of cattle rose every
year over the 6 year period 1981-1986, from 263 thousand head to 505
thousand\.
- 12 -
Livestock Exports
3\.08 While the numbers of sheep and cattle exported during the project
implementation period differ from those reported b, LMMC and figures
obtained from the Foreign Trade Statistics of the Bank of Sudan, the
differences are not significant and the trend towards increased exports
from fiscal years 1975 to 1983 when they peaked, is similar for both
estimates\. wxports of both sheep and cattle substantially exceeded
appraisal estimates until 1986 when exports were temporarily banned (para
1\.11)\. Sheep exports were probably reduced somewhat in 1984 and 85 because
of the drought (Table 5)\.
Livestock Transport
3\.09 Transport on block trains was delayed by one year after the
appraisal estimate but was finally operated by LMKC from November 1982
onwards\. The number of cattle transported increased rapidly from 1983 to
1985 from about 14,000 to about 45,000 head and exceeded appraisal
expectations if the one year lag in commencing operations is taken into
account (Table 6)\. The number of sheep transported exceeded appraisal
expectations up to 198V but the number dropped substantially in 1985 and
dramatically in 1986 due to the temporary ban on exports\.
3\.10 Sheep traffic began to decline after 1984, in part due to the
effect of the 1984/85 drought, but also as a result of reduced block train
operations\. Lack of spare parts and overuse of project locomotives by the
SRC were major causes for this reduction\. It should be noted, however,
that in spite of these difficulties, the number of cattle transported
exceeded appraisal estimates in 1985 (para 3\.09)\. This clearly indicates a
strong demand for livestock railway transport even under difficult
circumstances\.
3\.11 During 1984, before the drought became particularly serious and
affected development, 104 trains were operated (not shown in Table 6)\. Of
these, 34 were from the west to Khartoum (17 from Nyala, 13 from El Obeid
and 4 from intermediate stations)\. As a result, about 69,000 head of sheep
and 13,000 head of cattle were moved to Khartoum, mainly for export\. The
remaining 70 trains were operated from Khartoum to Port Sudan and carried
355,000 head of sheep (642 of exports) and 12,000 head of cattle (38S of
exports)\. Total receipts were LSd 3\.3 million, of which LSd 2\.3 were from
operating the Khartoum to Port Sudan route\.
3\.12 Over the first three complete years of block train operation, some
22? of sheep and 34? of cattle transported by rail were carried during the
April-June quarter, a period when trekking is impossible and animals are
extremely difficult to move\. There is some evidence of a reduction in
livestock price variation in Omdurman market after the beginning of railway
service operation, but it is not conclusive and the situation is
complicated by the effects of the drought\. The export ban has seriously
affected LMMC railway transport service revenue since September 1986\.
Income from the Khartoum to Port Sudan route has been particularly badly
affected\.
3\.13 Over the period of the drought and famine, the project railway
rolling stock played a very important part not only !a transporting animals
from the west, which would otherwise have been lost, but also in
- 13 -
distributing food aid to Darfur and Kordofan\. In tot&l, some 39 thousand
tonnes of food were backloaded, about half in 1985\. Of these, 27 thousand
tonnes were sent to Nyala from Khartoum or Kosti and three thousand tonnes
to El Obeid\. Some nine thousand tonnes were carried from Port Sudan to
Khartoum\. Cereals were the main component but significant quantities of
sugar, cooking oil and salt were also transported\.
3\.14 LMMC's performance in establishing and st'-ministrating the
livestock transport activities has been highly Cv tended by supervision
missions as well as being supported by good finanL\.al results, which have
been consistently profitable\.
Institution Developmant
3\.15 At the onset of the project, a new institution, LMKC (para 2\.22),
had been established and was in the process of structural organization and
staffing\. The other executing agency, the SRC (para 2\.2?;, although
already responsible for the operation of all Sudanese railroads and
equipment, needed managerial strengthening and was not fully convinced of
the practicality of operating a livestock transport system jointly with
LI4MC\. At the beginning of the project, six resident advisers, covering
livestock marketing organization and management, livestock railway
transport, administration and accounts and livestock and meat marketing
economics, were put in post\. The number of advisors was gradually reduced
as LMMC expertise developed\. The resident advisers were supported by some
twenty short term visits from specialist advisers and consultants\.
3\.16 LMMC has developed into an organization which is considered to be
outstanding in its financial management among Sudanese parastatals\. The
quality of its organization and management have been internationally
recognized as indicated by LMKC's winning of two awards, the African Award 2
and the Arab Trophy\. 3 Successful management is also indicated by LMKC's
implementation of efficient accounting and internal auditing systems and
classification of accounts, the establishment of cost responsibilities and
the attention paid to defining responsibilities and controlling costs\.
Further proof of the agency's development and performance is found in its
consistent profitability even during periods when serious constraints to
livestock trading prevailed (Table 7)\.
3\.17 The training component has been an important factor in the
successful achievement of LMMC's institution building objectives\. Although
in the early stages of implementation, the time and effort spent on
training staff may have been a factor in the delays experienced in
initiating project activities, this was eventually more than compensated
for by the impact of training on the agency's managerial capabilities\.
During the project period, over forty LMMC staff vis ted the United Kingdom
to take up training grants awarded by the British Council and funded by the
2f The African Award was given to LMMC in 1984 for outstanding marketing
services amongst African countries\.
3/ The Arab Trophy was given to LMMC in 1984 for outstanding marketing
services amongst Arab countries\.
- 14 -
ODA\. Training was provided in a wide range of subjects includings senior
management techniques; management of livestock markets; meat production and
processing; accountancy and agriculture extension\. Means of training
ranged from formal courses in training institutions, usually leading to a
recognized post-graduate degree or diploma, to courses specially arranged
to meet the needs of individuals with marketing or industrial
organizations\.
3\.18 The project's positive impact on strengthening the capabilities of
SRC while less evident than in the case of LMMC, should not be ignored,
although modifying an existing well established management approach to
operational and administrative problems is not an easy task at the best of
times\. The number of staff and range of technical assistance provided to
SRC was much less than that provided to LMKC\. Furthermore, the difficult
task of establishing workable agreements betwsen SRC and LMMC consumed
valuable time and energy that would have been better spent on improving
SRC's management style and procedures\. The fact that such agreements were
reached in spite of difficulties, and that the livestock transport
component remained operational while tough discussions on leases and
charges were in progress, is a clear reflection of SRC's increasing
appreciation of the value of collaboration with LMMC\.
3\.19 Difficulties experienced in constructing railway yards and delays
in procuring locomotive spare parts and equipment indicate that despite
improvements, SRC managerial weaknesses have not been fully resolved\.
These had a negative effect on project implementation\. Nevertheless, in
the later stages of the project, there were encouraging signs that these
problems were gradually being rectified\.
3\.20 While there is still ample room to improve the performance of both
implementing agencies and it is not clear that they will be able to
maintain their relatively good performance after the technical assistance
is withdrawn, institution building objectives of the project were achieved
to a substantial degree in each agency\. The impact of combining technical
assistance and training on institutional performance was impressive and
noteworthy\.
Consultants and Training
3\.21 Consultants, financed by ODA and IDA to strengthen LMMC
management, performed exceptionally well\. They were a significant factor
in developing LMKC's capabilities to undertake its assigned activities and
in enabling SRC to operate block trains\. In addition to resident longer
term expatriate staff, ODA provided short term backstopping technical staff
who visited the project regularly to review implementation and advise both
Sudanese and expatriate staff on operations\. Sudanese senior managers had
full responsibility for controlling, managing and monitoring the
performance of all consultants\.
3\.22 A trainiri program prepared at the start of the project was
successfully implemented\. This program included overseas short term
training for senior and middle management staff and local training for
technical staff\. The expatriate staff organized local training for market
officers in record keeping, grading of livestock and classification of
- 15 -
meat\. In addition, local staff were trained in the management of a
computerized information system\. Tne impact of the training program was
most valuable because it enabled LMMC to base its management decisions on
up-to-date information\.
Project Costs
3\.23 The estimated project cost was US$37\.9 million or about 752 of the
cost estimated at appraisal\. The lower cost was due to agreed non-
implementation or modification of some components - the construction of
fewer secondary markets (9 out of 11), Livestock Marketing offices (2 out
of 12)\. railway yards (8 out of 10) and the omission of 30 primary markets
included at appraisal\. Actual prices for locomotives and wagons were also
lower than appraisal estimates\. Lower costs were partly the effect of
frequent devaluations of the Sudanese currency associated with the
comparatively high rate of inflation in Sudan over the project period\.
Financing
3\.24 The project was jointly financed by IDA (US$23\.5 million), ODA
(US$2\.9 million) and GOS (US$11\.5 million)\. IDA was the main external
donor, funding infrastructural improvements aitd ODA funded the necessary
technical assistance and training on a grant aid basis\. The GOS amount
includes US$6\.0 million equivalent of duties and taxes\. These form part of
the local costs\. However, in practice, no actual tax payments were made on
project imports because they were exempted from taxation\. Disbursement
categories, amounts and appraisal estimates are given in Table 3\.
Procurement
3\.25 Managerial iaadequacies were responsible for delays in
implementing civil works and the procurement of equipment and spare parts\.
Cumbersome customs procedures were a further cause of delay in the
procurement of imported items\. Delayed credit effectiveness, due to the
existence of complex official procedures, were responsible for a ten-month
lag in project implementation\. Cumbersome customs procedures delayed
procurement by an additional five months\. The construction of livestock
markets by local contractors was delayed by problems associated with the
supply and transport of construction materials\. Construction of livestock
marketing offices and staff houses in remote areas was delayed by
difficulties in finding suitable local contractors\. Livestock watering
facilities were not provided at a few markets because underground water was
not found at those sites; this, however, is not surprising because drilling
for water in Sudan is a relatively risky business\. Despite these problems
it is worth noting that the construction, by contract, of the LMMC
headquarters in Khartoum was completed in less than one year, much faster
than anticipated\.
- 16 -
IV\. BENEFITS, FINANCIiL AND ECONOMIC ANALYSIS
Benefits
4\.01 Despite the difficulties that existed between LUW and SIC in the
operation of block trains for livestock transport and the subsequent delays
it the construction of associated livestock infrastructures, the project
was responsible for a substantial increase in the number of livestock
transported, marketed and exported (Tables 4, 5 and 6)\. Block trains
contributed greatly to increasing the number of livestock exported,
particularly sheep numbers to Saudi Arabia\. Actual livestock exports were
higher than appraisal estimates\. Under the project, a total of about 3\.3
million sheep were exported between 1981 and 1986 compared with an
estimated 2\.9 million at appraisal (a 142 increase)\. During the same
period, 133,000 cattle were exported compared with 111,000 estimated at
appraisal (a 202 increase)\. Other major project benefits included a
reduction in weight loss and maintenance costs of livestock transported by
block trains to Khartoum and Port Sudan\. The coefficients used for savings
in trekking times and liveweight when animals are transported by train are
the same as those used in the SAR Annex 11\. On average there is a saving
of about 122 in liveweight for cattle and 102 for sheep with a range of
0-182 depending on the time of the year when animals are trekked\.
Financial Performance of LMMC
4\.02 LbIMC revenue is mainly derived from market fees, payments for
export permits, and rental payments for block trains\. The main operating
costs include expenditures on livestock markets, headquarter administration
expenses and payments to Sudan Railways for operating block trains\. Over
the project period (1981 to 1986), LMMC made large gross profits (Table 7)\.
LHMC accounts provide a monthly breakdown of revenue and expenditure for
each market and by each operation\. This type of information enables
management to monitor the performance of each profit center and provide
remedial support promptly\. Despite delays in reaching agreement on SRC
charges for the rental and operation of livestock trains, LMMC was able to
pay off accumulated debts of LSd two million for the first two years
operai\.ion of the block trains once agreement was reached\. It is also worth
noting that LhMC is one of the few public corporations in the Sudan that
has been self-financing since establishment\. It has a sound financial base
which is supported by an adequate financial and accounting system
established under the project\.
Economic Analysis
4\.03 Project benefits accrue from a reduction in weight lose assuciated
with trekking livestock, an increase in live animals and beef exports as
well as savings in the cost of maintaining livestock prior to marketing\.
Incremental beef was valued in 1986 constant prices using adjusted World
Bank commodity price projections\. Sheep and/or mutton was valued on the
basis of import prices in Saudi Arabia which is the main market for
Sudanese sheep\. These export parity prices were adjusted for local
handling and transport\. Cost savings on livestock maintenance are baned on
the assumption that without the project, livestock trekking would continue
from the producing areas to Khartoum\. The project would reduce the holding
and feeding time of about two months required to condition animals for the
Omdurman/Khartoum market\. In addition local costs were adjusted by a
factor of 0\.6 to convert to border prices\. It was assumed that mutton
prices would remain constant over the remainder of the project's life\. All
- 17 -
costs are net of taxes and subsidies and imported items were valued at the
prevailing official exchange rate at the time of importation\.
4\.04 For the projected years (1987-2000), conservative estimates of
project benefits were used in the analysis\. For this period, project
operating costs and benefits were based on figures for 1984 (pre-drought
period) whieh were projected to remain constant for the remainder of the
project\. These projections take into account livestock exports,
utilization of block trains for livestock transport, and projected
throughputs for markets\. Although block train capacity to transport
livestock has increased with the purchase of an additional 31 wagons in
1986 the additional capacity was not taken into account when estimating
future benefits because of the conservative approach adopted\. It was
assumed that substantial purchases of locomotive spare parts in 1986 would
enable block trains to maintain existing capacity in operation throughout
the remaining life of the project\. Based on the above assumptions, the
project's economic rate of return was estimated at 402 (Table 8) compared
with 152 at appraisal\. The high rate of return is mainly attributable to a
substantial increase in the number of animals exported and much higher
livestock prices than those projected at appraisal\.
Imact on Livestock Policy
4\.05 Although the objective of influencing national policy in regard to
livestock was an indirect one, there can be no doubt that LHMC had a
definite impact on policy during the project implementation period\. The
impact was attributable to strong leadership within LMKC and its ability to
analyze the outcome of different policies and bring negative implications
forcefully to the Government's attention\. L1MM's influence and
representation played arn important part in the decision to grant a more
favorable exchange rate to livestock exporters in 1980 and eliminate a 252
tax on livestock exported on the hoof (para 3\.05)\. These measures resulted
in an increase in livestock exports which was assisted by a concurrent
devaluation of the Sudanese pound\. Although the 1986 temporary ban on
livestock exports was a severe blow to LMMC, the lifting of the ban in
August 1987 was in large measure a consequence of LMMC's effective
representations\.
V\. ASSESSMENT OF IDA PERFORMANCE AND LESSONS LEARNED
IDA Performance
5\.01 The Association, mainly through the preparation of a comprehensive
SAR and supervision missions which addressed implementation issues in a
positive and flexible manner, has contributed significantly to project
achievements and objectives\. IDA was quick to accept Government's
proposals for improving livestock transportation and marketing and the need
to establish LMMC for this purpose\. Revisions to the project which were
made prior to and during appraisal resulted in a more efficient and better
focussed project\.
5\.02 With hindsight, although institution building efforts were
evidently successful in strengthening LMKC, they could only be expected to
- 18 -
have a marginal effect on SRC because of the relatively meager resources
allocated to that organization and this resulted in an organizational
imbalance\. Supervision efforts during the early 3tages of project
implementation concentrated on the efficient organization of LHHC and
contributed significantly to this objective\. At a later stage supervision
missions devoted much effort to achieving agreement between LMMC and SRC on
matters such as railway yard construction and charges for block train
operations\. These efforts at mediation proved extremely time consuming\.
Nevertheless supervision missions played a commendable role in resolving
several organizational obstacles impeding implementation\.
Lessons Learned
5\.03 The main lessons learned under the project are as follows:
(a) the project was successful because it filled a major need in
Sudan's livestock transport and marketing systems;
(b) in projects involving transport equipment, early planning and
procurement of spare parts is essential to avoid reductions
and disruptions in rail transport services for livestock;
(c) technical assistance could have been better balanced between
the executing agencies LMKC and SRC even though SRC had been
established for a longer period of time and was fully
operational at the outset of the project (paras 3\.18 and
5\.02); and
(d) the capability of agencies responsible for constructing
buildings and civil works should be carefully accessed at
appraisal and sufficient technical assistance provided to
ensure timely construction\.
5\.04 The project rationale, which was based on a perceived demand for
livestock transport and improved marketing facilities, was fully confirmed
by implementation results\. Should the Sudanese government succeed in
curtailing I istock smuggling by continuing to adopt enlightened livestock
export policies, results would be even more positive still\. Although som
of the difficulties in achieving collaboration between LMKC and SRC might
have been avoided by an earlier appreciation of the potential conflict of
interest, it is likely that better collaboration would, in any event, have
been impeded by the lack of experience with the activities proposed under
the project\.
- 19 -
Table 1
PROJECT COWLETION REPORT
SUDAN - UVESTOCK MARKETIN PROJECT
(CREDIT NO\. 782-SU)
Key Indicatoro L/
Amended AOl
Unit SAR SAR Actual SAR (U)
Cllvl Works
Provincial livestock mrketing office 12 - 2 17
Socondary markets 11 11 9 82
Primary market\. as - -
Railway livestock yards 8 10 8 ISO
Torminal markeWt 2 2 2
Rai l terminal 1 - - 106
UMC headquarter - 1 1
Operations
Volum of rallway traffic handled (1984) '696
hed
Cattle so 2S a8
sheep 412 424 16s
Market throughput (sales) (1984) '600
hbws
Cattle 200 428 214
Shep 1160 1244 17
Export (1984)
Cattle 19 82 16l
Sheep 482 625 122
Revenue (1985/86) sm
LSd
Market tes 198 116 / 1V l
Export revenue 554 l16l a6n
Block train rvenues 115 1967 p/ 111
8349 4744 142
1S SaM key indicators were seriously affected by the 1968t- drought\.
T Including zmscellaneous fes for un of markett as overnight holding grounds, etc\., totalling
LSd 197,900\.
!/ Including LMMC revenu from backloading human food for drought ares, LSd 291,W\.6
- 20 -
Table 2
PROJECT COMPLETION RZPORT
SUDAN - LImVSTOCK MURRETING PROJECT
tCREDIT NO\. 782-SU)
Proiect Cost Suamarv
Appraisal Estimate Actual 11 Actual as 2
Local Foreign Total Local Foreign Total of avpraisal
- $US$ million ------ ------us$ million------ estimates
Livestock transport 7\.0 13\.5 20\.5 3\.7 12\.4 16\.1 79
Transport infrastructure 5\.7 4\.0 9\.7 2\.5 2\.4 4\.9 51
Market infrastructure 5\.8 2\.9 8\.7 2\.4 2\.0 4\.4 51
I\.MC headquarters 7\.1 2\.2 9\.3 5\.4 4\.2 9\.6 103
Technical assistance,
training and studies 0\.7 2\.4 3\.1 0\.1 2\.8 2\.9 94
Total Project Cost 26\.3 25\.0 51\.3 14\.1 23\.8 37\.9 74
11 Taxes and duties\. estimated at similar rates to those included in the appraisal\. have been
included to ensure comparability\. These form a component of local costs\. In practice\.
duties were waived on official project imports\.
- 21 -
Table 3
PROJECT COMPLETION REPORT
SUDAN - LIVESTOCK MARKETING PROJECT
(CREDIT NO\. 782-SU)
Allocation of Loan Proceeds
(in US Dollars)
Disbursements by Categories
Appraisal
Category Description Amount Disbursed Estimate
1 Livestock Transport 12,451,904\.82 9,500,000
2-A Transport Infrastructure 1,315,703\.34 2,000,000
Construction, Materials
and Equipment
2-B Transport Infrastructure, 1,328,857\.67 600,000
Civil Works
3 Market Infrastructure 1,770,058\.97 3,700,000
4 Vehicles and Equipment 1,483,943\.69 2,000,000
for LMNC
5-A Water Supply, Equipiment 377,478\.68 1,000,000
5-B Water S'pply, Civil Yorks 8,202\.60 300,000
6-A LNMC, Livestock and Meat 321,609\.00 300,000
Marketing Expert
6-B LMMC, Buildings 932,707\.51 1,500,000
6-C LMMC, Operating Costs 3,316,907\.51 600,000
7 Refunding of Project 233,979\.17 350,000
Unallocated - 3\.150\.000
Total Disbursements 23\.541\.353\.26 25\.000\.000
PROJECT COMPLElION REPORT
SUDAN - LIVESTOCK MARKETING PRUJECT
(CREDIT NO\. 782-SU)
LUvsatoec Throughput tor All Mbrkte
Flsacl Year 1961 1982 1988 1984 1985 1968
a eap 11cattle Shep p-Cattle h p Catt She p atle Shp- l ttl Shop l- Cattl-
July 41,0206 1,067 81,271 15,740 28,244 19,518 47,078 19,209 114,649 27,927 216,226 87,781
AupaI 82,906 2S,919 79,176 12,189 76,114 80,918 197,645 47,2M 166,688 89,690 S81,07 4$,718
JS\.ptsb\.Sr 128,785 42,967 12t,704 86,229 168,189 86,615 116e109 85,928 121,675 87,620 158,92 65,m
O@t\.bt 56,6s84 16,179 64,697 23,241 116,060 87,8e6 70,454 86,865 186,979 58,107 148,094 76,585
November F7,586 27,402 1,6e65 28,6$5 128,791 87,096 70,S6 46,938 ae9,762 so,691 91,696 51,518
Dc_mber 68,780 26,810 104,841 27,6s 164,857 41,818 190,244 46,697 246,686 41,286 112,a1 47,026
Jeauary 72,9568 28,270 7,867 26,519 114,569 48,218 110,641 40,191 186,286 86,76 6,6ee6 7,572
February 52,647 26,291 56,651 19,464 90,890 88,56, 122,619 86,548 122,589 84,162 44,701 86,994
March 51,586 19,596 48,661 20,795 75,66 87,761 124,628 4,402 117,94 40,642 9,206 87,629
Apri 47,196 17,744 47,349 18,621 54,628 29,475 111,211 29,062 129,n7 29,601 i,5,14 81,516
May 89,920 15,186 49,8 16,981 74,s62 28,229 170,560 81,087 118,696 6,614 66,906 24,139
Jun\. 87,2 16,65 41,869 1_ 46,8457 71\.77 21,627 1,97 21,912 0U,120 29,912
TOTAL 745,745 262,628 661,466 278,56 1,147,662 888\.962 1,248,e66 428,478 1,865,748 444,216 1,828\.496 564,75
Appraisal
Estiw"t 864,90 1/112,M 1 1,106, 296,06
Wml as X
ot Appra I as
Estimate 1a 214
/ SAl estlmt tor 1977\.
Source% LkMC MInthly Rporits (_nmbr, sold)\.
II
PROJECT COMPLETION REPOT
SUDAN - LIVESTOCK MARKE PROJECT
(CREDT NO\. M82-)
Sheep end Cattle Expo (191
Fical Veer 1981 12 16 1is4 1"5 1s"
__ _ bSeep --tat $beep -Cattlo Sb -C ttl e etl on p ¢l- e Ctl*
July 86,8\. 26 27,66 2,942 22,1" 1 ,671 4,68 2,482 03,31 1,370 76,185 1,6,
Auuat 28o,39 323 7,465 mn 12,449 M4 23,491 ,438 41,52 3,161 "3,5 1\.7W
September 46,232 1,345 71,76? 245 51,76 2a 3s,72T 1,9" 18,812 1,523 27,531 1,35I
OtoberW 46,172 582 33,6481,s I'3 360,0 - 2,00 1,764 86,270 988 55,265 35
November 43,321 2,310 49,314 $,397 76,9 - 54,841 4,21 51,927 I,' 43,60 -
o or 47,289 1,92 6,465 2,696 19,95 76 56,n7 2,393 67,O9 4,0665 59\.21 2,81s
Jamary 8,25 1,939 61,81 3,93S u53,s2 2,466 85,141 8,182 79,931 4,491 54,519 673
February 8#,908 947 315,82 2,55 6,539 2,165 59,405 5,672 49,666 3,86a 15,04C 1,2
March 53,768 2,532 81,856 2,566 57,349 2,457 47,62 96 27,866 2,196 84,826 es
Apr1 1 47,928 8,275 61,721 2,88 58,56 1823 62,220 2,094 56,8\.7 1,565 S,977 -
My 43,571 8,983 43,779 6 S6,198 see 76,826 1,540 05,834 1,i29 41,21 -
June 43,m 2,35 4386S 1,5\. 52,87 1,267 6,689 2,658 68,067 2,494 59,492 1,012
TOTAL 597,124 21,7W 53,751 265,4 926,565 18,368 2S,921 81,661 612,186 23,593 49,162 12,1W5
Appraisal
EtImtoe 294,066 14,606 339,00 18,9W 363,666 17,006 482,006 19,666 435,666 21,666 1,M,U 24,9 w
Actual S e
of App1aial
Estimate 172 156 154 10 104 79 122 16 126 180 s6 52
Sources LMMC Monthly Reports\.
PROJECT COMPLETION REPORT
SUDAN - LIVESTOCK MARKETING PROJECT
(CREDIT NO\. 782-S)
Block Train Traffic
Fiscal Yer 1988 1984 1961 1996
Sheep-Cbttl* Sheep-l~~Cattl- e,l**l Shnnp-Tattile
July 40,026 628 26,9Q8 610 9,610 687
Auust 81,249 1,891 22,828 1,991 8,600 -
September 19,581 738 24,56A 6,68e 2,727 -
October 14,828 1,022 82,961 7,868 21,416 -
November 10,642 - 17,819 S,981 84,520 4,216 11,791 100
DOcember 29,119 1,161 1,762 1,642 64,227 8,979 17,045 1,230
January 88,os6 1,676 41,696 2,251 86,484 4,845 21,464 692
February 41,588 986 42,7a4 1,641 30,095 2,269 9,e63 670
Mrbch 84,81 2,889 46,485 8,186 10,589 8,057 15,898 2,146
Apr) I 8,698 4,174 68,991 4,105 88,658 8,619 10,665 1,716
May 60,488 2,657 69,448 2,225 14,729 4,617 4,185 2,82,
June 88,279 818 29,809 2,2U5 16,666 1,516 11,875 2,079
TOTAL 274,640 18,756 424,172 25,182 849,628 44,869 189,636 11,616
Appralil Estimate 194,000 14,09 279,600 20,90 412,699 30,00 547,60 40,00 726\.099 54,000
Actual as X of
Appraisal Estlmte - - 192 89 18 84 64 112 19 21
Source: LC MYbMnthly Reports\.
t'4
- 25 -
Table 7
PROJECT COMPLETION REPORT
SUDAN - LIVESTOCK MAIKE?ING PROJECT
(CREDIT NO\. 782-SU)
LMMC Financial Perfonmance Summary For All Markets and Headquarters
(LSD)
Gross
Financial Year Revenue 1/ Expenditure 2/ Profit/Loss Profit/Loss 31
1979/80 666,795 416,246 250,549 37,337
1980/81 907,414 563,310 344,104 60,991
1981/82 979,434 939,337 40,097 19,743
1982/83 3,757,306 3,399,606 357,700 61,273
1983184 5,954,950 4,724,166 1,230,784 246,303
1\.7\.84 to 24\.9\.84 41 1,013,978 931,422 2,953,884 517,754
25\.9\.84 to 14\.9\.85 5/ 8,042,450 5,088,566 2,953,884 517,754
15\.9\.85 to 30\.6\.86 4t 4\.388\.619 3,678\.1Z7 710\.292 127\.626
TOTAL 25\.710\.946 19\.740\.980 5,969\.966 1\.088\.799
-\. Revenues from market fees, sale of export permits, livestock transport
on block trains and other miscellaneous items\.
Including market and headquarters expenses and payments to SRC for
block train operations but excluding depreciation, corporation taxes
and certain minor items\.
3/ Gross profit less depreciation and corporation taxes\.
4/ Transitional accounting period\.
5/ Higra accounting year 1405\.
PROJECT COWPLETON REPORT
SUAN - UVESTOCK MARKETING PROJECT
CREDIT NO\. 782-SU
Econezlc Ansalsal
Tr inTo-na Lau;
1986 196k 1062 1068 1984 loS 106 1987 1088 1909 1990-1994 1996-2061
BENEFIT
UT LOSS SAVING
G^Tl ot - - - 1275\.7 1967\.8 4664\.0 1723\.0 1617\.1 18S2\.7 8758\.7 8968\.2 4116\.8
SNEEP - - - 92a\.7 929\.E4 8196\.1 8596\.9 204S8\.2 28127\.9 24229\.2 25467\.6 26481\.9
MAINTENANCE COST SAVINC
CiTTLt - - - 446\.6 806\.0 1487\.1 869\.6 868\.6 86ee\.6 6\.0 8\.0 616\.
SHEEP - - - 1759\.8 2719\.9 2241\.1 891\.2 2241\.1 2241\.1 2241\.1 2241\.1 2241\.1
TOTAL BENEFITS - - - 12892\.8 14961\.2 16502\.8 e668\.5 25116\.2 286\.8 1 1636\.8 82563\.9 88506\.1
INESTMENT AND OPERATIN COSTS °N
- VtZIu IKWN6PUR - - 7451\.9 192\.7 - - 8158\.9 - - - - -
TRAWSPORT INFRASTRucTIME 121\.5 648\.4 1424\.6 06\.8 124\.2 258\.5 86s9\.6 - - - - -
MARKET INFRASTRUCTLRE - 261\.1 169\.0 192\.7 2142\.5 2241\.6 2741\.8 - - - - -
HQ UILD=NG 969\.1 482\.5 657\.5 858\.3 745\.2 59\.9 867\.7 - - - - -
TECHNICAL ASSISTAmNCE - 18\.4 1815\.0 6 70\.6 442\.4 627\.6 2ee\.6 - - - - -
SALARIES AND WAGES 8s4\.s 461\.4 518\.6 779\.0 86N\.7 884\.0 1169\.0 1169\.9 1169\.6 1l1e\.6 1169\.6 1109\.9
BLOCK TRAIN LAND OTHER OPER 189\.8 192\.1 265\.8 1918\.5 2988\.2 2253\.5 2169\.7 2996\.e 295\.06\. 9\. 299\.6 2995\.
VEHICLE AND MACH OPER 12\.2 5\.2 115\.7 127\.8 181\.2 229\.4 252\.8 252\.8 252\.8 252\.8 252\.8 252\.8
SPAR£S 159\.6 17\.4 4554\.2 166\.0 440\.2 1404\.9 4ss7\.8 6586\.9 538s\.9 5868\.9 5868\.0 684e\.9
TOTAL COSTS 1866\.4 2170\.5 16812\.4 45\.6 7765\.0 6 1992\.9 110181\. 9720\.2 9726\.2 9720\.2 9726\.2 9720\.6
NET INCREMENTAL SENEFI
TOTAL INCRMVENTAL NET 8ENEFIIS 1860\.4 2170\.5 16412\.4 9696\.8 7196\.6 8899\.4 -11660\.9 16898\.6 18818\.1 2181\.6 2279\.7 8 \.9
ECNOMIC RATE OF RETt\.I a 40\.0fl
M
O0 | APPROVAL |
P010332 | Document of
The World Bank
FOR OmCAL USE ONLY
Report No\. P-5041-CE
MEMORANDUM AND RECOMMENDATION
OF TdE
PRESIDENT OF THE
INTERNATIONAL DEVELOPMENT ASSOCIATION
TO THE
EXECUTIVE DIRECTORS
ON A
PROPOSED CREDIT
OF SDR 15\.5 MILLION
TO THE
DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA
FOR A
FOREST SECTOR DEVELOPMENT PROJECT
MAY 17, 1989
This document has a restricted distribution and may be used by recipients only in the performance of
their offcial dutie Its contents may not otewise be disclosed witbout Wo\.ld Bank authorization\.
CURRENCY AND EQUIVALENT UNITS
Currency unit = Sri Lanka Rupees (SL Rs)
US$1\.00 = SL Rs 33\.00
SL RS 1 - US$0\.0303
WEIGHTS AND MEASURES
1 kilometer (km) - 0\.62 miles (mi)
1 meter (m) = 1\.09 yards (yd)
1 square kilometer (km2) - 100 hectares (ha)
1 hectare (ha) - 10,000 m2 (0\.01 km2) - 2\.471 acres (ac)
1 cubic meter (m3) - 35\.315 cubic feet (ft3)
1 kilogram (kg) - 2\.2 pounds (lb)
1 metric (m tons) \. 1,000 kg - 2,205 lb
ABBREVIATIONS
ADB - Asian Development Bank
CIDA = Canadian International Development Agency
ED * Forest Department
FINNIDA - Finnish International Development Agency
GOSL - Government of Sri Lanka
ODA = Overseas Development Administration of the United Kingdom
STC - State Timber Corporation
UNDP = United Nations Development Program
USJ = University Sri Jayawardenapura
FISCAL YEAR
January 1 - December 31
FOR OMCIAL USE ONLY
,IMm
'E2AST SEC tOR DROPMEN? ?ICT
Credit and Proiect Swuigry
Borrower: Democratic Socialist Republic of Sri Lanka (GOSL)
Beneficiaries: Ministry of Lands, Irrigation and Mahaveli
Development (MLIHD), Forest Department (FD),
University of Sri Jayawardenapura (USJ), and State
Timber Corporation (STC)
Amount: SDR 15\.5 million (US$19\.9 million equivalent)
Terms: Standard, with 40 years maturity
Onlending Terms: Not applicable
FinancInR Plans
(USS million)
Government 8\.7
FIMNIDA 2\.8
IDA 19\.9
Total 31\.4
Economic Rate of Return: 282
Staff Appraisal Reiort: Report No\. 7699-CE
mat): IBRD 21471
This document has a esicted distribution and may be usd by reeipients only in the pfonance
of their official duties\. Its contents may no othrwe be dscked wiou Word Bak auonrizatn
MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT
OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION
TO THE EXECUTIVE DIRECTORS
ON A PROPOSED CREDIT
TO THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA
FOR THE FOREST SECTOR DEVELOPMENT PROJECT
1\. The following memorandum and recommendation on a proposed development
credit to the Democratic Socialist Republic of Sri Lanka for SDR 15\.5 million
(US$19\.9 million equivalent) is submitted for approval\. The proposed credit
would be issued on standard IDA terms with 40 years' maturity and would help
to finance a forest sector development project\. The project would be
cofinanced by the Finnish International Development Agency (FINNIDA) which
would provide a grant of US$2\.8 million equivalent\.
2\. Background\. In 1988, the forestry sector in Sri Lanka contributed
about RS 4\.7 billion to the country's economy, or 4\.21 of GDP\. Industrial
processing of timber and paper products contributes an additional Re 1\.4
billion\. Forestry employs about 170,00 people and forestry products are the
country's major source of energy, accounting for about 71? of total energy
consumption and 94? of the energy used in households\. However, the forest
land area of Sri Lanka has been shrinking over the last 25 years, primarily
due to the clearing of land for agricultural development\. Illicit felling and
shifting cultivation have also contributed to the reduction of forests\. Most
of the natural forests havy been logged over, and their stocking has been
reduced to a level which allows recovery to be achieved only by resting and
replanting\. Over the last 50 years, the Forest Department has established
about 150,000 ha of plantations to expand the productive resource base\.
However, most of these plantations, until recently, have not been tended or
managed\. IDA's involvement in the sector since 1979 has brought a new
dynamism to Sri Lanka's forestry sector by starting forest inventories,
bringing most of the plantations and selected natural forest under management,
training staff, strengthening the institutional framework, and most
importantly providing considerable assistance to the Government in the
formulation of a Forestry Master Plan to guide the long-term development of
the sector\. As a result of the ongoing IDA-led support, Sri Lanka now has an
up-to-date resource data base, a comprehensive sector development plan, and an
integrated sector investment program in forestry\. This experience is now
being used to formulate forestry projects in Bangladesh, Korea and Nepal
3\. Rationale for IDA Involvement\. IDA conducted a Forestry Sector
Review in 1979 and identified a development course for the forestry sector of
Sri Lanka\. It initiated the first phase of this development by providing
support through the ongoing Forest Resources Development Project (Cr\. 1317-CE)
which became effective in 1983\. Since then, a Forestry Master Plan has been
prepared, a Five-Year Investment Program has been formulated, the education of
professional foresters has started, and steps have been taken to introduce
modern forest management practices\. IDA is thus in a sound position to
continue to lead the external support efforts needed to translate these plans
into action\. Continuation of IDA support to the forestry sector through this
follow-up project would help channel assistance from other Donors and Aid
Agencies into the sector more effectively\. Finally, given IDA's involvement
-2-
would ensure that the development undertaken is consistent with strict
environmental protection principles\.
4\. Protect ObLectives\. The proposed project is designed to support the
implementation of a five-year time slice (1990-1994) of the Forestry Master
Plan\. The main objective of the project is to improve the performance of the
forestry sector in line with the economic, social, and environmental
expectations of the Government throughs (a) the intensive management of all
plantations and natural forests; (b) the establishment of an environmental
management aystenl; tc) expansion of the resource base by establishing new
plantations; (d) expanding and augmenting professional and technical education
and training; and Ce) strengthening of the institutional base\.
5\. Protect Descriltion\. The proposed project will be implemented under
the umbrella of the Ministry of Lands, Irrigation and Mahaweli Development by
the Forest Department, the State Timber Corporation, and the University of Sri
Jayewardenepura over a period of five years\. The Forest Planning Unit of the
Ministry of Lands, Irrigation and Mahaweli Development will coordinate project
implementation\. The project objectives would be achieved by support fors
(a) a FPorest Manaaement comoonent to enable the Forest Department to map and
complete inventories and forest management plans for 35,000 ha of young
plantations and about 100,000 ha of natural forests and carry out indicative
inventory of about 500,000 ha of natural forest in the Dry Zone\. Under this
component the Forest Department, in coordination with the State Timber
Corporation, will also carry out a silvicultural treatment program for the
existing 60,000 ha of established ptmntations and 40,COO ha of natural
forests; (b) an Environmental Manazement comoonent to establish a capability
within the Forest Department to formulate and enforce environmental protection
standards to ensure protection and preservation of the environment and
biodiversity within the forest estate; and (c) a Plantation Establishment
comDonent to enable the Forest Department to expand the productive and
protective forest resource base by establishing and tending about 17,900 ha of
new plantations; (d) an Educatlon and Training comuonent to enable the
expansion of professional forestry education facilities in the University of
Sri Jayewardenapura and the technical forestry training facilities of the
Forestry School of Nuwara Elia; and (e) an Institutional Sunport component to
enhance the capabilities of the Forestry Planning Unit to coordinate forestry
sector institutions and to plan and monitor the development of the sector,
equip the Forest Department and the State Timber Corporation with an up-to-
date and functional information system, and provide infrastructure and
mobility for efficient program implementation\. Implementation of the project
would require a technical assistance program consisting of 347 months of
international consulting expertise and 138 months local expertise\. About 502
of the technical assistance input will be utilized for education and training
purposes, which would create benefits far beyond the five-year period of the
project\. The remaining technical assistance inputs should be considered
modest in view of the anticipated modernization of the sector\.
6\. The project cost is estimated at US$31\.4 million, with a foreign
exchange component of US$12\.4 million (39S)\. This includes an investment cost
of US$24\.9 million (79?) and an incremental operating cost of US$6\.4 (20X)\.
IDA would finance US$19\.9 million (63S of total costs), includin; US$18\.1
million of the investment cost and US$1\.8 million of the incremental recurrent
-3-
cost\. FINNIDA would provide US$2\.8 million of grant financing for the
investment cosz of the technical education component, excluding civii works
and the investment cost of the program for the Forestry Planning Unit\. The
total external financing of the project would be US$22\.7 million (782 of total
cost, excluding taxes and duties)\. The Overseas Development Administration of
the United Kingdom (ODA) and the United Nations Development Program (UNDP)
indicated that they would be willing to provide grant financing for certain
activities included in the project\. However, scope and the extent of this
financing have yet to be determined\. The Government is also pursuing possible
cofinancing from the Canadian International Development Agency (CIDA)\. If the
Government of Sri Lanka reaches agreement on this cofinancing the IDA Credit
would be reduced by the amount applicable to the related activities\. A
breakdown of costs and financing is shown in Schedule A\. Amounts ana methods
of procurement and disbursement are shown in Schedule B\. A time table of key
processing events and the status of Bank Group operations in Sri Lanka are
given in Schedules C and D, respectively\. A map, IBRD 21471, is attached\.
The Staff Appraisal Report No\. 7699-CE, dated May 17, 1989, is\. being
distributed separately\.
7\. ARreed Actions\. The Government of Sri Lanka has agreed on the
following actionss (a) to undertake all forestry operations according to
forest management plans; (b) to carry out a study to assess the future
direction of the Forestry MSc course and discuss it with IDA; (c) to maintain
a Forestry Planning Unit; (d) to establish separate profit centers for STC's
logging, sawmilling, wood treatment, and furniture manufacturing operations;
(e) to undertake a study to explore possibilities for privatizing STC's
sawmill operations; (f) to maintain separate project accounts; (g) to audit
Statement of Expenditures annually; (h) to maintain the Interministerial
Forestry Master Plan Steering Committee; (i) to reorganize the Forestry
Department's headquarters and expand its field organization; (j) to establish
an Environmental Management Division within the Forest Department
organization; (k) to maintain the University Coordinating Committee; (1) to
establish all forest plantations on lands formally allocated for forestry
purposes; and (m) to undertake a mid-term review of the project and discuss
the findings with IDA\.
8\. Conditions of Credit Effectiveness are that: (a) the Government has
made arrangements satisfactory to IDA for commitment of the FINNIDA financing;
(b) project coordinators for the Forest Department, State Timber Corporation,
and University of Sri Jayewardenepura have been appointed and are in position;
(c) the technical assistance team has been appointed; and (d) STC's log sale
prices have been deregulated\.
9\. Benefits\. Through the project modern and economically and
scientifically sound forestry practices would be introduced in Sri Lanka\.
These practices would increase the production of wood, provide greater
protection to the environment, and create employment opportunities for the
rural population\. Altogether they would allow the country to meet most or all
of its requirement for wood and wood products over the long term\. The various
physical components of the project have directly quantifiable benefits, mainly
increased wood production, which give an internal economic rate of return of
28X\.
-4\.
10\. Risks\. Possible risks include a delay by the Forest Department in
establishing the required organizational structure and enforcing the standards
for the forest management\. However, to minimize this risk the project
provides for a fomal and well structured link between the Department and the
Ministry through the Forestry Planning Unit, which will closely monitor
project implementation\. In addition the technical asesstance program provided
by the project is designed to eliminate all technical hesitations by the
Department\. While direct project risks should be minimized, the ongoing
political disturbances may delay the start-up of some operations and cou:
prevent targets from being reac\.ed at certain locations\. This risk is
minimized by using conservative targets for these localities in the early
years of the project\. Therefore even if political problems continue at
present level and at the present locations neither the economic viability nor
the development impact of the project will be reduced significantly\.
11\. Recommendations\. I am satisfied that the proposed Credit would
comply with the Articles of Agreement of the Association and recommend that
the Executive Directors approve the proposed Credit\.
Barber B\. Conable
President
by Moeen A\. Qureshi
May 17, 1989
Attachments
Washington, D\.C\.
- - SceduLe A
SRI LANKA
FOREST SECTOR DEYELOPMENT PROJECT
Estimated Cost and Financina Plan
Estimated Proiect Cost: aJ
Local Porerin Total
--__- (US$ million) ------
A\. Forest management 1\.3 1\.2 2\.5
B\. Environmental management 0\.2 0\.8 1\.1
C\. Education and training 1\.2 3\.4 4\.6
D\. Institutional support 3\.8 2\.3 6\.1
E\. Plantation establishment 6\.6 2\.9 9\.5
Total Baseline Costs 13\.2 10\.6 23\.8
Physical contingencies 0\.7 0\.3 1\.0
Price contingencies 5\.1 1\.5 6\.6
Total Project Costs 19\.0 12\.4 31\.4
la Including taxes and duties of US$2\.1 million\.
Financing Plan
Local Foreisn Total
----(US$ million) ------
IDA 11\.3 8\.6 19\.9
FINNIDA 0\.2 2\.6 2\.8
Government 7\.5 1\.2 8\.7
19\.0 12\.4 31\.4
- 6 - Pogo I of 2
SRI LANX
FOREST SECTOR DEVELOPMENT PLiJECT
Procurement Method and Disburs\.ments
(US$ million)
Procurement Category ICB LCB Other la N/A Total Cost
1\. Goods
Vehicles 2\.04 - - 0\.17 lb 3\.11
(2\.48) (0\.00) (2\.48)
Equipment 0\.8 0\.87 0\.4 0\.44 Lb 2\.51
(0\.70) (0\.70) (0\.29) (0\.00) (1\.69)
Materials - 1\.30 0\.96 - 2\.26
(1\.00) (0\.70) (1\.70)
2\. Works
Civil Works - 1\.84 0\.2 - 2\.04
(1\.38) (0\.15) - (1\.53)
Site Preparation 3\.58 - - 3\.58
Contracts (2\.15) - - (2\.15)
Plantation/Forest - - 5\.12 - 5\.12
Management Labor (4\.61) (4\.61)
3\. Services
Technical - - 2\.96 1\.66 lb 4\.62
Assistance (2\.96) (0\.00) (2\.96)
Fellowships - - 1\.07 0\.52 lb 1\.59
(1\.07) (0\.00) (1\.07)
Salaries - - 3\.13 3\.13
(1\.56) (1\.56)
Allowances - - 0\.38 0\.38
(0\.19) (0\.19)
Operating and 3\.014 3\.014
maintenance - - - (0\.00) (0\.00)
Total 3\.74 7\.59 10\.71 9\.314 31\.4
(3\.18) (5\.23) (9\.76) (1\.7) (19\.9)
Note: Figures in parenthesis are the respective amounts financed by IDA\.
la Other" includes shopping procedures, consultant contracts, and force
account\.
lb Procurement under FINNIDA funding\.
7 _ Schedule B
Page 2 of 2
DIS-URSEMENTS
Cateaorv Amount 2
(US$ million)
(1) Works
(a) Building and
contruction 1\.53 752
(b) Site Preparation
Contract 2\.15 602
(c) Plantationl/orest
Management Labor 4\.61 902
(2) Vehicles\. equipment 1002 of foreign
and materials expenditures
including plantation 5\.87 1002 of local
inputs expenitures
(ex-factory cost)
and 702 of local
penditures for
other items pro-
cured locally\.
(3) Incremental staff 1002 of local
salaries and 1\.75 expenditures until
allowances January 31, 1991,
702until January 31,
1992, 502 until
December 31, 1994 and
202 of local expendi-
tures thereafter\.
(4) Consultants' services
and training 4\.03 100?
Total 19\.9
Estimated IDA Disbursement
IDA Fiscal Year
90 91 92 93 94 95 96
Annual 1\.7 9\.8 3\.8 4\.1 4\.4 1\.1 0\.1
Cumulative 1\.7 6\.5 10\.3 14\.4 18\.8 19\.8 19\.9
- 8 - Schedule C
SRS LANKA
FOREST SECTOR DEVELOPMENT PROJECT
Timetable of Rev Proiect Processint Events
(a) Time taken to prepare: Twelve months
(b) Prepared by: GOSL with FAO/CP assistance
(c) First IDA missions MaylJune 1988
(d) Appraisal mission departures January 1989
Ce) Negotiations April 1989
(f) Planned date of effectiveness: October 2, 1989
(g) List of relevant PCRs and PPARIs None
Schedule D
Page 1 of 2
SRI LANRA
FOREST SECTOR DEVELOPMENT PROJECT
THE STATUS OF BANR GROUP OPERATIONS IN SRI LANMA
A\. STATEMENT OF BANK LOANS AND IDA CREDITS la
(As of March 31, 1989)
Amount in USS million
Loan or (less cancellations)
credit Fiscal uno s-
number year Borrower Purpose Bank IDA bursed lb
Ten loans and twenty eight credits fully disbursed 107\.1 414\.0
1017 1980 Sri Lanka Smallholder Rubber Rehab\. 12\.0 0\.9
1079 1981 Sri Lanka Second Rural Development 33\.5 6\.4
1160 1981 Sri Lanka Village Irrigation Rehab\. 30\.0 12\.0
1166 1981 Sri Lanka Mahaweli Ganga Dev\. III 90\.0 36\.3
1317 1982 Sri Lanka Forestry I 9\.0 6\.5
1363 1983 Sri Lanka Third Rural bevelopment 23\.0 24\.5
1401 1983 Sri Lanka Industrial Dev\. Project 25\.0 0\.2
1494 1984 Sri Lanka Mahaweli Ganga Dev\. IV 30\.0 36\.6
2437 1984 Sri Lanka Mahaveli Ganga Dev\. IV 12\.1 12\.1
1537 1985 Sri Lanka Major Irrigation Rehab\. 17\.0 10\.7
2517 1985 Sri Lanka Second Roads 24\.0 6\.7
1562 1985 Sri Lanka Fourth Tree Crops 55\.0 37\.2
1692 1986 Sri Lanka Industrial Dev\. II 20\.0 6\.5
1697 1986 Sri Lanka Municipal Management 13\.0 9\.1
1698 1986 Sri Lanka Second Vocational Training 15\.0 13\.0
1700 1986 Sri Lanka Water Supply and Sanitation 37\.0 35\.0
1736 1987 Sri Lanka Ninth Power 52\.0 48\.2
1776 1987 Sri Lanka Agriculture Research 18\.6 18\.7
1860 1987 Sri Lanka TMird Small & Med\. Indus\. 20\.0 15\.5
1883 1988 Sri Lanka Emergency Recon\. & Rehab\. 78\.0 65\.4
1903 1989 Sri Lanka Health & Family Planning 17\.5 16\.9
1909 1989 Sri Lanka 2nd Smallholder Rubber Rehab\. 23\.5 22\.0
1933 1989 Sri Lanka Distribution & Transmission 40\.5 36\.0
1948 1989 Sri Lanka Third Industrial Development 43\.8 41\.0
Total 143\.2 1\.117\.4 517\.0
Of which has been repaid 62\.7 9\.2
Total now Held by Bank and IDA 80\.5 1\.108\.2
Amount sold 3\.5
Of which repaid 3\.5
Total Undisbursed 18\.8 498\.2 517\.0
La The status of the projects listed in Part A is described in a separate
report on all Bank IDA-financed projects in execution, which is updated
twice yearly and circulated to the Executive Directors on April 3o and
October 31\.
Lb As credits are denominated in SDRs (since IDA Replenishment VI),
undisbursed SDR credit balances are converted to dollars At the current
exchange rate between the dollar and the SDR\. In some cases, therefore,
the uncisbursed balance indicates a dollar amount greater than the
original principal credit amount expressed in dollars\.
Schedule D
-10- Page 2 of 2
B\. STATEMENT OF IFC INESTMENTS
(As of March 81, 1989)
Total
Total undisbureed
Fiscal hold including
Year Obligor Business Loan Equity Total by IFC participants
1978, Dov-lopm\.nt Flnance Development Finance - 0\.5 0\.5 0\.5 -
80, 83 Corporation ot Coylon
1970 Pearl Textile Mille Textile and Fibers 2\.5 0\.8 8\.8 - -
1978, 81 Bank of Ceylon Development Finance 7\.0 - 7\.0 2\.8 -
1979, Ceylon Synthetic T*xtile and Fibers 8\.1 0\.5 8\.6 - -
1981 Textilo
1979 Mlkechres Industrles Woven Polypropylene 0\.9 0\.1 1\.0 - -
Limited and Ceylon Bage
Paper Sacks Ltd\.
1980/84, Lanka Orient L eaing Capital Morket 8\.0 0\.8 8\.8 0\.1 -
1985 Company Ltd\.
1988 UAL Money end Capital - 0\.4 0\.4 0\.4 -
Market
1988 Lanka Hotels Tourism 18 0\.7 2\.5 2\.5 0 :
Total 18\.8 8\.8 21\.6 5\.8 0\.1
ItRD 21471
SRI LANKA
FOREST SECTOR DEVELOPMENT PROJECT
(FORESTRY 11)
Vomo D\.W ovtk ft
a¢w k ~~~~~~~~~~~~~~~~~~~Pre19S"
_w_d I | --~~~~~~~~~~~~~- PC6t-l9Uh
-- Pwoi-16 iqe ho=,go
* -tiag Pkb\.uwho\.
Fo,e, R~ese,
Agqmcho,o,c Zo,e Bo,~dn-
V Tom\., " '"log-
Noftd Copt\.1o
Roifo&d
*dS4~/ * vg! s O T hA-I
; /~~~~~~ ~~~~~ 0 N, E, \. kt E;h
I n d, sO n u 'AE'E A
* - i+Y AS + ~~~~~~(tbATICALOA)
) ce '' n
KILOMITESS g;
AAIL8S~ ~~~~~~~~~~~~
\. |ND|^ \* > gv~~~~all G * To\.ol o°
AMAARC 18
o\., iO ivD
AMLE z nin C\.e
SRI~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 7\.NK
CC ;M08,R o-
^t \. t r~~~~~~~~~~~~~~~~ | APPROVAL |